Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan ruled that the appropriate remedy for a party aggrieved by such termination is to first file an application for recall before the Arbitral Tribunal, and if rejected, to approach the Court under Section 14(2) of the Act. The Bench explicitly barred the filing of fresh applications under Section 11 to initiate a second round of arbitration.

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No Fresh Section 11 Petition Against Termination of Arbitral Proceedings; Remedy Lies in Recall Application or Section 14(2): SC
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December 9, 2025 11:30 AM

In a significant judgment settling the law regarding the termination of arbitral proceedings and the remedies available against such orders, the Supreme Court has held that an order terminating proceedings for non-payment of fees under Section 38 of the Arbitration and Conciliation Act, 1996 (“Act, 1996”) is essentially an order under Section 32(2)(c). A Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan ruled that the appropriate remedy for a party aggrieved by such termination is to first file an application for recall before the Arbitral Tribunal, and if rejected, to approach the Court under Section 14(2) of the Act. The Bench explicitly barred the filing of fresh applications under Section 11 to initiate a second round of arbitration.

Background of the Case
The appeal arose from a partnership dispute involving ‘M/s Amritsar Health & Hospitality Services’. Following disputes over capital contributions and management, the appellants invoked the arbitration clause. The Punjab and Haryana High Court appointed a Sole Arbitrator in March 2020, directing fees to be determined per the Fourth Schedule of the Act.

The Sole Arbitrator initially fixed the fee based on the Statement of Claim. However, after the respondent filed a counter-claim of over Rs. 82 Crores, the Arbitrator revised the fee to Rs. 37,50,000/-. The appellants expressed inability to pay the enhanced fee for both the claim and counter-claim. Since neither party was willing to pay the requisite fees, the Sole Arbitrator terminated the proceedings on March 28, 2022, invoking Section 38 of the Act.

The appellants challenged this termination via a Writ Petition, which was dismissed. Subsequently, they filed a fresh petition under Section 11(6) for the appointment of a new arbitrator, which the High Court rejected as not maintainable. The appellants then approached the Supreme Court.

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Legal Issues
The Supreme Court addressed three core questions:

The meaning of “termination of arbitral proceedings” under various provisions of the Act.
Whether termination under Section 38 (non-payment of costs) is the same as termination under Section 32.
The remedy available to a party aggrieved by an order terminating proceedings.
The Court’s Analysis
1. Source of Power to Terminate Proceedings The Court analyzed Sections 25 (default of party), 30 (settlement), 38 (deposits), and 32 (termination) of the Act. The Bench held that Section 32 is exhaustive and is the sole repository of the Tribunal’s power to terminate proceedings.

Justice Pardiwala, authoring the judgment, observed:

“The power of the arbitral tribunal to terminate the proceedings under the scheme of the Act, 1996 lies only in Section 32(2). The other provisions, namely, Section(s) 25, 30 and 38 of the Act, 1996, only denote the circumstances in which the tribunal would be empowered to take recourse of Section 32(2) and thereby, terminate the proceedings.”

The Court clarified that the phrase “the mandate of the Arbitral Tribunal shall terminate” in Section 32(3) applies to all forms of termination, rejecting previous distinctions made in SREI Infrastructure Finance Ltd. v. Tuff Drilling regarding Section 25(a). The Court stated:

“Irrespective of whether the proceedings are terminated on account of the rendition of a final award, or by the withdrawal of claims, or on account of default by the claimant… the legal effect remains the same, inasmuch as the arbitral tribunal thereafter stands divested of authority to act in the reference