India

S&A Law Offices lead by Mr. Manoj K Singh, Ms. Gunita Pahwa and assisted by Mr. Anand Pratap Singh, successfully defended Western M. P. Infrastructure & Toll Roads Private Limited (part of Cube Highways group) in an arbitration proceeding against Markolines Pavements Technologies Pvt. Ltd. The Arbitral Tribunal rejected 100% Claims of the Markolines and awarded substantial legal and arbitration costs to the Western MP. The dispute arose because of the termination of the Contract by Western MP to Markolines for the maintenance of the Project of four Laning of the Lebad to Jaora Road Project in Madhya Pradesh. Markolines challenged the termination of the contract and claimed damages for loss of profit, loss of profitability and other costs, which were rejected by the Arbitral Tribunal. This outcome is a testament to S&A Law Offices’ expertise in handling complex infrastructure and construction disputes.

Authored by Prabudh Singh (Associate) and Jai Raina (Associate) Introduction: The arbitration landscape in India has long been critiqued for frequent and extensive judicial intervention in the arbitral process. Despite reforms such as the 2015 amendments to the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) designed to limit challenges to arbitral awards, instances of judicial intervention persist. These include the Supreme Court’s exercise of curative jurisdiction to set aside awards[1] and various High Courts granting anti-arbitration injunctions[2]. Therefore, questions persist regarding the pace of India’s progress towards becoming a truly arbitration-friendly jurisdiction. However, recent decisions from the Supreme Court and High Courts signal a shift towards greater judicial restraint at key stages including referral to arbitration, conduct of proceedings, and post-award scrutiny. This article examines cases from the past year in which courts have, first, directed disputes to arbitration rather than retaining jurisdiction; second, increasingly recognised arbitral tribunals’ authority to decide procedural and jurisdictional issues; and finally, limited post-award judicial review to preserve finality and respect the parties’ agreement to arbitrate. The Referral Stage: An arbitration-friendly jurisdiction is characterised by judicial deference to parties’ agreements to arbitrate. Recent judicial trends in India reflect a growing recognition of this approach, reinforcing arbitration as the default dispute resolution mechanism in cases where parties have expressly chosen arbitration, thereby according primacy to party autonomy. In K. Mangayarkarasi v. N.J. Sundaresan[3], the Supreme Court clarified that Section 8[4] of the Arbitration Act leaves no discretion with courts once the existence of an arbitration agreement is established. In this case, trademark disputes arising from assignment deeds were held to be arbitrable where the rights asserted were contractual and in personam. The Court reiterated that allegations of fraud cannot be routinely invoked to bypass arbitration unless they are serious in nature and have public law implications. The same principle formed the basis of the Bombay High Court’s decision in Bholashankar Ramsuresh Dubey v. Dinesh Narayan[5], where a partnership dispute was originally wrongly withheld from arbitration on allegations of fraud by a district court. The High Court set aside the District Court’s judgment, holding that disputes relating to the internal affairs of a partnership remain arbitrable and that legal representatives are bound by arbitration agreements by virtue of Section 40 of the Arbitration Act.[6] The Court ruled that as long as the fraud revolves around civil aspects of the dispute, it can be adjudicated by an arbitral tribunal. In Offshore Infrastructure Ltd. v. Bhopal Petroleum Corp. Ltd.,[7] the Supreme Court further strengthened the pro-arbitration stance by holding that the ineligibility of a named arbitrator under does not invalidate the arbitration agreement itself. A defective appointment mechanism, the Court held, cannot be allowed to defeat the parties’ fundamental agreement to arbitrate. During Arbitral Proceedings: Judicial support and deference for arbitral autonomy are not limited to the referral stage and have also been reflected in the approach adopted by Indian courts during the pendency of arbitral proceedings. In ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji & Co.[8], the Supreme Court affirmed the power of arbitral tribunals to implead non-signatories under the Group of Companies doctrine. The Court rejected the contention that such determinations must be made at the referral stage by courts, holding instead that the question of a non-signatory being bound by an arbitration agreement involves complex, fact-intensive inquiries best left to an arbitral tribunal in terms of Section 16 of the Arbitration Act.