Patna High Court could not extend the arbitrator: Supreme Court sends Section 29A power to commercial court

Justice Ujjal Bhuyan and Justice Atul S. Chandurkar hold that only the court defined in Section 2(1)(e), not the High Court that appointed the arbitrator, can extend an arbitral mandate, while rejecting the bid by South Bihar Power Distribution Company to scrap the sole arbitrator for a three-member panel.

A High Court that appoints an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 does not thereby acquire the power to extend that arbitrator’s time. On 28 October 2026 the Supreme Court set aside the Patna High Court’s view that the jurisdiction to extend an arbitral mandate under Section 29A rests with the High Court, holding instead that the power belongs to the court defined in Section 2(1)(e): the principal civil court of original jurisdiction in the district, or a High Court exercising ordinary original civil jurisdiction. But the Bihar distribution licensee that won that point lost everything else. A bench of Justice Ujjal Bhuyan and Justice Atul S. Chandurkar found that South Bihar Power Distribution Company Ltd. had twice consented to a sole arbitrator in place of the three-member panel its contract promised, had filed counter claims before him, and could not raise the panel’s composition when the other side was asking for more time. The appeals were dismissed, the Court’s own bar on pronouncing the award was lifted, and the arbitrator, former Chief Justice of India Dipak Misra, was told to pass his award within six weeks.

The judgment, written by Justice Bhuyan and marked reportable, disposes of two connected appeals, Civil Appeal No. 9313 of 2026 and Civil Appeal No. 9325 of 2026, against a common Patna High Court judgment of 15 September 2023 in Request Case No. 36 of 2021 and Request Case No. 78 of 2022.

A Bodhgaya franchise and a clause that promised three arbitrators

South Bihar Power Distribution Company is a distribution licensee under the Electricity Act, 2003 for four areas of the State: the Patna Electric Supply Unit and the Central, Magadh and Bhagalpur Electric Supply Areas. The Act lets a licensee work through a franchisee, and India Power Corporation Ltd. won the competitive bid for one. The letter of intent required the bidder to contract through a special purpose vehicle, so India Power Corporation (Bodhgaya) Ltd. was incorporated as its 100 per cent subsidiary, and the three companies signed a tripartite Distribution Franchisee Agreement on 31 December 2013. The vehicle was to perform the obligations; its parent signed as confirming party.

Clause 17 of the agreement governs disputes. Clauses 17.2.1 to 17.2.4 send any difference first to a permanent dispute resolution body with equal representation, which must decide within 30 days, then to a high-powered body of the licensee’s Chairman or Managing Director and the head of the franchisee, which is to decide preferably within 15 days. Clause 17.2.5 sends whatever survives to arbitration under the 1996 Act by a panel of three arbitrators.

Disputes arose during implementation. India Power Corporation Ltd. served an arbitration notice on 9 November 2016 under Article 17. Nobody was appointed, so the special purpose vehicle moved the Patna High Court under Section 11 in Request Case No. 77 of 2018, which was disposed of by consent on 4 April 2018 with the appointment of a retired judge of that court, Justice Shashank Kumar Singh, as sole arbitrator. The arbitration began on 12 April 2018 and reached the stage of recording evidence before the arbitrator could continue no further. On 12 May 2018 he had rejected as not pressed an application the licensee filed under Section 13 read with Section 16(1). The licensee then filed a counter claim on 2 February 2019 and a supplementary counter claim on 28 March 2019.

Insolvency intervened. On 8 November 2019 the National Company Law Tribunal, Kolkata admitted a Section 9 application under the Insolvency and Bankruptcy Code, 2016 against the special purpose vehicle and appointed an interim resolution professional, who made a public announcement on 28 May 2020. The licensee filed no claim. The respondents went back to the High Court in Request Case No. 14 of 2020 for a replacement arbitrator, and on 10 March 2021, again by consent, the High Court appointed Justice Dipak Misra, a former Chief Justice of India who had also headed the Patna High Court. His procedural order of 7 April 2021 recorded that the parties had no objection to the composition of the tribunal or to his acting as sole arbitrator.

