In a significant ruling that harmonizes statutory timelines with the overarching goal of dispute resolution, the Supreme Court of India, on February 3, 2026, delivered a crucial judgment in C. Velusamy v. K Indhera. The Court addressed a vexing procedural deadlock: Can a court grant an extension of an arbitrator’s mandate under Section 29A of the Arbitration and Conciliation Act, 1996, after the arbitrator has already rendered an award, but did so after the statutory deadline had expired? In reversing the Madras High Court, the Supreme Court answered in the affirmative, prioritizing the completion of the arbitral process over a rigid, technical forfeiture. This blog post delves into the Court’s reasoning, the statutory landscape, and the profound implications of this ruling for the efficiency and integrity of arbitration in India.
I. The Procedural Conundrum: A Null Award and
a Timely Application
The dispute originated from three
agreements to sell between the parties. Following disagreements, a sole
arbitrator was appointed by the Madras High Court on April 19, 2022.
The Critical Timeline:
a. Commencement of 12-month
period: Pleadings were completed on August 20, 2022, triggering the
12-month clock under Section 29A(1) for making the award.
b. Consensual Extension:
Before this period lapsed, the parties jointly extended the mandate by a
further six months under Section 29A(3), making the new deadline February 20,
2024.
c. Post-Deadline Award:
Despite hearings concluding and the matter being reserved for award in
September 2023, the arbitrator, after several adjournments related to
settlement talks, finally signed the award on May 11, 2024 – nearly three
months after the mandate had technically terminated.
d. Dueling Applications:
The respondent, aggrieved by the award, filed an application under Section 34
to set it aside, arguing it was a nullity as the mandate had expired.
Conversely, the appellant filed an application under Section 29A(5) seeking an
extension of the arbitrator’s mandate nunc pro tunc (now for then).
The Madras High Court, in its
order dated January 24, 2025, held that an application under Section 29A was
not maintainable once an award had been passed. It followed the view that an
award rendered after the expiry of the mandate is a nullity, and the court
possessed no power to resuscitate a terminated mandate post-award. This appeal
challenged that narrow interpretation.
II. The Core Legal Question
The Supreme Court framed the
pivotal question of law for its consideration:
Whether a Court can entertain an
application under Section 29A(5) of the Arbitration and Conciliation Act, 1996
to extend the mandate of the arbitrator(s) for making the award even after an
'award' is rendered, though after the expiry of the statutory limit of
eighteen-month period?
The answer to this question
required a deep dive into the evolution of arbitration law, the legislative
intent behind Section 29A, and the fundamental principles of access to justice.
III. The Evolution of Timelines: From the 1940
Act to the 1996 Act
To appreciate the import of
Section 29A, the Court first traced the historical treatment of timelines in
arbitration law.
Under the Arbitration Act,
1940:
The 1940 Act, in its First
Schedule, prescribed a four-month period for making an award. Crucially, Section
28 of the 1940 Act granted the court an unambiguous, wide power:
> "The Court may, if it
thinks fit, whether the time for making the award has expired or not and
whether the award has been made or not, enlarge from time to time the time for
making the award."
This provision explicitly
authorized the court to extend time even after an award had been made,
reflecting a clear intent to salvage the arbitral process from technical
failure.
Under the Original 1996 Act:
The 1996 Act, modeled on the
UNCITRAL Model Law, initially embraced party autonomy and minimal judicial
intervention to an extreme. It conspicuously omitted any statutory timeline for
rendering an award. The only recourse for inordinate delay was an application
for termination of the arbitrator’s mandate under Section 14. This omission, as
the Court noted, led to unintended consequences—arbitrations dragging on for
years without any procedural impetus for conclusion, thus defeating the very
objective of arbitration as a speedy alternative to litigation.
IV. The Legislative Cure: Introduction of
Section 29A
The pathology of indefinite
delays prompted reform. The Law Commission of India, in its 176th Report,
diagnosed the problem and recommended a structured yet flexible timeline
system. The Commission’s philosophy was clear: the goal was not to terminate
arbitrations but to compel their timely progress and ensure they reach a final
award. The report emphasized that even if delays occurred, "there is no
point in terminating the arbitration proceedings... We propose it as they
should be continued till award is passed." This was to avoid wastage of
time, costs, and evidence already led.
