Extending The Mandate Of An Expired Arbitral Tribunal: Feasible Under The Law?

Update: 2024-06-09 14:30 GMT
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Section 29A of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the “A&C Act”) addresses the timeframe for issuing an arbitral award and when this deadline can be extended. However, there is an ongoing uncertainty and debate due to conflicting court rulings as to whether the arbitration tribunal's mandate can be extended before its expiration or only after it...

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Section 29A of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the “A&C Act”) addresses the timeframe for issuing an arbitral award and when this deadline can be extended. However, there is an ongoing uncertainty and debate due to conflicting court rulings as to whether the arbitration tribunal's mandate can be extended before its expiration or only after it has already expired and when an application for such an extension can be filed.

Section 29A was inserted by way of an amendment to the A&C Act, in the year 2015. Its aim was to prescribe a time limit for the completion of arbitration proceedings. It stated that the award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference, but the provision was silent as to whether the twelve-month period applied to both domestic and international commercial arbitrations or not. A need was felt that the timeline fixed for conducting domestic arbitrations under section 29A should commence after the completion of pleadings and that international commercial arbitrations should be exempted from adhering to a timeline of twelve months for making an award. Hence, the High-Level Committee chaired by Justice B N Srikrishna, set up to review the institutionalization of the arbitration mechanism in the country, made the following recommendations, in relation to Section 29A: -

  1. A new sub-section may be inserted in section 29A limiting the applicability of the section to domestic arbitrations only. International commercial arbitrations may be left outside the purview of the timelines provided in Section 29A.
  2. Section 29A(1) may be amended such that the time in section 29A(1) starts to run post completion of pleadings. Further, a time period of 6 months may be provided for submission of pleadings.
  3. Section 29A(4) may be amended to provide that if an application under Section 29A(5) is filed before a court, the mandate of the arbitral tribunal continues till the application is disposed.
  4. Section 29A(9) may be amended to add if the application is not disposed of within the period mentioned therein, it is deemed to be granted.
  5. A new sub-section should be inserted in Section 29A providing that where the court seeks to reduce the fees of the arbitrator(s), sufficient opportunity should be given to such arbitrator(s) to be heard.

Thereafter, Section 29A was further amended in 2019, and it required the arbitration proceedings to be completed within a period of twelve months from the date of completion of pleadings in domestic arbitrations whereas the arbitral tribunals in international commercial arbitrations were only expected to make an endeavor to complete the proceedings within twelve months from the date of completion of pleadings and were not bound to abide by the time limit prescribed for domestic arbitrations. Furthermore, Section 29A(3) stated that the parties can extend the period of twelve months by another six months by mutual consent.

Section 29A(4) states that if the award is not passed within the period of twelve months from the date of completion of pleadings or within the extended period of six months, the parties can file an application to the court for extending the mandate of the arbitral tribunal. The provision is clear that the tribunal's mandate can be extended even after the expiry of the specified period but it is silent as to when the application for extension can be filed – whether it can be filed before or after the expiry of the time limit for making an arbitral award under Section 29A? There has been a divergence of opinions by various High Courts of the country and it is pertinent to discuss some judgments on the issue at hand. 

In the matter of Rohan Builders (India) Private Limited v Berger Paints India Limited, 2023 LiveLaw (Cal) 266, the High Court of Calcutta held that Section 29A of the A&C Act contemplates making of the award within the prescribed statutory timelines and that the timelines are to be read as mandatory limits where the arbitrator and the parties to the arbitration are required to be conscious and vigilant of the cut-off dates for applying for extension of the mandate of the arbitral tribunal. Hence, the application for an extension must be made during the continuation of the mandate and not thereafter. The said decision was challenged before the Supreme Court in SLP No. 23320/2023 titled Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., which is pending adjudication. In another judgment titled, Vrindavan Advisory Services LLP v. Deep Shambhulal Bhanushali, the Calcutta High Court followed its decision in Rohan Builders (supra), and the Supreme Court in SLP(C) 24489/2023, stayed the operation of the said judgment. Recently, in Multiplex Equipments and Services Pvt. Ltd. v. Bagzone Lifestyles Pvt. Ltd. 2024 SCC OnLine Cal 174, the Calcutta High Court observed that the pendency of the SLP in Rohan Builders (supra) ought not to disadvantage the petitioner, and the arbitration proceedings cannot be kept in abeyance.

