Arbitration Extensions: Waiver of Coram Objections, IBC Moratorium, and the Correct Forum Under Section 29A

Picture of Stpl law

Stpl law

These civil appeals challenged a common judgment and order dated September 15, 2023, passed by the High Court of Patna in connection with arbitral proceedings arising out of a Distribution Franchisee Agreement dated December 31, 2013. The core issues revolved around whether a party can object to a sole arbitrator after participating and consenting to it despite a contractual clause requiring a three-member panel, whether an insolvency proceeding under the IBC against a corporate debtor bars them from continuing arbitration, and which court holds the proper jurisdiction to extend an arbitrator’s mandate under Section 29A of the Arbitration and Conciliation Act, 1996. A two-Judge Bench of the Supreme Court comprising Hon’ble Mr. Justice Ujjal Bhuyan and Hon’ble Mr. Justice Atul S. Chandurkar held that the appellant had waived its right to object to the single arbitrator’s coram through active participation and consent, affirmed that IBC moratorium provisions do not bar a corporate debtor from pursuing recovery claims like arbitration, but clarified that the High Court erred in holding that Section 29A extensions fall under the High Court’s jurisdiction rather than the Principal Civil Court/Commercial Court. Ultimately, because a parallel commercial court order had already validly extended the mandate, the Supreme Court dismissed the appeals and directed the sole arbitrator to conclude the proceedings within six weeks.

1. Background & Factual Matrix

  • The appellant (South Bihar Power Distribution Company Ltd.) entered into a tripartite Distribution Franchisee Agreement with India Power Corporation Ltd. and its Special Purpose Vehicle (SPV), India Power Corporation (Bodhgaya) Ltd.
  • Disputes arose during implementation, leading to arbitration. Through successive orders of the High Court consented to by both parties, retired judges were appointed as sole arbitrators (initially Justice Shashank Kumar Singh, and later former CJI Justice Dipak Misra).
  • After participating for 18 months, filing counter-claims, and consenting to a 6-month extension, the appellant resisted a further extension request and filed a separate case seeking the constitution of a 3-member arbitral tribunal as originally contemplated in the agreement.
  • Meanwhile, NCLT initiated Corporate Insolvency Resolution Process (CIRP) against the SPV under the IBC, during which a resolution plan was approved.
  • The High Court ruled against the appellant, holding that it had waived its right to object to the sole arbitrator, that the IBC did not bar the SPV from pursuing its claims, and that the High Court had jurisdiction under Section 29A to extend the arbitral mandate.

2. Issue 1: Waiver and Acquiescence regarding the Arbitral Tribunal’s Composition

  • Contractual Provision vs. Conduct: Clause 17.2.5 of the agreement provided for a panel of three arbitrators. However, the appellant twice consented before the High Court and before the sole arbitrator to substitute/appoint a sole arbitrator without raising timely objections.
  • Statutory Bar: Under Section 4 and Section 16(2) of the Arbitration and Conciliation Act, 1996, a party that proceeds with arbitration without stating its objections to non-compliance of an agreement requirement without undue delay is deemed to have waived its right to object. Filing counter-claims and participating extensively amounts to clear acquiescence.
  • Precedent Relied Upon: Citing Union of India v. Pam Development Private Limited, the Court reaffirmed that failure to raise jurisdictional objections at the earliest stage precludes a party from challenging it later. The High Court’s finding on this issue was affirmed.

3. Issue 2: Locus Standi and Impact of the Insolvency and Bankruptcy Code (IBC)

  • Scope of Section 14 IBC: The moratorium under Section 14 of the IBC prohibits debt recovery actions against the corporate debtor to protect its assets during insolvency. It does not bar the corporate debtor from pursuing recovery claims or arbitral proceedings that enhance its financial health.
  • Authorization: The Resolution Professional, with the approval of the Committee of Creditors under Section 28(1)(h) of the IBC, duly authorized the continuation of the proceedings.
  • The Supreme Court concurred with the High Court that the second respondent possessed full locus standi to continue the arbitration.

