Calcutta High Court Clarifies Purpose of Section 29A: To Expedite Arbitration, and Not Punish Parties

Calcutta High Court Clarifies Purpose of Section 29A: To Expedite Arbitration, and Not Punish Parties

In a recent ruling, the Calcutta High Court has clarified the intent of Section 29A of the Arbitration and Conciliation Act, 1996, stressing that its purpose is not to impose punitive measures on parties or arbitral tribunals but rather to ensure the timely and effective completion of arbitration proceedings. The court underscored that the section aims to prevent undue delays and ensure that arbitration processes are not unnecessarily protracted.

The High Court denied the petitioner company's request for an extension of the mandate of the arbitrator, reiterating the importance of adhering to reasonable timelines and expediting arbitration proceedings. The court's asserted that Section 29A of the Arbitration and Conciliation Act, of 1996, is not intended to grant automatic extensions of mandates but rather to encourage the timely completion of arbitration matters.

A Single Bench of Justice Moushumi Bhattacharya noted that section 29A of the 1996 Act is not centred on the Court merely sitting with a calculator in one hand and wielding a (whacking) stick with the other. Instead, it emphasised the importance of preventing parties and the arbitral tribunal from contributing to an excessively prolonged arbitration process. Section 29A highlights the difference between a disinterested litigant who allows the mandate to expire and a vigilant litigant who strives to meet the timelines but becomes entangled in the tactics employed by the opponent. The current case falls into the latter category.

The Bench observed that there is no evidence indicating that the petitioner treated the timelines with indifference or became unresponsive during the arbitration process. In contrast, the respondent, according to the Bench, played the role of a shrewd negotiator, remaining on the sidelines, swinging its legs, and attempting to manoeuvre the petitioner into the constraints of Section 29A.

On September 30, 2022, the pleadings were finalised. The 12 months from the date of completion of pleadings, as stipulated by Section 29A(1), concluded on October 1, 2023. The petitioner company invoked Section 12 of The Limitation Act, 1963, and Section 9 of the General Clauses Act, 1897, to argue that the first date, October 1, 2023, should be excluded. Additionally, the company sought to benefit from October 2, 2023, being a national holiday and a court holiday, as well as Section 4 of The Limitation Act. Consequently, an application was filed on the next working day, which was October 3, 2023.

The central issue was whether the company filed the application for an extension of the arbitrator's mandate within the time limits specified under Section 29A of the Arbitration and Conciliation Act, 1996. The company maintained that the deadline should be calculated from September 30, 2022, which was the date for completion of pleadings pursuant to Section 29A(1) of the Act.

However, the respondent company Bharat Heavy Electricals Limited (BHEL) argued that the date for completion of pleadings should be considered as August 20, 2022. BHEL cited Section 23(4) of the 1996 Act to support its stance.

In this context, the High Court observed, “Consent of the parties for extension of the mandate under section 29A(3) is an additional window for the arbitral tribunal to make the award. The timelines under section 29A cast a responsibility on the parties not only to obtain consent from the other, in the event the parties seek extension of the mandate; but also on the other party to communicate the refusal (to give consent) during the subsistence of the mandate.”

The Court further stated that one party cannot be solely held accountable for the lapse in the timelines, particularly when the other party fails to provide a clear and unambiguous indication of their refusal to consent.

The Court noted that the present application was filed within the subsistence of the mandate and the petitioner has been able to make out a case for the extension of the mandate under section 29A(4) of the Act. There is nothing to suggest that the provisions of The Limitation Act or the General Clauses Act will not apply under section 29A of the 1996 Act particularly where October 2, 2023, was a declared national holiday. Consequently, the High Court granted the application, extending the mandate for six months, from October 1, 2023, to March 31, 2024.