Sikkim High Court
Union Of India vs Valecha Shivalaya-Interdril (Jv) on 8 May, 2025
Author: Bhaskar Raj Pradhan
Bench: Chief Justice, Bhaskar Raj Pradhan
THE HIGH COURT OF SIKKIM: GANGTOK
(Civil Appellate Jurisdiction)
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DIVISION BENCH: THE HON'BLE MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE
THE HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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Arb. A. No. 03 of 2024
Union of India,
Represented by Chief Engineer,
Project Swastik,
C/O 99 A.P.O.,
Pin - 931717. .....Appellant
Versus
M/s Valecha Shivalaya - Interdril (JV),
Through the General Manager,
137, Avtar Enclave,
Paschim Vihar,
New Delhi - 110063. ..... Respondent
Appeal under section 37(1) of the Arbitration & Conciliation Act, 1996
[against the judgment and order dated 09.02.2024 passed by the ld. Judge, Commercial Court
at Gangtok in Commercial (Arbitration) Case No. 05 of 2023 in the matter of M/s Valecha
Shivalaya-Interdril (JV) vs. Union of India]
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Appearance:
Ms Sangita Pradhan, Deputy Solicitor General of India assisted
by Ms Natasha Pradhan and Ms Sittal Balmiki,
Advocates for the Appellant.
Mr. Sidhant Dwibedi and Mr. Hem Lall Manger, Advocates for the
Respondent.
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JUDGMENT
( 8th May, 2025)
Bhaskar Raj Pradhan, J.
The learned Commercial Court at Gangtok, has
set aside the arbitral award dated 23.02.2023 on the ground
that the sole Arbitrator had become functus officio after the
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
period provided under section 29(A)(4) of the Arbitration and
Conciliation Act, 1996 (for short, the Arbitration Act) [as
amended by the Arbitration and Conciliation (Amendment)
Act, 2015 (for short, the 2015 Amendment)] was over and the
arbitral award passed on 23.2.2023 was consequently non-
est in law and unenforceable. The learned Commercial Court
relied upon the judgment of the High Court of Telangana at
Hyderabad in the matter of Roop Singh Bhatty vs. Shriram City
Union Finance Limited1, in support of its opinion.
2. The Union of India is aggrieved by the impugned
judgment and order dated 09.02.2024 passed by the learned
Commercial Court at Gangtok. It is submitted that since the
arbitration proceeding was pending as on 30.8.2019 when
the Arbitration and Conciliation (Amendment) Act, 2019 (for
short, the 2019 Amendment) came into force, section 29-A as
amended by the 2019 Amendment, would be applicable.
3. As per the petition, on 15.12.2009, the appellant
and the respondent entered into an agreement for formation
and surfacing work on Gangtok - Nathula road, Sikkim. On
12.12.2013, the agreement was terminated by the appellant
2022 SCC OnLine TS 1049
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
as the work could not be completed within the period of
extension. The respondent invoked the arbitration clause
and approached the appellant for appointment of an
arbitrator. On 21.03.2019, the sole Arbitrator was
appointed. On 18.04.2019, communication with regard to
the appointment of the arbitrator was made to the parties.
On 27.01.2022, pleadings in the arbitration proceeding was
completed.
4. On 07.02.2023, according to the appellant, the
respondent gave consent for extension of time to complete
the arbitration proceedings till 30.03.2023. The respondent
contests this and submits that the consent was conditional
with a caveat.
5. On 23.02.2023, the arbitral award was passed in
favour of the appellant and against the respondent. On
14.07.2023, the respondent filed a petition under section 34
of the Arbitration Act before the learned Commercial Court at
Gangtok, challenging the arbitral award. On 09.02.2024, the
impugned judgment and order was passed by which the
arbitral award was set aside.
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
6. Elaborate and extensive arguments were made by
the learned Deputy Solicitor General of India and the
learned Counsel for the respondent. Essentially, these
arguments are all on whether section 29-A(1) as amended by
the 2015 Amendment or the 2019 Amendment would be
applicable to the facts of the case. While the Deputy Solicitor
General of India relied upon the judgment of the Hon'ble
Supreme Court in Tata Sons Pvt. Ltd. vs. Siva Industries and
Holdings Ltd.2, the learned Counsel for the respondent
distinguished the judgment as it related to international
commercial arbitration and relied upon judgments passed
by the Delhi High Court in National Skill Development
Corporation vs. Best First Step Education Private Limited &
Others3; Bombay High Court in Mahaveer Realities & Ors. vs.
Shirish J. Shah4; and High Court of State of Telangana in
Roop Singh Bhatty (supra). The judgment of the High Court of
Telangana was also the judgment referred to by the learned
Commercial Court in the impugned judgment.
7. We will first examine whether the respondent had
given consent for extension of time to complete the
2023 INSC 13
2024:DHC:1676
2023:BHC-AS:21586
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
arbitration proceeding till 30.03.2023 as pleaded by the
appellant.