4. Issue 3: Proper Forum for Extension of Mandate under Section 29A

  • Definition of Court: Reviewing precedents (Associated Contractors, Jagdeep Chowgule, Velusamy), the Supreme Court clarified that the “Court” empowered to extend an arbitral mandate under Section 29A(4) is the Principal Civil Court of original jurisdiction in a district (or a High Court only if it exercises ordinary original civil jurisdiction).
  • Exhaustion of Section 11 Powers: The High Court or Supreme Court’s power under Section 11 is exhausted upon constituting the arbitral tribunal; they do not retain residual supervisory control as a “court” under Section 2(1)(e) for Section 29A applications.
  • Outcome: Consequently, the High Court’s ruling that it possessed jurisdiction under Section 29A was legally incorrect and set aside. However, because a parallel application had already been moved and allowed by the Principal District Judge-cum-Commercial Court, Patna, this technical correction did not alter the practical outcome.

5. Final Directions

  • The Supreme Court lifted the stay/embargo on passing an award that had been imposed during the pendency of the proceedings.
  • The sole arbitrator was directed to conclude the arbitral proceedings and pass the final award within 6 weeks.
  • Both civil appeals were dismissed without costs.

2026 INSC 1165

South Bihar Power Distribution Company Ltd. v. India Power Corporation Ltd. & Anr. (D.O.J. 28.10.2026)

Loading Viewer...

Share
Next Story

Mandatory Nature of Section 143(2) Notice in Reassessment: SC Dismisses Revenue’s Appeals and Clarifies Section 292BB

October 31, 2026 No Comments

This batch of civil appeals filed by the Revenue challenged concurrent decisions of the Income Tax Appellate Tribunal and the High Court, which had set aside reassessment orders due to the total failure of the Revenue to issue a mandatory notice under Section 143(2) of the Income Tax Act, 1961. The assesses had responded to Section 148 reassessment notices by requesting that their original returns filed under Section 139 be treated as returns filed in response to the reopening. The Revenue argued that participation in proceedings cured defects under Section 292BB or that Section 142(1) letters/requests sufficed. A two-Judge Bench of the Supreme Court comprising Hon’ble Mr. Justice Sanjay Kumar and Hon’ble Mr. Justice Sanjeev Sachdeva held that issuing a notice under Section 143(2) is a mandatory sine qua non for reassessment, that Section 292BB cannot cure complete absence or non-issuance of a notice, and dismissed the Revenue’s appeals.

1. Background & Core Legal Issues

  • The assessments of the respondents (Orissa Mining Corporation Ltd. and Bijoy Kishore Mohanty) for various assessment years between 2008-09 and 2011-12 were reopened under Section 147 via notices under Section 148.
  • The assessees opted to have their original returns filed under Section 139 treated as responses to the Section 148 notices.
  • Admittedly, no notice under Section 143(2) was ever issued by the Assessing Officer, though notices under Section 142(1) seeking documents were sent and participated in.
  • The appellate authorities and High Court held that the failure to issue Section 143(2) notice vitiated the entire reassessment proceedings.

2. Supreme Court’s Analysis on Section 143(2) and Section 292BB

  • Mandatory Requirement: Relying on Assistant Commissioner of Income Tax v. Hotel Blue Moon, the Court reaffirmed that issuing a notice under Section 143(2) is a mandatory prerequisite (sine qua non) for conducting an inquiry and framing an assessment/reassessment. Omission to issue it is not a mere curable procedural irregularity.
  • Scope of Section 292BB (Deeming Fiction): Section 292BB cures infirmities regarding service, timely service, or improper service of a notice if the assessee participates in proceedings. However, as held in CIT v. Laxman Das Khandelwal, it cannot save the complete absence or non-issuance of a mandatory notice by the Revenue.
  • Reiterated Returns: Even when an assessee requests that an earlier return filed under Section 139 be treated as a response to a Section 148 notice, the Revenue remains strictly obligated to issue a Section 143(2) notice before making an assessment.
  • Section 142(1) Letters: A communication or inquiry letter issued under Section 142(1) during proceedings cannot substitute or satisfy the mandatory requirement of a Section 143(2) notice.

