INTRODUCTION:
The Bombay High Court in Supama Realtors LLP and Others vs. Mulchand Kaluchand Ranka and Others[1], inter alia held that an application for appointment of a substitute arbitrator under Section 11 read with Section 14 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") cannot be allowed where the arbitral proceedings themselves have stood terminated on account of abandonment under Section 32(2)(c) of the Arbitration Act. The Court clarified the distinction between termination of the mandate of an arbitrator and termination of arbitral proceedings. Where only the mandate of an arbitrator terminates, the arbitral reference survives and a substitute arbitrator may be appointed. However, where the arbitral proceedings are abandoned and consequently terminated, there remains no surviving reference in which a substitute arbitrator can enter upon reference.
FACTS:
By an order dated 17th September, 2014 passed in Arbitration Application No. 113 of 2014, the Bombay High Court referred disputes arising out of a partnership deed dated 14th October, 2010 to a sole arbitrator. The disputes related to the affairs, business and assets of the partnership firm, M/s. Shree Ranka Kothari Kanugo Realtors. The order recorded that the learned Arbitrator shall endeavour to pass his award within a period of nine months from the date of the first meeting.
Thereafter, by a further order dated 17th March, 2015 passed in Arbitration Application No. 332 of 2014, disputes between the Kanugo Group and the Ranka Group were also referred to the same Arbitrator. Both references were made before the Arbitration and Conciliation (Amendment) Act, 2015 came into force, whereby Section 29A was introduced in the Arbitration Act prescribing timelines for making of an arbitral award.
The arbitral proceedings commenced before the Arbitrator. The Applicants filed their statement of claim, the Respondents filed their respective statements of defence and counterclaims, and affidavits of evidence were also filed by the parties. The last meeting in the arbitral proceedings was held on 25th July, 2017. According to the Applicants, the proceedings were then at the stage of cross-examination of the Applicants’ witness. However, the parties jointly sought adjournments from time to time on account of settlement talks.
According to the Applicants, the settlement talks could not fructify on account of non-co-operation from the Ranka Group. On 2nd January, 2026, Respondent No. 6 addressed an email to the learned Arbitrator, inter alia, informing him about the demise of his father, the need to bring legal heirs on record, alleged non-co-operation of the Ranka Group, the desire to resume the arbitral proceedings, and a request that a meeting be scheduled for deciding the further conduct of the proceedings.
The Applicants contended that the Arbitrator did not respond to the said email. Upon making inquiries with his office, the Applicants were verbally informed that the Arbitrator was of advanced age and was not in a position to actively conduct and conclude the arbitration. In these circumstances, the Applicants filed the present application under Section 11 read with Section 14 of the Arbitration Act seeking termination of the mandate of the Arbitrator and appointment of a substitute arbitrator to continue the arbitration from the stage already reached.
ISSUE FOR CONSIDERATION:
The main issues for consideration before the Bombay High Court were as follows:
- Whether the arbitral proceedings continued to subsist in law or stood abandoned by the conduct of the parties; and
- Whether the Court could appoint a substitute arbitrator under Section 11 read with Section 14 of the Arbitration Act when there had been no effective step in the arbitral proceedings for nearly nine years.
SUBMISSIONS ON BEHALF OF THE APPLICANTS:
The Applicants submitted that substitution of the Arbitrator was necessitated because of his inability to conclude the arbitral reference on account of advanced age. It was argued that the Arbitrator had failed to respond to the request for resumption of the proceedings and, therefore, his mandate was liable to be terminated under Section 14 of the Arbitration Act on the ground of de facto inability to perform his functions.
It was further submitted that the reference to arbitration was made prior to the 2015 amendment to the Arbitration Act and, therefore, Section 29A had no application to the present proceedings. Reliance was placed on the decision of the Apex Court in Board of Control for Cricket in India vs. Kochi Cricket Private Limited2 to contend that Section 29A operates prospectively.
The Applicants also contended that the direction in the order dated 17th September, 2014 that the Arbitrator shall “endeavour” to pass the award within nine months could not be construed as a mandatory time-limit or as a condition precedent to the continuation of the arbitrator’s jurisdiction. It was submitted that the word “endeavour” is directory in nature and does not result in automatic termination of the mandate or the proceedings, relying on the decision of the Apex Court in Tata Sons Private Limited vs. Siva Industries and Holdings Limited3 and, which held that the timeline under Section 29A is directory rather than mandatory.
