बॉम्बे HC ने SAP मध्यस्थ न्यायाधिकरण का कार्यकाल एक वर्ष बढ़ाया, CIRP को पर्याप्त कारण मानते हुए

Bombay High Court: In a petition seeking extension of the mandate of the Arbitral Tribunal constituted by the Supreme Court and presided over by Justice Madan Lokur under Section 29-A (5), Arbitration and Conciliation Act, 1996 (Arbitration Act), a Single Judge Bench of Arif S. Doctor, J., held that the petitioner had made out sufficient cause for extending the mandate of the Tribunal. The Court observed that the arbitral proceedings had been adjourned sine die after the respondent was admitted into the corporate insolvency resolution process (CIRP) and the moratorium under Section 14, Insolvency and Bankruptcy Code, 2016 (IBC), came into force, following which the respondent invoked fresh arbitration involving a virtually identical claim. The Court further noted that the petitioner had pursued its jurisdictional challenge before the subsequently constituted tribunal, this Court and the Supreme Court and had approached the Justice Lokur Tribunal promptly after the Supreme Court dismissed its special leave petition (SLP). The Court held that the delay could not be attributed to any deliberate, wilful or negligent default on the part of the petitioner or the Tribunal and accordingly extended the mandate of the Justice Lokur Tribunal by 1 year.

Background

The petitioner and respondent had entered into a contract for provision of business software and related implementation services, with Clause 15.7 of the General Terms and Conditions providing for arbitration. The petitioner claimed that certain amounts remained outstanding and, pursuant to an order of the Supreme Court dated 2 January 2019, the Justice Lokur Tribunal was constituted. The petitioner filed its statement of claim on 22 March 2019 claiming ₹ 17,98,47,906. On 4 July 2019, the parties consented to an extension of 6 months for completion of the arbitral proceedings, following which the respondent filed its statement of defence and counter-claim claiming ₹ 45,99,71,098.

On 22 October 2019, after completion of pleadings, the National Company Law Tribunal (NCLT), Mumbai admitted the respondent into CIRP. Consequently, the moratorium under Section 14 IBC came into force, resulting in an automatic stay of legal proceedings against the respondent. The Justice Lokur Tribunal therefore informed the parties on 5 November 2019 that the arbitral proceedings stood adjourned sine die. Thereafter, on 7 November 2019, the respondent issued a fresh notice invoking arbitration against the petitioner and its parent company, SAP SE and subsequently approached the Supreme Court under Section 11, Arbitration Act.

On 16 December 2021, the NCLT directed liquidation of the respondent since no resolution plan was forthcoming. The petitioner lodged its claim with the liquidator on 21 February 2022, which was admitted by the liquidator. The respondent’s subsequent arbitration resulted in constitution of the Justice Mohit Shah Tribunal. The Supreme Court, while allowing the respondent’s Section 11, Arbitration Act petition, kept open the petitioner’s rights and contentions to raise objections before the Justice Shah Tribunal.

The petitioner thereafter challenged the jurisdiction of the Justice Shah Tribunal, including on the ground that substantially the same subject matter was already pending before the Justice Lokur Tribunal. The challenge was rejected by the tribunal, and the petitioner thereafter pursued the matter before the Court and the Supreme Court. The Supreme Court dismissed the petitioner’s SLP on 23 January 2026. The petitioner approached the Justice Lokur Tribunal on 2 February 2026 seeking resumption of the original arbitration.

On behalf of the petitioner, it was submitted that the delay was occasioned by circumstances beyond its control, including the respondent’s admission into CIRP, the statutory moratorium, the subsequent invocation of fresh arbitration and the petitioner’s pursuit of its jurisdictional objections before the Justice Shah Tribunal, the Court and the Supreme Court. It was submitted that the petitioner had acted promptly after the jurisdictional challenge was finally exhausted and therefore could not be treated as having abandoned the original arbitration.

On behalf of the respondent, it was submitted that the Justice Lokur Tribunal had become functus officio and that the petitioner had failed to demonstrate sufficient cause under Section 29-A (5), Arbitration Act. The respondent also contended that the petitioner had remained a “fence sitter” by participating in the subsequent arbitration and approaching the original Tribunal only after considerable delay. It was further submitted that the petitioner’s claim had already been lodged with and adjudicated by the liquidator and that continuation of the original arbitration would serve no useful purpose.

