Arbitration | Written Consent By Parties Need Not Be In Writing For Extending Arbitral Period: Himachal Pradesh High Court

“Consent of the parties envisaged under Section 29A(3) of the 2015 Arbitration & Conciliation Act for extending the arbitral period need not necessarily be either express or in writing. There can be a deemed consent, an implied consent of the parties, which can be gathered from their acts and conduct. Their acquiescence in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent”, Justice Jyostna Rewal Dua observed.

The case involved several appeals that raised common questions of law and facts related to land acquisition for the construction and maintenance of a four-lane road by the National Highways Authority of India (NHAI). The applicants-appellants sought enhancement of the compensation awarded by the Arbitrator under the National Highways Act, 1956.

The Arbitrator had initially enhanced the market value of the acquired land and awarded statutory benefits. However, the NHAI moved an application before the District Judge Mandi under Section 34 of the Arbitration and Conciliation Act, seeking to set aside the award, arguing that it was non-compliant with Section 29A of the Act. The NHAI contended that the award was pronounced after the mandated period of 12 months had lapsed, without any express consent from the parties or an extension order from the Court.

The District Judge allowed the application moved by the respondent NHAI holding that the Arbitrator had erred in proceeding ahead with the matter after expiry of one year from the date of entering the reference without taking either the express consent of the parties or without seeking an extension from the Court as required under Section 29A of the A&C Act. Consequently, the award dated 05.09.2017 passed by the Arbitrator was set aside. Aggrieved of the same the appellants filed the instant appeal.

Adjudicating on the matter Justice Dua analyzed Section 29A(3) of the Arbitration and Conciliation Act as it existed in the year 2016 and noted that the same provides that the award must be made within 12 months from the date the Arbitral Tribunal enters upon the reference. However, this period can be extended for a further six months by the consent of the parties, the court said.

Deliberating on the matter the bench emphasized that there is no explicit requirement in Section 29A(3) for the parties' consent to be expressed in writing. Instead, consent can be deemed or implied from the parties' conduct during the proceedings, the bench underscored.

In the present case, the court noted that both parties continued with the arbitration proceedings beyond the 12-month period without any objections, indicating their implied consent for the extension.

“Their acquiescence in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent. On the basis of such consent, the arbitral award if passed within a further period of six months would be a valid award”, the court maintained.

In view of these circumstances, the bench opined that the award passed by the Arbitrator within two months after the expiry of the initial 12-month period was valid under Section 29A(3) since it fell within the extended time limit permitted by the parties' implied consent.

For the aforesaid reasons, the bench allowed the appeals and the impugned judgments passed by the District Judge were set aside.