AKP Dispute Resolution Digest November 24, 2025

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 Law

1.1. Healthcare Industry

1.1.1. Supreme Court held that the mere Use of the Word 'Arbitration' Does Not Create an Arbitration Agreement

The Supreme Court has held that the mere repetition of the word "arbitration" in a contract clause is not sufficient to create a valid arbitration agreement if the clause does not demonstrate a mandatory intent to refer disputes to a private tribunal for a final and binding decision. This ruling came in an appeal by M/s Alchemist Hospitals Ltd. against a High Court order dismissing its application to appoint an arbitrator. The dispute arose from a software implementation agreement with M/s ICT Health Technology Services India Pvt. Ltd. Clause 8.28 of the agreement, titled "Arbitration," provided that disputes "shall be resolved by arbitration through senior management comprising respective Chairmen of the two parties." However, it also stated that if the conflict was not resolved within 15 days, the complaining party "shall seek remedies through the courts of law". The central issue was whether this clause constituted a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. The judgment dated November 6, 2025, clarified the essential elements of a valid arbitration agreement. The Court concluded that the clause functioned more like a structured mediation process because it lacked the critical component of finality, the parties were free to approach the courts if the so-called “arbitration” failed. Furthermore, designating the Chairmen of the disputing parties as arbitrators violated the principle of neutrality. Thus, despite the terminology used, the substance of the clause did not reflect a binding agreement to arbitrate.

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1.2. Electricity Law

1.2.1. Delhi High Court Bars Direct Arbitration Petitions, Affirms CERC's Exclusive Referral Power

The High Court of Delhi has held that the Central Electricity Regulatory Commission (“CERC”) holds the exclusive prerogative to refer disputes involving power-generating companies to arbitration, effectively barring High Courts from entertaining such matters under the general arbitration law. This ruling came in a petition filed by Renew Wind Energy (AP2) Pvt. Ltd., seeking interim protection against Solar Energy Corporation of India, which had threatened to deduct amounts from the petitioner's invoices due to an alleged supply shortfall. The petitioner invoked Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), arguing that the dispute was purely contractual. However, the Court dismissed the petition as not maintainable. The Court ruled that Section 79(1)(f) of the Electricity Act vests the CERC with dual powers, namely, to adjudicate specific regulatory disputes and to refer any dispute or disagreement involving generating companies to arbitration. This statutory "referral power" overrides the courts' jurisdiction under the Arbitration Act. Consequently, parties cannot bypass the CERC to seek arbitration or interim relief from a High Court; instead, they must approach the CERC, which is also empowered under Section 94(2) of the Electricity Act to grant interim measures akin to those under Section 9 of the Arbitration Act.

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2. Consumer Law

2.1. Insurance Sector

2.1.1. Supreme Court held Insurer Cannot Repudiate Claim on Defects Discovered Post-Accident, Supreme Court Rules

The Supreme Court has held that an insurance company cannot repudiate a valid claim by relying on defects discovered after an accident, especially when it had accepted the risk after due inspection. This ruling came in an appeal filed by Kopargaon Sahakari Sakhar Karkhana Ltd. against the National Insurance Co. Ltd. The dispute arose after a boiler explosion at the appellant's factory. The insurer rejected the claim, citing a surveyor's report that found corrosion and wear-and-tear in the boiler tubes, invoking an exclusion clause for "defects due to wearing away or wasting of material". The National Consumer Disputes Redressal Commission (“NCDRC”) had upheld this repudiation. The central issue was whether an insurer can cite pre-existing wear and tear to deny a claim for an accident that occurred while the equipment had a valid fitness certificate. The judgment emphasises the insurer's duty of due diligence at the time of issuing the policy. The Court reasoned that, since the boiler had a valid registration under the Boilers Act and the insurer had issued the policy after satisfying itself of the boiler's condition, it could not later escape liability by pointing to defects that were only revealed by the explosion. The Court set aside the NCDRC's order, holding the repudiation unjustified, and remanded the matter for determining the quantum of compensation.

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2.2. Technology Law

2.2.1. Supreme Court Rules Companies Buying Software to Boost Profits Are Not 'Consumers'

The Supreme Court has held that a commercial entity purchasing goods or services to automate its business processes and augment profits does not qualify as a "consumer" under the Consumer Protection Act, 1986. This ruling came in an appeal filed by M/S Poly Medicure Ltd. against M/S Brillio Technologies Pvt. Ltd. The appellant, a manufacturer of medical devices, had purchased a software license called "Brillio Opti Suite" to streamline its import-export documentation. When the software allegedly malfunctioned, the appellant filed a consumer complaint seeking a refund. The National Commission dismissed the complaint, holding that the purchase was for a "commercial purpose," thereby excluding the appellant from the definition of a consumer under Section 2(1)(d) of the Consumer protection Act,2019. The central issue was whether the purchase of software for internal business use qualifies as "self-employment" or "commercial purpose." The emphasis of the judgment, dated November 13, 2025, lies in its clarification of the "commercial purpose" exclusion. The Court distinguished this case from scenarios where goods are bought for self-employment or personal use. It ruled that when a profit-making company buys software to increase efficiency and reduce costs, there is a "direct nexus" with profit generation. Such a transaction is purely commercial, and the company cannot claim protection under consumer laws intended for individuals and end-users.

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3. Environmental Law

3.1. Mining and Construction

3.1.1. Supreme Court Orders Saranda Forest to Be Declared Wildlife Sanctuary; Mining Activities Banned

The Supreme Court has held that the State of Jharkhand must notify the Saranda Forest area as a Wildlife Sanctuary to protect its rich biodiversity, rejecting the State's attempts to reduce the protected area significantly. This direction was issued in an application filed by Dr Daya Shankar Srivastava, seeking to enforce a 1968 notification that declared approximately 314 sq. km of the Saranda forest a Game Sanctuary. Despite the Wildlife Institute of India confirming the area's ecological significance as a pristine Sal forest and elephant corridor, the State of Jharkhand sought to limit the sanctuary to roughly 249 sq. km., citing concerns over public infrastructure and the displacement of local tribal communities. Steel Authority of India Ltd. (“SAIL”) also intervened to protect its mining interests in the region. In its judgment, the Court criticised the State's shifting stance and directed the notification of the full 126 compartments (approx. 314 sq. km.) as a sanctuary within three months, excluding only six specific compartments identified as active mining zones. The Court clarified that the declaration of a sanctuary does not abrogate the rights of tribals and forest dwellers, which remain protected under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (FRA). While reaffirming the ban on mining within the sanctuary and its 1-km Eco-Sensitive Zone, the Court permitted SAIL to continue essential ancillary activities.

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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.

For further queries or details, you may contact:

Mr. Anuroop Omkar

Partner, AK & Partners

info@akandpartners.in