[9] The Court clarified that Kompetenz–Kompetenz is a meaningful allocation of authority to arbitral tribunals. A similar reluctance by the courts to interfere in the arbitral proceedings was seen in National Highway Infra Development Corp. Ltd. v. NSPR VKJ[10], where the Delhi High Court declined to terminate the mandate of an arbitrator based on unsubstantiated allegations of corruption and bias. The Court cautioned against the misuse of termination petitions as a tactical device to stall arbitral proceedings. These decisions help underscore the position that once the arbitral tribunal is constituted, it is the primary forum for procedural and jurisdictional control of the dispute. Post-Award review: Recent judicial decisions demonstrate a judicial approach of restraint at the post-award stage, acknowledging that the finality of arbitral awards is integral to the development of an arbitration-friendly jurisdiction. The Supreme Court in Somdatt Builders v. National Highways Authority of India[11] set aside a judgment of the Delhi High Court that had re-interpreted contractual clauses in an appeal under Section 37 of the Arbitration Act.[12] The Court reiterated that as long as the interpretation of contract by an arbitral tribunal is a plausible view, though it may not be the only possible view, courts should not interfere with it under Section 34 of the Arbitration Act.[13] The Supreme Court reiterated that frequent interference with arbitral awards defeats the very purpose of the Arbitration Act. Similarly, in Ramesh Kumar Jain v. Bharat Aluminium Company (BALCO)[14], the Supreme Court emphasised the limited scope of judicial intervention under Section 37 of the Arbitration and Conciliation Act, holding that the Chhattisgarh High Court had exceeded its jurisdiction by reassessing evidence and substituting its own factual conclusions for those reached by the arbitral tribunal. The Supreme Court clarified that interference with an arbitral award is warranted only where the patent illegality strikes at the heart of the award’s validity and arbitral awards are not liable to be set aside merely on the ground of erroneous in law or alleged misappreciation of evidence. It further recognised that where a contract is silent on compensation for additional work, an arbitrator may award reasonable compensation on the principle of quantum meruit to prevent unjust enrichment. The Supreme Court restored the arbitral award, holding that the High Court had applied a stricter standard of scrutiny than is contemplated under the Arbitration Act. In Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.[15], a Constitution Bench of the Supreme Court conclusively settled the controversy surrounding the power of courts to modify arbitral awards. The Court held that the power to set aside an award under Section 34 of the Arbitration Act includes a power to modify the award. However, it was also observed that such power to modify the award is limited to granting post-award interest, correction of any clerical or typographical errors, and severing those parts of the award that contravene Section 34 of the Arbitration Act (as long as they are capable of being severed without affecting the other parts of the award). The Court however cautioned that the power to modify the award should not be exercised in a manner where it results in rewriting the award or modifying the award on merits. In Popular Caterers v. Ameet Mehta & Ors.[16], the Supreme Court set aside a Bombay High Court order granting an unconditional stay on the execution of a money award, reiterating that such relief is exceptional under Section 36(3) of the Arbitration Act. Referring to its earlier judgment in Lifestyle Equities C.V. v. Amazon Technologies Inc.[17], the Court held that unconditional stays are justified only where awards are egregiously perverse, patently illegal, or tainted by fraud or corruption. Absent such circumstances, requiring security for stay was held to be consistent with the statutory scheme and arbitral finality. Divergent Judicial Approaches: While the aforementioned judgments indicate positive trends towards judicial restraint, this does not mean that instances of judicial intervention are non-existent. In Engineering Projects (India) Ltd v. MSA Global LLC[18], The Delhi High Court granted an anti-arbitration injunction restraining a Singapore-seated ICC arbitration on the grounds that it was “vexatious” and “oppressive”, thereby reasserting a supervisory role over a foreign-seated arbitration that was already subject to challenge before the arbitral tribunal, the ICC Court, and the supervisory court at the seat. Similarly, in