Orissa High Court
Ms. 916 Epari Jeweller Pvt. Ltd vs M/S. Ambar on 13 March, 2026
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No. 32030 of 2025
(In the matter of an application under Articles 226 and 227 of the
Constitution of India, 1950).
MS. 916 Epari Jeweller Pvt. Ltd. .... Petitioner(s)
-versus-
M/S. Ambar, 95, Janapath, .... Opposite Party (s)
Unit-3, Bhubaneswar & Anr.
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr. Biplab P. B. Bahali, Advocate
For Opposite Party (s) : Mr. D. P. Nanda, Senior Adv.
along with associates
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-07.03.2026
DATE OF JUDGMENT:-13.03.2026
Dr. Sanjeeb K Panigrahi, J.
1. The petitioner, M/s. 916 Epari Jewellers Pvt. Ltd., has filed the present
Writ Petition challenging the initiation of arbitration proceedings arising
out of a Memorandum of Understanding dated 01.11.2023 executed
between the petitioner and Opposite Party No.1 concerning the proposed
sale of a mortgaged immovable property belonging to the petitioner.
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Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
(i) The petitioner had earlier obtained a loan from the State Bank of India,
SME Madhupatana Industrial Estate Branch, Cuttack, by mortgaging its
property where a jewellery business was being conducted. Due to the
financial distress caused by the COVID-19 pandemic, the petitioner
defaulted in repayment of the loan and the loan account was
consequently classified as Non-Performing Asset (NPA).
(ii) In order to liquidate the outstanding dues, the petitioner decided to sell
the mortgaged property, and negotiations took place with Opposite Party
No.1 for purchase of the said property for a consideration of
approximately ₹27 crores.
(iii) As part of the settlement process, the bank approved a One Time
Settlement (OTS) proposal for the petitioner’s loan account. According to
the understanding between the parties, Opposite Party No.1 was to pay
the OTS amount directly to the bank in order to clear the petitioner’s
outstanding liability.
(iv) It is alleged that due to delay on the part of Opposite Party No.1 in
making the payment towards the OTS, the bank enhanced the settlement
amount, which allegedly resulted in a financial loss to the petitioner in
the transaction.
(v) The MOU dated 01.11.2023 contains Clause 31, which provides that in the
event of any dispute between the parties, the matter would be referred to
arbitration before a named arbitrator, Sri Dillip Kumar Mohanty, whose
decision would be final and binding.
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Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
(vi) Subsequently, the said arbitrator issued a notice dated 16.05.2025
initiating arbitration proceedings in Arbitration Case No.01 of 2025,
which has been assailed by the petitioner in the present writ petition
before the High Court.
II. SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. Learned counsel for the Petitioner earnestly made the following
submissions in support of his contentions:
(i) The petitioner contends that no valid and enforceable arbitration
agreement exists between the parties, as the MOU dated 01.11.2023
cannot be treated as a legally binding contract governing a transaction
involving immovable property of such high value.
(ii) It is asserted that the arbitration clause contained in Clause 31 of the
MOU is invalid, as the agreement itself is alleged to be improperly
executed, being on undervalued non-judicial stamp paper and neither
notarised nor registered, thereby rendering the document unenforceable
in law.
(iii) The petitioner further submits that the arbitrator has been unilaterally
appointed by Opposite Party No.1, which violates the principles of
impartiality and independence embodied in Section 12(5) of the
Arbitration and Conciliation Act, 1996 read with the Seventh Schedule.
(iv) According to the petitioner, the arbitrator in question is alleged to have
past or present professional or business association with Opposite Party
No.1, thereby giving rise to reasonable apprehension regarding his
neutrality and rendering him de jure ineligible to act as an arbitrator.
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Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
(v) The petitioner relies upon judicial precedents including TRF Ltd. v.
Energo Engineering Projects Ltd., Perkins Eastman Architects v. HSCC
(India) Ltd.1, Bharat Broadband Network Ltd. v. United Telecoms Ltd.2,
and the Constitution Bench decision in Central Organisation for Railway
Electrification v. ECI-SPIC-SMO-MCML (JV)3 to contend that a party
interested in the outcome of the dispute cannot have the exclusive power
to appoint a sole arbitrator.
(vi) It is argued that unilateral appointment of an arbitrator violates the
principle of equal treatment of parties under Section 18 of the Arbitration
Act and Article 14 of the Constitution, and any proceedings conducted by
such arbitrator would be void ab initio and incapable of resulting in an
enforceable arbitral award.
(vii) The petitioner further contends that no express written waiver under the
proviso to Section 12(5) was ever executed after the dispute arose, and
therefore the statutory disqualification of the arbitrator cannot be cured
by implication or by conduct.
