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Jurisdiction Divergence: Calcutta HC Right and Delhi HC Wrong in S.29A(4) Extension Decision



Why Calcutta HC[1] is right and Delhi HC[2] wrong in deciding whether the court has jurisdiction to entertain an extension of time application under Section 29A(4) of the A&C Act filed after the expiration of the period so specified?

 

I.            THE CONTROVERSY OR THE ISSUE BEFORE THE TWO COURTS:

 

     The section in Question:

 

Ingredients of S.29A relevant for the present:

 

·       Section 29A sets a 12-month time limit for Arbitral Tribunals to complete proceedings and issue an award from the completion of pleadings.

 

·       Parties can agree to extend this period by an additional six months.

 

·       If the award isn't made within the 12 months or the extended six months, the arbitrator(s)' mandate ends unless the court has, either prior to or after the expiry of the period so specified, granted an extension.

 

·       The court can only grant an extension upon application by any party and for valid reasons.

 

·       If there's a pending application related to the arbitration, the mandate of the arbitrators continues until the application is resolved.

 

Facts in Question

 

The parties before the two courts, in all the applications except one, had moved the court after the expiry of the period specified in S.29A. The Respondents in the Applications refused to give consent for the extension and also objected to the jurisdiction of the court to grant extension after the termination of the mandate of the arbitrator on expiry of the period specified in S.29A(2) & (3) of the Act.

 

 

The Issue

 

Whether the Court has the jurisdiction to entertain an application under S29A(5) of the Act for an extension of the period for making an award after the expiry of the period specified in S.29A(2) and (3) of the Act. In other words, if a party wants an extension of the period for making an award it must file an application for extension before the expiry of the mandate of the arbitral tribunal.

 

II.           THE DECISION OF THE TWO COURTS

 

(i)           Calcutta High Court

The Calcutta High Court extensively delves into the legislative intent and purpose behind Section 29-A, referring to insights from the 176th Law Commission Report on the Arbitration and Conciliation (Amendment) Bill, 2001. The court notably highlights the significance of the term "extension" as opposed to "renewal or revival." Through a meticulous examination of the statutory framework in Section 29-A, the judgment presents a scholarly, logical, and reasoned analysis.

 

In summary, it states the following:

 

(i)                  Section 29-A(4) and (5) do not provide for further extensions beyond 18 months from the completion of pleadings unless the court grants an extension based on a party's application and sufficient cause.


(ii)                Section 29-A of The Arbitration Act introduces a structured framework, departing from the discretionary approach of section 28 in the 1940 Act. Unlike the earlier provision, it enforces strict time limits for arbitration and allows the termination of the arbitrator's mandate if the award isn't made within prescribed timelines. Extensions beyond 18 months from pleading completion are only allowed when the court, prompted by a party's application demonstrating sufficient cause, grants approval. This legislative shift indicates a deliberate move towards a more regulated and time-bound arbitration approach.


(iii)               The Law Commission's 176th Report emphasizes expeditious arbitration resolution with minimal court intervention, proposing section 29-A to deter delays. However, the suggested ‘suspension’ of the arbitrator's mandate after statutory timeline expiration (section 29-A(1) or (3)) and before filing an extension application (section 29-A(4)) was rejected in favor of "termination" under section 29-A(4). This means the arbitrator's mandate to deliver the award within 12 months after completing pleadings or the extended 6-month period is conclusively terminated once specified timelines expire, without remaining in suspension until the extension application is filed.


(iv)               Sections 29-A(3) to (7) of the Arbitration Act emphasize the term "extension" in the context of the arbitrator's mandate. The second proviso to section 29-A(4) specifically envisions the pendency of an application for an extension rather than the filing of an application, suggesting that the mandate can only persist if the application is submitted before the mandate's expiration. The deliberate use of the term "extension" and the absence of "renewal" or "revival" in section 29-A(4) imply that the arbitrator's ongoing mandate is crucial for applying for an extension.


