Moving Of An Application By A Party Is Not Pre-Requisite For A Court To Exercise Power U/S 29A Arbitration Act: Delhi HC
The Delhi High Court observed that moving of an application by a party is not a pre-condition for exercising power under Section 29A Of Arbitration & Conciliation Act to extend the mandate of Arbitral Tribunal
The Court, in this case, extended the mandate of a sole arbitrator in an application filed under Sections 14 and 15 of the Arbitration Act.
A petition was filed to declare that the Sole Arbitrator is de jure unable to perform her functions and, further, to substitute the arbitrator. It was alleged that the Respondent failed to pay the debt in terms of a Loan Agreement entered between them, hence, the arbitration proceedings were initiated.
The Bench of Justice Neena Bansal Krishna observed, "While Clause 4 confers power of extension, Clause 5 states that the extension may be on an application. The language of these two sub-clauses make it amply clear that though either party or both the parties may seek extension of mandate, but moving of an Application is neither a pre-condition nor is the discretion of the Court under Clause 4 to extend the mandate of the learned Arbitral Tribunal is predicated on the moving of an application as Clause 5 specifically uses the word “may”. Therefore, there is no prohibition for the Court to extend the mandate if required to complete the arbitral proceedings."
Senior Advocate Ashish Dholakia appeared for the Petitioner while Advocate Aman Raj Gandhi appeared for the Respondents.
The petitioner submitted that Section 29A (1) of the Act provides that the Award shall be made within 12 months from the date of completion of the pleadings and if the proceedings are not concluded within the prescribed period, the parties can, with mutual consent, extend the mandate by the period not more than six months, under Section 29A(3).
The Court held, “Considering that both the parties have already invested their time and energy for around four years and are interested to continue with the Arbitration, to leave the parties in a limbo at this stage and to wait for an application under S.29A of the Act to be moved, would not only be doing damage to the explicit provision of S.29A of the Act which does not circumscribe the jurisdiction of the Court to extend the mandate by moving an application, but would also be against the very objectives of the Arbitration law of speedy, inexpensive and fair trial by an Arbitral Tribunal…It may thus be concluded that, there is nothing in the Act, which bars the court to extend the mandate by a reasonable time, to enable the learned Arbitrator to conclude the Arbitral proceedings while dismissing the application under Sections 14 & 15 of the Arbitration and Conciliation Act.”
The parties did not file their applications under Section 29A seeking an extension of the mandate. The Court said that the language of Clauses 4 and 5 of Section 29A makes it clear that moving an application is neither a pre-condition nor is the discretion of the Court. Therefore, there is no prohibition for the Court to extend the mandate if required to complete the arbitral proceedings, it said.
The Court held, “Necessarily, once period of 12 months and six months by mutual consent expired, the parties were required to approach the Court under Section 29A of the Act, to seek the extension of the mandate of the learned Arbitrator. Admittedly, neither the petitioner nor the respondent had filed any Petition under Section 29A of the Act. Instead, the present application for termination and appointment of substitute Arbitrator, has been filed on behalf of the petitioner…The respondent on specifically being asked, stated that he has already spent huge amounts and does not intend to abandon the present Arbitration proceedings. The petitioner by moving the present application, has also expressed its intention that the Arbitration proceedings may be continued.”
Hence, for the above reasons the Court extended the mandate of the Arbitrator till October 2024 for the completion of proceedings and disposed of the Petition.
Cause Title: Religare Finvest Limited v. Widescreen Holdings Private Limited And Ors. (Neutral Citation: 2024:DHC:3004)
Appearances:
Petitioner: Senior Advocate Ashish Dholakia, Advocates Vipin Tyagi and Priyamveda Mishra
Respondents: Advocates Aman Raj Gandhi, Vardaan Bajaj and Ojasvi Sharma