CIVIL APPEAL NO._________/2024
Special Leave Petition (CIVIL) No. 2272 OF 2024
The appeal centers on whether the Appellant's request for an extension of the mandate of the Arbitral Tribunal under Section 29A(4) of the Arbitration and Conciliation Act, 1996, should have been granted by the High Court. The Court ultimately concluded that there was "sufficient cause" to extend the time for the Arbitral Tribunal to make its award, allowing the appeal and extending the deadline until December 31, 2024. The facts of the present matter were such that the Appellant entered into a works contract with the first Respondent, and when disputes arose, the Appellant sought arbitration by issuing a notice in February 2018. The High Court appointed a sole arbitrator in February 2019. The first meeting of the Arbitral Tribunal was held in June 2019, and pleadings were completed by October 9, 2019. The statutory 12-month period for making the award began on this date, which would have expired on October 8, 2020. This period could be extended by mutual consent for an additional 6 months, extending the deadline to April 9, 2021. The COVID-19 pandemic impacted proceedings, leading to the Supreme Court’s order in January 2022 excluding the period from March 15, 2020, to February 28, 2022, from the limitation period under Section 29A. Arbitration hearings were delayed, but the parties agreed to seek an extension in May 2023. The Appellant filed an application for an extension on August 1, 2023, which was dismissed by the High Court on November 3, 2023.
The key issue decided by Court in the present case was Whether an application for extension can be entertained if filed after the expiration of the Arbitral Tribunal's mandate and if the application can be entertained, whether the facts of the case justify an extension. The Appellant argued that the pandemic period should be excluded from the limitation period, as per the Supreme Court's order. They claimed that the delay in filing the extension application was due to adjournments caused by the Respondents and the complexity of the case, and that the Tribunal had been diligent. On the other hand, the Respondents contended that the Tribunal's mandate expired in 2022, and the Appellant’s application was delayed by over two years. They argued that Section 29A mandates filing for an extension before the expiration of the statutory period.
The Court addressed several key issues concerning the interpretation and application of Section 29A(4) of the Arbitration and Conciliation Act, which governs the timeline for making an arbitral award. The Court emphasized that while Section 29A(4) mandates the termination of the tribunal’s mandate if the award is not made within 12 months from the completion of pleadings, this period can be extended by mutual consent for an additional 6 months. Furthermore, the provision explicitly grants the Court the power to extend the mandate even after the expiration of the statutory and extendable 18-month period, countering the Respondent’s claim that the application must be filed before the mandate expires. The Court referred to the Rohan Builders case, which clarified that an application for an extension of time could be filed both before and after the expiration of the statutory period for making the award. The Court confirmed that Section 29A allows the Court to extend the time even post-expiry, as long as an application is filed. Section 29A(5) gives the Court discretion to grant an extension if sufficient cause is shown. The Court made it clear that extensions are not automatic and must be based on valid reasons.
The Court accepted the reasons for delay as justifiable and found that the delay in filing the application was not caused by any fault of the parties or the Tribunal. The Court took into account the significant disruption caused by the COVID-19 pandemic, which started before the statutory period expired and led to delays in the proceedings. Additionally, the fact that the parties agreed in May 2023 to seek an extension further supported the Appellant’s case for a time extension. Given these factors, the Court concluded that there was sufficient cause to justify an extension. The Supreme Court allowed the appeal, set aside the High Court’s order, and extended the deadline for the Arbitral Tribunal to make its award until December 31, 2024.