(viii) It is also urged that the arbitration clause has lost its efficacy due to efflux
of time, since the transaction contemplated under the MOU did not
materialise within the stipulated period and the contract itself has ceased
to operate.
III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES:
4. The Learned Counsel for the Opposite Parties earnestly made the
following submissions in support of his contentions:
1
CIVIL APPEAL NO. 5306 OF 2017.
2
CIVIL APPEAL NO. 3972 OF 2019.
3
(2020) 1 SCALE 134.
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Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
(i) The Opposite Parties contend that the present writ petition is not
maintainable, as the dispute squarely falls within the domain of the
Arbitration and Conciliation Act, 1996, which provides a comprehensive
statutory mechanism for resolution of such disputes.
(ii) It is submitted that the petitioner has effective alternative remedies under
Sections 12, 13 and 14 of the Arbitration Act, whereby objections
regarding the independence or eligibility of the arbitrator can be raised
before the arbitral tribunal itself or before the competent court as
provided under the Act.
(iii) The Opposite Parties further contend that judicial interference in arbitral
proceedings is limited by Section 5 of the Arbitration Act, and courts
should refrain from intervening in matters governed by arbitration except
in circumstances specifically provided under the statute.
(iv) According to the Opposite Parties, the present case does not involve
unilateral appointment of an arbitrator, since the name of the sole
arbitrator was expressly agreed upon by both parties in Clause 31 of the
MOU dated 01.11.2023, which was voluntarily executed by the parties.
(v) It is argued that the petitioner never objected to the arbitration clause or
the appointment of the arbitrator at the time of execution of the MOU,
and therefore the present challenge is merely an afterthought arising out
of subsequent disputes between the parties.
(vi) The Opposite Parties submit that the judgments relied upon by the
petitioner, including Perkins Eastman and TRF Ltd. (supra), apply only
in situations where one party is given exclusive power to appoint an
arbitrator, whereas in the present case the arbitrator was mutually
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Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
designated by agreement of the parties at the time of execution of the
MOU.
(vii) Reliance is placed upon HRD Corporation v. GAIL (India) Ltd.4 and
Union of India v. Reliance Industries Ltd.5, to contend that challenges
relating to the eligibility or bias of an arbitrator must ordinarily be raised
within the arbitral framework itself and not directly before the writ court.
(viii) On these grounds, the Opposite Parties submit that the present writ
petition is devoid of merit and liable to be dismissed at the threshold,
leaving the petitioner to pursue remedies available under the Arbitration
and Conciliation Act, 1996.
IV. JUDGMENT AND ANALYSIS:
5. Heard Learned Counsel for the parties and perused the documents
placed before this Court.
6. The petitioner challenges the initiation of arbitral proceedings under
Clause 31 of the MOU dated 1.11.2023. The issues before this Court are as
follows: (i) whether this writ petition is maintainable given the
comprehensive remedy under the Arbitration and Conciliation Act, 1996
(the “Act”); (ii) the validity of the arbitration clause in the MOU; and (iii)
the question of the arbitrator’s appointment under Section 12(5) and the
Seventh Schedule.
7. It is well established that the Act provides a complete code for arbitral
disputes, permitting judicial intervention only in the limited cases
expressly provided. In fact, the Supreme Court in the case of Bhaven
4
(2018) 12 SCC 471
5
2022 SCC OnLine Del 4310
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Date: 30-Mar-2026 17:47:11
Construction v. Sardar Sarovar Narmada Nigam Ltd.6 recognized the
powers of the High Court to issue directions, orders or writs under
Article 226. It held that it is a basic feature of the Constitution that cannot
be curtailed by Parliamentary legislation. But such power needs to be
exercised by the High Court in exceptional rarity, wherein one party is
left remediless under the statute or a clear “bad faith”. The Court held as
follows:
“It is therefore, prudent for a Judge to not exercise
discretion to allow judicial interference beyond the
procedure established under the enactment. This power
needs to be exercised in exceptional rarity, wherein one
party is left remediless under the statute or a clear (“bad
faith” shown by one of the parties. This high standard set by
this Court in forms of the legislative intention to make the
arbitration fair and efficient.”
8. In general, challenges to the validity of an arbitration agreement or
appointment of an arbitrator must be raised under Section 12/14 of the
Act and not by a writ petition. Here, there is no allegation that the
dispute is non-arbitrable in public law or that the clause offends public
policy; rather, the petitioner claims infirmities in the agreement and
arbitrator’s neutrality. Such contentions fall squarely within Part I of the
Act, and the petitioner has remedies under Sections 12 and 14. Thus, this
Court will therefore examine the merits but note that writ relief is
generally unavailable to pre-empt arbitration.
