Mere Delay Or Inaction Does Not Amount To Abandonment Of Arbitration: Calcutta High Court

The Calcutta High Court has held that mere delay or inaction cannot, by itself, lead to an inference of abandonment of arbitration, emphasising that there must be a clear and conscious intention to relinquish the arbitral remedy.

Justice Gaurang Kanth allowed a petition by MIPL DRAIPL JV in a dispute with Eastern Railway and appointed a substitute arbitrator after terminating the earlier arbitrator's mandate.

“In law, abandonment cannot be readily inferred from mere inaction or delay. It must be established that there was a clear, unequivocal, and conscious intention on the part of the party to relinquish the arbitral remedy. The test is not merely of lapse of time, but of intention as discernible from the conduct of the party.”

The dispute arose from a contract dated September 5, 2013 for construction of railway bridges, which was terminated on August 8, 2017. The petitioner invoked arbitration on February 6, 2019, and a sole arbitrator was appointed by the Court on February 4, 2021.

Eastern Railway opposed the plea, contending that the petitioner had remained inactive for over four years after the arbitrator's appointment and had effectively abandoned the proceedings.

The Court noted that although the delay was substantial and the explanation offered was “not entirely satisfactory”, abandonment cannot be inferred from delay alone. It held that abandonment requires a clear and conscious intention to give up arbitration, which must be evident from the party's conduct.

On facts, the Court found that the petitioner had taken steps in 2025 to pursue arbitration, including approaching the Court and communicating with the arbitrator, indicating a continuing intention to proceed.

On limitation, the Court held that the right to seek substitution arises when the arbitrator's mandate becomes incapable of being performed, not from the date of appointment.

“In such circumstances, the right to apply arises not from the date of appointment of the arbitrator, but from the point at which the mandate becomes incapable of being performed. In the present case, the cause of action arose only upon the withdrawal of the learned Arbitrator on 19.06.2025.”

Accordingly, the Court terminated the mandate of the earlier arbitrator and appointed former Calcutta High Court judge Justice Pranab Kumar Chattopadhyay as the sole arbitrator to continue the proceedings.