SOUTH BIHAR POWER DISTRIBUTION COMPANY LTD. v. INDIA POWER CORPORATION LTD. & ANR.

REPORTABLE 2026 INSC 1165 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9313 OF 2026 (Arising out of Special Leave Petition (Civil) No. 27403 of 2023)

SOUTH BIHAR POWER APPELLANT(S) DISTRIBUTION COMPANY LTD.

VERSUS

INDIA POWER CORPORATION RESPONDENT(S) LTD. & ANR.

WITH

CIVIL APPEAL NO. 9325 OF 2026 (Arising out of Special Leave Petition (Civil) No. 24988 of 2026)

JUDGMENT

UJJAL BHUYAN, J.

Facts of both the appeals being inter-related and

parties being the same, those were heard together and are being

disposed of by this common judgment and order. Signature Not Verified

Digitally signed by

2. The two appeals take exception to the judgment and IRAMNAZ Date: 2026.10.28 16:08:34 IST Reason:

order dated 15.09.2023 passed by the High Court of Judicature

at Patna (briefly ‘the High Court’ hereinafter) in Request Case

No. 78 of 2022 and Request Case No. 36 of 2021.

3. By the aforesaid judgment and order dated 15.09.

2023 (‘impugned judgment and order’ hereinafter), High Court

held that the jurisdiction to extend the period of time has to be

exercised by the High Court under Section 29A of the

Arbitration and Conciliation Act, 1996 (briefly ‘the 1996 Act’

hereinafter). Accordingly, the High Court directed that there

shall be an extension of the mandate of the arbitral tribunal by

four months starting from the date of appearance of the parties

before the arbitral tribunal as per the extension granted by the

High Court. Consequently Request Case No. 36 of 2021 was

allowed and Request Case No. 78 of 2022 was rejected.

4. Relevant facts may be briefly noted.

5. Appellant i.e. South Bihar Power Distribution

Company Ltd. is a company incorporated under the Companies

Act, 1956. Electricity Act, 2003 provides for a distribution

licensee and contemplates appointment of a distribution

franchisee by a distribution licensee. Appellant is a distribution

licensee under the provisions of the Electricity Act, 2003. It has

the license to supply electricity in four electric supply areas i.e.

(i) Patna Electric Supply Unit, (ii) Central Electric Supply Area,

(iii) Magadh Electric Supply Area, and (iv) Bhagalpur Electric

Supply Area within the State of Bihar. For facilitating such

supply of electricity, appellant is also entitled to act through a

franchisee.

5.1. A competitive bidding process was initiated by the

appellant for selecting a franchisee pursuant to which India

Power Corporation Ltd., a company also incorporated under the

Companies Act, 1956, came out as the successful bidder. As per

the terms of the letter of intent, the successful bidder through

a special purpose vehicle was required to enter into a

distribution franchisee agreement with the appellant.

India Power Corporation (Bodhgaya) Ltd. was accordingly

incorporated as a 100% subsidiary of India Power Corporation

Ltd. to act as a special purpose vehicle whereafter a tripartite

agreement was entered into between the three companies i.e.

the successful bidder, the special purpose vehicle and the

distribution licensee, called the Distribution Franchisee

Agreement, dated 31.12.2013.

5.2. India Power Corporation (Bodhgaya) Ltd. i.e. the

special purpose vehicle was to undertake and perform the

obligations under the distribution franchisee agreement entered

into by the parties with the first respondent i.e. India Power

Corporation Ltd. to act as the confirming party.

5.3. In the implementation of the franchisee agreement,

disputes arose which led the first respondent i.e. India Power

Corporation Ltd. to issue arbitration notice to the appellant

dated 09.11.2016 in accordance with Article 17 of the

distribution franchisee agreement. Since no arbitrator was

appointed, the special purpose vehicle i.e. the second

respondent approached the High Court under Section 11 of the

1996 Act vide Request Case No. 77 of 2018. The said request

case was disposed of with the consent of the parties vide the

order dated 04.04.2018 whereby the High Court appointed a

retired Judge of the said High Court Mr. Justice Shashank

Kumar Singh as the sole arbitrator.

5.4. The arbitration proceedings commenced on

12.04.2018 and proceeded upto the stage of recording of

evidence whereafter the learned arbitrator could not continue

further. In the meanwhile, the sole arbitrator had rejected the

application filed by the appellant under Section 13 read with

Section 16(1) of the 1996 Act vide the order dated 12.05.2018

as not pressed. Appellant thereafter filed counter claim on

02.02.2019 and supplementary counter claim on 28.03.2019

before the sole arbitrator.

5.5. In the meanwhile, the National Company Law

Tribunal, Kolkata (NCLT) admitted an application under Section

9 of the Insolvency and Bankruptcy Code, 2016 (briefly referred

to as ‘IBC’ hereinafter) for initiating corporate insolvency

resolution process against respondent No. 2. Vide the order

dated 08.11.2019, NCLT admitted the said application and also

appointed an interim resolution professional (IRP). Though the

interim resolution professional made a public announcement

on 28.05.2020 regarding initiation of corporate insolvency

resolution process, appellant did not file its claim before the

interim resolution professional as per provisions of the IBC.

5.6. Respondents approached the High Court again vide

Request Case No. 14 of 2020 for appointment of another

arbitrator. Once again, with the consent of the parties, the High

Court vide the order dated 10.03.2021 appointed a former Chief

Justice of India, who was also a former Chief Justice of the High

Court, Mr. Justice Dipak Misra, as the new arbitrator.

