LiveLaw Supreme Court Half-Yearly Digest 2026 - Arbitration and Conciliation Act

Appeal by MPRDC against the arbitral award of ₹49 crores + 14.75% pre-award interest dismissed - High Court directed to release the deposited amount with interest to the respondent within two weeks. Appellant directed to pay the balance award amount with accrued interest within three months. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Appellant filed a consumer complaint alleging deficiency in service due to delay in handing over possession of a residential flat. Despite admitting the complaint and issuing notice, the District Forum referred the matter to arbitration solely on the ground of the arbitration clause in the flat purchase agreement. This order was upheld by the State Commission and the NCDRC. The Supreme Court set aside the orders of all three Fora. The Supreme Court allowed the appeal and directed the District Forum to decide the consumer complaint on merits expeditiously, preferably within one year. T.K.A. Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd, 2026 LiveLaw (SC) 633 : 2026 INSC 649

Arbitral Proceedings — Counterclaim vs. Set-off — 'Clean Slate' Principle — Whether a respondent can raise a plea of set-off in arbitration proceedings after the approval of a Resolution Plan, even if its counterclaim was not part of the plan and stands extinguished - Held, that once a Resolution Plan is approved under Section 31(1) of the IBC, all claims not included in the plan stand extinguished - a respondent cannot seek any affirmative relief through a counterclaim that was not part of the approved plan - if the specific terms of the Resolution Plan only bar payments or settlements and do not expressly or impliedly exclude the plea of set-off as a defense, such a plea can be raised to defend against the appellant's claim - The plea of set-off is permitted only as a defensive tool to prevent the appellant from succeeding entirely or in part - If the amount due to the respondent exceeds the amount awarded to the appellant, the surplus is not recoverable. If the appellant's proceedings are withdrawn, the counterclaim/set-off defense fails. [Relied on Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657; Bharti Airtel Ltd. v. Aircel Ltd. & Dishnet Wireless Ltd. (Resolution Professional) (2024) 4 SCC 668; Paras 21-27] Ujaas Energy Ltd. v. West Bengal Power Development Corporation Ltd., 2026 LiveLaw (SC) 272 : 2026 INSC 268 : AIR 2026 SC 1541

Arbitration – Jurisdiction – Excepted Matters – Rule of Law – Section 28 of the Indian Contract Act, 1872 – Section 9 of the Code of Civil Procedure, 1908 – The Supreme Court held that one party to a contract cannot be the sole arbiter to decide whether the other party committed a breach when liability is disputed. Such an interpretation violates the fundamental principle that no party shall be a judge in its own cause - Supreme Court clarified that while certain matters may be "excepted" from arbitration, they cannot be "excluded" from judicial remedy entirely, as a vacuum in legal remedies is opposed to the Rule of Law. ABS Marine Services v. Andaman and Nicobar Administration, 2026 LiveLaw (SC) 287 : 2026 INSC 274 : AIR 2026 SC 1594

Arbitration — Setting aside of Award — Patent Illegality and Public Policy — Interpretation of Contract: The Supreme Court affirmed that the construction and interpretation of contractual terms are primarily within the jurisdiction of the arbitral tribunal - If an arbitrator adopts one of two plausible interpretations, the court cannot substitute its own view merely because an alternative view is possible - An award is not "patently illegal" or against "public policy" simply because of a mere contravention of law; it must violate fundamental principles of justice. [Paras 26, 29, 33, 59] National Highways Authority of India v. Gammon Atlanta (JV), 2026 LiveLaw (SC) 71 : 2026 INSC 76

Arbitration (Proceedings Before the Courts) Rules, 2001 (Karnataka) – Rule 9(4) – Harmonious Construction with Section 9(2) – Held that while Rule 9(4) uses the term "initiated" and Section 9(2) uses "commenced," the terms must be read harmoniously - "Initiated" in Rule 9(4) must be understood as "commenced" within the meaning of Section 21 to prevent the strict timelines of the parent Act from being rendered otiose. [Relied on Sundaram Finance Ltd. v. NEPC India Ltd. (1999) 2 SCC 479; Milkfood Ltd. v. GMC Ice Cream (P) Ltd. (2004) 7 SCC 288; Geo Miller and Company Private Limited v. Chairman, Rajasthan Vidyut Utpadan Nigam Limited (2020) 14 SCC 643; Arif Azim Company Limited v. Aptech Limited (2024) 5 SCC 313; Para 29] Regenta Hotels v. Hotel Grand Centre Point, 2026 LiveLaw (SC) 21 : 2026 INSC 32 : (2026) 4 SCC 142

Consumer Protection Act, 1986 creates a special adjudicatory mechanism for expeditious resolution of consumer disputes. A private contractual arbitration clause cannot override or defeat this statutory remedy. After admission of the complaint, the District Forum is statutorily restrained under the proviso to Section 12(4) from transferring the matter to any other court, tribunal, or authority, including an arbitral tribunal. The consumer cannot be driven out of the statutory forum merely because of an arbitration agreement. [Relied on: Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751] T.K.A. Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd, 2026 LiveLaw (SC) 633 : 2026 INSC 649

Discretionary Toolkit of the Court – Held that while exercising power under Section 29A, the Court must examine "sufficient cause" and may deploy several measures to ensure integrity and efficiency – i. Reduction of arbitrator fees (up to 5% per month of delay); ii. Substitution of one or all arbitrators; iii. Imposition of actual or exemplary costs on parties; iv. Imposition of specific terms and conditions for the conduct of proceedings. C. Velusamy v. K. Indhera, 2026 LiveLaw (SC) 105 : 2026 INSC 112 : AIR 2026 SC 918

Ease of Doing Business & Foreign Investment - Uniformity, predictability, certainty, and finality in arbitral proceedings and their enforcement are essential for improving India's ease of doing business and attracting foreign investment. Excessive judicial re-examination of evidence and contractual terms at Sections 34/37 undermines party autonomy and investor confidence. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Estoppel and Participation – Jurisdictional Nullity – Participation in arbitral proceedings does not confer jurisdiction where an arbitration agreement is inherently absent. Since the arbitrator lacked inherent jurisdiction, the proceedings were a nullity (coram non judice) and the award was non-est - The Municipal Council was not estopped from challenging the award as it was "forced" into arbitration without consent while functioning under a State-appointed Administrator - Supreme Court rejected the application of these precedents, affirming the High Court's finding that there is no acquiescence or estoppel where a party is compelled to participate in proceedings that are a jurisdictional nullity. [Relied on N. Chellappan v. Secretary, Kerala State Electricity Board and Anr. (1975) 1 SCC 289; Inder Sain Mittal v. Housing Board, Haryana and Ors. (2002) 3 SCC 175; Paras 19-26] Bharat Udyog Ltd. v. Ambernath Municipal Council, 2026 LiveLaw (SC) 291 : 2026 INSC 288 : AIR 2026 SC 1586

Finality and Res Judicata in Arbitration - Once a jurisdictional issue (here, arbitrability vis-à-vis the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983) has been raised, adjudicated by the arbitral tribunal, and affirmed through multiple judicial forums including the Supreme Court, it attains finality between the parties. A subsequent change in law (e.g., *LG Chaudhary II*) cannot be used to reopen the issue at the execution/enforcement stage. Attempting to do so amounts to abuse of process. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Interpretation of Contracts — Arbitral Autonomy — Patent Illegality — Section 34(2A) - held that the interpretation of the terms of a contract is primarily the domain of the Arbitral Tribunal - Even if a second view is possible, an award cannot be set aside merely because the appellate court prefers an alternative interpretation – Held that the Tribunal's decision to award idling charges for a Backhoe Dredger (BHD) under Clause 51.1 of the License Agreement despite the respondent's claim that Clause 38 only specified charges for "major dredgers" was found to be a logical and reasonable construction of the agreement - For an award to be set aside for patent illegality, the error must be apparent on the face of the award - A speaking award based on logical reasoning and proper interpretation of clauses does not suffer from patent illegality - a mere contravention of substantive Indian law is no longer a standalone ground for setting aside an award – Appeal allowed. [Relied on MMTC Limited vs. Vedanta Limited (2019) 4 SCC 163; UHL Power Company Limited vs. State of Himachal Pradesh (2022) 4 SCC 116; Bombay Slum Redevelopment Corporation Private Limited vs. Samir Narain Bhojwani (2024) 7 SCC 218; National Highways Authority of India v. M/s Hindustan Construction Company Ltd. 2024 INSC 388; Larsen Air Conditioning and Refrigeration Company vs. Union of India & Ors. (2023) 15 SCC 472; Paras 30-46] Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust, 2026 LiveLaw (SC) 47 : 2026 INSC 34 : AIR 2026 SC 536 : (2026) 3 SCC 186

