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SUPREME COURT OF INDIA
SANJIV KHANNA, R. MAHADEVAN, JJ.
Rohan Builders (India) Private Limited – Appellant
Versus
Berger Paints India Limited – Respondent
Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 23320 of 2023) With Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 24489 of 2023) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 26938 of 2023) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) Nos. 26990-26991 of 2023) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 27353 of 2023) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 1344 of 2024) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 2115 of 2024) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 8131 of 2024) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) No. 12170 of 2024) Civil Appeal No. of 2024 (Arising out of Special Leave Petition (Civil) Nos. 13975-13976 of 2024)
Decided on : 12-09-2024
(A) Arbitration and Conciliation Act, 1996 – Section 29A – Arbitral award – Making of – Extension of time – Application for extension of time period for passing arbitral award under Section 29A(4) read with Section 29A(5) is maintainable even after expiry of twelve-month or extended six-month period, as the case may be – Court while adjudicating such extension applications will be guided by principle of sufficient cause – However, under Section 29A(5), power of court to extend the time is to be exercised only in cases where there is sufficient cause for such extension – Such extension is not granted mechanically on filing of application – Judicial discretion of court in terms of enactment acts as a deterrent against any party abusing process of law or espousing a frivolous or vexatious application – Court can impose terms and conditions while granting an extension – Delay, even on part of Arbitral Tribunal, is not countenanced. (Paras 15 and 19)
(B) Arbitration and Conciliation Act, 1996 – Section 29A – Arbitral award – Making of – Extension of time – Power to extend time period for making of award vests with court, and not with Arbitral Tribunal – Arbitral tribunal may not pronounce award till an application under Section 29A(5) of A & C Act is sub-judice before court – In a given case, where an award is pronounced during pendency of application for extension of period of Arbitral Tribunal, court must still decide application under sub-section (5), and may even, where award has been pronounced, invoke, when required and justified, sub-sections (6) to (8), or first and third proviso to Section 29A(4) of A & C Act. (Para 17)
(C) Arbitration and Conciliation Act, 1996 – Section 29A(4) – Arbitral Mandate – Termination of – Use of expression “terminate” reflects legislative intent of terminating mandate of Arbitral Tribunal upon expiry of specified period – Termination of arbitral mandate is conditional upon non-filing of extension application and cannot be treated as termination stricto sensu – Word “terminate” in contextual form does not reflect termination as if proceedings have come to a legal and final end, and cannot continue even on filing of application for extension of time – Termination under Section 29A(4) is not set in stone or absolutistic in character. (Paras 8 and 12)
(D) Interpretation of Statute – An interpretive process must recognize goal or purpose of legal text – Words can have various meanings and connotations – An interpretive exercise must be conducted with careful consideration of both text and context of the provision – Sometimes court eschews a literal construction if it produces manifest absurdity or unjust results – While interpreting a statute, must strive to give meaningful life to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios – An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic. (Paras 9, 13 and 18)
(E) Limitation Act, 1963 – Section 3 – Bar of limitation – Prescribing limitation period, unless clearly stated in words or necessary, should not be accepted – Bar by limitation has penal and fatal consequences – Courts should be wary of prescribing specific period of limitation in cases where Legislature has refrained from doing so – Rigid interpretation would amount to legislating and prescribing limitation period for filing application under Section 29A, when section does not conspicuously so state – Rather, expression and intent of provision are to the contrary. (Para 13)
Facts of the case:
Present common judgment decides whether application for extension of time under Section 29A of Arbitration and Conciliation Act, 1996 can be filed after expiry of period for making of arbitral award.
Findings of Court:
Court in terms of Section 29A(8) has power to impose actual or exemplary costs upon parties. Lastly, Section 29A(9) stipulates that an application for extension under sub-section (5) must be disposed of expeditiously, with endeavour of doing so within sixty days from date of filing.
Result : Reference answered.
Key Points: - The judgment holds that an application for extension of time under Section 29A(4) read with Section 29A(5) is maintainable even after expiry of the 12-month or extended 6-month period, guided by the principle of sufficient cause. (!) (!) - The term "terminate" in Section 29A(4) is read to be contextual and not absolute; termination is conditional upon non-filing of an extension application, and proceedings may continue if an extension is sought. (!) (!) - The court's power to extend time vests in the court, not the arbitral tribunal, and extensions must be granted for sufficient cause with possible terms and conditions; delays attributable to the tribunal can lead to fee reductions. (!) (!) - If an extension application is pending, the arbitral tribunal's mandate continues until disposal of that application. (!) (!) - The legislative intent favors efficiency and expediency in arbitration, allowing extensions to ensure an award is ultimately passed, rather than terminating proceedings prematurely. (!) (!) - The decision aligns with several High Court views that extensions after expiry can be entertained, rejecting a narrow, rigid interpretation. (!) (!) - The court may substitute arbitrators during extension proceedings, with reconstituted tribunals deemed to continue from the previous stage. (!) (!) - The tribunal may be reconstituted and continue from the point of record, preserving evidence and material already on record. (!) (!) - The court may impose actual or exemplary costs under Section 29A(8). (!) - The time for disposal of extension applications should be as expeditious as possible, aiming for around sixty days from service of notice. (!) (!)
