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2020 Supreme(Del) 726

IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, J.
Ongc Petro Additions Limited - Appellant
Versus
Ferns Construction Co Inc - Respondent
Original Miscellaneous Petition (Misc) (Comm) No. 256 of 2019; Interlocutory Application No. 4989 of 2020
Decided On : 21-07-2020

Advocates Appeared:
Nakul Dewan, Advocate, K.R. Sasiprabhu, Advocate, Somiran Sharma, Advocate, Robin V S, Advocate, Nooren Sarna, Advocate, Anushka Shah, Advocate, Sambit Nanda, Advocate, Naresh Thacker, Advocate, Arpan Behl, Advocate, Alok Jain, Advocate

The main legal point established in the judgment is that the amended Section 29A of the Arbitration and Conciliation Act, 1996 is procedural in nature and applies to all pending arbitrations seated in India as of August 30, 2019, and commenced after October 23, 2015.

Headnote:

Arbitration - Section 29A of the Arbitration and Conciliation Act, 1996 - [Arbitration] - [Section 29A] - [Summary: The court discussed the applicability of Section 29A of the Arbitration and Conciliation Act, 1996 to international commercial arbitrations and the retrospective or prospective nature of the amendment made to Section 29A by the Arbitration and Conciliation (Amendment) Act, 2019. The court analyzed the legal provisions and interpretations of Section 29A, distinguishing between substantive and procedural laws, and considered the conflicting views of Coordinate Benches. The court concluded that the amended Section 29A is procedural in nature and applies to all pending arbitrations seated in India as of August 30, 2019, and commenced after October 23, 2015. It clarified that there is no strict timeline of 12 months for international commercial arbitrations and that the Arbitral Tribunal is not bound by the timeline prescribed in the court's previous order if the proceedings are in the nature of an international commercial arbitration.]

Fact of the Case:

The petitioner sought clarification/modification of the court's previous order under Section 29A of the Arbitration and Conciliation Act, 1996, regarding the time limit for the Arbitral Tribunal to pass the award in an arbitration between the parties. The petitioner argued that the amended Section 29A, which excludes international commercial arbitrations from the statutory time limit, should be applied retrospectively to the arbitration proceedings.

Finding of the Court:

The court found that the amended Section 29A is procedural in nature and applies to all pending arbitrations seated in India as of August 30, 2019, and commenced after October 23, 2015. It clarified that there is no strict timeline of 12 months for international commercial arbitrations and that the Arbitral Tribunal is not bound by the timeline prescribed in the court's previous order if the proceedings are in the nature of an international commercial arbitration.

Issues: The main issue was the applicability of the amended Section 29A to the arbitration proceedings and whether it should be applied retrospectively or prospectively.

Ratio Decidendi: The court's decision was based on the interpretation of Section 29A, the distinction between substantive and procedural laws, and the conflicting views of Coordinate Benches. The court concluded that the amended Section 29A is procedural in nature and applies to all pending arbitrations seated in India as of August 30, 2019, and commenced after October 23, 2015.

Final Decision: The court held that the amended Section 29A is applicable to all pending arbitrations seated in India as of August 30, 2019, and commenced after October 23, 2015. It clarified that there is no strict timeline of 12 months for international commercial arbitrations and that the Arbitral Tribunal is not bound by the timeline prescribed in the court's previous order if the proceedings are in the nature of an international commercial arbitration.

JUDGMENT

V. Kameswar Rao, J. - This matter is being heard through video-conferencing.

    I.A. 4989/2020

      1. The present application has been filed with the following prayers:

        (a) Clarify / modify the order dated 25.09.2019 passed by this Hon''ble Court in O.M.P (MISC.) (COMM.) 256/2019 to hold that the time limit prescribed under Section 29A of the Arbitration and Conciliation Act, 1996 for the Tribunal to pass the award is not applicable in the present arbitration; and/or

          (b)Pass such other or further orders as this Hon''ble Court may be pleased in the facts and circumstances of the case.

          2. Vide order dated September 25, 2019 (''Order'', for short), this Court had disposed off the main petition filed under Section 29A of the Arbitration and Conciliation Act, 1996 ('' Act'', for short), extending the time period for the Arbitral Tribunal to complete the proceedings and render the Award by 18 months effective from June 24, 2019.

          3. Subsequent to the disposal of the petition under Section 29A, it appears an issue arose before the Arbitral Tribunal, whether the time limit to make an award would be applicable. In fact, the Arbitral Tribunal on March 23, 2020 had passed the following order:

            "However, it has been rightly pointed out by the Ld. Counsel for the Respondent No. 2 that- ''assuming without admitting that respondent No. 2 is determined as a proper party to the present arbitration, then the arbitration would qualify as an international commercial arbitration, and therefore, the statutory limit to make the award under Section 29A of the Arbitration and Conciliation Act, 1996 will not be applicable''. The Tribunal expects the Parties to file an appropriate application before the Hon''ble High Court of Delhi seeking clarifications on its Order dated 25- 9-2019 passed in O.M.P (MISC.) (COMM.) 256/2019 titled ''ONGC Petro Additions Limited -vsFernas Construction Co. Inc.''."

            4. A perusal of the above order also makes it clear that an issue is pending before the Tribunal for determining whether the respondent herein is a proper party to arbitration proceedings or not. Be that as it may, it is the case by the petitioner that initially when the petition under Section 29A of the Act was filed on May 31, 2019 (refiled on June 17, 2019), the said Section was applicable to all arbitration proceedings seated in India. However, Section 29A of the Act was amended vide Arbitration and Conciliation (Amendment) Act, 2019 (''Amendment Act of 2019'', for short) (came into effect from August 30, 2019) to the effect that the time limit for the Arbitral Tribunal to pass the Award does not apply to international commercial arbitration as defined under Section 2(1)(f) of the Act.

            5. In substance, it is the case of the petitioner that Section 29A of the Act, does not apply to the arbitration proceedings between the parties on the date when the petition under Section 29A was filed, owing to the retrospective applicability of the amendment made to Section 29A.

            6. Moreover, attention of this Court is drawn to two orders of the Coordinate Benches of this Court, wherein the orders prior in time in Shapoorji Pallonji and Co. Pvt. Ltd v Jindal India Thermal Power Limited O.M.P.(MISC.) (COMM.) 512/2019, decided on January 23, 2020 has held, the effect of amendment to Section 29A as per Amendment Act of 2019 to be retrospective in operation while the order latter in time in MBL Infrastructures Ltd. v. Rites Ltd. O.M.P.(MISC)(COMM) 56/2020, decided on February 10, 2020 held the applicability of amended Section 29A to be prospective in nature.

            7. Mr. Nakul Dewan, learned Senior Counsel appearing for the petitioner has drawn the attention of this Court to the distinction brought about in Section 29A of the Act prior to and subsequent to the Amendment Act of 2019 in the following manner:

              Section 29A prior to its amendment

              Section 29A as amended by the 2019 Amendment Act

              (1) The award shall be made within a period of

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