By Niharika Mehta.
Niharika Mehta is 3rd-year law student at the Hidayatullah National Law University, Raipur.
The article reviews the recent Supreme Court judgement in Mohan Lal Fatehpuria v. M/s Bharti Textiles & Ors. The Court reinforced mandatory timelines under Section 29A of the Arbitration and Conciliation Act, 1996 and also held that once the statutory timeline under this provision lapses, the arbitrator’s mandate expires automatically, requiring judicial intervention for substitution. It also analyses the significant shift from procedural flexibility to strict accountability, comparing advantages of expedited proceedings against risks like compromised party autonomy, increased costs and potential abuse. It marks a pivotal shift towards a performance-oriented and time-centric arbitration mechanism in India.
Keywords: Statutory timelines, Arbitral Mandates, Section 29A, Substitution of Arbitrator
Designed to counter the inherent delays in traditional litigation processes, arbitration, a swift, effective and commercially viable mechanism, was introduced as a formal process to settle disputes out of court. India introduced the Arbitration and Conciliation Act, 1996 (“A&C Act”) to match its legal framework with global norms and reduce judicial intervention. However, this objective of the Act has largely remained unfulfilled due to chronic delays in arbitral proceedings. Repeated failures to adhere to timelines has undermined the efficiency of the Act and has drawn serious criticism. An arbitration process which cannot stick to timelines can prove to be a cure worse than the disease.
In order to curb these persistent delays, the 2015 amendment, later refined in 2019 introduced Section 29A in the A&C Act, reflecting a pivotal shift from casual procedural flexibility to legal responsibility. The Section lays down a mandatory timeline of twelve months from culmination of proceedings which can be extended by six months with the consent of both the parties to deliver arbitral awards. Also, under Clause (4) of this provision, if statutory timelines are not followed it will result in automatic termination the arbitrator’s mandate by operation of law unless the mandate is extended by the court itself. Furthermore, clause (6) of the provision states that the power to substitute the arbitrator and grant extensions to expedite the process lies solely with the court.
Recently, this intent of legislature was reiterated by the Supreme Court (“SC”) in case of Mohan Lal Fatehpuria v. M/s Bharti Textiles & Ors.[2025 SCC OnLine SC 2754] (“Mohan Lal Fatehpuria”). It was held by the court that once the timeline under Section 29A lapses, the arbitrator becomes “functus officio”, effectively losing all the authority. The mandate cannot be revived by the court without considering substitution of the arbitrator. The SC emphasised that this provision is not optional in nature, reflecting a decisive shift towards implementing rigid timelines and accountability. The judgement sends an unequivocal message that adherence to statutory timelines is a compulsory safeguard and a failure to meet them can result in substitution of the arbitrator to preserve integrity of the Act.
The dispute in the case of Mohan Lal Fatehpuria arose out of a partnership deed which contained an arbitration clause. Pursuant to the dispute between the parties, the Delhi High Court intervened and by a common order, appointed a sole arbitrator who entered the reference on 20 May, 2020. During the course of these proceedings, issues emerged regarding the arbitrator’s directions relating to administrative expenses. However, these directions were challenged by the other respondents under Sections 14 and 15 of the A&C Act questioning the act of the arbitrator seeking his termination, which was later dismissed by the High Court in January 2022 which held that the arbitrator was neither de jure nor de facto ineligible and expense-related objections could be addressed before court.
The procedural course of the arbitration clearly demonstrates how proceedings can lose momentum. Owing to the Supreme Court judgement in Re: Cognizance for Extension of Limitation the period between 15 March 2020 and 28 February 2022 stood excluded. After these exclusions came to an end, the legitimate timeline under Section 29A (1) began of 1 March, 2022, requiring the arbitrator to render an award within twelve months. However, no award was passed, no extension application was filed and the deadline to render award expired resulting in expiry of mandate of the arbitrator by operation of law, rendering him functus officio.
The delay in proceedings was increased because of administrative difficulties relating to demands for expenses. Despite this, the Court, while acknowledging the delay declined to replace the arbitrator and instead extended his mandate by another four months. Ultimately, this decision of the High Court set the stage for intervention by the apex court.
Section 29A of the A&C Act was introduced to address the chronic delays in arbitral proceedings by laying down mandatory timelines for rendering of awards. Prior to post-amendment jurisprudence, there was considerable reluctance from the side of judiciary in allowing lapse of arbitral mandates. Continuance of proceedings was prioritised over legislative regulation, making extensions under the provision a repeated occurrence rather than exceptional. It was a practical approach but it slowed down the deterrent feature of Section 29A. Nonetheless, the remedial nature of Section 29A and its application to pending arbitral proceedings was reaffirmed in the case of Tata Sons Pvt. Ltd. v. Siva Industries & Holdings Ltd, highlighting the intent of the legislature to minimize delays. Although, the mandatory nature of timelines was accepted, courts still continued to exercise wide discretion in allowing extensions, often without considering the reason for delay carefully or whether arbitrator should be replaced.
Moving on, the judgement of Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. marked a pivotal shift by making it clear that under Section 29A termination is not absolute and courts still have the power to revive the mandate after expiry. Even though it was established by the Court that party autonomy will be protected and proceedings will not collapse due to technical reasons, there was a still a lacuna as to how the courts should treat persistent delays or delays caused by tribunal itself. This ambiguity was later removed by Mohan Lal Fatehpuria where it was held by the SC that no automatic revival of an expired mandate should be carried out and the courts should seriously consider Section 29A (6) to ensure a balance between flexibility and accountability. This decision has marked a significant shift in the existing jurisprudence from allowing regular extensions to a proper system of enforcing time-bound results. It is no more a rare practice to substitute an arbitrator but a powerful tool to assure time-centric arbitral proceedings.
