Arbitration continues to play a pivotal role in India’s dispute resolution landscape, balancing party autonomy, contractual sanctity, and judicial oversight. Recent judgments have clarified critical principles regarding the jurisdiction of courts, the rights of non-signatories, the enforceability of arbitration clauses, and the powers of arbitral tribunals. These decisions reinforce that while arbitration is intended as a private and efficient dispute resolution mechanism, courts remain vigilant to ensure fairness, confidentiality, and adherence to statutory mandates, especially when procedural or contractual irregularities arise.
Case : Engineering Projects (India) Ltd v. MSA Global LLP
Citation: 2025 SCC OnLine Del 5072
Ruling: Civil Courts can grant anti-arbitration injunctions in foreign-seated arbitrations
Date of Judgement: 25.07.2025
Forum: Delhi High Court
Facts:
Engineering Projects (India) Ltd (“EPL”) entered into a contract with MSA Global LLP (“MSA”), which included a dispute resolution clause providing for arbitration under the aegis of the International Chamber of Commerce (“ICC”). Singapore was the chosen seat of arbitration. A dispute arose concerning delays in performance, prompting the initiation of arbitration proceedings. MSA nominated its arbitrator in the 3-member tribunal.
MSA’s nominated arbitrator had previously participated in arbitral proceedings alongside MSA’s Managing Director, a fact he failed to disclose at the time of his appointment. EPL only discovered this non-disclosure after the tribunal issued an interim award in favour of MSA.
EPL challenged MSA’s nominated arbitrator’s appointment before the ICC Court, which, while acknowledging the non-disclosure as regrettable, dismissed the challenge on merits on the ground that it did not give rise to justifiable doubts regarding his impartiality or independence.
Against the ICC Court’s order, EPL approached the High Court of Singapore, and in parallel, the Delhi High Court in the present matter, seeking an anti-arbitration injunction, while MSA sought enforcement of the interim award.
Issues:
Whether civil courts can issue injunctions in for anti-arbitration injunction in foreign-seated arbitration?
Judgement:
The High Court held that Civil Courts, in exceptional cases, do have the jurisdiction to grant anti-arbitration injunctions, even in foreign-seated arbitrations, where the proceedings are found to be vexatious, oppressive, or a misuse of the legal process. The Court clarified that the challenge did not rest solely on proving actual bias by the co-arbitrator. Rather, the focus was on the said arbitrator’s failure to disclose his prior association with MSA at the time of his appointment. This non-disclosure deprived EPL of the opportunity to raise timely objections, undermined the tribunal’s impartiality, and eroded confidence in the arbitral process.
Noting that arbitration cannot be allowed to become a tool for sustained harassment or manipulation disguised as lawful proceedings, the Court found that an interim stay on the arbitration is warranted till the proper adjudication of the validity of impugned arbitrator’s appointment. It is necessary to prevent irreparable harm and to uphold fairness, especially in cases where rigid application of statutory principles would undermine equity and the constitutional right to access justice.
K S&Co Comments
This judgment has a significant impact on the arbitration landscape in India. It clarifies that the doctrine of minimal judicial intervention or interference, does not mean that the arbitration can proceed in a tainted, unfair and biased manner. This Judgment underlines the role of domestic and executing courts and raises the benchmark of Judicial intervention in an arbitration proceeding, as it would be improper to state that the parties by choosing arbitration as a dispute resolution process are consenting to a bias and unfair dispute resolution process. This ruling will likely lead to parties taking higher caution and due diligence in ascertaining the arbitrator, whereas on the other hand, Delhi High Court through this ruling gives a sense of relief to the parties that in such circumstances, the judiciary will uphold the integrity of arbitration.
Case : Kamal Gupta & Anr. v. M/S L.R. Builders Pvt. Ltd. & Anr.
Citation: 2025 SCC OnLine SC 1691
Ruling: A non-signatory to an arbitration agreement cannot be permitted to remain present in arbitration proceedings
Date: 13.08.2025
Forum: Supreme Court of India.