Union of India v. V.K. Sood Engineer & Contractors[19], the Court undertook an extensive re-appreciation of contractual and evidentiary material, expanding the contours of “patent illegality” and public policy beyond the restrained intervention envisaged under the 2015 amendments. In the same vein, Bharat Heavy Electrical Limited v. Koneru Constructions[20] saw the Delhi High Court set aside an award after closely scrutinising the effect of a No Dues Certificate and reassessing the evidentiary foundation of the arbitrator’s conclusions. This approach can be viewed as merits-oriented review undertaken under the guise of public policy and patent illegality. Although Gayatri Balaswamy limits the power of courts to modify the award to limited circumstances, it has raised concerns that post-award proceedings may, in practice, assume a quasi-appellate character, thereby diluting the principle of finality. Such instances underscore the need for arbitration jurisprudence as a whole to tilt more acutely towards restraint, before greater changes in the Indian arbitration landscape may occur. Conclusion: The recent judicial pronouncements discussed above reflect a coherent and deliberate reorientation towards judicial restraint in matters involving arbitration. Indian courts appear increasingly aligned with well-established global principles of limiting referral courts to a threshold examination of the existence of an arbitration agreement, entrusting arbitral tribunals with jurisdictional and procedural autonomy, and confining post-award scrutiny to limited and exceptional parameters. At the same time, recent jurisprudence also reflects some divergence in judicial approaches. Certain decisions have adopted a more expansive view of judicial oversight, particularly at the post-award stage, prompting debate on the appropriate limits of court intervention and the preservation of arbitral finality. These decisions indicate that while the broader pro-arbitration shift is evident, its application has not been entirely uniform. If the prevailing judicial approach continues to be consistently applied, it is likely to enhance both certainty and confidence in India’s arbitration framework. That said, change cannot be expected from courts alone, the sustained credibility of arbitration in India will also depend on the parallel evolution of arbitral institutions and the conduct of arbitral proceedings. Robust institutional practices, effective case management, and adherence by arbitrators to international best practices will remain essential to ensuring that arbitration delivers efficient, fair, and commercially credible outcomes. [1] Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Pvt. Ltd [(2024) 6 SCC 357] [2] Bina Modi v. Lalit Modi [(2021) 277 DLT 501 (DB)]; Balasore Alloys v. Medima LLC [2020 SCC OnLine Cal 1699] [3] (2025) 8 SCC 299 [4] Section 8 states that if a dispute brought before a court is covered by a valid arbitration agreement, the court must refer the parties to arbitration when a party asks for it before submitting its first statement on the substance of the dispute. [5] 2025 SCC OnLine Bom 1478 [6] As per Section 40, an arbitration agreement continues to be valid even after death of the party and can be enforced by or against the legal representatives of the deceased. [7] 2025 SCC OnLine SC 2147 [8] (2025) 9 SCC 76 [9] Section 16 gives power to the arbitral tribunal to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. [10] 2025 SCC OnLine 9022 [11] (2025) 6 SCC 757 [12] Section 37 limits appeal to only certain specific orders of courts pertaining to refusing to refer parties to arbitration, granting or refusing interim measures, or setting aside an arbitral award. [13] Section 34 lays down the limited grounds under which an award can be set aside by courts such as incapacity of a party, arbitration agreement not being valid under law, subject-matter of dispute was not arbitrable, arbitral award is in conflict with the public policy of India, award is vitiated by patent illegality, etc. [14] 2025 SCC OnLine SC 2857 [15] (2025) 7 SCC 1 [16] C.A. No. 14260-14262/2025 [17] 2025 SCC OnLine SC 2153 [18] 2025 SCC OnLine Del 5072 [19] 2025 SCC OnLine Del 4399 [20] O.M.P (COMM) 255/2020