Judicial Interference in Arbitration - Arbitration as a dispute resolution mechanism has not failed in India; however, courts have sometimes failed arbitration by excessive and unwarranted interference. Judicial intervention has often proved to be “a cure without a disease”. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Judicial Restraint - Judges handling arbitration matters must remain conscious of the foundational objectives of the Arbitration Act — speedy resolution, finality, and minimal judicial interference. Inconsistent judicial approaches cast a shadow on the viability of arbitration in India. Judicial restraint is the cornerstone of a successful arbitration ecosystem. Once an arbitral award attains finality on jurisdictional and other issues, repeated attempts to reopen it through successive proceedings must be firmly discouraged. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Jurisdiction under Article 227 is not an appellate jurisdiction in disguise and does not permit the reappreciation of evidence – Held that the High Court was not justified in dislodging concurrent findings of the Trial Court and First Appellate Court to refer a dispute to arbitration when the existence of the agreement was under serious doubt. [Relied on: Managing Director Bihar State Food and Civil Supply Corporation Limited v. Sanjay Kumar, (2025) SCC OnLine SC 1604; Avitel Post Studioz Ltd. & Ors. v. HSBC PI Holdings (Mauritius) Ltd., (2021) 4 SCC 713; Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710; A. Ayyasamy v. A. Paramasivam & Others, (2016) 10 SCC 386; Paras 16- 23] Rajia Begum v. Barnali Mukherjee, 2026 LiveLaw (SC) 101 : 2026 INSC 106

Mandatory vs. Permissive Clauses – Requirement of Fresh Consent – Held: For a clause to be a valid arbitration agreement, it must disclose a determination and obligation to go for arbitration - Clauses that require or contemplate further/fresh consent of the parties at the time a dispute arises indicated by language such as "parties can" or "if they so agree" are merely agreements to enter into an arbitration agreement in the future and are not enforceable as binding mandates. Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd; 2026 LiveLaw (SC) 388 : 2026 INSC 384

Mere existence of an arbitration clause in a consumer agreement does not bar or oust the jurisdiction of the Consumer Fora to entertain and adjudicate a consumer complaint on merits. Once a consumer complaint is admitted by the District Forum, it cannot be referred to arbitration, as the statutory remedy provided under the Consumer Protection Act, 1986 is additional and not in derogation of other remedies. T.K.A. Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd, 2026 LiveLaw (SC) 633 : 2026 INSC 649

Moratorium vs. Arbitral Continuity — Noted that the High Court erred in nullifying arbitral orders passed during a moratorium period while exercising jurisdiction under the Arbitration Act - The Supreme Court used its powers under Article 142 to declare transactions (sale of flats) made pursuant to such arbitral orders as lawfully valid to protect third-party homebuyer rights. [Relied on Yashwith Constructions Pvt. Ltd. v. Simplex Concrete Piles India Ltd. & Anr. (2006) 6 SCC 204; Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1; Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., 2025 SCC OnLine SC 2578; Official Trustee v. Sachindra Nath Chatterjee, 1968 SCC Online SC 103; Paras 28-47] Ankhim Holdings Pvt. Ltd. v. Zaveri Construction Pvt. Ltd., 2026 LiveLaw (SC) 133 : 2026 INSC 137 : AIR 2026 SC 1042

Non-arbitrability and Public Policy — Merely because a statute (like Section 41 of the 1882 Act) confers exclusive jurisdiction on a specific court for certain types of disputes (licensor-licensee/landlord-tenant), it does not ex proprio vigore (by its own force) neutralize arbitration clauses in private agreements. The Court distinguished the present case - where possession had already been handed over and the dispute was purely a monetary claim from cases requiring special statutory protection - Arbitration clauses find their roots in Section 28 of the Contract Act - Exceptions 1 and 2 to Section 28 expressly provide that a contract to refer disputes to arbitration is not rendered illegal or void as a restraint of legal proceedings – Appeal dismissed. [Relied on In re Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, (2024) 6 SCC 1; Paras 19–26] Motilal Oswal Financial Services v. Santosh Cordeiro, 2026 LiveLaw (SC) 32 : 2026 INSC 5 : (2026) 2 SCC 801

Party Autonomy and Contractual Interpretation – Held: The written word is the foundation of legal obligation - To disregard the chosen language of the parties and impute a mandatory obligation where none was intended would compromise party autonomy - Since the respondent refused to refer the matter to arbitration and the clause provided a choice rather than a mandate, the High Court's dismissal of the Section 11 application is upheld. [Relied on Jagdish Chander v. Ramesh Chander (2007) 5 SCC 719; Paras 7-13] Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd; 2026 LiveLaw (SC) 388 : 2026 INSC 384

Pre-Award Interest - A contractually agreed pre-award interest rate cannot be assailed as being contrary to public policy of India under Section 34 of the Arbitration and Conciliation Act, 1996. Madhya Pradesh Road Development Corporation Ltd. v. Jabalpur Corridor Pvt. Ltd., 2026 LiveLaw (SC) 580 : 2026 INSC 590

Principles of Natural Justice - Allegation of denial of procedural fairness – The appellant consistently engaged in dilatory tactics, failed to file point-wise replies, remained absent during scheduled meetings, and declined to attend a final hearing while merely expressing inability without seeking an adjournment - Held: The arbitrator was fully justified in treating the matter as heard and passing the award - A party cannot invoke the principles of natural justice to impugn an award when the delay and lack of presentation were substantially a result of its own conduct. [Paras 23–25] Gujarat Water Supply and Sewerage Board v. Saryu Plastics, 2026 LiveLaw (SC) 547 : 2026 INSC 552

Provisions of the 2013 LA Act relating to the determination of compensation are fully applicable to land acquisitions under the National Highways Act, 1956 - The Arbitrator cannot determine the market value of an industrial land by placing reliance on a single sale deed relating to a small residential plot in an adjoining village - Under Section 26(1)(b) read with Explanations 1 and 2, the lands must be of a "similar type", and the methodology requires working out an "average sale price" from multiple deeds rather than relying on a singular transaction. [Paras 8 - 11] Project Director, National Highways Authority of India v. Alfa Remidis Ltd., 2026 LiveLaw (SC) 494 : 2026 INSC 480 : AIR 2026 SC 2415

Seat as Exclusive Jurisdiction Clause — The designation of a seat operates as an exclusive jurisdiction clause, even if no part of the cause of action arose there - It serves as the "judicial anchor" and "juridical home" of the arbitration - The seat remains immutable unless expressly altered by a subsequent mutual agreement of the parties - A "stray recital" in the arbitral award recording a different place of arbitration is not determinative of the seat if the parties had previously agreed on a specific seat. [Relied on Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 55; Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. & Ors. (2017) 7 SCC 678; BGS SGS Soma JV v. NHPC Ltd. (2020) 4 SCC 234; Enercon (India) Ltd. & Ors. v. Enercon GMBH & Anr. (2014) 5 SCC 1; Paras 18-24] J&K Economic Reconstruction Agency v. Rash Builders, 2026 LiveLaw (SC) 377 : 2026 INSC 368 : AIR 2026 SC 1990

