Supreme Court of India
Rohan Builders (India) Private Limited vs Berger Paints India Limited on 12 September, 2024
REPORTABLE
2024 INSC 686
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 23320 of 2023)
ROHAN BUILDERS (INDIA) PRIVATE LIMITED ..... APPELLANT
VERSUS
BERGER PAINTS INDIA LIMITED ..... RESPONDENT
WITH
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 24489 of 2023)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 26938 of 2023)
CIVIL APPEAL NOS. OF 2024
(Arising out of Special Leave Petition (Civil) Nos. 26990-26991 of 2023)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 27353 of 2023)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 1344 of 2024)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 2115 of 2024)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 8131 of 2024)
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No. 12170 of 2024)
AND
CIVIL APPEAL NOS. OF 2024
Signature Not Verified (Arising out of Special Leave Petition (Civil) Nos. 13975-13976 of 2024)
Digitally signed by
babita pandey
Date: 2024.09.12
17:23:33 IST
Reason:
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 1 of 16
JUDGMENT
SANJIV KHANNA, J.
Leave granted.
2. This common judgment decides whether an application for extension of time
under Section 29A of the Arbitration and Conciliation Act, 1996 1 can be filed
after the expiry of the period for making of the arbitral award. The High Court
at Calcutta in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Limited2
has held that the application for extension of time under Sections 29A(4) and
29A(5) of the A & C Act can only be entertained if filed before the expiry of the
mandate of the arbitral tribunal. The High Court at Calcutta held that once the
mandate of the arbitral tribunal is terminated by afflux of time of twelve months,
or when so consented to by the parties after a further six-month extension, the
power of the court to extend time under Section 29A(4) cannot be invoked. A
similar view has been taken by a Division Bench of the High Court of Judicature
at Patna in South Bihar Power Distribution Company Limited v. Bhagalpur
Electricity Distribution Company Private Limited.3 However, a catena of
judgments from other High Courts have taken an opposite view. The High
Court of Delhi in ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam
Ltd.4, Wadia Techno-Engineering Services Limited v. Director General of
Married Accommodation Project and Another5, and some other cases6; the
High Court of Judicature at Bombay in Nikhil H. Malkan and Others v. Standard
1 For short, “A & C Act”.
2 AP/328/2023 and other connected matters decided on 06.09.2023.
3 Civil Writ Jurisdiction Case No. 20350 of 2021 and other connected matters decided on 26.04.2023.
4 2023:DHC:8078.
5 2023 SCC OnLine Del 2990.
6 ATS Infrastructure Ltd. and Another v. Rasbehari Traders, 2023 SCC OnLine Del 8645, M/s Power
Mech Projects Ltd. v. M/s Doosan Power Systems India Pvt. Ltd., 2024:DHC:3769, KMP Expressways
Ltd. v. IDBI Bank Ltd., 2024 SCC OnLine Del 2617, Reliance Infrastructure Limited v. Madhyanchal
Vidyut Vitran Nigam Limited, 2023:DHC:5745 et al.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 2 of 16
Chartered Investment and Loans (India) Limited7; the High Court of Kerala in
Hiran Valiiyakkil Lal and Others v. Vineeth M.V. and Others8; the High Court of
Madras in G.N.Pandian v. S. Vasudevan and Others9; and the High Court of
Jammu and Kashmir and Ladakh in H.P.Singh v. G.M. Northern Railways and
Others10, have held that an application for extension of time limit for arbitral
award can be filed by a party even after the expiry of the term of twelve months
or the extended period of six months. Recently, the High Court at Calcutta in a
subsequent decision of the single Judge in Ashok Kumar Gupta v. M.D.
Creations and Others11, on elaborated examination, has concurred with this
view.12
3. For the reasons recorded below, we accept the view taken by the High Courts
of Delhi, Jammu and Kashmir and Ladakh, Bombay, Kerala, Madras, and the
subsequent view expressed by the High Court at Calcutta in Ashok Kumar
Gupta (supra). However, before we elucidate our reasons, it would be
appropriate to first quote Section 29A of the A & C Act as it stands today:
“29-A. Time limit for arbitral award.—(1) The award in matters
other than international commercial arbitration shall be made by
the arbitral tribunal within a period of twelve months from the date
of completion of pleadings under sub-section (4) of Section 23:
Provided that the award in the matter of international commercial
arbitration may be made as expeditiously as possible and
endeavour may be made to dispose of the matter within a period
of twelve months from the date of completion of pleadings under
sub-section (4) of Section 23.
