Joint Application U/S 29A Of Arbitration Act Amounts To Valid Waiver U/S 4 Except In Cases Of Statutory Ineligibility U/S 12(5): Supreme Court

The Supreme Court held that a Joint Application under Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act) amounts to a valid waiver under Section 4, except in cases of statutory ineligibility under Section 12(5).

The Court held thus in a Civil Appeal filed against the Judgment of the Patna High Court by which it dismissed the Request Case filed under Section 11 of the A&C Act.

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan observed, “The harmonious construction lies in recognizing that only Seventh Schedule disqualifications attract the stringent waiver regime of Section 12(5). In all other cases viz., procedural lapses, delays, or non-jurisdictional irregularities, Section 4 applies. Accordingly, a joint application under Section 29A amounts to a valid waiver under Section 4, save in cases of statutory ineligibility under Section 12(5). Any contrary view would render Section 4 redundant and distort the legislative design.”

The Bench added that where the disqualification under Section 12(5) is attracted, the language being plain and mandatory, a joint application merely seeking extension, without an informed written waiver, cannot cure ineligibility.

“Conversely, where no such disqualification exists, the conduct of the parties, especially in jointly invoking Section 29A, constitutes waiver under Section 4”, it further observed.

Senior Advocates Navin Pahwa and Senthil Jagdeesan represented the Appellant, while AOR Manish Kumar represented the Respondents.

Factual Background

The Respondent-Bihar Rajya Pul Nirman Nigam Limited (BRPNNL) awarded a contract to the Appellant-Hindustan Construction Company Ltd. (HCCL) in 2014 for the construction of a bridge over River Sone in the Districts of Aurangabad and Rohtas, Bihar. The contract contained Clause 25 providing for settlement of disputes through arbitration. During execution of the contract, the Appellant by letter raised a claim before the Deputy Chief Engineer, BRPNNL seeking compensation for additional costs and losses incurred during the original contract period, in terms of Clause 25. Receiving no response, the Appellant preferred an Appeal before the Managing Director, BRPNNL and thereafter, issued a notice expressing its intention to commence arbitration. However, the Managing Director failed to appoint an Arbitrator within the prescribed period. Consequently, the Appellant filed an Application under Section 11 of A&C Act for appointment of Arbitrator. The High Court appointed a Sole Arbitrator who passed an Award, which was accepted by the Respondents and the awarded sum was duly paid to the Appellant.

Subsequently, the Appellant once again approached the Deputy Chief Engineer raising fresh claims relating to extension of time for completion of works and compensation for the additional costs incurred during the extended period. However, no response was received, and the Appeal to the Managing Director also remained undecided. Resultantly, the Appellant issued a notice and sought appointment of Arbitrator. As the Managing Director failed to act, the Appellant filed another Petition before the High Court. Again a Sole Arbitrator was appointed and despite having consented to arbitration and actively participated in the proceedings for over 3 years, the Respondents filed a Civil Review Application before the High Court, seeking review of the Order. The said Order was reviewed and the Arbitrator was directed not to proceed further with the ongoing arbitration. As a result, the Arbitrator suspended the arbitral proceedings sine die until further Orders. Afterwards, the High Court dismissed the Appellant’s Request Case and being aggrieved, it was before the Apex Court.

Court’s Observations

The Supreme Court in the above context of the case, said, “… the Arbitration and Conciliation Act, 1996 embodies a legislative policy of party autonomy, limited judicial intervention, and procedural self-sufficiency. Section 5 expressly restricts judicial interference except as provided under the Act, reflecting the pro arbitration intent of the legislature. Once the parties have agreed to resolve their disputes through arbitration, and such agreement satisfies the requirements of Section 7, the Court’s role becomes largely facilitative – confined to enabling, not obstructing, the arbitral process.”

Section 11 of A&C Act

The Court noted that although the power exercised by the High Court under Section 11 of A&C Act is judicial in nature, its scope remains narrow and once an Arbitrator is appointed, the arbitral process must proceed unhindered.

“There is no statutory provision for review or appeal from an order under Section 11, which reflects a conscious legislative choice. … While High Courts, as courts of record, do possess a limited power of review, such power is extremely circumscribed in matters governed by the Arbitration Act. It may be exercised only to correct an error apparent on the face of the record or to address a material fact that was overlooked. It cannot be used to revisit findings of law or reappreciate issues already decided”, it enunciated.

