TaxTMI 
TaxTMI 
2026 (2) TMI 281
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.... prescription of timelines for making the award and the recommendation of the law commission 10 IX. Introduction of Section 29A & its interpretation 12 X. International perspective on the validity of the arbitral award rendered after the stipulated statutory time limit 14 XI. Conclusion 18 1. Leave granted. I. Question of Law The following question of law has arisen for our consideration. 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? 2. We have considered the text as well as the context in which Parliament introduced Section 29A to the Act, empowering the Court to extend the mandate of the arbitrator. The power and the jurisdiction of the Court are not impaired by the indiscretion of the arbitrator in rendering an 'award' without a mandate, particularly when such an award does not partake the character of a decree and is unenforceable under Section 36. We have also explained the i....
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....ed, which agreement was, however, not placed before the arbitrator. We are informed that the matter was adjourned to 27.04.2024 and thereafter to 04.05.2024, and the arbitrator finally passed the award on 11.05.2024, which was later stamped and issued to the parties on 25.06.2024. In the meantime, as indicated earlier, the mandate of the arbitrator had terminated on 20.02.2024. 3.2 Aggrieved by the award dated 11.05.2024, the respondent filed an application under Section 34 of the 1996 Act for setting aside the award on the ground that the mandate of the arbitral tribunal expired and arbitral proceedings stood terminated before passing of the award. On the other hand, on 12.11.2024, the appellant filed an application under Section 29A of the Act seeking an extension of the mandate of the tribunal. 4. The High Court, by order dated 24.01.2025, impugned before us dismissed the application under Section 29A as not maintainable. On the other hand, the Section 34 petition filed by the respondent was allowed by the High Court on 14.02.2025, relying on the order dated 24.01.2025. III. Judgment of High Court 5. Rejecting reliance of respondent on the judgment of this Court in R....
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....nd the mandate either before or after expiry of the period under Sections 29A(1) and 29A(3). On the other hand, Mr. M. Vijayan, learned counsel assisted by Mr. P.S. Sudheer, AOR distinguished Rohan Builders (supra) and relied on the decision of the Madras High Court in Suryadev Alloys (supra) to argue that time cannot be extended after passing of the award as the 1996 Act contains no provision allowing post-award extension. V. Timelines for commencement, conduct, conclusion and termination of arbitral proceedings 7. Access to justice constitutes the very foundation of democratic governance, serving as the linchpin of a fair and equitable society. Our Constitution, in its wisdom, establishes a comprehensive judicial architecture, encompassing the Supreme Court, the High Courts, and District Courts for public and ordinary civil/criminal remedies to safeguard this inalienable right. It is imperative that these judicial remedies are effective. In fact, the effectiveness of judicial remedies is a constitutional mission, and it is always a work in progress for the Supreme Court to ensure that the remedies are impartial, readily accessible, financially viable, swiftly administered, ....
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.... 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." (emphasis supplied) VII. Timelines under the 1996 Act 9. Party autonomy, coupled with minimal intervention of judicial authorities, has been the guiding principle for the 1996 Act. This is perhaps the reason for not provisioning a statutory timeline for delivering awards and prescribing consequences of not delivering them on time. 9.1 In the event of failure of an arbitrator to act without undue delay, recourse was provided under Section 14 of the Act of 1996 to dual remedies-by approaching the arbitrator first and then the Court [Lancor Holdings Ltd v. Prem Kumar Menon & Ors., 2025 SCC OnLine SC 2319.]. Section 14(1)(a) states that the mandate of an arbitrator would stand terminated if he either becomes de jure or de facto unable to perform his functions or, for other reasons, fails to act without undue delay. Section 14(2) states that, if a controversy remains concerning any of the grounds referred to in Section 14(1)(a), a party may, unless otherwise agreed with by the parties, apply to the Court to dec....
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....wn 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 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 sug....
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....e 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." (emphasis supplied) IX. Introduction of Section 29A & its interpretation: 11. It is in the above-referred background that the Arbitration Act was amended with retrospective effect from 23.10.2015 to effectively deal with delays in arbitral proceedings by inserting Section 29A. The Statement of Objects and Reasons records that practical difficulties had arisen, necessitating amendments to make arbitration more user-friendly, cost-effective, and expeditious. Accordingly, provision was made requiring the arbitral tribunal to render the award within twelve months from the date it enters upon the reference, with liberty to the parties to extend the period by a further six months, any extension thereafter being permissible only by order of the Court on sufficient cause being shown. Thereafter, the Act of 1996 was further amended w.e.f. 30-8-2019 to provide, inter alia, that, where an application seeking extension of time under sub-section (5) of Section 29A is pending, the mandate of the arbitrator shall continue until ....