The arbitration did not finish within a year. The parties consented to the six-month extension the statute allows, and the proceedings still ran on. As that extended period approached its end, which the judgment records as 7 August 2021, the respondents filed Request Case No. 36 of 2021 asking the High Court for four more months. The licensee resisted on two fronts: the High Court had no jurisdiction to extend time at all, and the sole-arbitrator proceedings offended the three-arbitrator clause, whatever consent had been given on its behalf. It filed its own Request Case No. 78 of 2022 for a three-member tribunal. Meanwhile the committee of creditors approved the resolution plan of Rankini Power Generation Private Limited on 13 February 2021, the NCLT approved it on 18 July 2022, and from 28 August 2023 the vehicle was renamed Vikriti Power Limited.

Three questions, one High Court judgment, and a District Court in the middle

The High Court framed three questions: whether the licensee’s consent waived the three-arbitrator condition, or failing that whether eighteen months of participation before any objection amounted to acquiescence; whether the special purpose vehicle, a company in insolvency resolution, could competently request arbitration and press for an extension; and whether the Section 11 court or the principal civil court of original jurisdiction extends time under Section 29A. On 15 September 2023 it answered all three for the respondents. The consent was proper and worked as a waiver under Section 4, the conduct was acquiescence, the vehicle had standing despite the moratorium, and the High Court itself held the Section 29A power. It extended the mandate by four months from the date the parties appeared before the arbitrator, allowed Request Case No. 36 of 2021 and rejected Request Case No. 78 of 2022.

The licensee came to the Supreme Court, which on 12 February 2024 let the arbitration continue but directed that no award be declared. While the petition was pending, the respondents filed a Section 29A(5) application before the Principal District Judge-cum-Commercial Court, Patna, Arbitration Case No. 54 of 2024, seeking six months. On 21 January 2026 the Supreme Court directed the District Court to decide it on its own merits within two months of 24 January 2026, regardless of the pending petition. On 23 March 2026 the District Court extended the sole arbitrator’s mandate by six months from the date of its judgment. By the time the appeals were heard, the arbitrator was already working under an extension granted by the very court the licensee said was the right one.

What the senior counsel argued

Senior counsel Mr. Sundaram, for the licensee, took the Court to clauses 17.2.5 and 17.2.6: the agreement allowed disputes to be decided only by a three-member tribunal, so the High Court was wrong to refuse one. India Power Corporation Ltd., the first respondent, was merely a proforma party that had never raised a claim against the licensee; the real contest was with the special purpose vehicle, so the parent’s consent was immaterial. The corporate debtor had ceased to exist, and there could be no arbitration over the claim of a non-existent party. By foisting a solitary arbitrator, the High Court had taken away the forum the contract provided. The judgment should go and the parties be sent to a new tribunal of three. Senior counsel Mr. Raju Ramachandran, for the appellant in the connected appeal, supported those submissions and sought the same relief.

Senior counsel Mr. Atmaram Nadkarni, for the second respondent, defended the High Court’s judgment. The arbitrator had made sufficient progress within the extended period, and aborting the proceedings now would cause the respondents serious prejudice. He asked for the appeals to be dismissed.

Twice consented, then counter-claimed: the waiver finding stands

Justice Bhuyan began with the contract. The agreement is primarily between the licensee and the special purpose vehicle, with the parent as confirming party, and Clause 17.2.5 does require a three-arbitrator panel. What the Court would not accept was the licensee’s attempt to resile from the sole arbitrator it had itself agreed to.

