The arbitration proceedings concluded with an award, but one of the respondents challenged it before the Principle District Court under Section 34 of the Arbitration and Conciliation Act. The main objections were that the award was passed beyond the 12 month time limit prescribed under Section 29-A of the Act, without obtaining the parties’ consent for an extension, rendering the arbitrator functus officio.
The District Judge set aside the arbitration award solely on the ground of exceeding the statutory time limit and did not address other arguments. The appellant has now challenged this decision in the present appeal.
Contentions of the Appellant:
The Counsel for the appellant contended that after the final submissions in October 2017, the award was issued in March 2018 without any objections from the respondents about the expiry of the awaiting the award, the respondents impliedly consented to an extension of the arbitral period. The counsel asserted that Section 29A(3) allows for implied consent and that procedural issues should not invalidate the arbitration.
The counsel highlighted that the respondents participated in the proceedings even after the 12-month period expired and only raised objections after the award was unfavourable. They argued that the court can extend the arbitral period, and the appeal should be allowed to avoid reopening the dispute.
Contentions of the Respondent:
The counsel for the respondent argued that the Arbitrator, appointed by the Supreme Court, entered upon the reference in November 2016, and as per Section 29A(1) of the Arbitration and Conciliation Act, the proceedings should have concluded within 12 months. However, the award was passed in March 2018, well beyond the stipulated period. They contended that no express or implied consent was given by the parties to extend the arbitration timeline, and without such consent or a court order, the Arbitrator’s mandate had automatically terminated after 12 months.
The counsel emphasized that mere participation in arbitration within 12 months does not imply consent to extend the proceedings beyond that time. They further argued that the appellant’s reliance on a precedent where deemed consent was inferred is inapplicable here, as the facts differ. Further, the counsel contended that the appellant’s application to extend the arbitration period, filed after the award was passed, is not maintainable and the appeal should be dismissed.
Observation of the Court :
The Court observed that the Arbitrator, appointed by the Supreme Court, passed the award on 28.03.2018. This award was challenged on the grounds that it exceeded the 12-month period mandated under section 29-A of the Arbitration and Conciliation Act, the court states “When Section 29-A of the Act is only construed to be a procedural one and discretion is given to the parties to extend the arbitration period for a further period of 6 months, this Court can very well arrive at a conclusion that the respondents herein by not raising any objection before passing of the award, have not only given their implied consent but also waived their rights to raise any objection with regard to the non-passing of the award within a period of 12 months”. The Arbitrator had communicated with the parties on 03.11.2016, but the exact date when she received her appointment was not recorded. The District Judge took 03.11.2016 as the date the Arbitrator entered upon the reference and allowed the arbitration petition, holding that the award was passed after the permissible time frame.
It was further observed that there was no clear record of the date the Arbitrator received the certified copy of the Supreme Court’s order. Both parties did not seek clarification on this date. Based on the available facts, the District Court inferred that the Arbitrator had entered upon the reference on 03.11.2016, making the award late under Section 29A of the Act. The Court said “The objection relating to the invalidity of the award has been raised by the respondents only after they have suffered an adverse order. If such an interpretation is given to Section 29-A(4) of the Arbitration and Conciliation Act, the parties would resort to this argument after coming to know that they have suffered an adverse order. The legislative intent of inserting Section 29-A of the Act is only for expeditious disposal of the arbitration proceedings and not to confer a new defence upon an unsuccessful party to challenge the award and to reopen the entire proceedings”.
The Decision of the Court :
The Court allowed the appeal without costs and upheld the arbitration award passed within 18 months with the respondents’ implied consent, also dismissed the CMP (MD) No. 8135 of 2024, set aside the lower court’s order and remitted the matter for reconsideration.
Case Title: Ayyasmay vs. A.Shanmugavel (died) & Ors.
Citation: C.M.A.(MD). No.108 of 2020, CMP(MD).Nos.1888 & 8135 of 2024
Coram: Justice R. Vijayakumar
Advocate for Appellant: Adv. Sricharan Rengarajan (Senior Advocate), C. Ramesh
Advocate for Respondent: Adv. S. Meenakshi Sundaram (Senior Advocate), RT Arivukumar
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