2024 (11) TMI 1111 - SC - Indian Laws

Power and jurisdiction to extend the period, after the expiry of the Arbitral Tribunal's mandate - Whether the application filed by the appellant under Section 29A(4) of the Arbitration and Conciliation Act, 1996 for extension of the mandate of the Arbitral Tribunal ought to have been allowed by the High Court? Whether the application for extension can be entertained if it is filed after the expiry of the Arbitral Tribunal s mandate? - HELD THAT - When must an application under Section 29A(4) be filed - The effect of the provision is that if the arbitral award is not made within 12 months from when the pleadings are completed, extendable by a further 6 months by mutual consent of parties, the Tribunal s mandate will terminate, unless the court either prior or after the expiry of the period, extends it. The wording of subsection (4) clearly and explicitly enables a court to extend the Tribunal s mandate after expiry of the statutory and extendable period of 18 months. The issue is no longer res integra in view of a recent decision of this Court in Rohan Builders 2024 (10) TMI 1393 - SUPREME COURT (LB) The case squarely covers the issue against him - This Court in Rohan Builders has held that the application for extension of time can be filed even after the expiry of the period in sub-sections (1) and (3). Even if sub-section (4) provides for the termination of the Tribunal s mandate on the expiry of the period, it recognises party autonomy to move an application before the Court for further extension. Thus, the termination of mandate under the provision is only conditional on the non-filing of an extension application, and cannot be taken to mean that the mandate cannot be extended once it expires. The wording of Section 29A(4) and the decision in Rohan Builders clearly answer the first issue in favour of the appellant, i.e., an application for extension can be filed either before or after the termination of the Tribunal s mandate upon expiry of the statutory and extendable period. Whether an extension of time should be granted in the present case? - HELD THAT - As per Section 29A(5), the decision to extend the time is an exercise of discretion by the court and must be done on sufficient cause being shown, and on such terms and conditions that the court deems fit. The issue is not whether the application under Section 29A(4) is filed within the permissible time for seeking extension, i.e., 12 months, followed by another 6 months at the consent of the parties. The real issue is whether there is a sufficient cause for the Court to extend the period for making of the award. For considering whether there is a sufficient cause or not, it is necessary to take into account the following events. As indicated earlier, even before expiry of the period of 12 months under Section 29A(1), commencing from 09.10.2019 (date of completion of pleadings), the COVID pandemic had started. The period between 15.03.2020 and 28.02.2022 is anyways mandated to be excluded from periods of limitation - thus, it is clear that the reasoning adopted by the High Court in holding that there is a delay of 2 years, 4 months in filing the application is erroneous. The meaning of 'sufficient cause' for extending the time to make an award must take colour from the underlying purpose of the arbitration process. The primary objective in rendering an arbitral award is to resolve disputes through the agreed dispute resolution mechanism as contracted by the parties. Therefore, 'sufficient cause' should be interpreted in the context of facilitating effective dispute resolution. Having taken note of the fact that the pandemic had commenced even before the expiry of 12 months from the completion of pleadings, this Court excluding the period between 15.03.2020 to 28.02.2023 in Re Cognizance for Extension of Limitation 2022 (1) TMI 385 - SC ORDER , and the agreement between the parties on 05.05.2023 to seek extension of time by filing an application before the Court, it is opined that there is sufficient cause for extension of time. The order and judgment passed by the High Court is set aside - civil appeal allowed.

Summary

Issues Involved:

1. Whether the application for extension can be entertained if it is filed after the expiry of the Arbitral Tribunal's mandate?
2. If yes, do the facts and circumstances warrant an extension in the present case?

Issue-wise Detailed Analysis:

1. Application for Extension Post-Expiry of Tribunal's Mandate:

The primary issue addressed in the judgment is whether an application for extension of the Arbitral Tribunal's mandate under Section 29A(4) of the Arbitration and Conciliation Act, 1996 can be entertained if filed after the expiry of the Tribunal's mandate. The Supreme Court examined the wording of Section 29A(4), which states that the mandate of the arbitrator(s) shall terminate unless the court extends the period, either prior to or after the expiry of the specified period. The Court highlighted that the provision explicitly enables a court to extend the Tribunal's mandate even after the expiry of the statutory and extendable period of 18 months. This interpretation was supported by a recent decision in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., which clarified that the application for extension can be filed after the expiry of the period, recognizing party autonomy to move an application before the Court for further extension. Thus, the Court concluded that the application for extension can indeed be entertained post-expiry of the Tribunal's mandate.

2. Sufficient Cause for Extension in the Present Case:

The second issue considered was whether the facts and circumstances of the case warranted an extension of time for the Arbitral Tribunal to make its award. The Court noted that the statutory period for making the award was affected by the COVID-19 pandemic, which led to an exclusion of the period between 15.03.2020 and 28.02.2022 from the computation of periods of limitation, as per its earlier order. Consequently, the effective period for filing the application for extension was adjusted, and the delay in filing the application was significantly reduced. The Court also considered the reasons provided by the appellant for the delay, which included the impact of the pandemic, the complexity of the case, and the fact that the hearing was already concluded, with only the award pending. The Court emphasized that the meaning of 'sufficient cause' should be interpreted in the context of facilitating effective dispute resolution, and given the circumstances, there was sufficient cause for extending the time. Therefore, the Court allowed the appeal, set aside the High Court's order, and extended the period for making the award by the Arbitral Tribunal until 31st December 2024.

In conclusion, the Supreme Court held that an application for extension of the Arbitral Tribunal's mandate can be entertained even if filed after the expiry of the mandate, and in the present case, sufficient cause existed to warrant an extension.