New Delhi: The Supreme Court has held that once the statutory eighteen-month period for delivering an arbitral award expires without an application for extension, the arbitrator’s mandate automatically terminates under Section 29A(4) of the Arbitration and Conciliation Act, 1996. Further, when a court grants an extension of time after such termination, substitution of the arbitrator becomes mandatory under Section 29A(6).
A Bench of Justice Sanjay Kumar and Justice Alok Aradhe delivered the ruling while allowing appeals filed by Mohan Lal Fatehpuria and his wife, who had challenged a Delhi High Court order that declined to substitute a sole arbitrator but extended his mandate by four months.
The dispute stemmed from a partnership deed dated May 18, 1992, executed between the parties, which contained an arbitration clause. M/s Bharat Textiles was later registered as a partnership firm on January 5, 2007. When disputes arose, the Delhi High Court, by a common order dated March 13, 2020, appointed Mr. Anjum Javed, Advocate, as the sole arbitrator in two arbitration petitions filed by the appellants. The arbitrator’s fee was fixed as per the Fourth Schedule to the Act.
The arbitrator entered reference on May 20, 2020, and issued several directions requiring the parties to deposit various amounts towards administrative expenses. The respondents challenged these demands by filing applications under Sections 14 and 15 for termination of the mandate, but the High Court rejected the applications on January 28, 2022, holding that expenses must be paid on actuals and that the arbitrator was neither de jure nor de facto ineligible.
The arbitrator continued issuing directions regarding administrative expenses. On August 31, 2023, the appellants sought time to approach the High Court under Section 29A(4), prompting the arbitrator to adjourn the proceedings sine die. The appellants then filed petitions under Section 29A(6) seeking substitution of the arbitrator and extension of time for a substitute arbitrator.
On April 22, 2025, the Delhi High Court held that fees must strictly adhere to the Fourth Schedule and administrative expenses may be charged only on actuals with appropriate disclosure. However, it refused to substitute the arbitrator and instead extended the time for completion of the proceedings by four months.
Before the Supreme Court, the appellants argued that the arbitrator had acted contrary to the appointment order by demanding fees and expenses exceeding the Fourth Schedule, and that Section 29A(6) gives the court wide powers of substitution beyond the grounds under Sections 14 and 15. The respondents countered that no case for substitution was made out, and that since their Section 14/15 petitions had been dismissed earlier, a substitute arbitrator could not be appointed under Section 29A(6). They submitted that if substitution was ordered, a former judge should be appointed.
The Supreme Court examined Section 29A — inserted by the 2016 amendment and modified in 2019 — and emphasized that it was enacted to address widespread delays in arbitration and ensure time-bound resolution. The Court reiterated that Section 29A is remedial in nature and applies to all pending arbitrations as of August 30, 2019.
Based on the undisputed facts, pleadings were required to be completed by November 19, 2020. The period from March 15, 2020 to February 28, 2022 was excluded due to the COVID-19 pandemic. Under Section 29A(1), the arbitrator was required to pass an award within one year from March 1, 2022 — i.e., on or before February 28, 2023. As no extension was sought and no award was passed, the arbitrator became functus officio on that date by operation of Section 29A(4).
The Court noted the judgment in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., which held that termination under Section 29A(4) is conditional and not absolute. However, it reaffirmed that once the statutory period expires, the arbitrator cannot continue and the mandate stands terminated unless extended by the court.
The Court clarified that arbitration is ordinarily a consensual forum, but once the statutory timeline lapses, the arbitrator’s continuation becomes impermissible. Section 29A(6) therefore empowers — and obligates — the court to substitute the arbitrator once the mandate has ceased.
Rejecting the respondents’ argument regarding the dismissal of their earlier Section 14/15 petitions, the Court held that those proceedings were unrelated to a Section 29A determination. Since the arbitrator’s mandate had not expired in January 2022, that order had no bearing on the later proceedings.
Holding that the High Court erred in extending the arbitrator’s mandate despite its statutory termination, the Supreme Court ruled that substitution was mandatory.
Quashing the High Court’s order, the Supreme Court declared that the mandate of sole arbitrator Mr. Anjum Javed stood terminated by operation of law. It appointed Justice Najmi Waziri, former Judge of the Delhi High Court, as the substituted sole arbitrator and directed that proceedings shall continue from the stage already reached and be concluded within six months from receipt of the order.
Case Title: Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors.
[Civil Appeal arising from SLP(C) No. 13759 of 2025 and SLP(C) No. 13779 of 2025]
