Section 29A Extension Power Vests in Section 2(1)(e) Court, Not Section 11 Authority; Waiver of Three-Member Tribunal by Conduct : SC

The Supreme Court dismissed appeals challenging a Patna High Court order that extended a sole arbitrator's mandate under Section 29A of the Arbitration and Conciliation Act, 1996, while rejecting a plea for a three-member tribunal. The Court held that the appellant had waived its right to object to the tribunal's composition by twice consenting to a sole arbitrator and participating in proceedings for 18 months. It also affirmed that a corporate debtor under CIRP may pursue arbitral claims for recovery, as the IBC moratorium does not bar such proceedings. Crucially, the Court ruled that jurisdiction under Section 29A vests exclusively in the 'court' defined in Section 2(1)(e) - the principal civil court or a High Court exercising original civil jurisdiction - not in the Chief Justice or designate acting under Section 11. The High Court's extension order was set aside on this ground, but the subsequent District Court extension rendered the error inconsequential. The embargo on the arbitral award was lifted with a direction to conclude proceedings within six weeks.

Background & Facts

The Dispute

The appellant, South Bihar Power Distribution Company Ltd., a distribution licensee under the Electricity Act, 2003, entered into a Distribution Franchisee Agreement dated 31.12.2013 with India Power Corporation (Bodhgaya) Ltd. (respondent No. 2), a special purpose vehicle incorporated as a 100% subsidiary of India Power Corporation Ltd. (respondent No. 1), which acted as the confirming party. The agreement provided for a three-member arbitral tribunal under Clause 17.2.5 for disputes unresolved through negotiation and a two-tier dispute resolution mechanism.

Key Facts

• 09.11.2016: Respondent No. 1 issued arbitration notice to appellant under Article 17 of the agreement.
• 04.04.2018: Patna High Court, in Request Case No. 77 of 2018, appointed Justice Shashank Kumar Singh (retired Judge) as sole arbitrator with consent of parties.
• 12.04.2018: Arbitration proceedings commenced.
• 12.05.2018: Arbitrator rejected appellant's application under Sections 13 and 16(1) as not pressed.
• 02.02.2019 & 28.03.2019: Appellant filed counter-claim and supplementary counter-claim before the arbitrator.
• 08.11.2019: NCLT Kolkata admitted CIRP against respondent No. 2 under Section 9 IBC and appointed an IRP.
• 28.05.2020: IRP made public announcement; appellant did not file claim.
• 10.03.2021: High Court, in Request Case No. 14 of 2020, appointed Justice Dipak Misra (former CJI) as new arbitrator with parties' consent.
• 07.04.2021: New arbitrator passed procedural order recording parties' no-objection to sole arbitrator composition.
• 07.08.2021: Extended period (12 months + 6 months by consent) expired; respondents filed Request Case No. 36 of 2021 seeking four-month extension.
• 13.02.2021: Committee of creditors approved resolution plan of Rankini Power Generation Pvt. Ltd.
• 18.07.2022: NCLT approved resolution plan.
• 28.08.2023: Respondent No. 2 renamed Vikriti Power Limited.
• 15.09.2023: High Court delivered impugned judgment allowing extension, rejecting three-member tribunal plea.

Procedural History

• 15.09.2023: High Court judgment in Request Case No. 36 of 2021 (allowed) and Request Case No. 78 of 2022 (rejected).
• 27403 of 2023: SLP(C) filed by appellant against High Court order.
• 12.02.2024: Supreme Court permitted arbitral proceedings to continue but directed award not to be declared.
• 21.01.2026: Supreme Court directed Principal District Judge-cum-Commercial Court, Patna to decide Section 29A(5) application (Arbitration Case No. 54 of 2024) within two months.
• 23.03.2026: District Court allowed extension of mandate by six months from date of judgment.
• 28.10.2026: Supreme Court pronounced judgment in Civil Appeal Nos. 9313 and 9325 of 2026.