5.7. Arbitral proceedings commenced under the new

arbitrator and proceeded from the stage where the earlier

arbitrator had left. A procedural order was passed by the new

arbitrator on 07.04.2021 whereby it was recorded that the

parties had no objection to the composition of the arbitral

tribunal or the sole arbitrator arbitrating the dispute between

the parties. However, within a period of one year, the arbitration

proceedings could not be completed. Therefore, after expiry of

one year, time was extended by another six months in

accordance with the 1996 Act, again on the consent of the

parties. But the arbitration proceedings could not be completed

even within the extended period. As the extended period was

expiring on 07.08.2021, respondents filed Request Case No. 36

of 2021 before the High Court seeking extension of four months

for completion of the arbitration proceedings.

5.8. Appellant resisted the request on the ground that the

High Court had no jurisdiction to extend the time and also

challenged the arbitration proceedings initiated by the sole

arbitrator when the distribution franchisee agreement

specifically mentions of an arbitral tribunal comprising of three

arbitrators. Appellant also questioned the consent given before

the High Court for waving the condition of the agreement which

required an arbitral tribunal comprising of three arbitrators. In

this regard, appellant filed Request Case No. 78 of 2022 for

appointment of an arbitral tribunal as contemplated under the

distribution franchisee agreement.

5.9. In the meanwhile, following the corporate insolvency

resolution process of respondent No. 2, the consortium of

creditors in its meeting held on 13.02.2021 approved the

resolution plan of Rankini Power Generation Private Limited.

This was approved by the NCLT vide its judgment dated

18.07.2022.

5.10. Consequently, the name of the second respondent

was changed to Vikriti Power Limited on and from 28.08.2023.

5.11. By the impugned judgment and order dated

15.09.2023, the High Court held that there was proper consent

by the appellant to the appointment of a sole arbitrator which

constituted waiver of the special condition of the agreement for

appointment of an arbitral tribunal of three members; further

conduct of the appellant amounted to acquiescence to the

arbitral proceedings conducted by the sole arbitrator. The High

Court rejected the objection of the appellant that respondent

No. 2 i.e. the special purpose vehicle undergoing corporate

insolvency resolution process had no locus standi to initiate the

arbitration proceedings. The High Court also held that it has

the jurisdiction to extend the time of the learned arbitrator

under Section 29A of the 1996 Act and exercising such

jurisdiction, the High Court extended the mandate of the

learned arbitrator by four months. Consequently, Request Case

No. 36 of 2021 was allowed while Request Case No. 78 of 2022

was rejected.

6. This Court vide the order dated 12.02.2024

permitted continuance of the arbitral proceedings before the

learned arbitrator but directed that the award should not be

declared by the learned arbitrator.

7. It appears that during the pendency of SLP(C) No.

27403 of 2023 out of which Civil Appeal No. 9313 of 2026

arises, an application under Section 29(5) of the 1996 Act

was filed by the respondents before the Court of the

Principal District Judge-cum-Commercial Court, Patna seeking

extension of mandate of the arbitral tribunal by 6(six) months,

which was registered as Arbitration Case No. 54 of 2024.

8. On 21.01.2026, an order was passed by this Court

directing the District Court to consider the said application on

its own merit and in accordance with law within a period of two

months from 24.01.2026 which was stated to be the hearing

date of Arbitration Case No. 54 of 2024. This Court clarified that

decision on the extension application would be irrespective of

the fact that the special leave petition is pending before this

Court.

9. Thereafter, the Principal District Judge-cum-

Commercial Court, Patna passed judgment and order dated

23.03.2026 allowing the application filed under Section 29A(5)

of the 1996 Act by extending the mandate of the sole arbitrator

for a further period of 6(six) months to be reckoned from the

date of the judgment to enable completion of the arbitral

proceedings.

10. Mr. Sundaram, learned senior counsel for the

appellant has referred to clauses 17.2.5 and 17.2.6 of the

distribution franchise agreement and submits that it is clear

therefrom that under the provisions of the aforesaid agreement,

any dispute can only be gone into by an arbitral tribunal

comprising three arbitrators. Therefore, the High Court was not

justified in rejecting the contention of the appellant for

appointment of a three-member arbitral tribunal.

10.1. The High Court also committed an error in not taking

into consideration the fact that the first respondent is only a

proforma party. Contesting parties are the appellant and the

second respondent. Therefore, its consent is really not material.

Now, the corporate debtor i.e. respondent No. 2 has ceased to

exist. Therefore, there cannot be any arbitration with regard to

the claim of any non-existent party.

10.2. The High Court ought to have considered that no

claim was ever raised by the first respondent against the

appellant. First respondent is only a proforma party. Therefore,

notwithstanding the alleged consent, the dispute could not have

been referred to an arbitral tribunal having a solitary member

during the subsistence of the distribution franchisee

agreement. By the impugned judgment and order, the High

Court has caused serious prejudice to the appellant in as much

as the fora for adjudication of the dispute as provided under the

distribution franchise agreement has been taken away; instead

of a three-member arbitral tribunal, the High Court has foisted

a solitary arbitrator on the appellant.

10.3. In any view of the matter, the impugned judgment

and order of the High Court cannot be sustained and the same

should be set aside and quashed. Parties should be relegated to

a new arbitral tribunal comprising of three arbitrators, he

submits.

11. Mr. Raju Ramachandran, learned senior counsel

appearing for the appellant in the connected appeal has

supported the submissions of Mr. Sundaram and seeks

relegation of the parties to a new arbitral tribunal comprising of

three arbitrators after setting aside the impugned judgment and

order of the High Court.

12. Per contra, Mr. Atmaram Nadkarni, learned senior

counsel appearing for respondent No. 2 has supported the

impugned judgment of the High Court and submits that no case

for interference is made out. Sufficient progress has been made

by the learned arbitrator within the extended period. If the same

is aborted now, serious prejudice will be caused to the

respondents. He, therefore, seeks dismissal of the civil appeals.

