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Ankhim Holdings Pvt. Ltd. v. Zaveri Construction Pvt. Ltd.

Civil Appeal · 2026 INSC 137Decided 4 Feb 2026
C.A. No.-000779-000779 - 2026
Justice J.B. Pardiwala · Justice K.V. Viswanathan

Background

The appellants and the respondent had partnered on a slum redevelopment project in Mumbai, and their disputes were referred to arbitration before a retired judge. While arbitration was underway, the respondent company went into insolvency proceedings (CIRP) before the NCLT, triggering a moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC). Certain arbitral hearings and orders (permitting sale of some flats) took place between March and August 2022, a period that later turned out to overlap with the moratorium. When the original arbitrator's mandate ended and the Bombay High Court appointed a substitute arbitrator under Section 15(2) of the Arbitration Act, the High Court also went further and declared all arbitral proceedings held during that seven-date window a "nullity" because they occurred during the moratorium, prompting this appeal.

Decision Breakdown

The Supreme Court held that under Section 15(2) of the Arbitration Act, a court's role when substituting an arbitrator is narrow. It is not an appellate power to invalidate the substituted arbitrator's prior orders, and Sections 15(3) and 15(4) make clear that earlier proceedings and orders remain valid despite a change in the tribunal's composition unless the parties agree otherwise. Relying on its own five-judge bench ruling that the Arbitration Act is a "self-contained code," the Court found the High Court had exceeded its jurisdiction under Section 15(2) by effectively setting aside Section 16 and Section 17 orders of the tribunal outside the appeal mechanism specifically provided under Section 37 of the Act. Because significant time had passed and third-party home-buyers had already acquired rights in the flats sold pursuant to the arbitral orders, the Court invoked its special power under Article 142 of the Constitution to declare those transactions lawfully valid, while otherwise allowing the substitute arbitrator to continue the proceedings. The appeal was accordingly allowed in part, setting aside only the "nullity" finding.

Lesson Learnt

A court substituting an arbitrator under Section 15(2) of the Arbitration Act cannot use that occasion to invalidate the earlier arbitral tribunal's orders: challenges to arbitral orders must go through the specific appeal routes the Act provides (such as Section 37), and courts should be cautious not to unsettle transactions that innocent third parties have already relied upon.

Official source (sci.gov.in)View Judgment (PDF)

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