Section 29A Not Applicable To Arbitration Proceedings Commenced Before 2015: Delhi High Court

The Delhi High Court single bench Justice Manoj Kumar Ohri held that Section 29A of the Arbitration and Conciliation Act, 1996 which prescribes a time limit for issuance of arbitral award is not applicable to arbitration proceedings commenced before 2015 Amendment Act. It held that arbitral proceedings commence on the date when the Respondent receives the request for reference to arbitration. Section 29A mandates for the tribunal to make the award within a period of twelve months from the date of completion of pleadings.

Brief Facts:

Zillion Infraprojects Pvt. Ltd (“Petitioner”) was granted a Works Contract by M/s Bridge & Roof India Ltd. through a Letter of Intent. Subsequently, the Petitioner issued a letter of intent to Fab-Tach Works & Constructions Pvt. Ltd. (“Respondent”) for the transportation of materials from the storage yard to the work site, along with ancillary works on a back-to-back basis. Disputes arose between the parties which made the Respondent to invoke arbitration on. Following the completion of pleadings, the Arbitral Tribunal was reconstituted on 30.11.2016, and the arbitral proceedings continued.

As the matter approached its conclusion, it was listed for final arguments on 14.12.2023. At this juncture, the Petitioner, who was the Respondent in the arbitral proceedings, submitted an application for deferment, expressing the intention to file a petition under Section 29A(4) of the Arbitration & Conciliation Act, 1996 (“Arbitration Act”) in Delhi High Court (“High Court”) seeking an extension of the arbitral tribunal's mandate. The Respondent opposed this request, citing an earlier procedural order and argued that no extension was necessary since the arbitration was initiated before the Arbitration & Conciliation (Amendment) Act, 2015 (“Amendment Act”) came into force. Nonetheless, the Petitioner filed an application under Section 29A(4) in High Court.

Observations by the High Court:

The High Court noted that the Section 26 of the Amendment Act explicitly stated that the amendments would not apply to ongoing arbitral proceedings that had commenced in accordance with Section 21 of the Arbitration Act before the commencement of the Amendment Act, unless the parties agreed otherwise. In essence, the applicability of the Amendment Act was made prospective unless there was mutual agreement for retrospective application. The pivotal question before the High Court was whether Section 29A and its prescribed time limits would be applicable to arbitral proceedings initiated before the enactment of the Amendment Act.

Crucially, the High Court noted that the Arbitration Act did not stipulate any time limits for the issuance of an arbitral award. It was only through the addition of Section 29A via the Amendment Act in 2015 that such time limits were introduced for the first time. It held that the commencement of arbitral proceedings aligned with Section 21 of the Arbitration Act. Typically, arbitral proceedings concerning a specific dispute commence on the date when the Respondent receives the request for reference to arbitration, unless the parties agree otherwise. Therefore, it held that the arbitral proceedings were commenced prior to the enactment of the Amendment Act.

Consequently, the High Court held that neither Section 29A nor the time limits specified therein would be applicable to the ongoing arbitral proceedings. The application was dismissed.

Case Title: Zillion Infraprojecs Pvt. Ltd Through Anant Saxena Vs Fab-Tach Works & Constructons Pvt. Ltd.

Citation: 2024 LiveLaw (Del) 245

Case Number: O.M.P.(MISC.)(COMM.) 674/2023 and I.A. 25619/2023.

Advocate for the Petitioner: Mr. Sumit Kumar, Ms. Kumari Supriya and Mr. Vivek Sharma.

Advocate for the Respondent: Mr. Seemant K. Garg and Mr. Krishan Kumar.

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