Senbo Engineering Ltd. vs Hooghly River Bridge Commissioners

The arbitration petition for extension of time has been heard. Petitioner is claimant in the reference and has petitioned for extension of

time to conclude it. Mr. Datta, learned senior advocate, Advocate General appeared on behalf of respondentÂ

and argued, the petition is misconceived because section 29A in Arbitration and Conciliation Act, 1996 allows a once onlyÂ

approach to Court for the purpose.

Mr. Datta submitted, there is deliberate intention of Parliament, manifest by omission of the words “from time to time†in

section 29A, used in section 28 of repealed Arbitration Act, 1940 regarding extension of time for making the award. Section 29A was inserted by

amendment on consideration of report of the Law Commission on Arbitration (Amendment) Bill, 2001. He referred to paragraphs 2.21.1, 2.21.4,

2.21.5, 2.42 and paragraph 27 in the report. He submitted, the recommendation also had the words but ParliamentÂ

acted otherwise in omitting them. In that context he relied on following judgements on interpretation of statutes:

Sri Ram Saha vs. State of West Bengal reported in 2004(11) SCC 497, paragraphs 19 to 24;

Abdur Rahim vs. Mahomed Barkat Ali reported in 55 Indian Appeals 96, page 103 for the passage quoted below:

“It is a sound rule of interpretation to take the words of a statute as they stand and to interpret them ordinarily without any reference to the

previous state of the law on the subject or the English law upon which it may be founded; but when it is contended that the legislature intended by

any particular amendment to make substantial changes in the pre-existing law, it is impossible to arrive at a conclusion without considering what the

law was previously to the particular enactment and to see whether the words used in the statute can be taken to effect the change that is

suggested as intended. For this reason it becomes necessary to consider how the law stood prior to the enactment of s.92 ofÂ

the Code of Civil Procedure of 1908.â€​

LMJ International Ltd. vs. Swiss Singapore Overseas Enterprises PTE Ltd. reported in (2016) 4 CHN 4,8 p6age 4, which carries reference to

five judgements of English Courts, Supreme Court and this Court.

On consequences of a reference becoming abortive after exhausting recourse to provisions in section 29A, his contention being thatÂ

Court can only extend time once, he submitted, for thereafter resolution of the dispute, Court has to beÂ

moved. The litigant can  avail of exclusion of time provided under section 14 in Limitation Act, 1963.

This exclusion by the section has been expanded to apply to quasi judicial proceedings. He relied on judgments of

Srei Infrastructure Finance Ltd. V. Tuff Drilling(P) Ltd. reported in (2018) 11 SCC 47,0 paragraphs 13, 14 and 26 for arbitration reference

being a quasi judicial proceeding;

M.P. Steel Corporation V. Commissioner of Central Excise reported in (2015) 7 SCC 58, paragraphs 1 to 3, 11, 21, 34 and 35 for declaration of

law expanding application of section 14, Limitation Act, 1963 to beyond Courts; and

A.P. Power Coordination Committee V. Lanco Kondapalli Power Ltd. reported in (2016) 3 SCC 46 8in following M.P. Steel Corporation

(supra).

Mr. Mitra, learned senior advocate appeared on behalf of petitioner. On facts he referred to order dated 2t7h September, 2018,

of this Bench, to demonstrate that thereby there was first extension of time for mandate. Subsequently by order dated 3rd January, 2019, passed

by coordinate Bench, there was second extension of time for mandate. That such was extension stands admitted by respondent in paragraphÂ

16 of their affidavit in opposition affirmed on 3rd September, 2019. There is clear averment that order dated 3rd January,Â

2019, was passed under section 29A(6).

Respondent’s submission, thereafter in 66th sitting of the reference, was recorded as follows:-

“After withdrawal of the cease work call, the next hearing was held on June 15, 2019 when it was submitted on behalf of theÂ

Respondent that going by the order of the Hon’ble High Court the time to conclude the hearing within four months hadÂ

expired.

Hence, the parties should go before the High Court for further extension of time.â€​

As such, respondent now cannot obstruct there being extension of time to conclude the reference.

He then drew attention to provisions in the Act of 1996, regarding interference by Court. Section 5 limits extent of judicial intervention as confined

to, intervention where provided in part one. Section 34, dealing with setting aside of award, has in it sub-section (3) limiting time, in which Court

can entertain an application, being three months and thirty days but not thereafter. Section 37 limits orders, from which appealÂ

would lie. He submitted, there is no limit, on approach to Court, provided in section 29A.

On cases cited by respondent he submitted, order dated 31st July, 2019 in AP 337 of 2019 (Hindustan Construction Co. Ltd.

versus Kolkata Metropolitan Development Authority) was brought to notice of respondent by Court but was not

distinguished, as not applicable to its contention. He submitted further, view taken therein has not been interfered with till date.

