Dispute Resolution Quarterly Milestones (January-March 2025)

Partner: Mohit Rohatgi, Senior Associate: Ashwini Tak, Associate: Pravah Ranka

Key Developments

High Courts clarify scope of referral court’s interference in post-award Section 11 application

In significant rulings, the Delhi and Bombay High Courts¹ have clarified the power of referral courts under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) to refer a matter to arbitration if an arbitral award from a prior arbitration proceeding concerning the same matter had been set aside under the Arbitration Act.

The Supreme Court’s ruling in Vidya Drolia v Durga Trading Corporation² established a clear legal precedent regarding the scope of the referral court’s powers under Section 11 of the Arbitration Act for the initiation of new arbitrations. The general rule laid down in this case favours referring disputes to arbitration and leaves little scope for interference by the referral court.

In the present cases, the Delhi and Bombay High Courts addressed scenarios in which parties sought to re-initiate arbitration after the initial arbitral awards were set aside under Section 34 of the Arbitration Act. Expanding the referral court’s purview in such post-award Section 11 applications, the Delhi High Court (subsequently endorsed by the Bombay High Court) held that a mechanical referral would be inappropriate and could lead to abuse of the process, allowing parties to “take a second bite at the cherry”.

This clarification reinforces the pro-arbitration stance of Indian courts, requiring parties seeking to re-initiate arbitration to carefully assess whether any ‘dispute’ remains to be adjudicated.

Supreme Court lays down test for interference with non-appealable orders passed by arbitral tribunal

In a strong affirmation of minimal judicial intervention in arbitration proceedings, the Supreme Court³ has endorsed the standards for interference laid down by the Delhi High Court in Kelvin Air Conditioning and Ventilation Systems Pvt. Ltd. v Triumph Reality Pvt. Ltd. (Kelvin),⁴ concerning orders passed by an arbitral tribunal that are not subject to appeal under the Arbitration Act.

The case involved an arbitral tribunal’s dismissal of a claimant’s application for extension of time to cross-examine a witness. Subsequently, the Delhi High Court, in a petition filed under Articles 226/227 of the Indian Constitution, overturned the arbitral tribunal’s order.

The Supreme Court, taking note of the dictum of the Delhi High Court in Kelvin, held that interference under Articles 226 and 227 is permissible “only if the order is completely perverse, i.e., that the perversity must stare in the face”.

The judgment reinforces the judiciary’s commitment to respecting arbitral procedure unless there is a clear case of perversity.

Supreme Court clarifies altered mandate for First Information Report registration under Bharatiya Nagarik Suraksha Sanhita

In a significant ruling, the Supreme Court has clarified that sub-section (3) of Section 173 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) marks a departure from the requirements under Section 154 of the former Code of Criminal Procedure (CrPC).⁵

Under Section 154 of the CrPC, the police was obligated to register a First Information Report (FIR) if the information disclosed the commission of a cognizable offence. As established in Lalita Kumari v Govt. of U.P., a preliminary enquiry was permissible only when the information did not disclose the commission of a cognizable offence. The Supreme Court has now clarified that Section 173(3) of BNSS alters this position. It allows a police officer to conduct a preliminary inquiry to determine “whether there exists a prima facie case for proceeding in the matter,” even when the information discloses a cognizable offence, specifically for offences punishable with imprisonment for three years or more but less than seven years. The rationale behind this change is to “prevent registration of FIRs in frivolous cases.”

However, the Court has cautioned that if, after completing the preliminary enquiry under Section 173(3) of BNSS, the police is of the opinion that no prima facie case is made out, they must promptly inform the complainant. This ensures that the complainant can exercise their right to seek a remedy under Section 173(4) of BNSS.

The Supreme Court’s interpretation of Section 173(3) of the BNSS thus broadens the authority of the police to conduct preliminary inquiries, even in cases where the commission of cognizable offences is initially indicated.

Supreme Court mandates approval from Competition Commission of India before Committee of Creditors approves a resolution plan

The Supreme Court⁶ has recently clarified that obtaining prior approval from the Competition Commission of India (CCI) under the proviso to Section 31(4) of the Insolvency and Bankruptcy Code 2016 (IBC) is mandatory before the Committee of Creditors (CoC) can approve a resolution plan.

The Supreme Court held that this proviso clearly mandates that CCI approval must be obtained before the CoC votes on a resolution plan. The Supreme Court reasoned that this sequence is crucial since a conditional approval or rejection by CCI could substantially change the terms of a resolution plan. In such instances, it is imperative that the CoC considers the resolution plan with such changes. The Court therefore held that not treating Section 31(4) as mandatory would be inconsistent with the law’s intent and could lead to poor or flawed decision-making.

This decision reinforces regulatory compliance in the insolvency process by mandating pre-approval from the CCI, ensuring that anti-competitive concerns are addressed upfront. It adds certainty and discipline for resolution applicants in structuring transactions falling within the ambit of the Competition Act, 2002.

[1] Jaiprakash Associates Ltd. v NPHC Ltd., 2025 SCC OnLine Del 170; and Batliboi Environmental Engineering Ltd. v Hindustan Petroleum Corpn. Ltd., 2025 SCC OnLine Bom 580

[2] Vidya Drolia v Durga Trading Corpn., (2021) 2 SCC 1

[3] Serosoft Solutions (P) Ltd. v Dexter Capital Advisors (P) Ltd., 2025 SCC OnLine SC 22

[4] Kelvin Air Conditioning and Ventilation System Pvt. Ltd. v Triumph Reality Pvt. Ltd., 2024 SCC Online Del 7137

[5] Imran Pratapgadhi v State of Gujarat, 2025 SCC OnLine SC 678

[6] Independent Sugar Corpn. Ltd. v Girish Sriram Juneja, 2025 SCC OnLine SC 181

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