(2) If the award is made within a period of six months from the
date the arbitral tribunal enters upon the reference, the arbitral7 2023:BHC-OS:14063.
8 2023 SCC OnLine Ker 5151.
9 2020 SCC OnLine Mad 737.
10 2023 SCC OnLine J&K 1255.
11 2024 SCC OnLine Cal 6909.
12 This Court while issuing notice in the Civil Appeal a/o SLP (C) No. 2115 of 2024 had granted a stay
on the operation of the common judgment in Rohan Builders (India) Pvt. Ltd. (supra).
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 3 of 16
tribunal shall be entitled to receive such amount of additional fees
as the parties may agree.
(3) The parties may, by consent, extend the period specified in
sub-section (1) for making award for a further period not
exceeding six months.
(4) If the award is not made within the period specified in sub-
section (1) or the extended period specified under sub-section
(3), the mandate of the arbitrator(s) shall terminate unless the
court has, either prior to or after the expiry of the period so
specified, extended the period:
Provided that while extending the period under this sub-section,
if the court finds that the proceedings have been delayed for the
reasons attributable to the arbitral tribunal, then, it may order
reduction of fees of arbitrator(s) by not exceeding five per cent
for each month of such delay:
Provided further that where an application under sub-section (5)
is pending, the mandate of the arbitrator shall continue till the
disposal of the said application:
Provided also that the arbitrator shall be given an opportunity of
being heard before the fees is reduced.
(5) The extension of period referred to in sub-section (4) may be
on the application of any of the parties and may be granted only
for sufficient cause and on such terms and conditions as may be
imposed by the court.
(6) While extending the period referred to in sub-section (4), it
shall be open to the court to substitute one or all of the arbitrators
and if one or all of the arbitrators are substituted, the arbitral
proceedings shall continue from the stage already reached and
on the basis of the evidence and material already on record, and
the arbitrator(s) appointed under this section shall be deemed to
have received the said evidence and material.
(7) In the event of arbitrator(s) being appointed under this
section, the arbitral tribunal thus reconstituted shall be deemed
to be in continuation of the previously appointed arbitral tribunal.
(8) It shall be open to the court to impose actual or exemplary
costs upon any of the parties under this section.
(9) An application filed under sub-section (5) shall be disposed of
by the court as expeditiously as possible and endeavour shall be
made to dispose of the matter within a period of sixty days from
the date of service of notice on the opposite party.”Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 4 of 16
4. Earlier, the Arbitration Act, 1940, stipulated in its First Schedule that the arbitral
award must be made within four months from the date of reference, or from
the date the arbitrator was called upon to act by notice, or within any extended
time granted thereafter.13 Section 28(1) of the Arbitration Act, 1940,
empowered the court to extend the time for making an award, irrespective of
whether the original time had expired or whether the award had already been
made. As per Section 28(2) of the Arbitration Act, 1940, parties could extend
the time for making an award by mutual consent.14 Prior to the enactment of
Section 29A, the A & C Act did not specify a time limit for making an arbitral
award. This was deliberate, given the fact that the First Schedule and Section
28 of the Arbitration Act, 1940 led to litigation and delay. Section 29A, as
quoted above, was inserted by Act No. 3 of 201615 with retrospective effect
13 Paragraph 3 to the First Schedule of the Arbitration Act, 1940 reads:
“3. The arbitrators shall make their award within four months after entering on the reference
or after having been called upon to act by notice in writing from any party to the arbitration
agreement or within such extended time as the Court may allow.”
14 “28. Power to Court only to enlarge time for making award.—
(1) The Court may, if thinks fit, whether the time for making the award has expired or not and whether
the award has been made or not, enlarge from time to time the time for making the award.