8. The communication dated 07.02.2023 has been
placed on record. The respondent does not dispute that they
had made this communication. They, however, contest that
the consent was with a caveat, i.e., as they had already
given extension for six months by letter dated 27.04.2020
they did not have statutory right for further extension.
9. On a perusal of the communication dated
07.02.2023, we find that even after the caveat the
respondent had very clearly expressed "However only
because Hon'ble Tribunal order dated 27.01.2023, we are
extending the period of reference mentioned above, in
anticipation of the fact that the Hon'ble Tribunal shall pass
order as per the provision of the law for passing the Award."
10. Section 29-A(3) provides that the parties may, by
consent, extend the period specified in sub-section (1) for
making an award for a further period not exceeding six
months. If we take 27.01.2022 as the date of completion of
pleadings, the communication dated 07.02.2023 would
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
obviously be a consent as per section 29-A(3). In such view
of the matter, the caveat loses its relevance since the parties
have been given the power for extension of time for a period
not exceeding six months. Therefore, the time of twelve
months as provided in section 29-A(1) for the sole Arbitrator
to pass the award would be till on or around 26.01.2023.
The consent vide letter dated 07.02.2023 would give the sole
Arbitrator a further period of six months till on or around
26.07.2023. Therefore, the award dated 23.02.2023 would
be within time envisaged in section 29-A(1) and (3).
11. As contended by the learned Deputy Solicitor
General of India, we also find that during the pendency of
the arbitral proceeding, COVID-19 pandemic had set in and
the Hon'ble Supreme Court in Suo Moto Writ Petition (C) No.
3/2020 in Re: Cognizance for extension of limitation, had
directed that the period between 15.03.2020 till 28.02.2022
shall stand excluded in computing the period prescribed
under section 23(4) and section 29-A of the Arbitration Act.
This would have been a relevant fact to be considered by the
learned Commercial Court while examining whether the
arbitral award was passed within the time frame envisaged
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
in section 29-A(1). However, the learned Commercial Court
did not examine it.
12. The learned Counsel for the respondent heavily
relied upon judgments passed by the Delhi High Court in
National Skill Development Corporation (supra), Bombay High
Court in Mahaveer Realities (supra); and High Court of State
of Telangana in Roop Singh Bhatty (supra).
13. The judgment of the Delhi High Court rendered in
National Skill Development Corporation (supra) and the
Bombay High Court in Mahaveer Realities (supra) while
examining a petition under section 29-A of the Arbitration
Act for extension of the mandate of the arbitral tribunal
constituted to adjudicate disputes between the parties are
not relevant to the facts of the present case.
14. In Roop Singh Bhatty (supra), the High Court of
Telangana at Hyderabad, while deciding a revision against
the over ruling of the objection raised by the petitioners
therein and declaring the decree holder entitled to recovery
of the amount allowing the execution petition, examined
section 29-A as amended by the 2015 Amendment. It noted
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
that section 29-A was thereafter substituted by way of the
2019 Amendment dated 9.8.2019. It was, thus, held:
"We see no merit in the contention of the learned senior
counsel that the effect of substitution of Section 29-A of
the Act, 1996, operates retrospectively and, therefore,
award made is legal. As held consistently, merely
because word substitution is used, the amended
provision does not relate back to the date of original
provision that was amended. It depends on the language
employed, effect of the amendment and the intendment of
the legislature. This issue need not detain further having
regard to the intendment of the Parliament. Section 29-A
was amendment vide Section 6 of the Amendment Act
dated 9.8.2019."
15. The Hon'ble Supreme Court in Tata Sons (supra)
also noted three judgments of the Delhi High Court and one
of the High Court of Judicature for Orissa on the aspect of
whether section 29-A(1) of the Arbitration Act was procedural
in nature. These decisions were:-
(i) Shapoorji Pallonji & Co. (P) Ltd. vs. Jindal India
Thermal Power Ltd.5
(ii) ONGC Petro Additions Ltd. vs. Ferns Construction Co.
Inc.6
(iii) SARA International (P) Ltd. vs. South Eastern
Railways7
16. The Hon'ble Supreme Court held:
"36. In Shapoorji Pallonji [Shapoorji Pallonji & Co. (P)
Ltd. v. Jindal India Thermal Power Ltd., 2020 SCC OnLine Del
2611] , the Delhi High Court had held that amended Section 29-
2020 SCC OnLine Del 2611
2020:DHC:2320
2020 SCC OnLine Ori 973
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
A(1) of the Arbitration and Conciliation Act, being procedural
law, would apply to the pending arbitrations as on the date of
the amendment. However, a coordinate Bench in MBL
Infrastructures Ltd. v. Rites Ltd. [MBL Infrastructures
Ltd. v. Rites Ltd., 2020 SCC OnLine Del 2612] held that the
amended Section 29-A would be prospective in nature, without
referring to the earlier order in Shapoorji Pallonji [Shapoorji
Pallonji & Co. (P) Ltd. v. Jindal India Thermal Power Ltd., 2020
SCC OnLine Del 2611] . Finally, the Delhi High Court in ONGC
Petro Additions [ONGC Petro Additions Ltd. v. Ferns
Construction Co. Inc., 2020 SCC OnLine Del 2582] settled the
controversy and reiterated the position of law as laid down
in Shapoorji Pallonji [Shapoorji Pallonji & Co. (P) Ltd. v. Jindal
India Thermal Power Ltd., 2020 SCC OnLine Del 2611] . The
Court, inter alia, stated that Section 29-A(1) shall be applicable
to all pending arbitrations seated in India as on 30-8-2019 and
commenced after 23-10-2015, and there is no strict timeline
prescribed to the proceedings which are in nature of
international commercial arbitration as defined under the Act,
seated in India."
