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SANJIV KHANNA, R. MAHADEVAN
Rohan Builders (India) Private Limited – Appellant
Versus
Berger Paints India Limited – Respondent
What is the legal stance on filing an extension of time under Section 29A(5) of the Arbitration and Conciliation Act, 1996 after the expiry of the arbitral mandate? What is the meaning and effect of the term "terminate" in Section 29A(4) in the context of extensions and continuance of arbitration proceedings? What governs the court's exercise of power to extend time under Section 29A(4)-(5), and what constitutes "sufficient cause" for such extension?
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
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