Section 2(1)(e), Section 11, and Section 29A — Jurisdiction to extend the mandate of an Arbitral Tribunal — Held that the expression "Court" used in Section 29A for the extension of time or substitution of arbitrators refers strictly to the Court as defined under Section 2(1)(e) of the Act - This definition encompasses the Principal Civil Court of original jurisdiction in a district and includes a High Court only if it exercises ordinary original civil jurisdiction - The Supreme Court or High Courts exercising power under Section 11 to appoint an arbitrator do not retain supervisory control and become functus officio once the appointment is made. Jagdeep Chowgule v. Sheela Chowgule, 2026 LiveLaw (SC) 89 : 2026 INSC 92 : AIR 2026 SC 666

Section 2(a) and Section 39 – Absence of Arbitration Agreement – Jurisdiction of State Government – The Supreme Court upheld the High Court's decision setting aside an arbitral award, holding that there was neither a valid arbitration agreement nor informed consent by the Municipal Council to resolve disputes through arbitration - Noted that Clause 22 of the contract, which provided for dispute referral to the Collector with subsequent appeals to the Divisional Commissioner and the State Government, constituted a departmental dispute-resolution mechanism and not an "arbitration agreement". Bharat Udyog Ltd. v. Ambernath Municipal Council, 2026 LiveLaw (SC) 291 : 2026 INSC 288 : AIR 2026 SC 1586

Sections 2(1)(g), 35, and 40 – Definition and Continuity of Proceedings – The Arbitration Act is a self-contained, complete Code that does not envision arbitration proceedings to cease upon the death of a party - By virtue of Section 40, an arbitration agreement is not discharged by the death of a party and remains enforceable by or against their legal representatives. Consequently, legal representatives step into the shoes of the deceased party for the purposes of the Act - Since an arbitral award is binding on and enforceable against the legal representatives of a deceased party under Sections 35 and 40, the corresponding statutory right to challenge that award under Section 34 must naturally flow to them - Denying them this right would leave them remediless under the statute while simultaneously making them liable to fulfil the award, defeating the very object of the Act. [Relied on Ravi Prakash Goel v. Chandra Prakash Goel, (2008) 13 SCC 667; Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Limited and Anr., (2022) 1 SCC 75; Paras 13-22] V.K. John v. S. Mukanchand Bothra, 2026 LiveLaw (SC) 398 : 2026 INSC 393 : AIR 2026 SC 2041

Section 4 and Section 16(2) – Timelines for Objection vs. Past Conduct – Held that while an objection under Section 16(2) raised before the statement of defence is technically "timely" to prevent statutory waiver under Section 4, the prior conduct and acquiescence of the party remain relevant in adjudicating the merits of the jurisdictional challenge - A party cannot participate in the process, allow multiple appointments of presiding arbitrators without protest, and then "keep a jurisdictional ace up their sleeve" to challenge the final constitution - Supreme Court must respect arbitral autonomy and ensure minimum judicial interference - If the arbitrator's interpretation of a contractual clause is a plausible view, the Court cannot substitute it with another view merely because it is possible – Appeal dismissed. [Relied on Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. (2025 SCC OnLine SC 2578; Consolidated Construction Consortium Limited v. Software Technology Parks of India (2025 INSC 574); Paras 36, 40-45, 51-54, 61, 66, 67] Municipal Corporation of Greater Mumbai v. R.V. Anderson Associates, 2026 LiveLaw (SC) 235 : 2026 INSC 228

Section 5 and Section 15 — Scope of Judicial Interference — Supreme Court clarified that the jurisdiction under Section 15(2) is limited and must be read with the principle of minimal judicial intervention - A court acting under Section 15(2) cannot exercise powers barred to it under other sections, such as setting aside a Section 16 rejection order (which is not appealable) or interfering with Section 17 orders outside of a Section 37 proceeding. Ankhim Holdings Pvt. Ltd. v. Zaveri Construction Pvt. Ltd., 2026 LiveLaw (SC) 133 : 2026 INSC 137 : AIR 2026 SC 1042

Section 7 and 11 — Existence of Arbitration Agreement — Incorporation by Reference — Letter of Intent (LOI) — A Letter of Intent is generally a precursor to a contract and not the contract itself - It merely indicates a party's intention to enter into a contract in the future and does not create a binding legal relationship unless the intention to be bound is clear and unambiguous - A general reference in an LOI to terms and conditions of tender documents (which contain an arbitration clause) is a case of "reference" and not "incorporation" - For an arbitration clause from another document to be incorporated, there must be a specific reference to the arbitration clause itself - Where the LOI is contingent upon future acts (like issuance of a work order) and does not specifically incorporate the arbitration clause, no valid arbitration agreement exists. Maharashtra State Electricity Distribution Company Limited (MSEDCL) v. R.Z. Malpani, 2026 LiveLaw (SC) 356 : 2026 INSC 342

Section 7 and Section 11 – Validity of Arbitration Clause – Interpretation of the word 'can' – Held: An arbitration clause stating that disputes "can" be settled by arbitration does not constitute a mandatory or binding arbitration agreement - The word 'can' in this context signifies a factual possibility or a choice available to the parties, rather than a definitive mandate to refer all disputes to arbitration. Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd; 2026 LiveLaw (SC) 388 : 2026 INSC 384

Section 7(5) — Arbitration Agreement by Incorporation — Incorporation vs. Mere Reference — Distinction Explained — The High Court rejected Section 11 applications on the ground that a generic reference to a Development Agreement (containing an arbitration clause) in the subsequent Permanent Alternate Accommodation Agreements (PAAAs) executed with individual society members was insufficient to bind them to arbitration – Held that there is a distinct legal difference between a mere reference to another document and the incorporation of another document by reference - Where a subsequent contract explicitly provides that all terms, conditions, and clauses of an earlier document shall form part of it and be binding on the parties, the earlier document gets incorporated in its entirety (body and soul) into the later agreement - In the present case, Clause 14 of the PAAAs unequivocally stated that all terms, conditions, and clauses of the Development Agreement shall form a part of and be binding on the parties - This went beyond a mere general reference and clearly demonstrated the intention of the parties to import the Development Agreement in its entirety, including its dispute resolution mechanism (Clause 36) - a valid arbitration agreement existed between the parties by incorporation under Section 7(5) of the Act. [Relied on M.R. Engineers and Contractors Private Limited vs. Som Datt Builders Limited, (2009) 7 SCC 696; NBCC (India) Limited. vs. Zillion Infraprojects Private Limited, (2024) 7 SCC 174; Paras 9-13] Hirani Developers v. Nehru Nagar Samruddhi CHS Ltd., 2026 LiveLaw (SC) 499 : 2026 INSC 484

Sections 8 and 11 — Arbitrability and Allegations of Fraud — Whether disputes can be referred to arbitration when the very existence of the arbitration agreement is seriously disputed on allegations of forgery and fabrication — Held: When allegations of fraud are made regarding the arbitration agreement itself, the dispute is generally recognized as non-arbitrable - Arbitration is founded upon consent, and a party can only be bound if it is shown, at least prima facie, that they agreed to the process - Where an arbitration clause is embedded in a document (such as the "Admission Deed") whose existence is stoutly denied and alleged to be forged, the controversy strikes at the root of arbitral jurisdiction – Noted that in such cases, the court must examine the issue as a jurisdictional inquiry rather than referring the matter to an arbitrator - While findings in Section 9 proceedings are prima facie, once they attain finality (e.g., via dismissal of an SLP), they cannot be ignored in subsequent proceedings under Sections 8 and 11 involving the same issue. Rajia Begum v. Barnali Mukherjee, 2026 LiveLaw (SC) 101 : 2026 INSC 106

Section 9 — Threshold for Grant of Interim Relief - While the remedy is available, the threshold for granting interim relief under Section 9 will be higher in the case of an unsuccessful party - In rare and compelling cases, permitting such a party to invoke Section 9 prevents irreversible or irreparable prejudice and preserves the efficacy of the challenge proceedings - Courts must exercise care, caution, and circumspection while dealing with such applications. [Paras 49 - 60, 62] Home Care Retail Marts Pvt. Ltd. v. Haresh N Sangavi, 2026 LiveLaw (SC) 425 : 2026 INSC 415

