Arbitration Quarterly Digest: July-September 2025

Supreme Court Clause Saying Arbitration "May Be Sought" Doesn't Constitute A Binding Arbitration Agreement : Supreme Court Cause Title: BGM AND M-RPL-JMCT (JV) VERSUS EASTERN COALFIELDS LIMITED Citation : 2025 LiveLaw (SC) 731 The Supreme Court recently held that a clause in an agreement that arbitration "may be sought" to resolve disputes between the parties will not constitute a binding arbitration agreement. Approving the refusal of the High Court to refer the parties to arbitartion, the Supreme Court observed that the phraseology of the clause did not indicate that the parties were bound to go for arbitration. "...clause 13 does not bind parties to use arbitration for settlement of the disputes. Use of the words “may be sought”, imply that there is no subsisting agreement between parties that they, or any one of them, would have to seek settlement of dispute(s) through arbitration. It is just an enabling clause whereunder, if parties agree, they could resolve their dispute(s) through arbitration. In our view, the phraseology of clause 13 is not indicative of a binding agreement that any of the parties on its own could seek redressal of inter se dispute(s) through arbitration," the Court observed. The bench comprising Justices PS Narasimha and Manoj Misra heard the case where the dispute occurred due to a different interpretation of clause 13 in a contract entered into between the parties. Clause 13 provides an arbitration to be a permissive (or optional) mode of dispute settlement rather than a mandatory one, as it says that the parties 'may' opt for arbitration. Disputes Arising Out Of 'Work Contract' With MP Govt Instrumentality Shall Be Referred To MP Arbitration Tribunal : Supreme Court Cause Title: UMRI POOPH PRATAPPUR (UPP) TOLLWAYS PVT. LTD. VERSUS M.P. ROAD DEVELOPMENT CORPORATION AND ANOTHER Citation : 2025 LiveLaw (SC) 752 The Supreme Court today (July 30) reiterated that the disputes related to 'work contract' must be adjudicated exclusively by the Madhya Pradesh Arbitration Tribunal under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (“1983 Act”). Holding thus, the bench comprising Justices JB Pardiwala and R Mahadevan refused to interfere with the Madhya Pradesh High Court's ruling, which set aside the arbitration proceedings initiated by the Appellant, for settlement of the dispute arising out of the 'Work Contract' signed with the Respondent-MPRDC (a state-owned venture). “we find no infirmity in the reasoning or conclusion of the High Court in quashing the private arbitration proceedings and reaffirming the exclusive jurisdiction of the Madhya Pradesh Arbitration Tribunal established under the 1983 Act to adjudicate disputes arising from works contract involving the State or its instrumentalities.”, the court said. The Court clarified that regardless of the presence of the arbitration clause in the 'work contract', disputes arising out of the work contract shall be referred to the Madhya Pradesh Arbitration Tribunal, because of the overriding nature of the 1983 Act. Mere Pendency Of Criminal Cases Alleging Simple Fraud No Bar To Arbitration : Supreme Court Cause Title: THE MANAGING DIRECTOR BIHAR STATE FOOD AND CIVIL SUPPLY CORPORATION LIMITED & ANR. VERSUS SANJAY KUMAR Citation : 2025 LiveLaw (SC) 778 The Supreme Court has allowed the arbitration proceedings to continue in multi-crore Bihar Public Distribution System (“PDS”) Scam, stating that mere pendency of the criminal proceedings in offences involving simple fraud like cheating, criminal breach of trust doesn't bar a dispute from being referred to an arbitration. “The mere fact that criminal proceedings can or have been instituted in respect of the same incident(s) would not per se lead to the conclusion that the dispute which is otherwise arbitrable ceases to be so.”, the court said. The bench comprising Justices PS Narasimha and Manoj Misra dismissed the batch of petitions filed by Bihar State Food and Supply Corporation (“BSFSC”) against the High Court's decision to allow application for appointment of an arbitrator in 1,500-crore Bihar Public Distribution System (PDS) scam. Relying on a seven-judge bench decision in In Re: Interplay, the judgment authored by Justice Narasimha approved the arbitration, noting that since there existed a valid arbitration agreement, it would be impermissible at the referral stage to dive deeper into the dispute; instead referred the same to the arbitration for its adjudication. Place Of Exclusive Jurisdiction Deemed As 'Seat' Of Arbitration : Supreme Court Cause Title: M/S ACTIVITAS MANAGEMENT ADVISOR PRIVATE LIMITED VERSUS MIND PLUS HEALTHCARE PRIVATE LIMITED Citation : 2025 LiveLaw (SC) 795 The Supreme Court observed that in the absence of a seat or venue of arbitration in the arbitration agreement, the place where the exclusive jurisdiction has...

Arbitration Quarterly Digest: July-September 2025

Mohd Talha Hasan

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