Kiran Raj

The Supreme Court of India Division Bench of Justice Sanjay Kumar and Justice Alok Aradhe on Wednesday, December 10, 2025, held that once the statutory 18-month period for making an arbitral award lapses without any application for extension, the arbitrator’s mandate ends under Section 29A(4) of the Arbitration and Conciliation Act, 1996, and any later court-granted extension requires appointment of a substitute arbitrator under Section 29A(6). In a dispute from a partnership business referred to arbitration between the appellants and a respondent firm, the Court set aside the Delhi High Court’s order extending the original sole arbitrator’s tenure, declared his mandate terminated by operation of law, appointed a former High Court judge as substitute sole arbitrator, and directed that the proceedings resume from the existing stage and be completed within six months.

The appellants, a husband and wife, and the other partners executed a partnership deed in May 1992 containing an arbitration clause. A partnership firm was subsequently registered in January 2007, and disputes arising out of the partnership were referred to arbitration by the High Court, which in March 2020 appointed a sole arbitrator with fees to be governed by the Fourth Schedule to the Arbitration and Conciliation Act, 1996.

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The arbitrator entered reference in May 2020, issued directions on several dates, and called upon the parties to deposit administrative expenses. Two respondents challenged these demands through applications under Sections 14 and 15 of the Act, seeking termination of the arbitrator’s mandate; the High Court dismissed these applications in January 2022, holding that expenses were payable on actuals and that the arbitrator was not ineligible.

Thereafter, further directions were issued in 2022 and 2023 for deposits. The appellants sought time to move an application under Section 29A(4), and the arbitrator adjourned the proceedings sine die. The appellants then filed petitions under Section 29A(6) seeking substitution of the arbitrator and extension of time. The High Court, by order dated April 2025, declined substitution but extended the mandate for four months and directed that fees and administrative expenses adhere to the statutory framework.

The Court first explained the object and scheme of Section 29A, stating that “Section 29A was inserted in the Act, due to widespread criticism of delay in conducting the arbitration proceedings, as the delay is against the avowed object of the Act i.e., speedy resolution of the dispute. Section 29A aims to ensure time bound disposal of arbitration proceeding, which is in consonance with the object of the Act.” It further recorded that “Section 29A of the Act has been held to be remedial in nature and is made applicable to all pending arbitral proceedings as on 30.08.2019.”

Turning to the facts, the Court noted that “The undisputed facts which emerge from the record before us, are that, the sole Arbitrator entered the reference on 20.05.2020 and directed the parties to file the statements of claim and defence.” It then observed: “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.”

Addressing prior precedent, the Court stated that “We are conscious of the fact that a two Judge Bench of this Court has interpreted the word ‘terminate’ in Section 29A(4)… It has been held that on expiry of the initial period of six month and extended period of six months, the Arbitral Tribunal becomes functus officio but not in absolute terms… 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 then clarified the consequence of expiry of mandate and the role of the Court: “In the instant case, as stated supra, the mandate of the sole Arbitrator had terminated on 28.02.2023. When mandate of arbitrator has expired, his continuation is impermissible. Section 29A(6) empowers and obligates the Court to substitute the Arbitrator.” It added that “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.”

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The Court directed: “For the aforementioned reasons, the impugned order dated 22.04.2025 is quashed and set aside. The mandate of sole arbitrator Mr. Anjum Javed stands terminated by operation of law. Mr. Justice Najmi Waziri, Former Judge of Delhi High Court is appointed as the substituted sole arbitrator. The arbitral proceeding shall resume from the stage already attained and be concluded within six months from the date of receipt of a copy of this order. In the result, appeals are allowed. There shall be no order as to costs.”

Advocates Representing the Parties

For the Petitioners: 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 the Respondents: Mr. S. C. Singhal, Adv. Mr. Padam Kant Saxena, Adv. Ms. Megha Gaur, Adv. Mr. Parmanand Gaur, AOR

Case Title: Mohan Lal Fatehpuria v. M/S Bharat Textiles & Ors.
Neutral Citation: 2025 INSC 1409
Case Number: Civil Appeal No. of 2025 (@ SLP (C) No.13759 of 2025) with Civil Appeal No. of 2025 (@ SLP (C) No.13779 of 2025)
Bench: Justice Sanjay Kumar; Justice Alok Aradhe