On the question of abandonment, the Applicants submitted that abandonment requires a clear, unequivocal and demonstrable intention to relinquish the right to pursue arbitration. Mere passage of time, delay, or failure to seek dates could not amount to abandonment. The email dated 2nd January, 2026 was relied upon as an express affirmation of the intention to resume the arbitral proceedings. It was also contended that, if the Respondents were aggrieved by the delay, their remedy was to approach the Tribunal under Section 25 of the Arbitration Act and seek appropriate orders.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
Respondent Nos. 1 to 3 opposed the application and submitted that the arbitral proceedings were no longer alive. It was argued that the parties had abandoned the reference by their conduct, particularly because no communication was addressed to the Arbitrator and no effective step was taken in the proceedings for approximately nine years after 25th July, 2017.
It was further submitted that the order dated 17th September, 2014 contemplated making of the award within nine months. If the Applicants intended to continue the arbitration beyond that period, they ought to have approached the Court for extension of time. The email dated 2nd January, 2026 was also criticised on the ground that it was not marked to the Ranka Group and was addressed by Respondent No. 6, who was not then brought on record in the arbitral proceedings. Reliance was placed on the decision of the Bombay High Court in Nalin Vallabhbhai Patel and Another vs. Athrava Realtors4 in support of the submission that the arbitral proceedings had been abandoned and that abandoned proceedings could not be revived by filing a fresh application under Section 11 read with Section 14 of the Arbitration Act. Respondent Nos. 4 to 9, supported the Applicants.
JUDGMENT:
The Bombay High Court first considered whether the direction in the order dated 17th September, 2014 requiring the learned Arbitrator to “endeavour” to pass the award within nine months created a mandatory time prescription. The Court held that, prior to the 2015 amendment, there was no statutory time-limit for making an award. It further held that the use of the expression “endeavour” did not amount to a positive mandatory direction resulting in termination of the proceedings upon expiry of nine months. The Court also noted that the parties themselves never treated the period of nine months as a maximum permissible time-limit, since arbitral meetings continued well beyond that period and were held up to 25th July, 2017.
The Court then examined the statutory distinction between termination of the mandate of an arbitrator and termination of arbitral proceedings. Sections 14 and 15 of the Arbitration Act deal with termination of the mandate of an arbitrator and substitution of the arbitrator. In contrast, Section 32 deals with termination of arbitral proceedings. The Court observed that mere termination of the mandate of an arbitrator does not automatically terminate the arbitral proceedings; in such a case, the reference continues and the vacancy in the arbitral tribunal may be filled under the Arbitration Act.
However, the Court held that once the arbitral proceedings themselves are terminated under Section 32, there is no surviving reference in which a substitute arbitrator can be appointed. Under Section 32, arbitral proceedings terminate either by a final award or by an order of the arbitral tribunal where the claimant withdraws the claim, the parties agree to termination, or the tribunal finds that continuation of the proceedings has become unnecessary or impossible.
The Court considered the decision of the Supreme Court in Dani Wooltex Corporation vs. Sheil Properties Private Limited and Another5, where it was held that abandonment cannot be readily inferred and that failure by a claimant to request the tribunal to fix a hearing date, by itself, would not amount to abandonment. The Supreme Court had held that implied abandonment may be inferred only where the admitted or proved facts are so clinching that the only possible inference is that the claimant has given up the claim.
Applying the aforesaid test, the Bombay High Court held that the facts of the present case justified an inference of abandonment. The Applicants had not referred to any event in the arbitral proceedings between 25th July, 2017 and 2nd January, 2026. The pleadings regarding settlement talks were vague and unsupported by material. The Court observed that it was incomprehensible that settlement talks could continue for nine years without the Applicants once informing the learned Arbitrator that dates were not being sought because negotiations were ongoing.
The Court also placed weight on the fact that the Applicants themselves had not expressed any interest in prosecuting the claim during the long period of inaction. The only email seeking resumption was sent by Respondent No. 6, who was stated to be a legal heir of a deceased partner and had not been brought on record in the arbitral proceedings. The Court held that the Applicants could not rely upon that email to overcome their own inaction for nearly nine years.
In view of the above, the Court held that the inescapable conclusion from the established conduct of the Applicants was that the arbitral proceedings had been abandoned. Consequently, the proceedings stood terminated under Section 32(2)(c) of the Arbitration Act. Since the arbitral proceedings themselves had terminated, the Court held that it could not appoint a substitute arbitrator in exercise of powers under Section 11 or Section 14 of the Arbitration Act.
The application was accordingly dismissed with no order as to costs.
Footnotes
1 2016 SCC OnLine Bom 1792
2 (2018) 6 SCC 287
3 (2023) 5 SCC 421
4 2026 SCC OnLine Bom 2359
5 (2024) 7 SCC 1
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