Welcome to the March edition of our Arbitration Newsletter where we have explored significant judgments touching on the interpretation of the relevant provisions of the Arbitration and Conciliation Act, 1996 Act (the "Arbitration Act") and its interplay with other statutes.
1. Serosoft Solutions (P) Ltd. v. Dexter Capital Advisors (P) Ltd., 2025 SCC ONLINE SC 22
The Supreme Court, in the case of Serosoft Solutions (P) Ltd. v. Dexter Capital Advisors (P) Ltd. ("Serosoft"), underscored the limited ground for interference in arbitral proceedings by High Courts exercising their jurisdiction under Article 226 or 227 of the Constitution of India i.e., that the arbitral award is completely perverse.
In this case, a dispute arose between the Appellant, a start-up company and the Respondent, a capital advisory service provider, leading to arbitration between the parties. During the cross-examination of the Appellant's witness, the Respondent was provided with multiple opportunities, over several hearing sessions, to interrogate Appellant's witness. However, the Respondent sought more time from the tribunal for cross-examination of Appellant's witness, which the tribunal rejected. Aggrieved by the tribunal's refusal to grant more time, the Respondent moved the High Court, invoking its writ jurisdiction, and prayed for a direction to the tribunal to grant additional time for cross-examination. Although the High Court acknowledged that judicial interference in arbitration should be minimal citing Kelvin Air Conditioning and Ventilation System Pvt. Ltd. v. Triumph Reality Pvt. Ltd., 2024 SCC OnLine Del 7137 ("Kelvin Air"), still allowed additional time for cross-examination, citing exceptional circumstances.
The Appellant challenged the High Court's ruling before the Supreme Court. A two-judge bench comprising Justice PS Narasimha and Justice Manoj Misra set aside the High Court's decision, noting that the High Court failed to demonstrate any ex-facie perversity in the tribunal's order. The Supreme Court emphasized that arbitration proceedings should be conducted efficiently, with limited judicial intervention. It noted that the arbitral tribunal had already provided sufficient opportunities for cross-examination, and the Respondent's repeated requests showed a lack of preparedness rather than a genuine need. The Supreme Court found no perversity in the tribunal's decision and held that the High Court should not have interfered, as excessive judicial intervention weakens arbitration process. The Court highlighted that under Section 18 of the Arbitration Act, parties must be given a fair opportunity to present their case, but interference is warranted only when denial of such opportunity is evident. The High Court had not considered the limitations as noted in Kelvin Air while exercising its discretion in intervening with arbitral proceedings.
Through its judgement in Serosoft, the Supreme Court has reemphasized the importance of judicial restraint when High Courts exercise their supervisory jurisdiction over arbitral proceedings.
2. Krishna Devi V. Union of India, 2025 SCC ONLINE SC 24
The Supreme Court held that the limitation period for filing objections begins when a party becomes aware of the award's availability, not upon receiving a formal notice under the Arbitration Act, 1940 (the "1940 Act"). In doing so, the Supreme Court set aside the Delhi High Court's decision which declared the Appellant's application for judgment on the arbitral award as premature.
In this case, the Appellant's husband secured an award in his favour on 31 May 2022. Application under Section 17 of the 1940 Act was filed by Appellant on 10 November 2022 to pronounce the judgment according to the award, was dismissed by the Trial and the High Courts on the ground that the said application is premature as it was made before the expiry of the 30 days period, reckoned from 18 November 2022, when formal notice of the Award is said to have been received by the respondent. The question that arose for the court's consideration was whether the time for filing a Section 17 application commences when the party seeking to challenge the award receives a formal notice of the making of the award, or from the date such party is aware of the existence of the award.
The Supreme Court reiterated that under Section 14(2) of the 1940 Act, formal notice is not required to trigger the limitation period for filing objections; awareness of the award's filing suffices. Citing Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti 1961 SCC OnLine SC 7, Ch. Ramalinga Reddy v. Superintending Engineer (1999) 9 SCC 610, and Bharat Coking Coal Ltd. v. C.K. Ahuja 1995 Supp (1) SCC 744, the court emphasized that knowledge of the award, such as through informal means or a pleader, is sufficient. Applying this, the Court ruled that awareness from 21 September 2022 was sufficient notice, despite formal notice being issued on 18 November 2022. Relying on Indian Rayon Corporation Ltd. v. Raunaq and Co. (P) Lt (1988) 4 SCC 31, the Court stressed that treating notice as a procedural formality could lead to abuse and delay, ultimately undermining the Arbitration Act's purpose of ensuring swift dispute resolution.
The Court found that the Respondents were aware of the award by 21 September 2022, making the formal notice on 18 November 2022 irrelevant. Therefore, the limitation for objections expired on 20 October 2022 and the Appellant's application under Section 17 of the 1940 Act was not premature. The Court directed the District Judge to dispose of the matter within five months and reaffirmed that procedural formalities should not be exploited to delay arbitration proceedings.
3. Vidyawati Construction Company v. Union of India, 2025 SCC ONLINE SC 236
The Supreme Court, in the case of Vidyawati Construction Company v. Union of India, clarified that jurisdictional objections under Section 16(2) of the Arbitration Act must be raised before or at the time of filing the statement of defence, and failure to do so amounts to a waiver of the objection.
