Termination of Mandate Is Not Termination of Arbitration: Bombay High Court Revives Reference and Appoints Substitute Arbitrator

“Same Rules Apply to Substitute Arbitrator — Rigours of Section 11 and Limitation Cannot Be Avoided”, In a significant and nuanced decision on substitution of arbitrators and limitation under the Arbitration and Conciliation Act, 1996, the Bombay High Court held that termination of an arbitrator’s mandate does not result in termination of arbitral proceedings, and that appointment of a substitute arbitrator under Section 15(2) must comply with the same rules — including limitation — applicable to the original appointment.

Justice Sandeep V. Marne, while condoning delay and appointing a substitute sole arbitrator, underscored that “the arbitration agreement between the parties would not come to an end with the expiry of the Learned Sole Arbitrator – it would subsist.”

Withdrawal of Arbitrator and Institutional Inaction

The dispute arose out of Dealership Agreements dated 26 December 2012 and 9 July 2013 between Tata Motors and Ghosh Brothers Automobiles. After disputes over outstanding dues exceeding Rs. 20 crores, arbitration was invoked in February 2016 under Clause 43.2(b), which provided for arbitration under the Rules of the Bombay Chamber of Commerce & Industry (BCCI).

BCCI appointed Justice S.D. Pandit (Retd.) as Sole Arbitrator. Proceedings continued until April 2020. The mandate had earlier been extended by the Court under Section 29A. However, on 18 March 2021, the learned Arbitrator withdrew from the reference due to ill health.

The applicants approached BCCI twice for substitution. No appointment followed. Thereafter, applications were filed under Sections 29A, 14 and 15. By order dated 2 July 2025, the Court granted liberty to pursue remedy under Section 11, observing that the arbitration agreement subsisted.

The respondents resisted the Section 11 application on limitation and maintainability.

“Mere Termination of Mandate Does Not Automatically Result in Termination of Arbitral Proceedings”

The Court undertook a detailed analysis of Sections 14, 15 and 32 of the Arbitration Act and drew a clear distinction between termination of mandate and termination of proceedings.

Relying on the Supreme Court’s decision in Dani Wooltex Corporation, the Court reiterated:

“On a conjoint reading of Sections 14 and 15, it is apparent that an arbitrator always has the option to withdraw… But in such a case, his mandate will be terminated, not the arbitral proceedings.”

Justice Marne held that since no final award or order under Section 32 had been passed, the arbitral reference continued despite withdrawal of the arbitrator. What occurred was merely “a vacancy in the chair of the arbitrator,” which must be filled under Section 15(2).

“Article 137 Applies Even to Appointment of Substitute Arbitrator”

A central issue was whether limitation applies to an application for appointment of a substitute arbitrator.

The applicants argued that no limitation applied, as the reference was alive and substitution was merely administrative. The Court rejected this contention.

Referring to the Supreme Court’s recent ruling in M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd., which held that Article 137 of the Limitation Act applies to Section 11(6) petitions, the Court held that the same limitation regime applies to substitute arbitrators.

Justice Marne observed:

“Since same rules applicable to appointment of earlier arbitrator also apply for appointment of substitute arbitrator under Section 15(2), the period of limitation for appointment of arbitrator under Section 11(6) would equally apply when a composite application is presented for appointment of substitute arbitrator.”

The Court reasoned that the phrase “shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced” necessarily imports the rigours of Section 11 — including limitation

COVID Exclusion, Section 14 Protection and Condonation Under Section 5

The Court calculated limitation from 31 March 2021, when substitution was first sought from BCCI. Benefit of exclusion pursuant to the Supreme Court’s suo motu orders in Re: Cognizance for Extension of Limitation was granted until 28 February 2022.

Further, the period during which the applicants bona fide prosecuted remedies under Sections 29A, 14 and 15 was excluded under Section 14 of the Limitation Act.

Even after such exclusions, delay of 76 and 91 days remained.

Invoking the Supreme Court’s decision in HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad, the Court held that:

“the benefit under Section 5 of the Limitation Act is available in respect of the applications filed for appointment of arbitrator under Section 11(6)” and that “the requirement of filing application under Section 5… is not a mandatory pre-requisite.”

Considering the peculiar facts — withdrawal due to ill health, institutional inaction, and continuous efforts by the applicants — the delay was condoned in the interest of substantial justice.

Institutional Arbitration and Failure of Agreed Procedure

The arbitration clause required adherence to BCCI Rules. The applicants had twice approached BCCI for substitution. No appointment was made.

The Court noted that failure of the agreed institutional mechanism justified recourse to Section 11. It emphasized that technical objections should not defeat adjudication on merits, especially when the arbitration agreement subsists and the reference remains alive.

The Court allowed both applications and passed the following operative directions:

Delay in filing was condoned.

Mr. Justice R. Y. Ganoo (Former Judge, Bombay High Court) was appointed as substitute Sole Arbitrator to adjudicate disputes arising from the Dealership Agreements dated 26 December 2012 and 9 July 2013.

Directions were issued for statutory disclosure under Section 11(8) read with Section 12(1), appearance before the Arbitrator, and payment of fees in accordance with the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018.

All rights and contentions were kept open.

This judgment clarifies three important principles in arbitration law.

First, withdrawal of an arbitrator terminates only the mandate, not the arbitral proceedings, unless Section 32 conditions are met.

Second, Article 137 limitation applies equally to appointment of substitute arbitrators under Section 15(2), as the “same rules” govern both original and substitute appointments.

Third, courts retain discretion under Section 5 of the Limitation Act to condone delay in Section 11 petitions, even without a formal application, particularly where substantial justice demands continuation of the arbitral reference.

The decision reinforces a pro-arbitration approach — ensuring that procedural technicalities do not extinguish a live reference merely because of vacancy in the tribunal.

Date of Decision: 12 February 2026