Supreme Court: In an appeal arising from the Madhya Pradesh High Court’s interim order dated 02-12-2025 where in the Court declared the mandate of the existing Arbitrator in the ongoing arbitration proceedings between the parties to be terminated and directed the parties to propose the name of a new Arbitrator for appointment, a Division Bench of Sanjay Kumar and Alok Aradhe, JJ., set aside the impugned order and held that Section 29-A of the Arbitration and Conciliation Act, 1996 (A&C Act) does not mandate automatic substitution of Arbitrator.
The High Court relied upon Mohan Lal Fatehpuria v. Bharat Textiles, 2025 SCC OnLine SC 2754, while interpreting Section 29-A(6) of the A&C Act and termination of the Arbitrator’s mandate and directed substitution of the Arbitrator. Aggrieved by the termination of the Arbitrator’s mandate and the direction for substitution, the appellant approached the Supreme Court.
The Court noted that “the impugned interim order has been passed by the High Court on a misinterpretation of the ratio of the decision of this Court in Mohan Lal Fatehpuria (Supra).” It was noted that in paragraph 13 of Mohan Lal Fatehpuria (Supra), while dealing with Section 29-A(6), it was held that the provision “empowers and obligates the Court to substitute an Arbitrator.” The High Court construed the word “obligates” as mandating substitution in every case where the mandate stands terminated.
The Court clarified that when the expression “obligates” was used, “it only meant that a substitute Arbitrator would be appointed if the situation so warranted.” It is “not an inference which would necessarily follow the mandate of the Arbitrator standing terminated under Section 29-A(4) of the Arbitration Act.”
The Court relied upon C. Velusamy v. K. Indhera, 2026 SCC OnLine SC 142, wherein it was clarified that Mohan Lal Fatehpuria (Supra) “does not mandate the substitution of an Arbitrator as an inevitable consequence, when the Court is considering the extension of mandate that has already expired.”
The Court further referenced to Jagdeep Chowgule v. Sheela Chowgule, 2026 SCC OnLine SC 124, which held that “Section 11 of the Arbitration Act will have no bearing on the working of the provisions of Chapter 5 and 6, wherein Section 29-A is located.”
For the aforementioned reasons, the Court held that the application for extension of time under Section 29-A(4) did not lie before the High Court. The Court quashed and set aside the impugned order dated 02-12-2025 passed by the High Court.
The Court directed the application which had been disposed of by the Commercial Court, Bhopal to “stand revived”. It further directed the Commercial Court to decide the application seeking extension of the mandate of the Arbitrator expeditiously.
However, the Court clarified that it had “not expressed any opinion on the merits of the application seeking extension of the mandate of the Arbitrator which shall be decided on its own merits and in accordance with law by the Commercial Court.”
[Viva Highways Ltd. v. M.P. Road Development Corporation Ltd., Civil Appeal No. 2026 of 2026 (Arising out of SLP (C) No. 38327/2025), Decided on 06-02-2026]
Advocates who appeared in this case :
Mr. Soayib Qureshi, AOR, Mr. Sandeep Bajaj, Ms. Chetna Alagh, and Mr. Mayank Biyani, Counsel for the Petitioner