(v)                 The objective of section 29-A is to expedite the arbitration process, as highlighted in the 176th Law Commission Report, which aimed to reduce delays and costs associated with arbitral awards in India. The overall focus is on expeditiously concluding arbitration, emphasizing that parties must take prompt steps for extending the arbitrator's mandate within the mandate's subsistence rather than after its expiration. This interpretation aligns with the overarching goal of settling disputes through alternative dispute mechanisms swiftly and efficiently.


(vi)               Section 29-A of The Arbitration and Conciliation Act, 1996 establishes mandatory timelines for making awards, emphasizing the need for arbitrators and parties to be vigilant of cut-off dates for applying for an extension of the arbitral tribunal's mandate. Allowing extensions after the specified period's expiry would undermine the statute's expeditionary purpose and diminish award-making timelines' significance.


(vii)             If an award is made after the timelines expire, it's a jurisdictional error because there's no automatic renewal of the tribunal's mandate after termination. Once terminated under Section 29-A(4), the arbitrator or tribunal can't perform functions, and the court can't extend it, regardless of the circumstances or when consent was refused.

 

(ii)          Delhi High Court


In the Delhi High Court, the respondent argued that since the mandate of the arbitrator in the first reference has expired, the court lacks jurisdiction to entertain the petition under Section 29A(4) of the A&C Act, citing the Calcutta High Court's judgment in Rohan Builders (India) (P) Ltd. v. Berger Paints India Ltd.


However, the court, relying on Delhi HC’s Wadia Techno-Engineering Services[3] and Reliance Infrastructure[4] decisions, and the Kerala High Court's judgment in Hiran Valiiyakkil Lal[5] asserted that Section 29A(4) can be invoked even after the mandate's expiry.

The Delhi High Court while noting the reasons enumerated in Rohan Builders expressed disagreement with its reasoning and conclusion on the following grounds:


(i)                  Section 29A of the A&C Act, while regulating timelines for arbitral proceedings, does not impose an inflexible outer deadline. It provides flexibility for extension, allowing parties and the court to seek additional time when warranted, even if the petition under Section 29A(4) is filed after the prescribed period's expiration.


(ii)                If the legislature intended a blanket prohibition on extensions after the specified period, it would have explicitly stated so.


(iii)               The Law Commission's 176th Report, extensively cited in Rohan Builders, envisions a statutory framework that significantly differs from the enacted provisions. Selectively focusing on one aspect of the Law Commission's report, such as the suspension of arbitral proceedings, is inappropriate. Concluding that Section 29A(4) of the Act, as enacted, precludes extensions after the prescribed period due to the absence of "suspension" and the presence of "termination" overlooks and nullifies the deliberate deviations in the actual statutory provisions from the Law Commission's recommendations.


(iv)               The Supreme Court has taken the view in several cases that although the recommendation/s of the Law Commission or Parliamentary Standing Committees afford extrinsic guidance for the interpretation of statutory provisions in certain situations, there are also limitations on such reliance.


(v)                 Unlike the recommendation in the 176th report of the Law Commission, the statutory provision, as actually engrafted, specifically provides that “the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period”.


(vi)               Section 29A(4) of the Act gives the court the authority to decide on the termination of the arbitrator(s)' mandate, either before or after the specified period expires. The court can make this decision upon the filing of a petition under Section 29A(4), whether it is submitted before the expiration of the period mentioned in Section 29A(1) or Section 29A(3) or even afterwards. The statute does not prohibit filing a petition seeking an extension of time under Section 29A(4) after the specified period has ended. On the contrary, the court is explicitly empowered to grant an extension even post the specified period's expiration.


(vii)             The judgment in Rohan Builders acknowledges that the court can grant an extension of time under Section 29A(4) of the Act, provided a petition is filed before the expiration of the time period specified in Section 29A(1) or Section 29A(3). This recognition undermines the judgment's own reasoning, as it initially concludes that the mandate of the arbitral tribunal cannot be extended after termination, without a statutory provision for "revival" or "renewal" of the mandate.


