Analysing Jurisprudence On Extension Of Arbitrator's Mandate After Expiry Of Period U/S 29A Of A&C Act Before & After SC's Decision In Rohan Builders

IntroductionSection 29A was introduced into the Arbitration Act in 2015 to provide a clear-cut timeline within which an arbitral tribunal has to render an award. It provides that the mandate of the tribunal shall terminate if the award is not rendered within 12 months or a further extended period of 6 months as consented to by the parties. If the award is not rendered within that time period, the mandate of the tribunal is automatically terminated. Section 29A (4) further provides that an application can be filed before the court, either before or after the expiry of the mandate of the tribunal, to seek extension. The court can extend the mandate on sufficient cause being shown.In this article, we will unpack this issue with the help of statutory provisions and case laws.BackgroundThe Arbitration Act was enacted in 1996. It provides an alternate mechanism for resolving the disputes outside the traditional court system. The Act did not contain any provisions like its predecessor with respect to the timeline within which the arbitral proceedings have to be completed. The Act has been criticised by the legal experts for the inordinate delay it was causing, in resolving the disputes. Responding to these criticisms, section 29A was introduced into the Arbitration Act which provided a timeline within which the arbitral tribunal has to render an award.The insertion of section 29-A to the Act in 2016 is an intervention in the sense of mandating statutory timelines for making of the award. The earlier position in the form of section 28 of the Arbitration Act, 1940 provided the following: “28. (1) The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award. (2) Any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making .the award, shall be void and of no effect.”The erstwhile position in law thus makes it clear that the Court was empowered to extend the mandate for making the award regardless of whether the time had expired for making the award.Section 29-A changed all that and brought in not only strict time-limits for making of the award but also the concept of termination of the mandate if the award is not made within the prescribed statutory timelines.The question arises whether the mandate of the tribunal, under the new act, can be extended by the court even if the application seeking extension is filed after the expiry of the mandate. The courts had taken divergent views thereby creating unnecessary confusion. This confusion was finally put to rest by the Supreme Court in Rohan Builders (India) Private Limited Versus Berger Paints India Limited which will be analyzed in the later part of this article.Position Before Rohan Builders- Divergent Views of High CourtsVarious High Courts had strictly stated that the application to extend the mandate of the tribunal was required to be made before the expiry of the mandate. In the case of South Bihar Power Distribution Company Limited v. Bhagalpur Electricity Distribution Company Private Limited a Private Limited Company registered under the Companies Act, 1956[1], the Division Bench of the Patna High Court was of the view that even if the Court retains power to extend the mandate of the learned Arbitrator after expiry of the period so specified, an application or petition seeking such extension has to be made prior to expiry of the said extended period. Similarly, the Calcutta High Court followed the same path in Rohan Builders (India) (P) Ltd. v. Berger Paints India Ltd.[2] wherein it was observed that the application under section 29A (4) of the Act cannot be filed once the time period has expired. They referred to the 176th Law Commission Report which recommended the incorporation of section 29A into the Act. The court held as under:“The words “extended period” read with “……. the mandate of the arbitrator(s) shall terminate….” in section 29-A(4) unerringly presumes that the mandate is a continuing one at the time of making the application for extension. If the application is not made within a continuing mandate, the mandate shall simply terminate.”The court in the above case established that the mandate of the tribunal must not have expired when the application for seeking the mandate is filed. If the application is moved after the time period provided under section 29A (1) and (3) has expired, the court would then not be entitled to extend the mandate. The court interpreted the provision textually.As opposed to this, a learned Single Judge of the Delhi High Court in the case of ATC Telecom Infrastructure (P) Ltd. v. BSNL[3], in the context of Section 29A(4) and the power of the Court to extend the mandate, has observed as follows:“16. The purport of Section 29A of the A&C Act was clearly not to tie the hands of the parties or...

Analysing Jurisprudence On Extension Of Arbitrator's Mandate After Expiry Of Period U/S 29A Of A&C Act Before & After SC's Decision In Rohan Builders

Malik Chauhan & Tazeen Ahmed

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