Arbitration Newsletter| March 2026

Welcome to the March 2026 edition of our quarterly Arbitration Newsletter, where we delve into significant judgments that touch upon the interpretation of the relevant provisions of the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”) and its interplay with other statues.

Nagaraj V. Mylandla v. PI Opportunities Fund-I & Ors., 2026 INSC 298, Supreme Court of India

In this judgment, the Supreme Court expressly recognised the doctrine of transnational issue estoppel while deciding objections to enforcement under Section 48 of the Arbitration Act. The Court dismissed the special leave petitions filed by the promoters of Financial Software and Systems Private Limited (“FSSPL”) and upheld the Madras High Court’s order enforcing a Singapore‑seated SIAC award as a decree.

The dispute arose out of a shareholders’ agreement under which foreign investors acquired a majority stake in FSSPL, with an agreed obligation on the promoters to provide a time‑bound exit. When no exit was provided, the investors commenced SIAC arbitration seated in Singapore. The arbitral tribunal held that the promoters were in breach of their obligations, awarded damages calculated at the agreed exit price, and provided that a strategic sale could be undertaken only if the awarded amount was not paid within the stipulated time. The tribunal also recorded the investors’ undertaking to surrender their shares on receipt of the damages, to avoid any double recovery.

The promoters challenged the award before the Singapore High Court as the seat court, arguing, among other things, that the award effectively resulted in an unlawful buy‑back of shares and that the investors had waived their rights. The Singapore High Court rejected these objections on merits and upheld the award. Despite having a statutory right to appeal, the promoters did not pursue it.

When the investors sought enforcement of the award in India, the promoters raised broadly the same objections under Section 48 of the Arbitration Act, this time framing them as violations of the fundamental policy of Indian law, the Specific Relief Act, 1963, and the doctrine of election. The Supreme Court rejected this attempt, reiterating that an enforcement court is not permitted to conduct a fresh review of the merits of a foreign award.

Importantly, the Supreme Court formally adopted the doctrine of transnational issue estoppel, holding that where an issue has already been fully argued and conclusively decided by a competent court at the seat of arbitration, the same issue cannot be reopened before the enforcement court in another jurisdiction merely by re‑labelling it as a “public policy” objection. The Supreme Court clarified that this doctrine is narrower than res judicata. While res judicata bars re‑litigation of the entire dispute, issue estoppel prevents parties from re‑arguing specific issues that have already been decided.

Applying this principle, the Supreme Court held that the promoters could not reopen the “buy‑back” argument, which had already been rejected by the Singapore High Court. The Supreme Court agreed with the High Court’s reasoning that the award did not direct any buy‑back by the company, but only payment of damages, with surrender of shares being offered by the investors as a fairness measure. If the promoters paid the damages themselves, the shares could be surrendered to them, increasing their shareholding and attracting no bar under the Companies Act, 2013.

This decision is important as it strengthens the finality of foreign arbitral awards in India. By recognising the doctrine of transnational issue estoppel, the Supreme Court has made it clear that parties cannot repeatedly challenge awards in multiple jurisdictions on the same issues. The judgment reinforces that Indian courts will act as enforcement forums, not appellate courts, and aligns Indian practice with international standards under the New York Convention, providing greater certainty to parties involved in cross border arbitration.

Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust, 2026 INSC 34, Supreme Court of India

The Supreme Court held that an appellate court under Section 37 of the Arbitration Act cannot re‑appreciate evidence, revisit contractual interpretation, or substitute its own view once the arbitral award has already withstood scrutiny under Section 34 of the Arbitration Act. The Supreme Court also reaffirmed that review of an award under Section 37 of the Arbitration Act is even narrower than the limited supervisory role of courts under Section 34 of the Arbitration Act, and that courts cannot step into the tribunal’s domain of contractual interpretation unless the award violates the specific statutory grounds for interference.

The dispute arose from a dredging contract between Tuticorin Port Trust and Jan De Nul, where Jan De Nul sought compensation for idle time of a Backhoe Dredger that could not be operated due to delays attributable to the Port Trust. The arbitral tribunal accepted the claim, and the Madras High Court, while hearing a challenge under Section 34 of the Arbitration Act, upheld the award after finding the tribunal’s reading of the relevant contractual clauses to be reasonable and supported by the terms of the agreement.

