2019 Amendment To Section 29A Of The Arbitration & Conciliation Act, 1996 Is Procedural In Nature; Applies To All Pending Arbitrations: Delhi High Court

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.

Facts

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 pleadings were complete as on 29.08.2019 and in view of the 2019 amendment to Section 29A, the award was to be rendered within 12 months from the date of completion of pleadings i.e., by 28.08.2020.
• However, in the meantime the Covid-19 pandemic came and the Supreme Court excluded the period from 15.03.2020 till 28.02.2022 from the purview of limitation. Therefore, only 197 days were passed till 15.03.2022 and the arbitrator still had 168 days to make the award.
• 168 days expired on 16.08.2022, however, the award was passed only on 30.08.2022. There is a marginal delay of mere 14 days.
• The delay is occasioned on account of unfortunate demise of the two arbitrators and the recusal of the third arbitrator. Moreover, the petition seeking extension of time was filed much before the time period actually got expired, therefore, the Court should extend the time till 30.08.2022 i.e., the date on which the award was actually rendered.

The respondent made the following arguments against the extension of time:

• The 2019 amendment to Section 29A is prospective in nature and it would only apply to arbitrations that commenced post the coming into force of the amendment.
• In terms of the unamended Section 29A, the award was to be rendered within 12 months from the date of entering reference. Therefore, the period of 12 months expired on 08.01.2020 and the benefit of exclusion of time period due to covid-19 would not be available in the case.
• Moreover, in terms of Section 29A r/w Section 23(4), the entire pleadings including the rejoinder must be completed within 6 months from the date of reference, however, in the present case, the parties completed pleading much after the expiry of 6 months period.
• The mandate of the arbitrator already stood terminated on 08.01.2020 on account of his failure to make the award within the 12 months period, the award passed by him on 30.08.2022 is without jurisdiction and there cannot be any extension of time once the mandate has already been terminated.

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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