Municipal Corporation of Greater Mumbai v. R.V. Anderson Associates Limited 2026 INSC 228 - S.16 Arbitration - Statutory Waiver - Conduct Of Parties

Arbitration and Conciliation Act 1996 - Section 4,16,34,37 - Statutory waiver under Section 4 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) -Statutory waiver under Section 4 does not attract when a timely challenge to the jurisdiction of the Arbitral Tribunal has been made - However, upon making such a challenge by a party, while adjudicating the application under Section 16 on merits by the Arbitral Tribunal, or examining its rejection at the stage of Section 34 followed by Section 37, the prior conduct of the party certainly becomes a relevant consideration to decipher its understanding of the contractual scheme. This is especially so, when the jurisdictional challenge due to improper composition of the Arbitral Tribunal is made on the ground of non-compliance of the arbitration clause. In such a case, the conduct of the party right from the stage of invocation of arbitration becomes a relevant consideration. While examining the alleged departure from the contractual scheme, acquiescence by the party in its conduct, its actions pursuant to the contractual terms and how it has understood and acted as per the terms of the contract, are all crucial aid in comprehending the contractual scheme. (Para 61,62) A party cannot keep a ‘jurisdictional ace’ up their sleeve and then claim that filing of the jurisdictional challenge under 46 Section 16 would go back in time and wipe out the past conduct and acquiescence of the party which would clearly evince how the contractual terms were viewed by the parties. If the same is permitted, it will erode the basic principles of alternative dispute resolution and ethos of arbitration. (Para 67)

Contract Law - Subsequent conduct of the parties serves as a powerful practical tool to understand their contractual intent. Reliance on a party’s original understanding of obligations under a contract as well as their actions prevents a party from later 45 on adopting a legalistic interpretation which supports their case in stark contradiction of how they actually operated on the ground. (Para 67)

Arbitration and Conciliation Act 1996 - Section 34 -Courts cannot substitute the commercial wisdom of parties as is borne out from the plain meaning of the words used in the contract. The approach of the Court must be to respect arbitral autonomy and ensure minimum judicial interference. The scope of interference permissible in proceedings arising out of a challenge to the arbitral award under Section 34 is quite narrow. The arbitrator is the master of evidence and so also of interpretation of the terms of contract. If the arbitrator has reached at a certain view with respect to interpretation which is plausible, interference is not warranted merely because some other view may also be possible.  (Para 36)