(viii)           The present case highlights how the stance in Rohan Builders could hinder rather than serve legislative intent. Here, the arbitrator efficiently handled proceedings, with parties consenting to extend the time for completion. Denying an extension solely because the Section 29A(4) petition was filed shortly after the Section 29A(3) period's expiry goes against Section 29A(4) language and undermines arbitration efficiency and party autonomy.


(ix)               The Court is also bound by the view taken by a Co-ordinate bench of this Court in Wadia Techno-Engineering Services.


While Calcutta HC tried to unravel the reasons behind the addition of S.29A by going into the legislative intent and 176th Law Commission Report which was the bedrock of the S.29 Amendment in 2015, the Delhi HC simply relies upon the earlier decisions of the Delhi High Court in Wadia and Reliance and Kerala High Court in Hiran Valiiyakkil.


III.          Let’s see what the decisions in Wadia, Reliance and Hiran Valiiyakkil state:


Wadia: 

The Delhi High Court rejected the argument that the power under Section 29A (4) cannot be used after the mandate of the arbitral tribunal expires. The court, without detailed interpretation of Section 29A, in one para, held that the provision allows the court to extend the period even after expiry. It found no justification in the statute's text or its purposive interpretation to restrict the exercise of this power to applications filed before the mandate expires.


Reliance:

In this case, two issues were considered: one related to jurisdiction, and the other involved determining whether the petition suffered from delay and laches and whether there was sufficient cause for allowing it. The only discussion about the second issue is in Para 39 of the judgment which is also quoted in the ATC judgment as below:


“37. In any event, in terms of Section 29A (4) and (5) of the Act, the mandate of the Arbitrator can be extended by the Court even after the expiry of the time for making the arbitral award on sufficient cause being shown by the party making the application.”


Evidently, the Court did not consider any arguments regarding the court’s jurisdiction to entertain an extension Application under S.29(5) after the expiry of the specified period in S.29(1) & (3). There is no discussion at all on this aspect.  


Hiran Valiiyakkil:

In this case, the primary argument by the Respondent for opposing the Application for extension was that since, after the expiry of twelve months from the date of completion of pleadings, the parties have not, by consent, extended the period for making the award, the mandate of the arbitrator cannot be extended, as sub-section (4) applies only in case of an extended period specified under sub-section (3).


While rejecting the above submission, the Court clarified that the use of the conjunction "or" in S.29A(4) also applies in cases where the award is not made within the extended period not exceeding six months specified in sub-section (3).


The Kerala High Court was not dealing with the argument raised in Rohan Builders and ATC Infrastructure. It simply made a reference to S.29A(4) and read what the Section reads, i.e., the sub-section (4) provides that the Court is empowered to extend the period for making the award either prior to or after the expiry of the said period.

 

As stated above, none of the cases cited by the Delhi HC in support of its interpretation dealt with the specific arguments raised in the Calcutta HC.  Therefore, the reliance upon the above three judgments by the Delhi HC was not appropriate.


IV.         Now let’s see why Calcutta HC is right and Delhi HC is wrong.


To address this issue, we must assess the validity of the argument suggesting that the court loses jurisdiction to consider a petition for extending the time to render an award after the arbitrator's mandate has expired under Section 29A(4) of the Act.


The Calcutta High Court has placed significant emphasis on the "termination of the mandate of the arbitrator" in this context. According to the court, once the mandate is terminated, extension becomes unfeasible. The extension relies on continuity, but once the mandate is terminated, continuity is disrupted, and consequently, the court cannot extend the mandate.


(i)           So, what does the “the mandate of an arbitrator” mean under the Act? 


In legal terms, a "mandate" generally refers to an official command, instruction, or authorization given to someone to carry out specific actions or duties. It can also signify the authority granted to an individual or entity to act on behalf of another, often within a particular scope or context. The legal definition of "mandate" can vary depending on the specific area of law and jurisdiction.


In the context of arbitration proceedings, the term "mandate" generally refers to the authority given to an arbitrator or arbitral tribunal to conduct the arbitration and make a final and binding decision on the dispute between the parties. The mandate outlines the scope of the arbitrator's authority, including the issues to be resolved and the powers granted to them.


