Section 29a Time Limits: Strategic Considerations And Judicial Interpretations
I. INTRODUCTION
1. Section 29A (5) of the Arbitration and Conciliation Act 1996 (“the Act”) mandates that the applicant must demonstrate sufficient cause for seeking an extension. However, the Act does not define what is “sufficient cause”. As a result, there is a legislative lacuna on the meaning of sufficient cause, leaving the matter to judicial discretion.
2. The meaning of ‘sufficient cause’ for extending the time to make an award must take colour from the underlying purpose of the arbitration process. The primary objective in rendering an arbitral award is to resolve disputes through the agreed dispute resolution mechanism as contracted by the parties. Therefore, ‘sufficient cause’ should be interpreted in the context of facilitating effective dispute resolution.
II. ROLE OF JUDICIARY IN GRANTING EXTENSION OF TIME UNDER SECTION 29(A)(4) OF THE ACT
3. The Hon’ble Supreme Court in the case of M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr. [2024 SCC OnLine SC 3381] held that Efficiency in the conduct of arbitral proceedings is integral to the effectiveness of the dispute resolution remedy through arbitration. Efficiency is inextricably connected with expeditious conclusion of arbitral proceedings. While the statute incorporates party autonomy even with respect to the conduct and conclusion of arbitral proceedings, there is a statutory recognition of the power of the Court to step in wherever it is necessary to ensure that the process of resolution of the dispute is taken to its logical end, if according to the Court, the circumstances so warrant. It is in this context that the Arbitration and Conciliation Act adopts the well-known language of limitation statutes and provides that the Court can extend the time if it finds that there is sufficient cause.
4. In H.P. Singh v. G. M. Northern Railways and Others, 2023 SCC OnLine J&K 1255 the Hon’ble Jammu & Kashmir High Court observed that the power conferred to the Court for extension of time, would require application of judicial mind. And before directing any extension of the period under Sub-section (4), the Court has to be satisfied with the genuineness and sufficiency of the cause for extension of period put forth by the applicant and the Court may allow extension by imposing such terms and conditions as the Court may deem fit. Thus, it was held in H.P. Singh that, extension of time by the Court under Section 29(A)(4) of the Act can be done by application of judicial mind, which invariably would require that the Court has to be satisfied with the sufficiency of cause for extension of the mandate of the arbitral tribunal.
5. In Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., the Hon’ble Supreme Court stated that sufficient cause must be shown for any delay by assessing the bona fide conduct of the applicant. The Court found that the delay was justified and not due to negligence and thus granted the extension.
6. In Goel Construction Company Versus Delhi Metro Rail Corporation Ltd. (O.M.P.(MISC.)(COMM.) 628/2024 and I.A. 36842/2024), one of the party challenge that extention by the Court under Section 29A on the basis of that there is no pleading, in the petition, of the existence of “sufficient cause” for extension of the arbitral mandate, within the meaning of Section 29A(5) of the 1996 Act. The Court held that absence of any pleading of sufficient cause is concerned, there is no specific requirement in the 1996 Act for pleadings having to be made to that effect. The Court has to be satisfied that there is sufficient cause for extending the mandate of the Arbitral Tribunal. This is not a case in which, even as per the respondent, the petitioner has been remiss in attending the proceedings
7. Further, the Court in Goel Construction also held that, insofar as the time taken for cross-examination is concerned, there is no law which delimits the number of days over which cross-examination can be conducted. In the event that the learned Arbitral Tribunal has unnecessarily protracted the cross-examination, the remedy with the respondent lies elsewhere. That cannot be a ground to oppose the prayer for extension of the mandate of the Arbitral Tribunal.
8. “Sufficient cause” in s. 29-A is a flexible, fact-dependent standard, but the Court should examine whether the extension requested based on “Sufficient cause” is (i) bona fide conduct, (ii) external impediments beyond the parties’ control, and (iii) the overarching objective of speedy, cost-effective arbitration.
9. The Court under Section 29A(4) of the Act is not bound to grant extension of mandate of the arbitral tribunal, if the cause projected is frivolous, vexatious, belated and hopelessly time barred or merely to prolong the arbitral process unnecessarily.
10. The Courts under Section 29A of the Act are required to determine the attributability of delay and whether parties have diligently proceeded with their claims.
11. In most cases, the need for extension of mandate arises after applications for amendment, challenge to jurisdiction and extension of time for filing of Statement of Claim or Statement of Defense due to voluminous documentation.
III. THE INTERPLAY BETWEEN SECTION 23 AND SECTION 29A OF THE ACT
12. Section 23(4) was introduced through the 2015 Amendment which stipulates that pleadings should be completed within six months from the date the arbitrator or arbitral tribunal enters upon the reference. However, this timeline has been interpreted by courts as directory rather than mandatory. This means that while the provision encourages timely filing of pleadings, failure to adhere strictly to the six-month period does not render the proceedings invalid or vitiate the arbitration.
13. In contrast, Section 29A prescribes a mandatory timeline of twelve months for rendering the arbitral award in domestic arbitrations, starting from the date of completion of pleadings. This shift in the starting point from the date of reference to the date of completion of pleadings was a significant reform aimed at aligning procedural efficiency with practical realities.
14. The amendment implicitly acknowledges that delays in pleadings are common and that the arbitral tribunal should not be penalized for time lost during this preliminary phase.
