M/S AJAY PROTECH PVT. LTD.versusGENERAL MANAGER & ANR.

                 [2024] 11 S.C.R. 850 : 2024 INSC 889

                        M/s Ajay Protech Pvt. Ltd.
                                    v.
                         General Manager & Anr.
                      (Civil Appeal No. 13004 of 2024)
                              22 November 2024
                [Pamidighantam Sri Narasimha* and
                       Sandeep Mehta, JJ.]


                            Issue for Consideration
       Issue arose as to whether the application for extension can be
       entertained if it is filed after the expiry of the Arbitral Tribunal’s
       mandate; and whether the application filed u/s.29A(4) of the
       Arbitration and Conciliation Act, 1996 for extension of the mandate
       of the arbitral tribunal ought to have been allowed by the High Court.

                                   Headnotes†
       Arbitration and Conciliation Act, 1996 – s.29A(4) – Time limit
       for arbitral award – Extension of time – Application u/s.29A(4),
       for extension of the mandate of the arbitral tribunal – High
       Court, if ought to have allowed the same:
       Held: Wording of s.29A(4) clearly and explicitly enables a court
       to extend the Tribunal’s mandate after expiry of the statutory and
       extendable period of 18 months – Application for extension can be
       filed either before or after the termination of the Tribunal’s mandate
       upon expiry of the statutory and extendable period – As per s.29A(5),
       the decision to extend the time is an exercise of discretion by the
       court and must be done on sufficient cause being shown, and on
       such terms and conditions that the court deems fit – 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 – Primary objective in rendering an
       arbitral award is to resolve disputes through the agreed dispute
       resolution mechanism as contracted by the parties – Thus, 'sufficient
       cause' should be interpreted in the context of facilitating effective
       dispute resolution – On facts, the pandemic had commenced
       even before the expiry of 12 months from the completion of
       pleadings, this Court excluding the period between 15.03.2020
       to 28.02.2023 in Re: Cognizance for Extension of Limitation’s
* Author
[2024] 11 S.C.R.                                                           851

          M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr.


     case, and the agreement between the parties on 05.05.2023 to
     seek extension of time by filing an application before the Court,
     there is sufficient cause for extension of the period for making of
     the award – Reasoning adopted by the High Court in holding that
     there is a delay of 2 years, 4 months in filing the application is
     erroneous – Order and judgment passed by the High Court set
     aside – Period for making of the award by the Arbitral Tribunal is
     extended. [Paras 2, 8, 10, 11, 12-18]

                              Case Law Cited

     In re: Cognizance for Extension of Limitation [2021] 2 SCR 640 :
     (2022) 3 SCC 117; Rohan Builders (India) Pvt. Ltd. v. Berger
     Paints India Ltd. [2024] 9 SCR 473 : 2024 SCC OnLine SC
     2494 – relied on.

                                List of Acts

     Arbitration and Conciliation Act, 1996.

                             List of Keywords
     Application for extension of mandate of arbitral tribunal; Time
     limit for arbitral award; Arbitral award; Sufficient cause; COVID
     pandemic; Period of limitation; Delay; Efficiency in the conduct of
     arbitral proceedings; Dispute resolution remedy through arbitration;
     Re: Cognizance for Extension of Limitation case.

                            Case Arising From

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 13004 of 2024

     From the Judgment and Order dated 03.11.2023 of the High Court
     of Gujarat at Ahmedabad in MCA No. 1 of 2023

                         Appearances for Parties

     Gaurav Agrawal, Sr. Adv., C. George Thomas, Manan Daga,
     Ms. Kaarunya Lakshmi, Ansh Mittal, Advs. for the Appellant.

     Vikramjit Banerjee, A.S.G., Ms. Nisha Bagchi, Sr. Adv., Amrish
     Kumar, Siddharth Sinha, Shubendu Anand, Navanjay Mahapatra,
     Ms. Sansriti Pathak, Bhuvan Kapoor, Ashok Panigrahi, Sandeep
     Singh, Advs. for the Respondents.
852                                                          [2024] 11 S.C.R.