In the appeal under Section 37 of the Arbitration Act, the Division Bench of Madras High Courts set aside the award on the ground that idle‑time compensation was payable only for “major dredgers,” and that the Backhoe Dredger used by Jan De Nul was not covered under that category. By doing so, the Division Bench effectively re‑interpreted the contract and revisited the merits of the dispute, even though the award had already survived scrutiny under Section 34 of the Arbitration Act.

The Supreme Court reversed the Division Bench, holding that an appellate court under Section 37 of the Arbitration Act cannot reassess evidence or reinterpret contractual provisions once the tribunal has taken a plausible and contractually supported view. The Court clarified that the categorisation of the dredger as “major” or “minor” was immaterial at this stage, because the arbitral tribunal’s interpretation, already upheld by the Section 34 court, could not be displaced simply because another interpretation might also be possible.

In reaching this conclusion, the Supreme Court relied on its earlier decisions emphasising minimal judicial interference in arbitration. Therefore, this judgment reinforces the finality and autonomy of arbitral awards by ensuring that once an award has survived challenge before a court, appellate courts will not reopen issues of contractual interpretation or factual evaluation.

Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India, 2026 INSC 6, Supreme Court of India

The Supreme Court held that the ineligibility of an arbitrator arising from unilateral appointment under Section 12(5) of the Arbitration Act can be waived only through an “express agreement in writing” executed after disputes have arisen. Such waiver cannot be inferred from participation in proceedings, silence, filing pleadings, or statements recorded in procedural orders.

The case concerned two licence agreements between a consortium led by Bhadra International (India) Pvt. Ltd. (“Bhadra International”) and the Airports Authority of India (“AAI”), under which the Chairman of AAI was designated as the appointing authority for a sole arbitrator. After disputes arose in 2015, arbitration was invoked and the Chairman appointed an arbitrator in terms of the contract. The parties participated fully in the proceedings for several years and jointly sought extensions under Section 29A until a ‘nil’ award was eventually delivered.

It was only at the stage of challenging the award under Section 34 of the Arbitration Act that the appellants argued, for the first time, that the arbitrator’s appointment was invalid under Section 12(5) of the Arbitration Act. Both the Single Judge and the Division Bench rejected this argument, holding that the appellants had waived their objection by taking part in the proceedings and by recording “no objection” in the first procedural order.

The Supreme Court reversed this finding and held that Section 12(5) of the Arbitration Act creates a mandatory bar against appointments made by individuals who themselves fall within the categories of ineligibility under the Seventh Schedule of the Arbitration Act. The Court further clarified that the ineligibility under Section 12(5) of the Arbitration Act can be waived only through an express, written agreement executed after the disputes have arisen. Participation in proceedings, silence, filing pleadings, or joint requests for time extensions cannot amount to such a waiver. The absence of a post‑dispute written waiver meant that the arbitrator remained de jure ineligible, rendering the appointment invalid.

The Supreme Court also affirmed that an objection under Section 12(5) of the Arbitration Act may be raised even for the first time in a petition under Section 34 of the Arbitration Act, because an award delivered by an ineligible arbitrator is a nullity and lacks jurisdictional foundation. Such an award necessarily offends the public policy of India and cannot be sustained. Resultantly, the Supreme Court held that the Chairman of AAI lacked the legal competence to appoint the sole arbitrator and that no valid waiver had occurred. The appointment was therefore void, the award was set aside, and the parties were permitted to commence fresh arbitration proceedings.

This judgment is significant because it definitively rejects the idea that participation can cure defects arising from unilateral appointments. By insisting on an express post‑dispute written waiver, the decision reinforces the neutrality and independence of arbitral tribunals and ensures that appointment clauses in older contracts cannot override the statutory safeguards designed to protect arbitral integrity.

Bhagheeratha Engineering Ltd. v. State of Kerala, 2026 INSC 4, Supreme Court of India

The Supreme Court held that the absence of a separate notice under Section 21 of the Arbitration Act does not, by itself, preclude a party from raising claims before an arbitral tribunal, nor does it render an award vulnerable under Section 34 of the Arbitration Act, when the arbitration clause is widely worded to encompass all disputes arising out of or connected with the contract.

