C Velusamy v. K Indhera: Supreme Court on the Validity of an Award Rendered Post-Expiry of Arbitral Mandate
[Sia is a student at Gujarat National Law University.]
On 3 February 2026, the Supreme Court of India ruled in C Velusamy v. K Indhera (Velusamy ruling), that the courts can extend the arbitral tribunal’s mandate beyond the prescribed 18 months under Section 29A of the Arbitration and Conciliation Act 1996 (Act), even after an award is passed. However, the Supreme Court also categorically ruled that such award will be non-est and unenforceable under Section 36 of the Act, without regard for the circumstances surrounding the delay. This piece examines the ruling, its implications, and proposes a defined set of criteria that the courts can use for exercising their discretion in assessing awards rendered post-expiry of the arbitral mandate.
Factual Matrix of the Velusamy Ruling
The contractual relationship between the parties was governed by three agreements to sell. As disputes arose, a sole arbitrator was appointed by the Madras High Court in 2022. The pleadings were completed by August 2022, after which the 12-month statutory period under Section 29A (1) of the Act commenced. Before that period expired, the parties jointly agreed to extend the arbitrator’s mandate by another 6 months, thereby setting a new deadline of 20 February 2024. The final award was reserved on 30 January 2024.
However, the proceedings were adjourned due to the respondent claiming ongoing settlement talks, between the parties. The final award was ultimately passed on 11 May 2024, causing a delay of nearly 3 months after the statutory deadline of 20 February 2026.
Aggrieved, the respondent challenged the final award under Section 34 of the Act before the Madras High Court, claiming that the arbitrator’s mandate had already terminated before the final award was passed (Set Aside Application). The appellant, in turn, filed an application under Section 29A of the Act seeking extension of the arbitrator’s mandate (Extension Application).
The Madras High Court dismissed the Extension Application as not maintainable. The High Court held that an award passed after the expiry of the mandate is a nullity and as such, no extension can be granted. By a separate order, while relying on the aforesaid finding, the High Court allowed the Set Aside Application. Aggrieved, the appellant approached the Supreme Court.
As indicated above, the Supreme Court held that an arbitrator’s mandate can be extended even after the award is passed – thereby, reversing the High Court’s decision in the Extension Application (and therefore, also in the Set Aside Application). The Supreme Court remanded the Extension Application to the High Court for fresh consideration on merits, i.e., whether extension should be granted in the facts of the case.
Comment
Courts have previously held that an award passed after the statutory period (of 12 + 6 months) is a nullity and, therefore, patently illegal because once the 18 months lapse, the arbitrator loses their jurisdiction. However, the foundational purpose behind the introduction of Section 29A into the Act through the 2015 Amendment, which added Section 29A, was never to create a procedural guillotine capable of decapitating an already-rendered award. The 2015 Amendment added Section 29A to emphasize upon a deadline, while also establishing a threshold of 18 months from the date of completion of pleadings, in order to avoid unnecessary prolonging of the dispute.
Prima facie, the Supreme Court’s approach in this case aligns with Section 29A’s legislative history. Section 29A(4) provides that if an award is not rendered within the period of 1 year under sub-section (1) or under the 6-month extension under sub-section (3), the mandate of the arbitrator terminates. The language of the provision suggests that it addresses only non-rendition of the award, not post-expiry rendition. Despite that, the Supreme Court adopted a rigid approach and interpreted such an adverse situation within the scope of Section 29A, holding the award unenforceable under Section 36.
On the contrary, the Delhi High Court in Union of India v. Varindera Constructions Limited, while citing the Velusamy ruling, held that the statutory architecture of Section 29A of the Act must not be understood as a rigid mechanism intended to invalidate arbitral proceedings upon a mere lapse of time, but rather as a supervisory framework designed to ensure timely completion of the arbitration, while preserving the continuity of the adjudicatory process.
Further, the Law Commission of India in its 176th Report was emphatic in its concern that despite prolonged arbitrations defeating the very object of the dispute resolution mechanism, the proceedings must continue and an award must be rendered, because any result otherwise would not just be pointless, but also a massive waste of time and resources. The legislative intent underlying the provision is, thus, to ensure that arbitral proceedings culminate in a binding adjudication rather than being aborted on technical grounds.
The Supreme Court also elucidated upon certain foreign jurisdictions which recognized that a fixed time limit for the rendering of an arbitral award is not intended to frustrate the arbitral process. For instance, the statutory schemes of both, the English Arbitration Act 1950 and its successor, the English Arbitration Act 1996, make it clear that an agreed deadline for making an arbitral award does not automatically and irreversibly invalidate an award rendered late.
Similarly, in New York, it was held that an untimely award was not a nullity. Further, Article 31(2) of the ICC Rules allows courts to retroactively revive the tribunal’s mandate, and even render an award passed beyond the time limit valid. In 2023, the Privy Council in Alphamix Ltd. v. District Council of Riviere du Rempart (Mauritius) also upheld an arbitral award that had been annulled by the Mauritian courts on the basis that it was issued three days after the agreed deadline.
Beyond holding the award non-est and unenforceable, the Supreme Court remanded the matter back to the Madras High Court to decide the Extension Application on merits. It left it open to the Madras High Court to decide whether the arbitrator needs to be substituted, if the arbitrator’s fees should be reduced, or if costs are to be imposed upon the parties. If the Madras High Court rejects the Extension Application, the award continues to remain unenforceable, and the parties would be free to either settle, or restart the arbitration proceedings by appointing a new arbitrator. However, if the mandate is extended, endless possibilities open up and remain uncertain.
Since the award is non-est and isn’t cured by the retroactive extension of the arbitral mandate, the tribunal will pick up the thread from where it was left. As per the facts of this case, the extended time will begin from the day that the mandate terminated. If the arbitrator is not substituted, they will be motivated to render the same award again, which is in itself a wastage of time and resources, but also leaves open avenue for bias. If the arbitrator is substituted, they might require time to delve into the merits of the case and decide accordingly, which is also time-consuming.
Recommendations
In the author’s humble opinion, keeping the precedents, judicial opinions, and foreign jurisdictions of persuasive value in mind, the Supreme Court should have remanded the matter of revitalisation of the award back to the Madras High Court. The references that the Supreme Court took inspiration from while deciding the retrospective extension of an arbitral mandate also provided for a detailed understanding of how the non est awards should be retroactively validated.
Not commenting or opining on the same while ruling against that position without any justification creates confusion and uncertainty around the matter, and facilitates a perverse incentive mechanism. It allows the losing party an avenue to engineer a delay upon foreseeing an unfavourable award, and unnecessarily extend the litigation in order to harass the other party, or gain an undue benefit. Remanding the matter back to the Madras High Court would allow the High Court to delve into the merits of the case and examine whether there exists sufficient cause for revitalisation, or if the award must continue to stand invalid.
Further, since Section 34 does not envision mere lapse of time as a sufficient cause to set aside the award, the High Court should exercise its discretion in examining the non est award using a defined set of criteria, inclusive of multiple facets, such as the timeline of the award, commencing from when the award was ready to be delivered, to when it was actually rendered.
Along with the timeline, the High Court may dive deep into the reasons attributable to the delay, including any involvement of parties in the delayed award, any prejudice caused to the parties by the delay of the award, and good faith on part of the arbitrator as well as the parties. Upon appropriate analysis and application of these criteria in the relevant context, the High Court may grant the applicable extension to cure the procedural defect retroactively. This approach would align with the Law Commission’s suggestions that the arbitral process must ultimately yield an enforceable award, as well as resolve the issue created by the lacuna in Section 29A.
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