Full Judgment Text
REPORTABLE
2025 INSC 1409
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2025
(@ SLP (C) No.13759 of 2025)
MOHAN LAL FATEHPURIA …APPELLANT
VERSUS
M/S BHARAT TEXTILES & ORS. ...RESPONDENTS
WITH
CIVIL APPEAL NO. OF 2025
(@ SLP (C) No.13779 of 2025)
JUDGMENT
ALOK ARADHE, J.
1. Leave granted.
2. These appeals are filed against an order dated 22.04.2025 by
Delhi High Court by which it has declined substitution of a sole
arbitrator but has extended his mandate under Section 29A(6) of
the Arbitration and Conciliation Act, 1996 (hereinafter, referred to
as the ‘Act’) for a further period of four months.
Signature Not Verified
Digitally signed by
Deepak Guglani
Date: 2025.12.10
16:31:36 IST
Reason:
1
FACTS
3. The appellants who are husband and wife, along with
respondent nos. 2 to 4 executed a partnership deed dated
18.05.1992 which contained an arbitration clause. M/s. Bharat
Textiles namely, respondent no.1, was registered on 05.01.2007 as
a partnership firm. Upon disputes having arisen, the High Court
by a common order dated 13.03.2020, passed in two arbitration
petitions filed by the appellants, appointed Mr. Anjum Javed,
Advocate as a sole arbitrator. The High Court directed that a sole
arbitrator shall be entitled to fee as per the Fourth Schedule to the
Act.
4. The sole arbitrator entered the reference on 20.05.2020. He
thereafter issued various directions on 03.06.2020, 21.10.2020,
09.01.2021 and on 15.06.2021 and directed the parties to deposit
various amounts towards administrative expenses. The respondent
nos.2 and 3 questioned the action of the sole arbitrator in
demanding administrative expenses, in their applications filed
under Sections 14 and 15 of the Act, seeking termination of the
mandate of the sole arbitrator. The said applications were
dismissed by a common order dated 28.01.2022, passed by the
2
High Court, inter alia on the ground that all the expenses are
required to be paid on actuals. It was further held, that, it would
be open for respondent nos. 2 and 3 to approach the Arbitral
Tribunal, to account for administrative expenses. It was also held
that the sole arbitrator is neither de jure nor de facto ineligible to
act as an arbitrator. The petitions were dismissed.
5. The sole arbitrator issued directions on 09.07.2022,
06.01.2023 and on 14.08.2023 requiring the parties to deposit the
administrative expenses. The appellants on 31.08.2003 sought
time, in arbitral proceeding, to move an application before the High
Court under Section 29A(4) of the Act. Thereupon, the sole
arbitrator on 31.08.2023 adjourned the proceeding sine die .
6. The appellants, filed petitions under Section 29A(6) of the Act
seeking substitution of the sole arbitrator and extension of tenure,
for the substitute arbitrator. The High Court, by an order dated
22.04.2025, inter alia held that the fee must be charged by the sole
arbitrator strictly in accordance with Fourth Schedule and
administrative expenses only on actuals with disclosure to the
parties. The substitution of the sole arbitrator was declined and
time was extended to conclude the arbitral proceeding within a
3
period of four months. The petitions were partly allowed. In the
aforesaid factual background, these appeals arise for our
consideration.
SUBMISSIONS
7. Learned counsel for the appellant submitted that the sole
arbitrator acted in contravention of the initial order of appointment
dated 13.03.2020 and charged the fee and expenses in excess of
Fourth Schedule. It is further submitted that the sole arbitrator
also violated the directions issued in the order dated 28.01.2022
passed by the High Court. It is contended that the High Court
ought to have appreciated that the power of substitution of an
arbitrator is wider under Section 29A(6) of the Act and is not
restricted to the grounds in Sections 14 and 15 of the Act.
8. Per contra, learned counsel for the respondents submitted
that no ground is made out for substitution of the sole arbitrator.
It is further submitted that since the petitions filed by the
respondents under Sections 14 and 15 of the Act have been
rejected on 24.01.2022, therefore, a substitute arbitrator under
Section 29A(6) of the Act, cannot be appointed. Alternatively, it is
4
contended that, in case this Court directs substitution of an
arbitrator, a former judge be appointed, as the sole arbitrator.
