Arbitrator's Mandate Can Be Extended If Non-Completion Of Proceedings In 12 Months Is Due To Delays Not Attributable To Petitioner: Himachal Pradesh HC

The Himachal Pradesh High Court bench of Justice Ranjan Sharma has held that the mandate of the Arbitrator can be extended under Section 29A of the Arbitration and Conciliation Act, 1996 (Arbitration Act) if the arbitral proceedings are not completed within 12 months due to reasons not attributable to the petitioner, as failing to do so would cause grave prejudice to the petitioner. Brief Facts: Pursuant to Notification under Section 3(A) of the National Highways Act, 1956, the Central Government published a Notification to acquire the stretch of land Mandi-Gagal-Baggi-Janjehi and Shimla via Churag - Karsog, [NH-21] for building, widening, maintenance, management and operation of said Highway in State of Himachal Pradesh. Consequently, the land belonging to petitioner at Village Behna, Tehsil Balh, District Mandi [HP] was acquired by Competent Authority/Land Acquisition( CALA) in terms of an Award. The Petitioner filed a reference against the award before the Arbitrator cum Divisional Commissioner, Mandi Division, Mandi. The arbitral proceedings were closed and the mandate of Arbitrator was treated to have been terminated on the ground that arbitral proceedings could not be completed within the time schedule as per Section 29A(1) and Section 29A(3) of the Arbitration Act. This order of terminating the mandate of the Arbitrator has been challenged before this court. The Petitioner submitted that the delay in arbitration was due to administrative reasons therefore terminating the mandate of the Arbitrator would prejudice the parties. Accordingly it was prayed that the time for completion of the Arbitral proceedings be extended ith directions to Learned Arbitrator-cum-Divisional Commissioner concerned to conclude the proceedings. Observations: The court observed that arbitration is a consensual process and under sections 29A(1) and 29A(3) of the Arbitration Act, the Arbitrator has to complete the arbitral proceedings within 12 months which may further be extended by 6 months. In totality, the Arbitral proceedings have to be completed within 18 months. It further added that though, the arbitral proceedings under Section 29A(1) and Section 29A(3) are to be completed within 18 months period yet in case due to unforeseen eventualities the arbitral proceedings are not completed within 18 months, then the law-makers were conscious enough by prescribing a remedy under Section 29A(5), for extending the period of arbitral proceedings, only for sufficient cause and on such terms and conditions, as may be imposed by the Court. The court observed that the arbitration was initiated in 2018 which was delayed beyond 18 months due to the COVID pandemic (2020-2022), administrative constraints of the Arbitrator( Divisional Commissioner) and procedural lapses by the Respondent- NHAI. Since both parties participated in the arbitral proceedings without any objection beyond 18 months, the parties should not suffer due to reasons not attributable to the petitioner. It further said that once the parties to arbitral proceedings have consensually participated in arbitral proceedings since 2018 till February, 2024 then, the Impugned Order terminating the mandate of Arbitrator and keeping the arbitral proceedings in abeyance by passing the Impugned Order on 16.02.2024 has certainly prejudiced the parties to the arbitral proceedings which cannot be permitted to operate, resulting in prejudice to the parties herein. The court noted that the delays in arbitration were caused by the COVID, procedural lapses by NHAI and the administrative duties of the Arbitrator as Divisional Commissioner. These reasons constituted a bona fide and genuine cause for the non-completion of proceedings. The Supreme Court in TATA Sons Pvt. Ltd.(Formerly TATA Sons Ltd.) vs. Siva Industries and Holdings Ltd. and others (2023) held that “in terms of Section 29A(4), in case the arbitral award was not rendered within the twelve or eighteen month period as the case may be, the mandate of the arbitrator(s) would stand terminated, unless on an application made by any of the parties, the court extended time on sufficient cause being shown.” Similarly, the Supreme Court in Rohan Builders (India) Private Limited versus Berger Paints India Limited (2024) held that under Section 29A(5), the power of the court to extend the time is to be exercised only in cases where there is sufficient cause for such extension. Such extension mechanically on is not filing granted of the application. The court concluded that once the Arbitrator has permitted parties to participate in the proceedings even after expiry of 18 months, the Arbitrator cannot late say that he cannot proceed with the arbitral proceedings since his mandate stood terminated. Such action of the Arbitrator would prejudice the parties which defeats the principle of “Actus Curiae Neminem Gravabit”. ...

Arbitrator's Mandate Can Be Extended If Non-Completion Of Proceedings In 12 Months Is Due To Delays Not Attributable To Petitioner: Himachal Pradesh HC

Mohd Malik Chauhan

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