INTRODUCTION
The Supreme Court of India, in Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors., SLP (C) Nos. 13759 & 13779 of 2025, reported as 2025 INSC 1409, delivered a crucial judgment on 10 December 2025. The decision was rendered by a Division Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe.
The Judgment clarifies the scope and mandatory nature of Section 29A of the Arbitration and Conciliation Act, 1996, particularly the legal consequences flowing from the expiry of an arbitrator’s mandate and the obligation of courts to substitute an arbitrator whose mandate has terminated by operation of law.
BRIEF FACTS
The Appellants and the Respondents were partners in a Firm governed by a partnership deed containing an arbitration clause. Upon disputes arising, the Delhi High Court appointed a Sole Arbitrator in March 2020. The Arbitrator entered reference in May 2020 and issued several procedural directions, including demands for administrative expenses.
Objections were raised by some parties regarding the Arbitrator’s fee and expenses, leading to applications under Sections 14 and 15 of the Arbitration Act. These Applications were dismissed by the High Court in January 2022, holding that the Arbitrator was neither de jure nor de facto ineligible.
Subsequently, the arbitral proceedings continued without conclusion. After prolonged delay, the Appellants moved the High Court under Section 29A(6) seeking substitution of the Sole Arbitrator and extension of time. By an Order dated 22 April 2025, the High Court declined substitution, merely extending the Arbitrator’s mandate by four months. Aggrieved by this refusal, the Appellants approached the Supreme Court.
ISSUES OF LAW
The Supreme Court was required to examine:
1) Whether the mandate of the sole arbitrator had terminated by operation of law under Section 29A(4) of the Arbitration and Conciliation Act, 1996.
2) Whether, after such termination, the High Court could validly extend the mandate of the same arbitrator.
3) Whether the power of substitution under Section 29A(6) is independent of, and wider than, the grounds under Sections 14 and 15 of the Act.
ANALYSIS OF THE JUDGMENT
The Supreme Court undertook a detailed examination of Section 29A, noting that it was introduced to remedy chronic delays in arbitral proceedings and to reinforce the objective of speedy dispute resolution. The Court reiterated that Section 29A is remedial and mandatory in nature and applies even to pending arbitrations.
On facts, the Court found that the Sole Arbitrator had entered reference on 20 May 2020 and that pleadings stood completed by November 2020. After accounting for the period excluded due to the COVID-19 pandemic, the Arbitrator was required to render the Award by 28 February 2023. This admittedly did not occur and no consensual or judicial extension was obtained within the statutory framework.
The Court held that once the statutory period expired, the Arbitrator became functus officio and his mandate stood terminated under Section 29A(4). In such circumstances, continuation of the same Arbitrator was impermissible in law. The Supreme Court rejected the High Court’s approach of merely extending the mandate, holding that extension presupposes a subsisting mandate.
Importantly, the Court clarified that the power of substitution under Section 29A(6) is not circumscribed by the grounds under Sections 14 and 15. Even if an arbitrator is otherwise eligible, substitution becomes mandatory once the mandate ceases due to statutory timelines. The Court emphasised that arbitration is a consensual forum and once the arbitrator’s authority expires, judicial intervention is necessary to reconstitute the tribunal to advance the object of the Act.
By appointing a former Judge as the substitute arbitrator, the Supreme Court ensured continuity of proceedings from the stage already reached, while simultaneously reinforcing discipline in arbitral timelines.
CONCLUSION
The Judgment in Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors. decisively strengthens the time-bound framework of arbitration in India. It affirms that statutory timelines under Section 29A are not directory but mandatory and that courts cannot revive an arbitrator’s mandate once it has lapsed by operation of law.
By mandating substitution instead of extension, the Supreme Court has sent a clear signal that delays in arbitration will not be condoned through procedural indulgence. The ruling advances the legislative intent of expeditious dispute resolution and provides much-needed clarity on the interplay between extension and substitution of arbitrators under the Arbitration and Conciliation Act, 1996.
SARTHAK KALRA
Senior Legal Associate
The Indian Lawyer & Allied Services
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