The key aspects related to the "mandate" in arbitration:


Authority to Adjudicate: The mandate empowers the arbitrator to adjudicate and render an arbitral award. It specifies the matters or claims that fall within the scope of the arbitration.

Scope of Dispute: The mandate defines the limits of the dispute that the arbitrator has the authority to decide. It may encompass specific claims, counterclaims, or other issues raised by the parties.


Timeframe: The mandate may include provisions related to the time within which the arbitrator must conclude the proceedings and issue the final award.


Procedural Decisions: The mandate grants the arbitrator the authority to make procedural decisions, such as determining the applicable rules, selecting the venue, and deciding on evidence and witnesses.


(ii)          What does the termination of the mandate of an arbitrator mean under the Act


Key points related to the termination of the mandate of an arbitrator include:


Expiry of Timeframe: In some arbitration agreements or laws, there may be a specified time frame within which the arbitrator must render the final award. If the arbitrator fails to do so within the prescribed period, the mandate may terminate.


Completion of the Arbitration: The mandate of an arbitrator typically terminates upon the completion of the arbitration proceedings, including the issuance of the final arbitral award. Once the award is rendered, the arbitrator's authority comes to an end.


Statutory Provisions: Arbitration laws, such as Section 29A of the Arbitration and Conciliation Act in the provided legal context, may specify conditions under which the mandate of the arbitrator terminates. This could include the expiration of the time frame for making the award.


Court's Decision: In certain situations, a court may intervene and terminate the mandate of an arbitrator based on legal provisions. This could happen, for example, if there are procedural irregularities or challenges to the arbitrator's impartiality.


Extension of Mandate: In some cases, the mandate of an arbitrator may be extended either by mutual agreement of the parties or by court order, depending on the legal framework.

Finality of Decision: The arbitrator's decision within the mandate is typically considered final and binding on the parties, subject to limited grounds for challenging the award.


Therefore, in the context of arbitration proceedings, the "termination of the mandate of an arbitrator" refers to the conclusion or expiration of the arbitrator's authority to conduct the arbitration and make decisions on the dispute. The termination of the mandate is a significant event in the arbitration process and may occur under certain circumstances, often as outlined in relevant arbitration laws or agreements.


(iii)       Whether the wording "mandate of the arbitrator shall terminate" in the Act means that after the expiry of the period under S.29A, the mandate will automatically terminate, and any court is not required to give a ruling on the termination of the mandate.


The answer is, yes. The language used in the statute is crucial for interpretation. If the statute clearly mandates automatic termination, it indicates a legislative intent to have a definite endpoint for the arbitrator's mandate without the necessity for additional judicial intervention.


If the statute explicitly states that the "mandate of the arbitrator shall terminate," it implies an automatic termination of the arbitrator's mandate after the specified period under Section 29A has expired. In such a case, the termination is automatic, and there may not be a need for a separate court ruling or order to effectuate the termination. The termination would take effect by operation of the statute. The Calcutta HC has taken this position, and correctly so.


The above proposition finds strength from various recent judgments which hold that the award passed after the expiry of the stipulated period under S.29A would be without jurisdiction and hence nullity.[6] The arbitrator becomes functus officio after that period and, therefore, seizes to be an arbitrator.[7] 


In 2010, predating the enactment of Section 29A, the Supreme Court, in NBCC Ltd. v. J.G. Engineering Private Ltd.[8], addressed whether courts possessed the authority to extend the time stipulated by parties for the arbitral award—an issue resolved negatively, asserting that courts lacked the power to do so, emphasizing that the mandate of the arbitrator or arbitral tribunal terminates upon the expiration of the agreed-upon period. However, the impact of this decision has been diluted by the introduction of Section 29A.


