TaxTMI 
TaxTMI 
2026 (2) TMI 727
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....of by substituting the earlier Arbitrator appointed by the High Court, however, with a rider that the arbitral proceedings that took place on seven particular dates, i.e., from that took place on seven particular dates, i.e., from 17.03.2022 to 25.08.2022 could be said to be a nullity as those proceedings were undertaken at the time when the respondent company was under a moratorium as envisaged under Section 14 of the IBC, 2016. 3. The short facts giving rise to this appeal may be summarized as under:- (i) The appellants and respondent (now under liquidation) entered into a partnership firm named "M/s Anmol Alliance" to develop and construct an SRA project of Andheri Shiv Shakti CHS Limited admeasuring 4514 square metres along with 203 tenements standing thereon situated at CTS No. 195(pt) and 825(pt), Ambivali Village at Indira Nagar, Jay Prakash Road, Andheri (West), Mumbai. (ii) It appears that disputes cropped up between the appellants and the respondent. In such circumstances, the appellants preferred an application under Section 9 of the Act, 1996, i.e., Commercial Arbitration Petition No.347/2019 against the respondent. Pursuant to the filing of Section....
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....ion of the Arbitral Tribunal on the ground of the moratorium under Section 14 of the IBC. (xii) By order dated 29.03.2022, the Arbitral Tribunal rejected the Section 16 application referred to above, filed by the IRP of the respondent, seeking stay of the arbitration proceedings in light of the moratorium imposed under Section 14 of the IBC. (xiii) On 29.03.2022, by a separate order, the Arbitral Tribunal proceeded to pass an order in I.A. No.(L) 24302/2021, permitting the appellants herein to execute agreements for sale in respect of flat numbers 1001, 1302 and 704 respectively. (xiv) On 20.04.2022, the Arbitral Tribunal passed an order in I.A. No.(L) 6167/2020, permitting the appellants to sell the flat numbers 907 and 908 respectively. (xv) In pursuance of the orders dated 29.03.2022 and 20.04.2022 respectively, the appellants between July, 2022 and February, 2023 entered into agreements for sale with third parties for the flat numbers 907, 908, 1001, 1302 and 704 respectively. While we were recording the facts as aforesaid, the learned counsel appearing for the appellants brought to our notice that these flats referred to above have not been ....
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....ointed under Section 34 and a fresh moratorium is declared to have commenced under Section 33 (5). 15] In the wake of aforesaid situation, which emerges from the facts placed before me, the moratorium imposed under Section 14 by order dated 26.09.2019, continued to be in operation till 26.08.2022, when it is declared to cease to have its effect and the company is put into fresh moratorium under Section 33(5) of the IBC, by the NCLT. After this date, the ongoing arbitration proceedings which were in abeyance can continue, but all those which are held between 26.09.2019 and 26.08.2022, are hit by the moratorium, and this remains the position, despite this Court on 15.03.2022 permitting its revival, as it was misled to believe that on 15.03.2022, the IP has become functus officio. It is in fact only on 26.08.2022, the Tribunal appointed the Liquidator and directed him to proceed with the process of liquidation in the manner laid down in Chapter 3 of Part II of the IBC, 2016, when the Interim Application filed by the RP for liquidation of the Corporate Debtor was allowed. 16] It is for the aforesaid reason, the proceedings held by the Arbitral Tribunal on the....
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....Tribunal prior to the replacement of an Arbitrator under Section 15 would not be rendered invalid, solely because of some change in the composition of the Arbitral Tribunal, unless otherwise agreed between the parties. 18. Mr. Sood submitted that if what has been held by the High Court is to be given effect, it will have its own implications in so far as all those flats which have already stood transferred to the third parties. 19. In the last, Mr. Sood submitted that the High Court in exercise of its jurisdiction under the Act, 1966, could not have nullified orders which it had otherwise no jurisdiction to consider. In this context, the learned counsel relied on the decision of this Court in Official Trustee v. Sachindra Nath Chatterjee, reported in 1968 SCC Online SC 103. 20. In such circumstances referred to above, the learned counsel prayed that there being merit in the appeal, the same may be allowed appropriately. SUBMISSIONS ON BEHALF OF THE SBI:- 21. Mr. Tushar Mehta, the leaned Solicitor General assisted by the learned counsel, Mr. Sanjay Kapur appeared for the State Bank of India. According to Mr. Mehta, the flats referred to above were mortgaged with the B....
