Removal Of Fetters On The Arbitration Process: Arbitration Is Not Foreclosed Due To Pending Criminal Cases

The Arbitration and Conciliation Act, 1996¹ was enacted to facilitate expeditious and affordable resolution of disputes pertaining to in-personam rights arising out of contractual disputes between private parties. This raises questions on the impact that rights in-rem, such as those arising from criminal proceedings, would have on the arbitration process. This was analyzed by the Supreme Court in Managing Director Bihar State Food and Civil Supply Corporation Limited and Another v. Sanjay Kumar² on 5 August 2025.

Background

The Appellant, Bihar State Food and Civil Supplies Corporation, was required to procure paddy for the Food Corporation of India's³ scheme to distribute rice under the Public Distribution System⁴ scheme and entered into agreements with various rice millers across Bihar. However, the Respondent failed to supply the requisite amount of milled rice, so proceedings were initiated under the Revenue Recovery Act, 1890⁵.