Summary
Resolving a conflict among High Courts, the Supreme Court held that an application under Section 29A(4) read with Section 29A(5) of the Arbitration and Conciliation Act, 1996 to extend the time for making an arbitral award can be filed even after the twelve-month or consensually extended six-month period has expired. The words 'either prior to or after the expiry' are plain, the 'termination' of the mandate is conditional, and reading in a limitation bar would be judicial legislation; extension remains subject to sufficient cause.
Issues
- Whether an application for extension of time under Section 29A(4) and (5) of the Arbitration and Conciliation Act, 1996 is maintainable after the twelve-month period, or the six-month period extended by consent, has expired.
- What the word 'terminate' in Section 29A(4) means in its context.
- Whether the arbitral tribunal may make the award while an extension application is pending before the court.
Provisions considered
- Section 29A(4), Arbitration and Conciliation Act, 1996The mandate terminates 'unless' the court has extended the period 'either prior to or after the expiry' of the specified period; the Court read 'terminate' with the qualifying 'unless' clause and held termination to be conditional on no extension application being filed, so the court may extend time on an application filed after expiry. (¶¶ 3, 6, 8, 10, 11, 12, 13)
- Section 29A(5), Arbitration and Conciliation Act, 1996Any party may apply for extension, which may be granted only for sufficient cause and on terms; this judicial discretion, not a time bar, is the safeguard against abuse by recalcitrant litigants. (¶¶ 7, 15, 19)
- Section 29A(4), second proviso, Arbitration and Conciliation Act, 1996The mandate continues while an extension application is pending, but as the power to extend lies with the court the tribunal may not pronounce the award while the application is sub judice; if it does, the court must still decide the application. (¶¶ 7, 17)
- Section 29A(1) and (3), Arbitration and Conciliation Act, 1996Explained as prescribing the twelve-month period (from completion of pleadings after the 2019 amendment, and not applicable to international commercial arbitration) and a further consensual extension of up to six months. (¶ 5)
- Section 29A(6), (7) and (8) and first proviso to Section 29A(4), Arbitration and Conciliation Act, 1996The power to substitute arbitrators with the reconstituted tribunal deemed to continue the earlier one, to impose costs, and to reduce fees for delay attributable to the tribunal were relied on as showing a legislative intent of efficiency that is inconsistent with a narrow reading of 'terminate'. (¶¶ 15, 16, 17)
- Section 28 and First Schedule, paragraph 3, Arbitration Act, 1940Noted as the earlier regime under which the court could enlarge time whether or not it had expired, by way of legislative history. (¶ 4)
Held
- The expression 'either prior to or after the expiry of the period so specified' in Section 29A(4) is unambiguous: the court may extend the time for making the award on an application filed after the expiry of the period under sub-section (1) or the extended period under sub-section (3). (¶¶ 6, 19)
- 'Terminate' must be read in context and with the connecting word 'unless'; it renders the tribunal functus officio only conditionally, upon no extension application being filed, and is not termination stricto sensu. The legislature preferred 'terminate' to 'suspend' to respect party autonomy and avoid proceedings remaining suspended indefinitely when no one applies. (¶¶ 9, 10, 11, 12)
- Courts should not read a limitation period into a statute where the legislature has not prescribed one; holding that an application must be filed before expiry would add a bar with annulling consequences and amount to rewriting Section 29A. (¶ 13)
- A restrictive reading would force parties to rush to court before expiry and relegate a faultless party to a fresh reference, defeating the litigant-centric aim of the 2015 amendment; the fear of abuse is met by the sufficient-cause requirement, the court's power to impose terms, and fee reduction for delay attributable to the tribunal. (¶¶ 14, 15, 16)
- The power to extend time lies with the court, so the arbitral tribunal may not pronounce the award while an application under Section 29A(5) is pending; if an award is pronounced meanwhile, the court must still decide the application and may invoke sub-sections (6) to (8) or the first and third provisos to Section 29A(4). (¶ 17)
- The Court accepted the view of the Delhi, Bombay, Kerala, Madras and Jammu and Kashmir and Ladakh High Courts and the later Calcutta decision in Ashok Kumar Gupta, rejecting the contrary view of the Calcutta High Court in the judgment under appeal and of the Patna High Court; the consequences of termination and the remedies then available were left open. (¶¶ 2, 3, 14)
Result
Question answered: an application under Section 29A(4) read with 29A(5) is maintainable even after expiry of the twelve-month or extended six-month period, to be decided on sufficient cause; the appeals directed to be listed in the week commencing 30.09.2024 for final hearing.