ANALYSIS
9.
We have considered the rival submissions made by both sides
and have perused the record. The relevant statutory provision
namely, Section 29A was inserted by Amendment Act No.3 of 2016
and was amended by Act No.33 of 2019. 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. Section 29A is extracted
below for the facility of reference: -
“ 29A. Time limit for arbitral award .—(1) The
award in matters other than international
commercial arbitration shall be made by the
arbitral tribunal within a period of twelve months
from the date of completion of pleadings under sub-
section (4) of section 23.
Explanation.—For the purpose of this sub-section,
an arbitral tribunal shall be deemed to have
entered upon the reference on the date on which
the arbitrator or all the arbitrators, as the case may
be, have received notice, in writing, of their
appointment.
5
Provided that the award in the matter of
international commercial arbitration may be made
as expeditiously as possible and endeavour may be
made to dispose of the matter within a period of
twelve months on the date of completion of
pleadings under sub-section (4) of Section 23.
(2) If the award is made within a period of six
months from the date the arbitral tribunal enters
upon the reference, the arbitral tribunal shall be
entitled to receive such amount of additional fees as
the parties may agree.
(3) The parties may, by consent, extend the period
specified in sub-section (1) for making award for a
further period not exceeding six months.
(4) If the award is not made within the period
specified in sub-section (1) or the extended period
specified under sub-section (3), the mandate of the
arbitrator(s) shall terminate unless the Court has,
either prior to or after the expiry of the period so
specified, extended the period:
Provided that while extending the period under this
sub-section, if the Court finds that the proceedings
have been delayed for the reasons attributable to
the arbitral tribunal, then, it may order reduction of
fees of arbitrator(s) by not exceeding five per cent
for each month of such delay.
Provided further that where ap application under
sub-section (5) is pending, the mandate of the
arbitrator shall continue till the disposal of the said
application:
Provided also that the arbitrator shall be given an
opportunity of being heard before the fees is
reduced.
(5) The extension of period referred to in sub-
section (4) may be on the application of any of the
parties and may be granted only for sufficient cause
and on such terms and conditions as may be
imposed by the Court.
6
(6) While extending the period referred to in sub-
section (4), it shall be open to the Court to
substitute one or all of the arbitrators and if one or
all of the arbitrators are substituted, the arbitral
proceedings shall continue from the stage already
reached and on the basis of the evidence and
material already on record, and the arbitrator(s)
appointed under this section shall be deemed to
have received the said evidence and material.
(7) In the event of arbitrator(s) being appointed
under this section, the arbitral tribunal thus
reconstituted shall be deemed to be in continuation
of the previously appointed arbitral tribunal.
(8) It shall be open to the Court to impose actual or
exemplary costs upon any of the parties under this
section.
(9) An application filed under sub-section (5) shall
be disposed of by the Court as expeditiously as
possible and endeavour shall be made to dispose of
the matter within a period of sixty days from the
date of service of notice on the opposite party.
10. Section 29A of the Act has been held to be remedial in nature
and is made applicable to all pending arbitral proceedings as on
1
30.08.2019 . Section 29A(1) mandates that an award has to be
made within a period of twelve months from the date of completion
of pleadings under Section 23(4) of the Act. 29A(3) enables the
parties by consent to extend the period specified in sub-section (1)
for making the award for a further period not exceeding six
months. Section 29A(4) mandates that if the award is not made
1
TATA SONS PVT. LIMITED v. SIVA INDUSTRIES & HOLDINGS LTD. & ORS. (2023) 5 SCC 421
7
within the period mentioned in sub-section (1) or the extended
period specified in sub-section (3), the mandate of the Arbitrator
shall terminate, unless the court, has, either prior to or after the
expiry of the period so specified, extended the period. Section
29A(6) provides that while extending the period referred to in sub-
section (4), the court may substitute one or all of the Arbitrators
and if one or all of the Arbitrators are substituted, the arbitral
proceeding shall continue from the stage already reached.