3. Answers to Questions of Law & Final Decision

  • Q1: Section 292BB does not preclude an assessee from raising objections regarding non-issuance of a Section 143(2) notice merely because they cooperated in reassessment.
  • Q2: The Revenue is not absolved of its obligation to serve a Section 143(2) notice even if the assessee treats an earlier Section 139 return as a response to Section 148.
  • Q3: Issuing an inquiry letter under Section 142(1) does not amount to sufficient compliance with Section 143(2).
  • Consequently, all appeals filed by the Revenue were dismissed.

2026 INSC 1171

Principal Commissioner of Income Tax, Bhubaneshwar v. Orissa Mining Corporation Ltd. (and connected appeals) (D.O.J. 28.10.2026)

Loading Viewer...

Next Story

SC Transfers Conflicting Commercial Suits to a Neutral Forum

October 31, 2026 No Comments

This matter involved two interconnected transfer petitions filed under Supreme Court jurisdiction by opposing parties engaged in cross-litigation over trademark infringement and passing off concerning the mark ‘SUPREME’. While M/s The Supreme Industries Limited filed a commercial suit before the High Court of Delhi, M/s Supremo India Private Limited instituted a commercial suit before the District Judge (Commercial) in Indore, Madhya Pradesh. With both parties agreeing that the conflicting cross-suits ought to be tried together by a single court but strongly opposing each other’s preferred forum, a two-Judge Bench of the Supreme Court comprising Hon’ble Mr. Justice S.V.N. Bhatti and Hon’ble Mr. Justice N.V. Anjaria exercised its discretionary jurisdiction to transfer both commercial suits to a neutral forum, the City Civil Court at Ahmedabad, for a unified trial.

1. Nature of the Dispute & Proceedings

  • First Petition (TP (C) No. 3594 of 2025): Filed by M/s The Supreme Industries Limited seeking to transfer CS (Comm) No. 134 of 2025 (filed by M/s Supremo India Private Limited from the Commercial Court at Indore, Madhya Pradesh, to New Delhi). The Indore suit sought permanent injunctions regarding trademark usage, asset disclosures, removal from e-commerce platforms, and damages worth Rs. 15,00,000/-.
  • Second Petition (TP (C) No. 175 of 2026): Filed by M/s Supremo India Private Limited seeking to transfer CS (Comm) No. 1294 of 2025 (filed by M/s The Supreme Industries Limited before the High Court of Delhi, to Indore or another competent court). The Delhi suit alleged trademark infringement, passing off, copyright violation, and dilution, seeking damages of Rs. 2,00,01,000/- and a declaration of ‘SUPREME’ as a well-known mark.

2. Core Consensus and Conflict Between Parties

  • Both parties and their respective senior counsel were in full agreement (ad idem) that the two cross-suits must be tried together before a single court to avoid conflicting adjudications.
  • However, each party vehemently opposed transferring their matter to the forum chosen by the other, insisting that the trial take place where their respective suit was originally instituted.

3. Final Directions & Neutral Relocation

  • Without delving into the merits of the underlying claims or contentions, the Supreme Court exercised its discretionary powers to resolve the stalemate.
  • Transfer Order: CS (Comm) No. 134 of 2025 pending before the District Judge (Commercial), Indore, and CS No. 1294 of 2025 pending before the High Court of Delhi were both ordered to be transferred to the City Civil Court, Ahmedabad.
  • Procedural Instructions: The respective courts where the suits were originally filed were directed to transmit the plaints to Ahmedabad expeditiously.
  • Appearance Date: Both parties were directed to appear before the City Civil Court, Ahmedabad, on November 26, 2026.
  • The transfer petitions and any pending applications were accordingly disposed of.

