2026 (2) TMI 281 - SC - Indian Laws

Extension of arbitrator mandate under Section 29A can be sought after mandate expiry; court may grant with conditions and sanctions

An application under Section 29A(5) to extend an arbitrator's mandate is maintainable even after the eighteenmonth mandate has expired and an award has ... Power of the Court to extend mandate under Section 29A - application u/s 29A(5) maintainable after expiry and after award rendered - mandate termination u/s 29A(4) is conditional and transitory - award rendered after expiry of mandate unenforceable u/s 36 - continuation of arbitral proceedings while extension application is pending - Court's power to substitute arbitrators u/s 29A(6)-(7) - Court's power to reduce arbitrator's fees and impose costs as corrective measures - statutory requirement to dispose applications u/s 29A(9) expeditiously (60 days) - Whether a Court can entertain an application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 to extend the mandate of the arbitrator(s) for making the award even after an ‘award’ is rendered, though after the expiry of the statutory limit of eighteen-month period? - HELD THAT:- Section 29A of the Act does not, in terms, bar an application for extension of the mandate of an arbitrator in the event of the delivery of an award. There is no such prescription anywhere in the section. In the first place, if an award is made after expiry of the mandate, then there is no doubt about the fact that such an award is non est. A better expression would be to hold that such an award would be unenforceable under Section 36. Such an award need not be challenged under Section 34. Vesting of power and jurisdiction in the Court, in our opinion, is a complete answer to any apprehension that extension of time, even in cases where an ‘award’ is passed, could introduce a culture of indiscipline, as arbitrator(s) and/or counsels could become indifferent to the mandatory timelines. This apprehension is not true. There is no automatic extension of time. The Court will and must exercise its discretion only after evaluating the facts and circumstances after close scrutiny. Section 29A, in terms, enables the court to adopt distinct measures to ensure dynamic and efficient conduct of arbitral proceedings with integrity and expedition. In conclusion, we hold that an application under Section 29A(5) for extension of the mandate of the arbitrator is maintainable even after the expiry of the time under Sections 29A(1) and (3) and even after rendering of an award during that time. Such an award is ineffective and unenforceable. But the power of the court to consider extension is not impaired by such an indiscretion of the arbitrator. While considering the application, the Court will examine if there is sufficient cause for extending the mandate, and in the process, it may impose such terms and conditions as the situation demands. The Court will also take into account other factors such as reduction of the fee of the arbitrator under proviso to Section 29A(4) and also impose costs on parties if the fact situation so demands. Substitution is an option for the Court as the provision itself says, “it shall be open for the Court to substitute”, and it will be exercised carefully. If the mandate is extended, the arbitral tribunal will pick up the thread from where it was left, and seamlessly continue the proceeding from the stage at which the mandate had expired, and conclude within the time granted. Appeal against the judgment and order dated 24.01.2025 in Application passed by the High Court of Judicature at Madras is allowed. The Application No. 5993 of 2024 is restored to its original number and the High Court will proceed with the said application and dispose it of as per the principles laid down in our judgment. Issues: Whether an application under Section 29A(5) of the Arbitration and Conciliation Act, 1996 for extension of the arbitrator's mandate is maintainable even after the statutory period under Sections 29A(1) and (3) has expired and an award has been rendered thereafter.Analysis: Section 29A prescribes a twelve-month period to make an award with a party-consent extension of six months and confers power on the Court under subsection (4) to extend the period before or after expiry. The proviso to subsection (4) preserves the mandate pending disposal of an application under subsection (5). Subsections (6) and (7) permit substitution of arbitrators and deem a reconstituted tribunal to continue proceedings on the existing record. The statutory text, the Law Commission recommendations, and comparative jurisprudence demonstrate legislative and judicial intent to preserve and facilitate continuation of arbitration rather than to terminate it for technical non-compliance. Delay alone is not a standalone ground to set aside an award unless it adversely affects the award's findings or public policy. The Court's power to grant extension is discretionary, may be exercised only on sufficient cause and on such terms as to ensure integrity and expedition (including reduction of fees, substitution, and costs), and is not nullified by the arbitrator's unilateral act of delivering an award after the mandate expired.Conclusion: An application under Section 29A(5) is maintainable even after expiry of the periods in Sections 29A(1) and (3) and even where an award has been rendered after mandate expiry; such belated awards are ineffective/unenforceable but do not divest the Court of its power to extend the mandate, which the Court may grant on sufficient cause and subject to appropriate terms and conditions.