Section 9 vs Section 36 — Post-Award Interim Relief to Unsuccessful Party — Maintainability - A petition under Section 9 of the Act at the post-award stage, by a party that has lost in the arbitral proceedings and has no enforceable award in its favour, is maintainable in law - Any party to an arbitration agreement, including an unsuccessful party, may invoke Section 9 at the post-award stage before the award is enforced - The statutory framework under Section 9, commencing with the expression "a party", draws no distinction between a successful and an unsuccessful party, and its meaning cannot be contextually modulated or varied depending upon the outcome of the arbitral proceedings. [Paras 29 - 33, 50-62] Home Care Retail Marts Pvt. Ltd. v. Haresh N Sangavi, 2026 LiveLaw (SC) 425 : 2026 INSC 415

Section 9 vs Sections 34 & 36 — Distinct Spheres of Operation - Sections 34 and 36 provide remedies against an award or a stay thereof, whereas Section 9 ensures protection of the subject-matter or the amount in dispute - The mere availability of recourse under Section 34 or a stay under Section 36(2) cannot operate as a bar to seeking protection under Section 9 - Denying interim relief under Section 9 would leave an unsuccessful party entirely remediless, with no forum available to protect the subject-matter even if the award is stayed and potentially liable to be set aside. [Paras 42, 43] Home Care Retail Marts Pvt. Ltd. v. Haresh N Sangavi, 2026 LiveLaw (SC) 425 : 2026 INSC 415

Section 9(2) and Section 21 – Commencement of Arbitral Proceedings – Automatic Vacation of Interim Relief – The Supreme Court held that for the purposes of Section 9(2), arbitral proceedings "commence" on the date the respondent receives a request for the dispute to be referred to arbitration, as defined under Section 21 - set aside the High Court's finding that proceedings only commence upon the filing of a Section 11 petition - If a notice invoking arbitration is received by the respondent within 90 days of an interim order, the mandate of Section 9(2) is satisfied, and the interim relief does not stand automatically vacated under Rule 9(4) of the Arbitration (Proceedings Before the Courts) Rules, 2001. [Paras 23, 24, 31] Regenta Hotels v. Hotel Grand Centre Point, 2026 LiveLaw (SC) 21 : 2026 INSC 32 : (2026) 4 SCC 142

Section 11(6) — Code of Civil Procedure, 1908; Order 23 Rule 1 — Maintainability of fresh application for appointment of an arbitrator — Abandonment of proceedings - The Supreme Court held that the principles of Order 23 Rule 1 of the CPC, which prohibit the institution of fresh proceedings on the same cause of action without seeking leave of the court, apply to proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996. A litigant who has effectively abandoned previous arbitration proceedings or withdrawn an application without liberty to file afresh is barred from seeking a subsequent appointment of an arbitrator for the same cause of action. The Court emphasized that this bar is founded on Public Policy to prevent the abuse of the process of law. In the present case, the respondent's refusal to participate in the initial arbitral proceedings constituted abandonment. Furthermore, the dismissal of a third-party appeal regarding the underlying property did not create a "fresh cause of action" for the respondent, as the internal dispute between the parties was not the subject matter of that appeal. [Relied on HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad; 2024 SCC OnLine SC 3190; Paras 15-19] Rajiv Gaddh v. Subodh Parkash, 2026 LiveLaw (SC) 310 : 2026 INSC 302 : AIR 2026 SC 1701

Section 11(6) and Section 43 — Limitation Act, 1963; Article 137 and Article 18 — Appointment of Arbitrator — Dead Claims — The period of limitation for filing a petition seeking appointment of an arbitrator cannot be conflated with the limitation period applicable to the substantive claims under the underlying contract - While Courts must generally leave intricate evidentiary inquiries regarding limitation to the Arbitrator, they have a duty to prima facie examine and reject "dead claims" that are ex-facie and hopelessly time-barred to protect parties from costly and frivolous arbitration. [Paras 4, 5, 6] State of West Bengal v. B.B.M. Enterprises, 2026 LiveLaw (SC) 369 : 2026 INSC 358

Section 11(6-A) — Appointment of Arbitrators — Scope of Judicial Review — The Supreme Court or High Court, while considering a Section 11 application, must strictly confine its examination to the existence of an arbitration agreement - The use of the word "examination" indicates a limit to the court's jurisdiction, intended for a prima facie determination rather than a "laborious or contested inquiry" - Noted that Section 11(6-A) continues to remain in full force as its omission (by the 2019 Amendment) has not yet been notified. [Paras 14–17] Motilal Oswal Financial Services v. Santosh Cordeiro, 2026 LiveLaw (SC) 32 : 2026 INSC 5 : (2026) 2 SCC 801

Section 11(6A) — Paradigm Shift — The 2015 Amendment introduced Section 11(6A), which limited the Court's inquiry solely to the "existence" of an arbitration agreement, effectively overruling the Patel Engineering dictum for post-amendment cases – Noted for proceedings commenced prior to 23.10.2015, the broader judicial scrutiny and finality of the Section 11 order under the old regime continue to apply – Appeal allowed. [Relied on SBP & Co. v. Patel Engineering Ltd. & Anr. (2005) 8 SCC 618; Paras 22-32] Eminent Colonizers v. Rajasthan Housing Board, 2026 LiveLaw (SC) 109 : 2026 INSC 116

Section 11(6A) — Scope of Judicial Review — While the court's jurisdiction at the Section 11 stage is confined to the examination of the existence of an arbitration agreement and the principle of "When in doubt, do refer" applies, the court can reject an application if, even on a prima facie view, there appears to be no existence of an arbitration agreement. [Relied on NBCC (India) Ltd. v. Zillion Infraprojects Pvt. Ltd. (2024) 7 SCC 174; Himachal Pradesh v. OASYS Cybernatics Pvt. Ltd. 2025 SCC OnLine SC 253; Paras 20-40] Maharashtra State Electricity Distribution Company Limited (MSEDCL) v. R.Z. Malpani, 2026 LiveLaw (SC) 356 : 2026 INSC 342

Section 11, Section 16, and Section 34 — Pre-2015 Amendment Regime — Binding Nature of Section 11 Order — Res Judicata — Held that in cases governed by the SBP & Co. v. Patel Engineering Ltd. regime (prior to the 23.10.2015 amendments), the Section 11 Court exercised judicial power to determine the existence and validity of an arbitration agreement - Such a determination, even if implied, is binding on the parties at all subsequent stages, including before the Arbitral Tribunal and the Section 34 Court – Noted that the respondents, having failed to challenge the appointment order in the Supreme Court, cannot subsequently argue that the clause (Clause 23) was not an arbitration agreement. Eminent Colonizers v. Rajasthan Housing Board, 2026 LiveLaw (SC) 109 : 2026 INSC 116

Section 12(5) and Seventh Schedule – Ineligibility of Arbitrator – Unilateral Appointment – The principle of equal treatment of parties under Section 18 applies not only to arbitral proceedings but also to the procedure for appointment of arbitrators - Equal treatment entails that parties must have an equal say in the constitution of the arbitral tribunal - Any person whose relationship with the parties, counsel, or the dispute falls within the Seventh Schedule is ineligible to be appointed as an arbitrator by operation of law – Held a person who is statutorily ineligible to act as an arbitrator cannot nominate or appoint another person as an arbitrator - A unilateral appointment by one party, where that party has exclusive power to appoint a sole arbitrator, violates the principle of impartiality and neutrality. Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 LiveLaw (SC) 4 : 2026 INSC 6

Section 12(5) Proviso – Waiver of Ineligibility – “Express Agreement in Writing” – Held that the ineligibility of an arbitrator under Section 12(5) can only be waived by an "express agreement in writing" entered into by the parties subsequent to the disputes having arisen – Supreme Court laid down Parameters of Waiver- i. Mere participation in proceedings, filing a Statement of Claim, requesting an extension of time under Section 29A, or failing to object in the first procedural order does not constitute an "express agreement in writing" ii. Recording "No Objection": A procedural order recording that parties have "no objection" to the appointment is insufficient to satisfy the requirement of a conscious, written waiver under the proviso to Section 12(5). Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 LiveLaw (SC) 4 : 2026 INSC 6