However, in Wadia Techno-Engineering Services Limited v. Director General of Married Accommodation Project, 2023 SCC OnLine Del 2990, the Delhi High Court held that the mandate of the arbitral tribunal can be extended either prior to or after the expiry of the period so specified. In this matter, the arbitration proceedings had reached the stage of final arguments and the arbitrator had proceeded with due expedition in the conduct of the proceedings. Hence, the Court opined that there was sufficient cause for the extension of the mandate of the arbitral tribunal. It was also held that there was no justification in the text of the statute or on a purposive interpretation thereof, to hold that the power can only be exercised on an application filed prior to the expiry of the mandate. Again, in ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam Ltd., 2023 DHC 8078, the Delhi High Court disagreed with the judgment of Rohan Builders (supra) and held that that the mandate of the arbitral tribunal can be extended either prior to or after the expiry of the period so specified. It was held that an application for the extension of the arbitral tribunal's mandate can be filed either before the expiry of the period referred to under Section 29A(1) or Section 29A(3) of the A&C Act or even thereafter and when the Court has been specifically empowered to grant the requisite extension even after expiry of the specified period, it would not be apposite to read a proscription in the statutory provision to the effect that an application seeking extension of time must be filed before expiry of the specified period and not thereafter.

The High Court of Madhya Pradesh in Rajesh Kaila V. Union Of India And Ors, Misc. Civil Case No. 2855 of 2022, extended the mandate of the tribunal for a period of four months on an application made after the expiry of the prescribed period under Section 29A as the time which had elapsed after the initial period of 12 months was attributable to the pandemic and the proceedings were at the stage of final hearing. In Nikhil H. Malkan v. Standard Chartered Investment and Loans (India) Ltd. (2023:BHC-OS:14063), the Bombay High Court  disagreed with the views expressed by the Calcutta High Court in the case of Rohan Builders (supra) and held that there was nothing in the provision to indicate that if an application is not filed before the expiry of the mandate of the arbitrator, the Court would be rendered powerless to exercise its authority. It was held that Section 29A is a provision that enables the Court to pass appropriate orders in order to ensure that the arbitral proceeding reaches its logical conclusion and no purpose would be served in holding that if an application for extension of mandate of the arbitrator is filed after the expiry of the mandate, the Court would be in no position to entertain the same.

Recently, in the matter of M/S Power Mech Projects Ltd Vs M/S Doosan Power Systems India Pvt. Ltd., 2024 LiveLaw (Del) 654, the Delhi High Court was unable to follow the decision of the Calcutta High Court in Rohan Builders (supra) and held that the expression used in Section 29A(4) of the A&C Act is “prior to or after expiry of the period so specified”, hence, it is fully empowered to extend the mandate, even after expiry of the mandate of the tribunal. In the present case, the mandate of the tribunal expired on 4th February, 2024, and the application for the extension of the mandate of the tribunal was filed on 23rd February, 2024.

A conspectus of the narration above indicates that there is nothing in Section 29A that prohibits the filing of an application for the extension of the mandate of an arbitral tribunal after the statutory mandate of the tribunal has expired. The judgment in Rohan Builders (supra) has not been followed by various High Courts as discussed above. It has been held by numerous High Courts that the court is fully empowered to extend the mandate of the tribunal even after its expiry. Now, time will tell as to whether an extension application has to be filed before the expiry of the tribunal's mandate or can the same be filed after the expiry as well, as the matter is pending before the Supreme Court of India. It will also be clear as to whether the mandate of the tribunal terminates upon the expiry of the time provided under Section 29A unless extended during its subsistence. The questions that will require balancing are the deadlines as well as party autonomy under the A&C Act including the intention of the parties in resolving the disputes effectively in a time-bound manner. 

(the author is an Advocate and can be reached at muneebrashidmalik@gmail.com. He tweets @muneebmalikrash. Views are personal).

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