13. Submissions made by learned counsel for the parties

have received the due consideration of the Court.

14. At the outset, let us consider the relevant provisions

of the distribution franchisee agreement dated 31.12.2013.

From a perusal of the recital of the agreement it is seen that the

agreement is primarily between the appellant and the second

respondent with the first respondent entering into the

agreement in its capacity as the confirming party. Clause 17 of

the agreement deals with the governing law and dispute

resolution. Clause 17.2 provides for amicable settlement. As per

clauses 17.2.1 to 17.2.4, either party is entitled to raise any

dispute or difference of any nature arising out of or in

connection with the distribution franchisee agreement

including the existence of its validity by giving a written notice

to the other party. The parties are mandated to constitute a

permanent dispute resolution body having equal representation

from each of the parties. The disputes or differences shall be

referred to this body for resolution which shall communicate its

decision within 30 days. In case of non-settlement of such

disputes or differences by the permanent dispute resolution

body, such disputes or differences shall be referred for decision

to a high-powered body constituted by the Chairman/Managing

Director of the distribution licensee and the head of the

distribution franchisee which shall communicate its decision

preferably within a period of 15 days.

14.1. Clause 17.2.5 of the agreement is relevant and is

extracted hereunder:

17.2.5. Any dispute arising out of, in connection with or with respect to this agreement, the subject matter hereof, the performance or non performance of any obligation hereunder, which cannot be resolved by negotiation between the parties and the dispute resolution procedure as stated in the foregoing articles, shall be exclusively submitted to arbitration at the request of either party upon written notice to that effect to the other party and the proceedings shall be conducted subject to the provisions of the Arbitration and Conciliation Act, 1996 (the Arbitration Act) by a panel consisting of three arbitrators.

14.2. From a perusal of the above, it is seen that if the

disputes or differences are still not resolved in the manner

provided for in clauses 17.2.1 to 17.2.4, the same shall be

exclusively submitted to arbitration at the request of either

party upon written notice to that effect to the other party. The

arbitration proceedings shall be conducted as per provisions of

the 1996 Act by a panel consisting of three arbitrators.

15. We have noticed from the narration of facts that

initially Justice Shashank Kumar Singh was appointed as the

sole arbitrator, who commenced the arbitration proceedings on

12.04.2018. However, the learned arbitrator could not continue

beyond the stage of recording of evidence. Leaving aside for a

moment the intervening developments before the NCLT under

the IBC pertaining to the corporate insolvency resolution

process of respondent No.2, we find that with the consent of the

parties, the High Court appointed Mr. Justice Dipak Mishra, a

former Chief Justice of India, as the new arbitrator. The arbitral

proceedings under the new arbitrator commenced from the

stage where the earlier arbitrator had left the proceedings.

Within the statutory period of one year, the arbitration

proceedings could not be concluded. On consent of the parties,

the time period for arbitration was extended by six months.

However, the arbitration proceedings could not be completed

even within the extended period. Before expiry of the extended

period, respondents filed Request Case No. 36 of 2021 before

the High Court seeking extension of four months for completion

of the arbitral proceedings. Appellant not only resisted the

request but also instituted Request Case No. 78 of 2022 for

appointment of an arbitral tribunal as contemplated under the

distribution franchisee agreement. Vide the impugned

judgment and order dated 15.09.2023, the High Court held that

it has the jurisdiction to extend the time of the arbitrator under

Section 29A of the 1996 Act. Exercising such jurisdiction, the

High Court extended the mandate of the learned arbitrator by

four months.

16. In these circumstances, as noticed above, Section

29A of the 1996 Act assumes significance. Section 29A, as it

stands now, is extracted hereunder:

29-A. Time limit for arbitral award.— (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23.

Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavour may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23.

(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference,

the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.

(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub- section (3), the mandate of the arbitrator(s) shall terminate unless the court has, either prior to or after the expiry of the period so specified, extended the period:

Provided that while extending the period under this sub-section, if the court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay:

Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application:

Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.

(5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the court.

(6) While extending the period referred to in sub-section (4), it shall be open to the court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.

(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.

(8) It shall be open to the court to impose actual or exemplary costs upon any of the parties under this section.

(9) An application filed under sub-section (5) shall be disposed of by the court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.

17. Before we analyse the provisions of Section 29A, it

would be apposite to see as to how this Court has examined the

aforesaid provisions. There are two recent judgments of this

Court dealing with Section 29A though in somewhat different

contexts.

18. Rohan Builders (India) (P) Ltd. Vs. Berger Paints

(India) Ltd.1 is a two-Judge Bench decision of this Court where

the question for consideration was whether an application for

extension of time under Section 29A of the 1996 Act can be filed

after the expiry of the period for making of the arbitral award?

It was in that context that this Court analyzed the contours of

Section 29A. Adverting to Section 29A(1) and Section 29A(3),

this Court observed that two time limits for making of an

arbitral award are provided for under the aforesaid provisions.

As per the first provision i.e. Section 29A(1), the award is

required to be made by the arbitral tribunal within a period of

12 months. The second provision i.e. Section 29A(3), stipulates

that the parties by consent can extend the time for making the

award beyond 12 months, upto an additional period of 06 months.

Under Section 29A(4), where the award is not made within the

specified period of 12 months or 18 months, as the case may be,

the mandate of the arbitral tribunal will terminate. However, this

provision does not apply if the court has extended the period

either before or after the expiry of the initial period or the

extended term. This Court held that Section 29A(4) empowers

the court to extend the period for making of the arbitral award

beyond the period of 12 months or 18 months, as the case may

be. To be more specific, this Court has held that an application

for extension of time for passing an arbitral award under

Section 29A(4) read with Section 29A(5) is maintainable even

after the expiry of the 12 months or the extended 6 months

period, as the case may be.