2026 INSC 1170

M/s The Supreme Industries Limited v. M/s Supremo India Private Limited (D.O.J. 28.10.2026)

Loading Viewer...

Share
Next Story

Substantial Compliance and Prejudice-Oriented Test: SC Sets Aside Bail Granted on Procedural Grounds in Espionage Case

October 31, 2026 No Comments

This criminal appeal filed by the State of Rajasthan challenged the judgment and order dated May 18, 2026, passed by the High Court of Rajasthan, whereby the respondent (Jhabra Ram) was enlarged on regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The High Court had granted bail on the sole premise that the grounds of arrest were not furnished to the respondent in writing at the time of arrest, in violation of Section 47 of the BNSS. A two-Judge Bench of the Supreme Court comprising Hon’ble Mr. Justice M.M. Sundresh and Hon’ble Mr. Justice Prasanna B. Varale held that the High Court erred in adopting a hyper-technical approach and ignoring the gravity of offences affecting national security, noting that there was substantial compliance with statutory safeguards and no demonstrable prejudice was caused to the accused. Consequently, the Supreme Court allowed the appeal, set aside the High Court’s order, cancelled the respondent’s bail, and directed him to surrender within two weeks.

1. Background & Factual Matrix

  • Intelligence information revealed that the respondent (Jhabra Ram) was in contact with Pakistani intelligence handlers and was transmitting sensitive military intelligence regarding the Indian Army in Pokhran and Jaisalmer in exchange for money.
  • Prior to the registration of the FIR, statutory notices under Section 8(1) of the Official Secrets Act, 1923 (OSA) were served upon him.
  • Following a preliminary inquiry, FIR No. 01/2026 was registered on January 30, 2026, under Sections 3 and 9 of the OSA and Sections 152 and 238(b) of the Bharatiya Nyaya Sanhita, 2023 (BNS), and the respondent was formally arrested the same day.
  • When produced before the Magistrate on January 31, 2026, the respondent was legally represented, and no objection was raised regarding non-communication of the grounds of arrest.
  • The High Court subsequently granted him regular bail solely on the technical ground that written grounds of arrest were not furnished pursuant to Section 47 of the BNSS.

2. Legal Analysis on Communication of Grounds of Arrest

  • Substantial Compliance: The Supreme Court observed that the constitutional and statutory safeguards under Article 22(1) of the Constitution and Section 47 of the BNSS were fully satisfied in substance. The specific factual basis of the arrest (espionage and transmission of classified troop movements) was communicated to the respondent, recorded in the case diary, detailed in the signed Arrest Memo, and telephonically communicated to his brother.
  • Prejudice-Oriented Test: Relying on State of Karnataka v. Sri Darshan and Kasireddy Upender Reddy v. State of Andhra Pradesh, the Court reiterated that procedural lapses in furnishing written grounds do not ipso facto render custody illegal or entitle an accused to bail unless demonstrable prejudice or denial of a fair opportunity to defend is established.
  • In this case, the respondent had immediate and informed understanding of the accusations, was legally represented from the outset, and failed to plead or establish any prejudice.

3. Overlooking Core Bail Jurisprudence and Gravity of Offence

  • The High Court erred by treating an alleged procedural defect as a blanket key to unlock regular bail while completely bypassing the core parameters of bail jurisprudence, such as the gravity of the accusations involving national security and sovereign integrity.
  • Procedural formalities cannot override substantive compliance and the gravity of offences under the Official Secrets Act and anti-terror/security provisions of the BNS.

4. Final Directions

  • The appeal filed by the State of Rajasthan was allowed, and the High Court’s judgment granting bail was set aside.
  • The regular bail granted to Jhabra Ram was cancelled.
  • The respondent was directed to surrender before the trial court or investigating agency within two weeks, failing which the State authorities are mandated to take him into custody.

2026 INSC 1169

State of Rajasthan v. Jhabra Ram (D.O.J. 28.10.2026)

Loading Viewer...