Based on these recommendations,
Section 29A was introduced via the 2015 Amendment Act (with retrospective
effect) and later refined in 2019. Its architecture is as follows:
a. 29A(1): Mandates an award
within 12 months of completion of pleadings.
b. 29A(3): Allows parties, by
consent, to extend by a further 6 months.
c. 29A(4): States that if the
award is not made within the above periods, the mandate "shall
terminate". However, this termination is subject to the power of the Court
to extend the period, which power can be exercised "either prior to or
after the expiry of the period so specified".
d. 29A(5): Allows any party to
apply for an extension, grantable by the Court only for "sufficient
cause."
e. Proviso to 29A(4):
Importantly, it states that where an application under sub-section (5) is
pending, the mandate of the arbitrator shall continue till the disposal of the
said application. This creates a statutory "holding pattern."
f. 29A(6) & (7): Empowers the
Court, while extending time, to substitute arbitrators. The reconstituted
tribunal is deemed to be in continuation of the previous one, proceeding from
the existing stage and record.
V. Demystifying "Termination" and
the Court's Unimpaired Power
The High Court’s interpretation
hinged on viewing the "termination" of the mandate under Section
29A(4) as absolute and final, especially once an award was passed. The Supreme
Court dismantled this reading.
The Court, building upon its
precedent in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd.,
clarified that the termination under Section 29A(4) is not "stricto
sensu" (in the strict sense). It is conditional and transitory, subject to
the court's power to revive it via extension. The word "terminates"
in this context does not reflect a final, legal death of the proceedings but a
suspension that awaits the court's intervention.
The Court made several key
interpretive findings:
1.No Bar Post-Award:
Section 29A does not contain any explicit bar against filing an extension
application after an award is rendered. The absence of such a prescription is
significant.
2.Status of a Post-Expiry
Award: An award made after the mandate has expired is not a valid,
enforceable award. The Court aptly termed it "non est" (as if it did
not exist) or, more precisely, an award that is unenforceable under Section 36.
It need not even be set aside under Section 34; it simply carries no legal
force.
3.Indiscretion of Arbitrator
vs. Power of Court: The arbitrator’s unilateral act of passing an award
without a valid mandate is an indiscretion. This indiscretion cannot "denude
the power and jurisdiction" statutorily vested in the Court. The Court’s
power under Section 29A is independent and superior to the arbitrator’s
procedural misstep. To hold otherwise would allow an arbitrator’s error to
frustrate the entire statutory scheme and the parties’ investment in the
arbitration.
4.The Phrase "If an Award
is Not Made": The Court interpreted the conditional phrase in Section
29A(4) – "If the award is not made within the period specified..." –
as describing the trigger for the termination provision. It is not addressing
the scenario where an award has been belatedly rendered. The section’s focus is
on enabling the court to extend time "prior to or after the expiry,"
irrespective of what the arbitrator may have done in the interim.
5.Toolkit of Judicial Control:
The Court highlighted that Section 29A arms the court with a versatile
"toolkit" to ensure disciplined and efficient proceedings, even when
extending time retrospectively:
a. Costs: Imposing actual
or exemplary costs on parties (S. 29A(8)).
b. Fee Reduction: Reducing
the arbitrator’s fees by up to 5% per month for delay attributable to them
(Proviso to S. 29A(4)).
c. Substitution: Replacing
one or all arbitrators if the situation warrants (S. 29A(6)).
d. Terms & Conditions:
Imposing specific terms while granting extension for "sufficient
cause" (S. 29A(5)).
This arsenal ensures that the
power of extension is not a mere rubber stamp but a disciplined, corrective
mechanism. The fear that a post-award extension would foster a culture of
indifference to timelines is mitigated by these deterrent and corrective measures
at the court’s disposal.
VI. The Constitutional Imperative: Effective
Access to Justice
Beyond textual interpretation,
the Supreme Court anchored its judgment in a broader constitutional principle
of access to justice. The Court stated that a constitutional court has an
obligation to ensure that a legal remedy is:
a. Accessible (easily available),
b. Affordable (reasonably
priced),
c. Expeditious (devoid of
unreasonable delays), and
d. Cohesive (forming a complete
and effective whole).
A hyper-technical interpretation
that forever forecloses the arbitral process due to a missed
deadline—especially where parties have invested substantial time and
resources—would render the remedy incohesive and ineffective. It would force
parties to either abandon their claim or restart litigation from scratch,
violating the principles of affordability and expeditiousness. Section 29A,
interpreted purposively, is designed to be a cohesive mechanism that shepherds
disputes to a final resolution.
VII. International Perspectives: A Pragmatic
Consensus
The Court bolstered its view by
surveying international jurisprudence, finding a general judicial reluctance to
invalidate awards solely on grounds of delay, especially where no prejudice is
shown.
a. England: Both the old
Arbitration Act 1950 (Section 27) and the current 1996 Act (Section 50(4))
allow courts to extend time "whether or not the time previously fixed (by
agreement or otherwise) has expired." The English Court of Appeal in Oakland
Metal Co Ltd. confirmed this wide, retrospective discretion.
b. Mauritius: The Privy
Council in Alphamix Ltd. upheld an award issued three days late, finding the
parties had tacitly agreed to the short delay.
c. Commentaries:
Authorities like Redfern and Hunter note that courts in many jurisdictions are
reluctant to invalidate a late award where a party uses the time limit
tactically to frustrate the arbitration. The ICC Rules also provide for the
extension of time limits and revival of a tribunal’s mandate.