Another significant judgment arose in the case of Jayesh H. Pandya & Anr. v. Subhtex India Ltd. & Ors[9], where the question of the validity of an award rendered after the specified period in the agreement was deliberated. Given that the agreement was entered into prior to the enactment of Section 29A, the judgment was based on the unamended Act. The court held that the agreement between the parties is conclusive and binding on both parties and the arbitrator; once the stipulated period expires, and one of the parties objects to the extension of time or the award's issuance, the arbitrator or arbitral tribunal becomes functus officio, rendering any subsequently issued award invalid.


(iv)         Can a court extend the mandate of an already terminated mandate of an arbitrator?


Typically, the concept of extending the mandate of an already terminated mandate of an arbitrator may seem contradictory. Once the mandate of an arbitrator is terminated, it implies that the authority of the arbitrator to act in the arbitration proceedings has ended.

If the legislature had explicitly used terms like "revival" or "renewal" in conjunction with the mandate of the arbitrator, it might have conveyed a clearer intention to bring the mandate back into effect after its termination. The absence of such explicit language could be construed as a deliberate choice by the legislature.


The argument here is that the legislature, by using the term "terminate," has intended a definitive and conclusive end to the arbitrator's mandate. Without specific language indicating an extension or revival post-termination, one could argue that the legislative intent was for the mandate to conclude with finality.


(v)          How to explain the words “either prior to or after the expiry of the period so specified”, in S.29A(4) of the Act


History of S.29A and its proviso


The history of the addition of S.29A in the 2015 amendment is duly captured by the Calcutta HC in Para 21 of the judgment.


After noting the relevant paras in the 176th Law Commission Report of 2001 about S.29A, the Calcutta HC concluded that the Law Commission's proposal for “suspension” of the arbitrator's mandate after the expiry of statutory timelines under section29-A(1) mandate did not find favour with the Legislature as the concept of suspension was jettisoned and "termination" of the mandate was inserted under section 29-A(4). 


Meaning thereby, that the mandate of the arbitral tribunal to make the award within would stand terminated once the timelines under S.29A are exhausted. The mandate would not remain in suspension till filing of the application for extension of the mandate under section 29-A(4) or (3).


Now, let’s see what S.29A(4) is:


S.29A(4): If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period.

             

The Second Proviso to this Section is of utmost relevance:

             

Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application.


(vi)         Appointment of a High-Level Committee in 2017


Originally, Section 29A(4) did not contain the Proviso when S.29A was added by the 2015 amendment. Following the 2015 amendments, the Ministry of Law and Justice, Government of India, established a High-Level Committee in January 2017 to assess the institutionalization of arbitration mechanisms in India and propose reforms. Chaired by Justice (Retd.) B. N. Srikrishna, a former Supreme Court Judge, the committee submitted its report on July 30, 2017.


The Committee discussed the reason for the introduction of Proviso to S.29A(4) briefly in the following way:


Second, by forcing parties to approach the court where the arbitral proceedings are not completed within twelve months, section 29A(4) paves the way for more judicial involvement, contrary to the objective of the ACA of limiting judicial intervention. This provision is regressive and resurrects section 28 of the Arbitration Act 1940, which had empowered the court to extend the time for making the award. Judicial intervention at this stage could lead to more delays, particularly given that the mandate of the arbitral tribunal may have terminated during the pendency of the application before the court. The Committee notes that section 29A(9) provides for the application to be disposed of within a 60-day period; however, this provision may only be directory and not mandatory.


Recommendation of the Committee


The Committee amongst other things recommended further amendments to the Act to clear ambiguities in the legislation and promote the use of India as a seat of arbitration. The Committee recommended the following amendments to the S.29A of the Act:


Timelines under section 29A of the ACA – Amendments may be made to section 29A:


(a) to limit its application to domestic arbitrations only, and not international commercial arbitrations;

 (b) to provide for a 6-month period for the submission of pleadings;

(c) to provide that the time limit for completion of arbitral proceedings starts to run the aforementioned 6-month time period;

(d) to provide for the continuation of the mandate of the arbitral tribunal during the pendency of an application to extend the time limit;

(e) to provide that the application is deemed granted if it is not disposed of within the period mentioned in section 29A; and

(f) to provide for sufficient opportunity for hearing the arbitrator(s) where the court seeks to reduce the fees of the arbitrator(s).


