Arbitrator Cannot Continue After Mandate Expires, Supreme Court Rules

The Supreme Court has held that once the mandate of an arbitrator expires under the Arbitration and Conciliation Act, 1996, the arbitrator cannot continue and must be substituted in accordance with law. The Court ruled that continuation of an arbitrator after expiry of mandate is impermissible and contrary to the statutory scheme of time-bound arbitration.

A Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe allowed appeals filed by Mohan Lal Fatehpuria and his wife, setting aside an order of the Delhi High Court dated April 22, 2025. The High Court had declined to substitute the sole arbitrator and instead extended his mandate for a further period of four months under Section 29A(6) of the Act.

The Supreme Court held that Section 29A(6) empowers and obligates the court to substitute the arbitrator when the mandate has ceased to exist. It observed that substitution of a sole arbitrator is warranted to effectuate the object of the Act, which mandates expeditious resolution of disputes through arbitration.

The dispute arose out of a partnership deed executed on May 18, 1992 between the appellants and respondent numbers two to four. The partnership deed contained an arbitration clause. M/s Bharat Textiles, respondent number one, was registered as a partnership firm in 2007. Following disputes between the parties, the Delhi High Court, by a common order passed in 2020 in two arbitration petitions, appointed advocate Anjum Javed as the sole arbitrator. The High Court directed that the arbitrator would be entitled to fees in accordance with the Fourth Schedule to the Act.

The appellants contended before the Supreme Court that the sole arbitrator acted in contravention of the initial order of appointment dated March 13, 2020 by charging fees and expenses in excess of the Fourth Schedule. It was also submitted that the arbitrator violated directions issued by the High Court in a subsequent order dated January 28, 2022. The appellants argued that the High Court failed to appreciate that the power to substitute an arbitrator under Section 29A(6) is wider and not restricted to the grounds under Sections 14 and 15 of the Act.

On the other hand, the respondents opposed substitution and submitted that no ground existed for replacing the sole arbitrator. They argued that since petitions filed under Sections 14 and 15 of the Act had already been rejected on January 24, 2022, substitution under Section 29A(6) was not permissible. In the alternative, the respondents submitted that if substitution was ordered, a former judge should be appointed as the sole arbitrator.

The Supreme Court rejected the reasoning adopted by the High Court and underscored the legislative intent behind insertion of Section 29A. The provision was introduced due to widespread criticism of delays in arbitration proceedings, which undermined the objective of speedy dispute resolution. Section 29A was enacted to ensure time-bound disposal of arbitral proceedings in consonance with the object of the Act.

The Bench noted that under Section 29A(1), the sole arbitrator was required to pass an award within one year from March 1, 2022, that is, on or before February 28, 2023. The arbitrator failed to do so, and no application was filed by the parties seeking extension of time. As a result, by operation of Section 29A(4), the mandate of the arbitrator stood terminated, rendering him functus officio.

The Court further observed that an arbitral tribunal is ordinarily a forum chosen by the parties for resolution of their disputes and is not always statutory in nature. However, once the statutory mandate governing the tribunal expires, continuation is not permissible in law.

Setting aside the impugned order of the Delhi High Court, the Supreme Court held that the mandate of sole arbitrator Anjum Javed stood terminated by operation of law. The Court appointed Justice Najmi Waziri, former Judge of the Delhi High Court, as the substituted sole arbitrator. It directed that the arbitral proceedings shall resume from the stage already attained and be concluded within six months from the date of receipt of a copy of the judgment.

Case Title: Mohan Lal Fatehpuria Vs M/s Bharat Textiles and Others

Bench: Justice Sanjay Kumar and Justice Alok Aradhe

Date of Judgment: December 10, 2025