Introductory Overview
In Harshbir Singh Pannu & Anr. v. Jaswinder Singh, decided on 8 December 2025, the Supreme Court of India undertook a comprehensive examination of the statutory scheme governing termination of arbitral proceedings under the Arbitration and Conciliation Act, 1996. The judgment resolves long-standing doctrinal confusion on whether arbitral proceedings can be terminated for non-payment of arbitrator’s fees under Sections 25, 38, or only under Section 32 of the Act.
Arising from an appeal against a judgment of the Punjab & Haryana High Court, the case also addressed the remedies available against such termination, the scope of recall powers of an arbitral tribunal, and the permissibility of re-initiating arbitration after termination. The decision is significant for arbitrators, counsel, and commercial litigants, as it clarifies statutory interpretation, curtails procedural misuse, and reinforces party autonomy while cautioning against dilatory tactics in arbitration.
Case Snapshot
- Case Title: Harshbir Singh Pannu & Anr. v. Jaswinder Singh
- Court: Supreme Court of India
- Bench: J.B. Pardiwala J. and R. Mahadevan J.
- Date of Judgment: 8 December 2025
- Citation: 2025 INSC 1400
- Statutes Involved:
- Arbitration and Conciliation Act, 1996 (Sections 25, 32, 38, 14)
- Subject Area: Arbitration & Commercial Law
Brief Facts of the Case
The dispute between the parties was referred to arbitration pursuant to an arbitration agreement. During the arbitral proceedings, the Sole Arbitrator enhanced his fees in line with the Fourth Schedule to the Act, without the consent of the parties. The appellants objected to the enhancement and challenged it before the High Court.
While the challenge was pending, the arbitrator terminated the arbitral proceedings on the ground of non-payment of fees. The appellants approached the High Court, which upheld the termination, holding that such power flowed from Section 38(2) of the Act and that the aggrieved party must either seek recall before the arbitrator or challenge the termination under Section 14(2). Aggrieved, the appellants approached the Supreme Court.
Issues Before the Court
- Whether arbitral proceedings can be terminated for non-payment of arbitrator’s fees under Sections 25 or 38, independent of Section 32 of the Act.
- Whether Section 32 of the Arbitration and Conciliation Act, 1996 is exhaustive of all modes of termination of arbitral proceedings.
- What remedies are available against an order terminating arbitral proceedings.
- Whether an arbitral tribunal has the power to recall an order terminating proceedings.
Court’s Analysis & Reasoning
The Supreme Court undertook an extensive statutory and comparative analysis, including the legislative history of the UNCITRAL Model Law, to interpret the scheme of the Act. The Court held that Section 32 is exhaustive and the sole repository of power for termination of arbitral proceedings. Sections 25, 30, and 38 merely describe circumstances that may lead the tribunal to invoke Section 32(2); they do not confer independent termination powers.
Relying on Lalitkumar V. Sanghavi v. Dharamdas Sanghvi and reaffirmed by ONGC Ltd. v. Afcons Gunanusa JV, the Court clarified that termination for non-payment of fees falls within Section 32(2)(c), i.e., where continuation of proceedings becomes unnecessary or impossible. The Court rejected the view that Section 38(2) independently authorises termination.
On remedies, the Court harmonised conflicting precedents and held that the first remedy against termination is to seek recall before the arbitral tribunal itself, limited strictly to procedural errors or oversight of material facts. A recall does not permit review on merits. Only thereafter can statutory remedies be explored.
Key Findings / Ratio Decidendi
- Section 32 of the Arbitration and Conciliation Act, 1996 is exhaustive of all forms of termination of arbitral proceedings.
- Termination for non-payment of arbitrator’s fees can only be traced to Section 32(2)(c).
- Sections 25, 30, and 38 do not create independent termination powers.
- An arbitral tribunal has a limited procedural power of recall of a termination order, but no power of substantive review.
- Ordinarily, a party responsible for termination should not be permitted to re-initiate arbitration.
Practical & Legal Implications
For arbitrators, the judgment draws a clear boundary on fee-related powers and reinforces the requirement of party consent. For litigants and counsel, it underscores the seriousness of fee defaults and limits strategic non-payment as a dilatory tool.
The ruling will reduce forum shopping and parallel proceedings by standardising remedies against termination orders. It also strengthens finality in arbitration while cautioning against procedural abuse that burdens both arbitral and judicial systems.
Lex Maven Insight
This judgment restores doctrinal discipline to arbitration practice in India. Practitioners should advise clients that non-payment of fees is no longer a low-risk tactical choice. Challenges to fee fixation must be timely and strategically sequenced, keeping in mind that termination may bring finality to the reference.
Going forward, arbitration clauses and fee arrangements must be drafted with greater precision. The Court’s observations also signal legislative introspection, especially with the Arbitration and Conciliation Bill, 2024 under consideration, suggesting further statutory refinement may follow.
Conclusion
The Supreme Court’s decision in Harshbir Singh Pannu provides long-awaited clarity on termination of arbitral proceedings and remedies under the Arbitration Act. By reaffirming Section 32 as the statutory cornerstone, the Court balances party autonomy with procedural integrity and reinforces arbitration as a disciplined alternative to litigation.
— Lex Maven LLP | Legal Insight. Strategic Thinking.
