Supreme Court Holds That An Arbitral Award Can Be Challenged On The Ground Of Lack Of Arbitration Agreement, Even After The Party Challenging It Has Participated In The Arbitration Proceedings.

The Supreme Court of India, by way of its judgement dated 24.03.2026 in the matter of M/s. Bharat Udyog Limited v. Ambernath Municipal Council Through Commissioner & Anr.¹, held that even though a party has participated in an arbitration proceeding, the absence of a valid arbitration agreement renders the arbitral award non-est and a nullity.

In the present matter Bharat Udyog Limited (“BUL”) entered into an agreement with Ambernath Municipal Council (“Municipal Council”) for collection of octroi.

However, a dispute subsequently arose between the parties regarding the computation of reserve minimum price, and the matter was referred to arbitration. The arbitral tribunal directed Municipal Council to reduce the reserve minimum price. BUL approached the civil court seeking to make the arbitral award a rule of the court, which was allowed by the civil court. However, the order of the civil court was overturned by the High Court of Bombay, following which BUL filed an appeal.

The court observed that, mere participation in arbitral proceedings is no estoppel against a party to challenge the arbitral award on the ground that the contract/agreement did not stipulate for arbitration.

Footnote

1. SLP (C) No. 1127 of 2017

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