15. The difference in wording raises the question of whether “completion of pleadings” in Section 29A (1) includes or excludes the filing of rejoinder/ surrejoinder. The issue was recently addressed by the Karnataka High Court in Buoyant Technology Constellations Pvt Ltd v. Manyata Infrastructure Developers Pvt Ltd [2024 SCC OnLine Kar 82] wherein the Court held that the 12-month timeline under Section 29A(l), read with Section 23(4), begins when pleadings are marked as complete. It clarified that if a surrejoinder to a counterclaim reply is allowed, it forms part of the pleadings, which are deemed complete upon its filing.
16. The Hon’ble Supreme Court upheld the said judgment in an SLP filed by Buoyant Technology and ruled that when a rejoinder or surrejoinder is filed and accepted by the arbitral tribunal, pleadings under Section 29A are deemed complete on the date the last pleading is filed.
IV. PARTY AUTONOMY AND THE SIX-MONTH EXTENSION UNDER SECTION 29A (3)
17. Party autonomy is a cornerstone of arbitration law, which allows parties to structure their proceedings as they see fit. Section 29A (3) reflects this principle by permitting a consensual extension of the arbitrator’s mandate for six months beyond the initial 12-month period.
18. Mutual Consent is Mandatory for Section 29A (3): The six-month extension is entirely dependent on mutual agreement. If one party refuses consent, the extension under Section 29A (3) cannot be granted. This means that party autonomy is not absolute, and a single dissenting party can effectively block the extension, forcing intervention by Court.
What happens when one party refuses consent
19. The Court is empowered under Section 29A(4) of the Act to extend the mandate of the arbitral tribunal even in the absence of consent under Section 29A (3) by the parties to the arbitration: If parties cannot agree or the extended time expires, either party may apply to the court for further extension.
20. In Wadia Techno-Engineering Services Limited v. Director General of Married Accommodation Project (2023:DHC:003457), it was argued by on party that requirement of consent of the parties, as expressed in Section 29A (3) of the Act, is also implicit in Section 29A (4) and (5) of the Act and petitions under Section 29A (4) are not maintainable when one party have not consented to the extension, which must be treated as a pre-condition for extension of mandate even under Section 29A (4) of the Act. It was also argued that Section 29A (4) and 29A (5) the Act do not expressly exclude the requirement of consent of the parties
21. The Hon’ble Delhi High Court held that Section 29A (3) of the Act empowers the parties to extend the mandate of the tribunal by consent for a maximum period of six months without recourse to the Court. Section 29A (4) and 29A (5) of the Act, read together, empower the Court to do so for sufficient cause, on an application of any of the parties, when the period specified in sub-section (1) or the extended period specified in sub-section (3) lapses. The plain words of the provision are clear-the power is available in both situations i.e. when the consensual extension under Section 29A (3) of the Act is granted, and when it is not.
22. Further, in “Larsen and Toubro Limited v. IIC Limited, (“L&T v. IIC”), (2024: DHC: 909), the Hon’ble Delhi High Court was also called upon to decide the requirement of consent by the parties in exercise of power by the Court to extend the time period for making arbitral award under Section 29A(4) of the Act. In L&T v. IIC, party to the arbitration i.e. IIC had undergone insolvency proceedings and liquidator had been appointed towards the same. L&T had sought the consent of the IICL’s Liquidator for a six-month extension of the Arbitral Tribunal’s mandate under Section 29A(3) of the Act. However, no such consent was granted by IICL’s Liquidators. Being aggrieved, L&T had approached the Hon’ble Delhi High Court seeking extension of the mandate of the Tribunal in terms of Section 29A(4) of the Act. The Hon’ble Delhi High Court has ruled that the Court is empowered under Section 29A(4) of the Act to extend the mandate of the arbitral tribunal even in the absence of consent by the parties to the arbitration. Accordingly, the Hon’ble Delhi High Court extended the mandate of the Arbitral Tribunal.
23. The Hon’ble Delhi High Court also observed that there can be many instances where a party may not be able to give its consent for the extension of the mandate of the arbitral tribunal. The Court under Section 29A(4) of the Act is not powerless to extend the mandate of the arbitral tribunal on mere non-giving of consent by the parties.
How Parties provide consent:
24. Consent for a six-month extension under Section 29A (3) must be clearly documented to be valid. The most common method is a Joint Memo, a written submission signed by both parties, explicitly stating their agreement to extend the arbitrator’s mandate. Alternatively, consent can be recorded in a procedural order issued by the arbitral tribunal, based on verbal agreement during hearings. This order must clearly reflect the parties’ mutual consent and be shared with them. Both methods ensure transparency and prevent future disputes regarding the validity of the extension.
V. CONCLUSION
25. While party autonomy is a vital feature of arbitration, it must be carefully balanced against the legislative intent of expeditious dispute resolution. Section 29A of the Arbitration and Conciliation Act, 1996, was introduced to curb delays and ensure that arbitration proceedings conclude within a reasonable timeframe. Generally, an extension of 6 months should not be taken as a regular procedure in all arbitration proceedings. The arbitrator should ensure that proceedings are completed without any requirement of 6 months’ mutual consent. The mutual extension of 6 months should also be subject to certain conditions, such as demonstrable progress in proceedings or valid reasons for delay and evaluated by the tribunal, which should record reasons for accepting the extension. Parties do have the choice to extend the timeline, but this choice must be exercised within the statutory framework, i.e., before the expiry of the initial 12-month period to avoid any dispute.