India: Analysis Of Section 29A Of Arbitration And Conciliation Act: Approach Of Judiciary

BACKGROUND

In order to prevent unnecessary delay in passing of the arbitral award, a restrain has been placed on the arbitral tribunal to pass the award within 12 months from the date the arbitral tribunal enters upon reference.

Section 29A of the Act is intended to sensitize the parties as also the Arbitral Tribunal to aim for culmination of the arbitration proceedings expeditiously. It is with this legislative intent, Section 29A was introduced in the Act by way of the Arbitration and Conciliation (Amendment) Act, 2015. This provision is not intended for a party to seek substitution of an arbitrator only because the party has apprehension about the conduct of the arbitration proceedings by the said arbitrator. The only ground for removal of the arbitrator under Section 29A of the Act can be the failure of the arbitrator to proceed expeditiously in the adjudication process.¹

ANALYSIS

1) Whether retrospective / prospective in nature: The legislative intent was obviously not to make the provisions of Section 29A of the Act retrospective in nature. Section 26 of the Amendment Act is clear that the amendments apply prospectively, insofar as arbitral proceedings are concerned.²

2) When does initial period of 12 month commence: The aforesaid period is to be reckoned from the date of reference (i.e. when notice of appointment is received by the arbitrator). The period is calculated from the first reference.³ It is proposed in 2018 amendment bill that said period shall be reckoned from the period of completion of the pleadings.⁴ Such period of 12 months can be further extended by the consent of both the parties for 6 months i.e. effectively 18 months (12+6).

3) Time period for moving to court for extension of time: In case the award is not made within the period mentioned in point 1) then both parties (through joint application) or either of the parties can file an application for extension of the time period for making/passing of award. Such an application can be filed within reasonable period⁵ from either before or after the expiry of 12 months (in case other party doesn't give consent for extension of the time period) or 18 months.

4) Consequences of non delivery of award within 12 months/18 months: Although the said provision provides that mandate of arbitrator shall terminate unless the period of delivery of award is extended by the court if the party(ies) are able to show sufficient cause. Following will be sufficient cause:

a. Documents/evidence in arbitration proceeding is voluminous⁶

b. Parties/arbitral tribunal was diligent, and delay is not attributable to them⁷

c. 29A filed for extension of time for filing amendment to SoC, because amendment if filed will require further extension.⁸

d. Invested enough time and money, no purpose in stalling arbitration⁹ , time and money invested, and stage is evidence¹⁰

e. Construction dispute, voluminous document has been filed¹¹

f. Delay due to certain applications being filed, AT given time to complete the proceedings¹²

g. Arbitral tribunal is not at fault and has to consider the submissions of the parties¹³ h. At the final stage, arguments have been over, to meet the ends of justice¹⁴

Following is not a sufficient grounds:

i. arbitrator has deliberately decided to postpone the award to prevent any inconsistent award being passed if a similar arbitration proceeding is going on however the proceeding may be distinct and will have no bearing on the award¹⁵

5) Power to substitute arbitrator: While extending the period under sub-section 4, it shall be open to the court to substitute one or all of the arbitrators. The Courts have granted substitution on the following ground:

a. Arbitral tribunal responsible for delay¹⁶

b. if the conduct of arbitrator is contrary to basic principles of law like non re- cording of evidence.¹⁷

However, the court has generally refrained from granting substitution, categorically in the following cases:

a) Order passed with the consent of the respondent, merely aggrieved by the order of arbitral tribunal not a ground for setting aside the arbitrator. The issue of only expeditious disposal can be considered no other¹⁸

b) Mere statement by the partiers/bald allegations against the arbitrator - not prima facie backed by materials.¹⁹

c) Thus, there is no immediate termination of mandate of the arbitrator. Also, mere delay in delivery of award is not a ground for substitution of arbitrator.²⁰

d) No fault of the arbitrator, rather the party(ies) are at fault²¹

6) The Court can extend the period under Section 29A(4) subject to terms and conditions:

a. reduction in the fees of arbitrator.

b. substitution of arbitrator

c. imposition of actual or exemplary cost on either of the parties

d. direct parties to co-operate with each other²²

e. direct the arbitrator to not grant any unnecessary adjournment.²³

f. direct to record the conduct of the parties in minutes of the meeting of award²⁴

 g. direct to pay the cost of Section 29A proceedings.²⁵

7) Length of extended period: It varies and depends on the discretion of the court. However, the court has granted min. of 3 months to max. of 12 months. Below is the brief statistical analysis of the extension(s) granted²⁶:

It is discernible from above that court has easily extended the time period by 6 months (in 40% cases) and also didn't refrain from extending it by 12 months (in 27% cases). There is no bar under the act for max. extension that can be granted by the court under Section 29A(4). Thus, Court can grant extension of more than 12 months as well.