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....re 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." X. International perspective on the validity of the arbitral award rendered after the stipulated statutory time limit. 12. It is well recognized that a fixed time limit for the rendering of an arbitral award may foreclose the mandate of a tribunal if breached. However, such limits are not intended to frustrate the arbitral process. In....
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.... circumstances. The functus officio problem has led Belgian law to adopt a more practical solution to the effect that after six months has elapsed, the parties may apply to the court to set a time limit for rendering of the award. Section 50(4) of the English Arbitration Act 1996 allows a court to extend the time even if the time previously fixed has expired. ['Part II: The Process of an Arbitration, Chapter 6: Establishing the Procedural Framework', in Jeffrey Maurice Waincymer, Procedure and Evidence in International Arbitration (2012), p. 418.] (emphasis supplied) 12.4 In Redfern and Hunter on International Arbitration, it is noted that Courts in many jurisdictions have been reluctant to invalidate an award solely on the basis that it was rendered late: "It is important that a fixed time limit for rendering the award should not enable one of the parties to frustrate the arbitration. This might happen if a fixed limit were to run from the date of the appointment of the arbitral tribunal, rather than, for example, that of the end of the hearings. If a court has no power to intervene on the application of one party alone and the time limit can be extended only ....
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....ng that Courts may annul late awards where delay is substantial and unjustified. Under Singapore law, the High Court in Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd. [2010] SGHC 20, at para. 41., set aside an award that had been issued well beyond the agreed deadline. The arbitration concerned a modest construction dispute conducted under the Arbitration Rules of the Singapore Institute of Architects, which required the arbitrator to issue an award within 60 days of the close of the hearing. The arbitrator issued the award more than a year after that deadline. 12.8 When the award was challenged, the arbitrator sought belatedly to apply for an extension of time. The Court refused his application, noting that where parties had agreed to specify a deadline for the award to be issued, the principle of party autonomy meant that the Court should not lightly override this agreement. The Court noted that an extension would be granted only to (i) prevent substantial injustice, (ii) where there was no prejudice to the opposing party, and (iii) where there were very good reasons to justify the delay. One crucial factor in refusing the application was the failure by the....
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....ur to dispose of such an application within 60 days Section 29A(9) of the 1996 Act. (VIII) Delay in the delivery of an arbitral award, by itself, is not sufficient to set aside that award. It is only when the effect of the undue delay in the delivery of an arbitral award is explicit and adversely reflects on the findings therein, such delay and, more so, if it remains unexplained, can be construed to result in the award being in conflict with the public policy of India. [Lancor Holdings (supra).] (IX) Under Section 29A(6), while exercising the power of extension, it shall be open to the Court to substitute one or all the arbitrators. This is a discretionary power that the Court would exercise in the facts and circumstances of the case. Upon substitution, the reconstituted tribunal shall be deemed to be in continuation of the previously appointed tribunal as per Section 29A(7) and shall continue from the stage already reached and on the basis of evidence already on record. The newly appointed arbitrators shall be deemed to have received the evidence and materials. (X) Vesting of the power of substitution, under Section 29A(6), is on the "Court" and this Co....
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....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. 20. 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 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 pow....
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....rms, enables the court to adopt distinct measures to ensure dynamic and efficient conduct of arbitral proceedings with integrity and expedition. The following empowerments are in the nature of instruments in the toolkit of Section 29A, enabling the courts to deploy them as and when the factual matrix demands: i. Court has the power to extend the time before or after the expiry of the statutorily stipulated period. [Section 29A(4)] ii. Court is empowered to take measures to reduce the fee of the arbitrators if the Court is of the opinion that the proceedings are delayed for the reasons attributable to the Arbitrators. [Proviso to Section 29A(4)] iii. Court can grant an extension of the time period upon a finding that there is sufficient cause for such extension. [Section 29A(5)] iv. Court, while extending the mandate even when there is sufficient cause, is empowered to impose such terms and conditions as it thinks fit for efficiency and integrity of the arbitral proceedings. [Section 29A(5)] v. Courts are specifically empowered to substitute any one or all the arbitrators, if in the opinion of the Court the facts demand. This is a discret....
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....onclude within the time granted. 24. In view of the above, the appeal against the judgment and order dated 24.01.2025 in Application No. 5993 of 2024 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. --------------------- Notes: 1. Explained, in Rohan Builders (India) Pvt Ltd v. Berger Paints India Limited 2024 SC Online SC 2494, as "Prior to the enactment of Section 29A of 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 3 of 2016 with retrospective effect from 23.10.2015. The Arbitration and Conciliation (Amendment) Act, 2015 aimed to ensure that arbitration proceedings are completed without unnecessary adjournments and delay." 2. Section 29A(4) of the 1996 Act. 3. The Law Commission's 176th Report @ 2.21.5 explains the purpose a....