It can be observed from the SC’s decision that Section 29A of the Act has evolved moving from hesitant enforcement to a disciplined application. Judicial discretion is not supposed to weaken timelines instead promote time-centric and efficient dispute resolution. The rationale laid down by the SC does not become evident in isolation, rather, it reflects the pinnacle of a developing judicial conversation as to how firmly Section 29A should be enforced.
While the case of Mohan Lal Fatehpuria restores statutory timeline discipline to arbitration, it has certain drawbacks. Firstly, a rigid timeline, if followed, without adequate flexibility may in certain cases undermine the very efficiency it aims to foster. In first instance, substitution of an arbitrator may appear to be an elegant solution. However, when applied practically, it is accompanied by procedural and practical complexities. Arbitration has never been a linear process, it includes prolonged pleadings, complicated hearings and voluminous documents. When substituted, a new arbitrator may not be able to seamlessly adopt to the existing record, majorly in complex disputes. Depending upon the stage of proceedings, the newly appointed arbitrator may be compelled to re-examine large portions of the record or rehear arguments to understand the underlying issue. So, what was established as a time-saving mechanism may result in additional delay of months, including the burden of paying arbitral fees more than once.
Furthermore, the legitimacy of an arbitral proceeding significantly rests on party autonomy as a foundational principle, namely the parties’ freedom to choose their own judge. Although party autonomy is necessarily subject to statutory limitations and public policy considerations, the rigid enforcement promoted in Mohan Lal Fatehpuria creates the risk of dilution of this principle, mostly in situations where parties consensually agree to limited delay due to complexity or good faith conduct of the tribunal. If courts are empowered to substitute arbitrators without the consent of the parties frequently, it may give rise to perceptions of increased court supervision, thereby shifting arbitration closer to court-monitored process. Such repeated intervention by courts could create the risk of a rigid and slow arbitral proceeding which may blur the line between a tedious litigation process and arbitration.
Another concern that arises is that the fear of substitution may force the arbitrators to priortise speed over substance. When faced with a strict statutory termination, the arbitrators may cut back necessary oral arguments or reject adjournment requests just to beat deadlines. It can worsen as it may pressurize the adjudicator to deliver cut-paste awards, judgement which is rushed, unreasoned or poorly drafted. While such awards may satisfy Section 29A, however, later on it can invite inevitable challenges under Section 34 of the Act. An award delivered on time but set aside later for lack of reasoning will not serve the ends of justice.
Finally, the ruling may also open avenues for strategic abuse. Despite availability of judicial safeguards, such as refusing substitution where delay is attributable to the applicant imposing costs, the termination of mandate under Section 29A can still be misused as a tactical device. A respondent who feels they are about to lose the case, now have a tactical incentive to manufacture delay through frivolous applications or procedural obstructions, only to invoke Section 29A later. Parties may use the expiry of the mandate not as a genuine grievance against delay but an excuse to oust a strict arbitrator hoping court would substitute a lenient arbitrator. It creates a risk of the provision being misused rather than acting as a safeguard, undermining its intended purpose.
The pronouncement of the SC in Mohan Lal Fatehpuria proves to be not just a corrective exercise in understanding of the statute but also illustrates a significant shift in the way arbitral expediency will be regulated by judiciary in India. It lays a clear and concise future pathway in which courts are no longer passive spectators to delays but actively guard the timelines, ensuring preservation of credibility of arbitration as a swift dispute resolution mechanism. Automatic or routine deadline extensions are no longer the norm. The courts are now responsible to address consequences of delay and treat the expiry of an arbitral mandate as a chance for assessment and not mechanical prolongation. Replacing an arbitral tribunal, once a rare step, is now considered as an acceptable practice and even a legitimate response to breach of statutory timelines.
Equally significant is the introduction of a performance-oriented concept of arbitral tenure. Arbitral proceedings are no longer protected from scrutiny merely because appointment of the arbitrator was valid at the start. The central component of a legitimate arbitral proceeding is efficiency. The court, by permitting substitution without the need to establish misconduct or incapacity, has lowered the threshold for intervention where delay is the main reason behind endangering integrity of the process.
From this judgement, a clear procedural pathway is established for revival of stalled or dead arbitrations by reaffirming the fact that termination under Section 29A is conditional and not absolute. Even after the expiration of the mandate of the arbitrator, courts retain jurisdiction to restore the whole process through extension as well as substitution, ensuring that valid claims are not defeated by procedural lapses. There has been a significant shift in the approach of the courts as they are moving towards real enforcement which can be seen through the non-negotiable six-month deadline given to substituted arbitrator. This marks a balance between fairness and procedural discipline guaranteeing a more time-critical dispute resolution mechanism where delays can lead to consequences.
The ruling by the SC in Mohan Lal Fatehpuria lays down the principle that statutory timelines are to be followed in an absolute manner. It was reaffirmed by the SC that speed is central to the Arbitration Act. It shows that the process does not end when a deadline is missed rather it resets it, sometimes by changing the adjudicator. It now completely rests on the courts if they will efficiently use the reset button to ensure that disputes are resolved fairly and in time-bound manner.
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