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                       Judgment / Order of the Supreme Court

                                       Judgment

       Pamidighantam Sri Narasimha, J.

1.     Leave granted.
2.     The short issue in this appeal is whether the application filed by the
       appellant under Section 29A(4) of the Arbitration and Conciliation Act,
       19961 for extension of the mandate of the Arbitral Tribunal ought to
       have been allowed by the High Court. The text of Section 29A was
       sufficient for us to come to the conclusion that the Court has the
       power and jurisdiction to extend the period. Further, in the facts and
       circumstances of the case, we found that there is ‘sufficient cause’
       for the Court to extend the period for making the Award. Thus, we
       have allowed the appeal and extended the time till 31st December,
       2024 to make the Award. In this context, we have also explained the
       purport of the expression sufficient cause employed in this section.
3.     The brief facts are as follows. The appellant entered into a works
       contract with respondent no. 1. Subsequently when disputes arose,
       appellant sought resolution through arbitration by issuing a notice
       on 12.02.2018. Appellant’s application under Section 11 of the Act
       for appointment of a sole arbitrator was allowed by the High Court
       by orders dated 08.02.2019 and 15.02.2019.
       3.1 After the first meeting of the Arbitral Tribunal on 24.06.2019,
           parties were given time to complete their pleadings, which
           were in-fact completed on 09.10.2019. The statutorily stipulated
           12-month period under Section 29A(1) for making the award
           commences from this date, and would expire on 08.10.2020.
           Further, as the parties can extend this period by another 6
           months by mutual consent as per Section 29A(3), upon such
           mutual extension the time for making the award got extended till
           09.04.2021. Therefore, the 18-month period, which commenced
           from 09.10.2019, would have naturally expired on 09.04.2021.
       3.2 However, before the expiry of the said period, in fact even
           before the first stretch of 12 months, the nation was affected by


1    Hereinafter “the Act”.
[2024] 11 S.C.R.                                                              853

            M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr.


             the COVID pandemic. Taking note of this situation, this Court
             in Re: Cognizance for Extension of Limitation by order dated
             10.01.2022 passed orders declaring that the period between
             15.03.2020 and 28.02.2022 shall be excluded in computing
             periods of limitation under Sections 23(4) and 29(A) of the Act.2
             The relevant portion of the said order is as under:
                     “5. Taking into consideration the arguments advanced
                     by the learned counsel and the impact of the surge
                     of the virus on public health and adversities faced
                     by litigants in the prevailing conditions, we deem it
                     appropriate to dispose of MA No. 21 of 2022 with
                     the following directions:
                     ***
                     5.4. It is further clarified that the period from
                     15-3-2020 till 28-2-2022 shall also stand excluded
                     in computing the periods prescribed under Sections
                     23(4) and 29-A of the Arbitration and Conciliation
                     Act, 1996, Section 12-A of the Commercial Courts
                     Act, 2015 and provisos (b) and (c) of Section 138
                     of the Negotiable Instruments Act, 1881 and any
                     other laws, which prescribe period(s) of limitation for
                     instituting proceedings, outer limits (within which the
                     court or tribunal can condone delay) and termination
                     of proceedings.”
     3.3 Returning to the arbitral proceedings, the Arbitral Tribunal framed
         issues on 21.11.2019 and posted the matter for arguments for
         December 2019 and January 2020 but was compelled to adjourn
         the proceedings due to the pandemic. The record reveals that
         the proceedings resumed in the year 2022, and in fact, the
         hearing was concluded on 05.05.2023. It is an admitted fact
         that the parties to the arbitration agreement have submitted
         before the Arbitral Tribunal that they would move the Court under
         Section 29A(4) of the Act for appropriate orders for extension
         of time for making the award. In furtherance of the undertaking,
         an application under Section 29A(4) was filed by the appellant
         before the Gujarat High Court on 01.08.2023.


