Courts can extend mandate of arbitral tribunal even after delayed award is passed: Supreme Court

The Supreme Court on Tuesday held that courts can extend the mandate of an arbitral tribunal under Section 29A of the Arbitration and Conciliation Act, 1996 even after an arbitral award has been rendered beyond the statutory time limit. [C Velusamy v. K Indhera]

A Bench of Justices PS Narasimha and AS Chandurkar delivered the ruling, setting aside a contrary view taken by the Madras High Court. It held,

"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."

The core question before the Court was whether an application under Section 29A(5) seeking extension of the arbitrator’s mandate is maintainable after the arbitrator has already passed an award beyond the 18-month statutory period.

Answering the question in the affirmative, the Court held that the jurisdiction of the court to extend the mandate is not defeated by the arbitrator’s act of delivering a belated award.

The dispute arose from three agreements to sell between the parties. A sole arbitrator was appointed by the Madras High Court in April 2022. Pleadings were completed in August 2022, triggering the 12-month timeline under Section 29A(1), which was later extended by mutual consent for another six months till February 20, 2024.

Although arguments were concluded and the matter was reserved for award, the proceedings were repeatedly reopened due to settlement talks. Eventually, the arbitrator passed the award on May 11, 2024 - nearly three months after the mandate had expired.

The respondent challenged the award under Section 34, contending that it was a nullity. Meanwhile, the appellant filed an application under Section 29A seeking extension of the arbitrator’s mandate. The High Court dismissed the Section 29A application as not maintainable and allowed the Section 34 challenge.

The Supreme Court held that Section 29A does not create any statutory prohibition against entertaining an application for extension merely because an award has already been passed.

“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.”

Clarifying the legal effect of a belated award, the Bench observed:

“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.”

However, the Court made it clear that the arbitrator’s act of passing such an award does not curtail the court’s jurisdiction:

“A unilateral act or the indiscretion of the arbitrator in making such an award will have no bearing on the power and jurisdiction vested in the Court under Section 29A.”

Explaining its reasoning, the Court said,

"While interpreting an enactment providing legal remedies for the resolution of disputes, a constitutional court has the obligation to ensure that the provision is: (a) accessible, (b) affordable, (c) expeditious and (d) cohesive. Accessibility requires the remedy to be easily available. Affordability is an aspect that is related to the cost of availing the remedy, it must be at a reasonable price. Expeditious nature of a remedy is concerned with the quick disposal and abhors unreasonable delays. Yet another facet of effective remedy is in its cohesiveness."

The Court further noted that the legislative intent behind Section 29A was to ensure that arbitral proceedings reach their logical conclusion:

“The intention of the Parliament is to safeguard the conduct and conclusion of arbitral proceedings.”

Summing up its conclusions, the Court held:

“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.”

Allowing the appeal, the Supreme Court restored the appellant’s Section 29A application and directed the High Court to decide it afresh in light of the principles laid down in the judgment.

The appellant was represented by Senior Advocate V Mohana with Advocates B Ragunath, Pranav V Shankar, NC Kavitha, Nimisha Thomas, Runjhun Garg and Vijay Kumar.

The respondent was represented by Advocates M Vijayan, M Harish Kumar, Rishi Maheshwari, Anne Mathew, Bharat Sood, Jai Govind, Jashan Vir Singh and PS Sudheer.

[Read Judgment]