(2) Any provision in an arbitration agreement whereby the arbitrators or umpire may except with the
consent of all the parties to the agreement, enlarge the time for making the award, shall be void and
of no effect.”
15 Section 29A was inserted in the A & C Act vide the Arbitration and Conciliation (Amendment) Act,
2015 (Act No. 3 of 2016) which read:
“15. Insertion of new Sections 29-A and 29-B.— After Section 29 of the principal Act,
the following new sections shall be inserted, namely—
‘29-A. Time limit for arbitral award.—
(1) The award shall be made within a period of twelve months from the
date the arbitral tribunal enters upon the reference.
Explanation.— For the purpose of this sub-section, an arbitral tribunal shall
be deemed to have entered upon the reference on the date on which the
arbitrator or all the arbitrators, as the case may be, have received notice,
in writing, of their appointment.
(2) If the award is made within a period of six months from the date the
arbitral tribunal enters upon the reference, the arbitral tribunal shall be
entitled to receive such amount of additional fees as the parties may agree.
(3) The parties may, by consent, extend the period specified in sub-section
(1) for making award for a further period not exceeding six months.
(4) If the award is not made within the period specified in sub-section (1)
or the extended period specified under sub-section (3), the mandate of the
arbitrator(s) shall terminate unless the Court has, either prior to or after the
expiry of the period so specified, extended the period:
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 5 of 16
from 23.10.2015. The Arbitration and Conciliation (Amendment) Act, 2015
aimed to ensure that arbitration proceedings are completed without
unnecessary adjournments and delay.
5. Section 29A envisages two time limits for making of an arbitral award. First,
Section 29A(1) states that an award shall be made by the arbitral tribunal within
a period of twelve months. Secondly, Section 29A(3) stipulates that the parties
by consent can extend the time for making the award beyond twelve months,
up to an additional period of six months. Extension beyond six months, even
by consent of the parties, is not permitted. In terms of the Arbitration and
Conciliation (Amendment) Act, 2019 (Act No. 33 of 2019)16, the time-limit for
Provided that while extending the period under this sub-section, if the court
finds that the proceedings have been delayed for the reasons attributable
to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s)
by not exceeding five per cent for each month of such delay.
(5) The extension of period referred to in sub-section (4) may be on the
application of any of the parties and may be granted only for sufficient
cause and on such terms and conditions as may be imposed by the court.
(6) While extending the period referred to in sub-section (4), it shall be
open to the court to substitute one or all of the arbitrators and if one or all
of the arbitrators are substituted, the arbitral proceedings shall continue
from the stage already reached and on the basis of the evidence and
material already on record, and the arbitrator(s) appointed under this
section shall be deemed to have received the said evidence and material.
(7) In the event of arbitrator(s) being appointed under this section, the
arbitral tribunal thus reconstituted shall be deemed to be in continuation of
the previously appointed arbitral tribunal.
(8) It shall be open to the Court to impose actual or exemplary costs upon
any of the parties under this section.
(9) An application filed under sub-section (5) shall be disposed of by the
court as expeditiously as possible and endeavour shall be made to dispose
of the matter within a period of sixty days from the date of service of notice
on the opposite party.’ ”
16 Section 29A was further amended vide the Arbitration and Conciliation (Amendment) Act, 2019 (Act
No. 33 of 2019) which read:
“6. Amendment of Section 29-A.— In Section 29-A of the principal Act,—
(a) for sub-section (1), the following sub-section shall be substituted, namely:—
‘(1) The award in matters other than international commercial
arbitration shall be made by the arbitral tribunal within a period of
twelve months from the date of completion of pleadings under sub-
section (4) of Section 23:
Provided that the award in the matter of international commercial
arbitration may be made as expeditiously as possible and
endeavour may be made to dispose of the matter within a period of
twelve months from the date of completion of pleadings under sub-
section (4) of Section 23.’;
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 6 of 16
making an arbitral award under Section 29A(1) is not applicable to international
commercial arbitration. As per the amendment made by Act No. 33 of 2019,
the twelve-month period commences from the date of completion of pleadings
under Section 23(4) of the A & C Act. Earlier, Section 29A(1) had stipulated
that the twelve-month period would begin from the date the arbitral tribunal
enters upon reference. Section 29A(2) states that if the award is made within
six months, the arbitral tribunal will be entitled to receive such amount as
additional fees as the parties may agree.
