Application For Extending The Arbitrator’s Mandate Must Be Made During The Subsistence Of The Mandate – Arbitration & Dispute Resolution

On September 4, 2023, the Calcutta High Court, in the case of
Rohan Builders (India) (P) Ltd. v. Berger Paints India
Limited has held that Section 29-A (4) of the Arbitration and
Conciliation Act, 1996 (“Act“) requires
that an application for extending the arbitrator’s mandate must
be made during the subsistence of the mandate. Failure to do so
results in the automatic termination of the mandate by operation of
law, rendering any subsequent award void. The Court dismissed the
petitions seeking an extension of the arbitrator’s mandate as
they were filed after the termination of the mandates.

Brief Facts:

The Court was tasked with adjudicating three similar
applications, preferred by the petitioners under Section 29-A (4)
of the Act, wherein they sought an extension of the mandate for the
Ld. Arbitrators to make and publish their awards. The Respondents
in all three applications opposed the extension of the
arbitrator’s mandate. Furthermore, these cases are intertwined
with proceedings related to the initiation of the corporate
insolvency resolution process (“CIRP“)
against the petitioners under the Insolvency and Bankruptcy Code,
2016 (“IBC“).

Issue:

Whether the Court is conferred with the power under Section 29-A
(4) of the Act, to extend the mandate of the arbitrator when an
application for extension is made after the expiration of the
period stipulated in Section 29-A (1) or (3) of the Act?

Submission on behalf of the petitioners:

The submissions made on behalf of the petitioners are summarized
below:

1. The Petitioners contended that an application for an extension
   of the arbitrator’s mandate is maintainable even if submitted
   after the expiration of the period stipulated in Section 29-A (1)
   of the Act. This argument stems from the proviso in Section 29-A
   (4) of the Act, granting the Court the authority to extend it,
   whether before or after the period specified in Section 29-A (1),
   provided that sufficient cause under Section 29-A (5) has been
   established;




2. The petitioners relied upon the 176th and 246th Law Commission
   Reports to support their position. These reports emphasize that the
   legislative intent was to expedite the arbitration process, and to
   achieve this objective, the Court has been endowed with ample
   powers to extend the arbitrators’ mandate when sufficient cause
   has been demonstrated;




3. Furthermore, the petitioners contended that the period of CIRP
   represents a break in the sequence specified under Section 29-A of
   the Act.

Submissions on behalf of the respondents:

The submissions made on behalf of the respondents are summarized
below:

1. The respondents argued that the 176th Law Commission Report,
   when read in conjunction with Section 29A of the Act, clearly
   states that the arbitrator’s mandate would automatically cease
   to exist if the application for extension is not filed within the
   stipulated mandate period.




2. Furthermore, the respondents contended that the
   legislature’s choice of the term “terminate” implies
   that the proceedings would conclusively conclude if the award is
   not rendered within the statutory timeframe.

Decision of the Court:

In arriving at a conclusion, the Court examined the legislative
intent behind the inclusion of Section 29A in the Act. The Court
held the view that the 176th Law Commission Report had recommended
the use of the term “suspended” in reference to the
arbitration mandate after the expiration of the specified period
under subsection 1 of Section 29A. However, the current version of
the Act employs the term “terminated” instead of
“suspended.” Hence, the Court opined that the 176th Law
Commission’s proposal to suspend the arbitrator’s mandate
following the expiry of statutory timelines under Section 29-A (1)
or (3) did not gain favor with the Legislature, and the term
“terminated” was substituted, indicating the legislative
intent that, following the expiration of the period specified in
subsection 1 of Section 29A, the arbitration mandate is terminated.
In the present case, the respondents objected to the extension of
the arbitration mandate. However, even if both parties consent to
such an extension, it would not be permissible if the application
for extension is made after the expiry of the period specified
under the Act.

Furthermore, in accordance with Section 29-A (4) and (5) of the
Act, the Court possesses the power to grant an extension of the
mandate of the arbitration if sufficient cause is demonstrated. The
language used in Section A (4) states that ‘the mandate of the
arbitrator(s) shall terminate…’. If the arbitral tribunal
proceeds to issue an award after the expiration of the prescribed
timelines, the award would be susceptible to jurisdictional errors.
This is because there is no provision for the renewal of the
tribunal’s mandate once it has terminated by operation of
law

Hence, the Court held that all three applications for extension
had been filed after the termination of the mandate of the
arbitration, and therefore, the Court is statutorily precluded from
extending the mandate. Accordingly, all the applications were
dismissed.

Please find attached a copy of
the judgement.

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