1

$-

* IN THE HIGH COURT OF DELHI AT NEW DELHI

BEFORE

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

+ O.M.P. (T) (COMM.) 122/2022

INTERCODE SOLUTIONS PRIVATE LIMITED

HAVING ITS REGISTERED OFFICE AT

112/115, RAVI INDUSTRIAL ESTATE,

MAHAKALI CAVES ROAD , ANDHERI (E),

MUMBAI- 400 093, MAHARASHTRA

MR. BHAVIN C. KOTHARI

DIRECTOR OF INTERCODE SOLUTIONS PRIVATE LIMITED

S/O CHANDRA KANT N KOTHARI

R/O 101, LANDMARK, CARMICHAEL ROAD,

MUMBAI - 400026, MAHARASHTRA …..PETITIONERS

(Through: Mr. Rajshekhar Rao, Sr. Advocate with Mr. Yashvardhan, Ms.

Smita, Ms. Kritika Nagpal, Mr. Devesh Mohan, Mr. Gyanendra Shukla and

Mr. Pranav Das, Advocates.)

VERSUS

ARMOR INDIA CODING AND

IMAGING SUPPLIES PRIVATE LIMITED

HAVING ITS REGISTERED OFFICE AT

PLOT NO. 34A, B&C KIADB INDUSTRIAL AREA,

PHASE-1, SY. NO. 54, BIDADI

RAMANAGARA TALUK, BANGALORE RURAL

KARNATAKA- 562109

....RESPONDENT

(Through: Mr. Ashim Sood, Mr. Ekansh Gupta, Mr. Ankur Singhal and

2

Ms. Isha Khurana, Mr. Kartikeya Jaiswal and Mr. Prateek Singh Kundu,

Advocates..)

------------------------------------------------------------------------------------

% Reserved on: 16.12.2025

Pronounced on: 07.01.2026

-----------------------------------------------------------------------------------

JUDGMENT

“Everything is theoretically impossible, until it is done”, is a

remarkable statement by Robert A. Heinlein, an author of American science

fiction. It holds some relevance in the present case, as it involves an order of

termination of the arbitral proceedings on the ground that the continuation of

the proceedings has become „impossible‟.

2. The present petition is filed under Sections 14 and 15 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as the „Act‟)

assailing the order dated 02.09.2022 passed by the Arbitral Tribunal,

whereby, the Tribunal terminated the arbitral proceedings invoking Section

32(2)(c) of the Act. The impugned order has been challenged on various

grounds, inter alia, that the statutory requirements of Section 32(2)(c) of the

Act are not satisfied.

FACTUAL MATRIX

3. The dispute arises from a series of commercial arrangements between

the parties culminating in a Business Transfer Agreement (hereinafter

referred to as „BTA‟) executed on 03.05.2019, under which the respondent

agreed to acquire the petitioner‟s thermal transfer ribbon business for a total

consideration of INR 35 crores. The transaction was preceded by a Secrecy

3

Agreement dated 21.11.2017 and a Letter of Intent issued on 11.12.2018 by

Armor SAS, the parent company of the respondent.

4. Following the execution of the BTA and a mutually agreed extension

of the closing date, the respondent, on 30.08.2019, paid INR 29.5 crores and

took over the entire business undertaking, including all assets, records, and

employees, in terms of Schedule H of the BTA. The petitioners assert that

they fulfilled all pre-closing obligations as certified by the Closing

Certificate under Schedule G of the BTA. Despite assuming full operational

control of the business from the closing date, the respondent allegedly

withheld the balance INR 5.5 crores.

5. Conversely, after the takeover, as per the facts stated by the

respondent, PwC was engaged by the respondent to conduct a forensic audit

of the transaction between the parties. Through correspondence exchanged

between October and December 2019, PwC levelled allegations of fraud,

misrepresentation, and breach of the BTA against the petitioner.

6. In the meantime, the petitioners sought interim protection by filing a

petition under Section 9 of the Act, resulting in directions for disclosure of

assets. On 09.03.2020, the petitioners formally invoked arbitration under

Clause 9.6 of the BTA by filing an application to DIAC, but the respondent

did not respond, prompting the petitioners to move a petition under Section

11(6) of the Act.

7. During the pendency of the Section 11 petition, the respondent, in its

response to the petitioner's request for arbitration dated 09.03.2020 before

DIAC, nominated its nominee arbitrator on 19.01.2021. Thereafter, a three-

member Tribunal was constituted under the DIAC Rules, 2018.

4

8. Once the arbitral proceedings commenced, the respondent sought the

joinder of several non-signatory parties under Rule 28.1 of the DIAC Rules,

which the Tribunal rejected on 29.04.2021 while clarifying that the

respondent was free to pursue remedies before a competent forum. The

petitioners filed their Statement of Claim on 09.06.2021.

9. Shortly thereafter, and before filing its defence in arbitration, the

respondent instituted CS(COMM) 376/2021 on 13.08.2021 before this Court

against the petitioners and multiple non-signatories on the same underlying

cause of action forming the basis of its proposed counterclaims. The

following day, the respondent filed its Statement of Defence and

Counterclaims before the Tribunal, allegedly without disclosing the

pendency of the newly instituted civil suit.

10. Subsequent thereto, the petitioners challenged the maintainability of

the counterclaims through an application under Section 16 of the Act, which

the Tribunal dismissed on 12.02.2022. The parties then filed cross-

applications under Section 32 of the Act. The petitioners sought termination

confined to the counterclaims, while the respondent sought termination of

the entire arbitral proceedings on the ground that the petitioners, by

participating in the civil suit proceedings without invoking Section 8 of the

Act, had elected the civil forum, thereby rendering continuation of

arbitration impossible. After considering the rival submissions, the Tribunal,

vide order dated 02.09.2022, allowed the respondent‟s application under

Section 32(2)(c) of the Act and terminated the proceedings in their entirety,

primarily citing multiplicity arising from the civil suit.

