Section 29A Time Limit Does Not Apply To Arbitral Proceedings Commenced Before 2015 Amendment: Delhi High Court

The bench held the “commencement” of proceedings is the relevant yardstick for determining applicability of the Section 29A after 2015 amendment and is different from the concept of “entering upon the reference” referred to in Section 29A before the 2015 amendment.

Brief Facts:

The matter pertained to a petition filed under Section 29A of the Arbitration and Conciliation Act, 1996 seeking an extension of the mandate of the Arbitral Tribunal. The disputes arose from an agreement dated 15.09.2008 concerning the construction of foot over bridges on the Qazigund-Baramulla section of the new BG rail link project in Jammu and Kashmir.

Ircon International Limited (Respondent) didn't object to the continuation of the arbitral proceedings. However, it contended that Section 29A of the Arbitration Act does not apply to these proceedings. According to it, the proceedings were initiated well before the insertion of Section 29A into the Arbitration Act which occurred after the arbitration was commenced. It argued that the arbitration clause was invoked by Chinar Steel Industries (Petitioner) on 14.04.2009. When the parties could not agree on the appointment of the Arbitral Tribunal, the Petitioner approached the High Court of Jammu and Kashmir under Section 11 of the Arbitration Act. This petition was dismissed on 16.08.2013 for lack of territorial jurisdiction. A subsequent review petition was also dismissed which led the Petitioner to appeal to the Division Bench of the High Court of Jammu and Kashmir which dismissed the appeal on the grounds of maintainability.

Subsequently, the Petitioner approached the High Court under Section 11 of the Arbitration Act where the constituted the Arbitral Tribunal by an order. The parties since filed pleadings, led evidence, and the final hearing is in progress with the Petitioner currently presenting rejoinder arguments. The Respondent maintained that the facts demonstrate that the mandate of the Arbitral Tribunal is not bound by the time limits stipulated in Section 29A of the Arbitration Act. It pointed out that Section 29A was introduced by the Arbitration and Conciliation (Amendment) Act, 2015 effective from 23.10.2015, and Section 26 of the Amending Act specified that its provisions would apply only to proceedings commenced thereafter, unless otherwise agreed by the parties.

Observations by the High Court:

The issue before the High Court revolved around whether Section 29A, which mandates the completion of arbitration proceedings within a specified time frame, applied to the proceedings in question.

The High Court referred to the case of Republic of India Through Ministry of Defence vs. M/s Agusta Westland International Ltd. where although the matter was related to a civil suit, the dispute was about whether the mandate of the arbitral tribunal had expired under Section 29A. The court clarified that the "commencement" of arbitration proceedings, as defined under Section 21, is the key factor for determining the applicability of Section 29A. The court differentiated "commencement" from the concept of "entering upon the reference" under Section 29A which was applicable before its amendment. The judgment held that since the arbitration proceedings commenced before the amendment date of 23.10.2015, Section 29A did not apply.

In the present case, the Arbitral Tribunal was constituted on 20.09.2022 which was after the insertion of Section 29A. However, the High Court found that this timing distinction was immaterial. There was no fresh notice of invocation after the proceedings in the High Court of Jammu and Kashmir, which meant that there was no new "commencement" of proceedings as per Section 21. Therefore, Section 29A was held to be inapplicable.

The High Court disposed of the petition and the pending application with the observations that Section 29A did not apply to the proceedings.

Case Title: M/S Chinar Steel Industries Vs Ircon International Limited

Citation: 2024 LiveLaw (Del) 924

Case Number: O.M.P.(MISC.)(COMM.) 618/2024

Advocate for the Petitioner: Ms. Manpreet Kaur, Advocate.

Advocate for the Respondent: Mr. S.K. Chandwani, Mr. Sameer Chandwani, Advocates

Date of Judgment: 16.08.2024

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