19. Section 29A was again examined by a two-Judge

Bench of this Court in C. Velusamy Vs. K. Indhera2. This Court

referred to the amendment which inserted Section 29A in the

1996 Act with effect from 23.10.2015 to effectively deal with

delays in arbitral proceedings. In this connection, the Bench

examined the statement of objects and reasons necessitating

such amendment. The objective was to make arbitration more

user friendly, cost effective and expeditious. Accordingly, time

limit of 12 months was fixed with liberty to the parties to extend

the said period by a further period of six months; any further

extension beyond such period being permissible only by order

of the court on sufficient cause being shown. This Court also

noted that upon further amendment of Section 29A with effect

from 30.08.2019, it has been made explicitly clear that where

an application seeking extension of time under sub-section (5)

of Section 29A is pending, the mandate of the arbitrator shall

continue until such application is finally decided. This Court

held thus:

18. It is in the above-referred background that the Arbitration Act was amended with retrospective effect from 23-10-2015 to effectively deal with delays in arbitral proceedings by inserting Section 29-A. The Statement of Objects and Reasons records that practical difficulties had arisen, necessitating amendments to make arbitration more user-friendly, cost-effective, and expeditious. Accordingly, provision was made requiring the Arbitral Tribunal to render the award within twelve months from the date it enters upon the reference, with liberty to the parties to extend the period by a further six months, any extension thereafter being permissible only by order of the Court on sufficient cause being shown. Thereafter, the 1996 Act was further amended w.e.f. 30- 8-2019 to provide, inter alia, that, where an application seeking extension of time under sub-section (5) of Section 29-A is pending, the mandate of the arbitrator shall continue until such application is finally decided.

19.1. After threadbare analysis of each of the sub-sections

of Section 29A, this Court recorded its conclusions qua

assessment of Section 29A in the following manner:

21. Section 29-A, as explained in recent decisions of this Court in Rohan Builders, Lancor Holdings [Lancor Holdings Ltd. Vs. Prem Kumar Menon, (2026) 4 SCC 392] and Jagdeep Chowgule Vs. Sheela Chowgule [Jagdeep Chowgule Vs. Sheela Chowgule, (2026) 5 SCC 667 : 2026 SCC OnLine SC 124 : 2026 INSC 92] can be formulated as under:

21.1. Sub-section (1) of Section 29-A mandates that the award shall be made within 12 months of the completion of pleadings before the Arbitral Tribunal. While sub- section (2) incentivises expeditious making of the award, proviso to sub-section (4) and sub-section (8) authorises the Court to impose penalty for delay in making the award.

21.2. Sub-section (3) enables parties, by consent, to extend the period of 12 months for making the award by a further period not exceeding 6 months.

21.3. If the award is not made within the stipulated period of 12 months or the extended period of 6 months, the mandate of the arbitrator(s) shall terminate.

21.4. This termination is subject to the power of the Court to extend the period.

21.6. There is no statutory prescribed time-limit for the Court to exercise the power under Section 29-A(4) for extending the period, except for its own discretion. The Court can exercise the power before or after the expiry of the period under sub-sections 29-A(1) or (3). Further, there is no prescription of an outer limit for extending the time for the conclusion of arbitral proceedings. Given this power, the Court will exercise it with circumspection, balancing the remedy with the rights of other stakeholders.

21.7. The power of the Court to extend the time under sub-section (4) may be exercised on an application by any of the parties. Once such an application for extension of time is pending, the mandate of the arbitrator shall continue till the disposal of such application under sub- section (9). The Court shall endeavour to dispose of such an application within 60 days.

21.8. 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.

21.9. Under Section 29-A(6), while exercising the power of extension, it shall be open to the Court to substitute one or all the arbitrators. This is a discretionary power that the Court would exercise in the facts and circumstances of the case. Upon substitution, the

reconstituted Tribunal shall be deemed to be in continuation of the previously appointed Tribunal as per Section 29-A(7) and shall continue from the stage already reached and on the basis of evidence already on record. The newly appointed arbitrators shall be deemed to have received the evidence and materials.

20. Before proceeding further, it would be apposite to

examine the impugned judgment and order of the High Court.

In the factual backdrop narrated supra, the High Court posed

three questions for its consideration. We will proceed our

analysis question wise.

21. The first question framed by the High Court was

whether there was a proper consent by the appellant so as to

constitute waiver of the specific condition of the agreement for

appointment of an arbitral tribunal of three members? If the

answer to this question was in the negative, the High Court

posed the further question as to whether it could not be

presumed that there was acquiescence on the part of the

appellant who had participated in the arbitration proceedings

for about 18 months and thereafter has raised the objection as

to the coram of the arbitral tribunal?

21.1. The High Court referred to clause 17.2.5 which

provides for arbitration by an arbitral tribunal consisting of

three arbitrators and also referred to its earlier proceedings in

Request Case No. 77 of 2018 in which appellant had appeared

through counsel and his consent was specifically recorded for

appointing a retired Judge of the High Court as the sole

arbitrator. High Court also referred to the subsequent Request

Case No. 14 of 2020 which was also disposed of in the presence

of the counsel for the appellant whereby and whereunder a new

arbitrator was appointed to continue with the arbitration

proceedings from the stage of recording of evidence. In the

proceedings of Request Case No. 14 of 2020, it was specifically

recorded that appreciable efforts were put in by the learned

counsel appearing for both the parties whereafter the matter

was amicably resolved and it was agreed that the dispute would

be adjudicated through the new arbitrator. High Court noted

that the arbitrator so appointed had completed 18 months

including the extended period of six months consented to by

both the parties. Now the respondents have requested for

continuance of the arbitral proceedings under the arbitrator so

appointed for a further period of four months to which objection

regarding consent and constitution of arbitral tribunal was

raised by the appellant.