The case arose from a contractual dispute regarding payments under a government construction project. Although the contract required a three-member arbitral tribunal, a sole arbitrator was appointed by the High Court with the consent of both parties. The Respondent filed its Statement of Defence on 14 February 2004 but later raised a jurisdictional objection on 24 April 2004 on the ground that the appointment of a sole arbitrator violated the arbitration agreement. The arbitrator rejected Respondent's objection and subsequently, proceeded to issue an award in favour of the Appellant. The Respondent challenged the award under Section 34 of the Arbitration Act before the District Court, which set it aside on the ground of improper tribunal composition. The decision of the district court was upheld by the Allahabad High Court.
The Appellant then challenged the High Court's decision before the Supreme Court. A two-judge bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan set aside the High Court's decision, holding that the jurisdictional objection was untimely under Section 16(2) since it was raised after the submission of the Statement of Defence. The Court observed that the Respondent had explicitly agreed to the sole arbitrator's appointment and actively participated in the arbitration, thereby waiving its right to challenge jurisdiction. The Supreme Court held that the District Court and High Court erred by entertaining a belated jurisdictional challenge, reinforcing compliance of statutory limitations on filing jurisdictional objections in arbitration.
Through its judgment in Vidyawati, the Supreme Court reaffirmed that jurisdictional objections must be raised promptly in accordance with Section 16(2) of the Arbitration Act and that parties' conduct can amount to a waiver of such jurisdictional objections.
4. Health Care Medical & General Stores v. Amulya Investment, 2025 SCC ONLINE BOM 81
The Bombay High Court in Health Care Medical & General Stores v. Amulya Investment emphasized the mandatory service of signed arbitral awards upon all parties in the arbitration required under Section 31(5) of the Arbitration Act. The Bombay High Court ruled that the requirement of valid service under Section 31(5) of the Arbitration Act is not fulfilled by way of service of a signed award on an unauthorized employee of a party.
The Appellants challenged the arbitral award under Section 34 of the Arbitration Act, arguing that they had not been validly served as it was delivered to an unauthorized employee of their partnership firm. The trial court dismissed their petition as time-barred, prompting an appeal under Section 37 of the Arbitration Act.
The key legal questions before the High Court were whether service of an award upon an unauthorized employee satisfies Section 31(5) of the Arbitration Act, and whether the limitation period under Section 34(3) can commence without proper service of the arbitral award. The court ruled that the delivery of signed copies to each party is a statutory requirement, without which the limitation period does not commence. It relied on the judgements in State of Maharashtra v. Ark Builders Pvt. Ltd. and Benarsi Krishna Committee v. Karmyogi Shelters Pvt. Ltd, holding that only parties to the arbitration agreement can be considered valid recipients of the award.
Further, the court criticized the arbitrator for preparing only two signed copies despite there being multiple parties, calling this a procedural lapse that violated statutory requirements. It held that the appellants only became aware of the award on 10 August 2023, when the arbitrator refused to issue a copy, meaning their petition was not time-barred. The court set aside the dismissal and remitted the matter for further proceedings, highlighting the importance of procedural compliance and fairness in arbitration.
5. Lords Inn Hotels and Resorts vs. Pushpam Resorts LLP., 2025 SCC ONLINE BOM 447
The Bombay High Court recently ruled that the existence of an arbitration agreement can be inferred even in the absence of a conventional arbitration clause, provided there is a clear, discernible intent to arbitrate. Applying the business efficacy test, which allows courts to imply terms necessary to give effect to the parties' intentions, the High Court held that despite the absence of an express arbitration clause, the agreement to arbitrate was discernible from multiple references to arbitration in other clauses of the contract.
The dispute arose under a 'Resort Management Agreement' executed between Lords Inn Hotels and Resorts, and Pushpam Resorts LLP. Under this agreement, Lords Inn was responsible for managing and operating a resort built by Pushpam at Karjat, Maharashtra. Disputes arose between the parties, leading to the Respondent issuing a termination notice to the Petitioner. Lords Inn challenged the termination and sought arbitration under relevant clauses of the agreement. However, the Respondent denied the existence of a valid arbitration agreement as required under Section 7 of the Arbitration Act.
The Petitioner approached the Bombay High Court under Section 11 of the Arbitration Act. The Court undertook a detailed analysis of the principles governing arbitration agreements, including party autonomy, contractual intent, and the interpretation of Section 7 of the Arbitration Act. Notably, the Court considered the doctrine of business efficacy in interpreting the terms of the contract, to imply terms into a contract, where necessary, to give effect to the parties' intent. Applying this test, the Court held that although the agreement did not contain a stand-alone arbitration clause, multiple provisions referencing arbitration demonstrated a clear intention to arbitrate disputes.
The Court adopted the "real and reasonable interpretation" approach, concluding that since arbitration was mentioned in various parts of the agreement, the omission of a conventional arbitration clause was likely an inadvertent drafting error rather than an indication that the parties intended to exclude arbitration. The Court distinguished this case from precedents where arbitration was rejected due to lack of clear intent, emphasizing that references to arbitration in multiple provisions in the agreement supported an inference of intent to arbitrate.
Accordingly, the Bombay High Court ruled that an arbitration agreement exists between the parties in the facts of the case, even in the absence of a dedicated arbitration clause and therefore, proceeded to appoint an arbitrator. This decision is seminal as it clarifies that an arbitration agreement, under Section 7 of the Arbitration Act, exists between the parties even in the absence of a specific arbitration clause due to drafting errors, provided that the parties' intent to arbitrate is discernible from the other contractual clauses of the contract or from written communications between the parties leading the contract.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