From the 2019 amendment, it’s clear that all the recommendations of the Committee except the one which provided for the deemed grant of the extension application if it is not disposed of by the Court within the period mentioned in section 29A were accepted and added in the Act.


Hence, it is crucial to emphasize that the language "either prior to or after the expiry of the specified period" in Section 29A(4) of the Act has been in place since the 2015 amendment. However, the proviso mentioned earlier was introduced only in the 2019 amendments based on the recommendations of the High-Level Committee.


As can be seen from the excerpt of the recommendation, the suggestion to add a proviso was to prevent the termination of the mandate during the pendency of the application. The absence of such a provision in the pre-2019 S.29A created challenges in avoiding termination during the extension application's pendency. Therefore, the proviso ensures that once the extension application is filed, the mandate remains active even after the expiration of the period under S.29A(1) and (3) of the Act. This squarely aligns with the Calcutta HC's conclusion that both parties' consent and the court's application for extension must occur before the mandate expires.


(viii)       Whether Calcutta HC’s interpretation is sound and logical

 

Now, let's further examine the Calcutta HC's justification that the phrase "either prior to or after the expiry of the period so specified" in S.29A(4) of the Act pertains only to the Court's power to extend the "period so specified" mentioned in section 29-A(1) or section 29-A(3) and does not relate to any application for extending the arbitrator's mandate.

 

For that, we will have to examine the purpose and significance of the proviso in the context of the legislative intent behind Section 29A of the arbitration law. Here’s an articulation of the argument:

·       The specific provisions within Section 29A of the arbitration law aim to regulate the time frames for the conclusion of arbitration proceedings and the passing of awards. The proviso in Section 29A(4) serves a distinct purpose, and its interpretation is crucial to understanding the legislative intent.

·       Interpretation of the Proviso: The provision in Section 29A(4) is explicitly articulated to manage a specific scenario where an application under sub-section (5) is pending, ensuring the continuity of the arbitrator's mandate until the resolution of said application. This provision distinctly focuses on maintaining the arbitrator's authority during the pendency of an application for an extension.

·       Jurisdictional Limits: the legal significance of the termination of the arbitrator's mandate implies the end of their legal authority to continue proceedings or to entertain applications for extensions. Once the arbitrator's mandate terminates, the court lacks the legal authority or jurisdiction to entertain any applications related to the arbitrator’s mandate or the arbitration process.

·       Redundancy Argument: If the law intended to permit the filing of an application for an extension after the expiry of the specified period for passing the award, the inclusion of the proviso would seem redundant. The proviso's specific mention solely to address the scenario of a pending application under sub-section (5) reinforces that its purpose is to safeguard the arbitrator's authority during ongoing procedural matters, not to facilitate the submission of an extension application after the expiry of the mandate.

·       Legislative Intent: The presence of the proviso signifies the legislature's intent to grant continuity during the pendency of specific applications. If the law intended to allow applications for extension post the mandate's expiration, there would be no need for a special provision. This reinforces the notion that the law intends to maintain strict adherence to time limits and conclude the arbitration process within the stipulated time frames.

In summary, the distinct mention of the proviso in Section 29A(4) serves the purpose of ensuring the continuity of the arbitrator's mandate during the pendency of specific applications. This emphasizes that the legislative intent was to regulate the time frames strictly and does not imply the provision of extensions beyond the specified period. Therefore, the proviso’s existence reinforces the limitation on the extension applications after the termination of the arbitrator's mandate.


(viii)       S.14 and 15 of the Act support the Calcutta HC interpretation


This interpretation is supported by Sections 14 and 15 of the Act, which specifically address the termination of an arbitrator's mandate. Aside from Section 29A, where the statute discusses the Termination of Mandate, Sections 14, 15, 32, and 40 of the Act also use the concept of terminating the mandate of an arbitrator to indicate the conclusion of its role in the Arbitral Tribunal and the resolution of the referred dispute. This is why Sections 14 and 15 outline the appointment of a substitute arbitrator when the mandate of an arbitrator concludes due to reasons specified in those sections of the Act. This also reinforces the correctness of the argument that once the mandate is terminated, the arbitrator must be substituted and there is no question of his extension of the already terminated mandate.