Facts:
An oral family settlement between brothers Kamal Gupta and Pawan Gupta in 2015 for restructuring their family business was later formalized through a Family Settlement Deed (“Family MOU”) dated July 9, 2019. Disputes subsequently arose, leading Pawan Gupta and another to invoke arbitration under the MOU and file a Section 11(6) petition before the Delhi High Court for appointment of a sole arbitrator. Rahul Gupta, son of Kamal Gupta and a non-signatory to the MOU, sought to intervene claiming a substantial interest. By its order dated March 22, 2024, the Delhi High Court appointed a sole arbitrator, treated the Section 9 petition as one under Section 17, and dismissed Rahul Gupta’s intervention applications as he was a non-signatory.
Later, Rahul Gupta and other non-signatory entities filed fresh applications seeking to participate in the arbitral proceedings, to revive earlier applications, and to access records. The Delhi High Court, by its order dated November 12, 2024, allowed their participation citing transparency and protection of interests. Aggrieved, Kamal Gupta and Pawan Gupta approached the Supreme Court challenging the High Court’s order being contrary to the private and consensual nature of arbitration.
Issues:
- Whether a non-signatory can be permitted to attend arbitration proceedings?
- Whether a court can issue further directions in a disposed Section 11(6) proceeding after appointing an arbitrator?
Judgment:
The Hon’ble Supreme Court examined the scope of Section 35 of the Act, which states that “an arbitral award is final and binding on the ‘parties and persons claiming under them” and held that non-signatories cannot be bound by an arbitral award.
By highlighting the importance of confidentiality in arbitral proceedings the Hon’ble Court categorically held that permitting non-signatories to attend arbitral hearings would undermine the finality contemplated under Section 35 of the Act. In the present case, Rahul Gupta’s interests, even if substantial, did not confer a right to upon them to participate in confidential proceedings. It also highlighted the importance of confidentiality in arbitral proceedings. By referring to Section 42A of the Act, which mandates confidentiality to be maintained by the arbitrator, arbitral institution, and parties. Allowing their participation would undermine the finality of awards and breach confidentiality mandated under Section 42A, which protects the privacy of arbitral proceedings.
On the second issue, the Court held that once an arbitrator is appointed, the referring court becomes functus officio and cannot issue further directions in the disposed Section 11(6) proceedings.
K S&Co Comments
In this case the Hon’ble Supreme Court reinforced the principle of autonomy in arbitration proceedings. It has further strengthened the core of confidentiality principle under Section 42A of the Arbitration and Conciliation Act, 1996 in India’s ADR landscape. This judgment underscores the importance of adhering to the statutory framework governing arbitration and limits judicial intervention to what is expressly permitted under the Act. Moreover, this judgment not only rightly applies the international principles of Arbitration but also maintains its stand on limiting the powers of the referral court to the extent of the scope mentioned in the Arbitration and Conciliation Act, 1996.
While the first two cases primarily deal with the scope of judicial intervention and participation in arbitration focusing on issues such as anti-arbitration injunctions in foreign-seated arbitrations and the rights of non-signatories, the subsequent cases highlight the substantive powers of arbitral tribunals themselves. In particular, they examine the tribunal’s authority to adjudicate contractual claims, including awarding interest and determining arbitrability in the presence of parallel criminal proceedings. These rulings shift the focus from procedural safeguards and court oversight to the inherent powers and responsibilities of the arbitral tribunal under the contract and the Arbitration and Conciliation Act, 1996.
Case : The Managing Director Bihar State Food and Civil Supply Corporation Ltd & Anr v. Sanjay Kumar
Citation : 2025 LiveLaw (SC) 778
Ruling: Mere pendency of criminal cases alleging simple fraud is no bar to arbitration.
Date: 05.08.2025
Forum: Supreme Court of India
Facts:
The case arose from contractual disputes between the Bihar State Food and Civil Supply Corporation Limited (BSFCSCL) and several handling and transport contractors, including Sanjay Kumar. The Corporation had appointed these contractors for transportation, storage, and handling of food grains under the Public Distribution System. Alleging various contractual breaches, such as non-performance and financial irregularities, BSFCSCL unilaterally blacklisted and imposed recovery orders against the contractors. The contractors challenged these actions before the Hon’ble Patna High Court, by way of filing a criminal case,arguing that such unilateral measures were arbitrary and contrary to the arbitration clause contained in the contracts.