Section 14 & Mandate of Arbitrator – Estoppel / Acquiescence - Contractual time limits for arbitral awards – The appellant board actively participated in the arbitration proceedings and failed to raise objections regarding the expiration of the arbitrator's mandate despite multiple unilateral extensions and subsequent hearing fixtures - Held that the grievance regarding the expiry of the mandate is governed by the contract and not by statute - Having participated and acquiesced in the continuation of the proceedings, the appellant is estopped from challenging the validity of the award on the ground of expired mandate after the award has been passed. [Para 18-21] Gujarat Water Supply and Sewerage Board v. Saryu Plastics, 2026 LiveLaw (SC) 547 : 2026 INSC 552

Sections 14 and 34 – Challenge to Jurisdiction – Stage of Objection – Constitution of India; Article 14 – Public-Private Contracts - Held that an arbitrator falling under the Seventh Schedule becomes de jure unable to perform his functions, and his mandate terminates automatically - An objection to the inherent lack of jurisdiction due to such ineligibility can be raised at any stage, including for the first time in an application under Section 34 for setting aside the award – Held that unilateral appointment clauses in public-private contracts violate Article 14 for being arbitrary and failing to provide the minimum level of integrity required for quasi-judicial functions - Such clauses also violate the nemo judex rule, which constitutes a part of the fundamental policy of Indian law – Appeals allowed. [Relied on TRF Ltd. v. Energo Engineering Projects Ltd. (2017) 8 SCC 377; Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2020) 20 SCC 760; Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5 SCC 755; Dharma Prathishthanam v. Madhok Construction (P) Ltd. (2005) 9 SCC 686; Paras 55-107] Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 LiveLaw (SC) 4 : 2026 INSC 6

Section 15(2), 15(3), and 15(4) — Substitution of Arbitrator — Validity of prior proceedings — The Supreme Court held that while appointing a substitute arbitrator under Section 15(2), the High Court cannot declare proceedings undertaken by the previous tribunal as a "nullity" on the grounds of an IBC moratorium - Held that Section 15 is a mechanism to preserve continuity; prior proceedings remain valid unless the parties agree otherwise or the substitute tribunal, in its discretion, decides to repeat hearings. Ankhim Holdings Pvt. Ltd. v. Zaveri Construction Pvt. Ltd., 2026 LiveLaw (SC) 133 : 2026 INSC 137 : AIR 2026 SC 1042

Section 16 — Doctrine of Competence-Competence — Arbitrability of Disputes — The determination of the substantive existence and validity of an arbitration agreement, as well as the arbitrability of the dispute, is the domain of the Arbitral Tribunal under Section 16 - The Referral Court is not the appropriate forum to conduct a "mini-trial" regarding the validity of the agreement. [Paras 15–16] Motilal Oswal Financial Services v. Santosh Cordeiro, 2026 LiveLaw (SC) 32 : 2026 INSC 5 : (2026) 2 SCC 801

Section 16 – Indian Stamp Act, 1899 – Objection regarding stamping of agreement – Whether such objection can be entertained by Writ Court at a pre-arbitral stage – Held, non-stamping or inadequate stamping is a curable defect and does not render an agreement void – Any objection in relation to the stamping of the agreement falls within the ambit of the Arbitral Tribunal – The Writ Court ought not to embark upon an interpretation of the contract to decide the nature of the document while the arbitral proceedings are pending - Held, where a writ petition is filed invoking jurisdiction under both Articles 226 and 227, the maintainability of a Letters Patent Appeal depends upon the pleadings, the nature of the order, and the directions issued by the Single Judge – If the order is passed in a composite manner, the Division Bench has the jurisdiction to entertain the appeal. [Relied on Re: Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act, 1996 and The Indian Stamp Act, 1899 (2023 INSC 1066); Paras 18-26] Tarini Prasad Mohanty v. Sunflag Iron and Steel Company, 2026 LiveLaw (SC) 561 : 2026 INSC 566

Section 16 & 23 - Jurisdiction to decide disputes not specifically mentioned in invocation notice - Unless the arbitration agreement specifically restricts the tribunal to only decided "specifically referred disputes," the claimant is entitled to add or amend claims in the statement of claim, and the respondent is entitled to file counter-claims, provided they are arbitrable and within limitation - Where an arbitration clause is widely worded to cover "any matter arising out of or connected with the agreement," the tribunal has jurisdiction to entertain all such disputes once constituted. Bhagheeratha Engineering Ltd. v. State of Kerala, 2026 LiveLaw (SC) 31 : 2026 INSC 4

Section 16, 34, 37 – Constitution of India, Articles 226/227 – Challenge to order passed by Arbitral Tribunal under Section 16 – Maintainability of Writ Petition – Held, the scheme of the Act envisages minimal judicial interference in arbitral proceedings – Except in cases where the order is so perverse that a patent lack of inherent jurisdiction stares one in the face, the High Court should not entertain a challenge to a Section 16 order under Article 226/227 – The party must wait for the passing of the final award and avail the remedy under Section 34. Tarini Prasad Mohanty v. Sunflag Iron and Steel Company, 2026 LiveLaw (SC) 561 : 2026 INSC 566

Section 16, Section 16(5), Section 16(6), Section 34, and Section 37(2) – Maintainability of Section 34 application against rejection of Section 16 plea – When an Arbitrator rejects an application filed under Section 16(2) or 16(3) challenging the jurisdiction of the Tribunal (such as on the ground of limitation), the aggrieved party cannot immediately file an application under Section 34 to set aside that order - The statutory drill under Section 16 dictates that upon rejection of a jurisdictional plea, the Arbitral Tribunal shall continue with the arbitral proceedings and make an arbitral award - The party aggrieved by such rejection can only test its validity after the final arbitral award is passed, by moving an application under Section 34 against the final award - Piecemeal challenges impermissible – Entertaining a Section 34 application or a subsequent Section 37 appeal against a pre-award rejection order under Section 16(2) is erroneous, unsustainable, and does violence to the scheme of the Arbitration Act - Under Section 37(2), an appeal lies directly only if the Arbitrator accepts/upholds the plea of lack of jurisdiction and puts an end to the proceedings. [Distinguished from Indian Farmers Fertilizer Cooperative Limited vs. Bhadra Products (2018) 2 SCC 534; Paras 8 – 17] MCM Worldwide v. Construction Industry Development Council, 2026 LiveLaw (SC) 440 : 2026 INSC 425

Section 16, Section 4, and Section 34 – Appointment of Presiding Arbitrator – Improper Constitution of Tribunal – Waiver and Conduct – The Appellant challenged the arbitral award on the ground that the Presiding Arbitrator was appointed by the two nominee arbitrators beyond the 30-day period prescribed in Clause 8.3(b) of the Agreement - The Appellant contended that after 30 days, the power of the nominee arbitrators was extinguished, and only the Secretary General of ICSID could make the appointment - Held: Clause 8.3(b) is an enabling provision, not a restrictive one - It provides a "fail-safe" by permitting parties to approach ICSID if the nominee arbitrators reach an impasse, but it does not denude the nominee arbitrators of their power to appoint after the 30-day period unless a request is actually made to ICSID - Since neither party approached ICSID, the appointment by the nominee arbitrators was valid. [Paras 30-34] Municipal Corporation of Greater Mumbai v. R.V. Anderson Associates, 2026 LiveLaw (SC) 235 : 2026 INSC 228

Sections 20, 21, and Chapter IV – Mutually Exclusive Modes of Arbitration – Mandatory Nature of Court Reference in Pending Suits - The statutory scheme of the 1940 Act envisions three distinct and mutually exclusive modes of arbitration through Chapters II, III, and IV - Once a civil suit is instituted and pending between the parties regarding a subject matter, any reference of the dispute to arbitration can only fall within the ambit of Chapter IV - Section 21 mandates an express, written application by all interested parties to the court where the suit is pending to seek a formal order of reference - Subjective 'knowledge' of the pendency of the suit by the parties is not a condition precedent or a determinative factor; the mere factual 'institution' or 'pendency' of the suit triggers the mandatory operation of Chapter IV - Any arbitral reference made or continued out of court after the institution of a suit, without obtaining a formal order of reference from the trial court under Section 21, bypasses the legislative intent and renders the subsequent arbitral award legally ineffective as a bar or defense against the pending suit. [Relied on M.P. Rajya Tilhan Utpadak Sahakari Sangh Maryadit v. Modi Transport Service, (2022) 14 SCC 345; Paras 34-64] Ashok v. Padam Chand, 2026 LiveLaw (SC) 570 : 2026 INSC 591

