Safiya Malik

The High Court of Judicature at Bombay, Single Bench of Justice Somasekhar Sundaresan stated on April 23, 2025, in two arbitration petitions seeking extension of the arbitral mandate under Section 29-A of the Arbitration and Conciliation Act, 1996. The Court extended the mandate of the existing Arbitral Tribunal by six months and rejected the request for substitution of the arbitrator.

The petitions were filed by Indiabulls Infraestate Ltd., the petitioner in both matters, against Imagine Realty Pvt. Ltd. and Bliss Habitat Pvt. Ltd., respectively. Both Respondents were purchasers of high-end residential units in a luxury real estate project known as "Indiabulls Blu" in Worli, Mumbai. The disputes originated when Imagine and Bliss allegedly failed to pay balance amounts due towards the allotted apartments. The apartments had been financed by loans from Indiabulls Housing Finance Ltd. (IHFL), for which mortgages had been created.

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Upon default, Indiabulls paid off the loans to IHFL and cancelled the apartment allotments. Arbitration proceedings ensued between IHFL and each of Bliss and Imagine. In those proceedings, IHFL sought declarations validating the closing of the loan accounts and the recovery of dues. Bliss and Imagine attempted to implead Indiabulls in those arbitrations and later sought to club those proceedings with the arbitration initiated against Indiabulls. The Sole Arbitrator rejected both requests, holding that the causes of action and parties involved were distinct.

Subsequently, Bliss and Imagine initiated arbitration proceedings against Indiabulls through an order of the High Court passed with the consent of the parties. The same Sole Arbitrator, who was hearing the IHFL arbitration, was agreed upon to adjudicate the new disputes involving Indiabulls. Pleadings were completed in the arbitration against Indiabulls by April 19, 2021. Thereafter, Bliss and Imagine filed an application requesting the clubbing of both arbitrations and seeking a stay on the award in the IHFL arbitration until the arbitration with Indiabulls concluded.

The application was heard over multiple dates in July 2021 and orders were reserved. On February 26, 2023, the Sole Arbitrator informed the parties about the pronouncement of the award in the IHFL arbitration. On the same day, Bliss and Imagine requested the arbitrator to state on their clubbing application before issuing any award. However, the Sole Arbitrator rejected the application, reiterating the reasons already stated in the earlier rejection of the impleadment application. The award in the IHFL arbitration was passed the same day, holding IHFL had lawfully appropriated the amounts paid by Indiabulls and closed the loan accounts.

The final hearing in the Indiabulls arbitration concluded on May 10, 2023, and the award was reserved. The mandate of the Arbitral Tribunal expired on August 31, 2023. In the meantime, Indiabulls sought to introduce additional documents into the record through an application dated June 20, 2023, prompting responses and rejoinders from the Respondents and additional arguments. The tribunal noted the incomplete status of hearings on the new application and advised the parties to seek an extension of the mandate before further hearings.

Bliss and Imagine contended that the Bombay High Court had no jurisdiction under Section 29-A of the Act, asserting that the arbitration was seated in New Delhi since hearings occurred there. They also filed applications before the Delhi High Court. Despite contesting jurisdiction, they filed interim applications in the Bombay High Court seeking substitution of the Sole Arbitrator on grounds of bias and delay.

They argued that delays in adjudicating their applications and in concluding the proceedings, along with the alleged reluctance to address their fraud allegations against Indiabulls, amounted to a failure of the arbitrator to act without undue delay, warranting substitution. Indiabulls opposed these applications and reiterated the agreed seat of arbitration was Mumbai, thereby conferring jurisdiction on the Bombay High Court.

Justice Somasekhar Sundaresan examined the timeline of proceedings, pleadings, and judicial conduct in both arbitrations. The Court observed that the basis of jurisdiction lies in Section 42 of the Act, which mandates that once an application is filed in a court with jurisdiction over the arbitration agreement, all subsequent applications must be made in the same court. The Court stated:

"Even if the order appointing the Learned Arbitral Tribunal by consent of the parties is not an order under Section 11 of the Act, by operation of Section 42 of the Act, this is the only Court that can hear a petition under Section 29-A of the Act."

Regarding the delay and request for substitution, the Court recorded:

"The jurisdiction under Section 29-A of the Act is not one that would give me unbridled power to substitute an arbitrator lightly, without meeting the ingredients of Section 14 and 15 of the Act."

The Court stated that any alleged delay caused by the arbitrator must be undue and unjustified, not merely the result of procedural intricacies or statutory constraints such as those introduced during the COVID-19 pandemic. The Court noted:

"Allegations of bias cannot be lightly levelled and where it is a meritorious allegation, the forum for levelling it would be the Section 34 Court after the award is made."

It was also recorded that the attempt to substitute the arbitrator, primarily due to adverse judgements in a separate but related arbitration (IHFL arbitration), did not constitute valid grounds for removal.

"Merely because substitution is referred to in Section 29-A(6) of the Act, the principles and the grounds on which the substitution is envisaged in the Act would not evaporate."

The Court found that the grievance of the parties was more appropriately addressed through a challenge under Section 34 rather than a petition under Section 29-A. It added:

"It is not open to me to substitute the Learned Arbitral Tribunal’s approach to conducting arbitration with my own approach of how the arbitration could have been conducted."

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The Court disposed of the arbitration petitions by granting an extension of six months to the mandate of the Arbitral Tribunal. The order stated:

"It is hoped that the Learned Arbitral Tribunal shall state on Indiabulls’ belated application to bring on record further documents expeditiously. Should it be held that no documents are permissible to be brought on record at this stage, it is hoped that the Learned Arbitral Tribunal would pronounce the arbitral award well within the extended timeframe."

With regard to costs, the Court imposed Rs. 1,50,000 jointly on Bliss and Imagine, payable to Indiabulls within four weeks of the order upload. The Court remarked: "Such costs shall be paid to Indiabulls within four weeks of the upload of this judgement on the website of this Court."

The Learned Arbitral Tribunal was given liberty to assess and impose costs on Indiabulls for filing belated applications if it found the applications to be unjustified.

Advocates Representing the Parties:

For the Petitioners: Mr. Anoshak Davar a/w Mr. Dhaval Sethia & Kirti Shetty i/b Mr. Vaibhav Jagdale, Advocates.

For the Respondents: Mr. Chetan Kapadia, Senior Advocate a/w Mr. Shadab Jan, Mr. Abhay Chattopadhyay, Mr. Samarth Saxena & Mr. Atharva Diwe i/b Economic Laws Practice, Advocates.

Case Title: Indiabulls Infraestate Ltd. Versus Imagine Realty Pvt. Ltd. and Indiabulls Infraestate Ltd. Versus Bliss Habitat Pvt. Ltd.

Neutral Citation: 2025: BHC-OS:6783

Case Numbers: ARBITRATION PETITION NO.39 OF 2025 and ARBITRATION PETITION NO.33 OF 2025

Bench: Justice Somasekhar Sundaresan

[Read/Download order]