Supreme Court Replaces Arbitrator Where Mandate Terminated Under Section 29A And Quashes High Court Extension

A Bench of Justices Sanjay Kumar and Alok Aradhe heard appeals against a Delhi High Court order which had declined substitution of a sole arbitrator but extended his mandate under Section 29A(6) of the Arbitration and Conciliation Act, 1996 for a further period of four months. The appeals arose from petitions by the parties seeking substitution of the arbitrator and directions to conclude the arbitral proceedings.

The Court allowed the appeals, quashed the impugned High Court order dated 22.04.2025 and held that the sole arbitrator’s mandate had expired by operation of law. The Court observed that the sole arbitrator had become functus officio for failing to pass an award within the time mandated by Section 29A and that, under Section 29A(6), the Court was empowered and obliged to substitute the arbitrator. The Court appointed Mr. Justice Najmi Waziri (Retd.), former Judge of the Delhi High Court, as the substituted sole arbitrator and directed that the arbitral proceedings resume from the stage already reached and be concluded within six months from receipt of the order. The Court noted that “the mandate of sole arbitrator Mr. Anjum Javed stands terminated by operation of law.” The Court, in its reasoning, observed: “An arbitrator or an Arbitral Tribunal is not always statutory. It is, ordinarily, a forum chosen by the parties for resolution of their disputes. ... Section 29A(6) empowers and obligates the Court to substitute the Arbitrator. ... 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.”

Background

The dispute arose out of a partnership deed dated 18.05.1992 containing an arbitration clause; M/s Bharat Textiles was registered as a partnership firm on 05.01.2007. On 13.03.2020 the Delhi High Court appointed Mr. Anjum Javed, Advocate, as sole arbitrator and directed that his fee be as per the Fourth Schedule to the Act. The arbitrator entered the reference on 20.05.2020, issued several directions and demanded administrative expenses and deposits. Respondent parties challenged the arbitrator’s demands in applications under Sections 14 and 15; the High Court dismissed those applications by order dated 28.01.2022, holding inter alia that administrative expenses were to be paid on actuals and that the arbitrator was not de jure or de facto ineligible.

The arbitrator later adjourned proceedings sine die on 31.08.2023 after parties indicated they would seek time to move an application under Section 29A(4). The appellants then filed petitions under Section 29A(6) seeking substitution of the arbitrator and extension of tenure for a substitute. The High Court by order dated 22.04.2025 declined substitution but extended the mandate for four months while reiterating that fees must follow the Fourth Schedule and administrative expenses be disclosed and charged on actuals. The appellants challenged that order before the Supreme Court.

The Supreme Court analysed Section 29A (inserted by Amendment Acts of 2016 and 2019), its remedial purpose to ensure time-bound disposal and the consequences of non-compliance with its time limits. It accepted the exclusion of pandemic-affected period and held that, in the facts of the case, the sole arbitrator was obliged to pass an award by 28.02.2023 and failed to do so, rendering him functus officio. The Court noted precedent including Tata Sons v. Siva Industries and Rohan Builders on interpretation of Section 29A, and clarified that remedies under Sections 14, 15 and 29A are separate; an earlier rejection of a Section 14/15 petition did not preclude substitution under Section 29A(6) once the arbitrator’s mandate had terminated. The final result was that the impugned High Court order was set aside, the arbitrator’s mandate terminated by operation of law, a substitute arbitrator was appointed, and the arbitral proceedings were directed to be completed within six months. There was no order as to costs.

Case Details: Case No.: 2025 INSC 1409 Case Title: Mohan Lal Fatehpuriya v. M/s Bharat Textiles & Ors. Appearances: For the Petitioner(s): [Names not specified in the judgment] For the Respondent(s): [Names not specified in the judgment]