The Himachal Pradesh High Court has clarified that parties' consent to extend the arbitral period, as outlined in Section 29A(3) of the Arbitration and Conciliation Act, need not be explicitly in writing. The court emphasized that consent can be inferred from the parties' conduct throughout the arbitration process.
The court's interpretation aligns with the understanding that Section 29A(3) of the 2015 Arbitration & Conciliation Act does not mandate express or written consent. Instead, the court acknowledged the possibility of deriving consent from the parties' actions and behavior. Notably, the court highlighted instances where parties continued arbitration beyond twelve months without objections, signifying their implicit consent in line with the stipulations of Section 29A(3) of the Act.
Brief Facts:
The case revolves around a series of appeals that posed shared legal and factual inquiries concerning the procurement of land for the establishment and upkeep of a four-lane road by the National Highways Authority of India (NHAI). The applicants-appellants aimed to augment the compensation granted by the Arbitrator in line with the provisions of the National Highways Act, 1956. Initially, the Arbitrator had heightened the market value of the procured land and granted legal benefits.
However, the NHAI lodged a petition before the District Judge Mandi, invoking Section 34 of the Arbitration and Conciliation Act. Their intention was to invalidate the award, contending that it didn't adhere to the stipulations of Section 29A of the Act. The NHAI argued that the award was proclaimed after the mandated span of 12 months had surpassed, without explicit concurrence from the parties or an extended decree issued by the Court.
The application presented by the NHAI was granted by the District Judge, who determined that the Arbitrator had made a mistake by continuing with the proceedings after one year had passed since initiating the reference. This was done without obtaining the explicit agreement of the parties involved or seeking an extension from the Court, which is mandated by Section 29A of the A&C Act. As a result, the award issued by the Arbitrator on 05.09.2017 was nullified. Dissatisfied with this outcome, the appellants lodged the current appeal.
Observations of the Court:
Justice Dua, presiding over the case, scrutinized Section 29A(3) of the Arbitration and Conciliation Act as it stood in 2016. The provision stipulates that the award should be rendered within 12 months from the commencement of the Arbitral Tribunal's engagement in the matter. Nonetheless, the period can be extended for an additional six months through mutual agreement between the parties, as affirmed by the court.
The bench underscored that Section 29A(3) doesn't explicitly mandate the consent of the parties to be in writing. The bench emphasized that consent can be inferred from the parties' behavior throughout the proceedings. In the case at hand, both parties continued with the arbitration proceedings beyond the 12-month period without objection, indicating their implied agreement for the extension.
The court asserted that the parties' willingness to proceed with the arbitration for over twelve months without raising any objections essentially amounts to consent. In this light, the court held that an arbitral award passed within six months following the original 12-month duration would be valid, grounded in the inferred consent of the parties.
Considering these factors, the bench concluded that the award issued by the Arbitrator merely two months beyond the initial 12-month period was valid under Section 29A(3). This conclusion was reached as the award fell within the extended timeframe, sanctioned by the parties' implicit consent.
The decision of the Court:
The Himachal Pradesh High Court granted the appeals and set aside the judgments of the District Judge.
Case Title: Balak Ram Vs NHAI
Coram: Hon’ble Justice Ms. Jyotsna Rewal Dua
Case no.: Arb. Appeal No. 17 of 2023 a/w connected matters
Advocate for the Applicants: Mr. Varun Rana
Advocate for the Respondent: Ms. Shreya Chauhan
Read Judgment @LatestLaws.com
Picture Source :
