APPLICATION FOR EXTENSION OF TIME FOR PASSING THE ARBITRAL AWARD UNDER SECTION 29A ARBITRATION AND CONCILIATION ACT 1996 CAN BE FILED AFTER THE EXPIRY OF THE MANDATED PERIOD

Author : Utkarsh Srivastava
Advocate-On-Record (Supreme Court of India)

This paper discusses the scope of extension of time for passing the arbitral award past mandated period under Section 29A of the Arbitration and Conciliation Act 1996.

Section 29A was inserted into Arbitration and Conciliation Act 1996 (“1996 Act”) by the Arbitration and Conciliation (Amendment) Act 2015 with retrospective effect from 23.10.2015. The main purpose of the amendment act is to ensure that arbitral proceedings are completed without unnecessary adjournments and delay.

Section 29A serves this purpose by mandating that an award shall be passed within a period of twelve (12) months and this time limit can be further extended upto a maximum period of six (6) months by consent of parties. Extension beyond six (6) months is not permitted.

Section 29A has been further amended vide Arbitration and Conciliation (Amendment) Act 2019. The amendment is done to change the date of commencement of the mandatory period of twelve (12) months from the date of completion of pleadings instead of date of reference to the arbitration.

In addition to the above period of twelve (12) months or eighteen (18) months (with extension), the court is empowered by Section 29A(4) to extend the period beyond the mandated period of twelve (12) months and eighteen (18) months as prescribed under Section 29A(1) and 29A(3), respectively. Section 29A(4) used the expression “either prior to or after expiry of the period so specified”. Although, the expression is unambiguous, and it can be clearly deduced that the court can extend the time when an application is filed even after the expiry of the period of 12 or 18 months. The court has the power to extend the period for making an award at any time before or after the mandate period.

The same view has been taken by the Hon’ble High Court of Delhi in ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam Ltd., 2023 DHC 8078, Hon’ble High Court of Bombay in Nikhil H. Makkan & Ors. v. Standard Charted Investment and Loans (India) Ltd., 2023 BHCOS 14063, and Hon’ble High Court of Kerala, Hon’ble High Court of Madras, and Hon’ble High Court Jammu & Kashmir and Ladakh. 

However, a different view is taken by Hon’ble High Court of Calcutta in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., (2023) SCC OnLine Cal 2645, and Hon’ble High Court of Judicature at Patna in South Bihar Power Distribution Company Ltd. v. Bhagalpur Electricity Distribution Company Pvt. Ltd. (2023) 4 BLJ 165 (BHC).

Both Hon’ble High Court of Calcutta and Hon’ble High Court of Judicature at Patna are of the view that the application for extension of time under Section 29A(4) can only be entertained if filed before the expiry of the mandated period. The reason is based on the term “terminate” used in Section 29A(4). It was observed by the Hon’ble High Courts that on the termination of the mandate period, the arbitral tribunal becomes de jure incapable of performing its functions.

Therefore, the issue as to whether such an application for extension of time under Section 29A(4) can be filed post expiry of the time period mandated under Section 29A(1) and (3) arose from time to time and High Courts interpreted the provision either way.

This issue has been finally settled by the Hon’ble Supreme Court of India vide its recent judgment in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., 2024 INSC 686. Hon’ble Supreme Court has accepted the view taken by Hon’ble High Court of Delhi and Bombay holding that the reasoning given by High Court of Calcutta is fallacious and unacceptable. It observed that,

“11. The word “terminate” in Section 29A(4) makes the arbitral tribunal functus officio, but not in absolute terms. The true purport of the word “terminate” must be understood in light of the syntax of the provision. The absence of a full stop after the word “terminate” is noteworthy. The word “terminate” is followed by the connecting word “unless”, which qualifies the first part with the subsequent limb of the section, i.e. “unless the court has, either prior to or after the expiry of the period so specified, extended the period.” The expression “prior to or after the expiry of the period so specified” has to be understood with reference to the power of the court to grant an extension of time.

12. Accordingly, the termination of the arbitral mandate is conditional upon the non-filing of an extension application and cannot be treated as termination stricto sensu. The word “terminate” in the contextual form does not reflect termination as if the proceedings have come to a legal and final end, and cannot continue even on filing of an application for extension of time. Therefore, termination under Section 29A(4) is not set in stone or absolutistic in character.” 

…Emphasis Supplied

However, Hon’ble Supreme Court while passing the judgment also advised that the power of Court to extend the time is to be exercised only in cases where there is sufficient cause for such extension. It should not be granted mechanically, and the court’s discretion should act as a deterrent against any party intending to abuse the process of law. The court can also impose terms and conditions at the time of extending the period. Hence, as on date the law on the point has been settled that an application under Section 29A(4) of the 1996 Act for extension of time for passage of the arbitral award can be made at any stage either before or after the expiry of the mandatory period of twelve (12) months or eighteen (18) months as stipulated under Section 29A(1) and 29A(3) but the same shall show sufficient cause for extension of time and the extension is totally dependent upon the discretion of the court.

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