5

11. The petitioners, assailing the aforesaid order, filed the present petition

seeking setting aside of the impugned order and restoration of the arbitral

proceedings for adjudication of their claims under the BTA.

SUBMISSIONS

12. Mr. Rajshekhar Rao, learned counsel for the petitioners, has made the

following submissions: -

i) The present petition under Section 14 of the Act is maintainable in

light of precedents, inter alia, Lalitkumar V. Sanghavi (Dead)

through LRs. v. Dharamdas V. Sanghavi & Ors.

1

P, and CL

Suncon v. National Highways Authority of India

2

, which

recognize that termination of mandate under Section 32(2)(c) of

the Act may be examined under Section 14 of the Act.

ii) The impugned order is contrary to the principle of party autonomy

and the statutory framework of the Act, as the Tribunal, despite

acknowledging a valid arbitration agreement, directed the

petitioners to seek a remedy before a Civil Court, contrary to dicta

of the Supreme Court in Bharat Aluminium Co. v. Kaiser

Aluminium Technical Services Inc.

3

, Centrotrade Minerals &

Metal Inc. v. Hindustan Copper Ltd.,

4

and ONGC Ltd. v. Afcons

Gunanusa JV

5

1

(2014) 7 SCC 255

2

2021 SCC OnLine Del 313

3

(2016) 4 SCC 126

4

(2017) 2 SCC 228,

5

2022 SCC OnLine SC 1122

6

iii) The Arbitral Tribunal failed to appreciate that claims and

counterclaims are distinct proceedings and erred in holding that an

application under Section 8 of the Act before the Civil Court was

necessary, despite arbitration already having been invoked.

iv) The conduct of the respondent constitutes forum shopping and

abuse of process. Such conduct is impermissible in view of the

decision in Avitel Post Studioz Ltd. v. HSBC PI Holdings

(Mauritius) Ltd.

6

, and A. Ayyasamy v. A. Paramasivam.

7

v) The Tribunal erred in invoking the absence of non-signatory

parties as a ground for termination, particularly when the joinder

request had already been rejected by Procedural Order dated

29.04.2021 under Rule 28.1 of the DIAC Rules, which had

attained finality.

13. Per contra, Mr. Ashim Sood, learned counsel for the respondent,

supporting the impugned order, made the following submissions: -

i) The petitioners, by their consistent conduct, have waived their

right to invoke arbitration. It is a trite law that where a party

initiates or participates in civil proceedings without insisting on

arbitration, the arbitration agreement becomes inoperative as a

result of election.

ii) A party cannot selectively rely upon the arbitration clause for

certain claims while simultaneously pursuing civil remedies for

6

(2021) 4 SCC 713

7

(2016) 10 SCC 386

7

others. The principles of election and approbation reprobation

preclude a party from taking inconsistent stands and prevent a

party from approbating the contract for benefit while repudiating it

when convenient.

iii) A party seeking to enforce an arbitration clause must demonstrate

an unequivocal intention to be bound by arbitration. Any

participation in a civil suit without such assertion amounts to

abandonment of the right to arbitrate. The petitioner, knowingly,

did not file any application under Section 8 of the Act before the

Civil Court, and this fact has been duly recorded and relied upon

by the Tribunal.

iv) Once parties have engaged in parallel litigation or invoked

multiple Court proceedings, the arbitration clause stands rendered

inoperative, and compelling arbitration thereafter defeats the

legislative purpose of efficiency and finality.

v) The respondent relied upon equitable doctrines, including waiver,

estoppel, election, and the principle that no party may "blow hot

and cold" or "sail in two boats at the same time." Reference was

made to the decision of the Supreme Court in Food Corporation

of India v. Yadav Engineer & Contractor,

8

to submit that once a

party elects a forum and derives advantage from it, it cannot

subsequently rely upon the arbitration clause.

8

(1982) 2 SCC 499

8

vi) The termination of arbitral proceedings under Section 32(2)(c) of

the Act was justified as the petitioners, themselves, rendered

continuation of the proceedings impossible by their contradictory

conduct. A party guilty of such conduct cannot seek revival of the

arbitral mandate under Section 14 of the Act.

vii) Reliance is placed on the decisions of the Supreme Court in

Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Thomas

Cook (India) Ltd. v. Beach Ark Hotels (P) Ltd, to assert that

neither bifurcation of causes of action nor splitting of parties is

permissible under the scheme of the Act. Reliance is further placed

on Shri Chand Construction v. Tata Capital

3

, Tata Capital v.

Shri Chand Construction

4

, Onyx Musicabsolute v. Yash Raj

Films

5

, Rachappa Gurudappa Bijapur v. Gurudiddappa

6

, Food

Corporation of India v. Yadav Engineer & Contractor

7

,

Ramasamy Athappan v. ICC

8

and Union of India v. N.

Murugesan

9

.

14. I have heard learned counsel appearing for the parties and have

perused the record.

15. At this stage, it is apposite to note that after hearing the parties at

length, judgment in the matter was reserved on 13.11.2025. However, in the

interregnum, the Supreme Court authoritatively settled the legal position

concerning the remedy available against an order of termination under

Section 32 of the Act, holding in Harshbir Singh Pannu and Anr. v.

9

Jaswinder Singh

9

that the appropriate remedy is to approach a tribunal in a

review and then the Courts under Section 14 of the Act. In view of the said

pronouncement, the parties were re-notified and afforded an opportunity to

address further submissions on the issue, including as to whether the

petitioners intended to seek recourse by way of review. However, Mr. Rao,

placing reliance on the principles articulated by the Supreme Court in

paragraph no. 415 of the aforenoted decision, contended that the Arbitral

Tribunal has brought the proceedings to an end by adjudicating the matter

on merits, and consequently, the impugned action cannot be characterised as

falling within the limited ambit of a procedural correction or review. This

position was fairly conceded by Mr. Sood. In view thereof, the matter was

again reserved for consideration.

