Section 29A Petition Maintainable If Filed Before Award Is Delivered and Not If Award Is Delivered : Delhi High Court

Brief Facts:

The matter pertained to a Loan Agreement where the Petitioner acted as the lender, Respondent No. 1 served as the principal borrower, and Respondent Nos. 2 to 5 acted as guarantors, with Respondent No. 6 allegedly providing other undertakings. All parties, including the petitioner and Respondent Nos. 1 to 6, were involved in the arbitration proceedings. The arbitration proceedings were to be conducted under the auspices of the Indian Council of Arbitration (ICA). The Petitioner initiated arbitration by submitting a request to the ICA. In accordance with the ICA Rules, parties were required to complete pleadings before the arbitrator's appointment. The petitioner submitted its statement of claim, and Respondent Nos. 1 to 5 countered with their statement. No further pleadings were filed. An arbitrator was appointed by the ICA. Respondent No. 6 was declared ex-parte. Later, the arbitrator noted that counsel representing Respondent Nos. 1 to 5 sought to withdraw their vakalatnama, and they were permitted to do so. No other counsel appeared on behalf of Respondent Nos. 1 to 5 thereafter.

The final hearing in the arbitration proceedings occurred. Assuming the arbitrator's mandate would terminate one year after the completion of pleadings, the Petitioner approached the Delhi High Court (“High Court”) and file an application under Section 29A of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). Notice of the petition was issued to the Respondents. Later, the arbitrator published the award about a month after Petitioner filed Section 29A petition.

Therefore, the central question before the High Court was whether the mandate of the Tribunal could be extended after the award had been made

Observations by the High Court:

The High Court referred to the case of Harkirat Singh Sodhi v. Oram Foods (P) Ltd. [2023 LiveLaw (Del) 538], involved a situation similar to the case, where the award was rendered during the pendency of the Section 29A petition, and the mandate was extended until the award date. Another Coordinate Bench, in Powergrid Corpn. of India Ltd. v. SPML Infra Ltd., considered the question of whether an award could be validated if made after the Tribunal's mandate had expired and no prior application for extension was submitted. The court concluded that such a petition is not maintainable.

In the case, the High Court noted that the petition was filed before the award, albeit after the expiration of the Arbitrator's mandate. It held that a petition is maintainable when filed before the award is delivered during the ongoing petition, but becomes non-maintainable if filed after the award is delivered and proceedings for setting aside have commenced. This distinction, according to the High Court, is justified on a foundational principle – a party cannot selectively decide whether or not to seek an extension of the mandate after becoming cognizant of its position in the arbitration proceedings and when confronted with a challenge to the award on this basis.

In the case, the petition was filed after the expiry of the learned Arbitrator's mandate, whereas in Harkirat Singh Sodhi, it was filed while the mandate was still valid. However, the High court references its own precedent in ATC Telecom Infrastructure (P) Ltd. v. BSNL [2023 LiveLaw (Del) 1099], affirming that a Section 29A petition can be filed even after the mandate has expired.

Consequently, the petition was allowed.

Case Title: National Skill Development Corporation Vs Best First Step Education Private Limited & Ors.

Citation: 2024 LiveLaw (Del) 265

Case Number: O.M.P.(MISC.)(COMM.) 608/2023.

Advocate for the Petitioner: Ms. Mani Gupta, Mr. Pranav Malhotra, Ms. Vishakha Saluja, Advocates.

Advocate for the Respondent: None.

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