AKP Dispute Resolution Digest June 15, 2026

We are delighted to share this month's AKP Dispute Resolution Monthly Digest. Please feel free to write to us with your feedback at info@akandpartners.in.

1.              Arbitration and Mediation

1.1.           Commercial Contracts

1.1.1.    Delhi High Court Rules Withdrawal of Civil Suit Does Not Bar Invocation of Arbitration Clause

In a significant ruling reinforcing the autonomy of arbitration agreements, the Delhi High Court has held that the mere filing of an earlier civil suit does not disentitle a party from subsequently invoking an arbitration clause, particularly where such a suit has been withdrawn. The Court observed that, “Mere fact that earlier a civil suit had been filed, would be no bar to invoke arbitration in terms of the Arbitration Clause, especially when the said suit had been withdrawn.” The observation came in proceedings concerning disputes between VE Commercial Vehicles Ltd. (VECV) and its former dealer, Singh Enterprises. The dispute arose out of a dealership arrangement dating back to 2006 for the sale and servicing of Eicher commercial vehicles in Rewa, Madhya Pradesh. Following alleged performance deficiencies by Singh Enterprises, VECV terminated the dealership in May 2024 and sought recovery of approximately Rs. 1.42 crore. Arbitration was formally invoked by VECV in August 2025, prompting objections and a counterclaim of approximately Rs. 40.66 crore from Singh Enterprises. Opposing arbitration, Singh Enterprises argued that VECV had waived its right to arbitrate by previously instituting civil suits before courts in Indore and Rewa. However, the Delhi High Court rejected this contention, noting that the Indore suit had already been withdrawn with liberty to pursue appropriate remedies. In contrast, the Rewa suit arose from a separate and distinct cause of action for alleged post-termination interference with business activities. Finding the arbitration clause valid and operative, the Court held that disputes concerning alleged non-compliances under the dealership agreement were arbitrable. Since the nominee arbitrators appointed by both sides failed to reach a consensus on the presiding arbitrator, Justice (Retd.) Kurian Joseph, former Judge of the Supreme Court, as the Presiding Arbitrator.

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1.2.            Construction

1.2.1.        Delhi High Court Rules Participation in Arbitration is no waiver

The Delhi High Court has reiterated that the waiver of the applicability of Section 12(5), read with the Seventh Schedule, of the Arbitration and Conciliation Act, 1996, cannot be inferred from conduct and must arise only through an express written agreement between the parties. The Court observed that unilateral appointment of an arbitrator by an interested party, without an express written waiver under Section 12(5), is void ab initio. It further clarified that mere participation in arbitral proceedings or filing of claims cannot amount to waiver of statutory ineligibility. The Court held that objections to such an appointment may even be raised for the first time in proceedings under Section 34 of the Act.The dispute arose from a contract dated 10 June 2010 between the Air Force Naval Housing Board (AFNHB) and N.G. Construction of a residential complex. The agreement provided that disputes would be resolved by a sole arbitrator nominated exclusively by the Chairman of AFNHB. After disputes emerged, arbitration was invoked in November 2019, and AFNHB unilaterally appointed the arbitrator in accordance with the contractual clause. Although both parties participated in the proceedings without objection, an arbitral award was passed on 27 July 2022 and subsequently challenged under Section 34. Rejecting the argument of implied waiver through conduct, the High Court held that post the 2015 amendment, unilateral appointment by an interested party is impermissible unless parties expressly waive the bar in writing. Since no such written waiver existed, the Court held the appointment contrary to Section 12(5) and the Seventh Schedule, rendering the arbitral award void ab initio and liable to be set aside.

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2.              Consumer Protection

2.1.            Automotive Sector

2.1.1.        Delhi Consumer Commission directs MG Motor to refund the entire vehicle value for manufacturing defects and deficient warranty services

The Hon’ble District Consumer Disputes Redressal Commission-I, Delhi, directed MG Motor India Pvt. Ltd. to refund the entire purchase consideration of a vehicle after finding that repeated electronic failures and deficient after-sales support amounted to manufacturing defects and deficiency in service. The dispute arose after the consumer purchased an MG Astor vehicle, which allegedly developed multiple electronic faults, including malfunctioning Tyre Pressure Monitoring Sensors (TPMS) and an Electronic Steering Column Lock (ESCL) fault. The consumer further alleged that despite roadside assistance and extended warranty coverage, adequate support was not provided, ultimately resulting in an accident and prolonged immobilisation of the vehicle at the manufacturer's workshop. The Hon’ble Commission rejected the manufacturer's contention that the absence of an independent technical expert report prevented a finding of manufacturing defect. It was observed that the recurring electronic failures were not attributable to driving habits and that the manufacturer itself had custody of the vehicle for an extended period without conducting a meaningful technical assessment. The Commission further held that failure to honour warranty obligations and roadside assistance commitments constituted a clear deficiency in service. Considering that the vehicle had remained unrepaired for nearly three years, the Commission found that replacement or repair was impractical and directed a refund of the entire purchase price, together with compensation and litigation expenses. The ruling reinforces the principle that automobile manufacturers may face substantial liability when recurring defects remain unresolved and post-sale support mechanisms fail to meet promised standards.