6. Section 29A(4) is the provision which requires interpretation. It states that
where the award is not made within the specified period of twelve or eighteen17
months, the mandate of the arbitral tribunal will terminate. However, this
provision does not apply if the court has extended the period, either before or
after the expiry of the initial or the extended term. In other words, Section
29A(4) empowers the court to extend the period for making of the arbitral
award beyond a period of twelve months or eighteen months, as the case may
be. The expression “either prior to or after the expiry of the period so specified”
is unambiguous. It can be deduced by the language that the court can extend
the time where an application is filed after the expiry of the period under sub-
section (1) or the extended period in terms of sub-section (3). The court has
the power to extend the period for making an award at any time before or after
the mandated period.
(b) in sub-section (4), after the proviso, the following provisos shall be inserted, namely:—
‘Provided further that where an application under sub-section (5) is
pending, the mandate of the arbitrator shall continue till the disposal of
the said application:
Provided also that the arbitrator shall be given an opportunity of being
heard before the fees is reduced.’”
17 This includes the period of twelve months under Section 29A(1) and the extended period of six
months under Section 29A(3).
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 7 of 16
7. Section 29A(5) states that a party to the arbitration proceedings can file an
application in court for an extension of time for making the award. As per the
second proviso to Section 29A(4), where an application for an extension of
time under Section 29A(5) has been filed and is pending, the mandate of the
arbitral tribunal shall continue till the disposal of the application. Thus, the
second proviso to Section 29A(4), by specific mandate, allows the arbitration
proceedings to continue during the pendency of the extension application
under Section 29A(5) before the court. Lastly, the extension of time is to be
granted by the court only for ‘sufficient cause’ and on such terms and
conditions as may be imposed by the court. We will elaborate on the last
aspect, and why this interpretation is preferable. First, we will refer to the ratio
and reasoning in Rohan Builders (India) Pvt. Ltd. (supra).
8. The core of the ratio and reasoning of Rohan Builders (India) Pvt. Ltd. (supra)
is based on the use of the expression “terminate” in Section 29A(4). The
judgment relies on the recommendations made by the 176 th Report of the Law
Commission of India, which had suggested using the term “suspend”.
Juxtaposing the words “terminate” and “suspend”, it is noted that the use of the
expression “terminate” reflects the legislative intent of terminating the mandate
of the arbitral tribunal upon the expiry of the specified period. Therefore, the
reasoning observes that on the termination of the mandate, the arbitral tribunal
becomes de jure incapable of performing its function. Along the same lines, it
is argued before us that, as a sequitur, and in view of Sections 14, 15, 29A and
32 of the A & C Act, a party must file an application for an extension of time to
make an arbitral award before the culmination of the initial twelve-month period
or the extended six-month period.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 8 of 16
9. In our opinion, the aforesaid reasoning is fallacious and unacceptable.
Language serves as a means to express thoughts and intentions.18 Words can
have various meanings and connotations; thus, an interpretive exercise must
be conducted with careful consideration of both the text and the context of the
provision. Therefore, sometimes the court eschews a literal construction if it
produces manifest absurdity or unjust results.19
10. The word “terminate” in Section 29A(4) has to be read in the context of the said
provision.20 It should not be read as an isolated word with a strict dictionary
meaning, but rather in conjunction with the surrounding words and expressions
which warrant recognition and consideration. This evinces the legislative
intent. Secondly, the legislative preference for the term “terminate” over
“suspend” is apparent, since the word “suspend” could cause incongruity and
a legal conundrum if no party files an application for an extension of time. In
such a scenario, the arbitral proceedings would stand suspended ad infinitum.
Therefore, the legislature by using the word “terminate” intends to affirm the
principle of party autonomy. Resultantly, if neither party moves an application
for an extension of time for making the award, the arbitration proceedings are
terminated. Consequences follow. Clearly, the use of the word “suspension”
would have led to infeasible ramifications.