21.2. In the aforesaid context, the High Court referred to

the procedural order No. 1 passed by the learned arbitrator

which clearly stated that counsel and representatives of all the

parties stated that they had no objection on any ground

whatsoever to the composition of the arbitral tribunal or to the

learned arbitrator acting as the sole arbitrator to arbitrate the

dispute between the parties.

21.3. The High Court also noted that appellant had argued

before the learned arbitrator that there was neither a consent

given by the appellant nor any acquiescence could be inferred

before the sole arbitrator; there was no question of waiver of the

specific terms of the agreement which required a three-member

arbitral tribunal to be appointed. In so far consent is concerned,

the learned arbitrator held that not once but twice the appellant

had appeared through counsel and had consented to the

appointment and continuance of the sole arbitrator which

would be evident from the orders of the High Court and of the

arbitrator. The High Court further noted that the arbitrator had

referred to Section 4 of the 1996 Act to find that the specific

condition in the agreement requiring appointment of a three-

member arbitral tribunal was waived by the appellant. That

apart, the objection as to constitution of the arbitral tribunal

was not raised within the time prescribed in Section 16(2) of the

1996 Act which again constitutes a deemed waiver but High

Court noted that the arbitrator had rejected the application of

the appellant filed under Section 13 read with Section 16(1) of

the 1996 Act in this regard. In the aforesaid backdrop, the High

Court held that the appellant could not assail the consent given

by it earlier, the consent is evident and acquiescence is clearly

discernible. The High Court held thus:

14. On the facts, as noticed by the Arbitral Tribunal, I am convinced that there is no sustainable ground raised by the respondent to assail the consent given before the High Court, which is further buttressed by the acquiescence before the Tribunal, as recorded by the Tribunal. The consent is evident and acquiescence is clearly indicated which operates as a waiver under Section 4 of the Act of 1996.

22. There is one more aspect which we need to point out.

The first order of the High Court dated 04.04.2018 appointing

Justice Shashank Kumar Singh as the sole arbitrator as well as

the second order of the High Court dated 10.03.2021 appointing

Justice Dipak Misra as the new arbitrator were not assailed by

the appellant. Consequently, those orders have attained finality

and are binding on the parties.

23. On the question of waiver and acquiescence, we may

refer to Section 4 of the 1996 Act which reads as under:

4. Waiver of right to object.—A party who knows that— (a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non- compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.

23.1. As per this provision, a party who knows that any

requirement under the arbitration agreement has not been

complied with and yet proceeds with the arbitration without

stating his objection to such compliance without undue delay

or if a time limit is provided for stating that objection, within

that period of time, he shall be deemed to have waived his right

to so object.

24. We may also refer to Section 16 of the 1996 Act which

deals with competence of an arbitral tribunal to rule on its

jurisdiction. Sub-section (2) provides that a plea that the

arbitral tribunal does not have jurisdiction shall be raised not

later than the submission of the statement of defence; however,

a party shall not be precluded from raising such a plea merely

because he has appointed or participated in the appointment of

an arbitrator.

25. A careful examination of the aforesaid provisions

coupled with the analysis of the High Court would make it

abundantly clear that by its conduct, the appellant had clearly

waived its right to object to the composition of the arbitral

tribunal within the time limit provided by the statute. As

the appellant had continued to participate in the arbitral

proceedings before the sole arbitrator, including consenting

for the extended period of arbitration, it amounts to

acquiescence. That apart, appellant had filed counter claim and

supplementary counter claim before the sole arbitrator. Such

conduct amounts to clear acquiescence on the part of the

appellant to the arbitral proceedings conducted by the sole

arbitrator. This being the position, it was not open to the

appellant to have questioned the appointment of the sole

arbitrator as opposed to a three-member arbitral tribunal

provided for in the agreement at the very belated stage of the

respondents seeking further extension of the arbitral

proceedings under Section 29A(4) of the 1996 Act.

26. In Union of India Vs. Pam Development Private

Limited3, the arbitral proceedings were conducted by a sole

arbitrator appointed by the High Court of Calcutta under Section

11(6) of the 1996 Act. Appellant duly participated in the

arbitration proceedings. After the award was passed accepting

the claims of the respondent, appellant challenged the same first

under Section 34 of the 1996 Act and thereafter under Section

37. On being unsuccessful, the matter came up before this

Court. On behalf of the appellant it was contended that the High

Court had committed an error of jurisdiction by appointing a

sole arbitrator when the contractual conditions provided for a

three-member arbitration panel. It was in that context, this

Court observed that the order of the High Cout appointing the

sole arbitrator was not challenged by the appellant. Therefore,

the same had become final and binding. This Court held that

since the appellant had participated in the arbitral proceedings,

it would be deemed to have waived the requirement under the

agreement in view of the provisions contained in Section 4 read

with Section 16 of the 1996 Act. This Court adverted to Section

16(2) and observed that the said provision mandates that a plea

that the arbitral tribunal does not have jurisdiction shall be

raised not later than submission of the statement of defence.

This Court also relied upon Section 4 which provides that a party

who knows that any requirement under the arbitration

agreement has not been complied with and yet proceeds with the

arbitration without stating his objection to such non-compliance

without undue delay shall be deemed to have waived his right to

do so. This Court held thus:

16. As noticed above, the appellant not only filed the statement of defence but also raised a counterclaim against the respondent. Since the appellant has not

raised the objection with regard to the competence/jurisdiction of the Arbitral Tribunal before the learned arbitrator, the same is deemed to have been waived in view of the provisions contained in Section 4 read with Section 16 of the Arbitration Act, 1996.