ANALYSIS

16. At the threshold, it is pertinent to note the scope and ambit of the

jurisdiction of the Court under Section 14 of the Act. Section 14(1)(a) of the

Act envisages termination of the mandate of the Arbitrator when the

Arbitrator either becomes de jure or de facto incapable of functioning as an

Arbitrator.

17. In the context of termination of proceedings, the Supreme Court in

Harshbir Singh Pannu has now clarified that Section 14(2) of the Act, and

in particular the expression used therein “the Court to decide on the

termination of the mandate,” must receive a purposive and expansive

construction so as to encompass a challenge to an order simpliciter

terminating arbitral proceedings. The Supreme Court reasoned that

termination of arbitral proceedings, in substance and effect, results in the

9

2025 INSC 1400

10

arbitrator being discharged of the obligation to conduct and administer the

arbitration. In view of this consequence, and until the legislative lacuna in

the Act is addressed, the Court has held that a party aggrieved by an order

terminating arbitral proceedings must be afforded a remedy by permitting a

challenge to such an order before the Court under Section 14(2) of the Act.

18. Herein, the fundamental controversy pertains to the invocation of the

provision under Section 32(2)(c) of the Act. The petitioners assert that the

preconditions of Section 32(2)(c) of the Act were not satisfied and that the

Tribunal‟s decision amounted to a misapplication of law resulting in

frustration of party autonomy and arbitral process, whereas, the respondent

avers that the petitioners‟ conduct in pursuing parallel proceedings and

failing to seek recourse under Section 8 of the Act resulted in waiver,

abandonment, and rendering the arbitration agreement inoperative.

19. Accordingly, the primary question that arises for consideration is

whether the continuation of arbitration was rendered „impossible‟ or

„unnecessary‟ in view of the provisions of Section 32(2)(c) of the Act. The

consequential issue is whether the termination of the arbitral proceeding was

justified and sustainable in the eyes of law?

20. In limine, it is noted that the statutory text and scheme envisaged in

Section 32(2) of the Act, confers upon an arbitral tribunal a narrow, residual

power to terminate proceedings only in instances where (a) a claimant

withdraws his claim, (b) the parties agree to termination, or (c) the tribunal

finds that continuation of the proceedings has for any other reason become

„unnecessary‟ or „impossible‟.

11

21. The Supreme Court in Srei Infrastructure Finance Ltd. v. Tuff

Drilling (P) Ltd.,

10

expounded that Section 32(2)(c) of the Act contemplates

termination of arbitral proceedings only in narrowly circumscribed

contingencies expressly enumerated in said provision, and that the grounds

under Section 32(2)(c) of the Act operate in a domain wholly distinct from

the scheme of Section 25(a) of the Act, which governs termination for

default of the claimant. The Court, in the factual matrix therein, held that the

expressions „unnecessary‟ or „impossible‟ cannot be conflated with or

expanded to include situations of non-prosecution or absence of the

claimant, as such defaults fall squarely within Section 25(a) of the Act.

Accordingly, the Court also held that the scope of Section 32(2)(c) of the

Act is confined to circumstances where the arbitral process cannot proceed

for reasons extraneous to party default, and cannot be invoked as a substitute

for the relevant procedure prescribed under the Act.

22. In an almost similar factual matrix as Srei Infrastructure Finance

Ltd., the Supreme Court in Dani Wooltex Corpn. v. Sheil Properties (P)

Ltd.,

11

held that Section 32(2)(c) of the Act sets out an exhaustive

framework governing the termination of arbitral proceedings, which may

occur only upon the rendering of a final award or in the limited

circumstances expressly enumerated in Section 32(2)(c) of the Act.

Specifically, the Court emphasised that the grounds under Section 32(2)(a)

and (b) are confined to withdrawal by the claimant and consensual

termination by the parties, whereas, clause (c) operates as a residuary

10

(2018) 11 SCC 470

11

(2024) 7 SCC 1

12

provision applicable only when the continuation of the proceedings has, for

reasons independent of party default, become „unnecessary‟ or „impossible.‟

23. More importantly, the Bombay High Court in Maharashtra State

Electricity Board v. Datar Switchgear

12

, recognised that clause (c) to sub-

section 2 of Section 32 of the Act vests a residuary but exceptional power in

an arbitral tribunal to terminate the mandate, where continuation is rendered

infructuous or impossible.

24. Pertinently, it was also observed that a party that has engaged in

contumacious conduct cannot be permitted to derive advantage from such

conduct so as to seek termination of arbitral proceedings. The Court further

noted that it is neither feasible nor advisable to exhaustively enumerate the

circumstances in which an arbitral tribunal may conclude that continuation

of the proceedings has become unnecessary or impossible. Such

determinations, the Court noted, must depend on the facts and equities of

each case, guided by the overarching principle that a party cannot profit

from its own wrongful acts. The relevant extract of the aforenoted decision

reads as under: -

46. Section 32 is entitled “Termination of proceedings” and sub-

section (1) provides that the arbitral proceedings shall be terminated

by the final Arbitral Award or by an order of the Arbitral Tribunal

under sub-section (2). Sub-section (2) of section 32 is important for the

purposes of the present proceedings and provides as follows:

“32(2) The Arbitral Tribunal shall issue an order for the termination of

the arbitral proceedings where-

(a) the claimant withdraws his claim, unless the respondent objects to

the order and the Arbitral Tribunal recognises a legitimate interest on

his part in obtaining a final settlement of the dispute,

12

2002 SCC OnLine Bom 983

13

(b) the parties agree on the termination of the proceedings, or.

