Courts must substitute an arbitrator under Section 29A once the arbitral mandate has expired by operation of law

The Supreme Court of India has held that once the mandate of an arbitrator stands terminated under Section 29A(4) of the Arbitration and Conciliation Act, 1996 due to failure to deliver the award within the prescribed time, the court is obligated to substitute the arbitrator under Section 29A(6) rather than merely extend the mandate. The Court clarified that continuation of an arbitrator whose mandate has expired is impermissible in law.

Setting aside an order of the Delhi High Court which had extended the mandate of a sole arbitrator while declining substitution, the Supreme Court emphasised that Section 29A is a remedial provision enacted to ensure expeditious resolution of disputes, and courts must give full effect to its statutory scheme.

Case Background

The dispute arose out of a partnership arrangement between the appellants, who are husband and wife, and the respondents. A partnership deed executed in 1992 contained an arbitration clause. Following disputes between the parties, the Delhi High Court, by a common order passed in 2020, appointed a sole arbitrator to adjudicate the disputes and directed that the arbitrator’s fees be governed by the Fourth Schedule to the Arbitration and Conciliation Act.

The sole arbitrator entered reference in May 2020 and issued multiple directions requiring the parties to deposit amounts towards administrative expenses. Objections were raised by certain respondents regarding the arbitrator’s demand for administrative expenses, leading to applications under Sections 14 and 15 of the Act seeking termination of the arbitrator’s mandate.

What The Lower Authorities Held

The Delhi High Court, by an order passed in January 2022, dismissed the applications filed under Sections 14 and 15 of the Act. It held that the sole arbitrator was neither de jure nor de facto ineligible and that administrative expenses were payable on actuals, subject to accounting before the arbitral tribunal.

Subsequently, when the arbitral proceedings remained inconclusive well beyond the statutory time limits, the appellants approached the High Court under Section 29A(6) seeking substitution of the arbitrator and extension of time for the substituted arbitrator. By an order dated 22 April 2025, the High Court declined substitution, directed the arbitrator to adhere strictly to the Fourth Schedule regarding fees and expenses, and extended the arbitrator’s mandate by four months.

The Court’s Reasoning

The Supreme Court examined whether the High Court was justified in extending the mandate of the sole arbitrator despite the expiry of the statutory time limit prescribed under Section 29A. The Court began by tracing the legislative history of Section 29A, noting that it was introduced to address persistent delays in arbitral proceedings, which undermine the core objective of arbitration as a speedy dispute resolution mechanism.

The Court observed that under Section 29A(1), an arbitral award in domestic arbitration must be rendered within twelve months from the completion of pleadings. While the parties may mutually extend this period by six months, any further extension requires judicial intervention. Crucially, if no award is made within the prescribed or extended period, the mandate of the arbitrator terminates unless the court extends the time.

Applying these provisions to the facts, the Court noted that the pleadings stood completed in November 2020. After excluding the period affected by the COVID-19 pandemic, the arbitrator was required to deliver the award on or before 28 February 2023. No application for extension was filed within this period, and the arbitrator failed to make the award.

The Court held that once the statutory period expired, the arbitrator became functus officio. Although prior precedent recognises that termination under Section 29A(4) is not absolute in the sense that courts may extend time upon sufficient cause, the arbitrator cannot continue proceedings unless and until the court grants such extension.

In the present case, the Court found that the High Court erred in extending the mandate of an arbitrator whose mandate had already ceased to exist. The Court stressed that once the mandate stands terminated by operation of law, continuation of the same arbitrator defeats the statutory purpose and is legally impermissible.

Statutory Interpretation

The Supreme Court undertook a detailed interpretation of Section 29A of the Arbitration and Conciliation Act, 1996. It explained that Section 29A is a self-contained provision that governs time limits, extension of time, and consequences of delay in arbitral proceedings.

Section 29A(4), the Court noted, provides that the mandate of the arbitrator “shall terminate” if the award is not made within the stipulated period, unless the court extends the time. Section 29A(6) further empowers the court, while extending time, to substitute one or all of the arbitrators. This power is not discretionary in isolation but must be exercised in a manner that furthers the object of expeditious dispute resolution.

The Court clarified that remedies under Sections 14 and 15, which deal with termination of mandate on grounds of ineligibility or inability, operate independently of Section 29A. Rejection of an application under Sections 14 and 15 does not bar substitution under Section 29A once the mandate has expired due to statutory time limits.

Constitutional / Policy Context

The Supreme Court placed its interpretation of Section 29A within the broader policy objective of strengthening arbitration as an efficient and time-bound dispute resolution mechanism. The Court reiterated that legislative interventions introduced by the 2015 and subsequent amendments to the Arbitration and Conciliation Act were aimed at curbing delays that had historically plagued arbitral proceedings.

The Court observed that prolonged arbitral proceedings undermine party confidence and defeat the purpose of choosing arbitration over traditional litigation. Section 29A, therefore, reflects a conscious legislative choice to impose discipline on arbitral timelines while preserving limited judicial oversight to address genuine difficulties.

By mandating termination of the arbitrator’s mandate upon expiry of statutory timelines, the provision seeks to ensure accountability and reinforce the principle that arbitration must remain expeditious, predictable, and effective.

Interplay Between Sections 14, 15, and 29A

A central issue addressed by the Supreme Court was the relationship between Sections 14, 15, and 29A of the Act. The Court clarified that each provision operates within a distinct statutory sphere and serves a different purpose.

Sections 14 and 15 deal with termination and substitution of arbitrators on grounds such as de jure or de facto inability, ineligibility, or failure to act without undue delay. In contrast, Section 29A specifically governs termination of mandate arising from failure to conclude proceedings within prescribed timelines.

The Court held that rejection of an application under Sections 14 and 15 does not preclude the court from exercising its powers under Section 29A. Once the mandate terminates by operation of law due to lapse of time, the court must act under Section 29A(6) to ensure continuation of proceedings through substitution, rather than revival of the same arbitrator.

Limits on Judicial Discretion While Extending Time

The Supreme Court emphasised that while courts possess discretion to extend time under Section 29A(4), such discretion is not unfettered. It must be exercised in a manner consistent with the statutory scheme and legislative intent.

Where the delay is attributable to the arbitrator and the mandate has already expired, continuation of the same arbitrator would be contrary to the object of the provision. In such cases, substitution under Section 29A(6) is the appropriate course to restore momentum to the proceedings.

The Court cautioned that routine extensions without addressing the cause of delay would render Section 29A ineffective and revive the very delays the provision was designed to eliminate.

Why This Judgment Matters

This judgment provides authoritative clarity on the consequences of expiry of an arbitrator’s mandate under Section 29A and the obligations of courts thereafter. It reinforces that statutory timelines are not directory but carry substantive consequences.

For litigants, the decision underscores the importance of monitoring arbitral timelines and seeking timely judicial intervention where necessary. For courts, it offers guidance on the proper exercise of powers under Section 29A, discouraging extensions that undermine efficiency.

The ruling also strengthens the credibility of arbitration by reaffirming that delays will not be condoned at the cost of statutory discipline.

Final Outcome

The Supreme Court allowed the appeal and set aside the order of the Delhi High Court extending the mandate of the sole arbitrator. It held that the arbitrator’s mandate had terminated by operation of law and could not be revived.

The Court directed that a substitute arbitrator be appointed in accordance with Section 29A(6) of the Arbitration and Conciliation Act, 1996, and that the arbitral proceedings be continued afresh in accordance with law.

Case Details

• Case Title: Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors.
• Citation: 2025 INSC 1409
• Court: Supreme Court of India
• Date of Judgment: 10 December 2025