South Bihar Power Distribution Company Ltd. Vs India Power Corporation Ltd. & Anr. (Supreme Court of India)
Section 11 Appointment Does Not Confer Power to Extend Arbitral Mandate: Supreme Court
Summary: The Supreme Court considered two connected appeals arising from the Patna High Court’s common judgment dated 15 September 2023 in Request Case Nos. 78 of 2022 and 36 of 2021. The controversy arose from a tripartite Distribution Franchisee Agreement executed on 31 December 2013 among South Bihar Power Distribution Company Ltd., India Power Corporation Ltd. and India Power Corporation (Bodhgaya) Ltd., a special-purpose vehicle incorporated to implement electricity distribution franchise obligations. Clause 17.2.5 expressly envisaged arbitration by a panel of three arbitrators. Nevertheless, when disputes arose and arbitration was invoked, the Patna High Court appointed Justice Shashank Kumar Singh as sole arbitrator on 4 April 2018 with the parties’ consent. After that arbitrator became unable to continue, the High Court appointed former Chief Justice of India Justice Dipak Misra on 10 March 2021, again with consent. The appellant subsequently objected to the sole-arbitrator arrangement when respondents sought further extension of the mandate under Section 29A of the Arbitration and Conciliation Act, 1996.
The Supreme Court examined the parties’ conduct in light of Sections 4 and 16 of the Arbitration and Conciliation Act. Both orders appointing sole arbitrators had remained unchallenged and acquired finality. The replacement arbitrator’s procedural order dated 7 April 2021 recorded that the parties had no objection to the tribunal’s composition. The appellant had also participated in the proceedings, filed a counterclaim on 2 February 2019 and a supplementary counterclaim on 28 March 2019, and consented to an additional six months for completion of the arbitration. Section 4 deems a party to have waived an objection where it knows of non-compliance with a derogable statutory provision or contractual requirement but continues without objecting promptly. Section 16(2) ordinarily requires a jurisdictional plea by the time the statement of defence is submitted. Applying Union of India Vs. Pam Development Private Limited, the Court concluded that the appellant had waived its objection and acquiesced in the sole arbitrator’s jurisdiction. The contractual stipulation for three arbitrators could not be revived at the late stage of a further extension application.
A separate objection arose because corporate insolvency resolution proceedings had commenced against the special-purpose vehicle. The NCLT, Kolkata, admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, on 8 November 2019 and appointed an interim resolution professional. 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 the corporate debtor was renamed Vikriti Power Limited from 28 August 2023. The appellant argued that the insolvency proceedings and the corporate debtor’s alleged cessation of existence disabled the arbitration. Rejecting this objection, the Supreme Court affirmed that Section 14 of the IBC is designed to protect the corporate debtor against debt-recovery actions brought against it, not to extinguish claims pursued by the debtor for its own recovery. Successful recovery could strengthen the corporate debtor’s finances and value. The Court further noted that the resolution professional had authorised pursuit of arbitration with committee-of-creditors approval in compliance with Section 28(1)(h).
The Supreme Court has clarified that appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 does not confer continuing jurisdiction on the appointing court to extend the arbitral mandate under Section 29A. That power belongs to the “court” defined in Section 2(1)(e).
The Court also held that a party which consented to a sole arbitrator and participated extensively in the proceedings could not subsequently insist upon the contractual requirement of a three-member tribunal. Further, the IBC moratorium did not prevent the corporate debtor from pursuing its own recovery claim through arbitration.
The judgment in South Bihar Power Distribution Company Ltd. v. India Power Corporation Ltd. & Anr., 2026 INSC 1165, was delivered on 28 October 2026 by Justice Ujjal Bhuyan and Justice Atul S. Chandurkar.
Background of the arbitration dispute
South Bihar Power Distribution Company Ltd., a distribution licensee, selected India Power Corporation Ltd. as the successful bidder for a distribution franchise.
A special purpose vehicle, India Power Corporation (Bodhgaya) Ltd., was incorporated to perform the franchise obligations. The parties entered into a tripartite Distribution Franchisee Agreement dated 31 December 2013.
The agreement provided for disputes to be resolved through an arbitral tribunal comprising three arbitrators.
However, when disputes arose, the Patna High Court appointed a sole arbitrator with the parties’ consent. When that arbitrator could not continue, the High Court appointed a replacement sole arbitrator, again by consent.
The appellant participated in the proceedings, filed a counterclaim and supplementary counterclaim, and consented to an extension of time.