(c) the Arbitral Tribunal finds that the continuation of the proceedings

has for any other reason become unnecessary or impossible.”

(emphasis supplied).

47. Sub-section (2), therefore, contemplates three situations where the

Arbitral Tribunal is vested with the power to terminate the arbitral

proceedings, namely, (i) when the claimant withdraws his claim, (ii)

when the parties agree and (iii) when the Tribunal finds that

continuation of the proceedings has for any other reason become

unnecessary or impossible. The mandate of the Arbitral Tribunal

terminates with the termination of the arbitral proceedings. (Sub-

section (3) of section 32). Clause (c) of sub-section (2) of section 32 has

vested a residuary power in the Arbitral Tribunal to terminate the

proceedings where it finds that a continuation thereof has for any other

reason become unnecessary or impossible. The legislature has

advisedly left it to the Tribunal to determine as to when the

continuation of the proceedings has become unnecessary or impossible.

The expression “unnecessary” may for instance involve a situation

where proceedings are rendered infructuous. A situation may have

arisen as a result of which an adjudication into the dispute has become

unnecessary either as a result of the fact that the dispute does not

survive or for any other valid reason. Situations may also arise where a

continuation of proceedings is rendered impossible. Impossibility is not

merely to be viewed from the point of view of a physical impossibility of

an adjudication, but may conceivably encompass a situation where a

party by a consistent course of conduct renders the very continuation of

the arbitral proceedings impossible. Then again a party which has been

guilty of contumacious conduct cannot be heard to seek the benefit of

its conduct to seek termination. It is impossible to catalogue the

circumstances in which the Arbitral Tribunal may hold that it is either

unnecessary or impossible to continue the arbitral proceedings.”

25. Thus, by deploying the words in Section 32(2)(c) of the Act, the

legislature has created a narrowly circumscribed gateway for premature

termination of arbitral proceedings.

26. Elaborating more on the legal position explicated in Datar

Switchgear Ltd, it is apposite to observe that the terms „unnecessary‟ and

„impossible‟ are elastic and they must, in the context that they are used,

resist rigid, one-size-fits-all definitions. Depending on the factual matrix and

14

equities of each case, „unnecessary‟ may encompass instances where the

arbitral process no longer serves any meaningful adjudicatory purpose; but

what is „unnecessary‟ in one dispute may not be so in another. The tribunal

must therefore assess, in light of the circumstances before it, whether further

proceedings would be otiose.

27. Similarly, „impossible‟ should not be confined to a narrow conception

of physical inability alone. It may include circumstances that strike at the

tribunal‟s ability to adjudicate. How and when such circumstances amount

to „impossibility‟ will depend on the particular facts and on reasoned

findings by the tribunal.

28. Moreover, in order to protect the sanctity of the arbitral proceedings,

the power to terminate under Section 32(2)(c) of the Act may ordinarily be

treated as a measure of last resort. Before taking this step, a tribunal may

consider whether reasonably proportionate and practicable alternatives exist.

For example, staying proceedings, proceeding on narrowed issues in stages,

or impleading a necessary party and whether those alternatives can preserve

the tribunal‟s ability to render effective relief.

29. Also, where a party‟s own contumacious or obstructive conduct has

materially contributed to the impediment alleged, the tribunal must take that

conduct into account and be cautious about permitting that party to obtain

advantage from such conduct.

13

Whether such conduct disentitles a party

from seeking termination is a matter to be determined on the facts and the

equities of the case.

30. In short, an order of termination may be appropriate where the record,

taken as a whole, supports a reasoned conclusion that continuation has

15

become either „unnecessary‟ or „impossible‟. But the precise contours of

these conclusions will vary with the facts.

31. It is, therefore, neither feasible nor desirable to attempt an exhaustive

catalogue of circumstances in which Section 32(2)(c) of the Act will apply.

Each application of the provision is fact-driven and must be guided by the

tribunal‟s careful appraisal of the surrounding circumstances, the interests of

justice, and the principle that a party should not profit from its own wrongful

acts.

32. The statutory architecture of the Act, as consistently reiterated by the

Supreme Court, reflects the legislature‟s unwavering commitment to party

autonomy and the principle of minimal judicial intervention. These

foundational pillars are embedded throughout the Act‟s language and

structure. Any interpretation of Section 32(2)(c) of the Act should also

undoubtedly exemplify this commitment and, therefore, restricts the scope

of termination of proceedings in an agreed forum.

33. Turning to the facts of the instant case, it becomes apparent that the

reasons referred to by the Tribunal, particularly those articulated in

paragraph No. 32 of the impugned order and germane to the issues at hand,

may be categorised as follows:

(i) In view of the pending suit, there exists a clear likelihood of

conflicting decisions and a resultant multiplicity of proceedings.

(ii) Such multiplicity of proceedings, coupled with the potential for

inconsistent outcomes, runs contrary to the principles of public policy.

(iii) The continuation of the arbitral proceedings in respect of the

13

Reference to Datar switchgear ltd

16

claims under reference, despite the pendency of the suit, does not

offer an efficacious or workable remedy.

(iv) It is, therefore, legally impossible to allow the arbitration to

continue in these circumstances

34. For the sake of clarity, paragraph no.32 of the award is extracted as

under: -

32. As discussed hereinabove, the continuation of the present arbitration

proceeding, in the face of the suit, has resulted in multiplicity of proceedings

with the likelihood of conflicting decisions in contravention of the rule of

public policy. The termination of the proceedings qua the claims in the

reference, in the face of the suit, does not remedy the situation. lt is

therefore, legally impermissible to continue arbitration proceedings in the

singular facts and circumstances. In other words, continuation of the instant

arbitration proceeding has become impossible, warranting the invocation of

Section 32(2)(c) of the Act. The present arbitration proceeding is therefore

terminated as a whole under Section 32(2)(c) of the Act. The application

under Section 32(2}(c) filed by the Petitioner is rejected and that filed by the

Respondent is allowed”

35. Insofar as the discussion contained in paragraphs no. 31 and 33 of the

impugned order is concerned, it pertains to distinct aspects arising under

Sections 32, 25A, and 38(2) of Act.

