Arbitral Award Set Aside for Undue Haste and Lack of Jurisdiction as Bombay High Court Clarifies Seat vs Venue

Can an arbitral award survive when it is passed with “undue haste” by an arbitrator whose very appointment was under a cloud of legal challenge, and does a Commercial Court at the site of the work lose jurisdiction simply because the arbitrator held sittings elsewhere? In Shinde and Sons v. Godawari Marathwada Irrigation Development Corporation and Anr.¹,The Bombay High Court negated these propositions. The Court held that when an arbitrator willfully brushes aside the impact of related civil court decrees and proceeds ex-parte while a challenge to his jurisdiction is pending before higher courts, the resulting award is patently illegal. Furthermore, the Court clarified that in the absence of a designated “seat” in the contract, the court where the cause of action arose such as where the work was executed retains jurisdiction regardless of where the physical sittings of the tribunal took place.

Factual Evolution: From Tender to the ₹102 Crore Award 

The factual matrix of this dispute traces back to a 1990-91 tender for canal construction work on the Majalgaon Right Bank Canal, with an estimated cost of approximately ₹1.15 Crores. Although the work was slated for completion by August 1993, it was significantly delayed and only concluded in June 2006. This delay led to a series of legal battles, including civil suits (RCS No. 258 of 1994 and RCS No. 221 of 1995) that were initially compromised, with the contractor waiving claims for rate revisions in exchange for the revocation of a termination order. However, fresh disputes emerged following the final bill in 2006, leading to the appointment of multiple successive arbitrators. Ultimately, the contractor selected Mr. B.B. Jadhav from a list provided by the Chief Engineer. Despite vigorous objections from the Corporation regarding his eligibility and the subsequent appointment of a different arbitrator (Mr. A.R. Kamble) by the Department, Mr. Jadhav proceeded with the arbitration. While the Corporation’s challenge to his appointment was pending before the High Court and subsequently the Supreme Court, Mr. Jadhav conducted seven meetings in quick succession and passed a massive ex-parte award of over ₹102 Crores with 18% interest.

The rationale provided by the High Court for upholding the setting aside of this award centers on procedural impropriety and patent illegality. The Court noted that the arbitrator exhibited bias by proceeding in a “hurried manner” and showed a complete disregard for the principles of natural justice by ignoring the Corporation’s pending legal challenges. Crucially, the Court emphasized that the arbitrator failed to consider the impact of the 1994-95 civil court compromises, which had a prima facie bearing on the claims. On the jurisdictional front, the Court relied on the Supreme Court’s decision in BGS SGS Soma JV v. NHPC Limited², noting that since the agreement did not designate a “seat,” the jurisdiction of the District Court at Beed was valid because the cause of action the execution of the contract arose there. The Court rejected the appellant’s reliance on Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited³, distinguishing it by clarifying that when no seat is designated, a mere “venue” chosen for the arbitrator’s convenience does not confer exclusive jurisdiction.

Conclusion 

The Bombay High Court reaffirmed that the sanctity of an arbitral award is tied to the fairness of the process and the arbitrator’s respect for the rule of law. By proceeding ex-parte with “undue haste” while the very foundation of his authority was being questioned in the Supreme Court, the arbitrator rendered the award unsustainable. The judgment serves as a vital reminder that arbitration is not a license to bypass the impact of prior judicial decrees or to ignore the fundamental principles of territorial jurisdiction. Consequently, the High Court dismissed the appeal, leaving the parties at liberty to appoint a fresh arbitrator to adjudicate the long-standing dispute.

Citations

1. Shinde and Sons v. Godawari Marathwada Irrigation Development Corporation and Anr., (2026) ibclaw.in 2300 HC ↩︎
2. BGS SGS Soma JV v. NHPC Limited (2020) 4 SCC 234 ↩︎
3. Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited (2017) 7 SCC 678 ↩︎

Expositor(s): Adv. Jahnobi Paul