V.           What’s wrong with the Delhi HC interpretation of S.29A


Other than relying upon the three quoted judgments above, the Delhi HC gives the following reasons for not accepting the Calcutta HC decision.


a.       The court disagreed with Rohan Builders' interpretation of Section 29A of the A&C Act, arguing that it does not set an inflexible deadline for completion of arbitral proceedings but allows flexibility for extension in appropriate cases [16].

b.       The court argued that the term "extend" in Section 29A(4) does not imply that the application for extension must be made before the expiry of the mandate [16]. The court suggested that if the legislature intended to prohibit extensions after the expiry of the specified period, it would have explicitly stated so in the statute.

c.       The court also disagreed with the reliance on the Law Commission's report in interpreting statutory provisions, stating that it could lead to misinterpretation [21].

d.      The court further highlighted that denying an extension simply because the petition under Section 29A(4) was filed a few days after the expiry of the deadline would undermine the efficacy of the arbitral process and defeat the purpose of Section 29A.

 

Let’s see whether the above reasoning of the Delhi HC is correct.

 

(a)    The court didn't agree with how Rohan Builders interpreted Section 29A of the A&C Act. The court's view is that this section doesn't set a strict deadline for finishing arbitration proceedings. Instead, it allows for flexibility, permitting extensions when needed.

 

There is no quarrel with the proposition that section 29A doesn't set a strict deadline for finishing the arbitration proceeding as there is no defined timeline which the court can extend for the passing of the award, i.e., the court can extend the timeline for whatever period based on the facts of the case before it.

 

But that does not mean that the application for extension can be filed any time after the expiry of the timeline specified in S.29A(1) and (3) of the Act. So, if the Delhi HC view is adopted then there is no outer time limit for a party to move the court after the expiry of the timeline under S.29A(1) and (3).

 

Will it not impinge upon the entire purpose of introducing S.29A in the first place and leave the arbitral proceeding open forever even after the expiry of the mandate of the tribunal?

 

The Delhi HC failed to appreciate this aspect of the matter. If one keeps in mind the above argument, then it becomes clear that the Act provides for extension only if the application is moved promptly that is before the expiry of the mandate. If this view is adopted it will help parties approach the court promptly and the court will also be able to extend the time during the continuation of the mandate with the aid of the deeming proviso to S.29A(40 of the Act. 

 

(b)    The Delhi High Court asserted that the term "extend" in Section 29A(4) doesn't necessarily mean that the extension request must be made before the mandate expires. However, the court did not provide its interpretation for why the legislature used "extend" instead of "suspend," as suggested by the Law Commission. The court's rationale was mainly based on the argument that the committee's recommendations should not unduly influence how Parliament's words are interpreted. In contrast, the Calcutta High Court's reasoning on this matter is legally sound, supported by the definition of "extend" in Legal Dictionaries and a previous Supreme Court decision regarding the interpretation of the word "extend."

 

 

The Delhi HC’s further logic that if the legislature intended to prohibit extensions after the expiry of the specified period, it would have explicitly stated so in the statute, is not sound as the addition of proviso to S.29A(4) in 2019 makes it clear that the words "either prior to or after the expiry of the period so specified" were solely to address the scenario of a pending application under sub-section (5) and not to give jurisdiction to entertain an application and extend the timeline even after the termination of the mandate of the arbitrator.

 

(c)     The Delhi High Court, while defending its interpretation of Section 29A(4) and rejecting the Law Commission's report, cited judgments that may not be entirely accurate. Despite the acknowledged limitations on relying solely on such sources, the Supreme Court judgments do recognize that the Law Commission or Parliamentary Standing Committees can provide extrinsic guidance for interpreting statutory provisions in certain situations.

