Supreme Court Upholds Denial of Substitute Arbitrator Appointment Owing to Delay

The Supreme Court, on September 19, 2025, upheld the Delhi High Court's order rejecting an application filed under Section 15(2) of the Arbitration and Conciliation Act, 1996 for appointment of a substitute arbitrator, as there was no disclosure of sufficient cause for a delay of five days.

A bench of Justices P S Narasimha and Atul S Chandurkar dismissed an appeal filed by Tricolor Hotels Limited, saying that the view taken by the High Court could not be said to be perverse or resulting in manifest injustice for it to intervene in exercise of jurisdiction under Article 136 of the Constitution of India. 

"No special circumstances are shown to exist nor do the proceedings raise any issue of sufficient gravity for this court to undertake a review of the decision appealed against,'' the bench said.

Court found that the High Court considered the entire matter and was thereafter satisfied that the petitioner had failed to make out any sufficient cause for condoning the delay in filing the petition under Section 15(2) of the Act of 1996. 

As per facts of the matter, the petitioner and the respondents entered into two share purchase agreements in 2006. On disputes arising between the parties, the petitioner, in 2009, issued a notice and invoked the arbitration clause. The petitioner nominated its arbitrator and called upon the respondents to name their nominee. Since there was no response to the notice, the petitioner filed proceedings under Section 11 of the Act. In those proceedings, with the consent of parties, a sole arbitrator came to be appointed in 2010.  

During the course of the arbitration proceedings, the sole arbitrator on July 27, 2015, recused himself and indicated his inability to continue as the sole arbitrator. This fact was communicated to the parties through an email on the same date. 

The petitioner, on August 01, 201,8 filed a petition under Section 15(2) of the Act of 1996 seeking substitution of the sole arbitrator. Thereafter, on September 22, 2018, the petitioner filed an application seeking condonation of delay, if any, in filing the said proceedings.   

On November 09, 2022, the Delhi High Court's single judge rejected the application for condonation of delay on the ground that the petitioner had failed to show any sufficient cause. It also observed that condoning the delay would defeat the purpose of expeditious resolution of disputes by way of arbitration.  

The petitioner contended, in accordance with Article 137 of the Limitation Act, 1963, the period of limitation prescribed was three years from the date the right to apply accrued. Since the right to apply accrued to the petitioner when it got notice of the email sent by the sole arbitrator in the second week of August 2015, the petition filed under Section 15(2) on August 01, 2018, was prior to expiry of the period of three years, the petitioner said.

It also submitted that the period of limitation under Section 15 of the Act of 1996 would commence to run only after expiry of the period of 30 days from July 27, 2015, which was the date of the recusal of the sole arbitrator. If this period of 30 days was excluded, it was clear that the petition preferred by the petitioner on August 01, 2018 was within limitation, the petitioner contended.

Assuming that there was any delay in filing the petition, the same was only of a period of five days, it said. The reason that the petitioner’s counsel did not notice the email till the second week of August 2015 was sufficient to condone the delay, it added.

As the petitioner was diligently pursuing the proceedings, the delay ought to have been condoned so as to enable the parties to have their disputes resolved through arbitration, the petitioner's counsel said.  

The respondents contended that the share purchase agreements had been entered into in 2006, and the sole arbitrator who had been appointed on May 12, 2010, had recused himself on July 27, 2015. It was clear that even from said date, a period of about 10 years had elapsed. The petitioner was not diligent in pursuing the arbitration proceedings which was clear from its conduct. The discretion was rightly not exercised in its favour by the High Court, they said.

They submitted that the ground furnished by the petitioner for seeking condonation of delay was rightly found to not constitute ‘sufficient cause’. There was no question of the period of limitation commencing from the date of knowledge of such communication since the right to apply accrued immediately on July 27, 2015, they said.

The court, however, pointed out that after considering the grounds raised in the application for condonation of delay, the High Court found that no sufficient cause for the delay as occasioned had been furnished by the petitioner.

 An attempt to get over the aspect of delay was sought to be made by raising a plea of a technical glitch in the email account of the petitioner’s lawyer. The High Court found the explanation furnished to be ambiguous and hence was persuaded not to condone the delay, the bench pointed out.  

Court thus found no reason to entertain the special leave petition and accordingly dismissed it.   

Case Title: Tricolor Hotels Ltd Vs Dinesh Jain & Ors

Judgment Date: September 19, 2025

Bench: Justices P S Narasimha and Atul S Chandurkar