Court Rules Arbitral Proceedings Abandoned, No Scope for Substitution
In a recent judgment, the Bombay High Court dismissed the application filed by Supama Realtors LLP seeking the appointment of a substitute arbitrator in their ongoing arbitration case against Mulchand Kaluchand Ranka and others. The court ruled that the arbitral proceedings were effectively abandoned, thus terminating the proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996.
The case had initially seen disputes referred to arbitration in 2014 and 2015, with Mr. E.P. Bharucha appointed as the sole arbitrator. However, the proceedings came to a standstill following the last meeting in July 2017, with no further actions until an email was sent in January 2026 requesting a resumption.
Justice Sandeep V. Marne, presiding over the case, emphasized the distinction between the termination of the mandate of the arbitrator and the termination of arbitral proceedings. While the mandate of Mr. Bharucha as an arbitrator could be terminated due to his advanced age, the court clarified that the proceedings themselves were abandoned due to prolonged inaction, thus falling under the purview of Section 32(2)(c).
In his judgment, Justice Marne highlighted that mere failure to pursue arbitration does not automatically equate to abandonment. However, in this case, the lack of activity over nine years, coupled with the absence of any meaningful communication or actions by the parties involved, led to the conclusion that the proceedings had indeed been abandoned.
The court drew upon precedents from the Supreme Court, notably the Dani Wooltex Corporation case, which outlined that abandonment could be express or implied but must be supported by convincing circumstances. In Supama Realtors LLP's situation, the prolonged inactivity and lack of engagement with the arbitral process were deemed sufficient grounds to infer abandonment.
As a result, the application to appoint a substitute arbitrator was denied, and the arbitral proceedings were considered terminated. Justice Marne's ruling serves as a reminder of the importance of active participation in arbitration to prevent proceedings from being deemed abandoned.
Bottom line:-
Arbitration - Termination of arbitral proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 - Arbitral proceedings can be terminated if continuation becomes unnecessary or impossible - Mere failure of a party to pursue arbitration actively does not automatically indicate abandonment; however, long inaction and lack of interest may lead to inference of abandonment.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11, 14, 15, 32
Supama Realtors LLP v. Mulchand Kaluchand Ranka, (Bombay) : Law Finder Doc id # 2894906