The record was against it. In Request Case No. 77 of 2018 the licensee had appeared through counsel and its consent to a retired High Court judge as sole arbitrator was specifically recorded. Request Case No. 14 of 2020 was disposed of in the presence of its counsel, with the High Court noting appreciable efforts by counsel on both sides and an amicable agreement that the new arbitrator would decide the dispute from the stage of evidence. The arbitrator’s first procedural order recorded that all parties had no objection on any ground to the tribunal’s composition. When the licensee later argued before him that there had been neither consent nor acquiescence, the arbitrator held that it had consented not once but twice, that Section 4 treated the three-member condition as waived, and that no objection had been raised within the time Section 16(2) allows. The High Court agreed, finding that “the consent is evident and acquiescence is clearly discernible.”

The Supreme Court added a point of its own. Neither the order of 4 April 2018 appointing Justice Shashank Kumar Singh nor the order of 10 March 2021 appointing Justice Misra had ever been challenged. Both had attained finality and bound the parties.

Two provisions decide such objections. Section 4 deems a party to have waived its right to object where it knows that a requirement of the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating its objection without undue delay, or within any time limit the Act provides. Section 16(2) requires a plea that the tribunal lacks jurisdiction to be raised not later than the statement of defence. Reading the two with the High Court’s analysis, the Court found it abundantly clear that the licensee had by its conduct waived its right to object within the statutory time. It had kept participating before the sole arbitrator, had consented to the extended period, and had filed a counter claim and a supplementary counter claim. That was clear acquiescence, and the licensee could not question the sole arbitrator at the very belated stage when the respondents were seeking a further extension under Section 29A(4).

The Court anchored this in Union of India v. Pam Development Private Limited, (2014) 11 SCC 366, where the Calcutta High Court had appointed a sole arbitrator under Section 11(6) although the contract provided for three. The Union participated, lost, and only in the Supreme Court called the appointment a jurisdictional error. The Court held that the unchallenged appointment order had become final and that a party which filed a statement of defence and a counterclaim without objecting to the tribunal’s competence was deemed to have waived the requirement under Section 4 read with Section 16. The bench found no error in the High Court’s view on the first question and affirmed it.

A moratorium shields a corporate debtor; it does not gag one

On the second question the licensee had argued that the special purpose vehicle, being in insolvency resolution, had no standing to run the arbitration, and that the letter of intent had gone to the parent anyway. The High Court had rejected both limbs. Both respondents are separate legal entities, parties to the tripartite agreement and to the proceedings. Section 14 of the IBC bars suits and proceedings, including execution, against a corporate debtor after the insolvency commencement date; it does not necessarily stop the debtor pursuing recoveries due to it, which is what its arbitral claim was. The resolution professional had authorised the signatories to appear before the tribunal with the approval of the committee of creditors under Section 28(1)(h). As for the letter of intent, implementing the agreement fell squarely on the vehicle, incorporated exclusively for that purpose, and whether the parent must satisfy any award was an issue the arbitrator had framed, for him to decide.

The Supreme Court agreed on every step. The moratorium is meant to stop debt recovery action against the corporate debtor so that the insolvency process is not undermined; it does not impair a claim by the debtor, and an arbitral claim that succeeds would only improve the debtor’s financial health and value. The resolution professional had authorised the pursuit of the arbitration with the approval of the committee of creditors, which the Court called the best authority to assess the debtor’s financial position. The High Court had rightly decided the second issue.

Which court holds the Section 29A clock

The third question is where the High Court went wrong. Relying on Section 2 and decisions of various High Courts, it had concluded that the Section 29A power lay with the High Court.

Section 29A(1) requires the award in a domestic arbitration within twelve months of the completion of pleadings, and Section 29A(3) lets the parties add up to six months by consent. Under Section 29A(4) the mandate then terminates unless the court extends it, before or after expiry, and the mandate continues while an application under sub-section (5) is pending. Extension is only for sufficient cause and on terms; the court may cut fees for delay attributable to the tribunal, substitute arbitrators under sub-section (6) and impose costs under sub-section (8).