2   In re: Cognizance for Extension of Limitation (2022) 3 SCC 117.
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4.     By the order dated 03.11.2023 impugned before us, the High Court
       dismissed the application. The High Court reasoned that the initial
       statutory period of 12 months expired on 08.10.2020, and the same
       was extended by the mutual consent of the parties till 09.04.2021.
       Noting that the application for extension was preferred only in August
       2023, High Court held that there is no explanation for a delay of
       more than 2 years, 4 months in approaching it. The High Court
       held that the mandate of the Arbitral Tribunal stood terminated on
       09.04.2021, at which point there was not even an application for
       extension of time pending before it. In this view of the matter, the
       application was found to be misconceived, and was dismissed by
       the order impugned before us.
5.     We have heard Mr. Gaurav Agrawal, learned senior counsel for
       the appellant, and Mr. Vikramjit Banerjee, learned ASG for the
       respondents.
       5.1 Relying on this Court’s declaration Re: Cognizance for Extension
           of Limitation dated 10.01.2022 extending limitation on account
           of the pandemic,3 Mr. Agrawal submits that the High Court
           ought to have excluded the period between 15.03.2020 and
           28.02.2022 while determining the date on which the Tribunal’s
           mandate stood terminated. Further, he submits that the
           respondent had agreed to apply for extension of time before
           the Arbitral Tribunal, as is recorded in the Minutes of Arbitral
           Meeting dated 05.05.2023.
       5.2 Mr. Vikramjit Banerjee, ASG, submits that even if the benefit of
           this Court’s order is considered, the Tribunal’s mandate expired
           on 31.10.2022, and there is still a nine-month delay in filing the
           application. Further, placing reliance on a recent decision of this
           Court in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India
           Ltd.,4 he submits that an application under Section 29A(4) must
           be filed before the mandate of the Tribunal expires. It cannot be
           subsequently filed as the provision stipulates termination of the
           Tribunal’s mandate on expiry of the statutory and extendable
           period.



3    ibid.
4    2024 SCC OnLine SC 2494.
[2024] 11 S.C.R.                                                           855

           M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr.


6.   Having heard learned senior counsel and the learned ASG, there
     are two issues that we must consider:
     i.    Whether the application for extension can be entertained if it is
           filed after the expiry of the Arbitral Tribunal’s mandate?
     ii.   If yes, do the facts and circumstances warrant an extension in
           the present case?
7.   When must an application under Section 29A(4) be filed. The first
     issue is no longer res integra in view of a recent decision of this
     Court in Rohan Builders (supra). Despite Mr. Banerjee’s reliance on
     this decision, we find that it squarely covers the issue against him.
     Before dealing with this decision, it is necessary to take note of the
     text and wording of the relevant portion of Section 29A of the Act:
           “29A. Time limit for arbitral award.— (1) The award in
           matters other than international commercial arbitration
           shall be made by the arbitral tribunal within a period of
           twelve months from the date of completion of pleadings
           under sub-section (4) of section 23:
           Provided that the award in the matter of international
           commercial arbitration may be made as expeditiously as
           possible and endeavor may be made to dispose of the
           matter within a period of twelve months from the date of
           completion of pleadings under sub-section (4) of section 23.
           ***
           (3) The parties may, by consent, extend the period specified
           in sub-section (1) for making award for a further period
           not exceeding six months.
           (4) If the award is not made within the period specified in
           sub-section (1) or the extended period specified under sub-
           section (3), the mandate of the arbitrator(s) shall terminate
           unless the Court has, either prior to or after the expiry of
           the period so specified, extended the period:
           Provided that while extending the period under this sub-
           section, if the Court finds that the proceedings have been
           delayed for the reasons attributable to the arbitral tribunal,
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               then, it may order reduction of fees of arbitrator(s) by not
               exceeding five per cent. For each month of such delay:
               Provided further that where an application under sub-
               section (5) is pending, the mandate of the arbitrator shall
               continue till the disposal of the said application:
               Provided also that the arbitrator shall be given an
               opportunity of being heard before the fees is reduced.
               (5) The extension of period referred to in sub-section (4)
               may be on the application of any of the parties and may
               be granted only for sufficient cause and on such terms
               and conditions as may be imposed by the Court.”
                                                      (emphasis supplied)

