Mohan Lal FatehPuria v. M/S Bharat Textiles & Others
CASE BRIEF
Case Name: Mohan Lal FatehPuria v. M/S Bharat Textiles & Others.
Case Number: Special Leave Petition No. 13759 of 2025 with Special Leave Petition No. 13779 of 2025
Court: Hon’ble Supreme Court
Coram: Hon’ble Alok Aeadhe, J
Date: 10 December, 2025
1. FACTUAL MATRIX
- 1.1 The Appellants, Mohan Lal Fatehpuria and his wife (husband and wife) (“Appellants”), along with Respondent Nos. 2 to 4, executed a Partnership Deed (“Deed”) dated 18.05.1992, which registered M/s Bharat Textiles (“First Respondent”) as a partnership firm on 5.01.2007 and contained an arbitration clause.
- 1.2 When the disputes arose, the Appellants approached the Hon’ble High Court, which passed in two arbitration petitions filed by the Appellants by a common order dated 13.03.2020 and appointed Mr. Anjum Javed, Advocate, as the sole arbitrator. The Hon’ble High Court further directed that the fee payable to the sole arbitrator shall be in accordance with the Fourth Schedule to the Arbitration and Conciliation Act, 1996 (“Act”).
- 1.3 The sole arbitrator entered reference on 20.05.2020 and thereafter issued various directions, including orders dated 3.06.2020, 21.10.2020, 9.01.2021, and 15.06.2021, directing the parties to deposit amounts towards administrative expenses. Respondent Nos. 2 and 3 objected to the action for administrative expenses and filed applications under Sections 14 and 15 of the Act seeking termination of the mandate of the Sole Arbitrator. These applications were dismissed by the Delhi High Court by a common order dated 28.01.2022 on the ground that all the expenses are required to be paid on actuals and that the sole arbitrator was neither de jure nor de facto ineligible to continue. However, the Court allowed the Respondent Nos. 2 and 3 to approach the Arbitral Tribunal to account for administrative expenses
- 1.4 After this, the sole arbitrator issued various directions requiring the parties to deposit the administrative expenses. On 31.08.2023, the appellants sought time in the arbitral proceedings to move the High Court under Section 29A(4) of the Act. Thereafter, the sole arbitrator adjourned the proceedings sine die on the same date.
- 1.5 Subsequently, petitions under Section 29A(6) of the Act were filed by the Appellants, seeking substitution of the sole arbitrator along with extension of tenure. By an order dated 22.04.2025, the High Court declined to substitute the arbitrator but extended his mandate by four months, the Court also held that fee must be charged strictly in accordance to the Fourth Schedule and that administrative expenses could be charged only on actuals with disclosure to the parties. The petitions were partly allowed.
2. CONTENTIONS OF THE APPELLANT BEFORE THE HON’BLE SUPREME COURT
- 2.1 The Appellant contended that the sole arbitrator acted in contravention of the initial order of appointment dated 13.03.2020 and the fee and expenses were charged in excess of Fourth Schedule. The Appellant also submitted that the sole arbitrator also violated the directions issued in the order dated 28.01.2022 passed by the High Court which required that all the expenses are required to be paid on actuals.
- 2.2 The Appellant also contended that the High Court failed to appreciate 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.
3. CONTENTIONS OF THE RESPONDENT BEFORE THE HON’BLE SUPREME COURT
3.1 The Respondents contended that no ground is made out for substitution of the sole arbitrator and since the petitions filed by the respondents under Sections 14 and 15 of the Act have been rejected on 24.01.2022 and therefore, a substitute arbitrator under Section 29A(6) of the Act cannot be appointed.
3.2 Respondents also contended that in case this Court directs substitution of an arbitrator, a former judge be appointed as the sole arbitrator.
4. ISSUES
4.1 Whether the mandate of the sole arbitrator stood terminated by operation of law under Section 29A(4) of the Arbitration and Conciliation Act, 1996 upon failure to render the arbitral award within the statutory time period.
4.2 Whether the High Court was justified in extending the mandate of the sole arbitrator under Section 29A instead of substituting after the expiry of the mandate.
