In a series of significant rulings that will redefine the landscape of Indian arbitration, the Supreme Court of India has clarified the "remedial" nature of Section 29A of the Arbitration and Conciliation Act, 1996. The Court has held that while the mandate of an arbitrator technically "terminates" if an award is not passed within the statutory timeline, this termination is not absolute or "set in stone." Crucially, the Apex Court clarified that the Court is not compelled to substitute the arbitrator every time an extension is sought; rather, substitution is a discretionary "toolkit" to be used only when the delay is attributable to the arbitrator’s conduct.
Section 29A was introduced to the Arbitration Act to discipline the timelines of dispute resolution in India. It mandates that an award must be made within 12 months from the completion of pleadings, extendable by another 6 months with the consent of the parties.
The primary question before the Supreme Court was: What happens when these 18 months expire without an award? Various High Courts had taken a rigid view, suggesting that once the mandate ends, the arbitrator becomes functus officio (their authority ceases), and the Court must either appoint a new arbitrator or the entire process must collapse. However, the Supreme Court, in cases like Rohan Builders (India) Pvt Ltd v. Berger Paints India Limited and the more recent Jagdeep Chowgule v. Sheela Chowgule, has steered the law toward a more "facilitative" approach.
1. "Termination" is Conditional, Not Final
The Court observed that the term "terminate" in Section 29A(4) is followed by the word "unless." This linguistic structure implies that the termination is subject to the Court’s power to extend time. The Court held that an application for extension can be filed even after the mandate has technically expired. The legislative intent was to "rescue" the arbitration, not to kill it on a technicality.