Introduction of Section 29A to the Arbitration and Conciliation Act, 1996 (the “Act”), by way of an amendment in 2015, marked a significant event in the arbitration regime in India. It recognised the sluggishness that had crept into arbitration proceedings and provided for strict timelines for making of an award. The section was further amended in 2019, pursuant to recommendations of Justice B N Srikrishna committee.
Consequently, the amended Section 29A states that, in matters other than international commercial arbitration, the award shall be made within a period of twelve months from the date of completion of pleadings.[1] This period can be extended by a period of six months by mutual consent of the parties.[2] However, if the award is not made within the said (or extended) period, the tribunal’s mandate stands terminated, unless the same is extended by Court either prior to or after the expiry of the period so specified.[3] The Court can extend the period on an application made by either party, and only for sufficient cause.[4]
One pertinent question that has repeatedly been up for Courts’ consideration is whether an application to extend an arbitral tribunal’s mandate, under Section 29A, is tenable after the award has been rendered (i.e. when the award was rendered after the expiry of the stipulated time frame)? While there seemed to be a concurrence of views amongst High Courts, a recent divergent decision of the Kerala High Court has given rise to a debate that whether the Courts have any residuary/ inherent power to extend the mandate of an arbitral tribunal after making of the award.
This blog attempts to analyse the string of such judgments where applications under Section 29A (4) were made after the award had already been rendered by the tribunal.
Madras HC leads the way
One of the earliest decisions on this aspect was delivered by the Madras High Court in Suryadev Alloys and Power Pvt. Ltd. v. Shri Govindraja Textiles Pvt. Ltd.[5](“Suryadev”)The Court highlighted the distinction between the scope of the provisions of the 1940 and 1996 Arbitration Acts. It observed that under Section 28(1) of the 1940 Arbitration Act, the Court had the express authority to extend the time even after the award was made. However, Section 29A of the 1996 Act contains no such provision. According to Section 29A(4), if the award is not made within the stipulated or extended period, the arbitrator’s mandate is automatically terminated unless the Court grants an extension. Consequently, even the Court cannot retroactively ratify an award by extending the period, particularly in a petition under Section 34 of the Act seeking to set aside the award.
Delhi HC concurs
Madras High Court’s view in Suryadev was echoed by the Delhi High Court in Powergrid Corporation of India Ltd. v. SPML Infra Ltd.[6](“PCIL”)wherein it dismissed the application filed for extension of the tribunal’s mandate on the ground that the award has already been delivered. The High Court observed that the wordings of Section 29A clearly conveys that the deadlines specified under Section 29A of the Act are mandatory, and the award must be necessarily delivered within those timelines. It further reasoned that “Section 29A of the Act, 1996 contains no express specification (like Section 28 of the Arbitration Act, 1940) enabling the Courts to grant an extension after an award has been made. Had the legislature intended the import of Section 28 of the Arbitration Act, 1940 to be applicable to Section 29A of the Act, the same would not have been excluded from the words of the provision. Section 29A (4) of the Act clearly provides that if the award is not made within the specified period, the mandate of the Arbitrator shall terminate unless the Court has, either prior or after the expiry of the period so specified, extended the period. It clearly envisions that the proceedings must be still pending (and not concluded).The application of extension of time may be made even after the expiry of the mandate of the arbitrator, but only in the situation where the award has not been announced and the proceedings are still pending.”[7]
The Delhi High Court upheld its view in the recent case of National Skill Development Corporation v. Best First Step Education Pvt. Ltd.[8] It held that an application under Section 29A of the Act, if filed before the award is delivered, is maintainable if the award is delivered during its pendency. However, an application will not be maintainable if filed after the award is delivered and proceedings to set it aside have begun. The Court observed that this distinction is justifiable based on the premise that a party cannot opt for an extension of the mandate after learning of its fate in the arbitration proceedings and facing a challenge to the award on this ground.
Divergent views of Kerala HC
However, the Kerala High Court in its recent judgment in RKEC Projects Ltd. v. Cochin Port Trust[9] took a contrary view and held that the Court is empowered to extend the arbitral tribunal’s mandate even after pronouncement of the award, in appropriate cases with sufficient cause. The Court observed that the arbitrator’s mandate remains in effect until the disposal of such extension-seeking application made either before or after the expiry of the mandate under Section 29A (5) of the Act. Further, the termination of the Arbitrator’s mandate under Section 32 of the Act does not completely remove the Court of its powers to consider future applications. The said termination is subject to the powers of extension of the mandate as provided under Section 29A(3) and (4) of the Act.
Conclusion
It is pertinent to note that Section 28 of the Arbitration Act, 1940 expressly empowered the Court to extend the time for making an award, regardless of whether the award has been made or not. It may be prudent to conclude, as has been done by High Courts of Madras and Delhi, that the absence of this express provision in the 1996 Act depicts the intent of the legislature to restrict the powers of the Courts under Section 29A of the Act to pre-award timeline.
Further, as has been observed by the Delhi High Court in PCIL, the proviso Section 29A (4) of the Act states that if the Court finds that the delays in proceedings are attributable to the arbitral tribunal, it may order reduction of fee of arbitrators’ fees by up to 5% for each month of delay. Evidently, there cannot be an order for the reduction of fee of the arbitral tribunal once the award has been rendered. Once the proceedings are concluded, the fee already stands paid and there can be no occasion for the Court to consider the return of fees. Consequently, if the mandate is extended after the award is announced, then this proviso to sub-section 4 would be practically rendered nugatory.
Similarly, Section 29A (6) of the Act provides that while considering the application for extension of the period under sub-section 4, the Court may substitute one or all of the arbitrators and if such substitution is made, the arbitral proceedings shall continue from the stage already reached. Indubitably, this provision can be given effect only if the proceedings are pending as there is no occasion for substitution of the arbitrator(s) after the award has been announced.
Therefore, a conjoint reading of the sub-sections of Section 29A of the Act makes the legislature’s intent to allow extensions only to pending arbitration, fairly certain.
It will be interesting to see how the Hon’ble Supreme Court interprets the scope and limits of power of the Courts under Section 29A of the Act.[10] Till then, in light of the conflicting opinions of the High Court, it would be prudent to be mindful of the timeframe prescribed under the Act and file an application for extension of arbitral tribunal’s mandate within the stipulated (or extended) deadline.
For further information, please contact:
Vikash Kumar Jha, Partner, Cyril Amarchand Mangaldas
vikashkumar.jha@cyrilshroff.com
[1] Section 29A (1).
[2] Section 29A (3).
[3] Section 29A (4).
[4] Section 29A (5).
[5] 2020 SCC OnLine Mad 7858.
[6] 2023 SCC OnLine Del 8324.
[7] Supra Para 33.
[8] 2024 SCC OnLine Del 1479.
[9] 2024 SCC OnLine Ker 4192.
[10] Vide its order 30.07.2024 in a batch of Special Leave Petitions (SLP (C) No. 23320/2023 and others), the Hon’ble Supreme Court has reserved judgment on the question of law, that is, interpretation of Section 29A of the Arbitration and Conciliation Act, 1996.
