The Delhi High Court allowed an amendment to a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, observing that such amendment is permissible if the original petition was filed within the prescribed limitation period. The case concerned a challenge to the continuation of arbitral proceedings beyond the statutory time limit under Section 29A. The Court underlined that the extension of an arbitral tribunal’s mandate cannot be validated merely by the consent of the parties and must follow the statutory route. It emphasized that “the failure of the petitioner to raise objection regarding termination of the mandate in the original Section 34 petition will not cure the jurisdictional defect.”
Brief Facts:
The matter arose out of arbitral proceedings initiated between the parties, during which a substitute Arbitrator was appointed by the Court. The proceedings were to resume from the stage of final arguments. After the expiry of the initial mandate period, the Arbitral Tribunal (AT) issued an order seeking extension of its mandate for six months, to which both parties responded with emails conveying their consent. However, one of the parties subsequently moved the Court under Section 34 of the Arbitration Act, challenging the award and seeking to amend the original petition to raise a jurisdictional objection about the expiry of the AT's mandate.
Contentions of the Petitioner:
The counsel for the petitioner contended that although the consent to extend the tribunal’s mandate had been given, such consent held no legal effect once the statutory period under Section 29A had expired. It was argued that only the Court could have granted an extension, and any further continuance by the AT without judicial sanction was without jurisdiction. The petitioner relied on a prior order which limited the substitute Arbitrator’s role to final arguments and stressed that the amendment sought was legal in nature, based on facts already on record.
Contentions of the Respondent:
The counsel for the respondent objected to the maintainability of the amendment application, arguing that it was filed beyond the timeline under Section 34(3) and that the attempt to introduce new grounds post-limitation was impermissible. It was submitted that the petition effectively sought to modify the original challenge, which could not be done outside the statutory framework.
Observations of the Court:
The Delhi High Court carefully examined the question of whether the amendment sought could be allowed in view of the limitation prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996. Relying extensively on the Supreme Court’s decision in Hindustan Construction Co. Ltd. v. Union of India, the Court held that an amendment to a Section 34 petition is not automatically barred if the original petition was filed within the limitation period.
The Court clarified that the limitation under Section 34(3) applies to the initial filing of the petition, and not all subsequent amendments, provided the foundational facts for the new grounds already exist in the original record. It noted that Section 34(2)(b) gives courts the authority to set aside arbitral awards where the award is found to be in conflict with the public policy of India or where the subject matter is not arbitrable. Hence, in appropriate cases, amendments may be permitted if they are necessary to advance justice and do not amount to filing a fresh petition.
Importantly, the Court underscored the statutory framework of Section 29A and held that the continuation of arbitral proceedings beyond the permissible period is not a matter of private agreement between parties. It emphasized, “Extension of the mandate of the AT under Section 29A is not dependent upon the explicit or implied consent of the parties... such extension is within the exclusive supervisory jurisdiction of the Court.”
The Court further explained that if an arbitral tribunal continues to act beyond its mandate without seeking judicial extension, it may be deemed functus officio, and any award passed thereafter could be without jurisdiction. Thus, the petitioner’s omission to raise the jurisdictional issue in the initial filing did not bar the Court from examining whether the tribunal had valid authority to proceed.
Finally, it held that the grounds sought to be introduced were legal in nature and based on facts already mentioned in the original petition. Therefore, they fell squarely within the exceptions carved out by the Supreme Court in Hindustan Construction and could be considered through an amendment.
The decision of the Court:
Allowing the amendment, the High Court held that since the petition under Section 34 had been filed within limitation, the additional grounds could be brought on record. The Court clarified that its observations were limited to the maintainability of the amendment and would not prejudice the respondent’s rights during final adjudication.
Case Title: Raheja Developers Limited vs. Ahluwalia Contractors India Ltd.
Case No: O.M.P. (COMM) 415/2024 &I.A. 44283/2024
Coram: Justice Manoj Kumar Ohri
Advocate for Petitioner: Adv. Rajshekhar Rao (Senior Advocate), Manmeet Kaur, Mr.Gurtejpal Singh, Aashna Chawla, Aashna Arora, Suditi, Debarshi Roy
Advocate for Respondent: Adv. Shashank Garg (Senior Advocate), Nishtha Jain
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