36. A perusal of the reasons underlying the termination of the mandate

indicates that while the Tribunal‟s exposition of the legal position in the

preceding paragraphs is, in principle, unimpeachable, its application of the

law to the facts of the present case is wholly impermissible. At its

foundation, the principal basis for the invocation of the power of termination

is, as per the Tribunal, the impossibility of the arbitral proceeding in view of

the legal bar attracted due to the pendency of the civil suit.

37. At this stage, it is pertinent to compare the prayers made in the

statement of claim and the suit filed in the Court, so as to examine the aspect

17

of multiplicity of proceedings, which forms the basis of the conclusion

reached by the Tribunal. The comparison is depicted in the table below: -

RELIEF SOUGHT IN MATTER OF

ARBITRATION DAC/2764D/03-2020

RELIEF SOUGHT IN CS(COMM) NO.

376/2021

 Pass an award in favour of the

Claimant No. 1 directing the

Respondent to pay a sum of Rs.

6,81,04,278/- (Rupees Six Crores

Eighty-One Lakhs Four Thousand

Two Hundred Seventy-Eight Only)

towards the balance consideration

under the Business Transfer

Agreement dated 03.05.2019;

 Pass an award in favour of the

Claimant No.1 directing the

Respondent to pay a sum of Rs. Rs.

2,04,11,887/- (Rupees Two Crore

Four Lakh Eleven Thousand Eight

Hundred Eighty-Seven only)

towards the amounts paid to the

foreign creditors appearing in

Schedule E of the Business Transfer

Agreement dated 03.05.2019 on

behalf of the Respondent; 253

 Pass an award in favour of the

Claimant No.1 directing the

Respondent to pay a sum of Rs.

1,04,35,468/- (Rupees One Crore

Four Lakhs Thirty-Five Thousand

Four Hundred Sixty-Eight only)

towards the amounts to be paid to

the foreign creditors appearing in

Schedule E of the Business Transfer

Agreement dated 03.05.2019 on

behalf of the Respondent;

 In the alternative to Prayer (c)

above, pass an award in favour of

the Claimant No.1 directing the

Respondent to pay a sum of Rs.

 Order and decree the Defendants

to, jointly and severally, pay to the

Plaintiffs an amount of INR

19,02,91 ,000 (Rupees Nineteen

Crores Two Lakh Ninety-One

Thousand) or such other amounts

as may be deemed appropriate by

this Hon'ble Court, together with

interest, as compensation for

damages and losses suffered by the

Plaintiffs;

 Direct Defendant No. 6 to refund

the amount of INR 2, 77,57,825

(Rupees Two Crore Seventy-Seven

Lakh Fifty-Seven Thousand Eight

Hundred and Twenty -Five)

received by it from various

customers of the Undertaking as on

July 20, 2021, and such further or

other amounts as may be collected

by it thereafter;

 Direct the Defendants to deliver to

Plaintiff No. 1 any and all

confidential and other commercial

information relating to the

Undertaking that is in their

possession, including those parts of

the parts of the Undertaking not

transferred by Defendant No. 6 to

Plaintiff No. 1;

 Award costs of the proceedings in

favour of the Plaintiffs; and

Pass any further or other order(s)/

directions as this Hon'ble Court may deem

18

1,04,35,468/- (Rupees One Crore

Four Lakhs Thirty-Five Thousand

Four Hundred Sixty-Eight only)

directly to the foreign creditors;

 Pass an award in favour of the

Claimant No.1 directing the

Respondent to pay to a sum of USD

30,000 towards cancellation of

Purchase Order no. DLS

2018050402 dated 04 May 2018 in

terms of Clause 3.1.2 of the BTA in

the designated bank account of the

Claimant No.1 i.e.

Bank Name Kotak Mahindra Bank

Account CC

Type

Address Mira Bhayander Branch

Account 3911186009

Number

IFSC Code KKBK0000649

 Pass an award in favour of the

Claimant No.1 directing the

Respondent to pay pendente lite

and future interest @ 18% p.a. on

the amounts claimed under Claims

No. 1-5 above, till the date of actual

realization;

 Pass an award in favour of the

Claimant No.1 directing the

Respondent to pay the cost of the

present arbitration proceedings;

and

Pass an award in favour of the Claimants

and against the Respondent for such other

or further reliefs or amount(s) as this

Hon'ble Tribunal may deem fit and proper

in the facts and circumstances of this case.

fit and proper in the facts and

circumstances of the case

19

38. The above comparison would indicate that there may indeed be

certain overlapping issues between the arbitration proceedings and the civil

suit. However, the Court is of the opinion that the mere existence of such

overlap cannot, by itself, justify the Tribunal terminating the proceedings

midway under Section 32(2)(c) of the Act, on the apprehension that

conflicting decisions may arise.

39. At this stage, it is pertinent to extract the discussion of the Tribunal

while terminating the proceedings. The said extract is reproduced

hereinunder: -

18. As the pleadings in the reference and the suit demonstrate, the

Claimants‟ defence in the suit is their claims in the reference and the

Respondent‟s claims in the suit are premised on its defence to the

Claimants‟ claims in the present proceedings. To reiterate, the

Tribunal and the Hon‟ble High Court would have to examine the same

facts and issues. However, the adjudication in the suit would be more

comprehensive, having regard to the involvement of additional parties

and the cause of action pertaining to them. As indicated hereinabove,

the Claimants in their written statement have adequately elaborated the

facts on which their claims in the reference are founded and have also

set out their claims in details. The necessary foundational facts to

pursue their claims in the suit have thus been furnished in their written

statement. As such, the Claimants would not be rendered remediless, if

the present proceedings are terminated as a whole, and they would be

in a position to raise counterclaims in the suitor file a cross suit.

