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TMI Blog2024 (9) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... is pronounced during the pendency of an application for extension of period of the arbitral tribunal, the court must still decide the application under sub-section (5), and may even, where an award has been pronounced, invoke, when required and justified, sub-sections (6) to (8), or the first and third proviso to Section 29A(4) of the A C Act. While interpreting a statute, meaningful life must be given to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios. An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic. Thus, 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 appeals are directed to be listed in the week commencing 30.09.2024 for final hearing and disposal. - WITH CIVIL APPEAL NO. OF 2024 (Arising out of Special Leave Petition (Civil) No. 24489 of 2023) CIVIL APPEAL NO. OF 2024 (Arising out of Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Jammu and Kashmir and Ladakh in H.P.Singh v. G.M. Northern Railways and Others10, have held that an application for extension of time limit for arbitral award can be filed by a party even after the expiry of the term of twelve months or the extended period of six months. Recently, the High Court at Calcutta in a subsequent decision of the single Judge in Ashok Kumar Gupta v. M.D. Creations and Others11, on elaborated examination, has concurred with this view.12 3. For the reasons recorded below, we accept the view taken by the High Courts of Delhi, Jammu and Kashmir and Ladakh, Bombay, Kerala, Madras, and the subsequent view expressed by the High Court at Calcutta in Ashok Kumar Gupta (supra). However, before we elucidate our reasons, it would be appropriate to first quote Section 29A of the A C Act as it stands today: 29-A. Time limit for arbitral award. (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23: Provided that the award in the matter of international commercial arbitration may be made as expeditiously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (5) shall be disposed of by the court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party. 4. Earlier, the Arbitration Act, 1940, stipulated in its First Schedule that the arbitral award must be made within four months from the date of reference, or from the date the arbitrator was called upon to act by notice, or within any extended time granted thereafter.13 Section 28(1) of the Arbitration Act, 1940, empowered the court to extend the time for making an award, irrespective of whether the original time had expired or whether the award had already been made. As per Section 28(2) of the Arbitration Act, 1940, parties could extend the time for making an award by mutual consent.14 Prior to the enactment of Section 29A, the A C Act did not specify a time limit for making an arbitral award. This was deliberate, given the fact that the First Schedule and Section 28 of the Arbitration Act, 1940 led to litigation and delay. Section 29A, as quoted above, was inserted by Act No. 3 of 201615 with retrospective effect from 23.10.2015. The Arbitration and Conciliation (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where an application for an extension of time under Section 29A(5) has been filed and is pending, the mandate of the arbitral tribunal shall continue till the disposal of the application. Thus, the second proviso to Section 29A(4), by specific mandate, allows the arbitration proceedings to continue during the pendency of the extension application under Section 29A(5) before the court. Lastly, the extension of time is to be granted by the court only for sufficient cause and on such terms and conditions as may be imposed by the court. We will elaborate on the last aspect, and why this interpretation is preferable. First, we will refer to the ratio and reasoning in Rohan Builders (India) Pvt. Ltd. (supra). 8. The core of the ratio and reasoning of Rohan Builders (India) Pvt. Ltd. (supra) is based on the use of the expression terminate in Section 29A(4). The judgment relies on the recommendations made by the 176th Report of the Law Commission of India, which had suggested using the term suspend . Juxtaposing the words terminate and suspend , it is noted that the use of the expression terminate reflects the legislative intent of terminating the mandate of the arbitral tribunal upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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.21 13. An interpretive process must recognize the goal or purpose of the legal text.22 Section 29A intends to ensure the timely completion of arbitral proceedings while allowing courts the flexibility to grant extensions when warranted. Prescribing a limitation period, unless clearly stated in words or necessary, should not be accepted. Bar by limitation has penal and fatal consequences. This Court in North Eastern Chemicals Industries (P) Ltd. and Another v. Ashok Paper Mill (Assam) Ltd. and Another23 observed: When no limitation stands prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the absence of a provision as to time limit for passing an award. xx xx xx 2.21.3 ( )The time limit can be more realistic subject to extension only by the court. Delays ranging from five years to even fourteen years in a single arbitration have come to the Commission s notice. The Supreme Court of India has also referred to these delays of the arbitral tribunal. The point here is that these delays are occurring even in cases where there is no court intervention during the arbitral process. The removal of the time limit is having its own adverse consequences. There can be a provision for early disposal of the applications for extension, if that is one of the reasons for omitting a provision prescribing a time limit, say one month. Parties can be permitted to extend time by one year. Pending the application for extension, we propose to allow the arbitration proceedings to continue.( ) xx xx xx 2.21.4 It is, therefore, proposed to implement the recommendation made in the 76th Report of the Law Commission with the modification that an award must be passed at least within one year of the arbitrators entering on the reference. The initial period will be one year. Thereafter, parties can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase none of the parties files an application, even then the arbitral tribunal may seek an extension from the Court. From the moment the application is filed, the arbitration proceedings can be continued. When the Court takes up the application for extension, it shall grant extension subject to any order as to costs and it shall fix up the time schedule for the future procedure before the arbitral tribunal. It will initially pass an order granting extension of time and fixing the time frame before the arbitral tribunal and will continue to pass further orders till time the award is passed. This procedure will ensure that ultimately an award is passed. 15. Rohan Builders (India) Pvt. Ltd. (supra) highlights that an interpretation allowing an extension application post the expiry period would encourage rogue litigants and render the timeline for making the award inconsequential. However, it is apposite to note that under Section 29A(5), the power of the court to extend the time is to be exercised only in cases where there is sufficient cause for such extension. Such extension is not granted mechanically on filing of the application. The judicial discretion of the court in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, the court must still decide the application under sub-section (5), and may even, where an award has been pronounced, invoke, when required and justified, sub-sections (6) to (8), or the first and third proviso to Section 29A(4) of the A C Act. 18. While interpreting a statute, we must strive to give meaningful life to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios.29 An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic. 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. 20. We, accordingly, answer the question in the aforesaid terms. The appeals are directed to be listed in the week commencing 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, of their appointment. (2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. (3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months. (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 sub-section, 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. (6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Others v. Bishun Das, (1967) 1 SCR 836. 20 This Court in Renaissance Hotel Holdings Inc. v. B. Vijaya Sai and Others, (2022) 5 SCC 1 at 66 held that It is thus trite law that while interpreting the provisions of a statute, it is necessary that the textual interpretation should be matched with the contextual one. The Act must be looked at as a whole and it must be discovered what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation.( ) 21 Supra note 11. 22 Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619. 23 2023 SCC OnLine SC 1649. 24 Ajaib Singh v. Sirhind Cooperative Marketing-cum-Processing Service Society Ltd. and Another, (1999) 6 SCC 82. 25 We have not examined and pronounced on the legal consequence when the proceedings terminate in terms of Section 29A of the A C Act and the legal remedy available to the parties. 26 This Court in Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 Stamp Act, 1899, In re, (2024) 6 SCC 1 at para 94 held: The Arbitration Act represents the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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