Everything turns on which court. Section 2(1)(e)(i) answers that for domestic arbitration: the principal civil court of original jurisdiction in a district, including a High Court exercising ordinary original civil jurisdiction, with jurisdiction over the subject matter had it been a suit, and excluding any inferior court or court of small causes. That definition runs through Part I. The references to the Supreme Court and High Court in Sections 11(3A), 11(4) and 11(6) do not disturb it; those sub-sections step in when the parties or the two party-appointed arbitrators fail to agree, they deal with appointment, and “nothing more should be read into it.” The court acting under Section 11 is therefore not the court defined in Section 2(1)(e), and Section 42, which fixes jurisdiction in the court where the first Part I application was made, uses the same defined term.

The Court relied on four of its own decisions. In State of West Bengal v. Associated Contractors, (2015) 1 SCC 32, a three-judge bench held that Section 2(1)(e) is an exhaustive definition marking out only the principal civil court of original jurisdiction or a High Court with original civil jurisdiction; that Section 11 applications go to the Chief Justice or his designate, who is not a court as defined, so Section 42 does not reach them; and that the Supreme Court can in no circumstances be the court for Section 2(1)(e). A two-judge bench in Chief Engineer (NH) PWD (Roads) v. BSC and C and C JV, SLP (C) No. 10544 of 2024, decided on 13 May 2024, held that the Section 29A(4) power vests in the Section 2(1)(e) court, that a High Court without ordinary original civil jurisdiction does not qualify, and that the substitution power in Section 29A(6) is only consequential. Jagdeep Chowgule v. Sheela Chowgule, (2026) 5 SCC 667, answered the precise question raised here: Section 11 jurisdiction is exhausted once the tribunal is constituted, the appointing court retains no residual supervisory power, it is not thereby a court of first instance for Section 42, and the High Court’s extension order there was set aside with liberty to move the commercial court. C. Velusamy v. K. Indhera, (2026) 5 SCC 340, endorsed that in terms: the court under Section 29A is the Section 2(1)(e) court, not the High Court or Supreme Court under Section 11(6).

The bench also drew on Rohan Builders (India) (P) Ltd. v. Berger Paints (India) Ltd., (2025) 10 SCC 802, and C. Velusamy for the purpose of Section 29A. Both warn against reading the extension power narrowly, which would amount to judicial legislation and relegate a faultless party to a fresh reference. Both hold an extension application maintainable even after the twelve or eighteen months have run out, so that a tribunal whose mandate is revived picks up the thread where it left off. Neither treats extension as automatic: the court must find sufficient cause after close scrutiny.

Against that line of authority the High Court’s conclusion on the third question was, in the Court’s words, “clearly unsustainable in law.” The Chief Justice of the High Court or his designate under Section 11 cannot grant an extension under Section 29A(4). That part of the judgment was set aside.

Why losing the jurisdiction point cost the respondents nothing

The licensee had the jurisdiction point right, but by October 2026 it had already been cured. The Supreme Court’s order of 21 January 2026 had sent the extension question to the District Court, and the Principal District Judge-cum-Commercial Court, Patna had on 23 March 2026 extended the mandate by six months. Given Associated Contractors, BSC and C and C JV, Jagdeep Chowgule and C. Velusamy, and that order, setting aside the High Court’s view on the third question had no bearing on the outcome. The arbitration proceeds under an extension granted by the right court, and there was to be no fresh three-member tribunal: the waiver findings stood, the appointment orders were final, and the insolvency of the vehicle gave the licensee no escape from proceedings it had joined and counter-claimed in.

Order

The Patna High Court’s judgment of 15 September 2023 is upheld on the first and second questions, the waiver of the three-arbitrator clause and the standing of the special purpose vehicle, and set aside on the third, its assertion of Section 29A jurisdiction for itself. The embargo imposed by the Supreme Court’s order of 12 February 2024 on declaring the award stands lifted. The sole arbitrator is to conclude the proceedings and pass the award within six weeks of 28 October 2026. Civil Appeal No. 9313 of 2026 and Civil Appeal No. 9325 of 2026 are dismissed, with no order as to costs.