Termination Of Mandate Of Arbitral Tribunal Results In Waste Of Time, Resources And Money, Court Allowed Petition U/S 29A (4) And (5) Of Arbitration Act: Delhi High Court

Also, the said delay of four and a half months in filing the present petition is not an inordinate delay to direct that the mandate of the Sole Arbitrator should not be extended, or a substitute arbitrator should be appointed.

Brief Facts:

The present petition has been filed under Section 29A (4) and (5) of the Arbitration and Conciliation Act, 1996 read with section 7 of the Commercial Courts Act, 2015 seeking extension of the mandate of the Sole Arbitrator for a period of one year for concluding the arbitral proceedings and passing the arbitral award. The disputes between the parties arise in relation to the Memorandum of Understanding (“MOU”) and Reconstitution Deed (“RD”) executed between the parties. The prime controversy between the parties is that as per the petitioners, the petitioners were coerced to execute the MOU and the RD which were executed to address the outstanding payments owed to various vendors, including sub-contractors and suppliers, in connection with the four laning of 71 km of the Haridwar – Nagina section of the NH-74.

Then, the petitioners filed a petition under section 9 of the act and the parties were referred to arbitration. After the first arbitration hearing, the parties were referred to mediation before the Delhi High Court Mediation and Conciliation Centre and the same was intimated to the Sole Arbitrator. However, the mediation between the parties failed and the petitioner approached the Sole Arbitrator to continue with the arbitral proceedings. Thereafter, the pleadings in the arbitral proceedings came to be completed and the period of one year for concluding the arbitral proceedings and passing of the arbitral award in terms of section 29 A (1) of the Act began. Then, there was some confusion with respect to when the mandate of the sole arbitrator stood expired. Consequently, the parties were directed to file an application under section 29 A (4) of the Act seeking extension of the mandate of the Sole Arbitrator.

.Observation of the court:

The court observed that it is the case of the respondents that the extension under Section 29A of the Act should not be granted mechanically but only in cases where sufficient cause of delay in the arbitral proceedings has been shown. Also, the court relied on the judgment of Rohan Builders (India) Private Limited v. Berger Paints India Limited (2024), wherein the court relied upon the 176th Report of the Law Commission of India, and it was held that the termination of the mandate of the Arbitral Tribunal results in waste of time, resources and money for the parties.

Moving further, the court noted that the parties and the Arbitral Tribunal have invested a lot of time, effort and energy in the arbitral proceedings. The essence of the Arbitration and Conciliation Act, 1996 is a litigant-centric process to expedite the disposal of cases and reduce the cost of litigation. Also, the said delay of four and a half months in filing the present petition is not an inordinate delay to direct that the mandate of the Sole Arbitrator should not be extended, or a substitute arbitrator should be appointed.

Finally, the court allowed the petition, and the mandate of the Sole Arbitrator is extended by a period of 1 year.

Case Title: M/S RCC INFRAVENTURES LTD & ORS v. M/S DMI FINANCE PVT LTD & ORS

Case Number: O.M.P. (MISC.) (COMM.) 41/2024

Counsel for the Petitioner: Ms Amrita Panda and Mr Udbhav Gady, Advs.

Counsel for the Respondent: Ms Geeta Luthra, Sr. Adv. with Ms Shivani Luthra Lohiya, Ms Lalit Mohini Bhat, Mr Nitin Saluja, Mr Manas Aggarwal, Ms Ishita Soni, Mr Pranya Madan, Ms Ishita Agarwal, Ms Anirban Chanda, Mr B.S. Jakhar, Mr Vikram Singh Jakhar, Mr Nihar Dagar and Ms Varnika Sharma, Advs. for R-1. Mr Siddharth Khattar, Mr Divij Andley and Mr Gaurav Parewa, Advs. for R-2 and R-3 (through VC)

Date of Judgment: 19.12.2024

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