Supreme Court Resolves Conflicting High Court Views, Holds Time Extension for Arbitral Award Under Section 29A Can Be Sought After Expiry of Prescribed Period

Court’s Decision:
The Supreme Court ruled that an application for the extension of time for making an arbitral award under Section 29A of the Arbitration and Conciliation Act, 1996 (A & C Act), is maintainable even after the expiry of the initial 12-month period or the extended six-month period. The Court emphasized that judicial discretion and “sufficient cause” will guide the court in granting such extensions.

Facts of the Case:
The case originated from a dispute between Rohan Builders (India) Pvt. Ltd. and Berger Paints India Limited, among others, regarding an arbitral award’s time frame. The High Court at Calcutta had previously ruled that an application for an extension under Section 29A(4) could not be entertained if filed after the expiry of the arbitral tribunal’s mandate. However, other High Courts had taken an opposite view, allowing extensions even after the expiration of the arbitral mandate.

The Supreme Court addressed conflicting views from different High Courts regarding the applicability of Section 29A, particularly whether the time extension could be sought after the prescribed time period had lapsed.

Issues:
Whether an application for the extension of time for making an arbitral award can be filed after the expiration of the initial or extended period.
How Section 29A(4) and Section 29A(5) should be interpreted in the context of expired arbitral mandates.

Petitioner’s Arguments:
The petitioners argued that the use of the word “terminate” in Section 29A(4) implied that the arbitral tribunal’s mandate ended after the expiration of the specified period, and no extension could be sought afterward.

Respondent’s Arguments:
The respondents argued that the courts should have the discretion to grant time extensions even after the initial period has expired, as provided by Section 29A(5).

Court’s Analysis:
The Court found that the word “terminate” in Section 29A(4) does not signify an absolute end to the arbitral proceedings. Instead, the provision should be interpreted in conjunction with Section 29A(5), which allows the court to extend the time period for sufficient cause. The Court emphasized that the law does not intend to penalize parties with rigid deadlines when extensions are warranted.

It further noted that an interpretation restricting the extension of time to only pre-expiry applications would defeat the purpose of arbitration, as unforeseen delays could render the process ineffective.

Conclusion:
The Supreme Court concluded that an application for extension of time under Section 29A is maintainable even after the expiration of the original or extended arbitral mandate. The Court ruled that judicial discretion and sufficient cause are key to deciding such extensions, ensuring that the arbitral process remains efficient and practical.