Section 21 — Commencement of Proceedings — Arbitration proceedings commence on the date the request for initiation of arbitration is received by the respondent - Where a contractor completes work in July 2000 but issues the notice seeking arbitration only in June 2022 (after 21 years), the claim is hopelessly time-barred under the Limitation Act - The failure of the Engineer-in-Charge to issue a final measurement certificate does not indefinitely extend the limitation period; the contractor is expected to be diligent and initiate arbitration within the prescribed three-year period from the accrual of the cause of action. [Relied on Arif Azim Company Limited v. Aptech Limited (2024) 5 SCC 313; Vishram Varu and Company v. Union of India (2023) 12 SCC 588; Bharat Sanchar Nigam Limited and Anr. v. Nortel Networks India Private Limited (2021) 5 SCC 738; Aslam Ismail Khan Deshmukh v. ASAP Fluids Private Limited (2025) 1 SCC 502; Paras 6, 7] State of West Bengal v. B.B.M. Enterprises, 2026 LiveLaw (SC) 369 : 2026 INSC 358

Section 21 – Interpretation of "Commencement" – Supreme Court emphasized that the commencement of arbitral proceedings is a statutory event defined exclusively under Section 21 - This definition is not limited to calculating limitation under Section 43 but applies to all provisions of the Act unless specifically excluded - The legislature deliberately delinked commencement from judicial proceedings to ensure clarity and party autonomy. [Paras 24, 28, 29] Regenta Hotels v. Hotel Grand Centre Point, 2026 LiveLaw (SC) 21 : 2026 INSC 32 : (2026) 4 SCC 142

Section 21 & 23 - Object of Section 21 Notice - The object of Section 21 is primarily to determine the commencement of arbitral proceedings for reckoning limitation - It is a procedural rather than a jurisdictional requirement. Failure to issue a Section 21 notice is not fatal to a party's claim if the dispute is otherwise arbitrable and covered by the arbitration agreement - The claims raised in a Section 21 notice do not restrict or limit the claims that can be subsequently raised before the Arbitral Tribunal in the statement of claim under Section 23 - held that an arbitral tribunal cannot decide disputes beyond a specific issue referred to it and that a party cannot raise additional disputes without issuing a separate notice under Section 21 of the Arbitration and Conciliation Act, 1996. Bhagheeratha Engineering Ltd. v. State of Kerala, 2026 LiveLaw (SC) 31 : 2026 INSC 4

Section 29A and Section 11 — Jurisdiction — held that Section 11 has no bearing on the provisions of Chapters 5 and 6 (where Section 29A is located) - Noted, an application for extension of time under Section 29A(4) does not lie before the High Court. Viva Highways Ltd. v. Madhya Pradesh Road Development Corporation Ltd; 2026 LiveLaw (SC) 145

Section 29A vs. Section 11 — Separation of Appointment and Supervision — Held that the power of appointment under Section 11 is a "special and limited" jurisdiction - It is a misconception to assume a hierarchy where only the appointing Court can extend the mandate - The extension of a mandate or substitution under Section 29A is a measure of curial supervision, not an "appointment" under Section 11 – Held that applications for extending an arbitral tribunal's mandate under Section 29A (4) of the Arbitration & Conciliation Act, 1996 must be filed exclusively before the 'Court' as defined in Section 2(1)(e) i.e., the principal civil court of original jurisdiction, regardless of which authority appointed the arbitrators - Interpretations based on a perceived "conflict of power" or "hierarchical difficulties" between a Civil Court and a High Court are untenable and opposed to the rule of law. Jagdeep Chowgule v. Sheela Chowgule, 2026 LiveLaw (SC) 89 : 2026 INSC 92 : AIR 2026 SC 666

Section 29A(4) & 29A(5) - Power of Court to extend mandate after rendering of award – The Supreme Court held that an application for extension of the arbitrator's mandate under Section 29A(5) is maintainable even if it is filed after the expiry of the statutory period (12 months plus optional 6 months) and even after the award has been rendered in the interim - Noted that an award passed after the mandate has expired is unenforceable under Section 36 and "non est," but the arbitrator's indiscretion in passing such an award does not denude or impair the Court's jurisdiction to entertain an extension application. C. Velusamy v. K. Indhera, 2026 LiveLaw (SC) 105 : 2026 INSC 112 : AIR 2026 SC 918

Section 29A(4) and Section 29A(6) — Extension of Mandate and Substitution of Arbitrator — The Supreme Court clarified that the expression "obligates" used in the Mohan Lal Fatehpuria case regarding the substitution of an arbitrator does not mean that substitution is an inevitable consequence when considering an extension of a mandate that has already expired - Substitution is only required "if the situation so warranted" and is not a mandatory inference following the termination of a mandate under Section 29A(4). Viva Highways Ltd. v. Madhya Pradesh Road Development Corporation Ltd; 2026 LiveLaw (SC) 145

Section 31(7)(a) and 31(7)(b) — General Conditions of Contract (GCC); Clause 16(3) and 64(5) — Pre-award/Pendente lite Interest — Post-award Interest — The Arbitral Tribunal cannot award pre-award or pendente lite interest, even in the form of "compensation," if the contract expressly prohibits interest on amounts payable to the contractor - a contractual bar on pre-award interest does not automatically extend to post-award interest - Post-award interest is a statutory mandate under Section 31(7)(b) and is not subject to "contracting out" by parties unless the exclusion is explicit and unambiguous - The Court retains the power to modify the rate of post-award interest if it is deemed excessive or lacks justification - Key Findings and Relied-on Decisions: i. Contractual Supremacy in Pre-award Interest: Under Section 31(7)(a), the arbitrator's power to award pre-award interest is subordinate to the terms of the agreement. If a contract (like Clause 16(3) of the GCC) bars interest on "amounts payable to the contractor," the arbitrator lacks jurisdiction to grant it. Ii. Rejection of Ejusdem Generis: The phrase "amounts payable to the contractor under the contract" in Clause 16(3) is independent and distinct from "earnest money" or "security deposits." It cannot be read down to only include deposits; iii. Statutory Mandate of Post-award Interest: Section 31(7)(b) is not subject to party autonomy. The expression "unless the award otherwise directs" refers to the rate of interest, not the entitlement to it; iv. Power to Modify Interest Rate: Courts can modify post-award interest rates to avoid excessive financial burdens and ensure "just compensation" based on contemporary economic scenarios – Appeal partly allowed. [Relied on Union of India v. Manraj Enterprises (2022) 2 SCC 331; RP Garg v. Chief General Manager, Telecom Department 2024 SCC OnLine SC 2928; Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited (2025) 7 SCC 1; Union of India v. Bright Power Projects (India) (P) Limited (2015) 9 SCC 695; Union of India v. Manraj Enterprises (2022) 2 SCC 331; Paras 30-60] Union of India v. Larsen & Tubro, 2026 LiveLaw (SC) 214 : 2026 INSC 203 : AIR 2026 SC 1284

Section 33 & Section 34(3) – Limitation for filing Application to set aside Arbitral Award – Commencement of Limitation after disposal of Section 33 application - The Supreme Court held that once the jurisdiction of the Arbitral Tribunal under Section 33 of the Act is formally invoked, the limitation period of three months prescribed under Section 34(3) for challenging the arbitral award commences only from the date on which the Section 33 request is disposed of by the Tribunal - Supreme Court clarified that Section 34(3) does not distinguish between applications under Section 33 that are ultimately allowed or dismissed, nor does it restrict the benefit of deferred limitation only to applications that are found to be "maintainable" - Whether the application under Section 33 succeeds, fails, or is found to warrant no modification is not determinative; what matters is that the jurisdiction was formally invoked and the proceedings remained pending. [Paras 13-19] National Highway Authority of India v. T. Younis, 2026 LiveLaw (SC) 589 : 2026 INSC 616

