Withdrawal Of Arbitrator Does Not Automatically Terminate Arbitral Proceedings: Bombay High Court

The Bombay High Court has recently held that the withdrawal of an arbitrator does not terminate arbitral proceedings, reviving a stalled dispute between Tata Motors Passenger Vehicles Ltd. and Ghosh Brothers Automobiles.

Justice Sandeep V. Marne clarified that termination of an arbitrator's mandate is distinct from termination of arbitration itself. “Mere termination of mandate of arbitrator does not automatically result in termination of arbitral proceedings, and in such an event the reference continues and merely a vacancy occurs in the chair of the arbitrator, which can be filled up under Section 15(2) of the Arbitration Act,” the Court held.

The Court appointed Justice R.Y. Ganoo (Retd.), former judge of the Bombay High Court, as substitute arbitrator to adjudicate disputes arising out of dealership agreements dated December 26, 2012 and July 9, 2013.

Tata Motors claimed that Ghosh Brothers owed Rs. 20.80 crore towards vehicles and spare parts supplied under the agreements. A demand notice was issued on April 22, 2015, and arbitration was invoked on February 23, 2016. The Bombay Chamber of Commerce & Industry appointed Justice S.D. Pandit (Retd.) He acted as sole arbitrator and conducted proceedings until March 18, 2021, when he withdrew due to ill health.

Tata Motors promptly asked the Chamber to appoint a substitute and followed up again in June 2023. No appointment followed.

It then approached the High Court under Section 29A and separately under Sections 14 and 15 of the Arbitration Act. On July 2, 2025, the Court disposed of those petitions, observing that the proper remedy lay under Section 11.

Before the Court, Tata Motors argued that only the arbitrator's mandate had ended, not the arbitration proceedings. The reference continued, it said, and only a vacancy required filling.

Ghosh Brothers opposed the plea, contending that the Section 11 application for appointment of arbitrator was time-barred and that the three-year limitation under Article 137 of the Limitation Act applied.

Justice Marne agreed that Article 137 governs Section 11 applications. Even after giving the applicants the benefit of the COVID-19 limitation exclusion and the time spent pursuing remedies under the wrong provisions, the Court found that there was still a remaining delay of 76 days in one application and 91 days in the other.

However, the Court noted that the applicants had not “slept over the matter” and had taken steps to secure substitution of the arbitrator. The case involved “peculiar circumstances,” including the arbitrator's withdrawal and the Chamber's failure to appoint a substitute despite repeated requests. “Technical hurdles need to be surmounted” to ensure that the real objective of the proceedings is achieved, the Court observed.

Relying on the Supreme Court's ruling in HPCL Bio-Fuels Ltd., the High Court held that delay in filing a Section 11 application can be condoned even without a formal condonation application. It condoned the delay and appointed Justice Ganoo as substitute arbitrator.

All rights and contentions of the parties have been kept open for adjudication on merits.

For the Applicants (Tata Motors Passenger Vehicles Limited and Another): in Commercial Arbitration Application (L) No. 26333 of 2025: Advocates Mr. Vaibhav Charalwar with Ms. Tikshta Modi and Ms. Magdhi Pawar, instructed by M/s Akhil Modi & Associates

For the Applicants (Tata Motors Passenger Vehicles Limited and Another) in Commercial Arbitration Application (L) No. 25611 of 2025: Advocates Ms. Stephanie Pereira with Ms. Tikshta Modi, instructed by M/s Akhil Modi & Associates

For the Respondents (Ghosh Brothers Automobiles and Others) in Commercial Arbitration Application (L) No. 26333 of 2025: Advocates Mr. Prashant Chande with Ms. Sejal Shah, instructed by Daru Shah

For the Respondents (Ghosh Brothers Automobiles and Others) in Commercial Arbitration Application (L) No. 25611 of 2025: Ms. Sejal Shah, instructed by Daru Shah