[Arbitration & Conciliation Act] S.29A Preserves Arbitral Efficacy, Guards Against Those Who Put Making Of Award On Back-Burner: Calcutta HC

The Calcutta High Court has recently held that Section 29 of the Arbitration & Conciliation Act, 1996, ensures that the arbitral tribunal acts in consonance with the stakeholders to ensure that an award is made within the prescribed timelines.

A single bench of Justice Moushumi Bhattacharya held that in the present case, the arbitrator had informed the parties about the prescribed time for declaration of the award, and rejected the respondents contention that arbitration had to commence de novo due to expiration of mandate under Section 29A. It stated:

The respondent's argument would amount to a most unnatural reading of section 29A where the Court directs commencement of the arbitration from the very beginning despite the tribunal giving a date for pronouncing the award. Section 29A is for preserving arbitral efficacy and should not be made out to be a monster. Substitution or re-appointment is only warranted where the mandate has come to an end and the Court prods the arbitration to proceed to its logical conclusion, i.e. an award. It is indeed curious as to why the respondent, after having participated in the arbitration and consented to the extension of the mandate, is now keen to resist publication of the award.

Brief facts

The Court was dealing with a composite application for extension of the mandate of the arbitral tribunal under section 29A (4) and (5) of the 1996 Act, and for exclusion of the time period from 14.07.2023 to 10.01.2024 for the purpose of determining whether the application had been made within the prescribed period under the 1996 Act.

It was submitted that the mandate of the tribunal had been extended by mutual consent under Section 29A(3) for six months until 14.07.2023.

Thereafter, the petitioner admittedly applied before the trial court for extension of the mandate on 14.07, and the trial court transferred the matter to the Commercial court, which ultimately rejected it as not maintainable. 

Counsel for the petitioner argued that the delay in filing the petition be can be condoned under Sections 5 and 14 of the Limitation Act.

Counsel for the respondent argued that the mandate was originally terminated on 14.07.2023, and then on 9.01.2024, when the petitioner's application was rejected by the commercial court.

It was further argued that the Calcutta High Court lacked jurisdiction over the matter due to the definition of "Court" in the 1996 Act, as well as stated that the HC could not re-appoint the terminated arbitrator, but had to substitute instead.

Court's verdict

In perusing Section 29A, the Court noted that the mandate of the arbitral tribunal, is a thread which transitions seamlessly from one stage of section 29A to the next, unless the thread is broken either by the parties not consenting to extend the mandate under section 29A(3) or the parties failing to make an application to the Court for extension.

It noted that the mandate, unless extended before exhausting the available windows under section 29A(1), (3), (4)/(5), terminates and the tribunal would be rendered de jure ineligible to perform its functions, and that the Court could only step in if an application under Section 29A(4) or (5) was moved.

It was noted that in the present case, the question to be decided was whether the mandate was broken and rendered irrevocably terminated before the present application was filed.

Court observed that the mandate in the present case had a smooth run till the six month extension lapsed, and then was rejected for extension on 9.01.2024. 

It was held that the petitioner could be given the benefit of Section 14 of the Limitation act which provides that the time during which the applicant has been prosecuting another proceedings with due diligence against the same party for the same relief shall be excluded, where the proceeding is in good faith and the Court is unable to entertain the proceeding for defect of jurisdiction.

It was also found that any delay in filing could be condoned under Section 5 of the Limitation act. It noted:

The above factors persuade the Court to hold that the petitioner successfully held up the mandate from 14.7.2023 to 11.01.2024 - if not 15.01.2024 - without break, termination or interruption. Contrary to the stand taken on behalf of the respondent, the mandate did not terminate at any stage in this time frame.

Finally, in discussing the character of Section 29A, the Court noted that it was only enacted to ensure that arbitral efficacy was upheld and parties were abiding by the timelines prescribed. It also rejected the argument that the Calcutta HC would not have jurisdiction to adjudiate.

Howiever, it said that in the present case, there were no unnecessary delays and hence Section 29A could not be made out to be a monster.

Accordingly, the objection of the respondets was dismissed, and the Court extended the mandate of the arbitral tribunal for three weeks from date.

Citation: 2024 LiveLaw (Cal) 57

Case: Praxair India Pvt. Ltd. v Steel Authority of India Ltd

Case No: A.P. COM 41 of 2024

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