This international perspective
underscores a shared pragmatic approach: arbitration agreements are for
resolving disputes, and procedural deadlines should not become traps that
destroy that very purpose absent bad faith or prejudice.
VIII. The Supreme Court’s Conclusions and
Directives
Synthesizing its analysis, the
Supreme Court laid down the following principles:
1.Maintainability: An
application under Section 29A(5) for extension of the arbitrator’s mandate is maintainable
even after the expiry of the statutory period (12+6 months) and even after the
arbitrator has rendered an award during the period of lapsed mandate.
2.Status of Award: Such a
belatedly rendered award is ineffective and unenforceable (non est). Its
existence does not impair the court’s jurisdiction to consider the extension
application.
3.Court’s Discretionary
Exercise: When such an application is made, the court must examine whether "sufficient
cause" exists for the delay. It is not an automatic extension. The court
must scrutinize the reasons for the delay, attributing blame where due.
4.Use of Corrective Tools:
In deciding the application, the court must consider employing the corrective
measures in its toolkit:
a. Reduce the arbitrator’s fees
if delay is attributable to them.
b. Impose costs (actual or
exemplary) on parties if warranted.
c. Consider substituting the
arbitrator(s) if the facts demand (though this is not mandatory).
d. Impose specific terms and
conditions for the concluded proceedings.
5.Continuation of Proceedings:
If the mandate is extended, the arbitral tribunal (whether the original or a
substituted one) will seamlessly continue the proceedings from the exact stage
where the mandate expired, based on the existing record. The deeming provisions
under Sections 29A(6) & (7) facilitate this continuity.
Outcome: The Supreme Court
allowed the appeal, set aside the Madras High Court’s order, and restored the
appellant’s Section 29A application (No. 5993 of 2024) for fresh disposal in
accordance with the principles laid down in this judgment.
IX. Implications and Analysis: A Balanced and
Progressive Ruling
The Velusamy judgment is a
masterclass in balanced statutory interpretation. It achieves several important
objectives:
1. Prioritizes Substance Over
Form: The ruling refuses to let a procedural default (the late award)
extinguish substantive rights. It recognizes that arbitration is a contractual
investment, and its collapse on a technicality represents a significant
injustice.
2. Empowers Courts as
Supervisory Facilitators: It reaffirms the court’s role under the 1996 Act
not as an intruder but as a facilitator and supervisor tasked with ensuring the
efficacy of the alternative dispute resolution mechanism. The court’s power
under Section 29A is curative and completive, not destructive.
3. Introduces Disciplined
Flexibility: By clarifying that extension is not automatic and must be
accompanied by the use of corrective tools (costs, fee reduction,
substitution), the Court ensures that flexibility does not breed indiscipline.
Arbitrators and parties know that breaching timelines will invite judicial
scrutiny and potential penalty.
4. Prevents Tactical
Manoeuvring: It closes a potential loophole where a party, aware of a
looming deadline, could tactically delay proceedings to let the mandate expire
and then challenge any subsequent award as a nullity, thereby derailing the
entire process.
5. Aligns with Global Best
Practices: The judgment brings Indian arbitration law in sync with the
pragmatic, justice-oriented approach prevalent in advanced arbitration
jurisdictions.
For Practitioners: Lawyers
must be vigilant about statutory timelines and proactively seek extensions
under Section 29A before the mandate expires. However, the judgment provides a
crucial safety net. If an award is rendered late, the focus should shift
immediately to filing a Section 29A(5) application, demonstrating
"sufficient cause," and proactively suggesting terms (like cost
penalties) to assuage the court’s concerns about condoning delay.
X. Conclusion
The Supreme Court’s judgment in C.
Velusamy v. K Indhera is a landmark that breathes practical wisdom into the
procedural framework of arbitration. By holding that the court’s power to
extend an arbitrator’s mandate survives even the rendering of a late award, the
Court has fortified the foundational objective of arbitration: to achieve final
and binding resolution of disputes. It acknowledges that while timelines are
essential for efficiency, they are the servants of justice, not its masters.
This ruling ensures that the arbitral process in India is robust, resilient,
and capable of delivering on its promise as an effective alternative to
conventional litigation.
Judgment Cited: C.
Velusamy v. K Indhera, Civil Appeal No(s). of 2026 arising out of SLP (C)
No(s). 6551 of 2025, Supreme Court of India, decided on February 3, 2026.
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