Legal Review and Analysis of C Velusamy vs K Indhera 2026 INSC 112
Synopsis
The Supreme Court of India, in a significant ruling on arbitration law, addressed the question of whether a court can entertain an application to extend an arbitrator’s mandate under Section 29A(5) of the Arbitration and Conciliation Act, 1996, after an arbitral award has been rendered following the expiry of the statutory time limit. Overturning the High Court’s decision, the Court held that such an application is maintainable. The Court emphasized that the unilateral act of an arbitrator in delivering a time-barred award does not nullify the court’s inherent power to retrospectively extend the mandate upon a showing of sufficient cause, thereby prioritizing the completion of the arbitral process over a rigid, technical failure.
I. Basic Information of the Judgment
Case Citation: C. Velusamy v. K. Indhera, 2026 INSC 112
Court: Supreme Court of India
Coram: Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar
Nature of Bench: Division Bench
Civil Appeal No.: Arising out of SLP(C) No. 6551 of 2025
Date of Judgment: February 03, 2026
II. Legal Framework and Subject Matter
Governing Statute: The Arbitration and Conciliation Act, 1996 (as amended).
Core Provision: Section 29A - "Time limit for arbitral award."
Other Relevant Provisions: Sections 34 and 36 of the 1996 Act; Section 28 of the Arbitration Act, 1940 (for comparative context).
Subject Matter: The judgment interprets the scope, applicability, and timing of an application for extension of the arbitrator's mandate under Section 29A, particularly in scenarios where an award has been delivered after the expiry of the stipulated period.
Key Precedents Discussed:
Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd.
Lancer Holdings (relevant observations)
Suryadev Alloys & Power Private Ltd. v. Sh. Govindaraja Textiles Pvt. Ltd. (distinguished/not approved)
Ajay Protech Private Limited v. General Manager and Anr.
III. Relevant Facts of the Case
The dispute arose from three agreements to sell between the parties.
A sole arbitrator was appointed by the High Court on 19.04.2022.
The pleadings were completed on 20.08.2022, which marked the commencement of the 12-month period for making the award under Section 29A(1).
By joint consent, the parties extended this period by a further 6 months, making the final deadline 20.02.2024.
Arguments concluded, and the matter was reserved for award on 09.09.2023. However, subsequent adjournments were granted based on ongoing settlement talks.
Despite the mandate having terminated on 20.02.2024, the arbitrator proceeded to pass the award on 11.05.2024.
The respondent filed an application under Section 34 to set aside this award as time-barred. The appellant, conversely, filed an application under Section 29A(5) seeking an extension of the arbitrator’s mandate.
The High Court dismissed the Section 29A application as non-maintainable and set aside the award under Section 34. The appellant appealed to the Supreme Court.
IV. Issues Before the Court
The principal question of law framed for consideration was:
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?
V. Ratio Decidendi (Court’s Reasoning and Decision)
The Supreme Court allowed the appeal, setting aside the High Court’s order. The core reasoning is encapsulated in the following points:
No Statutory Bar on Post-Award Application: The Court held that Section 29A does not, in express terms, prohibit the filing of an application for extension of mandate after an award has been delivered. The absence of such a prohibition is significant.
Power of Court is Unimpaired by Arbitrator’s Indiscretion: The unilateral act of an arbitrator in rendering an award after the mandate has expired is an "indiscretion." This act does not, and cannot, strip the court of the power and jurisdiction expressly vested in it by Section 29A(4) to extend the period "either prior to or after the expiry of the period so specified."
Nature of a Time-Barred Award: An award rendered after the expiry of the mandate, and before any court-ordered extension, is non est (non-existent in law) or, more precisely, unenforceable under Section 36. It is a nullity and need not even be challenged under Section 34. However, its existence does not preclude the court from considering an extension application.
Interpretation of "If the Award is Not Made": The phrase "if the award is not made" in Section 29A(4) is contextual. It operates to trigger the court's power to extend time and does not create a factual prerequisite that an award must not have been attempted. The provision addresses the consequence of no award being made within time, not the scenario post an invalid award.
"Termination" of Mandate is Conditional and Transitory: Relying on Rohan Builders, the Court reaffirmed that the termination of mandate under Section 29A(4) is not absolute or "stricto sensu." It is conditional upon no application for extension being filed. The mandate is in a state of suspension, capable of being revived by a court order.