9. Clause 31 of the MOU, titled “Dispute Resolution”, provides that all
disputes shall be referred to a sole arbitrator (Sri Dillip Kumar Mohanty)
whose decision will be final. The petitioner attacks this clause on two
6
(2022) 1 SCC 75
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Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
grounds: (a) the MOU was executed on undervalued, non-judicial stamp
paper and was not notarized or registered, so that it is not a legally
enforceable contract governing a high-value immovable property; and (b)
the clause has become inoperative by efflux of time since the sale was not
completed.
10. Under the Stamp Act, a contract requiring stamp duty is void and not
admissible in evidence if duty is not paid. In fact, in N.N. Global
Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd.7 a 3:2 majority of the
Supreme Court had held that an arbitration clause in an insufficiently
stamped agreement is unenforceable until the stamp defect is cured. The
Court held as follows:
“109. … An agreement which is unstamped or
insufficiently stamped is not enforceable, as long as it
remains in the said condition. Such an instrument would be
void as being not enforceable [see Section 2(g) of the
Contract Act].”
11. However, that view was subsequently revisited: in December 2023 a
seven-judge Constitution Bench in In Re: Interplay Between Arbitration
Agreements Under The Arbitration And Conciliation Act 1996 And The
Indian Stamp Act 18998 held that non-stamping of the substantive
contract is a curable defect which does not render the arbitration
agreement void ab initio. The defect can be remedied by depositing the
requisite stamp duty and penalty, after which the arbitration clause
remains enforceable. The Court held as follows:
“The Stamp Act does not render such an instrument void.
The non-payment of stamp duty is accurately characterised
7
2023 SCC OnLine SC 495
8
2023 INSC 1066
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Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11as a curable defect. The Stamp Act itself provides for the
manner in which the defect may be cured and sets out a
detailed procedure for it. It bears mentioning that there is no
procedure by which a void agreement can be “cured”.”
12. Applying this law, this Court finds that the petitioner’s objection to the
stamp duty is not fatal to the existence of an arbitration agreement. The
clause is treated as an independent agreement under Section 7(7) of the
Act and survives even if the main contract has defects. The parties may
henceforth regularize any stamp deficiency in the MOU, and then act
upon the agreement. In short, the arbitration clause cannot be struck
down at the threshold merely because the agreement was on insufficient
stamp; it remains operative once compliance with the Stamp Act is
completed.
13. The petitioner’s further points, that the MOU was not notarized or
registered, do not invalidate the arbitration clause. Registration of an
agreement to sell immovable property is generally required if the
agreement transfers an interest in land (Registration Act, Section 17), but
a contract to sell (an executory agreement) may not per se require
registration. Notarization is not a statutory requirement. In any event,
even if the MOU could not itself be enforced in a civil suit without
registration, the existence of the arbitration clause is governed by the
Arbitration Act. Under Section 7 of the Act, an arbitration agreement
must be in writing; this clause satisfied that requirement. The clause
having been duly executed by both parties, it is a valid arbitration
agreement.
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Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 30-Mar-2026 17:47:11
14. This Court also notes that the subject-matter of the dispute, liability in
connection with the sale of the mortgaged property and One Time
Settlement payment, is a commercial contractual dispute, which is prima
facie arbitrable. The petitioner does not allege any statutory bar to
arbitration (e.g., issues of title to immovable property, which alone might
be non-arbitrable). In fact, the grievance arises out of the MOU itself
which contains the arbitration clause. In view of Section 8 of the Act, such
disputes ordinarily must be referred to arbitration. The writ forum cannot
be a substitute to it.
15. Thus, on the merits of the arbitration clause, the petitioners have not
shown that it is void or inoperative. Any procedural irregularity (like
stamp duty) can be cured without nullifying the clause. The existence of
the clause compels us to leave the dispute for arbitration.
16. The next issue pertains to the appointment of the Sole Arbitrator. Clause
31 names a sole arbitrator by mutual agreement of the parties. The
petitioner complains that this arbitrator has a past or present
business/professional relationship with Opposite Party No.1, which
would disqualify him under Section 12(5) of the Act, and the Seventh
Schedule, unless a statutory waiver has been given
17. The respondents point out that the arbitrator was expressly designated by
the contract itself and that the petitioner made no contemporaneous
objection. They argue that TRF Ltd. (Supra) and similar cases on
unilateral appointment do not apply since no party had exclusive power to
nominate the arbitrator. Even assuming arguendo that the arbitrator has a
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 30-Mar-2026 17:47:11
connection with OP-1, the remedy is for the petitioner to raise the
objection under Section 12 or 14 of the Act, not by an ad hoc writ.
18. This Court agrees that Clause 31 reflects a consensual designation of a
sole arbitrator. A clause fixing a particular arbitrator by agreement of
both sides is not the same as giving one party an unfettered power to
choose. The Constitution Bench in Central Organisation(Supra)
reaffirmed that a unilateral appointment scheme, where one side picks
arbitrator without collaboration, is contrary to the equality of parties and
generally void. The Court held as follows:
“I am of the opinion that a priori declaration that
arbitration agreements that prescribe unilateral
appointment procedures are invalid can lead to many
problems in the day-to-day working of arbitral remedies.