Section 33 & Section 34(3) – Prevention of Abuse of Process - Supreme Court cautioned that where applications under Section 33 are found to be sham, frivolous, or mala fide, or solely filed to defeat the limitation under Section 34(3) of the Act, courts are justified in imposing exemplary and punitive costs to maintain the balance between preserving legitimate remedies and preventing the abuse of the process of law. [Para 17, 18] National Highway Authority of India v. T. Younis, 2026 LiveLaw (SC) 589 : 2026 INSC 616

Section 33(1)(a) – Power to Modify Award – Scope of Review: Substitution of Interest – The Commercial Court, purporting to act under Section 33(1)(a), modified the arbitral award by substituting "simple interest" with "compound interest" for the pendente lite period, exponentially increasing the appellant's liability – Held that Section 33(1)(a) is strictly confined to the correction of computational, clerical, or typographical errors and does not contemplate a substantive review or material modification of the findings on merits - The choice between simple or compound interest represents a conscious, substantive assessment of equities by the arbitrator, not a clerical oversight. The Commercial Court manifestly exceeded its jurisdiction. [Relied on Gyan Prakash Arya v. Titan Industries Ltd., (2023) 1 SCC 153; Paras 30–32] Gujarat Water Supply and Sewerage Board v. Saryu Plastics, 2026 LiveLaw (SC) 547 : 2026 INSC 552

Section 34 — Juridical Seat vs. Venue — Exclusive Jurisdiction — The Supreme Court reaffirmed the settled distinction between the "seat" and "venue" of arbitration, holding that once a seat is designated by agreement, the courts of that seat alone possess exclusive supervisory jurisdiction - The mere fact that arbitral proceedings were conducted or the award was signed at a different geographical location (venue) for convenience does not alter the juridical seat. J&K Economic Reconstruction Agency v. Rash Builders, 2026 LiveLaw (SC) 377 : 2026 INSC 368 : AIR 2026 SC 1990

Section 34 – The Supreme Court invoked its extraordinary powers under Article 142 to set aside an order of the Trial Court, which had allowed land owners to withdraw their Section 34 petitions following a High Court judgment declaring Sections 3G and 3J of the National Highways Act unconstitutional - noted that since the High Court's judgment was subsequently stayed, the land owners were left "remediless" as fresh petitions would be barred by limitation under Section 34(3) of the 1996 Act - Supreme Court has raised concerns over the deep structural flaws in determining the land acquisition compensation acquired under the National Highways Act, 1956. The Court said that land owners whose lands were acquired under the 1956 Act faces significant disadvantage when compared to land owners whose lands were acquired under different laws. [Para 1-3] Riar Builders Pvt. Ltd. v. Union of India, 2026 LiveLaw (SC) 65

Section 34 & Section 37 – Scope of Judicial Review – Modification of Arbitral Awards – Power to Modify – The Supreme Court upheld the power of a Court under Section 34 to modify an arbitral award to a limited extent, particularly when applying contractually agreed clauses to admitted facts – Noted that a Section 37 Court cannot substitute its own view for a plausible view taken by a Section 34 Court regarding the determination of "reasonable compensation" unless that determination is arbitrary or perverse. Saisudhir Energy Ltd. v. NTPC Vidyut Vyapar Nigam Ltd., 2026 LiveLaw (SC) 112 : 2026 INSC 103 : AIR 2026 SC 850

Section 34 and Section 37 — Scope of Appellate Interference — The Supreme Court reiterated that the jurisdiction of an appellate court under Section 37 is extremely circumscribed and akin to the limited jurisdiction under Section 34 - An appellate court cannot undertake an independent assessment of the merits of the award or reappraise evidence as if it were an ordinary court of appeal - Its primary role is to ascertain whether the court exercising power under Section 34 acted within its prescribed limits or exceeded them - If an Arbitral Tribunal's interpretation of a contract is a "plausible view" and is upheld under Section 34, the Section 37 court has no authority to substitute it with a different interpretation. Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust, 2026 LiveLaw (SC) 47 : 2026 INSC 34 : AIR 2026 SC 536 : (2026) 3 SCC 186

Section 34 vs. Article 227 of the Constitution of India / Section 115 of the Code of Civil Procedure, 1908 – Remedy for Legal Representatives – Held that the appropriate statutory relief for a legal representative aggrieved by and seeking to challenge an arbitral award lies exclusively under Section 34 of the Arbitration Act and not via a revision petition under Article 227 of the Constitution or Section 115 of the CPC. V.K. John v. S. Mukanchand Bothra, 2026 LiveLaw (SC) 398 : 2026 INSC 393 : AIR 2026 SC 2041

Section 34(2A) – Patent Illegality – Setting aside of Arbitral Award – An award that completely ignores the statutory directives of Section 26(1)(b) of the 2013 LA Act and its Explanations by adopting a single, completely dissimilar sale exemplar is vitiated by patent illegality appearing on the face of the record - The cloak of protection under the proviso to Section 34(2A) (which restricts interference on mere erroneous application of law or reappreciation of evidence) cannot be extended to such an award. [Relied on National Highways Authority of India vs. P. Nagaraju alias Cheluvaiah and another, (2022) 15 SCC 1; Madhya Pradesh Road Development Corporation vs. Vincent Daniel and others, (2025) 7 SCC 798; Para 12] Project Director, National Highways Authority of India v. Alfa Remidis Ltd., 2026 LiveLaw (SC) 494 : 2026 INSC 480 : AIR 2026 SC 2415

Section 34(3) – Distinction from cases without formal invocation - The Supreme Court distinguished the present case from its earlier ruling in State of Arunachal Pradesh v. Damani Construction Co. (2007) 10 SCC 742 - held that the reliance on Damani Construction is misplaced where formal applications under Section 33 are admittedly filed within the statutory period and entertained by the Tribunal - In Damani Construction, the party had merely written a letter seeking a review/clarification outside the contours of Section 33 without formally invoking the Tribunal's jurisdiction. [Para 16] National Highway Authority of India v. T. Younis, 2026 LiveLaw (SC) 589 : 2026 INSC 616

Section 36 – Code of Civil Procedure, 1908 – Order XXI Rule 58 and Rule 102 – Execution of Arbitral Award – Transferee Pendente Lite – The Supreme Court upheld the dismissal of a claim petition filed by a third-party purchaser who acquired property after an arbitral award (money decree) was passed against the vendor – held that an arbitral award is a "deemed decree" enforceable under Section 36 of the 1996 Act - Under Order XXI Rule 102 CPC, the protections for bona fide claimants do not extend to a transferee pendente lite—defined as one to whom property is transferred after the institution of the suit/proceeding. R. Savithri Naidu v. Cotton Corporation of India, 2026 LiveLaw (SC) 151 : 2026 INSC 150 : AIR 2026 SC 913

Section 36 – Enforcement of Consent Award – Interpretation of Indemnity Clauses – Dispute regarding the timing of an indemnifier's obligation to discharge liability - The Supreme Court held that where a Consent Award contains an absolute obligation to "ensure" that no liability is recovered from the award-holder by a "Forum," such obligation is triggered as soon as a liability is crystallised and recovery is sought, regardless of whether a further appeal is pending. VPS Healthcare v. Prabhat Kumar Srivastava, 2026 LiveLaw (SC) 393 : 2026 INSC 361