8.     The effect of the provision is that if the arbitral award is not made
       within 12 months from when the pleadings are completed, extendable
       by a further 6 months by mutual consent of parties, the Tribunal’s
       mandate will terminate, unless the court either prior or after the expiry
       of the period, extends it. The wording of sub-section (4) clearly and
       explicitly enables a court to extend the Tribunal’s mandate after expiry
       of the statutory and extendable period of 18 months.
9.     This Court in Rohan Builders (supra) has held that the application
       for extension of time can be filed even after the expiry of the period
       in sub-sections (1) and (3).5 Even if sub-section (4) provides for the
       termination of the Tribunal’s mandate on the expiry of the period,
       it recognises party autonomy to move an application before the
       Court for further extension.6 Thus, the termination of mandate under
       the provision is only conditional on the non-filing of an extension
       application, and cannot be taken to mean that the mandate cannot
       be extended once it expires.7 The relevant portion of the judgment
       is extracted:
               “6. Section 29A(4) is the provision which requires
               interpretation. It states that where the award is not made


5    Rohan Builders (supra), para 6.
6    ibid, paras 10 and 11.
7    ibid, para 12.
[2024] 11 S.C.R.                                                                857

             M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr.


              within the specified period of twelve or eighteen months,
              the mandate of the arbitral tribunal will terminate. However,
              this provision does not apply if the court has extended
              the period, either before or after the expiry of the initial
              or the extended term. In other words, Section 29A(4)
              empowers the court to extend the period for making of
              the arbitral award beyond a period of twelve months or
              eighteen months, as the case may be. The expression
              “either prior to or after the expiry of the period so specified”
              is unambiguous. It can be deduced by the language that
              the court can extend the time where an application is filed
              after the expiry of the period under subsection (1) or the
              extended period in terms of sub-section (3). The court has
              the power to extend the period for making an award at
              any time before or after the mandated period.”
                                                       (emphasis supplied)

10. The wording of Section 29A(4) and the decision in Rohan Builders
    (supra) clearly answer the first issue in favour of the appellant, i.e.,
    an application for extension can be filed either before or after the
    termination of the Tribunal’s mandate upon expiry of the statutory
    and extendable period.
11. Whether extension must be granted. The next question is whether
    an extension of time should be granted in the present case. As per
    Section 29A(5), the decision to extend the time is an exercise of
    discretion by the court and must be done on sufficient cause being
    shown, and on such terms and conditions that the court deems fit.8
    This Court, in Rohan Builders (supra), has held:
              “14. In our opinion, a restrictive interpretation would lead
              to rigour, impediments and complexities. A party would
              have to rush to the court even when the period of arbitral
              mandate of twelve months has not expired, notwithstanding
              the possibility of a consent-based extension of six months
              under Section 29A(3). Narrow interpretation presents an
              additional challenge by relegating a faultless party to a fresh