18 Oswal Agro Mills Ltd. and Others v. Collector of Central Excise and Others, 1993 Supp (3) SCC 716.
19 Babu Manmohan Das Shah and Others v. Bishun Das, (1967) 1 SCR 836.
20 This Court in Renaissance Hotel Holdings Inc. v. B. Vijaya Sai and Others, (2022) 5 SCC 1 at ¶66
held that
“It is thus trite law that while interpreting the provisions of a statute, it is necessary that the
textual interpretation should be matched with the contextual one. The Act must be looked
at as a whole and it must be discovered what each section, each clause, each phrase and
each word is meant and designed to say as to fit into the scheme of the entire Act. No part
of a statute and no word of a statute can be construed in isolation.(…)”
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 9 of 16
11. The word “terminate” in Section 29A(4) makes the arbitral tribunal functus
officio, but not in absolute terms. The true purport of the word “terminate” must
be understood in light of the syntax of the provision. The absence of a full stop
after the word “terminate” is noteworthy. The word “terminate” is followed by
the connecting word “unless”, which qualifies the first part with the subsequent
limb of the section, i.e. “unless the court has, either prior to or after the expiry
of the period so specified, extended the period.” The expression “prior to or
after the expiry of the period so specified” has to be understood with reference
to the power of the court to grant an extension of time.
12. Accordingly, the termination of the arbitral mandate is conditional upon the
non-filing of an extension application and cannot be treated as termination
stricto sensu. The word “terminate” in the contextual form does not reflect
termination as if the proceedings have come to a legal and final end, and
cannot continue even on filing of an application for extension of time.
Therefore, termination under Section 29A(4) is not set in stone or absolutistic
in character.21
13. An interpretive process must recognize the goal or purpose of the legal text.22
Section 29A intends to ensure the timely completion of arbitral proceedings
while allowing courts the flexibility to grant extensions when warranted.
Prescribing a limitation period, unless clearly stated in words or necessary,
should not be accepted. Bar by limitation has penal and fatal consequences.
This Court in North Eastern Chemicals Industries (P) Ltd. and Another v.
Ashok Paper Mill (Assam) Ltd. and Another23 observed:
21 Supra note 11.
22 Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619.
23 2023 SCC OnLine SC 1649.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 10 of 16
“When no limitation stands prescribed it would be
inappropriate for a Court to supplant the legislature’s wisdom
by its own and provide a limitation, more so in accordance with
what it believes to be the appropriate period.”
Courts should be wary of prescribing a specific period of limitation in cases
where the legislature has refrained from doing so.24 If we give a narrow and
restrictive meaning to Section 29A(4), we would be indulging in judicial
legislation by incorporating a negative stipulation of a bar of limitation, which
has a severe annulling effect. Such an interpretation will add words to widen
the scope of legislation and amount to modification or rewriting of the statute.
If the legislature intended such an outcome, it could have stated in the statute
that – “the Court may extend the period only if the application is filed before
the expiry of the mandate of the arbitrator, not after”. Indeed, there would have
been no need to use the phrase “after the expiry of the period” in the statute.
In other words, a rigid interpretation would amount to legislating and
prescribing a limitation period for filing an application under Section 29A, when
the section does not conspicuously so state. Rather, the expression and intent
of the provision are to the contrary.
14. In our opinion, a restrictive interpretation would lead to rigour, impediments
and complexities. A party would have to rush to the court even when the period
of arbitral mandate of twelve months has not expired, notwithstanding the
possibility of a consent-based extension of six months under Section 29A(3).
Narrow interpretation presents an additional challenge by relegating a faultless
24 Ajaib Singh v. Sirhind Cooperative Marketing-cum-Processing Service Society Ltd. and Another,
(1999) 6 SCC 82.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 11 of 16
party to a fresh reference or appointment of an arbitrator under the A & C Act25,
thereby impeding arbitration rather than facilitating it.26 The legislature vide the
2015 Amendment envisions arbitration as a litigant-centric process by
expediting disposal of cases and reducing the cost of litigation.27 A narrow
interpretation will be counterproductive. The intention is appropriately captured
in the following observations made in the 176th Report of the Law Commission
of India :
“2.21.1 (…)But the omission of the provision for extension of
time and therefore the absence of any time limit has given rise
to another problem, namely, that awards are getting delayed
before the arbitral tribunal even under the 1996 Act. One view
is that this is on account of the absence of a provision as to
time limit for passing an award.
