Supreme Court of India· 11 March 2026

Under the Arbitration and Conciliation Act, 1996, when statutory waiver under Section 4 does not attract, is a party's prior conduct still relevant to how the contract was understood?

MUNICIPAL CORPORATION OF GREATER MUMBAI v. M/S R.V. ANDERSON ASSOCIATES LIMITED

2026 INSC 228
Coram: J.K. Maheshwari; Atul S. Chandurkar

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Answer

Yes. Although statutory waiver under Section 4 does not attract where the Section 16 challenge is filed prior to the statement of defence, the party's conduct in not objecting through three appointments of the Presiding Arbitrator without any demur remains a relevant consideration in understanding how the parties themselves interpreted the contract.

Headnote

Arbitration and Conciliation Act, 1996 — s.4, s.16, s.34, s.37 — Constitution of arbitral tribunal — Enabling clause vs. mandatory appointment — Arbitration and Conciliation Act, 1996 — Contractual clause on appointment of third arbitrator — Enabling, not restrictive — Held: A contractual clause permitting either party to approach ICSID after the co-arbitrators fail to name the third arbitrator within the stipulated period is an enabling provision, not a bar on the co-arbitrators' power. Absent a request by either party to ICSID, the co-arbitrators retain the power to appoint the third arbitrator even after the period expires. (¶30) Arbitration and Conciliation Act, 1996 — s.34, s.37 — Scope of interference — Plausible interpretation not disturbed — Held further: Where the arbitral tribunal has reached a plausible interpretation of the contract, a court under Section 34 or Section 37 cannot substitute its own view merely because another interpretation is possible. Interference remains narrow, and courts must respect arbitral autonomy and ensure minimum judicial interference. (¶36) Arbitration and Conciliation Act, 1996 — s.4 — Conduct short of statutory waiver — Relevant to interpreting the contract — Held further: Even where a timely Section 16 challenge means statutory waiver under Section 4 does not attract, a party's conduct in not objecting through three appointments of the Presiding Arbitrator without any demur remains relevant to how the parties themselves understood the contract. The appeals are dismissed. (¶66, 68)

In the Court's own words

Paragraph 61From the above judgements, it is clear that statutory waiver under Section 4 of the 1996 Act would attract in case an objection under Section 16 challenging the composition of tribunal and lack of jurisdiction is not filed prior to the time-limit as prescribed under Section 16(2). In the present case, the application under Section 16 has been filed within the said time-limit. Therefore, it cannot be said that the MCGM is completely precluded from raising a challenge of this nature. As such, statutory waiver under Section 4 does not attract in the present case since a timely challenge to the jurisdiction of the Arbitral Tribunal has been made by the MCGM. 41

Paragraph 66In the present case, the MCGM was completely aware about the non-compliance of a contractual requirement under the arbitration agreement which it alleges. It proceeded with the arbitration process without any demur, agreed to keep the arbitration proceedings in abeyance to pursue other methods of dispute resolution (mediation / conciliation), and did not object to such non-compliance on three different occasions when such alleged non-compliance took place. In such a case, filing of an application under Section 16 of the 1996 Act cannot regularize or condone its conduct and such conduct is a relevant consideration to decipher its understanding of the contractual terms while deciding the Section 16 application on merits by the Tribunal even in the absence of statutory waiver under Section 4 being attracted.

Acts & Sections

s.16 Arbitration and Conciliation Act, 1996s.4 Arbitration and Conciliation Act, 1996s.34 Arbitration and Conciliation Act, 1996s.37 Arbitration and Conciliation Act, 1996

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Also decided in this judgment

Under the Arbitration and Conciliation Act, 1996, whether the arbitral award deserves to be set aside on the ground of lack of jurisdiction due to improper constitution of the arbitral tribunal or patent illegality?Does a clause requiring co-arbitrators to jointly appoint the third arbitrator within thirty days become mandatory once that period expires, without the parties themselves approaching ICSID?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections