3 July 2023 4:30 AM GMT
The High Court of Delhi has held that 2019 Amendment to Section 29A of the A&C Act is procedural in nature and would apply to all arbitrations that were pending on the date of its coming into force. By way of the amendment, the time limit of 12 months for rendering an award was to be calculated from the date of the completion of proceedings and not from the date when the arbitrator...
The High Court of Delhi has held that 2019 Amendment to Section 29A of the A&C Act is procedural in nature and would apply to all arbitrations that were pending on the date of its coming into force. By way of the amendment, the time limit of 12 months for rendering an award was to be calculated from the date of the completion of proceedings and not from the date when the arbitrator entered reference as provided under the unamended Section.
The bench of Justice Anup Jairam Bhambhani extended the time period for rendering an arbitration award after considering the peculiar facts of the cases including the death of two arbitrators, recusal by the third arbitrator and the delay caused by the Covid-19 pandemic.
The parties entered into a lease deed dated 05.07.2016 by which the petitioner leased out to the subject premises to respondent. The agreement contained an arbitration clause.
A dispute arose between the parties when the respondent defaulted on its obligation to pay rental amounts. Accordingly, the petitioner issued the first termination notice, however, the parties entered into a settlement agreement dated 08.06.2017. Despite the settlement agreement, the respondent continued to default to pay monthly rent which led to the issuance of second termination letter. The petitioner directed the respondent to hand-back the possession of the subject premises, however, it failed to do that as well which led the MCD to seal the premises.
Thereafter, on 14.12.2018, the petitioner invoked the arbitration clause and issued the notice of arbitration and requested the DIAC to initiate arbitration. DIAC appointed a former Judge of Delhi High Court as the arbitrator, the parties filed their statements before the tribunal.
However, on 21.05.2019, the arbitrator passed away. Accordingly, DIAC substituted the arbitrator. The pleadings in the case were completed on 29.08.2019. However, before an award could be passed, the second arbitrator also passed away on 23.04.2021. During this time, by way of the 2019 amendment to the A&C Act, Section 29A of the Act was amended and the time limit of 12 months for rendering an award was to be calculated from the date of the completion of proceedings and not from the date when the arbitrator entered reference as provided under the unamended Section. Also, the Supreme Court also excluded time from 15.03.2020 till 28.02.2022 from the purview of limitation.
On the expiry of the second arbitrator, DIAC appointed the third arbitrator, who also recused himself from continuing with the proceedings. Finally, the fourth arbitrator was appointed on 16.09.2021. On 21.12.2021, the petitioner approached the Court for the extension of time for rendering an award. Finally, the award was passed on 30.08.2022, however, it was not delivered to the parties due to non-payment of arbitral fees by the respondents.
Contention of the parties
The petitioner sought the extension of the time on the following grounds:
The respondent made the following arguments against the extension of time:
Analysis by the Court
Firstly, the Court examined the issue of application of the 2019 amendment to Section 29A of the Act. The Court held that the 2019 amendment to Section 29A was only procedural in nature, therefore, it was to apply retrospectively to all pending arbitrations.
The Court held that the pleadings having been completed on 29.08.2019, the arbitrator, in terms of the amended Section 29A, was to deliver the award within 12 months from the date of completion of pleadings. However, during this time the Covid-19 pandemic came and the Supreme Court excluded time from 15.03.2020 till 28.02.2022 from the purview of limitation, therefore, the period of 12 months stood expired on 16.08.2022.
The Court observed that the arbitrator delivered the award to DIAC on 30.08.2022 and there is a marginal delay of 14 days in the rendering of the award but that is on account of certain exceptional circumstances in the form of unfortunate death of the two arbitrators and the recusal of the third arbitrator.
Moreover, the petitioner had filed the petition much within the period of limitation and acted with caution, therefore, the Court allowed the petition and extended the period of limitation till the date on which the award was rendered.
Case Details: Harkirat Singh Sodhi v. Oram Foods Pvt Ltd
Citation: 2023 LiveLaw (Del) 538
Counsel for the Petitioner: Ms. Chaand Chopra with Mr. Siddharth Shekhar and Mr. Adwaith Sreekumar, Advocates with petitioner in-person
Counsel for the Respondent: Ms. Ripu Adlakha, Advocate for R1 and 2, Ms. Deepti Kathpalia & Ms. Aksa Thomas, Advocates for R3.
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