He then referred to Sri Ram Saha (supra), to paragraph 24. He submitted, the Supreme Court found that the High Court had expanded scope and

application of section 4A in West Bengal Land Reforms Act, 1955. In entertaining repeated plea for extension of time the High Court would not be

expanding scope or application of section 29A. He reiterated, there is no limitation in the provision akin to those provided in sections 5, 34 and 37 of

the Act of 1996. On Abdur Rahim (supra) he submitted, section 29A was incorporated by amendment. The decision would not apply to it inasmuch

as this was not amendment made of an existing provision, to cause substantial change to it. The provision is a subsequent incorporation by

amendment and as such the decision does not go in aid of respondent’s contention.

Mr. Mitra drew attention to report of the Law Commission, in particular paragraphs 2.21.4 and 2.21.5. Recommendation was that itÂ

be left to Court to fix upper limit regarding the time of extension, in context of situation contemplated, of whether theÂ

extension should be capped at 24 months or allowed to be more. It was reported that proposal was to see that an arbitral award is ultimately

passed even if the delays have taken place. Mr. Mitra also submitted, section 14 in Limitation Act, 1963 is not applicable for theÂ

purpose of parties being compelled to approach Court on termination of mandate since the reference could not be said toÂ

have proceeded before the Tribunal, on it having suffered from defect of jurisdiction or other cause of a like nature.

Mr. Datta, with reference to sub-section (1) in section 14 of the Limitation Act, emphasized on three phrases in the sub-section, being ‘civil

proceeding’, ‘Court of first instance’ and ‘defect jurisdiction or other cause of a like nature’. According to him, Arbitral

Tribunal would be included in ‘Court of first instance’, subject matter of the reference beingÂ

indisputably ‘civil proceeding’. When, Arbitral Tribunal loses its mandate, on exhausting time provided under the Act, at

the first   instance and on extension by the one approach to Court, the phrase ‘defect of jurisdiction’ becomes applicable to it and the

civil proceeding thereafter cannot be prosecuted before the Tribunal. He relied on judgements of the Supreme Court.

P. Sarathy Vs. State Bank of India reported in (2000)5 SCC 355, paragraphs 8 to 15.

Nahar Industrial Enterprises Ltd. Vs. Hong Kong and Shanghai Banking Corporation reported in (2009) 8 SCC 64 6paragraphs 86 and 89.

With regard to his client’s conduct in the reference regarding record of submission made on its behalf, he submittedÂ

that without going into correctness of it, same cannot be construed as consent or even if it is, it cannot confer jurisdictionÂ

to this Court to entertain repetitive petition for extension of time.

In dealing with the judgements noted in last preceding paragraph, Mr. Mitra relied on judgement of the Supreme Court in Md, Army Welfare

Housing Organisation vs Sumangal Services (P) Ltd. reported in (2004) 9 SCC 61Â9 , paragraph 43 for said Court’s view

on Arbitral Tribunal not being Court. The paragraph is extracted below:-

“43. An Arbitral Tribunal is not a court of law.

Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The

jurisdiction of the   being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of

reference.

He concluded by pointing out that in Nahar Industrial Enterprises Ltd.(supra), the Supreme Court said following in paragraph 67,

extracted below:-

“67. The terms “tribunalâ€, “courtâ€Â and the “civil court†have been used in the Code differently. All “courtsâ€

are “tribunals†but all “tribunals†are not “courtsâ€. Similarly all “civil courts†are “courtsâ€Â but all “courtsâ€Â

are not “civil courts.â€​

It is not much in dispute that the broad distinction between a “courtâ€Â and a “tribunalâ€Â is whereas the decisionÂ

of the “courtâ€Â is final the decision of the “tribunal†may not be. The “tribunalâ€, however, which is authorised to take

evidence of witnesses would ordinarily be held to be a “court†within the meeting of Section 3 of the Evidence Act, 1872. It

includes not only Judges and Magistrates but also persons, except arbitrators, legally authorised to take evidence. It is an inclusive

definition. There may be other forums which would also come within the purview of the said definition.â€​

This petition with prayer for extension of time to conclude the reference is not the first approach to Court.

Hence, requirement for adjudication of respondent’s contention. Similar contention was raised before this Bench in AP 337 of 2019 (Hindustan

Construction Company Ltd. vs. Kolkata Metropolitan Development Authority), dealt with by order dated 31st July,Â

2019. During course of hearing, on recollection of having taken a view therein, same was brought to notice ofÂ

respondent. Petitioner relied on it. The view expressed is reproduced below:

“It is clear that intention of Legislature in inserting this provision regarding time limit for arbitral award is with object of expeditious resolution of

disputes. Where there is arbitration agreement between parties, their disputes must be addressed and adjudicated by reference. InterferenceÂ

of Court is limited. That means the disputes cannot be adjudicated by Court.