8) Scope of enquiry under Section 29A: Enquiry under Section 29A is limited to examining the issue of expeditious hearing of arbitration and nothing more. It cannot be use for Section 12, 13 or for challenging the impartiality of the Tribunal. ²⁷ If the arbitrator made the award within six months, then arbitrator is entitled to additional fees. The said provision also provides for reduction in fees of arbitrator.

Thus, it is evident from above that courts have refrained from granting substitution of arbitrator unless it finds that arbitral tribunal has contributed in the delay of proceedings. Hon'ble Court(s) while restricting the scope of enquiry under Section 29A, has adopted a liberal interpretation and granted extension without the imposition of 'harsh' conditions either on the parties or on the Ld. Tribunal.

Footnotes

1 NCC v. Union of India, 2018 SCConline Del 12699

2 Republic of India through ministry of defense v. agusta westland international ltd, (2019) SCConline Del 6419

3 International Trenching Pvt. Ltd v. Power Grid Corporation of India Ltd 2017 SCC OnLine Del 10801

4 https://www.prsindia.org/sites/default/files/bill_files/The%20Arbitration%20and%20Conciliation%20%28Amendment%29%20 Bill%2C%4 https://www.prsindia.org/sites/default/files/bill_files/The%20Arbitration%20and%20Conciliation%20%28Amendment%29%20 Bill%2C%202018.pdf

5 FCA India Automobiles Pvt. Ltd. (formerly known as Fiat Group Automobiles India Private Limited) v. Torque Motor Cars Pvt. Ltd. & Anr., 2018 SCC OnLine Bom 4371

6 supra note 3

7 supra note 3, Puneet solanki and another v. Sapsi electronics pvt ltd, 2018 SCC OnLine Del 10619.

8 ASF insignia Sez P. ltd v. Punj Lloyd Ltd, 2017 SCConline Del 10124

9 Vil Rohtak Jind Highway Private Limited v. NHAI, 2018 SCC OnLine Del 12000

10 Tecnimont SPA and Anr v. National Fertilizers Limited, 2018 SCC OnLine Del 13250

11 Abir Infrastructure Pvt. Ltd v. beas valley Power Corporation, 2018 SCC OnLine HP 1562

12 Bharat Heavy electricals ltd v. M/s Capital Control India pvt ltd, (2017) SCC online Del 10854

13 Delhi tourism and transportation Development corporation v. kore security services, 2018 SCConline Del 11816

14 Mora Tollways ltd v. Bihar State Road Development Corporation limited and anr., 2018 SCConline Pat 2333.

15 Ratna Infrastructure Projects Pvt. Ltd. v. Meja Urja Nigam Private limited, 2018 SCC OnLine Del 12466.

16 Olympic oil industries v. practical properties pvt ltd, 2018 SCC online Del 8887

17 FIITJEE Ltd.v. Dushyant Singh and anr, 2018 SCC OnLine Del 13157

18 Ssangyong Engineering & Construction Co. Ltd v. National Highways Authority of India (NHAI), 2018 SCC OnLine Del 10184

19 Supra note 10

20 Rajasthan Small Industries Corporation limited v. M/s Ganesh Contrainers movers syndicate, Civil Appeal no. 1039/2019

21 Supra note 1

22 supra note 5

23 supra note 5

24 supra note 5

25 supra note 1

26 The aforesaid is the data of cases of Delhi High Court, Bombay High Court. The statistics mentioned therein is just to give general understanding how liberal the court are in extending the time period. Total 16 cases have been considered as available in public domain.

27 Puneet solanki and another v. Sapsi electronics pvt ltd, 2018 SCC OnLine Del 10619

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