JUDGMENT :
SANJIV KHANNA, J.
Leave granted.
2. This common judgment decides whether an application for extension of time under Section 29A of the Arbitration and Conciliation Act, 19961[For short, “A & C Act”.] can be filed after the expiry of the period for making of the arbitral award. The High Court at Calcutta in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Limited, AP/328/2023 and other connected matters decided on 06.09.2023, has held that the application for extension of time under Sections 29A(4) and 29A(5) of the A & C Act can only be entertained if filed before the expiry of the mandate of the arbitral tribunal. The High Court at Calcutta held that once the mandate of the arbitral tribunal is terminated by afflux of time of twelve months, or when so consented to by the parties after a further six-month extension, the power of the court to extend time under Section 29A(4) cannot be invoked. A similar view has been taken by a Division Bench of the High Court of Judicature at Patna in South Bihar Power Distribution Company Limited v. Bhagalpur Electricity Distribution Company Private Limited., Civil Writ Jurisdiction Case No. 20350 of 2021 and other connected matters decided on 26.04.2023. However, a catena of judgments from other High Courts have taken an opposite view. The High Court of Delhi in ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam Ltd. 2023:DHC:8078, Wadia Techno-Engineering Services Limited v. Director General of Married Accommodation Project and Another, 2023 SCC OnLine Del 2990., and some other cases6 ATS Infrastructure Ltd. and Another v. Rasbehari Traders, 2023 SCC OnLine Del 8645, M/s Power Mech Projects Ltd. v. M/s Doosan Power Systems India Pvt. Ltd., 2024:DHC:3769, KMP Expressways Ltd. v. IDBI Bank Ltd., 2024 SCC OnLine Del 2617, Reliance Infrastructure Limited v. Madhyanchal Vidyut Vitran Nigam Limited, 2023:DHC:5745 et al.; the High Court of Judicature at Bombay in Nikhil H. Malkan and Others v. Standard Chartered Investment and Loans (India) Limited, 2023:BHC-OS:14063; the High Court of Kerala in Hiran Valiiyakkil Lal and Others v. Vineeth M.V. and Others, 2023 SCC OnLine Ker 5151, the High Court of Madras in G.N.Pandian v. S. Vasudevan and Others, 2020 SCC OnLine Mad 737; and the High Court of Jammu and Kashmir and Ladakh in H.P.Singh v. G.M. Northern Railways and Others, 2023 SCC OnLine J&K 1255, have held that an application for extension of time limit for arbitral award can be filed by a party even after the expiry of the term of twelve months or the extended period of six months. Recently, the High Court at Calcutta in a subsequent decision of the single Judge in Ashok Kumar Gupta v. M.D. Creations and Others, 2024 SCC OnLine Cal 6909, on elaborated examination, has concurred with this view. 12[This Court while issuing notice in the Civil Appeal a/o SLP (C) No. 2115 of 2024 had granted a stay on the operation of the common judgment in Rohan Builders (India) Pvt. Ltd. (supra).]
3. For the reasons recorded below, we accept the view taken by the High Courts of Delhi, Jammu and Kashmir and Ladakh, Bombay, Kerala, Madras, and the subsequent view expressed by the High Court at Calcutta in Ashok Kumar Gupta (supra). However, before we elucidate our reasons, it would be appropriate to first quote Section 29A of the A & C Act as it stands today:
(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon th
(1) Arbitral award – Application for extension of time period for passing arbitral award under Section 29A(4) read with Section 29A(5) of Arbitration and Conciliation Act, 1996 is maintainable even a....
(1) Extension of mandate of Arbitrator(s) – Application under Section 29A(5) for extension of mandate of Arbitrator is maintainable even after expiry of time under Sections 29A(1) and (3) and even af....
The court can extend the mandate of arbitrators under Section 29A(5) after an award is rendered, even if done post statutory timeline, reinforcing the integrity of the arbitration process.
The court's power to extend an arbitrator's mandate under Section 29-A is not limited by the timing of the application, allowing for extensions even after termination.
(1) Extension of mandate of Arbitral Tribunal – Court has power and jurisdiction to extend period.(2) Efficiency in conduct of arbitral proceedings is integral to effectiveness of dispute resolution ....
The termination of the mandate of the arbitrator(s) is subject to the decision of the Court, which may be made either before or after the expiry of the specified period, allowing for flexibility in g....
Court may extend arbitrator's mandate under Section 29A(4),(5) post-termination for sufficient cause not attributable to petitioners, prioritizing pragmatic and effective arbitral conclusion.
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