17. In SARA International (supra), on a similar issue
raised before the High Court of Orissa at Cuttack, it was
held that for domestic arbitration the clock for timeline of
twelve months envisaged in the 2019 Amendment of section
29-A(1) for passing of the award would now start ticking
from the date of completion of pleadings as per section 23(4)
of the Arbitration Act.
18. Identical issue was raised in Union of India vs. M.K.
Infrastructures (P) Ltd. in Arb. A. No. 04 of 2024, wherein it has
been held, inter alia, that:
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
i) The learned Commercial Court had failed to
consider the limited jurisdiction it had while examining
the challenge to the arbitral award under section 34 of
the Arbitration Act.
ii) The ambit and scope of section 34 of the
Arbitration Act is limited to the extent provided in sub-
sections (2) and (3), thereof. An appeal under section
34 is not a regular appeal.
iii) In the facts of the present case, the learned
Commercial Court exceeded its jurisdiction under
section 34 of the Arbitration Act.
iv) Section 29-A(1) of the Arbitration Act is a
procedure to be followed by the arbitral tribunal and
does not confer any right or impose any obligation on
the parties. It is also remedial in nature.
v) Section 29-A(1) does not lay down any sacrosanct
timeline as sub-section (3) permits further extension of
six months by consent of parties. Even thereafter, sub-
section (4) gives the power to the Court to extend the
period further by six months.
vi) Section 29-A(1) as amended by the 2019
Amendment and not the 2015 Amendment would
govern the procedure to be followed by the arbitrator as
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
the arbitration was pending when the 2019 Amendment
was brought into force on 30.08.2019.
19. We find that as on 30.08.2019, the arbitration
proceeding in the present case was also pending. Thus,
Union of India vs. M.K. Infrastructures (P) Ltd. (supra), would
also cover the present case.
20. As the issue raised in the present case has been
examined by us in M.K. Infrastructure (P) Ltd. (supra), we
would rather agree with the opinion of the Delhi High Court
in Shapoorji Pallonji (supra) and ONGC Petro Additions Ltd.
(supra) which examined the amended sections 23(4) and 29-
A(1) as amended by the 2019 Amendment and concluded
that the Arbitration Act, being procedural law, would apply to
pending arbitrations as on the date of amendment. These
opinions were also approved by the Hon'ble Supreme Court
in Tata Sons (supra). We are also in agreement with the view
rendered by the High Court of Orissa in SARA International
(supra).
21. Therefore, it is held that:
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
(i) The learned Commercial Court travelled beyond the
four corners of sub-sections (2) and (3) of section 34
of the Arbitration Act by setting aside the arbitral
award rendered by the sole Arbitrator on the ground
that he had become functus officio beyond the time
frame provided in section 29-A(1) of the Arbitration
Act as amended by the 2015 Amendment.
(ii) The opinion of the learned Commercial Court that
section 29-A(1) as amended by the 2015 Amendment
would be the governing procedure is incorrect and it
is held that since the 2019 Amendment which was
brought into force on 30.08.2019, when the
arbitration proceeding was pending, would govern
the procedure and as such, the arbitral award was
within the twelve months timeframe provided in
section 29-A(1).
(iii) Section 29-A, as amended by the 2019 Amendment,
is both procedural and remedial in nature.
(iv) The learned Commercial Court failed to consider
that during the period of arbitration, COVID-19
pandemic had hit the nation and the Hon'ble
Supreme Court had directed that the period between
15.03.2020 till 28.02.2022 shall also stand excluded
Union of India vs. M/s Valecha Shivalaya-Interdril (JV)
in computing the period prescribed under section
23(4) and section 29-A of the Arbitration Act.
22. In such circumstances, the impugned judgment
and opinion of the learned Commercial Court dated
09.02.2024, is set aside. The parties shall bear their
respective costs.
23. Arbitration appeal is allowed and stands disposed
of, accordingly.
( Bhaskar Raj Pradhan ) ( Biswanath Somadder )
Judge Chief Justice
Approved for reporting : Yes
Internet : Yes
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