Arbitration in India continues to evolve through a delicate balance between party autonomy, the powers of arbitral tribunals, and the supervisory role of courts. While arbitral tribunals are vested with wide procedural and substantive authority to adjudicate disputes efficiently, courts retain a limited but crucial role in safeguarding fairness, neutrality, and adherence to statutory mandates. Recent judicial pronouncements reiterate that although minimal judicial interference remains the guiding principle, courts will not hesitate to intervene where arbitral proceedings or awards are vitiated by illegality, procedural impropriety, or violations of public policy. The decisions discussed in this newsletter reflect how courts have exercised this supervisory jurisdiction—both to set aside flawed awards and to uphold arbitral determinations where the tribunal has acted within its mandate.
Case 1: Express Written Waiver Required for Arbitrator Eligibility
Ruling: Supreme Court holds that participation in arbitral proceedings does not waive objection to arbitrator’s eligibility — express written waiver required
Case Name: Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India
Case Nos.: Civil Appeal Nos. 37–38 of 2026 (arising out of SLP (C) Nos. 16107–16108 of 2025)
Date of Judgement: 6th January 2026
Forum: Supreme Court of India
Facts:
The dispute arose from a licence agreement between Bhadra International (India) Pvt. Ltd. (“Appellants”) and the Airports Authority of India (“AAI”). Clause 78 of the agreement provided for reference to “sole arbitration of a person, to be appointed by the Chairman of the Authority.” After disputes arose in 2015, the appellants invoked the arbitration clause. The Chairman of AAI appointed a sole arbitrator, who in 2018 passed a ‘nil’ award against the appellants. The appellants challenged the award under Section 34 before the Delhi High Court, which held that the appellants had waived their right to object to the arbitrator’s appointment by participating in the proceedings. The appellants then moved to the Supreme Court, contending that no express written waiver had been executed as required under Section 12(5).
Issues:
Whether mere participation in arbitral proceedings, or non-objection in procedural orders, amounts to waiver of the right to object to an arbitrator’s eligibility under Section 12(5) of the Arbitration Act, and whether an appointment in violation of Section 12(5) is void ab initio.
Judgement:
The Supreme Court analysed the statutory scheme of Section 12(5) in light of established precedents such as Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. and TRF Ltd. v. Energy Eng’g Projects Ltd., holding that:
- Ineligibility includes both arbitrator and appointing authority: A person who is ineligible to act as arbitrator cannot validly appoint another arbitrator.
- Express written waiver required: The proviso to Section 12(5) requires a waiver of objection by an “express agreement in writing” executed after the dispute has arisen. Mere conduct — such as participating in hearings, filing claims, recording “no objection” in procedural orders, filing applications for extensions, or other procedural acts — does not amount to a waiver.
- Appointment void ab initio: A unilateral appointment by an ineligible authority is void ab initio, and an arbitrator so appointed lacks jurisdiction to decide the merits.
- Objection can be raised at any stage: Given that the defect goes to jurisdiction, an objection can be raised at the pre-award or post-award stage, including under Section 34.
The Supreme Court allowed the appeals, set aside the impugned High Court judgment, and consequently set aside the arbitral award, emphasizing that parties are free to conduct fresh arbitration in conformity with law.
K S&Co Comments:
This judgment reinforces a key principle in Indian arbitration law: party autonomy in arbitrator selection must align with statutory mandates, and statutory safeguards like Section 12(5) cannot be undermined through implied conduct or procedural participation. The Supreme Court has clarified that the only mode of waiver is a deliberate written agreement entered into after disputes have arisen, thereby safeguarding impartiality and equal treatment in tribunal appointments. For practitioners and contracting parties, this reinforces the need to draft clear appointment provisions and ensure compliance with statutory eligibility criteria. It also highlights that challenges to jurisdictional defects — including unilateral appointments — remain available even at the post-award stage, ensuring that tribunal constitution defects that go to the root of jurisdiction are not insulated. The judgment thus serves as a cautionary note for parties to ensure compliance with statutory appointment mechanisms at the outset, failing which even concluded arbitrations may be rendered vulnerable.
