Calcutta HC Quashes Arbitral Award Against Tata Steel Over Invalid Tribunal [Read Order]

New Delhi: The Calcutta High Court has set aside an arbitral award passed against Tata Steel Limited in a dispute with MSP Sponge Iron Limited, holding that participation in arbitration proceedings cannot validate a tribunal that was not constituted in accordance with law, and that an award passed by an ineligible arbitrator is void, non est, and contrary to public policy.

Justice Shampa Sarkar, while allowing Tata Steel’s application under Section 34 of the Arbitration and Conciliation Act, 1996, held that “the participation of the petitioner before a forum which was not constituted as per law and did not have the jurisdiction to decide the dispute is inconsequential,” and that “a party who cannot act as an arbitrator cannot also choose an arbitrator.”

The dispute arose from an agreement dated October 31, 2014, between Tata Steel and MSP Sponge Iron. The arbitration clause in the agreement provided that disputes would first be attempted to be resolved through consensus, failing which they would be referred to an arbitrator appointed by the seller or its nominee in accordance with the Rules of Arbitration of the Indian Council of Arbitration. In March 2017, MSP Sponge Iron invoked arbitration and unilaterally sought to appoint a senior advocate as the sole arbitrator without following the agreed procedure. Tata Steel objected to this appointment through a letter dated April 17, 2017, contending that it was contrary to the Arbitration and Conciliation Act, 1996.

Despite the objection, the arbitration proceedings went ahead. Tata Steel raised a jurisdictional challenge before the tribunal, which was rejected. Both parties thereafter led evidence and made their final submissions, following which the sole arbitrator delivered the award on January 5, 2023.

Tata Steel moved the High Court challenging the award on the ground that the unilateral appointment of the arbitrator rendered the entire process legally unsustainable from the outset, thereby making the award a nullity. It contended that participation in the proceedings could not cure the fundamental defect in the constitution of the tribunal, as there can be no estoppel against statute.

MSP Sponge Iron opposed the challenge on two grounds. First, it argued that Tata Steel had knowingly participated throughout the arbitration, examined witnesses, and allowed the proceedings to continue until the award was passed. Second, it contended that Tata Steel had waived its objection by not opposing the extension of the arbitrator’s mandate before the High Court under Section 29A of the Act.

The Court rejected both contentions. On the question of waiver, the Court held that waiver of statutory ineligibility under Section 12(5) of the Arbitration and Conciliation Act could only be effected through an express written agreement after disputes had arisen, and that “there was no express agreement between the parties agreeing to waive any objection with regard to applicability of Section 12(5) of the said Act.” The Court further held that “participation in arbitration proceedings per se does not qualify as an express agreement in writing to waive the objection under Section 12(5) of the said Act,” and that filing applications relating to the extension of the arbitrator’s mandate likewise could not amount to such waiver.

On the question of whether Tata Steel was barred from raising the objection at the stage of challenging the award, the Court rejected that contention as well. Relying on Supreme Court decisions, including the decision in Bhadra International, the Court held that the constitution of the arbitral tribunal was itself invalid and that “nothing prevents the petitioner from challenging the award passed by a unilaterally appointed arbitrator by filing an application under Section 34 of the said Act.” The award was accordingly set aside.

Case Details: Tata Steel Limited v. MSP Sponge Iron Limited, Application under Section 34 of the Arbitration and Conciliation Act, 1996, Calcutta High Court. Before Justice Shampa Sarkar. Order dated May 11, 2026. Senior Advocate Ratnanko Banerji, along with Advocates Deepan Kumar Sarkar, Jaydeb Ghorai, Saugata Banerjee, and Diptesh Ghorai, appeared for Tata Steel. Senior Advocates Abhrajit Mitra and Anirban Ray, along with Advocates Shounak Mukhopadhyay and Biswarup Acharyya, appeared for MSP Sponge Iron.

[Read Order]