S.29A Of Arbitration Act As Amended By 2019 Amendment Governs All Pending Arbitrations After Coming Into Force: Sikkim High Court

The Sikkim High Court bench of Justices Bhaskar Raj Pradhan and Biswanath Somadderhas held that section 29A, as amended by the 2019 Amendment, shall apply to all arbitration proceedings that were pending at the time the amendment came into force. Brief Facts: The present appeal has been filed under section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) against an order passed the Commercial Court at Gangtok that had set aside the arbitral award dated 23.02.2023 on the ground that the sole Arbitrator had become functus officio after the expiry of the time period prescribed under Section 29A(4) of the Arbitration Act as amended by the Arbitration and Conciliation (Amendment) Act, 2015. Consequently, the arbitral award dated 23.02.2023 was held to be non est in law and unenforceable. The appellant and the respondent entered into an agreement for formation and surfacing work on the Gangtok–Nathula Road in Sikkim. The appellant terminated the agreement on 12.12.2013 as the work could not be completed within the extended period. The respondent invoked the arbitration clause and sought appointment of an arbitrator. A sole Arbitrator was appointed on 21.03.2019, and the parties were informed of the appointment on 18.04.2019. Pleadings were completed on 27.01.2022. According to the appellant, the respondent consented on 07.02.2023 to extend the time for concluding the arbitration proceedings until 30.03.2023. However, the respondent disputes this, claiming that any consent given was conditional. The arbitral award was passed on 23.02.2023 in favour of the appellant. On 14.07.2023, the respondent filed a petition under Section 34 of the Arbitration and Conciliation Act before the Commercial Court at Gangtok, challenging the award. The court, by its order dated 09.02.2024, set aside the arbitral award. The Appellant submitted that since the arbitration proceeding was pending as on 30.8.2019 when the Arbitration and Conciliation (Amendment) Act, 2019 ( 2019 Amendment) came into force, section 29-A as amended by the 2019 Amendment, would be applicable. Observations: The court at the outset observed that upon examining the communication dated 07.02.2023, it is evident that the respondent, despite adding a caveat, consented to extend the arbitration period, stating the extension was granted in anticipation of a lawful award. It further observed that under Section 29A(3) of the Arbitration Act, parties may extend the time to make an award by up to six months. Assuming 27.01.2022 as the date of completion of pleadings, the initial 12-month period under Section 29A(1) would end around 26.01.2023. The respondent's consent on 07.02.2023 would validly extend the time until approximately 26.07.2023. Hence, the award dated 23.02.2023 falls within the permissible period and is not time-barred. The Supreme Court in Tata Sons Pvt. Ltd. vs. Siva Industries and Holdings Ltd after noting the conflicting judgments rendered by various High Courts on the issue whether the 2019 Amendment is retrospective or prospective in nature held that In Shapoorji Pallonji & Co. (P) Ltd. v. Jindal India Thermal Power Ltd. (2020), the Delhi High Court held that amended Section 29A(1) of the Arbitration Act, being procedural in nature, would apply to pending arbitrations as of the date of the amendment. The Apex Court further noted that however, a coordinate Bench in MBL Infrastructures Ltd. v. Rites Ltd. (2020) held it to be prospective, without referring to Shapoorji Pallonji. The conflict was resolved in ONGC Petro Additions Ltd. v. Ferns Construction Co. Inc. (2020), where the Court reaffirmed the view in Shapoorji Pallonji, holding that Section 29A(1) applies to all arbitrations seated in India that were pending as on 30.08.2019 and commenced after 23.10.2015. It further held that no strict timeline applies to international commercial arbitrations seated in India. Similarly, the Supreme Court in Union of India vs. M.K. Infrastructures (P) Ltd. held that Section 29-A(1) as amended by the 2019 Amendment and not the 2015 Amendment would govern the procedure to be followed by the arbitrator as Union of India the arbitration was pending when the 2019 Amendment was brought into force on 30.08.2019. Since the arbitration was pending when the 2019 Amendment came into operation therefore the present case would also be governed by this amendment only, the court said. The court concurred with the view taken by the Delhi High Court in Shapoorji Pallonji and ONGC Petro Additions Ltd., which examined the amended Sections 23(4) and 29A(1) introduced by the 2019 Amendment. These decisions held that the Arbitration Act, being procedural in nature, applies to arbitrations pending as on the date of the amendment. This interpretation was subsequently endorsed by the Supreme Court in Tata Sons. Based on the above, the court held...

S.29A Of Arbitration Act As Amended By 2019 Amendment Governs All Pending Arbitrations After Coming Into Force: Sikkim High Court

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S.29A Of Arbitration Act As Amended By 2019 Amendment Governs All Pending Arbitrations After Coming Into Force: Sikkim High Court

Mohd Malik Chauhan

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