Arbitration is meant to save time. Parties choose it hoping to avoid crowded courtrooms, endless adjournments, and years of uncertainty. Yet, in practice, arbitration itself has often fallen into the same trap it was meant to escape delay.
The Supreme Court’s decision in Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors. (2025 INSC 1409) captures this frustration with striking clarity. At its heart, the case asks a very human question: How long should parties be made to wait for justice? And when patience has already been exhausted, can the law still look the other way?
Speaking through a firm and purposive interpretation of Section 29A of the Arbitration and Conciliation Act, 1996, the Supreme Court of India answered with an unmistakable message time limits in arbitration are not polite suggestions, they are legal commands.
Once an arbitrator allows time to slip beyond the statutory boundary, the law steps in. Not with sympathy, but with consequence.
- FACTUAL AND PROCEDURAL BACKGROUND
On 18 May 1992, the appellants, who are a husband and wife, along with respondents 2 to 4, signed a partnership agreement. This agreement had an arbitration clause, meaning disputes would be settled through arbitration. Later, M/s Bharat Textiles (Respondent No. 1) was registered as a partnership firm on 5 January 2007.
After disputes arose between the partners, the High Court appointed Mr. Anjum Javed, Advocate, as the sole arbitrator on 13 March 2020. The Court also directed that the arbitrator’s fees would be fixed as per the Fourth Schedule of the Arbitration and Conciliation Act, 1996.
The arbitrator officially started the arbitration on 20 May 2020. Between 2020 and 2023, he issued several orders asking the parties to pay money towards administrative expenses. Respondents 2 and 3 objected to these demands and filed applications under Sections 14 and 15 of the Act, asking for the arbitrator’s removal. However, on 28 January 2022, the High Court rejected these applications, holding that the expenses were payable and that the arbitrator could continue.
Later, on 31 August 2023, the appellants asked for time to approach the High Court under Section 29A to seek an extension of time. After this, the arbitrator paused the proceedings indefinitely.
The appellants then filed fresh petitions under Section 29A(6), asking the Court to appoint a new arbitrator and also extend the time. On 22 April 2025, the High Court extended the time by four months but refused to replace the arbitrator. Because of this refusal, the matter was taken to the Supreme Court of India through the present appeals.
- ISSUES BEFORE THE SUPREME COURT
- Whether the sole arbitrator’s authority had already ended under Section 29A(4) before the High Court extended time on 22 April 2025.
- If the arbitrator’s authority had ended, could he legally continue as an arbitrator, or did Section 29A(6) require the court to appoint a new arbitrator?
- Whether an application under Section 29A(6) is separate from and not affected by earlier applications under Sections 14 and 15, which had been dismissed on 28 January 2022.
- How the COVID-19 limitation extension orders affect the calculation of time limits under Section 29A.
- ANALYSIS OF THE JUDGMENT
- When did the arbitration truly start?
The arbiter formally launched the arbitration process on 20 May 2020. As per law, pleadings were supposed to be finished within six months, which transpired by 19 November 2020.
- What about the COVID-19 disruption?
The Court acknowledged the reality of the pandemic. Relying on its earlier decision extending limits during COVID-19, it omitted the period from 15 March 2020 to 28 February 2022 in calculating deadlines. This guaranteed that parties were not unfairly punished for delays caused by events beyond their control.
- By when should the prize have been passed?
Under Section 29A(1), an arbitral award must be given within 12 months from completion of pleadings. After removing the COVID period, the Court recalculated the schedule and held that the award required to be passed by 28 February 2023.
- What went wrong after that date?
No award was passed by the deadline. More importantly, no party requested for extension, and no court granted further time. The law is unequivocal on this point—silence and delay cannot save an expired mandate.
- Automatic consequence under the law
The Court decided that once the deadline elapsed, the arbitrator’s duty immediately came to an end under Section 29A(4). This termination came by operation of law, not by choice of the parties or the arbiter. From that moment, the arbitrator became functus officio, meaning he no longer had the legal authority to function.
- Can an arbitrator continue unless replaced?
The Court emphatically responded no. It clarified that following expiry of the statutory time limit, an arbitrator cannot continue proceedings unless the court extends time before expiry. Any acts taken after the mandate ends have no legal backing.
- Role of Section 29A(6): Power becomes duty
Although Section 29A(6) contains the phrase “it shall be open to the Court”, the Supreme Court gave it a stronger connotation. The Court concluded that once an arbitrator’s mandate has expired, permitting the same arbitrator to continue is improper, and substitute becomes required. In such instances, substitution is not a choice—it is the correct legal action.
- What about earlier challenges under Sections 14 and 15?
The respondents stated that since their earlier petitions under Sections 14 and 15 were dismissed, substitution was not possible. The Court rejected this claim, saying that Sections 14, 15, and 29A act independently. A unsuccessful challenge earlier does not prevent proceedings under Section 29A when time constraints are later broken.
- Where did the High Court go wrong?
The High Court extended the arbitrator’s authority after it had already expired. The Supreme Court held this to be a legal error. Once the mandate has ceased to exist, it cannot be restored by a simple extension.
- Final remedy granted by the Court
The Supreme Court struck aside the High Court’s order, concluded that the arbitrator’s mandate had already lapsed by law, and appointed a new solo arbitrator. To avoid wasting time and effort, the Court instructed that arbitration should continue from the stage already reached and be finished within six months.
- CONCLUSION
The judgment in Mohan Lal Fatehpuria v. M/s Bharat Textiles & Ors. strongly supports India’s time-bound arbitration system. The Supreme Court of India made it clear that once an arbitrator’s mandate ends by law, courts cannot revive or renew it. The Court also confirmed that the time limits under Section 29A are mandatory, not optional.
The Supreme Court clearly stated that delays in arbitration will not be tolerated. Instead of allowing more time, the Court held that a new arbitrator must be appointed once the legal time limit is crossed. This approach ensures that arbitration remains fast and effective, as intended by the law.
Overall, the judgment helps achieve the legislative goal of quick dispute resolution and clearly explains how the rules on extension and substitution of arbitrators work under the Arbitration and Conciliation Act, 1996.