Case at a Glance
A power-distribution franchise dispute in Bihar had been before a sole arbitrator for years, though the agreement provided for a three-member tribunal. The Supreme Court held that the distribution company had waived its objection to the tribunal’s composition by consenting to appointments, extensions and filing counterclaims, and that the franchisee’s insolvency did not stop it from pursuing its own claims. But it ruled that only the “court” defined in Section 2(1)(e) of the Arbitration Act can extend an arbitrator’s mandate under Section 29A, not the High Court acting under Section 11. The appeals were dismissed and the arbitrator was directed to pass the award within six weeks.
South Bihar Power Distribution Company and India Power Corporation (Bodhgaya) Ltd. signed a distribution franchisee agreement on 31 December 2013 under the Electricity Act, 2003. Clause 17.2.5 provided for arbitration by a three-member panel. After a notice of arbitration on 9 November 2016, the Patna High Court, on consent, appointed a retired judge as sole arbitrator on 4 April 2018, and on 10 March 2021, again on consent, replaced him with a former Chief Justice of India. Meanwhile the franchisee entered insolvency; NCLT admitted the application on 8 November 2019 and a resolution plan was approved on 18 July 2022.
When an extension of time was sought before the High Court, the distribution company countered by seeking a three-member tribunal. The High Court decided both requests by its judgment of 15 September 2023, and the distribution company appealed. On 12 February 2024 the Supreme Court allowed the arbitration to continue but barred the declaration of the award. On 21 January 2026 it directed the District Court, Patna to decide a pending extension application, and on 23 March 2026 the Principal District Judge-cum-Commercial Court extended the mandate by six months.
The Key Question Before the Court
Did the distribution company waive its right to a three-member tribunal; could the insolvent franchisee pursue arbitration; and which court can extend the arbitrator’s mandate under Section 29A?
Waiver, moratorium and the Section 29A court
On composition, the Court noted that the appointment orders were never challenged and had become final. Under Section 4 (waiver) and Section 16(2) of the Arbitration and Conciliation Act, 1996, the appellant’s participation, its consent to extensions and its counterclaims meant “the appellant had clearly waived its right to object to the composition of the arbitral tribunal.” The Court followed Union of India v. Pam Development Pvt. Ltd., (2014) 02 SC CK 0079 On insolvency, it held that the Section 14 IBC moratorium does not bar a corporate debtor from pursuing its own claims; here the resolution professional had authorised the proceedings and the committee of creditors approved them.
On the third issue, relying on State of West Bengal v. Associated Contractors, (2014) 09 SC CK 0094, Jagdeep Chowgule v. Sheela Chowgule, (2026) 01 SC CK 1899, C. Velusamy v. K. Indhera, (2026) 02 SC CK 1741 and Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., (2024) 09 SC CK 0031, the Court held that only the “court” as defined in Section 2(1)(e) can extend time under Section 29A; the High Court acting under Section 11 cannot. The High Court’s contrary view was set aside. However, since the Commercial Court had already extended the mandate on 23 March 2026, this did not change the outcome.
What the Court Actually Held
- By participating, consenting to appointments and extensions and filing counterclaims, the appellant waived its objection to a sole arbitrator instead of a three-member tribunal (Sections 4 and 16(2)).
- The IBC moratorium under Section 14 does not prevent a corporate debtor from pursuing its own arbitral claims.
- Only the Section 2(1)(e) “court” can extend an arbitrator’s mandate under Section 29A; the High Court’s ruling on this point was set aside.
- The appeals were dismissed, the 12 February 2024 bar on the award was lifted, and the arbitrator was directed to conclude proceedings and pass the award within six weeks.
Why This Judgment Matters
- It settles a practical forum question that frequently delays arbitrations: where to file a Section 29A extension.
- It warns parties that long participation without objection can waive the agreed composition of a tribunal.
- It confirms that insolvency of a claimant does not freeze its own recovery claims.
What Should Advocates Take Away From the Judgment?
For Businesses
- If you object to how a tribunal is constituted, object early; participation may amount to waiver.
- An insolvent counterparty can still press its claims against you in arbitration.
- Extensions of time must be sought before the principal civil court, not the High Court under Section 11.
For Counsel
- File Section 29A applications before the Section 2(1)(e) court to avoid jurisdictional challenges.
- Cite Union of India v. Pam Development on waiver of composition objections.
- Check whether the resolution professional and CoC have authorised arbitration by a corporate debtor.
Key Takeaways
- Section 29A extension lies before the Section 2(1)(e) court only.
- Waiver under Sections 4 and 16(2) defeated the three-member tribunal plea.
- IBC moratorium does not bar a corporate debtor’s own claims.
- Award to be passed within six weeks.
Frequently Asked Questions
Can the High Court extend an arbitrator’s mandate under Section 29A?
Not while acting under Section 11. The Supreme Court held that only the “court” defined in Section 2(1)(e) of the Arbitration Act can extend time under Section 29A.
Can a party later insist on a three-member tribunal after agreeing to a sole arbitrator?
Here, no. The appellant consented to appointments and extensions and filed counterclaims, so it was held to have waived its objection under Sections 4 and 16(2).
Does insolvency stop a company from pursuing arbitration?
The Court held the Section 14 IBC moratorium does not bar a corporate debtor from pursuing its own claims, particularly where the resolution professional authorised and the CoC approved them.
Conclusion
South Bihar Power, (2026) 10 SC CK 3849 brings clarity on three recurring arbitration questions. Its most practical holding — that Section 29A extensions belong to the principal civil court — will guide where parties file, while its waiver ruling reminds them that conduct in arbitration has consequences.
Practical takeaway: File Section 29A extension applications before the Section 2(1)(e) court, and raise objections to tribunal composition at the outset or risk waiving them.
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