11. 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. The period of six months prescribed under Section
23(4) of the Act, for completion of pleadings expired on
19.11.2020. The period from 15.03.2020 till 28.02.2022 deserves
2
to be excluded on account of pandemic caused by Covid-19 virus .
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,
2
COGNIZANCE FOR EXTENSION OF LIMITATION, IN RE (2022) 3 SCC 117
8
in view of mandate contained in Section 29A(4) became functus
officio.
12. We are conscious of the fact that a two Judge Bench of this
3
Court has interpreted the word ‘terminate’ in Section 29A(4),
while dealing with an issue whether an application for extension of
time for passing the arbitral award is maintainable even after the
expiry of twelve months or extended six month period, as the case
may be. 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. It has further
been held that the termination of arbitral mandate is conditional
upon the filing of an application for extension and cannot be
treated termination It has also been held that the
stricto sensu.
legislature by using the word ‘terminate’ intends to affirm the
principle of party autonomy. 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.
3
ROHAN BUILDERS (INDIA) PVT. LTD. v. BERGER PAINTS INDIA LTD. – 2024 SCC OnLine SC 2494
9
13. An arbitrator or an Arbitral Tribunal is not always statutory.
It is, ordinarily, a forum chosen by the parties for resolution of
their disputes. An Arbitral Tribunal with the consent of the parties
decides their disputes. 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. In so far as submission of the
respondents, that, since the petition filed under Sections 14 and
15 of the Act was rejected on 24.01.2022 by the High Court is
concerned, suffice it to say that the Act provides separate remedies
in the circumstances mentioned in Sections 14, 15 and 29A of the
Act. In any case, on 24.01.2022, the mandate of the sole arbitrator
was not terminated. Therefore, the order dated 24.01.2022 does
not have any impact on the decision of the petition under Section
29A of the Act filed by the appellants. 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
10
Act. The High Court erred in granting an extension when the
mandate of the sole arbitrator had ceased to exist.
CONCLUSION
14.
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.
15. In the result, appeals are allowed. There shall be no order as
to costs.
……………….……………J.
[SANJAY KUMAR]
..…….…………………….J.
[ALOK ARADHE]
NEW DELHI;
DECEMBER 10, 2025.
11
2025 INSC 1409
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2025
(@ SLP (C) No.13759 of 2025)
MOHAN LAL FATEHPURIA …APPELLANT
VERSUS
M/S BHARAT TEXTILES & ORS. ...RESPONDENTS
WITH
CIVIL APPEAL NO. OF 2025
(@ SLP (C) No.13779 of 2025)
JUDGMENT
ALOK ARADHE, J.
1. Leave granted.
2. These appeals are filed against an order dated 22.04.2025 by
Delhi High Court by which it has declined substitution of a sole
arbitrator but has extended his mandate under Section 29A(6) of
the Arbitration and Conciliation Act, 1996 (hereinafter, referred to
as the ‘Act’) for a further period of four months.
Signature Not Verified
Digitally signed by
Deepak Guglani
Date: 2025.12.10
16:31:36 IST
Reason:
1
FACTS
3. The appellants who are husband and wife, along with
respondent nos. 2 to 4 executed a partnership deed dated
18.05.1992 which contained an arbitration clause. M/s. Bharat
Textiles namely, respondent no.1, was registered on 05.01.2007 as
a partnership firm. Upon disputes having arisen, the High Court
by a common order dated 13.03.2020, passed in two arbitration
petitions filed by the appellants, appointed Mr. Anjum Javed,
Advocate as a sole arbitrator. The High Court directed that a sole
arbitrator shall be entitled to fee as per the Fourth Schedule to the
Act.
4. The sole arbitrator entered the reference on 20.05.2020. He
thereafter issued various directions on 03.06.2020, 21.10.2020,
09.01.2021 and on 15.06.2021 and directed the parties to deposit
various amounts towards administrative expenses. The respondent
nos.2 and 3 questioned the action of the sole arbitrator in
demanding administrative expenses, in their applications filed
under Sections 14 and 15 of the Act, seeking termination of the
mandate of the sole arbitrator. The said applications were
dismissed by a common order dated 28.01.2022, passed by the
2
High Court, inter alia on the ground that all the expenses are
required to be paid on actuals. It was further held, that, it would
be open for respondent nos. 2 and 3 to approach the Arbitral
Tribunal, to account for administrative expenses. It was also held
that the sole arbitrator is neither de jure nor de facto ineligible to
act as an arbitrator. The petitions were dismissed.
