Summary
The Supreme Court held that an application under Section 29A(4) of the Arbitration and Conciliation Act, 1996 to extend an arbitral tribunal's mandate may be filed even after the mandate has expired, and that 'sufficient cause' under Section 29A(5) must be read to facilitate effective dispute resolution. Given the COVID-period exclusion and the parties' agreement to seek extension, it found sufficient cause and extended time for the award to 31.12.2024.
Issues
- Whether an application for extension of the arbitral tribunal's mandate under Section 29A(4) can be entertained if filed after the mandate has expired.
- Whether sufficient cause was shown under Section 29A(5) for extending the time to make the award, and from what point the delay should be measured in light of the COVID limitation exclusion.
Provisions considered
- Section 29A(1) and (3), Arbitration and Conciliation Act, 1996The award must be made within 12 months of completion of pleadings, extendable by six months by consent. Here pleadings were completed on 09.10.2019; applying the exclusion of the COVID period ordered in In re: Cognizance for Extension of Limitation, the 18-month period would have run until 31.03.2023. (¶¶ 3.1, 3.2, 7, 12)
- Section 29A(4), Arbitration and Conciliation Act, 1996Read with Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., the words 'either prior to or after the expiry of the period so specified' expressly allow the Court to extend the mandate after the 12- or 18-month period has expired; termination is conditional on no extension being sought. (¶¶ 7, 8, 9, 10)
- Section 29A(5), Arbitration and Conciliation Act, 1996Extension is discretionary and may be granted only for sufficient cause and on terms. The Court held that 'sufficient cause' takes colour from the purpose of arbitration and should be interpreted to facilitate effective dispute resolution; it found such cause on the facts. (¶¶ 11, 15, 16, 17)
Held
- An application for extension under Section 29A(4) may be filed either before or after the tribunal's mandate terminates on expiry of the statutory and extended period; the text of the provision and Rohan Builders settle this, and that decision in fact went against the respondents' contention. (¶¶ 7, 8, 9, 10)
- Where the COVID period is excluded from computing the Section 29A timeline under In re: Cognizance for Extension of Limitation, only about five months had run before 15.03.2020, so the remainder of the 18 months expired on 31.03.2023. The delay to be explained was therefore only the period from 31.03.2023 to the filing of the application on 01.08.2023, and the High Court erred in treating it as a delay of over two years and four months. (¶¶ 12, 13)
- Efficiency and expedition are integral to arbitration, but the Act borrows the language of limitation statutes to let the Court extend time on sufficient cause; 'sufficient cause' must be construed in the context of enabling the parties' agreed dispute resolution mechanism to reach its end. (¶¶ 15, 16)
- The onset of the pandemic before the first 12 months ran out, the exclusion ordered by this Court, the completion of hearings, and the parties' agreement on 05.05.2023 to apply for extension together constituted sufficient cause for extending the time. (¶¶ 14, 17)
Result
Appeal allowed; the High Court's order dated 03.11.2023 in MCA No. 1 of 2023 set aside and the time for the Arbitral Tribunal to make the award extended till 31.12.2024; parties to bear their own costs.