Arbitral Tribunal Terminates Proceedings Under Section 32(2)(c) Citing Impossibility of Continuation

Arbitral Tribunal Terminates Proceedings After Holding Continuation 'Unnecessary And Impossible' Under Section 32(2)(c)

An arbitral tribunal terminated ongoing arbitration proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996, holding that continuation had become "unnecessary and impossible." The decision was based on the absence of a substitute arbitrator, an NCLT-imposed stay, and the expiry of the statutory timeline for completion of arbitration.

📅 08 Aug 2026 👤 For: All Legal Professionals 📰 Source: LiveLaw 👁 12 views

An arbitral tribunal has terminated arbitration proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996, after concluding that continuation of the proceedings had become both unnecessary and impossible due to a combination of procedural and legal obstacles.

The dispute arose after the respondent sought termination of the arbitration, arguing that several developments had rendered the proceedings impracticable. The claimant, represented through a Resolution Professional, opposed the request and maintained that the requirements of Section 32(2)(c) were not satisfied.

The tribunal observed that pleadings had been completed and the matter was scheduled for the recording of evidence. However, progress was interrupted when the claimant's nominee arbitrator resigned following a challenge to his independence and impartiality. Subsequent efforts to appoint replacement arbitrators proved unsuccessful, leaving the tribunal incompletely constituted.

The tribunal also noted that the proceedings remained stalled due to an interim stay granted by the National Company Law Tribunal (NCLT), Odisha Bench. In addition, the statutory period prescribed under Section 29A of the Arbitration and Conciliation Act for completion of the arbitration had expired, and no written extension of the tribunal's mandate had been obtained from the parties.

Considering the cumulative impact of these factors, the tribunal held that the absence of a substitute arbitrator, the continuing NCLT restraint order, and the expiry of the statutory timeline collectively made further continuation of the proceedings impracticable. Accordingly, the tribunal invoked Section 32(2)(c), which permits termination where continuation has become unnecessary or impossible.

While the respondent had also raised issues relating to non-payment of arbitral fees and other procedural concerns, the tribunal declined to examine those grounds separately, holding that the primary circumstances were sufficient to justify termination.

The ruling highlights the practical application of Section 32(2)(c) and underscores how procedural deadlocks, tribunal constitution issues, insolvency-related proceedings, and statutory time limitations can collectively affect the viability of arbitration proceedings in India.