Analysis

The Court observed that it was well settled, in view of Rohan Builders (India) (P) Ltd. v. Berger Paints (India) Ltd., (2025) 10 SCC 802, that the time to complete arbitration proceedings can be extended after the expiry of the initial 12-month period or the extended 6-month period. However, the question before the Court was whether the petitioner had made out sufficient cause for extending the mandate of the Justice Lokur Tribunal under Section 29-A (5), Arbitration Act.

The Court noted that the legislative intent underlying Section 29-A, Arbitration Act is to ensure that arbitral proceedings proceed expeditiously and that an arbitral award is rendered within the prescribed timelines. The Court referred to C. Velusamy v. K. Indhera, (2026) 5 SCC 340, wherein the Supreme Court held that the court must exercise its discretion under Section 29-A after carefully examining the facts and circumstances of each case and not as a matter of routine. The Court further referred to Ajay Protech (P) Ltd. v. General Manager, (2026) 7 SCC 452, where it was observed that the expression “sufficient cause” must be understood in the context of the underlying purpose of arbitration, namely, the resolution of disputes through the mechanism agreed upon by the parties.

The Court emphasised that where arbitration proceedings do not conclude within the prescribed timelines for reasons beyond the parties’ or tribunal’s control, or where the delay is not due to any wilful default or deliberate attempt to delay by the party applying for an extension, it would be manifestly unjust not to condone the delay if sufficient cause is shown.

The Court noted that after completion of pleadings before the Justice Lokur Tribunal, the respondent was admitted into CIRP, resulting in a stay of legal proceedings against it under Section 14 IBC. It was in these circumstances that the Justice Lokur Tribunal adjourned the proceedings sine die. The respondent thereafter invoked fresh arbitration against the petitioner and SAP SE, in which it made a virtually identical claim against the petitioner as the counterclaim filed before the Justice Lokur Tribunal. The Court further noted that when the Supreme Court allowed the respondent’s Section 11, Arbitration Act petition, it specifically kept open all rights and contentions of the petitioner to raise objections before the Justice Shah Tribunal. The petitioner was therefore fully justified in contesting the jurisdiction of the Justice Shah Tribunal.

The Court further observed that the Supreme Court dismissed the petitioner’s SLP on 23 January 2026 and that the petitioner approached the Justice Lokur Tribunal on 2 February 2026, within a short period, thereafter, seeking resumption of the original arbitration. The Court held that, immediately after the jurisdictional challenge was finally exhausted, the petitioner acted promptly to seek resumption of the proceedings. This conduct was inconsistent with any suggestion that the petitioner had abandoned the arbitration before the Justice Lokur Tribunal. The Court therefore held that the respondent’s contention that the petitioner was a “fence sitter” was ill-founded.

The Court also considered the respondent’s conduct in withdrawing its counterclaim before the Justice Lokur Tribunal while opposing continuation of the proceedings on the ground that the petitioner’s claim had already been adjudicated by the liquidator. The Court observed that the petitioner was thereby placed in a position where its claim could effectively be prevented from being adjudicated through no fault of the petitioner. The respondent’s contention that the petitioner’s claim had already been adjudicated by the Official Liquidator did not, at that stage, take the matter any further, particularly having regard to Regulation 29 IBC, which recognised the right to claim mutual credits and set-off. The Court clarified that this was not something it was required to consider while deciding whether the petitioner had made out a case for extension under Section 29-A (5), Arbitration Act, and that the respondent remained free to raise such objections before the tribunal.

The Court accordingly held that the petitioner had made out a case for extension of the mandate of the Justice Lokur Tribunal. The delay in completion of the arbitral proceedings could not, in the facts of the case, be attributed to any deliberate, wilful or negligent default on the part of the petitioner, much less the Tribunal. The Court observed that permitting the mandate to lapse without affording the petitioner an opportunity to have its pending claim adjudicated would defeat rather than advance the underlying object of the arbitral process.

Decision

Accordingly, the Court allowed the petition and extended the time limit for the Arbitral Tribunal to make an award by 1 year with no order as to costs. The extended period was directed to commence from the date on which a copy of the order was uploaded.

[SAP India (P) Ltd. v. Cox and Kings Ltd., Commercial Arbitration Petition No. 865 of 2026, decided on 10-9-2026]

Advocates who appeared in this case:

For the Petitioner: Yohaann Limathwalla, Farhad Sorabjee, Pratik Pawar, Shanaya Cyrus Irani, Siddhesh S. Pradhan i/b J. Sagar Associates

For the Respondent: Navdeep Dahiya, Hiroo Advani, Janhavi Sakalkar, Hitanshi Mehta i/b Advani Law, Bharucha & Partners

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