Court Permits Post‑Award Extension Of Arbitrator’s Mandate Under Section 29A; High Court Order Set Aside

A bench of Justices Pamidighantam Sri Narasimha and Atul S. Chandurkar heard an appeal arising out of the Madras High Court's refusal to entertain an application under Section 29A(5) of the Arbitration and Conciliation Act, 1996. The central question before the Supreme Court was whether a civil court could grant an extension of an arbitrator's mandate under Section 29A(5) even after an award had been rendered following expiry of the statutory period (twelve months plus a consensual six‑month extension).

The Court allowed the appeal, held that an application under Section 29A(5) was maintainable even after expiry of the periods under Sections 29A(1) and (3) and even where an award had been pronounced after the mandate had lapsed, and directed the High Court to proceed with the restored extension application. The Court treated an award passed after expiry of mandate as ineffective and unenforceable under Section 36, but emphasised that the arbitrator’s indiscretion in pronouncing such an award did not oust the jurisdiction of the court to consider extension. The Court noted that while entertaining an extension application it could impose terms including reduction of arbitrator’s fees, substitution of arbitrators, and costs to ensure expedition and integrity of proceedings. The Court, in its reasoning, observed: “In conclusion, we hold that an application under Section 29A(5) for extension of the mandate of the arbitrator is maintainable even after the expiry of the time under Sections 29A(1) and (3) and even after rendering of an award during that time. Such an award is ineffective and unenforceable. But the power of the court to consider extension is not impaired by such an indiscretion of the arbitrator. While considering the application, the Court will examine if there is sufficient cause for extending the mandate, and in the process, it may impose such terms and conditions as the situation demands. The Court will also take into account other factors such as reduction of the fee of the arbitrator under proviso to Section 29A(4) and also impose costs on parties if the fact situation so demands. Substitution is an option for the Court as the provision itself says, “it shall be open for the Court to substitute”, and it will be exercised carefully. If the mandate is extended, the arbitral tribunal will pick up the thread from where it was left, and seamlessly continue the proceeding from the stage at which the mandate had expired, and conclude within the time granted.”

Background

The dispute arose from three agreements to sell between the appellant and respondent. The Madras High Court appointed a sole arbitrator on 19 April 2022; pleadings were completed on 20 August 2022 and the statutory 12‑month period under Section 29A(1) commenced. Parties by consent extended the period by six months, taking the mandate to 20 February 2024. Though the matter was reserved for award, the arbitrator passed the award on 11 May 2024 and issued it on 25 June 2024—after the mandate had expired. The respondent filed a Section 34 petition impugning the award on grounds of termination of mandate. The appellant filed an application under Section 29A on 12 November 2024 seeking retrospective extension. The High Court dismissed the Section 29A application as not maintainable on 24 January 2025 and allowed the Section 34 petition on 14 February 2025.

The Supreme Court examined the legislative history including the Law Commission’s recommendations and earlier decisions such as Rohan Builders and Lancor Holdings, interpreting Section 29A as designed to secure timely conclusion of arbitration while enabling judicial supervisory control. The Court observed that “such an award is non est” when made after mandate expiry and would be unenforceable under Section 36, but clarified that Parliament did not intend the arbitrator’s unilateral act to oust the court’s power to extend time. The Court restored the Section 29A application to its original number and directed the High Court to decide it in accordance with the principles laid down, permitting the court to consider reduction of fees, substitution of arbitrators, and imposition of costs where justified.

Case Details: Case No.: 2026 INSC 112 Case Title: C. Velusamy v. K Indhera Appearances: For the Petitioner(s): Mrs. V. Mohana, Senior Counsel For the Respondent(s): Mr. M. Vijayan; assisted by Mr. P.S. Sudheer, AOR