When a further extension was sought, it objected to the tribunal’s composition and requested appointment of three arbitrators.
Consent and participation amounted to waiver
The Supreme Court rejected the belated objection.
It noted that the appellant had consented to the appointment of the sole arbitrator on two occasions. The appointment orders had not been challenged and had therefore become final and binding.
The tribunal’s procedural order also recorded that the parties had no objection to its composition.
Applying Section 4, the Court explained that a party which knows of non-compliance with a contractual arbitration requirement but proceeds without objecting within the prescribed time may waive its right to object.
The Court also considered Section 16(2), under which a jurisdictional plea ordinarily must be raised no later than submission of the statement of defence.
Taken together, the appellant’s consent, participation, counterclaims and agreement to extend time established waiver and acquiescence. It could not revive the contractual objection at the stage of a further extension application.
IBC moratorium did not bar the debtor’s recovery claim
During the arbitration, insolvency proceedings commenced against the special purpose vehicle. A resolution plan was subsequently approved, and its name changed to Vikriti Power Ltd.
The appellant questioned the entity’s entitlement to continue the arbitration.
The Supreme Court agreed with the High Court that Section 14 of the Insolvency and Bankruptcy Code, 2016 does not necessarily prohibit a corporate debtor from initiating or pursuing proceedings to recover its dues.
The moratorium protects the debtor against recovery action that could adversely affect insolvency proceedings. A successful claim by the debtor, however, could improve its financial position and enhance its value.
The Court additionally noted that the resolution professional had authorised pursuit of the arbitration, with approval of the committee of creditors under Section 28(1)(h).
Accordingly, the insolvency objection did not invalidate continuation of the claim.
Which court can extend the arbitral mandate?
On jurisdiction, the Supreme Court disagreed with the High Court.
For the domestic arbitration concerned, Section 2(1)(e)(i) identifies the competent court as the principal civil court of original jurisdiction in the district, including a High Court exercising ordinary original civil jurisdiction where applicable.
The appointment function under Section 11 does not alter that definition. Once the tribunal is constituted, the appointing court does not retain a residual supervisory power merely because it made the appointment.
The Court also clarified that a Section 11 application does not, by itself, attract Section 42 so as to reserve subsequent arbitration applications to the appointing court.
Therefore, the High Court’s conclusion that its Section 11 role empowered it to grant the extension was legally unsustainable.
Extension remains subject to sufficient cause
The Court reiterated that an application under Section 29A may be entertained even after expiry of the stipulated mandate.
However, extension is not automatic. The competent court must examine the circumstances, assess sufficient cause and exercise its discretion carefully.
In this case, the Principal District Judge-cum-Commercial Court, Patna, had already granted a further extension pursuant to an earlier Supreme Court direction. Consequently, correcting the High Court’s jurisdictional ruling did not materially affect continuation of the arbitration.
Final decision
The Supreme Court upheld the findings on waiver and insolvency, set aside the High Court’s conclusion on extension jurisdiction, and ultimately dismissed the appeals without costs.
It lifted its earlier restriction against declaring the award and directed the arbitrator to conclude the proceedings by passing an award within six weeks.
Cases Discussed
- Rohan Builders (India) (P) Ltd. Vs Berger Paints (India) Ltd.; (2025) 10 SCC 802 — Section 29A extension applications remain maintainable after expiry of the statutory mandate.
- C. Velusamy Vs K. Indhera; (2026) 5 SCC 340 — Explains extension of mandates and the statutory court under Section 29A.
- Lancor Holdings Ltd. Vs Prem Kumar Menon; (2026) 4 SCC 392 — Referred to within the Court’s discussion of the Section 29A framework.
- Jagdeep Chowgule Vs Sheela Chowgule; (2026) 5 SCC 667; 2026 INSC 92 — Section 11 appointing courts do not automatically exercise Section 29A jurisdiction.
- Union of India Vs Pam Development Private Limited; (2014) 11 SCC 366 — Participation without timely objection can amount to waiver of the contractual tribunal-composition requirement.
- State of West Bengal Vs Associated Contractors; (2015) 1 SCC 32 — Interprets Section 2(1)(e) and the exclusive-jurisdiction operation of Section 42.
- Chief Engineer (NH) PWD (Roads) Vs M/s BSC & C and C JV; SLP(C) No. 10544 of 2024; 13.05.2024 — Confirms that Section 29A(4) jurisdiction vests in the court defined under Section 2(1)(e).