5. The sole arbitrator issued directions on 09.07.2022,
06.01.2023 and on 14.08.2023 requiring the parties to deposit the
administrative expenses. The appellants on 31.08.2003 sought
time, in arbitral proceeding, to move an application before the High
Court under Section 29A(4) of the Act. Thereupon, the sole
arbitrator on 31.08.2023 adjourned the proceeding sine die .
6. The appellants, filed petitions under Section 29A(6) of the Act
seeking substitution of the sole arbitrator and extension of tenure,
for the substitute arbitrator. The High Court, by an order dated
22.04.2025, inter alia held that the fee must be charged by the sole
arbitrator strictly in accordance with Fourth Schedule and
administrative expenses only on actuals with disclosure to the
parties. The substitution of the sole arbitrator was declined and
time was extended to conclude the arbitral proceeding within a
3
period of four months. The petitions were partly allowed. In the
aforesaid factual background, these appeals arise for our
consideration.
SUBMISSIONS
7. Learned counsel for the appellant submitted that the sole
arbitrator acted in contravention of the initial order of appointment
dated 13.03.2020 and charged the fee and expenses in excess of
Fourth Schedule. It is further submitted that the sole arbitrator
also violated the directions issued in the order dated 28.01.2022
passed by the High Court. It is contended that the High Court
ought to have appreciated that the power of substitution of an
arbitrator is wider under Section 29A(6) of the Act and is not
restricted to the grounds in Sections 14 and 15 of the Act.
8. Per contra, learned counsel for the respondents submitted
that no ground is made out for substitution of the sole arbitrator.
It is further submitted that since the petitions filed by the
respondents under Sections 14 and 15 of the Act have been
rejected on 24.01.2022, therefore, a substitute arbitrator under
Section 29A(6) of the Act, cannot be appointed. Alternatively, it is
4
contended that, in case this Court directs substitution of an
arbitrator, a former judge be appointed, as the sole arbitrator.
ANALYSIS
9.
We have considered the rival submissions made by both sides
and have perused the record. The relevant statutory provision
namely, Section 29A was inserted by Amendment Act No.3 of 2016
and was amended by Act No.33 of 2019. 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. Section 29A is extracted
below for the facility of reference: -
“ 29A. Time limit for arbitral award .—(1) The
award in matters other than international
commercial arbitration shall be made by the
arbitral tribunal within a period of twelve months
from the date of completion of pleadings under sub-
section (4) of section 23.
Explanation.—For the purpose of this sub-section,
an arbitral tribunal shall be deemed to have
entered upon the reference on the date on which
the arbitrator or all the arbitrators, as the case may
be, have received notice, in writing, of their
appointment.
5
Provided that the award in the matter of
international commercial arbitration may be made
as expeditiously as possible and endeavour may be
made to dispose of the matter within a period of
twelve months on the date of completion of
pleadings under sub-section (4) of Section 23.
(2) If the award is made within a period of six
months from the date the arbitral tribunal enters
upon the reference, the arbitral tribunal shall be
entitled to receive such amount of additional fees as
the parties may agree.
(3) The parties may, by consent, extend the period
specified in sub-section (1) for making award for a
further period not exceeding six months.
(4) If the award is not made within the period
specified in sub-section (1) or the extended period
specified under sub-section (3), the mandate of the
arbitrator(s) shall terminate unless the Court has,
either prior to or after the expiry of the period so
specified, extended the period:
Provided that while extending the period under this
sub-section, if the Court finds that the proceedings
have been delayed for the reasons attributable to
the arbitral tribunal, then, it may order reduction of
fees of arbitrator(s) by not exceeding five per cent
for each month of such delay.
Provided further that where ap application under
sub-section (5) is pending, the mandate of the
arbitrator shall continue till the disposal of the said
application:
Provided also that the arbitrator shall be given an
opportunity of being heard before the fees is
reduced.