Legislative Intent is Facilitative, Not Abortive: Analyzing the Law Commission's 176th Report that led to the introduction of Section 29A, the Court underscored that the amendment's purpose was to curb delays and ensure arbitrations are taken to a logical conclusion—a binding award. The provisions allowing continuation of proceedings pending an extension application [Proviso to 29A(4)] and seamless continuation upon reconstitution of a tribunal [29A(6) & (7)] demonstrate an intent to safeguard the arbitral process, not to terminate it on technicalities.
Discretionary Safeguards Prevent Abuse: The Court assuaged concerns that this interpretation might promote indiscipline. It highlighted the numerous safeguards and discretionary tools within Section 29A:
Extension is granted only for "sufficient cause" [29A(5)].
The Court can impose terms and conditions [29A(5)].
The Court may reduce the arbitrator's fees for delays attributable to them [Proviso to 29A(4)].
The Court has the power to substitute one or all arbitrators [29A(6)].
The Court can impose actual or exemplary costs on parties [29A(8)].International Jurisprudence Supports Pragmatism: The Court noted a consistent international trend where courts, under various jurisdictions and institutional rules (e.g., English Arbitration Act 1996, ICC Rules), retain the power to extend time limits retrospectively to prevent the arbitration from failing due to procedural delays, especially where no prejudice is shown.
VI. Legal Principles Established / Clarified
This judgment establishes and clarifies several key principles:
Maintainability: An application under Section 29A(5) for extension of the arbitrator’s mandate is maintainable even after the expiry of the initial/extended period and even after a time-barred award has been rendered.
Status of Time-Barred Award: Such an award is ineffective and unenforceable under Section 36 from its inception.
Court’s Discretion is Paramount: The court retains a broad, structured discretion to extend the mandate after scrutinizing the facts for "sufficient cause" and may employ corrective measures (costs, fee reduction, substitution) to ensure integrity and efficiency.
Continuity of Process: If the mandate is extended, the arbitral tribunal (whether the original or a substituted one) continues the proceedings from the stage where the mandate expired, using the existing record.
VII. Critical Analysis and Final Outcome
Analysis: The judgment represents a pragmatic and purposive interpretation of Section 29A. It correctly prioritizes substantive justice and the completion of the dispute resolution process over a formalistic and potentially harsh application of timelines. By holding that the arbitrator's error does not oust the court's jurisdiction, it prevents a situation where parties' time and resources invested in arbitration are completely wasted due to the tribunal's procedural lapse.
However, it places a significant responsibility on courts to exercise their discretionary powers under Section 29A judiciously. The requirement of "sufficient cause" must be strictly applied to prevent parties or tribunals from developing a casual attitude towards statutory deadlines. The toolkit of sanctions (costs, fee reduction, substitution) must be used effectively to maintain discipline.
Final Outcome:
The Supreme Court allowed the civil appeal.
The High Court's order dismissing the Section 29A application was set aside.
The application under Section 29A(5) was restored to the file of the High Court for fresh disposal in accordance with the principles laid down in this judgment.
The High Court will now examine whether "sufficient cause" exists for extending the mandate, considering all attendant circumstances and the discretionary tools available under the law.
VIII. (MCQs)
1. As per the Supreme Court's ruling in C. Velusamy v. K. Indhera, what is the legal status of an arbitral award rendered after the expiry of the arbitrator's mandate under Section 29A, but before a court-ordered extension?
a) It is valid but can be challenged under Section 34.
b) It is temporarily valid pending the court's decision on extension.
c) It is non est and unenforceable under Section 36.
d) It is valid if neither party objected during the proceedings.
2. The power of the Court to extend the mandate of an arbitrator under Section 29A(4) can be exercised?
a) Only before the expiry of the statutory period.
b) Only within 30 days after the expiry of the statutory period.
c) Either prior to or after the expiry of the statutory period.
d) Only if the award has not yet been rendered.
3. Which of the following is NOT a corrective measure available to the Court while dealing with an application for extension of mandate under Section 29A, as highlighted in the judgment?
a) Imposing actual or exemplary costs on the parties.
b) Reducing the fees of the arbitrator(s).
c) Setting aside the time-barred award on its own motion.
d) Substituting one or all of the arbitrators.
4. The Supreme Court interpreted the phrase "if the award is not made" in Section 29A(4) to mean?
a) A factual condition that must be strictly satisfied before court intervention.
b) A context setting the consequence which enlivens the court's power to extend time.
c) A bar against filing extension applications once an award is published.
d) A directive to the arbitrator to withhold the award.