Indeed, it has not been argued on behalf of the Claimants that their

remedies in the suit are barred by limitation, their only cavil being of

delay in adjudication and denial of their right to pursue the present

proceedings in terms of the BTA.

19. The scope and purport of Section 8 of the Act prior to its

amendment vide Arbitration and Conciliation (Amdt.) Act 2015 came to

be examined by the Hon‟ble Apex Court in Sukanya Holdings (P) Ltd.

(Supra). The appellant therein had filed an application under Section 8

of the Act in a suit filed by the Respondent No.1, to refer the parties to

arbitration. The application was resisted by the Respondent No.1

contending that the subject matter of the suit was not between the

contracting parties and the reliefs claimed were not only against the

20

contracting parties but also against other parties/defendants. The

jurisdictional High Court before which the application had been filed,

rejected the same. The Hon‟ble Apex Court observed that there was no

provision that when the subject matter of the suit includes subject

matter of the arbitration agreement as well as other disputes, the

matter is required to be referred to arbitration. Further, there was no

provision as well for splitting the cause of action or parties and

referring the subject matter of the suit to arbitration. Having regard to

the text of Section 8 as it stood then, it was held that the matter in the

suit ought to be one which comes within the ambit of the arbitration

agreement and which the parties have agreed to refer to arbitration. It

was ruled consequently that, where a suit is as to a matter which lies

outside the arbitration agreement and is also1064between some of the

parties who are not parties to the arbitration agreement, Section 8

would have no application. With reference to the poser whether a

dispute can be partly referred to arbitration, their Lordships held the

view that no interpretation of Section 8 is possible, permitting

bifurcation of the subject matter or the cause of action or the parties.

20. In Emaar MGF Land Limited (Supra), the Hon‟ble Apex Court in

the context of the amended language of Section 8, consequent upon the

2015amendment of the Act, held that the same limits the intervention by

the judicial authority to the scrutiny of only one aspect i.e the prima

facie existence of a valid arbitration agreement. It was held that the

words „notwithstanding any judgement, decree or order of the Supreme

Court or any court‟ added by the amendment were to give effect to the

legislative intendment of minimizing the intervention of the judicial

authority in the context of an arbitration agreement, registering a

departure from the determinations made inter-alia in Sukanya

Holdings(P) Ltd. (Supra).

21. Having regard to the imputations made in the suit and reiterated by

the Respondent in its statement of defence in the reference, about the

involvement of the Claimants and the other Defendants in the alleged

conspiracy and their liability for the fraud and the deceit said to have

been perpetrated by them, the Tribunal would be rendered unable to

adjudicate1065thereon in absence of the additional parties. The

adjudication in the reference in this context, would result in bifurcation

of the parties and the cause of action, which does not meet judicial

approval. On the other hand, these imputations having been pleaded,

are required to be adjudicated comprehensively in presence of all the

Defendants, in the suit.

22. To restate, adjudication of the claims in the reference, would

involve examination of the statement of defence and likewise,

adjudication of the claims in the suit would warrant assessment of the

defence of the Claimants, resulting in mutual evaluation of common

facts, leading to multiplicity of the proceedings with the possibility of

21

conflicting decisions. The cause of action for the suit though different

from that of the claims in the reference to begin with, would essentially

get interknit at the time of adjudication, as common facts and issues

would be involved. There would be bifurcation of parties and cause of

action in course of adjudication in the reference in absence of the

additional parties and to that extent, the adjudication in the reference

would be incomplete, being limited to the parties and the cause of

action before the Tribunal. In this extraordinary fact situation, the

arbitration agreement has to yield to the consideration of public policy,

as the continuation of the reference in the attendant facts and

circumstances would result in multiplicity of the proceedings and

likelihood of conflicting decisions.

23. In Aloys Wobben (Supra), Prem Kalia and Daryanani (Supra),

Mangilal Rungta (Supra), Kirtika Mukesh Bura (Supra), Vishnu B.

Mayekar (Supra)and Debashis Singha Roy (Supra), it has been

consistently underlined that the rule of public policy and justice

warrants avoidance of multiplicity of judicial proceedings requiring the

Court to decide again in respect of the same subject matter resulting in

conflicting decisions on the same point.

24. The Hon‟ble Apex Court in Vidya Drolia (Supra), propounded that

an arbitrator, like the Court is bound to resolve and decide disputes in

accordance with the public policy of the law. This decision is to drive

home the point, that this Tribunal ought to avoid multiplicity of

proceedings, which is opposed to the rule of public policy.

25. In re the contention of the Claimants, that as in terms of Clause 9.3

of the BTA, the Claimants are liable to indemnify the Respondent, for

the losses suffered by it due to their (Claimants) fraud, willful

misconduct and gross negligence, the Respondent ought to have acted

as per the BTA, if it had any grievance in that regard instead of

instituting the suit, suffice it to state that Clause 9.3.2 of the BTA limits

such claims resulting directly from the fraud, willful misconduct or

gross negligence by the Claimant No.1 and not by the additional

parties in the suit as alleged. The indemnity clause of the BTA thus does

not include third parties who are not parties to the BTA but are

allegedly active participants to the fraud and deceit. The1067claims in

the suit against the additional parties, imputing fraud and deceit by

them therefore, do not come within the purview of the BTA. The suit, in

this factual premise, cannot be faulted to have been instituted in breach

of the BTA. The plea of the Claimants to the contrary, is rejected.

