The question of whether a court can extend the mandate of an arbitral tribunal after the expiration of the prescribed statutory period has been a subject of legal debate. In a recent ruling, the Supreme Court of India addressed this issue in the case of Civil Appeal arising out of SLP (C) No. 2272/2024. The Court ruled that the High Court erred in dismissing an application for extension filed after the expiration of the statutory time limit, clarifying the scope of Section 29A(4) of the Arbitration and Conciliation Act, 1996 (the "Act").
Key Issue: The Power to Extend Arbitral Mandate
The core issue in this case revolved around whether an application for the extension of time for the arbitral tribunal to pass an award could be filed after the tribunal's mandate had expired. Section 29A of the Act stipulates a 12-month period from the date of completion of pleadings for the tribunal to deliver its award. This period can be extended by mutual consent for another 6 months. However, if the award is not made within the specified period or the extended period, the tribunal’s mandate is deemed to terminate, unless the court extends the period, either before or after its expiration.
The Facts of the Case:
The appellant had entered into a works contract with the respondent, and a dispute arose, which led to the appointment of an arbitral tribunal in February 2019. The proceedings began in June 2019, and by October 2019, the pleadings were completed, triggering the 12-month period for making the award. The statutory period for the arbitral tribunal to render an award was set to expire on October 8, 2020. However, the timeline was extended by mutual consent until April 9, 2021.
Before the expiration of the period, the COVID-19 pandemic significantly impacted the arbitration process, leading to delays. In response to the challenges posed by the pandemic, the Supreme Court, in its Re: Cognizance for Extension of Limitation order dated January 10, 2022, excluded the period from March 15, 2020, to February 28, 2022, for computing limitation periods under various laws, including the Arbitration and Conciliation Act. This exclusion applied to the timeline for making an arbitral award as well.
Despite the impact of the pandemic, the arbitral proceedings resumed in 2022, and the hearings were concluded in May 2023. However, an application for an extension of time was only filed in August 2023, prompting the High Court to dismiss the petition. The High Court ruled that the appellant's delay in filing the application was not adequately explained, and that the tribunal's mandate had terminated in April 2021.
The Supreme Court’s Ruling:
The Supreme Court, after hearing the arguments, held that an application for extension could indeed be filed even after the expiry of the statutory period. The Court relied on the clear language of Section 29A(4), which allows the court to extend the time either before or after the expiration of the specified period. This interpretation was reinforced by the Court's decision in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. (2024), which upheld the view that the tribunal's mandate can be extended even after it has technically expired, provided a valid application for extension is filed.
In considering whether there was "sufficient cause" to justify an extension, the Court emphasized the importance of facilitating effective dispute resolution through arbitration. The Court acknowledged that the pandemic had disrupted the arbitration process, and the period between March 15, 2020, and February 28, 2022, had been excluded from the limitation period. This effectively extended the deadline for filing the application for extension until March 31, 2023. The appellant's delay in filing the application after that period was attributed to various reasons, including adjournments requested by the respondent's counsel and the complexity of the case.
The Supreme Court concluded that there was sufficient cause to extend the deadline, given the unique circumstances of the case, including the global pandemic and the parties' agreement to seek an extension of time.
Conclusion:
The Supreme Court’s decision underscores the judiciary’s role in ensuring that the arbitration process remains effective, even when challenges such as the COVID-19 pandemic disrupt timelines. The Court clarified that the power to extend the arbitral mandate under Section 29A(4) is not limited to applications filed before the expiration of the statutory period, and that courts have the discretion to grant extensions for sufficient cause. This decision reinforces the notion that arbitration is a flexible and party-centric dispute resolution mechanism, and the courts have a vital role in ensuring its timely and fair resolution.
The case serves as a reminder that courts will consider the specific circumstances of each case before exercising their discretion to extend deadlines, ensuring that the arbitration process remains efficient and just for all parties involved.
Arbitration and Conciliation Act, 1996