17. Section 16 of the Arbitration Act, 1996 provides that the Arbitral Tribunal may rule on its own jurisdiction. Section 16 clearly recognises the principle of kompetenz-kompetenz. Section 16(2) mandates that a plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. Section 4 provides that a party who knows that any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay shall be deemed to have waived his right to so object.

27. We, therefore, do not find any error or infirmity in the

view taken by the High Court in so far the first issue is

concerned and, accordingly, affirm the same.

28. The second issue considered by the High Court was

whether the special purpose vehicle i.e. respondent No. 2 is

competent to request for arbitration, especially when the letter

of intent was issued to the first respondent and the dispute

includes claims by the appellant against the first respondent.

In that context, the High Court also considered whether

provisions of the IBC initiated against the second

respondent would disable the second respondent from

continuing with the request for extension of time of the sole

arbitrator.

28.1. Rejecting the contention that the second respondent

has no locus standi to initiate the arbitration proceeding, the

High Court analyzed the character of the two respondents. Both

are separate legal entities and are parties to the tripartite

agreement alongwith the appellant. Both the respondents were

parties before the High Court. As to initiation and pendency of

proceedings under the IBC against the second respondent, the

High Court observed that Section 14 of the IBC prohibits

initiation and continuation of any suit or proceeding including

execution against the corporate debtor after the insolvency

commencement date. The High Court reasoned that this does

not necessarily prohibit the corporate debtor from proceeding

with the recovery due to it, which in essence, is the arbitration

proceeding initiated by the second respondent. The High Court

noted that the respondents had specifically pleaded in their

reply to the objection filed by the appellant before the arbitrator

that the resolution professional appointed by the NCLT had

authorized the signatories to appear before the arbitral tribunal

which was also approved by the committee of creditors in

compliance with Section 28(1)(h) of the IBC. In such

circumstances, the High Court held that there was no infirmity

in the proceedings initiated by the second respondent on the

ground that there was moratorium under the IBC.

28.2. Insofar initiation of arbitration is concerned, though

the letter of intent was issued to the first respondent, the

responsibility for implementation of the terms of the agreement

squarely falls within the ambit of the second respondent which

is a special purpose vehicle formed in terms of the agreement.

The second respondent is also a subsidiary of the first

respondent and incorporated exclusively for the purpose of

implementation of the agreement.

28.3. The High Court proceeded to hold that such a dispute

has to be decided by the arbitrator and not by the courts. The

obligation of the first respondent to ensure due implementation

as also to satisfy the obligation of and under the award is one

of the issues framed by the learned arbitrator. In such

circumstances, the argument regarding the second respondent

having no locus standi to initiate the arbitration has been

rejected by the High Court.

29. We agree with the view taken by the High Court that

Section 14 of the IBC does not necessarily prohibit the corporate

debtor from initiating proceedings for recovery of its dues,

which, as in the present case, would include an arbitral

proceeding. The moratorium provided for in Section 14 of the

IBC is intended to prohibit debt recovery action against the

corporate debtor so as not to adversely impact the insolvency

process; however, it would not impair any claim by the

corporate debtor, such as, an arbitral claim, which if successful,

would only bolster the financial health thereby enhancing the

value of the corporate debtor.

30. That apart, the resolution professional has

authorized the signatories of the second respondent to pursue

the arbitral proceeding which has been approved by the

committee of creditors in compliance with Section 28(1)(h) of the

IBC, which is the best authority to assess the financial position

of the corporate debtor.

31. We, therefore, concur with the view taken by the High

Court qua the second issue and hold that the High Court has

rightly decided this issue.

32. The third question framed by the High Court for its

consideration was whether the Chief Justice of the High Court

or his designate empowered under Section 11 of the 1996 Act

to consider a request for arbitration, can grant extension of time

as required under Section 29A of the 1996 Act or is it the

principal civil court of original jurisdiction in the concerned

district or the High Court having original civil jurisdiction alone

which will be empowered to exercise the power under Section

29A of the 1996 Act?

32.1. The High Court referred to Section 2 of the 1996 Act

and the decisions of different High Courts and came to the

conclusion that the jurisdiction to extend the period of time has

to be exercised by the High Court under Section 29A of the

1996 Act.

33. Let us examine the relevant provisions of the 1996

Act and a few judgments of this Court to analyse whether the

view taken by the High Court is legally correct or not.

34. There are two parts to Section 2(1)(e). We are

concerned with the first part i.e. Section 2(1)(e)(i) which defines

‘court’ in the case of an arbitration other than international

commercial arbitration to mean the principal civil court of

original jurisdiction in a district and includes the High Court in

the exercise of its ordinary original civil jurisdiction, having the

jurisdiction to decide the questions forming the subject matter

of the arbitration if the same had been the subject matter of a

suit; but it does not include any civil court of a grade inferior to

such principal civil court or any court of small causes. This

definition of ‘court’ permeates through Part I of the 1996 Act

which deals with domestic arbitration. Reference to the

Supreme Court or to the High Court in Sections 11(3A), (4) & (6)

do not in any manner impact the definition of ‘court’ in terms of

Section 2(1)(e)(i). This is because of the specific role assigned to

the Supreme Court or to the High Court in sub-sections (3A),

(4) & (6) of Section 11 i.e. where the parties fail to appoint the

arbitrator or the two arbitrators (one each appointed by one

party) fail to agree on a third arbitrator, then the aforesaid

provisions come into play. In other words, these provisions deal

with appointment of an arbitral tribunal; nothing more should

be read into it. Therefore, the Supreme Court or the High Court

referred to in Section 11 cannot be deemed to be the ‘court’ as

defined in Section 2(1)(e).

