Summary
The sole arbitrator had not made the award within the period allowed by Section 29A(1) of the Arbitration and Conciliation Act, 1996, and no extension had been sought, so his mandate had terminated. The Supreme Court held that the High Court erred in extending the mandate of an arbitrator whose mandate had ceased, and itself substituted a former High Court judge as sole arbitrator under Section 29A(6).
Issues
- Whether the High Court could extend the mandate of the sole arbitrator under Section 29A of the Arbitration and Conciliation Act, 1996 when the time for making the award had expired without any extension being sought.
- Whether the earlier dismissal of the respondents' applications under Sections 14 and 15 of the Act barred substitution of the arbitrator under Section 29A(6).
Provisions considered
- Section 29A(1), (3) and (4), Arbitration and Conciliation Act, 1996The award had to be made within twelve months of completion of pleadings, extendable by six months by consent; failing that the mandate terminates unless the Court extends the period. Pleadings were due by 19.11.2020; excluding the Covid-19 period up to 28.02.2022, the award was due by 28.02.2023. No award was made and no extension sought, so the arbitrator's mandate had terminated and he could not proceed, subject only to an order of the Court under Section 29A(4). (¶¶ 9, 10, 11, 12, 13)
- Section 29A(6), Arbitration and Conciliation Act, 1996While extending the period, the Court may substitute one or all arbitrators, and the proceedings continue from the stage reached. Where the mandate has ceased, the Court is empowered and obliged to substitute the arbitrator to further the object of speedy resolution. (¶¶ 9, 10, 13, 14)
- Sections 14 and 15, Arbitration and Conciliation Act, 1996The Act provides separate remedies under Sections 14, 15 and 29A. The earlier rejection of the respondents' applications under Sections 14 and 15, made when the mandate had not yet terminated, had no bearing on the Section 29A petition. (¶ 13)
Held
- Section 29A, being remedial and aimed at time-bound arbitration, applies to arbitral proceedings pending on 30.08.2019. Once the twelve-month period (and any consensual six-month extension) expires without an award, the arbitrator cannot continue and the mandate terminates, subject only to an order of the Court under Section 29A(4). (¶¶ 9, 10, 12)
- Excluding the Covid-19 limitation period from 15.03.2020 to 28.02.2022, the award was due by 28.02.2023; as it was not made and no extension was sought, the sole arbitrator's mandate had terminated by operation of law. (¶¶ 11, 13, 14)
- An arbitral tribunal is ordinarily a forum chosen by the parties; once its mandate has expired its continuation is impermissible, and Section 29A(6) empowers and obliges the Court to substitute the arbitrator. The High Court erred in extending the mandate of an arbitrator whose mandate had ceased. (¶ 13)
- Dismissal of applications under Sections 14 and 15 of the Act does not bar substitution under Section 29A(6), since these are distinct remedies and the earlier order was passed while the mandate subsisted. (¶ 13)
Result
Appeals allowed; High Court order of 22.04.2025 set aside; the sole arbitrator's mandate declared terminated by operation of law; a former Delhi High Court judge appointed as substituted sole arbitrator, the proceedings to resume from the stage reached and conclude within six months; no costs.