Section 42 — Inapplicability to Section 11 — Section 42, which mandates that subsequent applications be filed in the same Court where the first application was made, does not apply to Section 11 applications - The Chief Justice or their delegate exercising power under Section 11 is not a "Court" as defined by Section 2(1)(e); therefore, a Section 11 application does not fix the jurisdiction for Section 29A applications – Appeals allowed. [Relied on SBP and Co. v. Patel Engineering Ltd. (2005) 8 SCC 618; State of West Bengal v. Associated Contractors (2015) 1 SCC 32; State of Jharkhand v. Hindustan Construction Co. Ltd. (2018) 2 SCC 602; Chief Engineer (NH) PWD (Roads) v. BSC&C and C JV 2024 SCC OnLine SC 1801; Paras 15-26] Jagdeep Chowgule v. Sheela Chowgule, 2026 LiveLaw (SC) 89 : 2026 INSC 92 : AIR 2026 SC 666

Section 47 Proviso – Code of Civil Procedure, 1908 (CPC) – Order XXIII Rule 3 – Enforcement of Private Award in Pending Suit – Absolute Necessity of Post-Award Consent - The proviso to Section 47 acts as a limited saving mechanism for an award 'otherwise obtained' (i.e., outside the regular provisions of the 1940 Act or during the pendency of a suit without court intervention) - Such an award cannot proprio vigore (of its own force) be enforced, set up as a valid defense, or used to non-suit a plaintiff - It can only be taken into consideration by the court as a compromise or adjustment of the suit under Order XXIII Rule 3 of the CPC if allinterested parties explicitly give their mutual consent after the award has been made - This post-award consent is a strict sine qua non - In the absence of an express or implied post-award consent by a party to treat the award as a compromise, the court has no jurisdiction to enforce it or non-suit the parties on its basis, and must instead proceed to decide the suit on its independent merits. [Relied on Naraindas v. Vallabhdas & Ors., (1971) 3 SCC 642; Paras 49-69] Ashok v. Padam Chand, 2026 LiveLaw (SC) 570 : 2026 INSC 591

Sections 61, 73, and 74 — Part III — Challenge to Conciliation Award and Partition Deed — Order VII Rule 11 of CPC — Rejection of Plaint — The Supreme Court set aside the rejection of a suit challenging a partition deed (KBPP) and a subsequent Conciliation Award - held that the Jegatheesan group's challenge based on coercion, undue influence, and misrepresentation regarding the KBPP, and the allegation of fraud/fabrication regarding the Conciliation Award, disclosed a real cause of action that could not be summarily dismissed – Noted that while an execution proceeding under Section 36 is pending, an Execution Court cannot examine the validity of a partition deed or family arrangement; such challenges must be resolved through a properly instituted civil suit. J. Muthurajan & Anr. v. S. Vaikundarajan, 2026 LiveLaw (SC) 135 : 2026 INSC 139 : (2026) 5 SCC 71

Section 73 — Authentication of Settlement — A settlement agreement (KBPP) not authenticated by the Conciliator as mandated under Section 73(4) and not signed by the parties at the time of the alleged award (Annexure P-2) raises serious questions regarding its status as an award under the Act – noted that coercion within a family context may not always involve physical threats or "life threats"- It can arise from a feeling of subservience or manifest obedience to an elder's opinion, which are matters of evidence and cannot be peremptorily rejected at the threshold of a suit - The plea of constructive res judicata is not applicable when earlier rounds of litigation specifically reserved liberty for the parties to work out their remedies in accordance with law and challenge the partition deed in a Civil Court. [Relied on Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) D. Thr. LRs and Ors. (2020) 7 SCC 366; Paras 23-31] J. Muthurajan & Anr. v. S. Vaikundarajan, 2026 LiveLaw (SC) 135 : 2026 INSC 139 : (2026) 5 SCC 71

State Government lacks the authority under Section 143-A(3) to unilaterally "foist" arbitration on parties governed by a concluded contract - The power of the State to issue directions under this section is limited to regulating the manner and procedure of octroi collection and does not extend to appointing an arbitrator for the Municipal Council and its agent. Bharat Udyog Ltd. v. Ambernath Municipal Council, 2026 LiveLaw (SC) 291 : 2026 INSC 288 : AIR 2026 SC 1586

Statutory Interpretation — Literal vs Purposive Construction — Separation of Powers - Where the words of a statute are clear, plain, and unambiguous, the Court is bound to construe them in their natural, ordinary, and grammatical sense - Resorting to contextual or purposive interpretation to arrive at a meaning contrary to the plain language of a clear statute does violence to the text and constitutes a breach of the doctrine of separation of powers - Modulating the definition of "a party" based on the outcome of arbitration would amount to an impermissible judicial amendment. [Paras 33 - 56] Home Care Retail Marts Pvt. Ltd. v. Haresh N Sangavi, 2026 LiveLaw (SC) 425 : 2026 INSC 415

Statutory Interpretation of Section 29A – The expression "if an award is not made" in Section 29A(4) does not create a threshold bar for cases where a late award has been delivered; rather, it empowers the Court to ensure proceedings reach their logical conclusion of a binding award - Termination of the mandate under Section 29A(4) is "conditional" and not "absolutistic," meaning it is subject to the Court's power to revive and extend the mandate retrospectively – Appeal allowed. [Relied on Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., 2024 SCC Online SC 2494; Paras 13-23] C. Velusamy v. K. Indhera, 2026 LiveLaw (SC) 105 : 2026 INSC 112 : AIR 2026 SC 918

Supreme Court drew the following conclusions: i. The principle of equal treatment of parties provided in Section 18 of the Act, 1996, applies not only to the arbitral proceedings but also to the procedure for appointment of arbitrators - Equal treatment of the parties entails that the parties must have an equal say in the constitution of the arbitral tribunal; ii. Sub-section (5) of Section 12 provides that any person whose relationship with the parties or counsel, or the dispute, whether direct or indirect, falls within any of the categories specified in the Seventh Schedule would be ineligible to be appointed as an arbitrator - Since, the ineligibility stems from the operation of law, not only is a person having an interest in the dispute or its outcome ineligible to act as an arbitrator, but appointment by such a person would be ex facie invalid; iii. The words “an express agreement in writing” in the proviso to Section 12(5) means that the right to object to the appointment of an ineligible arbitrator cannot be taken away by mere implication - The agreement referred to in the proviso must be a clear, unequivocal written agreement; iv. When an arbitrator is found to be ineligible by virtue of Section 12(5) read with the Seventh Schedule, his mandate is automatically terminated - In such circumstance, an aggrieved party may approach the court under Section 14 read with Section 15 for appointment of a substitute arbitrator - when an award has been passed by such an arbitrator, an aggrieved party may approach the court under Section 34 for setting aside the award; v. In arbitration, the parties vest jurisdiction in the tribunal by exercising their consent in furtherance of a valid arbitration agreement - An arbitrator who lacks jurisdiction cannot make an award on the merits - an objection to the inherent lack of jurisdiction can be taken at any stage of the proceedings. Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 LiveLaw (SC) 4 : 2026 INSC 6

Supreme Court noted that a widely worded arbitration clause (Clause 3.22) must be read in conjunction with restrictive default clauses (Clause 3.20) - Clause 3.20, which accorded finality to the Administration's decision and barred legal proceedings, was interpreted to apply only where liability is admitted and only the quantification is at issue - Where liability is disputed, the matter falls within the ambit of the arbitration clause. [Relied on State of Karnataka v. Shree Rameshwara Rice Mills Thirthahalli, (1987) 2 SCC 160; J.G. Engineers Private Limited v. Union of India, (2011) 5 SCC 758; Sri Vedagiri Lakshmi Narasimha Swami Temple v. Induru Pattabhirami Reddi, 1966 SCC OnLine SC 243; Paras 25-38] ABS Marine Services v. Andaman and Nicobar Administration, 2026 LiveLaw (SC) 287 : 2026 INSC 274 : AIR 2026 SC 1594

While a "precedent" operates in rem and serves as a source of law for other parties, "res judicata" operates in personam between the same parties to ensure finality in litigation - Even if other benches of a High Court interpreted an identical clause differently in separate litigations (precedent), the specific order appointing the arbitrator between the current parties constitutes res judicata regarding the existence of the arbitration agreement - The correctness of the initial decision is immaterial unless it relates to a lack of inherent jurisdiction. Eminent Colonizers v. Rajasthan Housing Board, 2026 LiveLaw (SC) 109 : 2026 INSC 116