The dispute arose from four road maintenance contracts awarded to Bhagheeratha Engineering Ltd. (“Bhageeratha”) under the Kerala State Transport Project, which provided for a tiered dispute resolution system i.e., engineer’s decision, adjudication, and thereafter arbitration. The adjudicator decided four disputes, two in the Bhageeratha’s favour and two against. The State of Kerala then invoked arbitration but only referred one of these disputes. Bhageeratha, however, placed all four disputes before the arbitral tribunal without issuing an independent notice under Section 21 of the Arbitration Act. The tribunal adjudicated all four issues and passed an award in favour of the Bhageeratha.

The District Judge set aside the award under Section 34 of the Arbitration Act, on the ground that the tribunal had exceeded its jurisdiction by deciding disputes that were never the subject of a notice under Section 21 of the Arbitration Act. The Kerala High Court affirmed this view in appeal under Section 37 of the Arbitration Act, holding that the tribunal’s authority was confined to the single dispute mentioned in the State’s notice invoking arbitration, and that failure by the contractor to issue a separate notice under Section 21 of the Arbitration Act was fatal.

Reversing these findings, the Supreme Court held that Section 21 of the Arbitration Act serves only a procedural purpose i.e., to fix the date of commencement of arbitration for the purpose of calculating limitation and is not a jurisdictional prerequisite. The Court emphasised that Section 21 of the Arbitration Act neither limits the tribunal’s jurisdiction to the disputes enumerated in the notice nor obligates both parties to issue notices. It further drew on its earlier decisions, including State of Goa v. Praveen Enterprises, (2012) 12 SCC 581, ASF Buildtech v. Shapoorji Pallonji, (2025) 9 SCC 76 and Adavya Projects v. Vishal Structurals (2025) 9 SCC 686, to reaffirm that claims or counterclaims not specified in a notice under Section 21 of the Arbitration Act may still be raised before the tribunal so long as they fall within the scope of the arbitration agreement.

The Court also relied on M.K. Shah Engineers & Contractors v. State of M.P. (1999) 2 SCC 594 to reaffirm that a party who, by its conduct, treats the entire dispute as open cannot later rely on procedural objections to narrow the tribunal’s jurisdiction. In this case, the State’s own actions, its objections before the tribunal, its request to declare the adjudicator’s decision null and void, and its insistence that the contractor submit to arbitration, showed that all four disputes had been placed at large before the Arbitral Tribunal, preventing it from later contending that only one dispute was arbitrable.

The Supreme Court concluded that the arbitration clause was broadly framed and empowered the tribunal to adjudicate any dispute arising out of or in connection with the contract. The High Court had therefore erred in imposing a restriction that did not flow from either the contract or the Act. Holding that the tribunal had acted within its jurisdiction, the Supreme Court set aside the judgment of the High Court and restored the arbitral award in full.

Rajia Begum v. Barnali Mukherjee 2026 SCC OnLine SC 135, Supreme Court of India

In a significant ruling on the arbitrability of disputes involving forged agreements, the Supreme Court held that where an arbitration clause is embedded in a document whose very existence is seriously disputed on allegations of forgery and fabrication, the controversy strikes at the very root of arbitral jurisdiction and falls squarely within the category of non-arbitrable disputes. The Court quashed the High Court’s order referring the dispute to arbitration under Section 8 of the Arbitration Act and affirmed the High Court’s separate refusal to appoint an arbitrator under Section 11 of the Arbitration Act.

The dispute arose from a partnership originally formed in 2005 under the name M/s Rddhi Gold, by a partnership deed dated 01.12.2005, executed between Barnali Mukherjee, Aftabuddin, and Raihan Ikbal. Rajia Begum, the Appellant, later claimed rights to the partnership under an Admission Deed dated 17.04.2007, which had been executed by Aftabuddin and Raihan Ikbal, by way of which they retired from the firm, and she was inducted as a partner with a 50.33% share. The Respondent, categorically denied the execution of this document and asserted that it was a forged and fabricated deed, noting that the firm’s business had subsequently been absorbed into Rddhi Gold Pvt. Ltd. by an absorption deed dated 27.02.2011.

