Legal Review and Analysis of Mohan Lal Fatehpuria vs Ms Bharat Textiles & Ors 2025 INSC 1409
Case Synopsis
Mohan Lal Fatehpuria vs M/s Bharat Textiles & Ors. (2025 INSC 1409)
Synopsis : The Supreme Court mandates substitution of an arbitrator under Section 29A(6) once their mandate terminates for failing to pass an award within the statutory timeline, prioritizing expeditious dispute resolution.
Expiry of Mandate Triggers Substitution: Supreme Court Reinforces the Imperative of Timely Arbitration under Section 29A.
1. Heading of the Judgment
Case Name: Mohan Lal Fatehpuria vs M/s Bharat Textiles & Ors.
Citation: 2025 INSC 1409
Court: Supreme Court of India
Judges: Hon'ble Mr. Justice Alok Aradhe, Hon'ble Mr. Justice Sanjay Kumar
Date of Judgment: December 10, 2025
2. Related Laws and Sections
Arbitration and Conciliation Act, 1996:
Section 29A: Time limit for arbitral award. Sub-sections (4) & (6) are central.
Section 14: Failure or impossibility to act by an arbitrator.
Section 15: Termination of mandate and substitution of arbitrator.Key Precedents Relied Upon:
Tata Sons Pvt. Limited v. Siva Industries & Holdings Ltd. & Ors. (2023) 5 SCC 421.
Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. (2024 SCC OnLine SC 2494).
Cognizance for Extension of Limitation, In re (2022) 3 SCC 117.
3. Judgment Details
A. Facts of the Case
A sole arbitrator was appointed by the Delhi High Court on March 13, 2020, for disputes arising from a partnership deed. The arbitrator's mandate was to follow the fee structure in the Fourth Schedule of the Arbitration Act. The arbitrator repeatedly directed the parties to deposit administrative expenses. Some respondents challenged this under Sections 14 and 15 of the Act, but the High Court dismissed their petitions on January 28, 2022, holding the arbitrator was not ineligible and expenses were payable on actuals. The arbitrator failed to pass an award within the statutory timeline under Section 29A. The appellants (Mohan Lal Fatehpuria and wife) filed an application under Section 29A(6) seeking substitution of the arbitrator and extension of time for a new arbitrator. The High Court, by order dated April 22, 2025, declined substitution and merely extended the original arbitrator's mandate by four months. The appellants appealed to the Supreme Court.
B. Issues Before the Supreme Court
Whether the High Court erred in not substituting the sole arbitrator under Section 29A(6) of the Arbitration and Conciliation Act, 1996, when his mandate had statutorily terminated.
Whether the power of substitution under Section 29A(6) is independent of and wider than the grounds for termination under Sections 14 and 15 of the Act.
C. Ratio Decidendi (Court's Reasoning)
The Supreme Court allowed the appeal, set aside the High Court's order, and substituted the arbitrator. Its reasoning was as follows:
Mandatory Timelines and Automatic Termination: The Court analyzed Section 29A, emphasizing its object of ensuring time-bound arbitration. The sole arbitrator entered reference on May 20, 2020. Excluding the COVID-19 period, the deadline to pass an award was February 28, 2023. As the award was not made, the arbitrator's mandate terminated automatically by operation of law under Section 29A(4).
Distinction Between Sections 14/15 and Section 29A: The Court rejected the respondents' argument that a prior dismissal of a petition under Sections 14 and 15 barred substitution under Section 29A(6). It held that Section 29A provides a separate, distinct remedy triggered by the expiry of the statutory period, irrespective of challenges on grounds of independence or impartiality.
Wide Power of Substitution under Section 29A(6): The Court held that the word "may" in Section 29A(6) confers a discretionary power on the court, which becomes an obligation to substitute when the mandate has terminated and continuation with the same arbitrator would frustrate the expeditious resolution of disputes. The power under this section is not restricted to the grounds in Sections 14 or 15.
High Court's Error: The High Court erred in extending the term of an arbitrator whose mandate had already ceased. Once functus officio, the arbitrator cannot proceed, and the court's task is to ensure the proceeding continues swiftly with a substitute.