The Parties' Positions

Appellant: Contended that Clause 17.2.5 mandated a three-member tribunal; consent to sole arbitrator was not informed waiver; respondent No. 1 was mere proforma party; respondent No. 2 lost locus standi post-CIRP; High Court lacked jurisdiction under Section 29A as only 'court' under Section 2(1)(e) could extend time.

Respondents: Argued appellant consented twice to sole arbitrator, participated for 18 months, filed counter-claims, and raised objection belatedly; respondent No. 2 as SPV was proper party to enforce agreement; RP authorized proceedings with CoC approval; High Court had jurisdiction under Section 29A.

Relief Sought

Appellant sought setting aside of High Court order dated 15.09.2023, appointment of three-member arbitral tribunal per agreement, and quashing of extension granted to sole arbitrator.

The Legal Issue

The Court addressed three questions: (1) Whether appellant's conduct constituted waiver of the agreement's three-member tribunal requirement under Section 4 of the 1996 Act; (2) Whether respondent No. 2, undergoing CIRP, retained locus standi to pursue arbitration for recovery of dues; (3) Whether the High Court exercising power under Section 11 qualifies as 'court' under Section 2(1)(e) to grant extension under Section 29A(4).

Arguments Presented

For the Appellant

Mr. Sundaram, senior counsel, submitted that Clause 17.2.5 expressly required a three-member panel; the High Court erred in finding waiver based on consent orders in Request Cases 77/2018 and 14/2020, as respondent No. 1 was only a confirming party and its consent immaterial. He argued respondent No. 2 ceased to exist post-resolution plan approval, extinguishing its capacity to arbitrate. On jurisdiction, he relied on State of West Bengal v. Associated Contractors and Jagdeep Chowgule v. Sheela Chowgule to assert that 'court' under Section 29A means the principal civil court or High Court with original civil jurisdiction, not the Section 11 appointing authority.

For the Respondent

Mr. Atmaram Nadkarni, senior counsel, supported the High Court's finding of valid consent and acquiescence. He emphasized that the arbitrator's procedural order recorded no objection to composition; appellant filed counter-claims and participated for 18 months. On locus, he cited RP authorization and CoC approval under Section 28(1)(h) IBC. He contended the High Court, having appointed the arbitrator, retained supervisory jurisdiction under Section 29A.

The Court's Analysis

Waiver and Acquiescence

The Court examined Section 4 of the 1996 Act, which deems a party to have waived its right to object if it proceeds with arbitration without stating objection without undue delay. It also considered Section 16(2), requiring jurisdictional pleas by the statement of defence stage. The Court found that appellant:

• Consented to Justice Shashank Kumar Singh's appointment in Request Case No. 77/2018.
• Consented to Justice Dipak Misra's appointment in Request Case No. 14/2020.
• Participated in proceedings for 18 months including extended period.
• Filed counter-claim and supplementary counter-claim.
• Did not challenge either Section 11 order, which attained finality.
• Raised composition objection only when respondents sought further extension.

"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."

The Court relied on Union of India v. Pam Development Private Limited, where participation in arbitration before a sole arbitrator despite a three-member clause constituted waiver under Sections 4 and 16. The High Court's finding of evident consent and clear acquiescence was affirmed.

Locus Standi of Corporate Debtor Under CIRP

The Court analyzed Section 14 IBC, which imposes moratorium on proceedings against the corporate debtor. It held the moratorium aims to protect the debtor from recovery actions, not to disable it from pursuing claims that would enhance its value. The arbitration sought recovery by the corporate debtor, which would bolster its financial health.

"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."

The RP's authorization of signatories, approved by CoC under Section 28(1)(h) IBC, validated the proceedings. The High Court correctly held that arbitrator, not courts, should decide issues framed including respondent No. 1's obligation under the award.

