S. 29A Arbitration Act | Arbitrator's Mandate Terminates On Expiry Of Time; Substituted Arbitrator Must Resume After Extension : Supreme Court

The Supreme Court on Wednesday (December 10) held that once the statutory 18-month period for delivering an arbitral award expires, the arbitrator's mandate automatically comes to an end as per Section 29A(4) of the Arbitration and Conciliation Act, 1996, when no application for extension is made. Therefore, when an extension of time is granted by the Court after the mandate of the arbitrator is terminated, then the substitution of the arbitrator is mandatory under Section 29A(6) of the Arbitration and Conciliation Act, 1996.

In essence, the Court held that once the maximum 18-month period for delivering an arbitral award has expired, only a substituted arbitrator can continue the proceedings when any further extension of time is granted.

A bench comprising Justice Sanjay Kumar and Justice Alok Aradhe heard an appeal arising out of a Delhi High Court's order, which has declined substitution of a sole arbitrator under Section 29A (6) of the Arbitration and Conciliation Act, 1996 ('Act') while extending the mandate of an arbitrator for a further period of four months.

Setting aside the High Court's order, the judgment authored by Justice Aradhe held that once the statutory time limit for delivering an arbitral award expires, the arbitrator's mandate ceases to exist, when there was no extension of period under Section 29A(4).

"In view of mandate contained in Section 29A(1) of the Act, the sole Arbitrator was under an obligation to pass an award within a period of one year from 01.03.2022, i.e. on or before 28.02.2023. However, the sole Arbitrator failed to do so. The parties did not apply for extension of period to pass an award. The sole arbitrator, in view of mandate contained in Section 29A(4) became functus officio," the Court observed with reference to the facts of the case.

The Court said that it was aware of the precedent in ROHAN BUILDERS (INDIA) PVT. LTD. v. BERGER PAINTS INDIA LTD which held that extension can be sought even after the expiry of the period and that the mandate of the arbitrator does not terminate in the absolute sense.

With reference to the precedent, the Court said :

"However, the fact remains that on expiry of initial period or extended period, the arbitrator cannot proceed with the arbitration proceeding and his mandate terminates, subject to an order which may be passed by the Court in a proceeding under Section 29A(4) of the Act."

The Court added :

"When mandate of arbitrator has expired, his continuation is impermissible. Section 29A(6) empowers and obligates the Court to substitute the Arbitrator....“The substitution of a sole arbitrator is warranted, when his mandate ceases to exist, to effectuate the object of the Act, which mandates expeditious resolution of the dispute. In view of the statutory scheme and undisputed factual position, we are satisfied that the case warranted the exercise of jurisdiction under Section 29A (6) of the Act. The High Court erred in granting an extension when the mandate of the sole arbitrator had ceased to exist.”, the court observed.

Resultantly, the appeal was allowed, and the impugned order was set aside, with Mr. Justice Najmi Waziri, Former Judge of Delhi High Court, appointed as the substituted sole arbitrator who shall resume the arbitral proceedings from the stage already attained and be concluded within six months from the date of receipt of a copy of this order.

Cause Title: MOHAN LAL FATEHPURIA VERSUS M/S BHARAT TEXTILES & ORS. (and connected case)

Citation : 2025 LiveLaw (SC) 1190

Click here to download judgment

Appearance:

For Petitioner(s) Mr. Pradeep Aggarwal, Adv. Mr. Lal Pratap Singh, Adv. Mr. Umesh Pratap Singh, Adv. Mr. Arjun Aggarwal, AOR Mr. Sahil Gupta, Adv. Mr. Vishal Singh, Adv. Mr. Aman Kumar, Adv.

For Respondent(s) Mr. S. C. Singhal, Adv. Mr. Padam Kant Saxena, Adv. Ms. Megha Gaur, Adv. Mr. Parmanand Gaur, AOR