Before the Supreme Court, the central issue became whether a dispute founded on an allegedly forged agreement containing the arbitration clause was arbitrable at all. Reiterating the principles in Ayyasamy v. A. Paramasivam (2016) 10 SCC 386, Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd. (2021) 4 SCC 713, and the later refinement of the tests to establish fraud in Managing Director, Bihar State Food and Civil Supply Corporation Limited v. Sanjay Kumar, 2025 SCC OnLine SC 1604, the Supreme Court held that while ordinary allegations of fraud do not bar arbitration, fraud that strikes at the existence or validity of the arbitration agreement itself renders the dispute non‑arbitrable.

The Court found multiple circumstances casting serious doubt on the authenticity of the Admission Deed and emphasised that arbitration is rooted in consent, there can be no reference to arbitration when a party asserts, with credible supporting material, that it never executed the very document purported to contain the arbitration clause. Consequently, the Court held that the arbitration clause could not be said to exist, affirmed the refusal of appointment under Section 11 and conclusively declared that the matter was not arbitrable because the alleged Admission Deed was itself under serious suspicion of forgery.

Through this decision, the Supreme Court reaffirms that arbitration is founded upon consent, and where the document containing the arbitration clause is alleged to be forged, the dispute strikes at the very root of arbitral jurisdiction and is non-arbitrable.

C. Velusamy v. K Indhera 2026 SCC OnLine SC 142, Supreme Court of India

Resolving a question that had divided High Courts across the country, the Supreme Court held that a court’s jurisdiction under Section 29A (5) of the Arbitration Act to extend an arbitrator’s mandate is not extinguished by the mere fact that an award has been rendered after the expiry of the statutory time limit. An award passed without a subsisting mandate is unenforceable under Section 36 of the Arbitration Act, but such indiscretion by the arbitrator has no bearing on the court’s power under Section 29A, which stands on its own footing.

The contractual relationship between the parties was governed by three agreements to sell. As disputes arose, the Madras High Court appointed a sole arbitrator by an order dated 19.04.2022. Pleadings were completed on 20.08.2022, which date commenced the twelve-month period under Section 29A (1) of the Arbitration Act. Before its expiry, the parties jointly extended the mandate by a further six months to 20.02.2024. Following protracted settlement discussions, the arbitrator passed an award on 11.05.2024, by which point the mandate had already terminated. Before the Madras High Court, the Respondent filed an application under Section 34 of the Arbitration Act to set aside the award on the ground of expired mandate. The Petitioner filed a Section 29A application on 12.11.2024 seeking retrospective extension. The Madras High Court dismissed the extension application as not maintainable, and relying on that order, allowed the Section 34 petition on 14.02.2025.

The Supreme Court reversed both orders. Placing reliance on Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., 2024 SCC OnLine SC 2494 and drawing on the 176th Report of the Law Commission of India, the Court reasoned that the legislative intent behind Section 29A was never to terminate arbitral proceedings but to compel their timely progress, with judicial intervention operating as a facilitative and corrective mechanism. The Court held that the expression “if an award is not made” in Section 29A (4) is employed in the context of enabling the court to extend the mandate and does not address the situation where an award has been rendered after the mandate expired.

Further the Court held that the word “terminate” in Section 29A (4) is transitory and conditional upon the non-filing of an extension application and is not absolutistic in character. A unilateral act by the arbitrator in rendering a post-mandate award therefore cannot denude the court of its jurisdiction under Section 29A. The Court also clarified that a post-mandate award need not be challenged under Section 34 of the Arbitration Act but may be validated if the court subsequently extends the mandate on sufficient cause being shown, whereupon the tribunal continues proceedings from the stage at which the mandate had expired.

This decision reiterates that Section 29A of the Arbitration Act must be interpreted to preserve and advance the arbitral process rather than abort it.

Contributors to the newsletter

Abhishek Sharma, Partner

Shravan Yammanur, Partner

Mangesh Krishna, Senior Associate

Prachi Kaushik, Associate

Gaurav Majumdar, Associate

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