Particularly for institutions involving multiple transactions
such as insurance claims, credit card defaults, etc. involving
large number of cases but each claim may be of small sum.”
19. But where both parties have named the arbitrator in advance, the clause
itself is not automatically invalid. In short, the nomination of Sri Mohanty
by mutual accord does not on its face offend the law.
20. However, the statutory disqualification under Section 12(5) is separate.
The law makes it clear that an arbitrator who falls within the categories of
the Fifth/Seventh Schedule cannot act unless the parties have after the
dispute arose given express written waiver (the proviso to Sec.12(5)). The
mere fact that the parties agreed to appoint a person before any
controversy does not itself amount to a waiver under the statute.
21. Indeed, Bharat Broadband Network Ltd.(Supra) held that the proviso
requires an express written waiver by both parties, made with full
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 30-Mar-2026 17:47:11
knowledge of the arbitrator’s disqualifying relationship. Absent any such
documented waiver after this dispute arose, the arbitrator, if affected by a
prohibited association, would be de jure ineligible under Section 12(1)(b).
22. In the present petition, the petitioner asserts without contradiction that
the named arbitrator has (had) a business/partner relationship with OP-1.
If proven, this would invoke Section 12(5) and Seventh Schedule. But
rather than grant relief in this writ, the appropriate course is for the
petitioner to file an application under Section 12 (or raise the issue under
Section 14) before the arbitral tribunal or the appointing authority. This is
exactly the remedy envisaged by the Act.
23. The Supreme Court in Bhaven Construction (Supra) is abundantly clear
in its view that the Arbitration Act is a complete code in itself without
there being scope for any judicial interference beyond what is permitted
therein, yet, a legislative enactment by itself cannot curtail a constitutional
right, particularly that under Article 227 of the Constitution. It held as
follows:
“13. The Arbitration Act itself gives various procedures and
forums to challenge the appointment of an arbitrator. The
framework clearly portrays an intention to address most of
the issues within the ambit of the Act itself, without there
being scope for any extra statutory mechanism to provide
just and fair solutions.”
24. If we apply the abovementioned precedent to the current situation, it can
be inferred that an arbitrator’s eligibility should be canvassed under the
Act and not in writ proceedings. In any event, if the arbitrator indeed
lacks impartiality, his mandate may be terminated upon such a challenge.
For completeness, I observe that if the petitioner wishes, he can raise an
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 30-Mar-2026 17:47:11
appropriate application under Section 12(1)(b) of the Act, supported by
facts of the association. This Court has no reason to prejudge that issue
now; in any event, no arbitral proceedings or award have yet been made.
25. The petitioner suggests that the arbitration clause lost effect since the
contemplated transaction did not complete within the expected
timeframe. This does not render the clause void. he MOU envisioned
certain obligations (like payment of OTS) and expressly provided for
arbitration of disputes “in connection with” that contract.
26. Even if the sale did not materialize, disputes have arisen under that
agreement, such as delay in payment and increased liability. An
arbitration clause typically survives the failure of a contract unless it is
clearly conditional on completion. Here Clause 31 is unconditional,
providing that arbitration will apply “in the event of any dispute between
the parties.” The parties’ subsequent dealings and their mutual conduct,
including invoking or rejecting arbitration, would determine the clause’s
continued force, but there is no automatic lapse merely because the sale
did not go through. In any case, the remedy on this claim lies before the
arbitral tribunal, which is competent under Section 16 of the Act to
interpret the contract and determine whether it ever became infructuous.
At this stage, the writ court cannot hold that the clause has expired.
V. CONCLUSION:
27. For the foregoing reasons, we find no ground to entertain this writ
petition. The arbitration clause in the MOU is a valid agreement (subject
to stamp-duty compliance) and disputes arising thereunder are to be
resolved by arbitration. The petitioner’s remedy is to challenge the
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Reason: Authentication
Location: ORISSA HIGH COURT,
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Date: 30-Mar-2026 17:47:11
arbitrator’s eligibility under Section 12/14 of the Act and to comply with
any stamp duty adjudication, not to quash the arbitration proceedings by
writ.
28. Accordingly, the Writ Petition is dismissed at threshold. The parties shall
be at liberty to proceed with the arbitration. The petitioner may make any
necessary application under Section 12 of the Arbitration and Conciliation
Act to challenge the arbitrator’s mandate. The parties should also ensure
that the MOU is duly stamped as required by law, and furnish evidence
of payment to the arbitrator or tribunal as needed.
29. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 13th March, 2026/
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