Arbitration and Conciliation Act, 1996 — Section 29A — Extension of mandate after award
(Paras 1–2, 14–23)
An application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 for extension of the mandate of the arbitral tribunal is maintainable even after expiry of the statutory period of twelve months (extendable by six months by consent) and even where an award has been rendered after expiry of the mandate.
An award rendered after expiry of the mandate is unenforceable under Section 36 and does not attain the status of a decree; however, such unilateral act of the arbitrator does not denude the Court of its jurisdiction under Section 29A(4) and (5) to extend the mandate upon sufficient cause being shown.
Nature of termination under Section 29A(4) — Not absolute or irretrievable
(Paras 16–18)
The termination of the arbitrator’s mandate under Section 29A(4) upon expiry of time is not final or irreversible. The expression “terminate” in the context of Section 29A is transitory and subject to judicial intervention. The legislative scheme, including continuation of proceedings pending extension application and power of substitution under Section 29A(6), demonstrates the intention to preserve and not abort arbitral proceedings.
Court’s powers under Section 29A — Toolkit for ensuring efficiency and integrity
(Paras 20–23)
While considering extension under Section 29A, the Court may reduce arbitral fees, impose costs, substitute arbitrators, and impose appropriate terms and conditions. The power of substitution is discretionary and fact-dependent. The statutory scheme reflects a balance between expeditious resolution and procedural integrity.
ANALYSIS OF FACTS
The dispute arose out of three agreements to sell between the parties. A sole arbitrator was appointed by the High Court under Section 11 of the Arbitration and Conciliation Act, 1996. Pleadings were completed on 20.08.2022, triggering the twelve-month period under Section 29A(1). By consent under Section 29A(3), the mandate was extended by six months till 20.02.2024.
Though arguments were concluded and the matter reserved for award, settlement negotiations intervened. Ultimately, the arbitrator passed the award on 11.05.2024, i.e., after expiry of the extended mandate on 20.02.2024.
The respondent challenged the award under Section 34 on the ground that it was rendered after expiry of mandate. The appellant filed an application under Section 29A seeking extension of mandate. The High Court dismissed the Section 29A application as not maintainable and allowed the Section 34 petition, holding that an award passed after expiry of mandate is a nullity and mandate cannot be extended post-award.
The Supreme Court was thus called upon to decide whether extension under Section 29A can be granted even after an award has been rendered beyond the statutory timeline.
ANALYSIS OF LAW
The Court undertook a structural and purposive interpretation of Section 29A.
Under the Arbitration Act, 1940, Section 28 expressly empowered the Court to enlarge time whether or not the award had been made. The 1996 Act initially did not prescribe timelines, which led to delay. The Law Commission’s 176th Report recommended structured timelines but emphasized continuation of arbitral proceedings even where delay occurred.
Section 29A, introduced by amendment, prescribes:
twelve months from completion of pleadings;
six months’ consensual extension;
further extension only by Court upon sufficient cause;
continuation of mandate pending extension application;
power of substitution;
power to reduce fees and impose costs.
The Court held that Section 29A does not expressly bar post-award extension. The phrase “if an award is not made” in Section 29A(4) merely identifies the contingency for termination; it does not prohibit extension after an award is rendered.
The Court clarified that:
An award passed after expiry of mandate is unenforceable under Section 36 and need not necessarily be challenged under Section 34 merely for that reason.
The unilateral act of the arbitrator in rendering such an award cannot curtail the Court’s statutory power.
Termination under Section 29A(4) is conditional and subject to judicial revival.
The power to extend exists both prior to and after expiry of mandate.
International jurisprudence was referred to, including developments under English law, to demonstrate that courts retain retrospective power to enlarge time in appropriate cases.
The Court approved earlier observations in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., 2024 SCC Online SC 2494, and clarified that Parliament intended Section 29A to safeguard arbitration from technical collapse due to delay, not to render proceedings futile.
The Court emphasized that extension is not automatic. The Court must examine sufficient cause and may impose costs, reduce fees, or substitute arbitrators where warranted.
RATIO DECIDENDI
An application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 for extension of the mandate of the arbitral tribunal is maintainable even after expiry of the statutory period and even after an award has been rendered beyond the mandate. Such an award is unenforceable, but the Court’s jurisdiction under Section 29A remains intact. The termination under Section 29A(4) is not absolute and is subject to judicial extension upon sufficient cause.
RESULT
The judgment of the High Court dismissing the Section 29A application was set aside. The application was restored for fresh consideration in accordance with the principles laid down by the Supreme Court.
The appeal was allowed.
