Consent and Participation Waive Objection to Sole Arbitrator Despite Three-Member Clause; Section 11 Appointment Does Not Confer Section 29A Extension Power: Supreme Court

Case Name: South Bihar Power Distribution Company Ltd. v. India Power Corporation Ltd. & Anr.

Date of Judgment: 28 October 2026.

Citation: 2026 INSC 1165.

Bench: Justices Ujjal Bhuyan and Atul S. Chandurkar.

Held: The Supreme Court held that a party which consented to the appointment of a sole arbitrator, participated in the proceedings, filed counterclaims and agreed to an extension of time could not belatedly insist upon a three-member tribunal stipulated in the arbitration agreement. Such conduct constituted waiver and acquiescence under Sections 4 and 16 of the Arbitration and Conciliation Act, 1996. The unchallenged orders appointing the arbitrators had also attained finality.

The Court further held that appointment of an arbitrator under Section 11 does not confer jurisdiction upon the appointing High Court to extend the tribunal’s mandate under Section 29A. That power belongs to the “court” defined in Section 2(1)(e): the principal civil court of original jurisdiction in a district, or a High Court exercising ordinary original civil jurisdiction. It also affirmed that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 does not necessarily prevent a corporate debtor from pursuing arbitration to recover its own dues.

Summary: The dispute arose from a tripartite Distribution Franchisee Agreement dated 31 December 2013 between South Bihar Power Distribution Company Ltd., India Power Corporation Ltd. and its special purpose vehicle, India Power Corporation (Bodhgaya) Ltd. Although the agreement provided for a three-member arbitral tribunal, the Patna High Court appointed a sole arbitrator with the parties’ consent in April 2018. When that arbitrator could not continue, the High Court appointed former Chief Justice of India Dipak Misra as the substitute sole arbitrator in March 2021, again with consent.

South Bihar Power participated in the arbitration, filed a counterclaim and supplementary counterclaim, and consented to an extension of time. However, when the respondents sought a further extension, it challenged the tribunal’s composition and sought appointment of three arbitrators in accordance with the agreement. It also disputed the special purpose vehicle’s competence to pursue arbitration following insolvency proceedings and challenged the High Court’s jurisdiction to extend the mandate under Section 29A.

Rejecting the challenge to the tribunal’s composition, the Supreme Court emphasised the appellant’s repeated consent, participation and failure to challenge the appointment orders. The objection could not be revived at the belated stage of an application for further extension.

On insolvency, the Court upheld the special purpose vehicle’s competence to pursue its recovery claim. The resolution professional had authorised its signatories to continue the arbitration, with approval of the committee of creditors. The Court distinguished proceedings against a corporate debtor, which attract the statutory moratorium, from proceedings pursued by the corporate debtor for recovery of amounts due to it.

However, the Supreme Court rejected the High Court’s conclusion that its power to appoint an arbitrator under Section 11 also empowered it to extend the mandate under Section 29A. It reiterated that Section 11 jurisdiction stands exhausted upon constitution of the tribunal and leaves no residual supervisory or controlling power over the arbitration. A Section 11 application also does not attract Section 42 so as to reserve subsequent applications to the appointing court.

This jurisdictional correction did not disrupt the arbitration because the Principal District Judge-cum-Commercial Court, Patna had subsequently granted a six-month extension on 23 March 2026, following the Supreme Court’s direction to consider the extension application.

Decision: The Supreme Court affirmed the High Court’s findings on waiver of the three-member tribunal requirement and the special purpose vehicle’s competence to pursue arbitration, but set aside its finding on jurisdiction to grant an extension under Section 29A.