8   ibid, para 15.
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             reference or appointment of an arbitrator under the A&C Act,
             2015, thereby impeding arbitration rather than facilitating
             it. The legislature vide the 2015 Amendment envisions
             arbitration as a litigant-centric process by expediting
             disposal of cases and reducing the cost of litigation. A
             narrow interpretation will be counterproductive….
             15. Rohan Builders (India) Pvt. Ltd. (supra) highlights that
             an interpretation allowing an extension application post
             the expiry period would encourage rogue litigants and
             render the timeline for making the award inconsequential.
             However, it is apposite to note that under Section 29A(5),
             the power of the court to extend the time is to be exercised
             only in cases where there is sufficient cause for such
             extension. Such extension is not granted mechanically on
             filing of the application. The judicial discretion of the court
             in terms of the enactment acts as a deterrent against any
             party abusing the process of law or espousing a frivolous or
             vexatious application. Further, the court can impose terms
             and conditions while granting an extension. Delay, even
             on the part of the arbitral tribunal, is not countenanced.
             The first proviso to Section 29A(4) permits a fee reduction
             of up to five percent for each month of delay attributable
             to the arbitral tribunal.”
12. The issue before us is not whether the application under Section
    29A(4) is filed within the permissible time for seeking extension,
    i.e., 12 months, followed by another 6 months at the consent of
    the parties. The real issue is whether there is a sufficient cause
    for the Court to extend the period for making of the award. For
    considering whether there is a sufficient cause or not, it is necessary
    to take into account the following events. As indicated earlier, even
    before expiry of the period of 12 months under Section 29A(1),
    commencing from 09.10.2019 (date of completion of pleadings),
    the COVID pandemic had started. The period between 15.03.2020
    and 28.02.2022 is anyways mandated to be excluded from periods
    of limitation.9 Therefore, from the date of completion of pleadings
    till 15.03.2020, only a period of 5 months is taken. If the remainder


9   In re, Cognizance for Extension of Limitation (supra), para 5.4.
[2024] 11 S.C.R.                                                        859

          M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr.


     of the 18 months period is reckoned from 28.02.2022, the said
     period would expire on 31.03.2023. In other words, the appellant
     would have been within the period specified under Section 29A(1)
     read with Section 29A(3) had it filed the application by such date.
     However, the problem arose because the application was filed on
     01.08.2023. Really speaking, it is the period commencing from
     31.03.2023 to 01.08.2023 that the Court is to take into account for
     considering whether there is sufficient cause to exercise the power
     under Section 29A(5) to extend the period.
13. In view of the above, it is clear that the reasoning adopted by the
    High Court in holding that there is a delay of 2 years, 4 months in
    filing the application is erroneous.
14. We will have to consider if there is sufficient cause for not filing
    the application before 31.03.2023. In the application for extension,
    the appellant has submitted that the reasons for extension of
    time are as follows: (i) the Arbitral Tribunal proceeded with online
    hearings in 2022, but was required to adjourn the proceedings on
    several occasions at the request of the respondents’ counsel as the
    panel from which the arbitrator was appointed had been changed.
    (ii) That the dispute involved technical and legal questions, and the
    record of the case is bulky. (iii) That the delay is neither attributable
    to the parties, nor to the Arbitral Tribunal, who have acted in a
    prompt and cautious manner. (iv) The hearing is complete, and
    only the award needs to be declared, thereby leading to hardship
    to the parties if the time for making the award is not extended. On
    these grounds, the appellant prayed for a one-month extension
    under Section 29A(4).
15. 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
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       limitation statutes and provides that the Court can extend the time
       if it finds that there is sufficient cause.
16. 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.
17. Having taken note of the fact that the pandemic had commenced
    even before the expiry of 12 months from the completion of pleadings,
    this Court excluding the period between 15.03.2020 to 28.02.2023 in
    Re: Cognizance for Extension of Limitation (supra), and the agreement
    between the parties on 05.05.2023 to seek extension of time by filing
    an application before the Court, we are of the opinion that there is
    sufficient cause for extension of time.
18. In view of the above, we allow the Civil Appeal arising out of
    SLP (C) No. 2272/2024 and set aside the order and judgment passed
    by the High Court in MCA No. 1/2023 dated 03.11.2023, and extend
    the period for making of the award by the Arbitral Tribunal till 31st
    December, 2024.
19. The parties shall bear their own costs.

       Result of the case: Appeal allowed.



       †
           Headnotes prepared by: Nidhi Jain