In present case, Dani Wooltex, a partnership firm, owned land in Mumbai, part of which was to be developed by Sheil Properties under a Development Agreement. Another portion was to be sold to Marico as per a Memorandum of Understanding (MOU). Marico objected, insisting any transaction be subject to the Development Agreement. Disputes arose, leading to suits between Dani Wooltex, Sheil, and Marico. Eventually, they agreed to arbitration by appointing a Sole Arbitrator. Marico's claim was arbitrated and awarded while Sheil's claim remained unresolved. The Arbitral Tribunal terminated proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act. Sheil approached the High Court which overturned the termination. Aggrieved by this the Appellant approached the Supreme Court.

Whether termination of the arbitral proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 is valid and legal?

The Court observed that “The abandonment of the claim by a claimant can be a ground to invoke Section 32(2)(c). The abandonment of the claim can be either express or implied. The abandonment cannot be readily inferred. There is an implied abandonment when admitted or proven facts are so clinching that the only inference that can be drawn is of the abandonment. Only if the established conduct of a claimant is such that it leads only to one conclusion that the claimant has given up his/her claim can an inference of abandonment be drawn. Even if it is to be implied there must be convincing circumstances on record which lead to an inevitable inference about the abandonment. Only because a claimant after filing his statement of claim does not move the Arbitral Tribunal to fix a date for the hearing the failure of the claimant per se will not amount to the abandonment of the claim.”

The Supreme Court dismissed the appeal and held that the power under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 can only be invoked if there are compelling reasons making the continuation of proceedings either unnecessary or impossible.