Bombay High Court Buries Stalled Arbitration Proceedings Between Multiple Petitioners and Arrow Engineering.


23 April 2025 Arbitration Law >> Business & Commercial Law  

In Surinder Singh & Others v/s Arrow Engineering Ltd., the Bombay High Court has brought an end to a protracted legal saga involving multiple petitions filed under Section 29-A of the Arbitration and Conciliation Act, 1996, concerning arbitration proceedings between several Petitioners and Arrow Engineering Ltd. ("Arrow"). These petitions, seeking an extension of the Arbitral Tribunal's mandate, had languished in the court's docket since 2020 with minimal progress from either side.

Justice SOMASEKHAR SUNDARESAN, addressed a total of 22 such petitions, four of which were subsequently withdrawn. Of the remaining 18, three had been previously disposed of by a Learned Single Judge in an order dated October 12, 2020 ("October 2020 Order"), granting a mandate extension until November 1, 2021. Review petitions filed by Arrow against this order were later tagged with the remaining petitions.


 

 

However, subsequent to the October 2020 Order, the matter remained stagnant. The extended mandate expired, and no fresh petitions for further extension were filed by the involved parties. Recognizing the prolonged inactivity, the High Court, on its own motion, listed these long-pending petitions, initiating a process to determine their future.

The underlying arbitration stemmed from contracts where Arrow was tasked with constructing bungalows in the Navi Mumbai International Airport Influence Notified Area (“NAINA”), a project spearheaded by the City and Industrial Development Corporation of Maharashtra Ltd. (“CIDCO”). The Petitioners' primary claim in the arbitration was for a directive compelling Arrow to specifically perform these construction contracts.

Notably, it was the Petitioners who had initiated the arbitration, securing an order under Section 11 of the Act from the High Court for the appointment of a Learned Senior Counsel as the arbitrator on June 30, 2016. Pleadings were completed by April 26, 2017. Subsequently, the Petitioners sought leave from the Arbitral Tribunal to approach the High Court for witness summons under Section 27 of the Act, aiming to compel the attendance of a CIDCO (NAINA) planning official, a step deemed beyond their power in a private arbitration. This application was granted.

However, no petition under Section 27 was ever filed in court. Instead, on October 29, 2017, the Petitioners applied to the Arbitral Tribunal for the termination of its mandate, citing their alleged inability to afford the arbitrator's fees. They also pointed to Arrow's purported financial difficulties in a parallel arbitration. Arrow contested this, arguing against termination based on unaffordability. A back-and-forth ensued regarding alleged prior consent from Arrow to terminate the proceedings, which Arrow later retracted following the arrest of its promoter. The Arbitral Tribunal ultimately rejected the Petitioners' application for termination in a detailed order dated January 17, 2018, deeming it unmaintainable and potentially setting an unhealthy precedent.

Following this, the Arbitral Tribunal noted the Petitioners' failure to pursue the witness summons and the expiry of the initial mandate. While the Petitioners expressed willingness to seek a Section 29-A extension, the issue of significant unpaid fees was highlighted.

A petition under Section 29-A was eventually filed in August 2019, disclosing the fee situation and alleging Arrow was deliberately making the arbitration unaffordable. This petition sought both an extension and the substitution of the arbitrator but was later withdrawn with the liberty to file afresh, leading to the current set of petitions filed in October 2020.

Justice SOMASEKHAR SUNDARESAN, after reviewing the record and hearing arguments from both sides, concluded that the proceedings had become stagnant and no compelling reason existed to extend the Arbitral Tribunal's mandate. The court opined that further extension would only prolong the dispute without offering any real benefit or confidence in achieving closure for either party.

The court also emphasized the October 2020 Order, which had already explicitly rejected the Petitioners' request for arbitrator substitution based on unaffordability, a decision the Petitioners did not appeal. The extended mandate granted in that order expired on November 1, 2021, without any significant activity in the arbitration. The Petitioners also failed to capitalize on the Supreme Court's suo motu extensions of statutory timelines during the Covid-19 pandemic to revive the proceedings.

Highlighting the protracted delay, with nearly a decade passing since the initial Section 11 order, the court found no evidence of sustained interest or effort from the Petitioners to actively pursue the arbitration for almost five years. The court deemed the Review Petitions filed by Arrow as having become infructuous due to the passage of time and the lack of progress under the order they sought to review.

Ultimately, Justice SOMASEKHAR SUNDARESAN concluded that sufficient cause for extending the mandate had not been demonstrated. The court deemed it appropriate to bring closure to the long-dormant arbitration proceedings by dismissing the petitions, allowing the litigants to move forward.

In the final order, all the pending petitions were dismissed, effectively burying the stalled arbitration proceedings.


Section 29, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996