 

In this case, the Law Commission Report provides important information about why Section 29A was introduced. So, it can be trusted as a useful guide when trying to understand and interpret Section 29A. The use of “extend” instead of “suspend” definitely shows the intention of the legislature to end the mandate of the arbitrator if the application is not moved prior to the expiry of the periods referred to in S.29A (1) & (3)

 

In conclusion, the Delhi High Court's interpretation of Section 29A of the A&C Act is questionable on the following fronts:


. While rejecting Rohan Builders' interpretation and asserting that Section 29A allows for flexibility without a strict deadline, the court overlooks the potential absence of an outer time limit for parties to approach the court post-expiry, possibly prolonging arbitral proceedings indefinitely.

·       The court's failure to recognize the significance of a timely application for extension may compromise the efficiency of the arbitral process. Moreover, its interpretation of "extend" in Section 29A(4), suggesting that the extension request need not precede the mandate's expiry, contradicts the Calcutta High Court's legally sound reasoning.

·       Dismissing the Law Commission's recommendation to use "suspend" and arguing that the 2019 proviso only addresses pending applications appear unsubstantiated.

·       The legislative intent, evident in the proviso, clarifies the scope of extension, emphasizing the need for applications either before or after the specified period's expiry.

·       The court's reliance on Supreme Court judgments (on the significance of Law Commission Reports for interpreting a statute) while rejecting the Law Commission's report is questionable, given that the report provides valuable insights into the legislative rationale behind Section 29A.

·       The use of "extend" over "suspend" signifies a legislative intention to conclude the arbitrator's mandate if the application is not submitted before the specified periods expire. In this context, the Law Commission's report serves as a pertinent guide for understanding and interpreting Section 29A, aligning with the legislative purpose and intent.

 

Postscript

(i)                  Another bench of the Delhi High Court[10] has followed the judgment in ATC and rejected the Calcutta HC interpretation.


(ii)                An appeal challenging the decision of the Calcutta High Court in the Rohan Builders case is currently pending before the Supreme Court. Furthermore, another decision[11] by the same judge in Rohan Builders, issued by the Calcutta High Court, has been stayed by the Supreme Court as of November 6, 2023.


(iii)               It is likely that, notwithstanding the robust reasoning of the Calcutta High Court in the Rohan Builders case, the Supreme Court may not concur with it. The Supreme Court could potentially reject this stance based on the argument that, in order to further the aims and objectives of the Arbitration and Conciliation Act, and through a purposive interpretation of the statute, the court should possess the authority to extend the time even when an application is filed after the expiry of the arbitrator's mandate.

 

 

 

***


[1] Rohan Builders (India) (P) Ltd. v. Berger Paints India Ltd.

[2] ATC Telecom Infrastructure Private Limited Vs Bharat Sanchar Nigam Limited

[3]Wadia Techno-Engineering Services Ltd. v. Director General of Married Accommodation Project 2023 SCC OnLine Del 2990

[4] Reliance Infrastructure Ltd. v. Madhyanchal Vidyut Vitran Nigam Ltd., 2023 SCC OnLine Del 4894

[5] Hiran Valiiyakkil Lal v. Vineeth M.V., 2023 SCC Online Ker 5151

 

[6] Department of Transport v. Star Bus Services (P) Ltd., 2023 SCC OnLine Del 2890; Roop Singh Bhatty and others versus M/s. Shriram City Union Finance Limited Civil Revision Petition Nos.1354 And 1934 Of 2021 C.R.P.No.1354 Of 2021 (Division Bench of High Court of Telangana)

[7] Roop Singh Bhatty (Supra)

[8] (2010) 2 SCC 385

[9] 2019 (11) SCALE 528

[10] ATS Infrastructure Ltd. Vs Rasbehari Traders: OMP (T) (COMM.) 91/2023 decided on 17.11.2023

[11] Vrindavan Advisory Services Llp Vs Deep Shambhulal Bhanushali SLP (C) No(s). 24489/2023

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