Section 29A(6) and the Perils of Mechanical Substitution: Reading Mohan Lal Fatehpuria Correctly

The decision of the Supreme Court in Mohan Lal Fatehpuria v. Bharat Textiles has led to considerable discussion on the interpretation of Section 29A(6) of the Arbitration and Conciliation Act, 1996. The concern that appears to have emerged is whether the judgment should be read to mean that the moment the statutory timeline for making an arbitral award expires, substitution of the arbitrator becomes inevitable. Such a reading, however, risks oversimplifying both the statutory framework and the reasoning adopted by the Court.

Section 29A was introduced to address delays in arbitral proceedings and to ensure timely resolution of disputes. At the same time, the provision is structured to retain flexibility. While it prescribes consequences for failure to adhere to timelines, it also preserves the court's power to intervene in a manner that keeps the arbitral process effective. The scheme of the provision indicates that it was not intended to function as a rigid or punitive mechanism, but as a supervisory tool to prevent arbitral stagnation.

In Mohan Lal Fatehpuria v. Bharat Textiles – 2025 LiveLaw (SC) 1190, the Supreme Court was dealing with a case where the arbitral proceedings had seen prolonged delay. The sole arbitrator had not rendered an award within the prescribed period, no extension by consent had been obtained, and the proceedings had effectively come to a standstill. In this factual context, the Court held that the arbitrator had become functus officio by operation of law and that the High Court erred in extending the mandate without considering the consequences of its expiry.

A substantial part of the interpretive anxiety arises from paragraph 13 of the judgment, where the Court observed: “When mandate of arbitrator has expired, his continuation is impermissible. Section 29A(6) empowers and obligates the Court to substitute the Arbitrator.” Read in isolation, this formulation may suggest that substitution is the inevitable outcome of mandate expiry. However, such a literal reading would sit uneasily with both the text of Section 29A and the Court's own prior jurisprudence.

The reference to “impermissible” continuation must be understood in its proper context. It reflects the position that an arbitrator cannot continue proceedings on their own once the mandate has expired. It does not mean that the court loses its power to intervene by extending the mandate under Section 29A(4). The restriction operates against unilateral continuation by the arbitrator, not against judicial oversight exercised to ensure that the proceedings remain meaningful and effective.

Similarly, the Court's observation that Section 29A(6) “empowers and obligates” the court to substitute the arbitrator cannot be read as laying down a universal rule. While the provision undoubtedly empowers the court to substitute the tribunal, that power is discretionary and must be exercised in light of the surrounding circumstances. The obligation referred to by the Court is best understood as a duty to ensure that the objective of the Act—expeditious resolution of disputes—is not defeated by routine or mechanical extensions that fail to address persistent delay or inefficiency.

Seen in this light, the judgment does not eliminate the distinction between extension of time and substitution of the arbitrator. Instead, it underscores that substitution becomes appropriate where continuation of the same tribunal would no longer serve the purpose of timely adjudication. Factors such as prolonged inaction, repeated procedural deadlock, or loss of efficacy of the proceedings assume relevance in deciding whether substitution is warranted.

This interpretation is consistent with earlier Supreme Court decisions such as Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. 2024 LiveLaw (SC) 693 and Tata Sons Pvt. Ltd. v. Siva Industries & Holdings Ltd. 2023 LiveLaw (SC) 38, which recognise that termination of mandate under Section 29A is not absolute and that the court's role remains supervisory rather than punitive. These decisions emphasise that Section 29A is a remedial provision and must be applied in a manner that furthers, rather than frustrates, the arbitral process.

Read as a whole, Mohan Lal Fatehpuria cannot be understood as laying down a rule that substitution must automatically follow the expiry of the statutory timeline. The judgment cautions against extending mandates without examining whether such extension meaningfully advances the arbitral process. The concern addressed by the Court is not delay in isolation, but delay coupled with stagnation and the absence of effective progress.

Interpreting the decision as mandating mechanical substitution would risk converting a flexible supervisory provision into a rigid procedural rule. Such an approach would neither align with the statutory scheme of Section 29A nor with the broader objective of promoting efficient arbitration. Properly understood, the judgment serves as a reminder that judicial intervention under Section 29A must be principled, contextual, and directed towards preserving the effectiveness of the arbitral process.

The peril, therefore, lies not in substitution itself, but in its mechanical application. Mohan Lal Fatehpuria is best read as reaffirming the need for principled judicial engagement with delay, rather than as a mandate for automatic substitution upon the expiry of time.

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The Author Is An Advocate Practising At Supreme Court Of India

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