The court ruled that substitution of an arbitrator under Section 29-A of the Arbitration Act is not absolute and requires specific grounds to be met, emphasizing the need for minimal court interference in arbitration.

JUDGEMENT :

Context and Background:

1. These Petitions are applications under Section 29-A of the Arbitration and Conciliation Act, 1996 (“the Act”), filed by the Petitioner, Indiabulls Infraestate Ltd. (“Indiabulls”) seeking an extension of mandate of the Arbitral Tribunal.

2. In both the Petitions, Indiabulls has sought extension by one year, of the mandate of the Learned Arbitral Tribunal, which expired on August 31, 2023. The relevant arbitral proceedings covered by Arbitration Petition No. 33 of 2025 involve the Respondent, Bliss Habitat Pvt. Ltd. (“Bliss”), as the Claimant. In Arbitration Petition No.39 of 2025, the Respondent, Imagine Realty Pvt. Ltd. (“Imagine”), is the Claimant. The arbitral proceedings are being conducted together as one composite matter.

3. Mr. Chetan Kapadia, Learned Senior Counsel on behalf of Bliss and Imagine would submit that the Learned Sole Arbitrator manning the Learned Arbitral Tribunal should be substituted in the course of disposal of these Petitions. For the reasons recorded herein, I am unable to agree with his request.

4. The Learned Arbitral Tribunal is seized of disputes and differences between the parties. In each of the arbitral proceedings, the agreement in question entailed Bliss and Imagine having booked high-end apartments in the project called Indiabulls Blu in Worli, Mumbai. The apartments were allotted to Bliss and Imagine by Indiabulls. In each of the proceedings, a loan facility was availed of by Bliss and Imagine from Indiabulls Housing Finance Ltd. (“IHFL”), for which a mortgage was created over the units agreed to be acquired by them.

5. The project was completed and the occupation certificate was received, but according to Indiabulls, despite being given opportunities, Bliss and Imagine did not pay the balance amounts due. Eventually, with the apartments having been reserved for Bliss and Imagine, Indiabulls is said to have given an opportunity to make the final payment due. On failure to make payment, eventually, the reservation of these units allocated to Bliss and Imagine was cancelled. The amounts owed by them to IHFL was paid by Indiabulls to release the mortgage and correspondingly, the allotments were cancelled.

IHFL Arbitration:

6. Arbitration between IHFL and each of Imagine and Bliss was initiated by IHFL before a Learned Sole Arbitrator (“IHFL Arbitration”), seeking a declaration that the acceleration and the closing out of the loan account was valid in law.

7. On August 11, 2020, Bliss and Imagine moved an application before the Learned Sole Arbitrator conducting the IHFL Arbitration seeking to implead Indiabulls as a party to those proceedings. By an order dated November 7, 2020, the Learned Sole Arbitrator dismissed the application seeking impleadment of Indiabulls, ruling that the cause of action in the IHFL Arbitration was different from the disputes and differences between Indiabulls on one side and Bliss and Imagine on the other. The issue in the IHFL Arbitration was whether IHFL had rightly appropriated the amounts towards redemption of the loan advanced and release of mortgage while the dispute with Indiabulls was about whether the cancellation of the allotments was legitimate.

Indiabulls Arbitration:

8. Meanwhile, on an application filed by Bliss and Imagine under Section 11 of the Act, on December 7, 2020, the Learned Arbitral Tribunal was constituted pursuant to an order passed by a Learned Single Judge of this Court. The Section 11 jurisdiction was invoked to initiate arbitration to adjudicate disputes and differences Bliss and Imagine had with Indiabulls (“Indiabulls Arbitration”). The Learned Single Judge took note of the consent of the parties to proceed to arbitration by the same Learned Sole Arbitrator and stated that the order disposing of the applications filed by Bliss and Imagine was not an order in exercise of the powers under Section 11 of the Act. Since the IHFL Arbitration was already pending before the Learned Sole Arbitrator, the parties rec