(5) The extension of period referred to in sub-
section (4) may be on the application of any of the
parties and may be granted only for sufficient cause
and on such terms and conditions as may be
imposed by the Court.
6
(6) While extending the period referred to in sub-
section (4), it shall be open to the Court to
substitute one or all of the arbitrators and if one or
all of the arbitrators are substituted, the arbitral
proceedings shall continue from the stage already
reached and on the basis of the evidence and
material already on record, and the arbitrator(s)
appointed under this section shall be deemed to
have received the said evidence and material.
(7) In the event of arbitrator(s) being appointed
under this section, the arbitral tribunal thus
reconstituted shall be deemed to be in continuation
of the previously appointed arbitral tribunal.
(8) It shall be open to the Court to impose actual or
exemplary costs upon any of the parties under this
section.
(9) An application filed under sub-section (5) shall
be disposed of by the Court as expeditiously as
possible and endeavour shall be made to dispose of
the matter within a period of sixty days from the
date of service of notice on the opposite party.
10. Section 29A of the Act has been held to be remedial in nature
and is made applicable to all pending arbitral proceedings as on
1
30.08.2019 . Section 29A(1) mandates that an award has to be
made within a period of twelve months from the date of completion
of pleadings under Section 23(4) of the Act. 29A(3) enables the
parties by consent to extend the period specified in sub-section (1)
for making the award for a further period not exceeding six
months. Section 29A(4) mandates that if the award is not made
1
TATA SONS PVT. LIMITED v. SIVA INDUSTRIES & HOLDINGS LTD. & ORS. (2023) 5 SCC 421
7
within the period mentioned in sub-section (1) or the extended
period specified in sub-section (3), the mandate of the Arbitrator
shall terminate, unless the court, has, either prior to or after the
expiry of the period so specified, extended the period. Section
29A(6) provides that while extending the period referred to in sub-
section (4), the court may substitute one or all of the Arbitrators
and if one or all of the Arbitrators are substituted, the arbitral
proceeding shall continue from the stage already reached.
11. 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. The period of six months prescribed under Section
23(4) of the Act, for completion of pleadings expired on
19.11.2020. The period from 15.03.2020 till 28.02.2022 deserves
2
to be excluded on account of pandemic caused by Covid-19 virus .
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,
2
COGNIZANCE FOR EXTENSION OF LIMITATION, IN RE (2022) 3 SCC 117
8
in view of mandate contained in Section 29A(4) became functus
officio.
12. We are conscious of the fact that a two Judge Bench of this
3
Court has interpreted the word ‘terminate’ in Section 29A(4),
while dealing with an issue whether an application for extension of
time for passing the arbitral award is maintainable even after the
expiry of twelve months or extended six month period, as the case
may be. 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. It has further
been held that the termination of arbitral mandate is conditional
upon the filing of an application for extension and cannot be
treated termination It has also been held that the
stricto sensu.
legislature by using the word ‘terminate’ intends to affirm the
principle of party autonomy. 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.
3
ROHAN BUILDERS (INDIA) PVT. LTD. v. BERGER PAINTS INDIA LTD. – 2024 SCC OnLine SC 2494
9
13. An arbitrator or an Arbitral Tribunal is not always statutory.
It is, ordinarily, a forum chosen by the parties for resolution of
their disputes. An Arbitral Tribunal with the consent of the parties
decides their disputes. 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. In so far as submission of the
respondents, that, since the petition filed under Sections 14 and
15 of the Act was rejected on 24.01.2022 by the High Court is
concerned, suffice it to say that the Act provides separate remedies
in the circumstances mentioned in Sections 14, 15 and 29A of the
Act. In any case, on 24.01.2022, the mandate of the sole arbitrator
was not terminated. Therefore, the order dated 24.01.2022 does
not have any impact on the decision of the petition under Section
29A of the Act filed by the appellants. 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
10
Act. The High Court erred in granting an extension when the
mandate of the sole arbitrator had ceased to exist.
CONCLUSION
14.
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.
15. In the result, appeals are allowed. There shall be no order as
to costs.
……………….……………J.
[SANJAY KUMAR]
..…….…………………….J.
[ALOK ARADHE]
NEW DELHI;
DECEMBER 10, 2025.
11