Bombay High Court directs appointment of substitute arbitrator, condones delay to revive live arbitral reference

A bench of Justice Sandeep V. Marne heard applications under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator to adjudicate disputes under dealership agreements between the applicants and the respondents. The petitions challenged the respondents' refusal to consent to substitution after the previously appointed arbitrator withdrew and raised questions on limitation and maintainability.

The Court allowed the applications, held that the arbitral reference continued despite termination of the previous arbitrator’s mandate and directed appointment of a substitute arbitrator to enable adjudication on merits. The Court emphasised that termination of an arbitrator’s mandate did not automatically terminate the arbitral proceedings and that the rules for appointment of a substitute arbitrator were the same as those for the original appointment. The Court, in its reasoning, observed: "The other way of ascertaining the relevant point in time when the limitation period for making a Section 11(6) application would begin is by making use of the Hohfeld’s analysis of jural relations. It is a settled position of law that the limitation period under Article 137 of the Limitation Act, 1963 will commence only after the right to apply has accrued in favour of the applicant... Thus, the limitation period for filing a petition under Section 11(6) of the Act, 1996 can only commence once a valid notice invoking arbitration has been sent by the applicant to the other party, and there has been a failure or refusal on part of that other party in complying with the requirements mentioned in such notice." The Court also noted that "the arbitration agreement between the parties would not come to an end with the expiry of the Learned Sole Arbitrator – it would subsist."

Background
The dispute arose from dealership agreements dated 26 December 2012 and 9 July 2013, under which the applicants alleged outstanding dues of over Rs. 20.8 crore against the respondents. The Bombay Chamber of Commerce & Industry (BCCI) had earlier appointed a sole arbitrator who conducted proceedings until he withdrew on 18 March 2021. The applicants sought substitution from BCCI on 31 March 2021 and again in June 2023; BCCI did not appoint a replacement and respondents refused consent. The applicants pursued remedies under Sections 14, 15 and 29A and were granted liberty by this Court on 2 July 2025 to seek relief under Section 11. Respondents contended the Section 11 petitions were time-barred and challenged maintainability on the ground that the applicant was not a signatory; the Court rejected the maintainability objection, accepting the applicants’ succession by a court‑approved scheme of arrangement.

Relying on Supreme Court precedents (including the Apex Court’s ruling that Article 137 of the Limitation Act applied to Section 11 petitions and that limitation began only after a valid notice invoking arbitration), the Court held that the applicants’ Section 11 petitions were governed by Article 137 but that the short delays (about 76 and 91 days after accounting for COVID‑period exclusions and prosecution of other proceedings) were condonable under established principles. The Court therefore appointed Mr. Justice R. Y. Ganoo (Retd.) as substitute sole arbitrator, directed exchange of statutory disclosures and fixed procedural steps: the arbitrator was to send the statement of disclosure under Section 11(8) read with Section 12(1) within two weeks, parties were to provide contact particulars, and the tribunal would fix the schedule for pleadings, hearings and evidence. Fees were ordered to follow the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018, with costs borne equally subject to the final award. All substantive rights and contentions remained open for adjudication by the arbitral tribunal.

Case Details:
Case No.: Commercial Arbitration Application (L) No.26333 of 2025 and Commercial Arbitration Application (L) No.25611 of 2025
Case Title: Tata Motors Passenger Vehicles Ltd. & Anr. v/s Ghosh Brothers Automobiles & Ors.
Appearances:
For the Petitioner(s): Mr. Vaibhav Charalwar (Advocate) with Ms. Tikshta Modi and Ms. Magdhi Pawar i/b M/s. Akhil Modi & Associates (for CARAP(L) 26333/2025); Ms. Stephanie Pereira (Advocate) with Ms. Tikshta Modi i/b M/s. Akhil Modi & Associates (for CARAP(L) 25611/2025)
For the Respondent(s): Mr. Prashant Chande (Advocate) with Ms. Sejal Shah i/b Daru Shah (for Respondent Nos.1 to 3 in CARAP(L) 26333/2025); Ms. Sejal Shah i/b Daru Shah (for Respondent Nos.1 to 3 in CARAP(L) 25611/2025)