Source: Allahabad High Court

Why in News?

Recently a bench of Justice Shekhar B. Saraf held that the application under Section 29A of the Arbitration & Conciliation Act, 1996 (A&C Act) is maintainable if the appointment of the arbitrator was made by the court under Section 11 of the A&C Act.

• The Allahabad High Court gave this observation in the case of M/s Geo Miller and Co. Pvt. Ltd. v. UP Jal Nigam and Others.

What was the Background of M/s Geo Miller and Co. Pvt. Ltd. v. UP Jal Nigam and Others Case?

• M/s Geo Miller and Co. Pvt. Ltd. (Petitioner – ARBT 4) and U.P. Jal Nigam and Others (Respondent – ARBT 4) entered into a contract.
• Disputes and differences arose between Petitioner – ARBT 4 and Respondents – ARBT 4 which were referred to arbitration.
• Petitioner – ARBT 4 filed an application under Section 11 of the A&c Act before the Court for appointment of an arbitrator.
  • The Court appointed an arbitrator.
• The time limit for making an arbitral award as provided under Section 29A of the A&C Act expired on 29^th February 2024.
  • The arbitrator could not publish his award within the statutory time limit and asked the parties to seek extension of time in accordance with the law.
• Petitioner – ARBT 4 filed an application under Section 29A of the A&C Act, seeking extension of the mandate of the arbitral tribunal.
• Disputes and differences arose between GPT Infraprojects Limited (Petitioner - ARBT 5) and Kanpur Development Authority (Respondent - ARBT 5), which were referred to arbitration.
• The Court appointed an arbitrator in the case between Petitioner - ARBT 5 and Respondent - ARBT 5 under Section 11 of the A&C Act.
• The time limit to make an arbitral award in accordance with Section 29A of the Act was about to expire on 7^th March 2024.
• Petitioner - ARBT 5 filed an application under Section 29A of the Act, seeking an extension of time before the Court.

What were the Court’s Observations?

• The court said that the principle of judicial discipline and adherence to binding precedents is a cornerstone of the legal system, essential for maintaining consistency, predictability, and legitimacy of judicial decisions.
• In light of the above, since the appointment of the arbitrator in ARBT 4 and 5 of 2024 were made by the Allahabad High Court in exercise of its powers under Section 11 of the Act, the instant applications filed under Section 29A(4) and Section 29A(5) of the A&C Act were held maintainable before this Court.
  • Accordingly, ARBT NO.4 & 5 of 2024 were allowed, and the mandate of the arbitrator was extended for 8 months from the date of this judgment.

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.