1. Corporate insolvency — Moratorium under IBC — Appointment of substitute arbitrator — High Court declaring arbitration proceedings conducted during moratorium as nullity. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 )
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2026 Supreme(SC) 149
SUPREME COURT OF INDIA
J.B. PARDIWALA, K.V. VISWANATHAN, JJ.
Ankhim Holdings Pvt. Ltd. and Another – Appellants
Versus
Zaveri Construction Pvt. Ltd. – Respondent
Civil Appeal No. 779 of 2026 [Arising Out of SLP (C) No. 11667 of 2024]
Decided On : 04-02-2026
Advocates appeared:
For the Petitioner(s): Mr. Ashim Sood, Adv. Mr. Saahil Memon, Adv. Mr. Senu Nizar, Adv. Mr. Ekansh Gupta, Adv. Mr. Kartikeya Jaiswal, Adv. Mr. Prateek Kundu, Adv. Mr. Karan Kumar, Adv. Ms. Pallavi Pratap, AOR
For the Respondent(s): Mr. Tushar Mehta, S.G. Mr. Sanjay Kapur, AOR Mr. Surya Prakash, Adv. Ms. Shubhra Kapur, Adv. Ms. Santha Smruthi, Adv. Mr. Shakti Kanta Pattanaik, AOR Mr. Santosh Kumar, Adv.
For the Petitioner(s): Mr. Ashim Sood, Adv. Mr. Saahil Memon, Adv. Mr. Senu Nizar, Adv. Mr. Ekansh Gupta, Adv. Mr. Kartikeya Jaiswal, Adv. Mr. Prateek Kundu, Adv. Mr. Karan Kumar, Adv. Ms. Pallavi Pratap, AOR
For the Respondent(s): Mr. Tushar Mehta, S.G. Mr. Sanjay Kapur, AOR Mr. Surya Prakash, Adv. Ms. Shubhra Kapur, Adv. Ms. Santha Smruthi, Adv. Mr. Shakti Kanta Pattanaik, AOR Mr. Santosh Kumar, Adv.
IMPORTANT POINT
Termination of mandate and substitution of Arbitrator – Object of speedy resolution of disputes by arbitration would best be sub-served by a substitute Arbitrator continuing at the point at which earlier Arbitrator has left off.
Headnote:
Arbitration and Conciliation Act, 1996 – Section 15(2) – Termination of mandate and substitution of Arbitrator – Object of speedy resolution of disputes by arbitration would best be sub-served by a substitute Arbitrator continuing at the point at which earlier Arbitrator has left off – Parties can come to agreement on question of re-hearing either prior to stage of substitution being reached or after Arbitrator has been substituted – Where Act, 1996, provides procedures for assailing orders, or prohibits such orders of a Tribunal from being assailed, then no alternate procedure can be adopted by court whose jurisdiction derives from a provision of Act, 1996, itself – It would be impermissible for court acting under Section 15(2) to adopt a procedure whereby it exercises jurisdiction barred to it by Act, 1996 – High Court is not empowered to nullify orders which it had no jurisdiction to consider – High Court assumed and exercised power which has clearly not been conferred by Act, 1996, more particularly, wherein statute itself envisages minimal judicial intervention – Proper and legal course for High Court acting under Section 15(2) of Act, 1996, should have been to appoint a substitute Arbitrator to continue from existing stage of proceedings – Impugned judgment and order of High Court stands modified. (Paras 31, 40, 41, 42, 43, 44, 45, 46, 47 and 48)
Facts of the case:
Present appeal arises from the judgment and order passed by the High Court of Bombay dated 12.04.2024 in Commercial Arbitration Petition (L) No. 30650/2023 by which petition filed by appellants herein before High Court under Section 15(2) of Arbitration and Conciliation Act, 1996 came to be disposed of by substituting earlier Arbitrator appointed by High Court, however, with a rider that arbitral proceedings 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 respondent company was under a moratorium as envisaged under Section 14 of IBC, 2016.
Findings of Court:
Part of impugned order by which High Court declared proceedings undertaken between 17.03.2022 and 25.08.2022 as a nullity deserves to be interfered with.
Result : Appeal partly allowed.