New Delhi, January 05, 2026: Lakshmikumaran & Sridharan Attorneys acted as legal advisor to NU Hospitals Private Limited, its promoters, and certain non-promoter selling shareholders in connection with a significant minority investment by Somerset Indus Capital Partners, a healthcare-focused private equity firm. The transaction encompassed both primary and secondary components, culminating in stake in NU Hospitals - a Bengaluru-headquartered leading super-specialty healthcare group known for its excellence in nephrology, urology, fertility/IVF and renal transplant care. The LKS team provided comprehensive, end-to-end legal support for the transaction, advising NU Hospitals, its promoters, and select selling shareholders on all aspects of the transaction. Leveraging deep sector expertise in healthcare and private equity, the firm structured and navigated simultaneous primary and secondary components, ensuring optimal outcomes for all stakeholders. The firm’s involvement spanned structuring the deal, managing simultaneous primary and secondary components, and steering the transaction from signing to closing. The team led negotiations and finalised the deal documentation - including share subscription and purchase agreements and shareholders’ agreement - while also coordinating closing formalities, aligning diverse interests and ensuring seamless execution across multiple stakeholders. This engagement underscores the firm’s capability in managing sophisticated transactions that drive strategic growth and investor confidence in India’s healthcare sector. The team from LKS was led by Gaurav Dayal (Executive Partner) and Sushrut Biswal (Partner), with support from Rohan Verma (Associate Partner), Saurabh Raman (Principal Associate), Sukoon Dinodia (Senior Associate), and Snigdha Ghosh (Associate). About Lakshmikumaran & Sridharan attorneys Lakshmikumaran & Sridharan (LKS) is a premier full-service law firm in India, specializing in areas such as corporate & M&A/PE, dispute resolution, taxation and intellectual property. The firm, through its 14 offices across India, works closely on Corporate, M&A, litigation and commercial law matters, advising and representing clients both in India and abroad. Over the last 4 decades the firm has worked with over 15,500 clients which range from start-ups, small & medium enterprises, to large Indian corporates and multinational companies. The professionals within the firm bring diverse experience to service clients across sectors such as automobiles, aviation, consumer electronics, e-commerce and retail, energy, EPC, financial services, FMCG, hospitality, IT/ITeS, logistics, metals, mining, online gaming, pharma and healthcare, real estate and infra, telecom and media, and textiles. The firm takes pride in the value-based, client-focused approach that combines knowledge of the law with industry experience to design bespoke legal solutions. The firm’s driving principles to achieve our vision are integrity, knowledge and passion. 

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) (Amendment) Directions, 2025, effective 5 December 2025, as part of a broader recast of its 2016 framework on financial services by banks and their group entities. In parallel, RBI has notified the Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) (Amendment) Directions, 2025, which amend the NBFC Master Directions to align NBFCs that are part of bank groups with the updated bank framework. These measures have been issued after a draft was placed in the public domain and stakeholder feedback was considered. The Directions apply to Scheduled Commercial Banks, including banking companies, corresponding new banks and the State Bank of India as defined under Section 5 of the Banking Regulation Act, 1949, but not to Small Finance Banks, Payments Banks or Local Area Banks, which are covered under separate category-specific directions. Through a new paragraph 60A in the NBFC Master Direction, NBFCs and housing finance companies that belong to a Scheduled Commercial Bank group are required to comply with the Commercial Banks – Undertaking of Financial Services Directions, 2025 in respect of activities that they undertake which are also undertaken by the parent bank. This creates a harmonised activity-based framework for bank-led groups and seeks to minimise regulatory arbitrage within conglomerates. The framework delineates what must be undertaken only departmentally by the bank and what must be undertaken through group entities. The “business of banking” under Section 5(b) of the Banking Regulation Act, including acceptance of deposits (particularly time deposits), must be carried out only departmentally, subject to a narrow exception for housing finance companies as permitted by sectoral rules. As a principle, a given form of business is expected to be housed in a single entity within the group; where a bank proposes to carry the same line of business through more than one entity, a detailed rationale must be recorded and approved by the Board. At the same time, activities such as mutual funds, insurance, portfolio management services and broking cannot be undertaken departmentally and must be carried out only through subsidiaries or joint ventures, reflecting RBI’s preference for structural separation