Arbitration In IndiaCourts Empowered to extend mandate of Arbitral Tribunal under Section 29 of A&C Act

The Delhi High Court, in M/s. Power Mech Projects Ltd. v. M/s. Doosan Power Systems India Pvt. Ltd.[ O.M.P. (MISC.) 6/2024, decided on 07.05.2024], held that the  Court has the jurisdiction to extend the mandate of an Arbitral Tribunal under Section 29A (5) of the Arbitration and Conciliation Act, 1996, even after expiry of such mandate.

FACTS

The M/s. Power Mech Projects Ltd., (hereinafter referred to as  ‘Petitioner’)entered into an a works contract titled “Subcontract for Boiler Works of Unit 1,2,3 of BARH STPP-1 (3×660 MW) Balance Work of Main Plant Package (SG &AUX.).” (hereinafter referred to as the ”Works Contract”)with M/s. Doosan Power Systems India Pvt. Ltd. (hereinafter referred to as ‘Respondent’) on 12.05.2016.

According to the Works Contract, and the work was to be completed by 30.11.2018. However, the work was not completed on the decided date.

The parties invoked the arbitration clause under Clause 25 of the Works Contract on 10.05.2022. Thereby, an Arbitral Tribunal with three members entered reference on 06.07.2022. As the proceedings, were not completed within a span of one year as mandated by Section 29A of the Arbitration and Conciliation Act,1996 (hereinafter referred to as the “A&C Act”) both the parties  mutually consented for six-month extension on 10.10.2023.

The mandate of the Arbitral Tribunal ended on 04.02.2024. As the proceedings are at the cross-examination stage, the Petitioner requested a further extension of 12 months for the mandate. However, the Arbitral Tribunal   on 21.02.2024, passed an order (hereinafter referred to as the “Impugned Order”) stating that as the mandate has expired, it would resume the proceedings when appropriate orders are received.

Hence, being aggrieved and dissatisfied by the Impugned Order, the Petitioner has approached this Hon’ble Court for extension of mandate under Section 29 of the A&C Act .

ISSUES BEFORE THE  DELHI HIGH COURT

Whether the Court has the jurisdiction of extension of the mandate of an Arbitral Tribunal under Section 29A (5) of the A&C Act, even after the expiration of such mandate?

CONTENTIONS OF THE PARTIES

The Petitioner submitted that the extension of the mandate till 10.10.2023 was mutually agreed upon by both parties as the proceedings have not been completed within a span of one year. The mandate of the Arbitral Tribunal expired on 04.02.2024 and can be extended by a further period by the Hon’ble Court in accordance with Section 29A (5) of the A&C Act.

In response to the notice dated 04.03.2024, the Respondent’s counsel argued that the petition was filed to delay the arbitration proceedings. They cited a communication from 04.08.2023, where the Tribunal noted the Petitioner’s unnecessary adjournments. The Respondent referred to Tribunal orders from 07.07.2023, highlighting that after the Petitioner’s witness failed to appear due to ill health, the Petitioner requested an amendment to the claims. When listed for evidence, the Petitioner again sought an adjournment. The Respondent asserts that these actions demonstrate the Petitioner’s repeated attempts to delay the proceedings

The Respondent argued that the mandate of the Tribunal expired on 04.02.2024. The Respondent did not object to the extension of the mandate but contended that the Hon’ble High Court did not have jurisdiction of extension of mandate, as it had expired through the operation of law.

DECISION AND FINDINGS

The Delhi High Court examined that Section 29A (5) of the A&C Act and relied upon  Wadia Techno-Engineering Services Limited v. Director General of Married Accommodation Project, [2023 SCC OnLine Del 2990] and ATC Telecom Infrastructure Pvt. Ltd. v. Bharat Sanchar Nigam Ltd., [2023 DHC 8078].  and observed that the Courts have the jurisdiction for the extension of the mandate even after the expiry of the said period of the mandate.

The  High Court relied upon Nikhil H. Malkan v. Standard Chartered Investment and Loans (India) Ltd., [2023 BHC OS 14063], and  held that even when the petition is not filed before the expiry of the mandate of the Arbitral Tribunal, there is nothing which renders the Court powerless to allow such extension.

The Delhi High Court held that the extension of mandate under Section 29 (4) of the A&C Act, are possible situations under two situations, one wherein the mandate is not extended and the time period of 12 months has already expired; and second wherein the mandate was extended for further six months through mutual consent of the parties.

The High Court extended the mandate of Arbitral Tribunal till 31.12.2024 and directed for the conclusion of the arbitral proceedings.

AMLEGALS REMARKS

The Delhi High Court observed that Section 29A (4) of the A&C Act specifies ‘prior or after the expiry of the specified period’, this Court has the power to grant the extension even after the expiry of the mandate.

The Delhi High Court held that it is empowered to grant such extension under Section 29A (5) of the Act even after the expiration of the mandate, and hence directed for the conclusion of the Arbitral proceedings.

– Team AMLEGALS assisted by Ms. Akansha Yadav (Intern)