Source: Delhi High Court

Why in News?

The case adjudged by the bench of Justice Prathiba M Singh relates to Sections 29A (4) & (5) of the Arbitration and Conciliation Act, 1996 (A&C Act).

• The Delhi High Court gave this observation in the case of M/S Power Mech Projects Ltd v. M/S Doosan Power Systems India Pvt. Ltd.

What was the Background of M/S Power Mech Projects Ltd v. M/S Doosan Power Systems India Pvt. Ltd?

• The petitioner, M/s. Power Mech Projects Ltd., and the respondent entered an agreement titled “Subcontract for Boiler Works of Unit 1,2,3 of BARH STPP-1 (3x660 MW) Balance Work of Main Plant Package” on 12^th May 2016.
• Disputes arose between the parties regarding the works under the agreement, and the petitioner invoked arbitration proceedings by way of a 'Request for Arbitration' dated 10^th May 2022, under the aegis of the Indian Council of Arbitration.
• A three-member Arbitral Tribunal entered reference on 6^th July 2022.
• Since the arbitral proceedings did not complete within one year as per Section 29A of the A&C Act, both parties consented to a six-month extension on 10th October 2023.
• The mandate of the Arbitral Tribunal expired on 4^th February 2024, while the proceedings were at the stage of cross-examination.
• The Arbitral Tribunal stated that its mandate had expired and that it would resume proceedings after receiving appropriate orders.
• Later, the petitioner filed the present petition before the Delhi High Court under Sections 29A (4) & (5) of the A&C Act, seeking a 12-month extension of the mandate of the Arbitral Tribunal.

What were the Court’s Observations?

• The court considered various judgments from other High Courts on whether the mandate of an Arbitral Tribunal can be extended under Section 29A (5) even after its expiry.
• The court held that it is empowered to extend the mandate even after its expiry, given the expression "prior to or after expiry of the period so specified" used in Section 29A (4).
• Accordingly, the court extended the mandate of the Arbitral Tribunal till December 2024, to enable the completion of the arbitral proceedings.

What is Section 29A of the Arbitration and Conciliation Act, 1996?

• Time Limit for Domestic and International Commercial Arbitration Awards (Sub-section 1)
  • The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.
  • International Commercial Arbitration: The award in international commercial arbitration should be made as expeditiously as possible, and an effort may be made to dispose of the matter within twelve months from the date of completion of pleadings under sub-section (4) of section 23.
• Additional Fees for Timely Awards (Sub-section 2)
  • If the award is made within six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive additional fees as agreed upon by the parties.
• Extension of Time by Consent (Sub-section 3)
  • The parties may, by consent, extend the period for making the award for a further period not exceeding six months.
• Termination of Mandate and Court Extensions (Sub-section 4)
  • If the award is not made within the period specified in sub-section (1) or the extended period under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court extends the period, either prior to or after the expiry of the specified period.
  • Fee Reduction:
    • The Court may order a reduction of the arbitrators' fees by up to five percent for each month of delay if the delay is attributable to the arbitral tribunal.
  • Pending Applications:
    • If an application under sub-section (5) is pending, the mandate of the arbitrator shall continue until the disposal of the application.
  • Opportunity for Arbitrators:
    • Arbitrators shall be given an opportunity to be heard before any reduction of fees.
• Extension of Period by Court (Sub-section 5)
  • The Court may extend the period referred to in sub-section (4) upon application by any party for sufficient cause and may impose terms and conditions.
• Substitution of Arbitrators (Sub-section 6)
  • While extending the period, the Court may substitute one or all of the arbitrators. The arbitral proceedings shall continue from the current stage, and the new arbitrator(s) shall consider the evidence and material already on record.
• Continuity of Arbitral Tribunal (Sub-section 7)
  • An arbitral tribunal reconstituted under this section shall be deemed to continue from the previously appointed tribunal.
• Imposition of Costs (Sub-section 8)
  • The Court may impose actual or exemplary costs upon any of the parties under this section.
• Expeditious Disposal of Applications (Sub-section 9)
  • Applications filed under sub-section (5) shall be disposed of by the Court as expeditiously as possible, with an endeavor to dispose of the matter within sixty days from the date of service of notice on the opposite party.