Whether Extension of Mandate of Arbitral Tribunal u/s Section 29A (5) of the Arbitration & Conciliation Act, 1996 can be granted retrospectively after arbitration award has been rendered?

Analysing the Kerela High Court's Decision in 'RKEC Projects Ltd vs Cochin Port Trust and Anr (Decided on 20.03.2024)

Facts:

Arbitral Award was passed on 06.05.2023 after two months of expiry of timeline provided in section 29A (1) (01.03.2023). The Decree Holder for the first time filed an application seeking extension of mandate before the Hon’ble Kerela High Court, after the passing of Arbitral Award which was resisted on ground that award is non est in law as extension application, if any, were to be filed before or after expiry of mandate, but not after passing of the arbitral award.

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The Hon’ble Supreme Court’s Ruling and observations:

The Hon’ble Supreme Court has allowed the applications seeking extension of mandate of Arbitral Tribunal on following grounds:

1.      A reading of Section 29A (3) and (4) of the Act would empower court to grant extensions either before or after the time provided for passing of award has elapsed. 29A (4) provides that it is only in situation where this Court is convinced that there is real and proper reason to do so that the time is liable to be further extended. The Second proviso to Section 29A (4) of the Act provides that the mandate of the arbitrator shall continue till the disposal of the said application.

2.      A reading of Section 32 would also make it clear that the termination of the mandate of the arbitrator and the termination of the proceedings on a final arbitral award being passed are not absolute and are also subject to Sub-section 4 of Section 34 of the Act (which empowers the courts to adjourn the court proceedings to give Arbitral Tribunal an opportunity to resume arbitral proceedings or take action that can eliminate ground for setting aside award).

3.       The termination in 29A (4) can only be read to be subject to the powers of  Court to extend mandate as provided under Section 29A (3) and (4) of the Act.

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Conclusion:

As per Section 29 A (1), the original timeline of 1 year provided for completion of arbitration proceedings  from date of completion of pleadings is extendable by 6 months in two stages: the first 6 months under section 29A(3) through consent of parties and the second 6 months in the event, the award is not passed within the first extended 6 months, through an application to court under section 29A(4). A second extension through the court is to be granted only when sufficient cause is shown. Further, proviso to Section 29A (4) provides that pendency of extension application would operate as extension of mandate, until the disposal of application and arbitral proceedings can continue during such pendency. 29A (4) provides that incase the award is not passed between 18 months and 24 months, the mandate of arbitral tribunal shall terminate unless the same is extended by the court before or after expiry of the timeline.

While The Division Bench of Apex court is set to decide on the issue if extension application can be entertained after 24 months have elapsed as the same defeats the very object. And purpose for which 29A was introduced, which is speedy disposal of arbitration proceedings, the current Judgment of the Hon’ble Kerela High Court, sets a problematic precedent in absolute disregard by making an attempt to ex post -facto ratify the arbitral award. Allowing extensions at a subsequent stage could undermine the effectiveness of the timelines set forth in the section and encourage abuse of the process. This cannot be granted as a matter of right to applications filed after passing of award as the pressure to complete proceedings within the timeline and faith in law will both lose its significance.

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