4. Core Principle and Analysis of the Judgment
Title: The Primacy of Timelines and the Mandate to Substitute under Section 29A(6)
Main Issue Addressed
The core legal issue was the interpretation of the court's power under Section 29A(6) of the Arbitration Act when an arbitrator fails to render an award within the statutory period. The judgment clarifies whether substitution is discretionary or mandatory in such a scenario and delineates the boundary between termination of mandate under Section 29A and under Sections 14/15.
Analysis and Reasoning
This judgment provides an in-depth analysis of the procedural imperative introduced by the 2015 and 2019 amendments to the Arbitration Act. The Supreme Court reinforced that Section 29A is not merely directory but creates a substantive framework to combat delays. The Court's reasoning established a clear sequence of legal consequences:
Automatic Termination as Default Rule: Upon the expiry of the statutory period (including any consented extension), the arbitrator's mandate terminates. This termination is self-executing by law (subject only to a timely court order extending it). The Court, referring to Rohan Builders, clarified that this termination is not absolute stricto sensu until the court decides an extension application, but it unequivocally strips the arbitrator of the authority to proceed proprio vigore.
The Transformative Nature of Section 29A(6): The Court interpreted the phrase "it shall be open to the Court to substitute" as conferring a remedial and facilitative power. This power is to be exercised to effectuate the primary objective of Section 29A—speedy conclusion. When an arbitrator has already overshot the timeline, insisting on their continuation defeats the provision's very purpose. Therefore, the discretion tilts heavily in favor of substitution to inject fresh impetus into the stalled process.
Remedial Independence: A crucial doctrinal point settled is that Section 29A operates in a distinct sphere from Sections 14 and 15. The latter deal with an arbitrator's personal incapacity, de jure or de facto inability, or lack of impartiality. Section 29A addresses systemic delay, regardless of the arbitrator's conduct or qualifications. A clean chit under Sections 14/15 does not immunize an arbitrator from substitution under Section 29A(6) for mere expiry of time.
Supreme Court's Directive
The judgment directs courts (including High Courts) to adopt a purposive and strict approach to timelines under Section 29A. It holds that:
Once the statutory period lapses without an award, the arbitrator becomes functus officio.
In applications under Section 29A(4) read with (6), the court must first determine if the mandate has terminated.
If the mandate has terminated, the court must ordinarily substitute the arbitrator under Section 29A(6) to ensure expedition, unless rare and compelling reasons justify a simple extension with the same arbitrator.
Merely extending the time for an arbitrator whose mandate has ceased is an error of law.
5. Final Outcome
The Supreme Court allowed the appeals. It quashed the High Court's order dated April 22, 2025. It terminated the mandate of the erstwhile sole arbitrator, Mr. Anjum Javed, and appointed Justice Najmi Waziri (Retd.) as the substituted sole arbitrator. The arbitral proceedings were directed to continue from the stage already reached and conclude within six months.
6. MCQs Based on the Judgment
Question 1: In Mohan Lal Fatehpuria vs Bharat Textiles (2025 INSC 1409), the Supreme Court held that the power to substitute an arbitrator under Section 29A(6) of the Arbitration Act?
(a) Is only available if the arbitrator is found to be biased under Section 14.
(b) Becomes an obligation of the court when the arbitrator's mandate has terminated due to expiry of the statutory period under Section 29A(4).
(c) Can only be exercised before the expiry of the 12-month period for making the award.
(d) Is entirely at the discretion of the arbitral institution.
Question 2: The Supreme Court distinguished the remedy under Section 29A from those under Sections 14 and 15 of the Arbitration Act on the basis that?
(a) Section 29A deals with the arbitrator's fees, while Sections 14/15 deal with jurisdiction.
(b) Sections 14 and 15 require a hearing, while Section 29A does not.
(c) Section 29A is triggered by the expiry of a statutory timeline for making the award, irrespective of the arbitrator's conduct or eligibility.
(d) Only Section 29A applies to international commercial arbitration.