23 June 2025 Arbitration Law >> Business & Commercial Law  

The Bombay High Court in Neelkanth Mansions & Infrastructure Private Limited & Another v/s Urban Infrastructure Trustees Limited & Another has ruled that an arbitration petition filed under Sections 14, 15, and 34 of the Arbitration and Conciliation Act, 1996, is not maintainable against an Arbitrator's order refusing to terminate arbitration proceedings. This decision was made in response to an application seeking to dismiss such a petition as not maintainable.

The petitioners had sought to terminate the arbitration proceedings before the Arbitrator under Section 32(2)(c) of the Arbitration Act, claiming that continuation had become impossible due to certain developments. However, the Arbitrator dismissed their application on May 7, 2024, disagreeing with the impossibility claim.

The applicant (original claimant) argued that the Arbitrator's order was merely an "order" refusing to terminate proceedings, not an "Award," and therefore, a petition under Section 34 (for setting aside an award) was not permissible. They emphasized the clear distinction between an "Award" and an "Order" under Section 32 of the Act, stating that an order under Section 32(2)(c) is explicitly not an award. The applicant contended that the issue decided by the Arbitrator did not pertain to the core disputes of the arbitration and therefore could not be considered an interim or partial final award. Furthermore, they asserted that the petitioners would not be "remediless," as they could challenge the Arbitrator's order in an appeal against a final award if it goes against them.

The petitioners, conversely, argued for looking at the "substance over form," contending that the Arbitrator's decision, even if styled as an order, effectively decided an issue between the parties, thus qualifying as an "Award" (interim or partial final) challengeable under Section 34. They cited judgments that suggest an order which finally decides a "lis" between parties could be an award. They also argued that dismissing their petition would leave them without a remedy.

The High Court meticulously analyzed Section 32 of the Arbitration Act, emphasizing that it clearly differentiates between a "final arbitral award" and an "order of the arbitral tribunal under sub-section (2)." The Court affirmed that an order under Section 32(2)(c), which deals with the termination of proceedings due to impossibility or unnecessariness, is not an arbitral award. It reinforced its earlier stance that the remedy under Section 34 is exclusively for challenging an arbitral award.

The Court concluded that the Arbitrator's order, both in form and content, was strictly an order under Section 32(2)(c) of the Arbitration Act. It did not relate to any matter on which a final award could be made and primarily addressed the continuation of the arbitration. The Court also dismissed the petitioners' argument of being "remediless," clarifying that they retain the right to challenge the Arbitrator's findings in the event a final arbitral award is passed against them, at which point they can file a petition under Section 34.

Accordingly, the High Court allowed the application, declaring the arbitration petition non-maintainable and dismissing it.

Section 14, Arbitration and Conciliation Act - 1996  

Section 15, Arbitration and Conciliation Act - 1996  

Section 32, Arbitration and Conciliation Act - 1996  

Section 34, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996