Court Fully Empowered To Extend Mandate Even After Expiry Of Arbitral Tribunal's Mandate Under Section 29A(4): Delhi High Court

Brief Facts:

The Petitioner and the Respondent into an Agreement titled 'Subcontract for Boiler Works of Unit 1,2,3 of BARH STPP-1 (3x660 MW) Balance Work of Main Plant Package (SG &AUX.)', which included erection, testing & commissioning of balance work of the main plant package. Disputes arose between the parties which led to arbitration proceedings initiated by the Petitioner. Despite a six-month extension agreed upon by both parties on 10th October 2023, the proceedings were not concluded within the stipulated time frame. Feeling aggrieved, the Petitioner approached the Delhi High Court (“High Court”) and filed a petition under Sections 29A(4) & (5) of the Arbitration and Conciliation Act, 1996 for an extension of the mandate of the three-member Arbitral Tribunal.

The Petitioner contended that the mandate of the Arbitral Tribunal expired on 4th February 2024, while the proceedings were at the cross-examination stage. Consequently, it asked for a further extension of 12 months for the Tribunal's mandate to continue. However, the Tribunal, through an order dated 21st February 2024, declared its mandate expired and announced a halt in proceedings pending further orders.

In response, the Respondent contested the petition and alleged that the Petitioner's actions indicated a deliberate delay in the arbitration proceedings.

Observations by the High Court:

The High Court referred to the decision of the Calcutta High Court in Rohan Builders (India) Private Limited v. Berger Paints India Limited where it held that if an arbitral award is not delivered within the specified time limits under Section 29A(1) and/or Section 29A(3) of the Arbitration Act, the tribunal's mandate automatically expires. Consequently, it emphasized the necessity for parties to file a petition under Section 29A(4) before the tribunal's mandate expires, as seeking an extension post-expiry is impermissible according to the legislative intent, which uses the term 'terminate' in Section 29A(5) without provisions for 'revival' or 'renewal'.

However, other High Courts, such as the High Court of Jammu & Kashmir and the High Court of Kerala, took different views on the interpretation of Section 29A(4) of the Arbitration Act. For instance, the Jammu & Kashmir High Court, in H. P Singh v. G. M. Northern Railways, held that the court has the authority to extend the mandate of an arbitral tribunal beyond the initial or extended period specified under Section 29A(4). Similarly, the Kerala High Court, in Hiran Valiiyakkil Lal v. Vineeth M.V., allowed for an extension on sufficient cause, either before or after the expiry of the period provided under Section 29A(2) & (3).

Contrary to the stance of the Calcutta High Court, the Bombay High Court, in Nikhil H. Malkan v. Standard Chartered Investment and Loans (India) Ltd., followed the interpretation of Section 29A(4) as provided by the Delhi High Court in ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam Ltd. It disagreed with the Calcutta High Court's decision in Rohan Builders and held that the court has the authority to entertain extension petitions even after the expiry of the mandate, provided sufficient grounds are presented.

The High Court held that it wouldn't be able to follow the decision laid down by the Calcutta High Court in the case of Rohan Builders, which was relied upon by the Respondent.

The High Court noted that the mandate of the Arbitral Tribunal expired on 4th February 2024, while the petition before the High Court was filed on 23rd February 2024. Despite the expiration of the tribunal's mandate, the matter was still at the stage of cross-examination. The High Court referred to Section 29A(4) of the 1996 Act and held that it employs the phrase "prior to or after expiry of the period so specified." Based on this phrase, the High Court held that it retains full authority to extend the mandate of the learned Arbitral Tribunal, even after the expiration of the initially specified period.

Therefore, the High Court extended the mandate of the Arbitral Tribunal until 31st December 2024.

Case Title: M/S Power Mech Projects Ltd Vs M/S Doosan Power Systems India Pvt. Ltd.

Citation: 2024 LiveLaw (Del) 654

Case Number: O.M.P. (MISC.) 6/2024

Advocate for the Petitioner: Mr. Naresh Markanda, Sr. Adv. with Mr. Rajesh Markanda, Mr. Keshri Kumar, Mr. Rohan Markanda, Ms. Aviral Setia

Advocate for the Respondent: Mr. Shankh Sengupta, Mr. Aubert Sebastian, and Mr. Vedant Kumar

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