Share
Next Story

Refining the Execution of Arbitral Awards: SC Rejects Post-Decision Clarifications and Calls for Law Commission Study

October 31, 2026 No Comments

This appeal challenged an interim order passed by the High Court of Delhi in an execution proceeding, which had granted parties the liberty to seek a clarification from the Supreme Court as to why a factual matter—namely, whether the principal amount was paid in Indian Rupees back in 2009—was not raised when the Supreme Court previously answered a certified substantial question of law under Article 134-A read with Article 133(1)(a). A three-Judge Bench of the Supreme Court comprising Hon’ble Mr. Justice Vikram Nath, Hon’ble Mr. Justice Sandeep Mehta, and Hon’ble Mr. Justice Aparesh Kumar Singh held that appellate proceedings addressing a certified question of law cannot be expanded into factual inquiries regarding subsequent execution events or adjustments. Consequently, the Supreme Court set aside the High Court’s liberty to seek clarifications, dismissed a connected miscellaneous application seeking modification of its prior judgment, and left it open for the executing court to determine questions of set-off or adjustment. In a strong epilogue reflecting on a dispute originating under the 1940 Arbitration Act and lingering for over two decades, the Court requested the Law Commission of India to study and recommend reforms for strengthening the execution framework of arbitral awards in India.

1. Background & Factual Matrix

  • An international arbitration award was rendered in favor of the appellant (award-holder) on August 10, 2002, denominated in Iraqi Dinars.
  • After extensive litigation, the Supreme Court on February 24, 2015, underscored the principle of minimal judicial intervention and restored the directions in the arbitral award.
  • During execution proceedings, the High Court’s Single Judge allowed the award-debtor to discharge liability in Indian Rupees based on the 1982 exchange rate, which the Division Bench set aside while certifying a substantial question of law regarding currency conversion under Articles 134-A and 133(1)(a) of the Constitution.
  • On October 10, 2023, the Supreme Court answered the question, holding that no occasion arose for determining a conversion date and that the original award terms should not be disturbed.
  • When execution resumed, the respondent argued that principal amounts had already been paid in Indian Rupees in 2009, leading the High Court to pass the impugned interim order on February 16, 2026, granting parties liberty to seek clarification from the Supreme Court.

2. Scope of Appellate Jurisdiction and Clarifications

  • The Supreme Court held that the High Court erred in appreciating the scope of the prior appellate adjudication, which was strictly confined to answering the specific substantial question of law certified by the High Court.
  • The Apex Court cannot be called upon, under the guise of seeking clarifications, to assume a supervisory role over ongoing execution proceedings or to adjudicate factual matters concerning deposits and withdrawals.
  • Once the referred question of law stands answered, the scope of the earlier appellate proceedings stands exhausted, and parties cannot enlarge its scope with unconnected factual queries.
  • The connected Miscellaneous Application seeking modification of the October 10, 2023 judgment was dismissed, with liberty granted to the parties to raise all contentions regarding adjustment, set-off, or payments before the executing court.

3. Epilogue: Call for Law Commission Study on Arbitral Award Execution

  • Expressing serious concern that parties were still litigating over an arbitral award more than 24 years after it was rendered, the Court highlighted that the true efficacy of an arbitration regime depends on the successful party’s ability to realize the fruits of an award within a reasonable time.
  • Noting that execution under Section 36 of the Arbitration and Conciliation Act, 1996 relies on the ordinary civil execution framework (CPC, 1908), the Court emphasized that asset disclosure, multi-mode coordination, and repetitive objections require focused scrutiny.
  • Recommendation: The Supreme Court formally requested the Law Commission of India to undertake a focused study of the statutory and procedural framework governing the enforcement and execution of arbitral awards, and to make necessary legislative or procedural recommendations to ensure swift recovery.
  • A copy of the judgment was ordered to be forwarded to the Hon’ble Chairman of the Law Commission of India.

2026 INSC 1167

M/s Royal Construction Company Pvt. Ltd. v. M/s National Projects Construction Corporation (D.O.J. 28.10.2026)

Loading Viewer...

Share

Recent Articles