Section 29A Arbitration Act & Time Limit for Filing Application

Section 29A(1) of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") in its relevant portion states: 

"(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..."

If the award is not made within this period or an extension period (of up to six months) agreed between the parties, the mandate of the arbitrator "shall terminate". The exception to this termination is where prior to or after expiry of that period, the Court extends such period. This extension is to be granted by the court on an application made by a party and for sufficient cause. Once the application for extension is filed, the mandate of the arbitrator is to continue till disposal of the application.  

In Rohan Builders v Berger Paints, 2024 INSC 686 (Rohan Builders), the question decided the important question of whether an application for extension of time u/s 29A could be filed after the expiry of the period specified in S. 29A(1) (i.e., 12 months from completion of pleadings).

The court had to construe Section 29A(4), which, in its relevant part provides:

"(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..."

Taking note of this provision, the court held that it could be deduced from this "unambiguous language" that the Court could extend the time "where an application is filed after the expiry of the period". (Para 7). Note this the provision quoted does not explicitly talk about the application being filed after the expiry- it only deals with the power of the court to extend the period after its expiry.

The court also noted that if either party took no action, "the arbitration proceedings are terminated". (Para 10). However, this does not mean that if no application is filed within 12 months or the extended six months period (u/s 29A(3)), the mandate of the arbitrator would terminate or that the arbitrator would become de jure incapable of performing her function. Construing the effect of "terminate" in 29A(4), the Supreme Court held:

"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." (Para 12).

Hence, the termination contemplated in S. 29A(4) is not an "absolute" termination (Para 12). The court reasoned that if a rigid construction of the provision was made, that would amount to legislating a limitation period judicially, which was not "conspicuously" stated by the provision. (Para 13). The court also noted that "the expression and intent of the provision are to the contrary." (Para 13).

The court also gave an ex post facto justification for its construction: if a rigid construction was given to the provision, it would mean more frequent applications and interventions by courts, and worse, re-commencing the arbitration once again, which would only impede arbitration (para 14).

The court stated that this construction would not encourage rogue litigants who would be bent on making the time limit for award inconsequential since the court could, on sufficient cause alone, extend the time limit, and can also impose time limits. The SC was also conscious that in the process of application u/s 29A, the court could substitute the arbitrators, thereby eliminating the need for going through another round of appointment process or S. 11 proceedings. 

Interestingly, the court also made it clear that the arbitral tribunal could not pass the award till an application u/s 29A(5) is filed before the court. Even if the award is passed, the court could invoke its powers u/s 29A. The court held:

"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." (Para 17)

In conclusion, the court answered the question before it in the following manner: 

"... 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." (Para 19).