In the ever-evolving theatre of Indian arbitration law, the Bombay High Court’s Division Bench judgment in Harkisandas Tulsidas Pabari & Anr. vs. Acharya & Ors. (Arb. Appeal Nos. 62 & 63 of 2007, decided on 22 July 2025) is not just a precedent—it is a bold reiteration of judicial limits and arbitral conduct. In a verdict that reminds us that arbitral autonomy cannot override statutory sanctity, the Court has laid down crucial boundaries governing recommencement of proceedings, scope of concluded contracts, and the impermissibility of enforcing impracticable specific performance under Section 34 and 37 of the Arbitration and Conciliation Act, 1996 (“the Act”).
The Factual Canvas
A Memorandum of Understanding dated 20.07.1994 formed the epicentre of the dispute, whereby the appellants (Pabaris) agreed to purchase undivided rights in a property from the Acharya brothers for Rs.18 lakhs. A General Power of Attorney was executed. Partial payments were made. Disputes arose. The MOU was terminated. Arbitration was invoked.
A sole arbitrator passed an award in 1998 granting specific performance. This was set aside on procedural grounds. In a questionable move, the same arbitrator suo motu recommenced proceedings and delivered a fresh award in 2005—again directing specific performance, and this time with conditions bordering on architectural and municipal overreach.
The Judicial Lens: A Three-Pronged Inquiry
The High Court’s analysis pivots on three determinative points:
1. Can the Same Arbitrator Recommence Proceedings Without Fresh Reference?
Here lies the first jolt to arbitral presumptuousness. After the 1998 award was set aside, the Arbitrator assumed he could simply resume proceedings without a fresh mandate. The Court held otherwise. The judgment tears apart this illusion by holding that the continuation of arbitral proceedings post-setting aside of an award cannot occur unless:
- There is a fresh invocation under Section 21 of the Act, and
- The parties consent to reappointment of the same Arbitrator.
Mere return of records to the Arbitrator did not amount to reinstatement of mandate. Without adherence to Section 21, the proceedings were vitiated ab initio.
2. Was There a Concluded Contract Capable of Specific Performance?
The MOU was a scaffold, not a structure. With no consensus on whether the entire building was to be demolished or additional floors added, the Court saw no concluded contract.
The MoU required:
- Consent of tenants (never obtained),
- Unclear modalities of development, and
- No firm blueprint for execution.
In other words, the MoU was a letter of intent masquerading as a sale deed. The Arbitrator’s award, seeking to force its performance, attempted to create clarity where ambiguity reigned.
3. Can Courts Enforce Impracticable Specific Performance?
Even if one were to stretch imagination and accept the MoU as concluded, the real estate realities of Mumbai cannot be brushed aside. The Arbitrator expected respondents to obtain consents, secure approvals, hand over possession and earmark parking—all within months.
But, as the Court rightly said, “What the arbitrator ordered was not construction—it was alchemy.”
The enforceability of specific performance depends not just on rights, but on reality. The award ignored legal and practical impediments, making its implementation judicially unsustainable.
The Broader Jurisprudential Statement
This judgment is a subtle but firm reaffirmation that:
- Arbitrators are creatures of consent, not self-anointed extensions of prior authority.
- Courts under Section 34 and 37 are not mere rubber stamps—they remain vigilant constitutional guardians ensuring that arbitral proceedings do not mutate into private legislatures.
- Specific performance cannot be imposed in abstraction. Even arbitral equity must bow before practical impossibility.
A Critique of Arbitral Adventurism
The judgment also shines a light on a rising concern in Indian arbitration: arbitral adventurism—where the arbitrator not only resolves but often recasts the contractual matrix. In this case, the Arbitrator crossed the Rubicon—issuing directions on building plans, parking allocations, pathways, and rent indemnities—without sufficient legal or factual substrate.
What results is not adjudication, but arbitral legislation. The Court has rightly reined this in.
Conclusion
The Bombay High Court’s decision is not merely about one MoU or one Award. It is a broader caution: that the authority of arbitrators, like the jurisdiction of courts, flows from procedure, from principle, and from parties—not from assumption or self-will.
It is a timely reaffirmation that the Arbitration Act is not a carte blanche, but a calibrated mechanism of dispute resolution—within statutory and constitutional guardrails.
This ruling will undoubtedly resonate in arbitral halls and boardrooms alike, reminding all that arbitral sanctity cannot be a cover for procedural shortcuts or contractual vagueness.
Disclaimer:
The views expressed herein are purely for academic and informational purposes and do not constitute legal advice. Readers are encouraged to seek independent and qualified professional opinion on specific legal issues or disputes.