26. The fact that the Respondent had along with another, instituted the

suit for realizing its counter claims in the reference, before filing its

counterclaim in the present proceedings, per se does not merit an

inference that it had waived its right to pursue the counter claims in the

instant proceedings. The Claimants noticeably, did not file any

application under Section 8 in the suit and instead filed their written

22

statement therein. The contention of the Claimants, that as at the time

of institution of the suit and filing of the written statement, the disputes

had already been referred to arbitration, such an application was

inconsequential, lacks in persuasion. The pendency of the present

reference notwithstanding, the Claimant sought to have filed such an

application before the Hon‟ble High Court, apprising it of the

pendency of the reference and seeking appropriate orders from it,

before filing its written statement. The stand of the Respondent that the

parties by their conduct, thus indicated that they were willing to seek

resolution of their disputes before the Hon‟ble High Court, therefore

cannot be lightly disregarded. The plea of the Claimants that they

cannot be compelled to forego their remedies in the reference in terms

of BTA, cannot be sustained in the exceptional facts and circumstances

of the case as the continuation of the instant proceedings would signify

multiplicity of proceedings with the possibility of conflicting decisions

opposed to the rule of public policy.

27. In the context of Section 34 of the Arbitration Act 1940, relating to

stay of legal proceedings, the Hon‟ble High Court of Madras in

Ramasamy Athappan (Supra), after a detailed survey of the renderings

of the Hon‟ble Apex Court amongst others in F.C.I Vs Yadav Engineer

& Contractor,(1982) 2 SCC 499 and General Electric Company Vs

Renusagar Power Company, (1987) 4 SCC 137, enunciated that the

action of the defendant in filing a written statement or taking other

steps in the legal proceedings would tantamount to abandonment of the

right to seek arbitration. Their Lordships held that this principle would

apply even to a case covered by the Act and if the defendant did not

apply under Section 8 thereof, to refer the parties to arbitration, before

submitting its first statement on the substance of the dispute, he would

be guilty of abandonment of the right to seek arbitration.

28. The reservation expressed on behalf of the Claimants that the

Respondent did not endeavour to seek the consent of the additional

parties also does not merit acceptance. As per Rule 28.1 of the Rules,

having regard to the stage at which the request was made by the

Respondent for joinder of additional parties, such impleadment was not

permissible unless all parties including the additional party agreed

thereto in writing. Admittedly the Claimants, who are parties to the

BTA, declined to give consent to such joinder. Rule 28.3 of the Rules

enjoins that all parties to the arbitration agreement shall be required to

give written consent to the joinder of parties in addition to the written

consent of the party to be impleaded. In view of the refusal of the

Claimants to give written consent to the joinder of the additional

parties, sought for by the Respondent, asper the above provisions of the

Rules, any consent by the additional party to be impleaded, would have

been of no consequence.”

23

40. A perusal of the aforesaid findings indicates that the Tribunal appears

to have proceeded on the premise that the petitioner's objections to the

respondent‟s counterclaims, arising from the overlap between the issues

involved in the arbitration and civil suit, somehow rendered the arbitration,

as a whole, as impossible. This expansion of a limited and issue-specific

concern into a general impossibility of the arbitral proceeding seems to be

unwarranted. The petitioner consistently maintained that their own

contractual claims remained amenable to arbitral resolution and notably had

not been carried to any other forum. The crux of the reasoning given by the

Tribunal is the overlapping issues in the arbitration. However, this aspect

has also not been subjected to any close scrutiny. The Tribunal appears to

have accepted the same in a summary and cursory manner, and on mere

assertions. Even if the Tribunal deemed such overlapping to have created

any practical impossibility, it must have examined this aspect so as to

demonstrate such impossibility. Suffice to note that such a discussion is

conspicuously missing.

41. The Tribunal, however, relies on the decision of the Supreme Court in

Sukanya Holdings. The said decision has also been reiterated by Mr. Sood.

However, such reliance is misplaced. The decision in Sukanya Holdings

arose in the context of an application under Section 8 of the Act, as it stood

prior to the 2015 amendment. The Supreme Court, therein, was concerned

with the limited jurisdiction of a civil Court at the threshold stage of

considering whether a dispute ought to be referred to arbitration. In that

context, it was held that Section 8 did not permit bifurcation of causes of

action or parties, and that where the subject matter of the suit was not fully

referable to arbitration, a partial reference could not be ordered. However,

24

the facts of the instant case would indicate that reference to arbitration

preceded the filing of the suit. In such facts, the impermissibility of

bifurcation of the arbitrable disputes and non-arbitrable disputes at the stage

of Section 8 of the Act would have no application.

42. The Tribunal further accepted the respondent‟s contention that the

arbitration was incapable of meaningful continuation because additional

parties, said to be necessary, could not be joined. This conflates procedural

inconvenience with statutory impossibility. The Tribunal did not identify

any legal or factual circumstance demonstrating that disputes between the

signatories could not be adjudicated within the arbitral framework. Instead,

it treated the civil suit as the more convenient and comprehensive platform

and regarded this as a primary reason to terminate the arbitration. The

termination of arbitral proceedings cannot rest on the Tribunal‟s assessment

of which forum might be better placed to dispose of the entirety of the

dispute, especially when the parties have already been ad idem as to the

referability of arbitration for the disputes arising from the contract.

43. Equally untenable is the Tribunal‟s conclusion that the petitioner had

waived arbitration by not invoking Section 8 of the Act in the civil suit and

filing a written statement. A party‟s decision not to move a Section 8

application in a suit filed by the opposite party subsequent to the

commencement of arbitration proceedings cannot be elevated into an

abandonment of the arbitral process. Furthermore, the petitioner filed a

written statement in the civil suit in response to allegations made by the

respondent. In their written statement, they have explicitly reserved their

right to pursue their remedies under the arbitration agreement.

