Summary
The Supreme Court held that an application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 to extend an arbitrator's mandate is maintainable even after the statutory and consensual periods have expired and even after the arbitrator has made an award in the meantime; such an award is unenforceable, but the arbitrator's indiscretion does not curtail the Court's power to extend. The High Court's dismissal of the extension application as not maintainable was set aside.
Issues
- Whether a Court can entertain an application under Section 29A(5) to extend the mandate of the arbitrator after an award has been made, though after expiry of the twelve-month period and the six-month consensual extension.
Provisions considered
- Section 29A(4) and (5), Arbitration and Conciliation Act, 1996The Court read sub-section (4) as allowing the Court to extend the period before or after its expiry, held that 'if the award is not made' does not address awards made after the mandate expired, and treated termination of the mandate as transitory and subject to the Court's power, so an extension application remains maintainable after an award. (¶¶ 11.1, 13, 14, 16, 17, 21, 23)
- Section 29A(6) to (9) and provisos to Section 29A(4), Arbitration and Conciliation Act, 1996These were described as tools available to the Court when considering extension: fee reduction for delay attributable to the tribunal, terms and conditions, discretionary substitution of arbitrators with continuity of proceedings, costs, and expeditious disposal; substitution is optional and to be exercised carefully. (¶¶ 13, 18, 20, 23)
- Sections 34 and 36, Arbitration and Conciliation Act, 1996An award made after expiry of the mandate was described as non est, better described as unenforceable under Section 36, which need not be challenged under Section 34; delay alone is not a ground to set aside an award unless its effect is explicit and adversely reflects on the findings. (¶¶ 9.1, 13, 14, 23)
- Section 28, Arbitration Act, 1940Referred to as the earlier provision expressly allowing the Court to enlarge time whether or not the award had been made, as part of the legislative history leading to Section 29A. (¶ 8)
Held
- Section 29A was introduced, following the Law Commission's 176th Report, to curb delay while ensuring that arbitral proceedings reach an award, with the Court acting as a facilitative and corrective mechanism rather than a means of aborting the arbitration. (¶¶ 10, 11, 18)
- Section 29A does not, in terms, bar an application for extension of the mandate after an award has been delivered. An award made after the mandate expired is unenforceable under Section 36, but the arbitrator's unilateral act in making it does not affect the Court's independent power and jurisdiction under Section 29A. (¶¶ 14, 15)
- The phrase 'if the award is not made' in Section 29A(4) enables the Court to extend the period before or after expiry and does not address an award rendered after the mandate expired; termination of the mandate under Section 29A(4) is not absolute but subject to the Court's power, as explained in Rohan Builders, whose observations the Court approved. (¶¶ 2, 16, 17, 19)
- There is no automatic extension: the Court must find sufficient cause after close scrutiny and may impose terms, reduce the arbitrator's fee, impose costs, or substitute arbitrators, which answers the concern that post-award extension would encourage indiscipline. (¶¶ 20, 23)
- An application under Section 29A(5) is maintainable even after expiry of the periods under Sections 29A(1) and (3) and even after an award has been rendered in that interval; if the mandate is extended, the tribunal resumes from the stage at which the mandate expired and must conclude within the time granted. (¶¶ 21, 23)
Result
Appeal allowed; High Court's order dated 24.01.2025 dismissing the Section 29A application as not maintainable set aside; Application No. 5993 of 2024 restored to the High Court for disposal in accordance with the principles laid down.