35. Section 42 of the 1996 is included in Part I thereof.

It deals with jurisdiction. Section 42 starts with a non obstante

clause. As per Section 42, nothing contained in Part I of the

1996 Act or in any other law for the time being in force, where

with respect to an arbitration agreement any application under

Part I has been made in a court, that court alone shall have

jurisdiction over the arbitral proceedings and all subsequent

applications arising out of that agreement and the arbitral

proceedings shall be made in that court and in no other court.

36. Question is whether the ‘court’ referred to in Section

42 would be the ‘court’ as defined in Section 2(1)(e) of the 1996

Act?

37. In State of West Bengal Vs. Associated Contractors4,

the specific question before a three-Judge Bench of the

Supreme Court was, which court will have the jurisdiction to

entertain and decide an application under Section 34 of the

1996 Act? In that context, the Bench analysed Section 2(1)(e)

and Section 42 of the 1996 Act. It concurred with an earlier

decision of this Court that the provisions of the 1996 Act leave

no room for any doubt that it is the superior most court

exercising original jurisdiction which has been chosen to

adjudicate disputes arising out of arbitration agreements.

Proceeding further, this Court observed that it is obvious that

Section 11 applications are not to be moved before the ‘court’ as

defined but before the Chief Justice either of the High Court or

of the Supreme Court, as the case may be, or their delegates.

This is despite the fact that the Chief Justice or his delegate

have now to decide judicially and not administratively. Referring

to Section 42, it has been held that it would not apply to

applications made before the Chief Justice or his delegate for

the simple reason that the Chief Justice or his delegate is not

4 (2015) 1 SCC 32

‘court’ as defined by Section 2(1)(e). Interestingly, this Court

held that if an application were to be preferred to a court which

is not a principal civil court of original jurisdiction in a district

or a High Court exercising original jurisdiction to decide

questions forming the subject matter of an arbitration if the

same had been the subject matter of a suit, then obviously such

application would be outside the four corners of Section 42. If

such an application were to be made to a court which is not the

principal civil court or to a High Court which has no original

jurisdiction or to a court which has no subject matter

jurisdiction, it would be outside Section 42; it would not debar

subsequent applications from being filed in a court other than

such a court.

37.1. After a threadbare analysis, the three-Judge Bench

recorded its conclusions on Sections 2(1)(e) and Section 42 as

under:

25. Our conclusions therefore on Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows: (a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of Original Jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no

other court as ‘court’ for the purpose of Part I of the Arbitration Act, 1996. (b) The expression ‘with respect to an arbitration agreement’ makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an award is pronounced under Part I of the 1996 Act. (c) However, Section 42 only applies to applications made under Part I if they are made to a court as defined. Since applications made under Section 8 are made to judicial authorities and since applications under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42. (d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42. (e) In no circumstances can the Supreme Court be ‘court’ for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil Court having original jurisdiction in the district, as the case may be.

(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part I. (g) If a first application is made to a court which is neither a Principal Court of Original Jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42. Also, an application made to a court without subject-matter jurisdiction would be outside Section 42.

38. A two-Judge Bench of this Court in SLP(C) No. 10544

of 2024 (Chief Engineer (NH) PWD (Roads) Vs. M/s. BSC & C and

C JV), decided on 13.05.2024, held that the power under sub-

section (4) of Section 29A of the 1996 Act vests in the court as

defined in Section 2(1)(e). It is the principal civil court of original

jurisdiction in a district which includes a High Court provided

the High Court has ordinary original civil jurisdiction. In the

facts of that case it has been held that the High Court does not

have the ordinary original civil jurisdiction. The power under

sub-section (6) of Section 29A is only a consequential power

vesting in the court which is empowered to extend the time; the

said power has to be exercised by the court which is empowered

to extend the time as provided in sub-section (4) of Section 29A

of the 1996 Act.

39. In Jagdeep Chowgule Vs. Sheela Chowgule5, the

question before this Court was if an arbitral tribunal appointed

by the High Court or by the parties concerned does not complete

the proceedings within the required time frame or within the

extended time limit, can an application to extend the time limit

under Section 29A of the 1996 Act be filed before the High Court

or before the civil court? While answering this question, this

Court interpreted the expression ‘court’ appearing in Section

2(1)(e) of the 1996 Act. The Bench clarified that Section 11 will

have no bearing on the working of the provisions in Chapter V

and VI where Section 29A is located and held that the power

under sub-section (4) of Section 29A vests in the ‘court’ as

defined in Section 2(1)(e) of the 1996 Act. It is the principal civil

court of original jurisdiction in a district or a High Court

provided the High Court has ordinary original civil jurisdiction.

This Court clarified that exercise of jurisdiction under Section

11 stands exhausted upon the constitution of the arbitral

5 (2026) 5 SCC 667

tribunal. There is no residual supervisory or controlling power

left with the High Court or the Supreme Court over the arbitral

proceedings after the appointment is made. Turning its

attention to Section 42, this Court clarified that solely because

a superior court appoints the arbitrator, it cannot be regarded

as a court of first instance for the purpose of Section 42. In the

facts of that case, this Court set aside the order of the High

Court granting extension of time to the arbitral tribunal under

Section 29A while granting liberty to the parties to move the

commercial court for further extension under Section 29A(5) for

exercising the court’s power under Section 29(A)(4).

40. This Court in C. Velusamy endorsed the view taken

in Jagdeep Chowgule and held as follows:

21.5. The ‘Court’ under Section 29-A shall be the civil court of ordinary original jurisdiction in a district and includes the High Court in exercise of its original civil jurisdiction under Section 2(1)(e), and shall not be the High Court or the Supreme Court under Section 11(6) of the Act. Section 42 of the Act relating to jurisdiction for applications will also not apply to Section 11 of the Act. [

40.1. Elaborating further, the Bench clarified that vesting

of the power of substitution under Section 29A(6) is on the

‘court’ and this court is the ‘court’ as defined in Section 2(1)(e).