4.3 Whether the power of substitution of an arbitrator under Section 29A(6) of the Arbitration and Conciliation Act, 1996 is independent of, and wider than, the grounds available under Sections 14 and 15 of the Act.
5. JUDGMENT
5.1 At the outset, the Supreme Court addressed the issue under Section 29A of the Act and held that the said section was inserted in the Act due to widespread criticism of delay in conducting the arbitration proceedings and for speedy resolution of the disputes. The Court held that Section 29A aims to ensure time bound disposal of arbitration proceeding, which is in consonance with the object of the Act. The Supreme Court relied on the Judgement of Tata Sons Pvt. Limited v. Siva Industries & Holdings Ltd. & Ors1TATA SONS PVT. LIMITED v. SIVA INDUSTRIES & HOLDINGS LTD. & ORS. (2023) 5 SCC 421 and held Section 29A to be remedial in nature and held that it is made applicable to all pending arbitral proceedings as on 30.08.2019
5.2 The Court explained Section 29 and held that:
- 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 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.
5.3 The Supreme Court held that in view of mandate contained in Section 29A(4), the sole arbitrator became functus officio as the Sole Arbitrator was under an obligation to pass an award within a period of one year from 01.03.2022, which he failed to do so and the parties did not apply for extension of period to pass an award.
5.4 The Court relied on the case of Rohan Builders (India) Pvt. Ltd. V. Berger Paints India Ltd.2ROHAN BUILDERS (INDIA) PVT. LTD. v. BERGER PAINTS INDIA LTD. – 2024 SCC OnLine SC 2494 that has interpreted the word ‘terminate’ in Section 29A(4) and 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 and also held that that the termination of arbitral mandate is conditional upon the filing of an application for extension and cannot be treated termination in strict sense. The Court discussed the intention of legislature in using the word ‘terminate’ and held that legislature intends affirm the principle of party autonomy and held that on expiry of initial period or extended period, the arbitrator cannot proceed with the arbitration proceeding and his mandate terminates which is subject to an order which may be passed by the Court in a proceeding under Section 29A(4) of the Act.
5.5 The Court held that Arbitral Tribunal is not always statutory rather it is a forum chosen by the parties with their consent for resolution of their disputes. In the present case, continuation of mandate of arbitrator is impermissible as the mandate expired on 28.02.2023. It also held that the Court is empowered and obliged under Section 29A(6) to substitute the Arbitrator.
5.6 With regard to the petitions filed by under Section 14 and 15 of the Act which were rejected by the High Court on 24.01.2022, the Court held that the Act provides separate remedies in the circumstances mentioned in Sections 14, 15 and 29A of the Act and the mandate of the sole arbitrator was not terminated on 24.01.2022. Thus, the order of High Court does not have any impact on the decision of the petition under Section 29A of the Act filed by the appellants. The substitution of the sole arbitrator was warranted by the Court, as his mandate ceased to exist and the High Court made a mistake in granting an extension when the mandate of the sole arbitrator had ceased to exist.
5.7 In Conclusion, the Hon’ble Supreme Court by allowing the Appeal, quashed and set aside impugned order dated 22.04.2025 passed by the Hon’ble High Court and terminated the mandate of sole arbitrator Mr. Anjum Javed and appointed a substituted arbitrator.
6. PSL OPINION / ANALYSIS
6.1 The judgement reinforces that the timelines under Section 29A are mandatory and not merely procedural. After the statutory time to make the award has expired, without a valid extension, the mandate of the arbitrator was terminated by the operation of law and it cannot be revived by the Court by extending time. In such circumstances, substitution of the arbitrator under Section 29A(6) becomes necessary to uphold the object of the Act of expeditious resolution of the dispute.
6.2 The Court also clarifies that proceedings under Sections 14, 15 and 29A operate independently as Act provides separate remedies in the circumstances mentioned in Sections 14, 15 and 29A. A prior refusal to terminate an arbitrator’s mandate does not affect the legal consequences that follow from expiry of the mandate under Section 29A. The decision therefore promotes procedural discipline in arbitration and ensures that delay does not defeat the statutory scheme of time-bound dispute resolution.
This Case Brief is authored by Himesh Thakur, Associate Partner and Vaibhav Mishra, Associate.
