Has Supreme Court's Interpretation Of Section 29A Created Uncertainty Around Challenge To Arbitral Awards? A Critical Analysis

The Supreme Court has recently made a controversial shift in the interpretation of Section 29A (5) of the Arbitration & Conciliation Act, 1996, by allowing the post-award extension to the arbitral tribunal to make otherwise unenforceable award, enforceable. In C. Velusamy vs. K Indhera, 2026 LiveLaw (SC) 105, the two-judge bench held that an application seeking extension of an arbitrator's mandate under Section 29A (5) is maintainable even after an arbitral award has been delivered beyond the statutory time limit, and that such extension can operate retrospectively to validate the award. The ruling reflects a paradigm shift in the arbitration regime; it seeks to prevent technical objections from defeating substantive justice, simultaneously raising serious concerns about whether it undermines the discipline and certainty that Section 29A was designed to introduce into Indian arbitration.

Before critically analysing the judgment, it is essential to understand Section 29A of the Act.

Introduced via the 2015 Amendment to the Act, the provision aims to set a definitive timeline for adjudication of the dispute by an arbitral tribunal and passing of an award. In simple words, Section 29A fixes a 12-month timeline for passing of an award, which can be extendable further up to 6 months with the consent of the parties. This means, ideally, an award has to be passed within a total timeline of 18 months.

When an award is not passed within the maximum timeline of 18 months, a mandate of an arbitral tribunal stands terminated under Section 29A (4) unless extended by a concerned civil court under Section 29A (5) on an application filed by any of the parties.

Critical Reflection

At the heart of the controversy lies the Court's reliance on its earlier decision in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd, 2024 LiveLaw (SC) 693 to justify extending an arbitrator's mandate even after an award has been delivered beyond the statutory timeline. On a closer reading, however, the two judgments operate at entirely different procedural stages.

In Rohan Builders, the Court dealt with a situation where no arbitral award had yet been passed, although the tribunal's mandate had technically expired. Taking a literal view of the word “termination” used in Section 29A(4), the Court held that the tribunal's mandate could still be extended even after the maximum statutory period of 18 months had elapsed, enabling the tribunal to proceed and make an award.

In contrast, Velusamy concerned a post-award situation, where the arbitral tribunal had already delivered its award after the termination of its mandate. The central issue, therefore, was whether a tribunal whose mandate had already ended could lawfully render an award. This question was answered in the affirmative in Velusamy.

In substance, while Rohan Builders allowed an arbitral tribunal to make an award after the expiry of the statutory timeline, it did not address the validity of an award passed after the tribunal's mandate had already terminated. That unresolved issue was nonetheless relied upon extensively by the Court in Velusamy to justify post-award validation.

The judgment notes that Section 29A of the Act does not expressly prohibit an application for extension of an arbitrator's mandate after the delivery of an award, as no such bar is prescribed in the provision. However, a close reading of Section 29A indicates that it is designed to address situations where an award is “not made” within the stipulated period and contemplates extension of time only to enable the tribunal to render an award. It does not deal with a situation where an award already exists but has been rendered without authority, namely after the arbitral tribunal's mandate has expired. Significantly, unlike the Arbitration Act, 1940, which explicitly empowered courts to extend time even after an award was made, the 1996 Act contains no comparable curative mechanism. If Parliament had intended to permit post-award extensions, it could have expressly provided so, as it did under the 1940 Act, but it consciously refrained from doing so.

Furthermore, the ruling introduces procedural uncertainty regarding the status of awards delivered after the termination of the tribunal's mandate. An award rendered after expiry of the mandate exists in a legal grey area, made but unenforceable until validated by a court order. It also raises unresolved questions about whether and when such awards can be challenged under Section 34, thereby complicating post-award remedies.

The judgment says that an arbitral award passed after the expiry of the tribunal's mandate is not automatically void. Instead, such an award was described as “unenforceable” unless the court later extends the tribunal's mandate under Section 29A. At the same time, the Court observed that such awards need not necessarily be challenged under Section 34.

“if an award is made after expiry of the mandate, then there is no doubt about the fact that such an award is non est. A better expression would be to hold that such an award would be unenforceable under Section 36. Such an award need not be challenged under Section 34.”, the court said.

This approach, while intended to prevent arbitration proceedings from collapsing due to missed deadlines, has left parties unsure about when and how such awards can be challenged or enforced.

The difficulty arises because Section 34 provides the only statutory mechanism to challenge an arbitral award, and it comes with strict limitation periods. Under the law, a party has three months (extendable by 30 days) from the date of receiving the award to file a challenge.

The judgment asserting that a post-mandate award is not yet enforceable and may later be validated through an extension of the tribunal's mandate raises a pertinent question: Should a party challenge an award immediately, i.e., after passing of the award by a tribunal whose mandate was terminated, or wait to see whether the court extends the mandate to file a challenge thereafter?

Technically, an arbitral award passed after the expiry of the tribunal's mandate would be treated as non-existent in law, leaving no scope for a challenge under Section 34. At the same time, the judgment states that such an award remains unenforceable under Section 36. This raises a critical unanswered question: what remedy is available to a party seeking to contest such an award? The Court did not address this issue, despite its far-reaching procedural consequences

It would have been beneficial if the judgment had highlighted and addressed above raised ambiguity regarding the challenge to an award passed after the termination of the arbitral tribunal's mandate.

Views Expressed Are Personal

(The author is a Supreme Court Correspondent at Live Law. He can be reached at yash@livelaw.in)