The text as well as the context for identifying the court in

Section 29A(6) as well as in Section 29A(4) is the court in

Section 2(1)(e). The expression court appearing in other

provisions of the 1996 Act must be guided by the meaning given

in Section 2(1)(e).

41. In Rohan Builders, this Court observed that Section

29A intends to ensure the timely completion of arbitral

proceedings. While the section allows the courts the flexibility

to grant extensions when warranted, the Bench however

cautioned against giving a narrow and restrictive meaning to

Section 29A(4) of the 1996 Act. This Court observed that if we

do so, we would be indulging in judicial legislation by

incorporating a negative stipulation of a bar or limitation which

has a severe annulling effect. A restrictive interpretation would

lead to rigour, impediments and complexities. Narrow

interpretation presents an additional challenge by relegating a

faultless party to a fresh reference or appointment of an

arbitrator under the 1996 Act, thereby impeding arbitration

rather than facilitating it. This Court went on to observe that

the legislature vide the 2015 amendment envisioned arbitration

as a litigant centric process by expediting disposal of cases and

reducing the cost of litigation. A narrow interpretation will be

counter-productive. This Court further observed that while

interpreting a statute, like Section 29A of the 1996 Act, we must

strive to give meaningful life to an enactment or rule and avoid

cadaveric consequences that result in unworkable or

impracticable scenarios. In the facts of that case and in the

context of the question framed, this Court held that an

application for extension of the time period for passing an

arbitral award under Section 29A(4) read with Section 29A(5) of

the 1996 Act is maintainable even after the expiry of the 12

months or the extended 6 months period, as the case may be;

of course, adjudication of such extension application would be

guided by the principle of sufficient cause.

42. In the case of C. Velusamy, while endorsing the

decision in Rohan Builders, this Court held that Section 29A(4)

is intended to enable the court to extend the period of

arbitration before or after the expiry of the mandate. After

analysing the various provisions of Section 29A, this Court

observed that intention of Parliament is to secure the arbitral

proceedings and to ensure that these are taken to the logical

conclusion of passing of an award as is evident from the various

provisions contained in Section 29A itself. These provisions

make it evident that the intention of Parliament is to safeguard

the conduct and conclusion of arbitral proceedings. This Court

declared that there is no automatic extension of time. The court

will and must exercise its discretion only after evaluating the

facts and circumstances after close scrutiny. Thereafter, the

Court declared that the following are the empowerments which

flow from Section 29A:

28.1. Court has the power to extend the time before or after the expiry of the statutorily stipulated period. 28.2. Court is empowered to take measures to reduce the fee of the arbitrators if the Court is of the opinion that the proceedings are delayed for the reasons attributable to the arbitrators. 28.3. Court can grant an extension of the time period upon a finding that there is sufficient cause for such extension. 28.4. Court, while extending the mandate even when there is sufficient cause, is empowered to impose such terms and conditions as it thinks fit for efficiency and integrity of the arbitral proceedings.

28.5. Courts are specifically empowered to substitute any one or all the arbitrators, if in the opinion of the Court the facts demand. This is a discretion that the Court would exercise with caution and circumspection. 28.6. The Court is empowered not only to grant costs but also to impose exemplary and actual costs upon any of the parties, if the situation so demands.

42.1. Based on the above analysis, this Court opined that

provisions of the 1996 Act, particularly Section 29A, must not

be interpreted to infer a threshold bar for an application under

Section 29A(5) for extension of the mandate of the arbitrator

even when an award is passed though after expiry of the

mandate. Therefore, this Court answered the question framed

by holding that an application under Section 29A(5) for

extension of the mandate of the arbitrator would be

maintainable even after the expiry of the time under Sections

29A(1) and (3) and even after rendering of an award during that

time. If the mandate is extended, the arbitral tribunal will pick

up the thread from where it was left and seamlessly continue

the proceedings from the stage at which the mandate had

expired and conclude the arbitration within the time granted.

43. Based on our above discussion and analysis, we hold

that the view taken by the High Court in so far the third

question is concerned i.e. the Chief Justice of the High Court or

his designate empowered under Section 11 of the 1996 Act can

grant extension of time under Section 29A(4) is clearly

unsustainable in law. The conclusion reached by the High

Court that the jurisdiction to extend the period of time has to

be exercised by the High Court under Section 29A of the 1996

Act is not correct and is accordingly set aside.

44. However, in view of the legal position clarified by this

Court in Associated Contractors, M/s BSC & C and C JV,

Jagdeep Chowgule and in C. Velusamy as well as the order of

this Court passed in the present proceeding on 21.01.2026

directing the District Court to consider the extension

application following which the Principal District Judge-cum-

Commercial Court, Patna passed the judgment and order dated

23.03.2026 extending the mandate of the sole arbitrator for a

further period of 6(six) months, setting aside of the impugned

judgment and order of the High Court on this issue would have

no bearing and would not materially affect the outcome of this

proceeding.

45. In the circumstances, we uphold and affirm the

impugned judgment and order of the High Court dated

15.09.2023 in so far question Nos. 1 and 2 are concerned. As

regards question No. 3, we set aside the impugned decision of

the High Court.

46. Thus having regard to the facts and circumstances of

the case and considering all aspects of the matter, the embargo

imposed by this Court vide the order dated 12.02.2024 stands

lifted. The learned arbitrator shall now conclude the arbitral

proceedings by passing the award within a period of 6(six) weeks

from today.

47. Civil appeals are accordingly dismissed.

48. No costs.

…...…………………………J. [UJJAL BHUYAN]

…..….………………………J. [ATUL S. CHANDURKAR]

NEW DELHI; OCTOBER 28, 2026.