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2.2.           Housing Finance

2.2.1        Consumer Commission holds housing finance company liable for delay in issuing foreclosure statement

The Hon’ble Consumer Disputes Redressal Commission, Thrissur, held PNB Housing Finance Ltd. liable for deficiency in service for delaying the issuance of a loan foreclosure statement despite receipt of the prescribed processing fee and a valid request from the borrower. The complainant sought a foreclosure statement to close his housing loan account and alleged that the lender delayed issuance beyond the prescribed period while continuing to levy interest on the outstanding loan amount. During the intervening period, the lender engaged with the borrower regarding a possible reduction in interest rates and subsequently relied upon those discussions to justify the delay. Rejecting the defence, the Commission held that once a borrower submits a valid foreclosure request and pays the applicable fee, the lender becomes obligated to issue the foreclosure statement within the stipulated timeline. The Commission observed that commercial negotiations regarding revised loan terms cannot suspend or override an existing foreclosure request. It further held that a financial institution cannot benefit from delays attributable to its own conduct by charging additional interest during the period of non-compliance. Applying this principle, the Commission directed a refund of the excess interest collected, along with compensation and litigation costs. The decision serves as an important reminder to banks and housing finance companies to strictly comply with foreclosure timelines. It highlights the consumer-protection consequences of administrative delays in loan servicing.

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3.              Insolvency & Bankruptcy

3.1.            Banking & Finance

3.1.1.      Supreme Court holds that a delay in re-filing a defective appeal after curing defects cannot be condoned beyond the statutory limitation

The Supreme Court in CA Ramchandra Dallaram Choudhary v. Adani Infrastructure and Developers Pvt. Ltd. has reiterated that the limitation framework under the Insolvency and Bankruptcy Code, 2016 (‘IBC’) must be applied with strictness and that delay in re-filing an appeal after curing defects cannot be condoned as a matter of routine once the statutory period prescribed under the Code has expired. The dispute arose when an appellant sought condonation of delay in re-filing an appeal before the National Company Law Appellate Tribunal after defects identified by the Registry had been cured. The appellant argued that since the original appeal had been presented within time, the subsequent delay in re-filing ought to be treated liberally. Rejecting this contention, the Supreme Court held that the IBC is founded upon the principle of time-bound resolution and that parties cannot circumvent statutory timelines by relying upon procedural defects and delayed re-filings. The Court observed that once defects are notified, the appellant must act with diligence and re-file the matter within the period permitted by law. A defective filing does not create an indefinite right to pursue appellate remedies. The judgment reinforces the strict limitation regime under the IBC and serves as a reminder that procedural discipline is integral to the insolvency framework. It is likely to have significant implications for litigants seeking to challenge NCLT and NCLAT orders, particularly in matters involving delayed re-filings after expiry of statutory timelines.

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4.              Negotiable Instruments Act

4.1.            Banking & Finance

4.1.1.       Supreme Court holds authorised signatory signing a cheque on behalf of the NGO deemed the drawer and liable for dishonour

In K Ranganayakulu v. State of Telangana & Ors., the Hon’ble Supreme Court held that an authorised signatory who signs a cheque on behalf of a non-governmental organisation or similar entity falls within the ambit of the “drawer” for Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’) and may be held liable for cheque dishonour proceedings. The dispute arose from the dishonour of cheques issued on behalf of an NGO. The authorised signatory sought discharge from criminal proceedings by contending that the cheque had been issued on behalf of the organisation and that liability, if any, was that of the entity alone. Rejecting this argument, the Supreme Court held that a person who signs a cheque in an authorised capacity plays a direct role in the issuance of the instrument and therefore attracts liability under the statutory scheme governing cheque dishonour. The Court distinguished such cases from those involving directors, office bearers, or committee members whose liability arises only through Section 141 and requires proof that they were in charge of and responsible for the conduct of the organisation’s affairs. The ruling clarifies that while vicarious liability requires specific pleadings and evidence, an authorised signatory occupies a distinct position under the NI Act and may be proceeded against on account of the very act of signing and issuing the cheque. This judgment is likely to be highly relevant to societies, trusts, NGOs, and other non-corporate entities that routinely operate through authorised representatives.

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4.1.2.           Supreme Court holds that a conviction under Section 138 of the NI Act can be set aside upon settlement between the parties

The Supreme Court in Parsharvanath Weld Wires Pvt. Ltd. & Anr. v. State of Chhattisgarh & Anr. has reaffirmed that proceedings under Section 138 of the Negotiable Instruments Act, 1881 are primarily compensatory in nature and that even after conviction, courts may give effect to a genuine settlement between the parties by setting aside the conviction and closing criminal proceedings. The case arose after the accused, having been convicted for cheque dishonour by the trial court and having exhausted substantial stages of the appellate process, entered into a settlement with the complainant. The complainant acknowledged receipt of the agreed amount and expressed no objection to the closure of the proceedings. Taking note of the settlement, the Supreme Court observed that offences under Section 138 are intended principally to ensure the credibility of commercial transactions and to facilitate the recovery of amounts due to the complainant. Once the complainant's grievance is fully redressed and the parties have voluntarily resolved their dispute, continuation of criminal proceedings would serve little practical purpose. The Court accordingly exercised its powers to give effect to the settlement and quashed the conviction. The ruling reinforces the well-established principle that cheque dishonour cases are amenable to compounding at various stages of litigation and encourages consensual resolution of commercial disputes. This judgment is significant for businesses and financial institutions, as it reiterates the judiciary’s preference for settlement and recovery over prolonged criminal prosecution in cheque-dishonour matters.

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[1] DC/80/RBT/22/54/2024

[2] CC/116/2023

Disclaimer

The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.

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Mr. Anuroop Omkar

Partner, AK & Partners

info@akandpartners.in