between deposit-taking and market-facing businesses. For lending entities in the group, the Directions mandate that NBFCs and housing finance companies belonging to a bank group must comply with the Upper Layer NBFC framework (other than listing), even if they are not otherwise classified as such, thereby subjecting them to enhanced governance, risk management and capital standards. These entities must also adhere to existing restrictions on advances against shares of the parent bank, loans to directors and related parties, financing of promoters’ contribution, land acquisition financing and limits on loans against shares, IPO financing and ESOP funding. This is aimed at preventing the use of group NBFCs as vehicles to undertake exposures that are constrained or discouraged at the bank level. On the investment side, the Directions introduce prudential limits on equity holdings by banks in subsidiaries, joint ventures and other companies. A bank’s equity investment in a single entity should not exceed 10 per cent of the bank’s paid-up share capital and reserves, and the aggregate of all such investments is capped at 20 per cent of the bank’s paid-up capital and reserves. Holdings of 20 per cent or more in any entity require prior RBI approval. The Directions recognise limited exceptions where exposures of up to 30 per cent in non-financial entities may be taken, such as under debt restructuring or to protect existing exposures, subject to internal documentation and oversight. The treatment of investments in REITs and InvITs is also updated in line with the broader prudential framework. In respect of Alternative Investment Funds (AIFs), the Directions provide that a bank’s contribution to a Category I or II AIF scheme must not exceed 10 per cent of the scheme’s corpus, and that the total contribution by all regulated entities to such a scheme should not exceed 20 per cent of the corpus. Banks are prohibited from directly investing in Category III AIFs, except through eligible subsidiaries in accordance with SEBI regulations. Where an AIF downstreams its investment into a company that is a debtor of the bank, strict provisioning requirements apply on the bank’s exposure, reflecting RBI’s concern about indirect evergreening or risk transfer through fund structures. Paragraph 66(A) of the amended Directions permits a bank to act as a Professional Clearing Member (PCM) in the equity derivatives segment of SEBI-recognised stock exchanges, with the same prudential norms, capital requirements, risk-management standards and operational conditions that already apply to PCMs in the commodity derivatives segment under paragraph 66 being extended mutatis mutandis to equity derivatives. Simultaneously, the revised paragraph 67 reinforces a structural separation for broking activities by prohibiting banks from directly offering broking services in the commodity derivatives segment; such services may only be undertaken through a separate subsidiary and must comply with the specific conditions prescribed for subsidiary-level engagement. The combined effect is that while banks can assume clearing functions directly subject to strict prudential safeguards any client-facing broking activity in commodity derivatives must remain legally and operationally ring-fenced from the bank. On the procedural side, banks seeking to undertake any new form of business not expressly permitted under the Directions, whether on their own books or through group entities, must obtain prior approval or no-objection from RBI. Non-Operative Financial Holding Companies (NOFHCs) are exempt from prior approval to enter mutual funds, insurance, pension fund management and broking, save where RBI advises otherwise, but must inform RBI within fifteen days of the Board resolution to take up such activities; for all other businesses under an NOFHC, prior approval remains mandatory. The existing directions, instructions and guidelines on undertaking financial services by commercial banks stand repealed, with past actions and approvals continuing to be governed by the earlier instruments but deemed to have effect under the new Directions going forward. Overall, the 2025 Directions seek to consolidate and modernise the regulatory architecture for financial services undertaken by Scheduled Commercial Banks and their group entities, with a pronounced emphasis on Board-level governance, activity-wise segregation within groups, capped and better-monitored investment exposures and a more conservative approach to complex structures such as AIFs. For bank-led financial conglomerates, these changes will require a reassessment of group structures, intra-group transactions and business strategies to ensure sustained compliance with the new regulatory perimeter.