Case 2: Natural Justice Violation Due to Undue Haste
Ruling: Arbitral award set aside for undue haste and violation of natural justice after prolonged delay
Case Name: Amit Engineers v. Union of India & Ors.
Citation: 2026 LLBiz HC (BOM) 5
Case Number: Commercial Arbitration Petition No. 847 of 2024
Date of Judgement: 8th December 2025
Forum: Bombay High Court
Facts:
Amit Engineers, a government contractor engaged by the Central Railway for maintenance of air-conditioned railway coaches, invoked arbitration over payment and performance disputes. A Deputy Chief Accounts Officer was appointed sole arbitrator in August 2015, and claims were filed in December 2015. After limited preliminary steps and a single hearing in June 2017, the proceedings remained dormant for several years. Despite this, the arbitrator passed an award on 31 May 2021 rejecting all claims.
The contractor challenged the award before the Bombay High Court, contending that the arbitrator had abandoned the proceedings and passed the award without any hearing, despite being aware of a pending substitution petition. The Railway opposed the challenge, arguing that the arbitration pre-dated statutory timelines and that delay alone could not invalidate the award.
Issues:
Whether an arbitral award passed after prolonged inactivity, without recording evidence or hearing arguments, and in circumstances indicating undue haste, is liable to be set aside for violation of principles of natural justice and public policy.
Judgement:
The Bombay High Court rejected the arbitrator’s justification for the prolonged delay, holding it to be factually incorrect and noting that there were no pandemic-related restrictions between June 2017 and March 2020. The Court found that despite dates being fixed in April and May 2021, no hearings were conducted, no evidence was recorded, and no arguments were heard before the award was passed. It observed that the arbitrator had “clearly misconducted” himself by mischaracterising earlier meetings as hearings and by rushing to deliver the award after becoming aware of a pending substitution application.
Holding that such conduct amounted to a breach of natural justice and was contrary to public policy, the Court set aside the arbitral award dated 31 May 2021 and noted that a fresh arbitral tribunal had already been constituted to adjudicate the disputes afresh.
K S&Co Comments:
This decision reinforces a fundamental principle of arbitration—that efficiency cannot come at the cost of fairness.The Bombay High Court has sent a strong message that prolonged arbitral dormancy followed by a sudden, hearing-less award is impermissible and will not be protected under the shield of arbitral autonomy. For government contracts and PSU-led arbitrations, this judgment is particularly significant. It cautions arbitrators against procedural complacency and underscores that failure to conduct hearings, record evidence, or meaningfully engage with parties can amount to misconduct. The ruling also strengthens the public policy ground under Section 34 by affirming that awards passed in breach of natural justice are inherently vulnerable. Parties and practitioners alike must remain vigilant in monitoring arbitral timelines and procedural fairness, while arbitrators must ensure continuous conduct of proceedings and adherence to basic principles of audi alteram partem to preserve the legitimacy of the arbitral process.
Case 3: Deemed Acceptance Bars Rejection After Use
Ruling: Buyer cannot reject goods after putting them to use; deemed acceptance under the Sale of Goods Act bars rejection
Case Name: Godrej and Boyce Manufacturing Company Limited v. Remi Sales and Engineering Limited
Case Number: Commercial Arbitration Petition No. 232 of 2024
Date of Judgement: 24th December 2025
Forum: Bombay High Court
Facts:
Godrej and Boyce Manufacturing Company Limited issued a purchase order in August 2016 to Remi Sales and Engineering Limited for the supply of 8,339 stainless steel seamless tubes conforming to ASTM A213 TP 316/316L specifications. The tubes were intended for use in heat exchangers for an oil refinery project in Oman, with the total contract value exceeding ₹5 crore. The tubes were supplied in 2017, accepted by Godrej, and subsequently installed in the heat exchangers. Thereafter, Godrej alleged that certain tubes exhibited rusting, pitting, and discoloration. Following discussions between the parties, approximately 965 tubes were sent back for cleaning under a procedure approved by Godrej. Despite the cleaning process, Godrej later rejected the goods and withheld payment, prompting Remi to invoke arbitration. The arbitral tribunal allowed Remi’s claims and awarded ₹4,25,44,680 along with interest at 10% per annum, holding that the goods conformed to contractual specifications and that their use by Godrej amounted to deemed acceptance. Aggrieved, Godrej challenged the award before the Bombay High Court under Section 34 of the Arbitration Act.