xx xx xx
2.21.3 (…)The time limit can be more realistic subject to
extension only by the court. Delays ranging from five years to
even fourteen years in a single arbitration have come to the
Commission’s notice. The Supreme Court of India has also
referred to these delays of the arbitral tribunal. The point here
is that these delays are occurring even in cases where there
is no court intervention during the arbitral process. The
removal of the time limit is having its own adverse
consequences. There can be a provision for early disposal of
the applications for extension, if that is one of the reasons for
omitting a provision prescribing a time limit, say one month.
Parties can be permitted to extend time by one year. Pending
the application for extension, we propose to allow the
arbitration proceedings to continue.(…)
xx xx xx
25 We have not examined and pronounced on the legal consequence when the proceedings “terminate”
in terms of Section 29A of the A & C Act and the legal remedy available to the parties.
26 This Court in Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996
& Stamp Act, 1899, In re, (2024) 6 SCC 1 at para ¶94 held:
“The Arbitration Act represents the principles of modern arbitration, which seeks to give
effect to the mutual intention of the parties to resolve their disputes by a neutral third-party
Arbitral Tribunal, whose decision is final and binding on all the parties. Arbitration law
allows the parties to design arbitral procedures, which ensures efficiency and expediency
of the arbitration process. One of the reasons that business and commercial entities prefer
arbitration is because it obviates cumbersome judicial processes, which can often prove
expensive, complex and interminable. (…) It is the duty of this Court to interpret the
Arbitration Act in a manner which gives life to the principles of modern arbitration in India.”
27 See Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Bill, 2015
inserting Section 29A.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 12 of 16
2.21.4 It is, therefore, proposed to implement the
recommendation made in the 76th Report of the Law
Commission with the modification that an award must be
passed at least within one year of the arbitrators entering on
the reference. The initial period will be one year. Thereafter,
parties can, by consent, extend the period upto a maximum of
another one year. Beyond the one year plus the period agreed
to by mutual consent, the court will have to grant extension.
Applications for extension are to be disposed of within one
month. While granting extension, the court may impose costs
and also indicate the future procedure to be followed by the
tribunal . There will, therefore, be a further proviso, that
further extension beyond the period stated above should be
granted by the Court. We are not inclined to suggest a cap on
the power of extension as recommended by the Law
Commission earlier. There may be cases where the court
feels that more than 24 months is necessary. It can be left to
the court to fix an upper limit. It must be provided that beyond
24 months, neither the parties by consent, nor the arbitral
tribunal could extend the period. The court’s order will be
necessary in this regard. But in order to see that delay in
disposal of extension applications does not hamper
arbitration, we propose to allow arbitration to continue pending
disposal of the application.
2.21.5 One other important aspect here is that if there is a
delay beyond the initial one year and the period agreed to by
the parties (with an upper of another one year) and also any
period of extension granted by the Court, there is no point in
terminating the arbitration proceedings. We propose it as they
should be continued till award is passed. Such a termination
may indeed result in waste of time and money for the parties
after lot of evidence is led. In fact, if the proceedings were to
terminate and the claimant is to file a separate suit, it will even
become necessary to exclude the period spent in arbitration
proceedings, if he was not at fault, by amending sec. 43(5) to
cover such a situation. But the Commission is of the view that
there is a better solution to the problem.
The Commission, therefore, proposes to see that an arbitral
award is ultimately passed even if the above said delays have
taken place. In order that there is no further delay, the
Commission proposes that after the period of initial one year
and the further period agreed to by the parties (subject to a
maximum of one year) is over, the arbitration proceedings will
nearly stand suspended and will get revived as soon as any
party to the proceedings files an application in the Court for
extension of time. In case none of the parties files an
application, even then the arbitral tribunal may seek an
extension from the Court. From the moment the application is
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 13 of 16
filed, the arbitration proceedings can be continued. When the
Court takes up the application for extension, it shall grant
extension subject to any order as to costs and it shall fix up
the time schedule for the future procedure before the arbitral
tribunal. It will initially pass an order granting extension of time
and fixing the time frame before the arbitral tribunal and will
continue to pass further orders till time the award is passed.