The Court observed that once the Section 11 Order had attained finality, the only remedies available to the Respondents were to approach the Supreme Court under Article 136 or to raise objections under Section 16 before the Arbitral Tribunal.

“Having chosen neither route, and having participated in the arbitral proceedings, including joint applications under Section 29A, they were estopped from reopening the matter through review. A later judgment cannot revive a concluded cause of action”, it remarked.

The Court emphasised that the Courts must resist “attempts to re-enter through the back door what the statute has shut through the front door”.

“Section 11 is intended to trigger arbitration, not to create multiple stages of judicial reconsideration”, it said.

The Court was of the view that the High Court did not have the jurisdiction to reopen or review its earlier Order passed under Section 11(6) of the A&C Act and once the appointment was made, the Court became functus officio and could not sit in Judgment over the very issue it had already settled.

“The review order cuts against the grain of the Act, undermines the principle of minimal judicial interference, and effectively converts the review into an appeal in disguise. Such an exercise cannot stand”, it held.

Section 7 of A&C Act

The Court further said that where parties have acted on a shared understanding to arbitrate, they are estopped from subsequently denying the existence of such an agreement.

“Having invoked and participated in the arbitral process, the respondents cannot now be permitted to resile from its earlier position. … The present contract, being a public -private contract, must withstand not only conventional contractual scrutiny but also constitutional scrutiny. As held in CORE II, arbitral appointments in public contracts must satisfy the requirements of fairness, equality, and non-arbitrariness under Article 14”, it also noted.

The Court, therefore, held that a valid and subsisting arbitration agreement exists between the parties and Clause 25, when read in its entirety and construed in accordance with the doctrine of severability, satisfies the statutory requirements of an arbitration clause under Section 7 of the Act.

Section 29A of A&C Act

The Court elucidated that Waiver is a foundational principle of arbitration, rooted in party autonomy and fairness in conduct and arbitration, being adversarial in nature, inevitably results in a winning and a losing side.

“The legislative rationale in codifying waiver is to ensure that parties do not secure a second bite at the cherry after an unfavourable outcome. Parties are not permitted to sleep over their rights. This statutory policy is in harmony with the scheme of minimal judicial intervention, where the grounds for interference with an arbitral award are narrow, and waiver operates as a significant bar to belated objections”, it clarified.

Furthermore, the Court said that the Act elevates silence to waiver by importing an element of intent, thereby preventing parties from approbating and reprobating.

“A party who has actively participated or consented to continuation of the proceedings cannot later challenge the same process merely because the result is adverse. The legislative design thus discourages tactical objections and multiplicity of proceedings”, it added.

The Court noted that a joint application under Section 29A stands on a distinct footing from ordinary acts of participation such as filing pleadings, and when both parties jointly seek an extension, they signify continued consent and confidence in the Tribunal.

“Under Section 29A(5), even a single party may apply; the other is free to oppose. The Court may, in its discretion, extend the mandate with or without substituting the arbitrator. … Thus, when a party joins in seeking extension under Section 29A despite having the opportunity to object or seek termination, it signifies a higher degree of consent. However, such consent cannot be equated with an express written waiver under Section 12(5). The statutory language is categorical: only an express written post-dispute waiver can cure Seventh Schedule ineligibility”, it observed.

Conclusion

The Court remarked that Section 12(5) protects impartiality; Section 4 regulates procedural conduct; and Section 29A ensures continuity of proceedings.

“It is necessary to restate the well-settled legal position regarding the precedential value of orders dismissing Special Leave Petitions. A non-speaking dismissal of an SLP signifies only that this Court, in its discretion under Article 136, has declined to interfere. It does not amount to approval of the reasoning of the subordinate forum. The doctrine of merger does not apply to such dismissals”, it concluded.

Accordingly, the Apex Court allowed the Appeal.

Cause Title- Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Limited and Others (Neutral Citation: 2025 INSC 1365)

Appearance:

Appellant: Senior Advocates Navin Pahwa, Senthil Jagdeesan, AOR E. C. Agrawala, Advocates Mahesh Agarwal, Rishi Agrawala, Shruti Arora, and Abhinabh Garg.

Respondents: AOR Manish Kumar, Advocates Divyansh Mishra, and Kumar Saurav.

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