Summary: This article analyses the Supreme Court’s decision in Ankhim Holdings Pvt. Ltd. & Anr. v. Zaveri Construction Pvt. Ltd., which reiterates the limited role of courts under Section 15(2) of the Arbitration and Conciliation Act, 1996. The Supreme Court held that substitution of an arbitrator does not permit courts to revisit or nullify prior arbitral proceedings, reaffirming the Act’s self‑contained structure and its emphasis on minimal judicial intervention.
In Ankhim Holdings Pvt. Ltd. & Anr. v. Zaveri Construction Pvt. Ltd., Civil Appeal No. 779 of 2026,the Supreme Court addressed a critical issue arising from a dispute over the scope of judicial powers under Section 15(2) of the Arbitration and Conciliation Act, 1996 (“Act”).
The judgment reaffirmed principles of minimal judicial intervention while clarifying the interplay between arbitrator substitution, preservation of prior proceedings, and the self-contained nature ofthe arbitration framework under the Act.
Factual Background
Ankhim Holdings (“Appellant”) and Zaveri Construction (now under liquidation) (“Respondent”) entered into a partnership to develop an SRA project in Mumbai. Disputes arose, prompting the Appellant to file an application under Section 9 of the Act before the Bombay High Court. The parties worked out an interim arrangement for the continuation of the project and, accordingly, the Bombay High Court recorded consent terms between the parties and appointed a sole arbitrator.
Soon thereafter, moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, was imposed on the Respondent.
Given the moratorium, the Appellant filed two petitions under Section 9 of the Act seeking permission to sell certain flats per the consent terms and restraining the Resolution Professional from interfering with such sales.
The Bombay High Court disposed of these petitions, granting liberty to the Appellant to approach the Arbitral Tribunal under Section 17 of the Act. Meanwhile, the Respondent (through the Resolution Professional) filed an application under Section 16 of the Act before the Arbitral Tribunal, seeking stay of arbitration proceedings in light of the moratorium.
The Arbitral Tribunal rejected the Respondent’s application under Section 16 of the Act and, vide separate orders, permitted the Appellant to execute sale agreements for certain flats.
The Respondent was put into liquidation soon thereafter. The Arbitral Tribunal passed an order terminating the arbitration proceedings. The Appellant filed a petition seeking the substitution of the sole arbitrator. While appointing a substitute sole arbitrator, the Bombay High Court observed that proceedings undertaken by the Arbitral Tribunal during the subsistence of the moratorium, were a nullity.
The issue before the Supreme Court was whether a court exercising jurisdiction under Section 15(2) of the Arbitration and Conciliation Act, 1996, which permits the substitution of arbitrators under specific circumstances, could pass orders such as those issued by the Bombay High Court, in relation to declaring previous proceedings conducted by the Arbitral Tribunal during the moratorium period as a nullity.
Views of the Supreme Court
Scope of Section 15(2) of the Act, 1996
The Supreme Court held that Section 15(2) must be read with Sections 15(3) and 15(4) of the Act. The jurisdiction under Section 15(2) is circumscribed and must be defined with reference to the Court’s powers under Section 11 of the Act.Relying on Yashwith Constructions Pvt. Ltd. v. Simplex Concrete Piles India Ltd., (2006) 6 SCC 204, the Supreme Court reaffirmed that “the appointment of the substitute arbitrator must be done according to the original agreement or provision applicable to the appointment of the arbitrator at the initial stage.”
It emphasised that Section 15(3) of the Act provides that any hearing previously held may be repeated at the discretion of the Arbitral Tribunal, subject to agreement between the parties. Referring to Section 15(3) of the Act, the Supreme Court noted that “[…] if the parties agree for repetition of hearing, the term ‘may’ transforms into ‘shall’. Whereas, if the parties agree for non-repetition of hearing, the term ‘may’ transforms into ‘shall not’. In case the parties fail to arrive at a conclusion, the arbitral tribunal would decide whether the hearing already conducted before his substitution would be repeated.”
Further, Section 15(4) of the Act expressly provides that an order or ruling of the arbitral tribunal made prior to substitution shall not be invalid solely because of a change in composition of the tribunal. Relying on Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., 2005 SCC OnLine SC 2578, the Supreme Court held that “substitution preserves continuity, and prior proceedings remain valid unless either party objects.”
Relying on Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996, & Stamp Act, 1899, In re, (2024) 6 SCC 1, the Supreme Court held that the Act is a self-contained code on matters dealing with appointment of arbitrators, commencement of arbitration, making of awards, and challenges thereto. When a self-contained code sets out a procedure, it implies that the general legal procedure is excluded. Accordingly, a court acting under Section 15(2) cannot adopt a procedure that lets it exercise jurisdiction the Act itself denies.
In this case, theHigh Court had, while exercising jurisdiction under Section 15(2) of the Act impermissibly:(i) set aside an order rejecting an application under Section 16, even though the Act does not provide for it; (ii) set aside orders under Section 17, but not through the appropriate process under Section 37 (i.e., the statutory appellate remedy); and (iii) set aside other procedural orders, even though no court is vested with the power to exercise such jurisdiction under the Act. The Supreme Court relied on the ratio in Official Trustee v. Sachindra Nath Chatterjee, 1968, SCC OnLine SC 103,which held that“the High Court is not empowered to nullify orders which it had no jurisdiction to consider.”
The Supreme Court held that the Bombay High Court exceeded its jurisdiction by declaring prior proceedings as a nullity when the Act itself preserves their validity.
It allowed the appeal in part, overturning the impugned order only to the extent that it had declared the Arbitral Tribunal proceedings during the moratorium period as a nullity. Considering the long lapse of time and creation of third-party rights, the Supreme Court exercised jurisdiction under Article 142 of the Constitution of India to declare that the third-party sale transactions as lawfully valid.
Conclusion
This ruling decisively reaffirms the limited and carefully demarcated role of courts within India’s arbitration framework. The Supreme Court emphasised that arbitral orders cannot be overturned without statutory authority simply because of a substitution. This decision reinforces arbitral autonomy and efficiency of the arbitral process.
For parties and practitioners, the message is unambiguous: substitution under Section 15(2) maintains continuity and is not an opportunity to reopen or invalidate prior proceedings or derail adjudication. Challenges to interim orders must be channelled through statutory pathways contemplated under the Act, not via collateral routes. With its pragmatic safeguard of third‑party rights under Article 142, the judgment also reflects the Supreme Court’s commitment to commercial certainty and equitable outcomes.
Ultimately, the decision strengthens confidence in the arbitral process by ensuring that courts act as facilitators, not disruptors, of arbitration, preserving procedural stability and statutory integrity.