This procedure will ensure that ultimately an award is passed.”
15. Rohan Builders (India) Pvt. Ltd. (supra) highlights that an interpretation
allowing an extension application post the expiry period would encourage
rogue litigants and render the timeline for making the award inconsequential.
However, it is apposite to note that under Section 29A(5), the power of the
court to extend the time is to be exercised only in cases where there is sufficient
cause for such extension. Such extension is not granted mechanically on filing
of the application. The judicial discretion of the court in terms of the enactment
acts as a deterrent against any party abusing the process of law or espousing
a frivolous or vexatious application. Further, the court can impose terms and
conditions while granting an extension. Delay, even on the part of the arbitral
tribunal, is not countenanced.28 The first proviso to Section 29A(4) permits a
fee reduction of up to five percent for each month of delay attributable to the
arbitral tribunal.
16. Lastly, Section 29A(6) does not support the narrow interpretation of the
expression “terminate”. It states that the court – while deciding an extension
application under Section 29A(4) – may substitute one or all the arbitrators.
Section 29A(7) states that if a new arbitrator(s) is appointed, the reconstituted
arbitral tribunal shall be deemed to be in continuation of the previously
appointed arbitral tribunal. This obliterates the need to file a fresh application
28Supra note 10.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 14 of 16
under Section 11 of the A & C Act for the appointment of an arbitrator. In the
event of substitution of arbitrator(s), the arbitral proceedings will commence
from the stage already reached. Evidence or material already on record is
deemed to be received by the newly constituted tribunal. The aforesaid
deeming provisions underscore the legislative intent to effectuate efficiency
and expediency in the arbitral process. This intent is also demonstrated in
Sections 29A(8) and 29A(9). The court in terms of Section 29A(8) has the
power to impose actual or exemplary costs upon the parties. Lastly, Section
29A(9) stipulates that an application for extension under sub-section (5) must
be disposed of expeditiously, with the endeavour of doing so within sixty days
from the date of filing.
17. As per the second proviso to Section 29A(4), the mandate of the arbitral
tribunal continues where an application under sub-section (5) is pending.
However, an application for extension of period of the arbitral tribunal is to be
decided by the court in terms of sub-section (5), and sub-sections (6) to (8)
may be invoked. The power to extend time period for making of the award
vests with the court, and not with the arbitral tribunal. Therefore, the arbitral
tribunal may not pronounce the award till an application under Section 29A(5)
of the A & C Act is sub-judice before the court. In a given case, where an award
is pronounced during the pendency of an application for extension of period of
the arbitral tribunal, the court must still decide the application under sub-section
(5), and may even, where an award has been pronounced, invoke, when
required and justified, sub-sections (6) to (8), or the first and third proviso to
Section 29A(4) of the A & C Act.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 15 of 16
18. While interpreting a statute, we must strive to give meaningful life to an
enactment or rule and avoid cadaveric consequences that result in unworkable
or impracticable scenarios.29 An interpretation which produces an
unreasonable result is not to be imputed to a statute if there is some other
equally possible construction which is acceptable, practical and pragmatic.
19. In view of the above discussion, we hold that an application for extension of
the time period for passing an arbitral award under Section 29A(4) read with
Section 29A(5) is maintainable even after the expiry of the twelve-month or the
extended six-month period, as the case may be. The court while adjudicating
such extension applications will be guided by the principle of sufficient cause
and our observations in paragraph 15 of the judgment.
20. We, accordingly, answer the question in the aforesaid terms. The appeals are
directed to be listed in the week commencing 30.09.2024 for final hearing and
disposal.
………………………………..J.
(SANJIV KHANNA)
………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
SEPTEMBER 12, 2024.
29 Franklin Templeton Trustee Services (P) Ltd. and Another v. Amruta Garg and Others, (2021) 6 SCC
736.
Civil Appeal a/o. SLP (C) No. 23320 of 2023 & Ors. Page 16 of 16