Issues:
1) Whether a buyer who has put goods to use can subsequently reject them on the ground of defects?
2) Whether such use constitutes deemed acceptance under Section 42 of the Sale of Goods Act, 1930, thereby barring rejection of goods?
Judgement:
The Bombay High Court upheld the arbitral findings, holding that Remi had proved conformity with contractual specifications through extensive documentary evidence, which was not open to re-appreciation under Section 34. Relying on Section 42 of the Sale of Goods Act, the Court held that Godrej had deemed accepted the goods by installing and using them. The Court rejected the argument that the contract permitted rejection after acceptance, clarifying that rejection was allowed only prior to use, while post-acceptance remedies were limited to damages. Observing that the alleged rusting was not shown to be a material defect and that Godrej could not “blow hot and cold” after approving cleaning and reuse, the Court dismissed the Section 34 petition.
K S&Co Comments:
This judgment offers valuable clarity at the intersection of contract law, sale of goods principles, and arbitration. By reaffirming the doctrine of deemed acceptance under Section 42 of the Sale of Goods Act, the Bombay High Court has reinforced commercial certainty and prevented buyers from approbating and reprobating after having derived benefit from supplied goods.
From an arbitration perspective, the decision underscores the narrow contours of judicial interference under Section 34 and the courts’ reluctance to re-evaluate evidence or contractual interpretation undertaken by arbitral tribunals.
For manufacturers and suppliers, the ruling provides strong protection against post-use rejection of goods, while buyers are reminded that once goods are put to use, remedies are confined to damages for breach of warranty and not rejection—an important takeaway for structuring supply contracts and dispute strategies.
Case 4: Termination for Non-Payment of Arbitrator’s Fees
Ruling: Arbitral tribunal is empowered to terminate arbitral proceedings under Section 38(2) of the Arbitration and Conciliation Act, 1996 for non-payment of arbitrator’s fees. Once such termination takes place, the aggrieved party cannot seek appointment of a fresh arbitrator under Section 11 and must first seek recall before the arbitral tribunal. If such recall is rejected, the appropriate remedy lies under Section 14(2) of the Act.
Case Name: Harshbir Singh Pannu & Anr. v. Jaswinder Singh
Citation : 2025 LiveLaw (SC) 1183
Date of Judgement: 8th December 2025
Forum: Supreme Court
Facts
The sole arbitrator terminated the arbitral proceedings after both parties failed to deposit their respective shares of arbitral fees, invoking powers under Section 38(2) of the Act. Instead of seeking recall of the termination order before the arbitral tribunal, the appellant approached the Punjab & Haryana High Court seeking appointment of a new arbitrator. The High Court dismissed the petition, holding that termination under Section 38 conclusively ended the proceedings and could not be bypassed by invoking Section 11.
Issues
The principal issues before the Supreme Court were:
(i) the legal meaning and effect of termination of arbitral proceedings under Section 38 of the Act; and
(ii) the appropriate remedy available to a party aggrieved by such termination.
Judgement
The Supreme Court held that termination of proceedings under Section 38 has the same legal effect as termination under Section 32, once proceedings are terminated, the arbitral reference stands concluded and the tribunal becomes functus officio. The Court clarified that the proper course is to first seek recall of the termination order before the arbitral tribunal. If such recall is rejected, the party may approach the court under Section 14(2). While affirming this legal framework, the Court appointed a substitute arbitrator in the present case due to prolonged delay and observed that even the proposed Arbitration & Conciliation Bill, 2024 fails to provide a clear statutory remedy for such situations.
K S & Co Comments
This judgment brings much-needed clarity on the procedural consequences of termination of arbitral proceedings due to non-payment of fees. By delineating a structured remedial pathway, recall before the tribunal followed by recourse under Section 14(2), the Supreme Court has curtailed forum shopping and reinforced procedural discipline in arbitration. The Court’s observations on the absence of a clear statutory remedy also highlight a critical gap in the existing and proposed legislative framework, warranting urgent reform to ensure certainty and efficiency in arbitral proceedings.