The key contention centered on clause 22 of the agreement, which provided for arbitration as the exclusive mode of dispute resolution. The contractors argued that any dispute, including those related to blacklisting or recovery of amounts, had to be referred to arbitration rather than being decided unilaterally by the Corporation. The High Court accepted this view and quashed the Corporation’s orders, holding that once the contract contained an arbitration clause, the Corporation could not act as judge in its own cause by passing punitive or recovery orders without invoking arbitration. The order was challenged before the Hon’ble Supreme Court.
Issues:
Whether the dispute has become non-arbitrable in view of the initiation and pendency of the criminal cases?
Whether the decision in the order of Bihar Public Works Contracts Disputes Arbitration Tribunal operates as res judicata?
Judgment:
The Supreme Court held that the pendency of criminal proceedings does not make a civil or contractual dispute non-arbitrable unless both are identical in nature and scope. In this case, while criminal cases alleged misappropriation in food grain distribution, the contractual disputes over termination, blacklisting, and recovery arose independently from contractual obligations. Hence, the parties’ duty to arbitrate remained unaffected.
The Court further held that the disputes fell within the arbitration clause, and the Corporation’s unilateral actions in blacklisting or recovering amounts amounted to adjudicating its own cause impermissible where an arbitration agreement exists. Reaffirming party autonomy, the Court directed that such disputes be resolved through arbitration.
On the final issue, it ruled that the Bihar Public Works Contracts Disputes Arbitration Tribunal’s earlier decision did not operate as res judicata since it involved different contracts, causes of action, and parties.
K S&Co Comments
The Supreme Court’s ruling reaffirms that mere pendency of criminal proceedings does not render contractual disputes non-arbitrable unless the issues are identical in nature and scope. By emphasizing party autonomy and the sanctity of the arbitration clause, the Court has clarified that government entities cannot unilaterally adjudicate disputes or bypass arbitration through administrative orders like blacklisting or recovery. The judgment strengthens the distinction between criminal liability and contractual obligations, reinforcing arbitration as the appropriate and binding forum for resolving such commercial disputes.
Case : ONGC Ltd. vs M/s G & T Beckfield Drilling Services Pvt. Ltd.
Citation: Civil Appeal No. 11324 of 2025 (Arising out of SLP (C) No. 18331 of 2019); 2025 INSC 1066
Ruling: An Arbitral Tribunal can grant pendente lite interest unless expressly or impliedly barred in the contract.
Forum: Supreme Court of India
Date of judgment:02.09.2025
Facts:
ONGC challenged an arbitral award dated November 21, 2004, directing payment of USD 6,56,272.34 with 12% interest from December 12, 1998, under Section 34 of the 1996 Act, contending, among other pleas, that Clause 18.1 of the contract barred interest on disputed claims.
Clause 18.1 of the contract stated:
“….Should corporation question any item or items of an invoice, it may withhold payment of the amount in dispute until such matter is resolved between the parties, but the amount not in dispute is to be paid within above period. No interest shall be payable by ONGC on any delayed payment /disputed claim.”
The District Judge set aside the award on grounds that it was non-reasoned and Section 16(2) objections were not addressed. The respondent appealed under Section 37(1)(c), and the High Court affirmed the award. The Special Leave Petition was limited to whether interest at 12% on the total amount was permissible.
Issues:
Whether clause 18.1 prescribes payment of even pendente lite interest on the sum awarded?
Judgment
The Hon’ble Supreme Court held that Clause 18.1 did not explicitly or by necessary implication bar the arbitral tribunal from awarding pendente lite interest. The clause merely restricted ONGC’s liability to pay interest on delayed or disputed claims but did not oust the tribunal’s statutory power to award interest during the arbitration proceedings. The Court distinguished this case from precedents where the contract used comprehensive language to bar interest “in any respect whatsoever.” Thus, upholding the Tribunal’s powers to award pendente lite interest.
K S & Co Comments:
In this case the point that is to be focused is that while deciding the power of the arbitral tribunal, the court, rather than considering the statutory powers of the tribunal, focused upon the contract and whether the contract bars the arbitral tribunal from being able to give pendente lite interest on the disputed amount. By considering the contract between the parties in its entirety, the court believed that when read completely, the clause in the contract mentions about the ONGC’s restriction upon the liability and does not restrict the tribunal’s power from awarding the same. The court laid emphasis on the fact that the arbitration clause did not prevent the learned tribunal from awarding pendente lite interest, rather it only excluded ONGC’s liability from such interest.