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....r or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal." 28. A bare perusal of Section 15 referred to above indicates that Section 15(2) is not a standalone provision and should be read with Section 15(3) and Section 15(4) respectively. 29. Section 15(2) states that when mandate of an arbitrator is terminated under Section 14, a substitute arbitrator has to be appointed. It further states that such an appointment must be made according to the rules that were made applicable to the appointment of the arbitrator being replaced. 30. Further, Section 15(3) provides the course of action after the arbitrator has been replaced under sub-section (2). The essential ingredients of the provision are thus:- i. Any hearing previously held may be repeated; ii. The repetition of the hearing is at the discretion of the arbitral tribunal; iii. However, such repetition of the hearing is subject to the agreement between the parties; If the parties agree for repetition of hearing, the term "may" transforms into "s....
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.... to the provision for appointment contained in the arbitration agreement or any rules of any institution under which the disputes were referred to arbitration. There was no failure on the part of the party concerned as per the arbitration agreement, to fulfil his obligation in terms of Section 11 of the Act so as to attract the jurisdiction of the Chief Justice under Section 11(6) of the Act for appointing a substitute arbitrator. Obviously, Section 11(6) of the Act has application only when a party or the person concerned had failed to act in terms of the arbitration agreement. When Section 15(2) says that a substitute arbitrator can be appointed according to the rules that were applicable for the appointment of the arbitrator originally, it is not confined to an appointment under any statutory rule or rule framed under the Act or under the scheme. It only means that the appointment of the substitute arbitrator must be done according to the original agreement or provision applicable to the appointment of the arbitrator at the initial stage. We are not in a position to agree with the contrary view taken by some of the High Courts." (Emphasis supplied) 34. Since the appo....
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....ovisions of other statutes cannot interfere with the working of the Arbitration Act, unless specified otherwise." (Emphasis supplied) 39. We may refer to the decision in Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., reported in 2025 SCC OnLine SC 2578, wherein while dealing with an application seeking review of appointment of arbitrator made after extending the mandate of the arbitrator twice, the High Court directed the arbitrator not to continue the arbitral proceedings. This was in view of the fact that the arbitrator was appointed as a President of the State Consumer Dispute Redressal Commission. The Court held that when an arbitrator is unable to act owing to recusal, the proper course would be to invoke Section 15(2) and appoint a substitute arbitrator to continue from the existing stage of the proceedings. The observations of the Court succinctly capture that substitution preserves continuity, and prior proceedings remain valid unless either party objects. The observations read thus:- "16. Once the High Court had accepted the existence of a valid arbitration agreement and appointed an arbitrator, its later interference on the same....
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....orders, which again is not a power vested in any court exercising jurisdiction under the Act, 1996. 42. We also find merit in the submission of Mr. Sood that the High Court is not empowered to nullify orders which it had no jurisdiction to consider. In this context, we may refer to and rely upon the decision of this Court in Official Trustee (supra). The relevant observations read thus:- "15. From the above discussion it is clear that before a Court can be held to have jurisdiction to decide a particular matter it must not only have jurisdiction to try the suit brought but must also have the authority to pass the orders sought for. It is not sufficient that it has some jurisdiction in relation to the subject-matter of the suit. Its jurisdiction must include the power to hear and decide the questions at issue, the authority to hear and decide the particular controversy that has arisen between the parties... x x x x 17.[...]The jurisdiction conferred on the court under Section 34 is a limited jurisdiction. Under that provision, the court has not been conferred with overall jurisdiction in matters arising under a Trust deed. The statute has prescribed wha....