Legal Category Hierarchy
- practice and procedure
- insolvency and bankruptcy law
Table of Contents
2. Parties disputed whether High Court exceeded jurisdiction under Section 15(2) Arbitration and Conciliation Act by declaring arbitration proceedings during moratorium period null and void. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 21 , 22 , 23 , 24 , 25 )
3. The High Court exercised jurisdiction not conferred by the Arbitration and Conciliation Act by nullifying procedural orders and arbitration proceedings while merely appointing a substitute arbitrator. (Para 36 , 37 , 40 , 41 , 42 , 43 , 44 )
4. Under Section 15(2) Arbitration and Conciliation Act, a court appointing a substitute arbitrator lacks jurisdiction to declare prior procedural rulings or proceedings void; substitution preserves continuity. (Para 27 , 28 , 29 , 30 , 33 , 34 , 38 , 39 )
5. High Court order declaring arbitral proceedings nullity set aside; arbitration proceedings validated; and transactions involving third-party rights declared lawfully valid. (Para 46 , 47 , 48 , 49 )
6. Can a court while appointing a substitute arbitrator under Section 15(2) of the Arbitration and Conciliation Act nullify previous arbitral proceedings?
No. The court's jurisdiction under Section 15(2) is limited to appointing a substitute arbitrator. It cannot exercise appellate or supervisory powers to declare prior arbitral rulings or proceedings null and void, as the Act is a self-contained code that strictly prescribes the scope of judicial intervention. (Para 36 , 37 , 38 , 40 , 41 , 42 , 43 )
7. What is the effect of replacing an arbitrator on the validity of previous hearings and rulings?
Under Section 15(4), orders or rulings made prior to the replacement of an arbitrator are not invalid solely due to the change in composition. Substitution essentially preserves the continuity of the proceedings, and previous hearings may be repeated only if the tribunal so decides or per party agreement. (Para 17 , 27 , 30 , 39 )
ORDER :
1. Leave granted.
2. This appeal arises from the judgment and order passed by the High Court of Bombay dated 12.04.2024 in Commercial Arbitration Petition (L) No. 30650/2023 by which the petition filed by the appellants herein before the High Court under Section 15(2) of the Arbitration and Conciliation Act, 1996 (for short “the Act, 1996”) came to be disposed 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 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 9 petition, an interim arrangement was worked out and based on the same, the parties proceeded with the project.
(iii) On 09.07.2019, the Bombay High Court passed an order in Commercial Arbitration Petition No. 347/2019 referred to above accepting the minutes of order recording them as consent terms between the parties.
(iv) The High Court proceeded to appoint Hon’ble Mr. Justice J.N. Patel (former Chief Justice of the Calcutta High Court) to act as the Arbitrator to arbitrate the disputes and differences between the parties.
(v) It appears from the materials on record that on 26.09.2019, the NCLT Mumbai passed an order in Company Petition (I.B.) No. 411/2019 admitting the respondent to CIRP and imposing a moratorium under Section 14 of the IBC.
(vi) On 03.11.2020, the appellants filed I.A. No. (L) 6167/2020 under Section 9 of the Act, 1996, before the High Court whereby they sought to restrain the RP of the respondent from obstructing the sale of certain flats and further sought permission to sell those flats in the light of the consent terms recorded in the order dated 09.07.2019 referred to above. The RP filed its written submissions to oppose the reliefs which were prayed for in I.A.(L) 6167/2020 referred to above.
(vii) On 14.10.2021, the appellants preferred one another Section 9 petition, i.e. I.A. No. (L) 24302/2021 seeking permission to execute the agreement for sale with respect to flat numbers 1001, 1302 and 704, respectively.
(viii) On 15.03.2022, the High Court passed an order in I.A. No. (L) 24302/2021 and I.A. No. (L) 6167/2020 respectively referred to above recording a finding that the Interim Resolution Professional had become functus officio and no order for liquidation was passed by the NCLT.
(ix) The High Court proceeded to dispose of the Section 9 petitions while granting liberty to the appellants herein to move the applications under Section 17 of the Act, 1996, before the Arbitrator.
(x) In pursuance of the order dated 15.03.2022 referred to above, the appellants herein preferred Section 17 applications on 17.03.2022 before the Arbitrator. The Arbitrator proceeded to pass an order, scheduling the hearing for Section 17 applications.
(xi) On 25.03.2022, the respondent preferred an application under Section 16 of the Act, 1996, seeking to challenge the jurisdiction 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 t