25

44. Pertinent to also note herein that Section 8 of the Act provides a

statutory option to a party to the arbitration agreement, or to any person

claiming through or under such party, to apply before the judicial authority

where a civil action is instituted. Mere failure of a party to invoke the option

does not automatically confer jurisdiction upon the judicial authority. The

non-exercise of the remedy under Section 8 of the Act would not deter the

judicial authority, being this Court in the present case, from independently

exercising its jurisdiction and inherent powers to examine whether the civil

suit is barred under Section 9 of the Code of Civil Procedure, 1908 (CPC).

Reference can be made to the decision of this Court in Master Abhishek

Mehra & Ors. v. DLF Commercial Developers Ltd.

14

, wherein the Court

examined the maintainability of the suit therein in view of the constitution of

an Arbitral Tribunal and applied the bar under Section 5 of the Act and

Section 9 of CPC.

45. Importantly, merely because the petitioner participated in a suit that

involves some apparently overlapping issues, as only one of the defendants,

it does not mean that the petitioners‟ own claim under the contract has been

abandoned. A conclusion inviting such drastic consequences cannot be

drawn in a cursory manner. If the arbitration is terminated on mere

institution of the civil suit by the opposite party, it would effectively render

the arbitration mechanism at the mercy of the other side. Moreover, the

petitioner would be prohibited from seeking a fresh referral to arbitration, in

light of the termination of the mandate of the Tribunal, despite the Arbitral

Tribunal being the mutual forum of choice. And not to forget, the petitioner

would invite all these consequences solely because the opposite party chose

14

CS(OS) No. 58/2008

26

to institute a civil suit after subjecting itself to arbitration, thereby,

frustrating the very intent of the arbitration clause in the contract governing

the parties.

46. Moving on, the Tribunal further held that the pendency of parallel

proceedings, the possibility of overlapping issues, or the interest of public

policy justified termination under Section 32(2)(c) of the Act. In a robust

legal system, there could be multiple avenues for a party to vindicate its

rights, and more often than not, the law permits parallel proceedings when

they are intended for different purposes. In such a scenario, mere pendency

of parallel proceedings would not ipso facto render any proceeding as

impossible unless it is affected by a legal bar. Reference can be made to the

recent decision of this Court in Lata Yadav v. Shivakriti Agro Pvt. Ltd &

Ors,

15

wherein, upon a detailed examination of the impugned order passed

by the Arbitral Tribunal therein, the Court reiterated the settled legal

position that the mere pendency, existence, or progression of parallel

criminal or statutory proceedings does not operate as a bar to the

continuation of arbitral proceedings.

47. The Court in Lata Yadav recognized the settled principle that a single

transaction or set of underlying facts may legitimately give rise to multiple

proceedings, civil and criminal, which may proceed simultaneously and

independently within their respective statutory and jurisdictional confines. It

was categorically observed that to accept the pendency of criminal

proceedings, including those under the Prevention of Money Laundering

Act, 2002, as a ground for termination of arbitration would undermine the

arbitral process and enable parties to routinely defeat arbitral jurisdiction by

27

initiating or relying upon parallel proceedings, irrespective of their ultimate

outcome. The Court further relied upon the decision of the Supreme Court in

Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee

16

to reaffirm that there is no rigid or inflexible rule mandating the stay of civil

or arbitral proceedings merely because a criminal trial is pending,

particularly since findings rendered by an arbitral tribunal are not binding on

criminal Courts and, at best, may have only persuasive value. It is pertinent

to note that parallel litigation involving overlapping issues could certainly be

held as „undesirable‟ or „inconvenient‟, but it cannot be termed as

„impossible‟ without there being a prohibition of law against it or there

being a clear demonstration of practical impossibility.

48. At this stage, it is also germane to note that the respondent‟s conduct

also reveals an attempt to approbate and reprobate by first affirming the

arbitral process and thereafter seeking to undermine it through the institution

of a civil suit. Having participated in the arbitration and allowed the

Tribunal to be constituted, the respondent cannot subsequently pivot to the

civil forum and rely on the breadth of its own pleadings to contend that

arbitration has lost efficacy. The respondent‟s assertion that the petitioner

was "blowing hot and cold" goes against itself. It is the respondent who

introduced the civil suit after arbitral proceedings were commenced.

Notably, a party cannot resort to parallel forums and thereafter attempt to

shift the allegation of inconsistency to the other side. Such conduct cannot

be invoked to dilute or defeat the petitioner‟s legitimate invocation of

arbitration under the contract.

15

2025: DHC:3984

16

(2014) 6 SCC 677

28

49. Thus, the Tribunal‟s reasoning falls short of the stringent standard

mandated by Section 32(2)(c) of the Act. There is no identification of any

factor that renders continuation of proceedings before the Arbitral Tribunal

as impossible. Although the termination in question is based on

impossibility, but for the clarity of reasoning and in terms of Section

32(2)(c) of the Act, it may also be noted that there is no demonstration that

the adjudication of the petitioner‟s claims had become unnecessary. Even

otherwise, the lis between the parties is wholly alive, and adjudication is

indeed necessary for putting the respective rights and liabilities to rest.

50. What emerges, instead, is a preference for the civil forum in the

interest of perceived comprehensiveness. As already reiterated hereinabove,

this is insufficient to order termination under the provisions of Section

32(2)(c) of the Act.

51. The Tribunal‟s order, therefore, stands vitiated and is, hereby, set

aside. Let further steps be taken by the parties in accordance with law. No

order as to costs.

52. The instant petition stands disposed of.

(PURUSHAINDRA KUMAR KAURAV)

JUDGE

JANUARY, 7

th

2026

Nc/mj