Validity of extension of Arbitral Mandate post award in terms of Section 29A of the Arbitration and Conciliation Act, 1996 : Reassessed in light of the principles of Interpretation of Statutes and the celebrated Judgement of Hon’ble Supreme Court in Rohan Builders Vs. Berger Paints, SLP (Civil) No. 23320 of 2023
In courts, a majority of petitions/applications have been filed regularly for extension of the arbitral mandate in case of its expiry in terms of Section 29A of the Arbitration and Conciliation Act, 1996, failing which the all the actions / omissions etc., carried by the Arbitral Tribunal would be a nullity
Although, Section 29A of the 1996 Act was silent on the aspect of seeking extension post – arbitral award unlike Section 28 (1) of the 1940 Act. However, it will always come in our mind as to why is there any need for any extension when, arbitral award has already been passed, the reason being there were cases when the award has been passed by the Arbitral Tribunal after the expiry of the arbitral mandate and hence, to ratify such awards, parties mostly approach the Courts for extension.
Before, delving further let us first revisit the erstwhile Section 28 (1) of the 1940 Act & Section 29A of the current 1996 Act:
- Section 28.
(1) Power to Court only to enlarge time for making award. (1). The Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not enlarge from time to time the time for making the award.” - Section 29A:
(4) If the award is not made within the period specified in sub section (1) or the
extended period specified under sub-section (3), the mandate of the arbitrator(s)
shall terminate unless the Court has, either prior to or after the expiry of the period
so specified, extended the period. Provided that while extending the period under
this subsection, if the Court finds that the proceedings have been delayed for the
reasons attributable to the arbitral tribunal, then, it may order reduction of fees of
arbitrator(s) by not exceeding five per cent for each month of such delay.
(5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.
On this issue, one of the earliest judgements was delivered by the Madras High Court in Suryadev Alloys and Power Pvt. Ltd. Vs. Shri Govindraja Textiles Pvt. Ltd. 2023, SCC Online Del 8324, one of the issues involved in the said judgement was the validity of the arbitral award after the expiry of the arbitral mandate. The Hon’ble Madras High Court while distinguishing between the provisions of erstwhile Section 28 (1) of the 1940 Act with Section 29A of the 1996 Act. The one of the relevant para is reproduced hereunder:
- 18. Since the provisions of Section 28(1) of the 1940 Act gives express power to the Court to enlarge the time even after the making of the Award, the Award passed after the extended period can be validated. However, a similar provision is not available in Section 29A of the 1996 Act. The language of Section 29A (4) clearly stipulates that if the award is not made within the stipulated period or the extended period then the mandate of the Arbitrator stands terminated unless extended by Court.
That the above view of the Madras High Court was also cited by the Hon’ble Delhi High Court in Powergrid Corporation of India Ltd. Vs. SPML Infra Ltd. 2023 SCC Online Del. 8324. In the said judgement the question for consideration before the High Court was that “whether an award can be validated, if it has been made after the expiry of mandate of the learned Tribunal and no application for extension has been made prior to its pronouncement?”
The Hon’ble Delhi High Court in detail examined the provisions of erstwhile Section 28 (1) of the repealed 1940 Act with the present Section 29A of the, 1996 Act has held as follows:
- 33. Perspicuously, Section 29A of the Act, 1996 contains no such express specification enabling the Courts to grant an extension after an Award has been made. Had the legislature intended the import of Section 28 of the Arbitration Act, 1940 to be applicable to Section 29A of the Act, 1996, the same would not have been excluded from the words of the provision. Subsection 4 of Section 29A clearly provides that if the Award is not made within the specified period, the mandate of the Arbitrator shall terminate unless the Court has either prior or after the expiry of the period so specified extended the period. It clearly envisions that the proceedings must be still pending and not concluded and the application of extension of time may be made even after the expiry of the mandate of the Arbitrator, but only in the situation where the Award has not been announced and the proceedings are still pending.
