Legal Heir Can Challenge Arbitral Award Despite Not Participating In Proceedings: Delhi High Court

The Delhi High Court has held that a legal representative of a deceased party can challenge an arbitral award even if the legal representative did not participate in the arbitration.

Justice Swarana Kanta Sharma was dealing with a plea by Faisal Ahmed, one of the nine legal heirs of late Sultan Ahmed, who sought to participate in arbitration proceedings concerning his father's rights in a shop at the Hyatt Regency Shopping Arcade, New Delhi.

The court declined to stop the arbitration, which had already reached the stage of final arguments, but held that Faisal and the other legal heirs would have a remedy against the eventual award.

Explaining why Faisal could not be treated as remediless merely because he had not participated in the arbitration, the court relied on the statutory scheme governing legal representatives of deceased parties. It observed that an award can bind persons claiming under a deceased party and that the right to challenge such an award must also be available to them.

“The said remedy would, therefore, also be available to the petitioner and to the other legal heirs of late Sh. Sultan Ahmed. Any grievance regarding want of notice or opportunity to present their case, as well as any other ground available under Section 34 of the A&C Act, can accordingly be raised at the appropriate stage,” Justice Sharma observed.

The dispute concerned Shop No. U-72 at the Hyatt Regency Shopping Arcade. Sultan Ahmed had entered into agreements with Asian Hotels (North) Limited concerning the premises.

Asian Hotels issued a termination letter on May 29, 2020, concerning Sultan Ahmed's rights in the shop. Similar termination letters were issued to other shop owners, following which several civil suits were filed before the high court.

It subsequently invoked Arbitration. The high court referred the parties to arbitration on December 20, 2023.

Sultan Ahmed died on September 9, 2023, leaving nine legal heirs. Mujeeb Ahmed, one of them, continued pursuing the claims concerning the shop.

An arbitrator was appointed in March 2024, and Mujeeb filed his statement of claim in May 2024. After the original arbitrator recused, the high court appointed another sole arbitrator on September 2, 2024.

Faisal claimed that he was never informed about the arbitration and learned about it only when the proceedings had reached final arguments. He sought permission to participate and produce additional documents.

He also wanted any right or relief concerning his father's rights to be treated as part of the estate rather than Mujeeb's exclusive entitlement.

The arbitrator disposed of the application on May 7, 2026, observing that Mujeeb had brought the claim as Sultan Ahmed's legal heir and represented his father's estate. It further held that any relief obtained would be held in that representative capacity and that the inter se rights of the legal heirs could not be decided in the arbitration.

Faisal then approached the high court under writ jurisdiction alleging violation of natural justice.

Asian Hotels opposed the plea, arguing that Faisal could challenge the eventual award under Section 34 and that intervention at the final-arguments stage would derail proceedings that had already been pending for more than two years.

The high court noted that Section 40 provides that an arbitration agreement does not end with the death of a party and remains enforceable by or against the deceased's legal representative. Section 35 makes an arbitral award binding on the parties and persons claiming under them.

The court relied on the Supreme Court's ruling in V.K. John v. S. Mukanchand Bothra and HUF, which recognised that a legal representative claiming under a deceased party can challenge an arbitral award under Section 34 even without participating in the arbitration.

The court held that such grievances could therefore be raised when challenging the eventual award, depending on the facts and circumstances.

At the same time, the court found that the absence of Faisal and the other legal heirs did not, by itself, invalidate the arbitration. Mujeeb was representing the estate, and any award in his favour would benefit the estate rather than give him an exclusive personal right.

The court declined to interfere with the arbitration at the stage of final arguments and dismissed Faisal's petition. It clarified that it had not decided the inter se rights of the legal heirs and that their remedies under Section 34 or before another competent forum remained open.

For Petitioner (Faisal Ahmed): Advocates Harsh Vardhan Sharma, Saksham Gupta, Neeraj Kumar.

For Respondent (Asian Hotels North Ltd): Advocate Akansha Kaul.

For Respondent (Mujeeb Ahmed): Senior Advocate Deepak Dhingra with Advocates Sneh Somani, Riya Sardana.