Therefore, if in a situation mandate of a Tribunal is terminated by expiry of the period, what will happen to adjudication of the disputes?Â

Respondent in contending Court can extend only once, this being prayer for second extension by Court, cannot ask for

recourse to sub-section (6), which provides for substitute arbitrator being appointed, to continue with the reference. On considering stage of

proceedings and conduct of it on pleadings submissions, Court is not convinced recourse to sub-section (6) is to be had. Mr. Mitra’sÂ

argument is also  of substance since, if Court extends the time by substituting arbitrator, it can do so on a finding in terms of proviso

under sub-section (4). As such, Court is convinced its discretion is not circumscribed to be exercised only once in the matter of extending the

time.â€​

So it was that respondent submitted regarding subsequent step to obtain remedy of adjudication from Court, upon getting

excluded time spent in the reference.

The Act of 1996, on enactment, did not have provision limiting time for arbitral award. Section 29A was incorporated by amendment. The provision

requires award to be made within 12 months from the date the Arbitral Tribunal enters upon the reference. 6 months extension

of the period can be had on consent of parties, after which mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after

expiry of the period, extended it. The extension by Court may be on the application of any of the parties.

The ground may be only for sufficient cause and on such terms and conditions as may be imposed by the Court. The power of CourtÂ

to grant extension of time is attended by several other things that Court can do in the matter. ProvisoÂ

in sub-section (4) says that while extending the period, if Court finds the proceedings have been delayed for reasons attributable to the

Tribunal, then it may order reduction of fees of arbitrator(s) by not exceeding 5 per cent for each month of such delay. On approach to Court,

either upon expiry of the 12 months period or said period extended by further 6 months on consent of parties, a finding on

delay caused in aforesaid periods is possible. This indicates it to be a first step in regulating procedure adopted by the Tribunal dealingÂ

with the reference in the prescribed time period. Then there is provided in sub-section (6) that it shallÂ

be open to the Court to substitute one or all of the arbitrator(s)and sub- section (8) provides that it shall be open to the Court to impose

actual or exemplary cost upon any of the parties, under the section.

Whether extension of time to conclude the reference can be had from Court on a once only approach can be

answered by analyzing provisions in the section.

Provision for Court’s attendant powers, to reduce fees of arbitrator(s) or substitute them, have beenÂ

made by successive separate sub-sections. The incorporated sub-section (1) said, the period of 12 months commences from the date the arbitral

Tribunal enters upon the reference. By the newly substituted sub-section, the commencement date was pushed back to be date of completion of

pleadings under sub-section (4) of section 23, brought in by amendment of 2019. Also by amendments of 2019 was incorporated, inter alia, the

proviso in sub-section (4). Further included incorporated proviso under sub-section(4) mandates for the arbitrator toÂ

be given opportunity of being heard before the fees is reduced, obviously indicating that an enquiry on causes of delay may result inÂ

finding that the delay was not caused by the Tribunal. Amendments of 2019, to the section, are with effect from 30thÂ

August, 2019. This petition was filed on 24th July, 2019. Even adjudicating the question raised in the petition on basis of amendments of

2015, view taken by this Bench in Hindustan Construction Company Ltd. (supra) appears to find support from the Legislature’s

manifest intention, for the reference being concluded. Sri Ram Saha (supra) was relied upon by Mr. Datta on submission that phrase ‘time to

time’ stands omitted from the provisions in section 29A, which phrase cannot be imparted into it by analogy, on supplying the omission of

engrafting on it or introducing in it, under the guise of interpretation. To do so would be entrenching upon the preserves of theÂ

Legislature. The Supreme Court, in dealing with a case where the High Court had extended scope of application of

section 4A in West Bengal Land Reforms Act, 1955 to areas in State of West Bengal other than the specified area, beingÂ

three subdivisions of Darjeeling district, had referred to its this earlier decision. Also in the context Abdur Rahim (supra)Â

was relied upon for that when it is contended the Legislature intended, by any particular amendment, to make

substantial changes in the pre- existing law, it is impossible to arrive at a conclusion without considering what the law was previously to the

particular enactment, to see whether the words used in the statute can be taken to effect the changeÂ

that is suggested as intended. These guides of interpretation cannot be employed in aid of respondent’s contention.

Substantial change in arbitration law was brought about by the Act of 1996. Arbitration Act, 1940 had section 28 providing for extension of time to

conclude the reference, as could be made by Court from ‘time to time’. The 1996 Act did not have in it a provision for extension of time to

conclude the reference.

Interpretation on this can well be that the Legislature thought fit to do away with procedure of repeated approach to Court forÂ

extension of time, to leave the Tribunal to conclude the reference without limitation of period, in which to do it. Instead, the omission

would have to be taken into consideration for purpose of interpreting section 29A, later incorporated by amendment of 2015 withÂ

further amendments made to it.

Such consideration does not lead to conclusion that approach to Court for extension of time can be only once.

Consequent upon view taken above, the other legal issues of, ‘defect of jurisdiction or like nature’ or

whether ‘Arbitrator’ is ‘Court’ are not required to be answered.

There will be extension of time to conclude the reference. The extension will be up to 30th June, 2021.

As parties did not invite Court to adjudicate on causes of delay, no direction is being made in respect thereof.

The petition is allowed as above.