UnderstandingJudgment in Rohan Builders (India) Private Limited Vs. Berger Paints India Limited
The case originates from SLP under the Arbitration and Conciliation Act, 1996. The main issue in the matter is-
- Whether an application for an extension of time under Section 29A of the Arbitration and Conciliation Act could be filed after the period for making the arbitral award had expired?
The Calcutta High Court has held in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd. that such an application under Sections 29A (4) and 29A (5) could only be entertained if filed before the expiry of the tribunal’s mandate, the Patna High Court also gave similar Judgment in South Bihar Power Distribution Company Limited v. Bhagalpur Electricity Distribution Company Pvt. Ltd. Opposite interpretations were given by various other High Courts of Delhi, Bombay, Madras, Kerala, Jammu & Kashmir which held that an extension could be granted even after the expiry of the period specified.
The court gave a clarity on the interpretation of Section 29A, specifically whether the court had the power to extend time after the arbitral tribunal’s mandate had technically expired.
- Judgment of the Court:
The Supreme Court, through this Judgment has overturned these interpretations given by the Calcutta and Patna High Courts. The Court held that-
– An application for the extension of time for making an arbitral award under Section 29A (4) of the A&C Act is maintainable even after the expiry of the initial 12 months or the additional 6-month extension as provided by Section 29A (3).
– The court highlights that the word “terminate” in Section 29A (4) should not be understood as an absolute end of the arbitral tribunal’s mandate, since there is no full stop after the word “Terminate”. The word “terminate” is followed by the connecting word “unless,” which qualifies the first part with the subsequent limb of the section, i.e. “unlessthe court has, either prior to or after the expiry of the period so specified, extended the period. The section should be read in context, where the court can extend the period for making the award either before or after the expiry of the prescribed period.
The Court disagreed with the literal interpretation of “terminate” given by the Calcutta High Court, stating that such an approach would lead to absurd or unjust outcomes, such as forcing parties to rush to the court even before the expiration of the 12-month period, disregarding the possibility of a consensual 6-month extension. The Court emphasized flexibility in the arbitral process, allowing courts to extend the period for sufficient cause under Section 29A (5), with the discretion to impose conditions and costs as necessary. It stated that a rigid interpretation would defeat the purpose of arbitration by potentially causing further delay, inconvenience, and additional costs for the parties.