Jurisdiction Under Section 29A

The Court undertook a detailed interpretation of 'court' in Section 2(1)(e)(i): principal civil court of original jurisdiction in a district, including High Court exercising ordinary original civil jurisdiction. It traced the legislative scheme:

• Section 11(3A), (4), (6) assign appointment role to Chief Justice/designate - a specific, limited function.
• Section 42 confers exclusive jurisdiction on 'court' as defined for subsequent applications.
• Associated Contractors (three-Judge Bench) held Section 11 applications are outside Section 42 because Chief Justice is not 'court' under Section 2(1)(e).
• Jagdeep Chowgule and C. Velusamy expressly held Section 29A(4) power vests in Section 2(1)(e) court; Section 11 role exhausts upon tribunal constitution.
• Rohan Builders emphasized Section 29A's purpose: timely completion with judicial flexibility, but not by the appointing authority.

The Court concluded the High Court's assumption of Section 29A jurisdiction was legally unsustainable. However, the District Court's subsequent order of 23.03.2026 (pursuant to Supreme Court's 21.01.2026 direction) extending mandate by six months rendered the error inconsequential.

The Verdict

The Supreme Court dismissed both civil appeals. It upheld the High Court's findings on waiver of three-member tribunal requirement and respondent No. 2's locus standi during CIRP. It set aside the High Court's exercise of Section 29A jurisdiction as erroneous in law, but held the error immaterial given the District Court's valid extension order dated 23.03.2026 granting six months from that date. The Court lifted its 12.02.2024 embargo and directed the sole arbitrator to conclude proceedings and pass the award within six weeks from 28.10.2026. No costs were awarded.

What This Means For Similar Cases

Waiver by Conduct Is Irreversible After Substantial Participation

• A party that consents to a sole arbitrator's appointment not once but twice, participates in proceedings for 18 months, files counter-claims, and fails to challenge the appointment orders cannot later resile from that consent when faced with an adverse procedural development.
• Section 4 operates as a statutory estoppel: knowledge of non-compliance with the arbitration agreement coupled with continued participation without timely objection constitutes deemed waiver.
• Practitioners must advise clients to raise composition objections at the earliest opportunity - ideally before or at the statement of defence stage under Section 16(2).

Corporate Debtor Retains Right to Prosecute Claims During CIRP

• The IBC moratorium under Section 14 is a shield against creditor actions, not a sword preventing the corporate debtor from recovering its own dues.
• Arbitral proceedings initiated by the corporate debtor for recovery are permissible and even desirable, as successful claims enhance the estate's value.
• Resolution professional authorization with CoC approval under Section 28(1)(h) provides sufficient mandate for the debtor's representatives to pursue arbitration.
• Courts should not entertain locus standi challenges that properly belong to the arbitrator's kompetenz-kompetenz under Section 16.

Section 29A Jurisdiction Is Strictly Confined to the Defined 'Court'

• The 'court' for Section 29A extensions is exclusively the principal civil court of original jurisdiction or a High Court exercising ordinary original civil jurisdiction per Section 2(1)(e).
• The Chief Justice or designate acting under Section 11 performs a distinct, exhaustible appointment function; no residual supervisory jurisdiction over arbitral proceedings survives constitution of the tribunal.
• Applications for extension under Section 29A(5) must be filed before the Section 2(1)(e) court, not the High Court that appointed the arbitrator (unless that High Court also exercises original civil jurisdiction over the subject matter).
• Rohan Builders, Jagdeep Chowgule, and C. Velusamy form a consistent trilogy: Section 29A must be interpreted purposively to facilitate arbitration, but jurisdictional boundaries are rigid.

Practical Takeaways for Practitioners

• Drafting: Include clear timelines for raising tribunal composition objections in arbitration agreements; consider opting out of Section 4 waiver by express provision.
• Procedure: Calendar the Section 16(2) deadline (statement of defence) for jurisdictional pleas; file Section 29A(5) applications before the correct court - the commercial court or principal civil court, not the Section 11 appointing authority.
• CIRP Context: Resolution professionals should proactively authorize pursuit of arbitral claims; creditors should recognize that debtor-initiated arbitration benefits the estate.
• Appellate Strategy: Even if a jurisdictional error occurs at the High Court level under Section 29A, a subsequent valid extension by the proper court may cure the defect, as the Supreme Court demonstrated by refusing to disturb the District Court's order.