3 Feb 2026 – The SC in the case of C. VELUSAMY vs K INDHERA dealt with Section 29A(5) of the Arbitration and Conciliation Act, 1996, and its extension beyond 18 months.
Statutory provision involved –
- Section 29A(1): Award must be made within 12 months from completion of pleadings.
- Section 29A(3): Parties may extend by consent for 6 months (total = 18 months).
- Section 29A(4): If no award within this period, the mandate of the arbitrator terminates unless the Court extends it (either before or after expiry).
- Section 29A(5): Court may extend mandate on sufficient cause.
Facts: The parties were involved in a dispute for which a sole arbitrator was appointed by the High Court. The first arbitral sitting was held on 22 May 2022, and the pleadings were completed on 20 August 2022, hence the commencement of the statutory 12-month period under Section 29A. The parties subsequently mutually extended the mandate by six months, making the total permissible period 18 months.
Despite this extension, the arbitrator’s mandate expired on 20 February 2024. However, the arbitrator proceeded to pass the award on 11 May 2024, i.e., after the expiry of the mandate.
Aggrieved by this, the respondent filed an application under Section 34 of the Act seeking to set aside the award.
Legal issue:—”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 an eighteen-month period?”
Obiter—The Court observed that Section 34 of the 1996 Act does not postulate delay in the delivery of the arbitral award as a ground in itself for setting aside an award.
The emphasis of the judgment was on the continuation of arbitration proceedings , even when an application for extension of time is pending. The Court clarified that procedural delays should not result in the wastage of time, costs, or evidence already recorded. The court referred to extrinsic aids such as legislative intent behind Section 29A , which was to ensure that an arbitral award is ultimately rendered, with judicial intervention functioning as a facilitative and corrective mechanism to curb delay, rather than as a tool to terminate or frustrate the arbitral process.
In this context, the Court referred to the 176th Law Commission Report and quoted the following passage:
> “2.21.5 One other important aspect here is that if there is a delay beyond the initial one year and the period agreed to by the parties (with an upper of another one year) and also any period of extension granted by the Court, there is no point in terminating the arbitration proceedings. We propose it as they should be continued till award is passed. Such a termination may indeed result in waste of time and money for the parties after lot of evidence is led.”
The Court further recognized the international approach to delay in arbitral proceedings, noting:
> “…Courts have retroactively extended timelines and even upheld awards rendered outside agreed deadlines where it was necessary to preserve justice and prevent the arbitration from being defeated by technical non-compliance.”
Reinforcing this position, the Court stated:
> “(vii) Delay in the delivery of an arbitral award, by itself, is not sufficient to set aside that award. It is only when the effect of the undue delay in the delivery of an arbitral award is explicit and adversely reflects on the findings therein, such delay and, more so, if it remains unexplained, can be construed to result in the award being in conflict with the public policy of India.”
Ratio –
If an award is made after expiry of the mandate, such award is not enforceable (the court rejected the use of ‘non est’ which legally means does not exist). Therefore, the parties should not file under Section 34 (Application for setting aside arbitral award) but rather Section 36 (Enforcement). But the Court still has power under Section 29A to extend time retrospectively. If the court extends the time, then the award becomes valid.
Coram –
- Justice Pamidighantam Sri Narasimha
- Justice Atul S. Chandurkar
