Time to pass arbitral award can be extended even after 18 month deadline

Legal Brief: Time to pass arbitral award can be extended even after 18 month deadline

Case Name: Rohan Builders (India) Private Limited v. Berger Paints India Limited

Court: Hon’ble Supreme Court of India

Date of Judgment: 12.09.2024

By- Aakanksha Bhatia

 

Facts:

This case consolidated several appeals before the Hon’ble Supreme Court of India regarding the interpretation of Section 29A of the Arbitration and Conciliation Act, 1996 (“A&C Act”). The central issue was whether a party could file an application to extend the time limit for an arbitral award after the initial twelve-month period or the extended eighteen-month period had expired.

Conflicting decisions arose from different High Courts in India. Some High Courts held that an application for a time extension under Section 29A could only be entertained if filed before the arbitral tribunal’s mandate expired. This view, exemplified in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Limited, in Calcutta High Court, argued that the use of the term “terminate” in Section 29A(4) signified the legislature’s intention to end the arbitral tribunal’s mandate upon expiry of the specified period, making the tribunal incapable of further action.

Conversely, other Hon’ble High Courts, including Delhi, Bombay, Kerala, Madras, and later Calcutta, held that an application for a time extension could be filed even after the twelve or eighteen-month deadline.

 

Issues:

The Hon’ble Supreme Court consolidated these appeals to resolve the conflicting interpretations of Section 29A, specifically:

Whether an application for extension of time to make an arbitral award under Section 29A(4) and 29A(5) of the A&C Act is maintainable after the expiry of the initial twelve-month period or the extended eighteen-month period.

 

Judgment:

The Hon’ble Supreme Court ruled that an application for an extension of time under Section 29A(4) read with Section 29A(5) is maintainable even after the expiry of the initial twelve-month or extended eighteen-month period. The Court determined that a restrictive interpretation limiting extension applications to within the initial time frame would contradict the Act’s objective of efficient and timely arbitration.

 

Legal Analysis:

The Court arrived at its decision through a careful examination of the language, context, and purpose of Section 29A.

  • Statutory Interpretation: The Hon’ble Court rejected the narrow interpretation of “terminate” in Section 29A (4), arguing that it should not be read in isolation but within the context of the entire provision. The Hon’ble Court held that the phrase “unless the court has, either prior to or after the expiry of the period so specified, extended the period” clearly empowers the court to grant extensions even after the deadline.
  • Legislative Intent: The Hon’ble Court emphasized that Section 29A aims to ensure the timely completion of arbitral proceedings while providing courts flexibility to grant extensions for “sufficient cause”. Imposing a restrictive time limit for extension applications, would amount to judicial legislation and contradict the legislature’s intent.
  • Practical Considerations: The Hon’ble Court considered the practical implications of a restrictive interpretation. Forcing parties to file for extensions even before the possible extension period under Section 29A(3) would lead to unnecessary litigation. Further, it could penalize parties for delays not attributable to them, leading to a fresh arbitration process and contradicting the Act’s objective of efficiency.
  • Harmonious Construction: The Hon’ble Court interpreted Section 29A harmoniously with other provisions, such as 29A(6) and 29A(7), which allow for the substitution of arbitrators and continuation of proceedings from the same stage even after the initial time frame, demonstrating the legislature’s intent for flexibility.
  • Sufficient Cause and Judicial Discretion: The Hon’ble Court reiterated that courts hold the discretion to grant extensions only if “sufficient cause” is demonstrated, safeguarding against potential abuse of the extension provision by litigants.

Conclusion:

The Hon’ble Supreme Court’s judgment in Rohan Builders (India) Private Limited v. Berger Paints India Limited provides critical clarity regarding the time limit for filing applications to extend arbitral award deadlines under Section 29A of the A&C Act. The Court’s decision favors a broader, purposive interpretation of the statute, prioritizing the timely and efficient resolution of disputes through arbitration. The judgment underscores the importance of judicial discretion in granting extensions, ensuring that the process is not misused while maintaining the sanctity of the statutory framework for arbitration in India.

 

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