- 36. It is evident from the language of the various clauses of Section 29A that the
power of extension of the mandate of the Arbitrator by the Court, on an application
by either party, arises only in cases where the arbitral proceedings are pending at
the time of the application; the only leverage is that the application may be made
either before or after the expiry of timeline, but it necessarily has to be before the
Award is announced. Therefore, extension may be granted by the Court on the
following conditions:
- An application is moved by any of the parties when the arbitral proceeding is pending;
- Sufficient cause for extension is shown; and
- Such time may be extended on terms and conditions that the Court may impose. This includes the variation/reduction in the fee of the Arbitrator if the delay is attributable to the Tribunal and even substitution of the Arbitrator
Reiterating the above provision with a slight addition, the Hon’ble Delhi High Court again in National Skill Development Corporation Vs. Best First Step Education Private Limited & Ors. O.M.P. (Misc.) (Comm.) 608/2023 highlighted that:
- 11. In my view, the two judgments can be reconciled. Where a petition is filed prior to the award having been delivered, and the award is delivered during the pendency of the petition, the petition would be maintainable. However, a petition filed after the award is delivered and proceedings for setting aside have been instituted, is not maintainable. This distinction is justifiable on principle also- a party cannot choose whether or not to seek extension of the mandate after becoming aware of its fate in the arbitration proceedings, and facing a challenge to the award on this ground.
However, the Hon’ble Kerala High Court in RKEC Projects Limited, Represented by its Managing Director Vs. Cochin Port Trust, Represented by Chief Engineer and Anr., 2024 SCC Online Ker. 4192, had taken a contrary view and agreed to grant extension despite the fact that award was passed after the expiry of the arbitral mandate on the basis of facts and circumstances of the case. The Hon’ble Kerala High Court in said judgement, terming the termination of proceedings and termination of mandate as non – absolute and observed that, “…Therefore, it is clear that the termination of the mandate of the Arbitrator under Section 32 of the Act is not an absolute termination so as to denude this Court of any further power to consider any application. The said termination can only be read to be subject to the powers of extension of the mandate as provided under Section 29A (3) and (4) of the Act”. It was further held by the court that “13. In the above view of the matter, I am of the opinion that in an appropriate case where this Court is convinced that there is sufficient cause so to do, this Court would be empowered to extend the time for passing the award even in a case where the award has already been passed….”
Hence, in view of the above it can be easily ascertained that divergent views are expressed by the different High Courts of the country with respect to the issue of extension of arbitral mandate post award.
The Hon’ble Apex Court has already paved a way of filing application seeking extension under Section 29A of the Act even after expiry of the arbitral mandate in Rohan Builders Vs. Berger Paints, SLP (Civil) No. 23320 of 2023. The relevant para of the said Judgement are as follows:
- 19. In view of the above discussion, we hold that an application for extension of the time period for passing an arbitral award under Section 29A (4) read with Section 29A (5) is maintainable even after the expiry of the twelve-month or the extended six-month period, as the case may be. The court while adjudicating such extension applications will be guided by the principle of sufficient cause and our observations in paragraph 15 of the judgment.
Reading the above judgements of the Hon’ble High Courts in the light of recently pronounced judgement of the Hon’ble Supreme Court Rohan Builders (supra.), a possibility may arrive that the Court may allow ratification of award even the same was passed after the expiry of the arbitral mandate or, in the light of Rohan Builders judgement, the Courts are now also empowered to grant extension post award.
Further, going by the reasoning of the judgements pronounced by Hon’ble Madras High and Hon’ble Delhi High Court, one must not also not loose the sight of the fact that “change of language is not, however, always indicative of a change in construction (Redrow Homes Ltd. Vs. Bett Bros. Plc. (1998) 1 All ER 385)”.
Also, the alteration in language in or by a later statute may be result of many factors. For instance, words may be omitted in a later statute when they were mere surplusage and the natural and ordinary meaning of the existing words indicates no intention of alteration of meaning (Redrow (supra.) & Madanlal Fakirchand Dudhediya Vs. S. Changdeo Sigar Mills, AIR 1962 SC 1543).