Sikkim High Court: 2019 Amendment Of Section 29A(1) Arbitration Act Applies To Pending Arbitrations As On The Date Of Amendment
The Sikkim High Court set aside the decision of the Commercial Court that had set aside an arbitral award.
Chief Justice Biswanath Somadder and Justice Bhaskar Raj Pradhan, Sikkim High Court
The Sikkim High Court clarified that the 2019 Amendment of Section 29A(1) of the Arbitration and Conciliation Act applies to pending arbitrations as on the date of the said amendment.
The Court stated that the Commercial Court failed to consider that during the period of arbitration, COVID-19 pandemic had hit the nation and the Supreme Court had directed that the period between 15.03.2020 till 28.02.2022 would also stand excluded in computing the period prescribed under Sections 23(4) and 29-A of the the Arbitration and Conciliation Act, 1996 (the Act).
A Division Bench of Chief Justice Biswanath Somadder and Justice Bhaskar Raj Pradhan remarked, “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.”
Deputy Solicitor General Sangita Pradhan appeared for the Appellant, while AGA Mohammed Jaffar Shah represented the Respondent.
Brief Facts
The Respondent had filed a Petition under Section 34 of the Act, challenging the arbitral award passed in favour of the Appellant. The Commercial Court set aside the arbitral award stating that the sole Arbitrator had become functus officio after the period under Section 29(A)(4) of the Act had expired.
The Appellant challenged this decision, arguing that the Commercial Court had incorrectly applied the 2015 Amendment of the Arbitration Act instead of the 2019 Amendment.
Court’s Reasoning
The High Court held, “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).”
The Bench referred to the decision in Union of India vs. M.K. Infrastructures (P) Ltd. (Arb. A. No. 04 of 2024) wherein it was held, “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, subsection (4) gives the power to the Court to extend the period further by six months…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 the arbitration was pending when the 2019 Amendment was brought into force on 30.08.2019.”
The Bench, therefore, held, “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.”
Consequently, the Court ordered that “In such circumstances, the impugned judgment and opinion of the learned Commercial Court dated 09.02.2024, is set aside.”
Accordingly, the High Court allowed the Appeal.
Cause Title: Union of India v. M/s Valecha Shivalaya – Interdril (JV) (Arb. A. No. 03 of 2024)
Appearance:
Appellant: Deputy Solicitor General Sangita Pradhan; Advocates Natasha Pradhan and Sittal Balmiki
Respondent: Advocates Sidhant Dwibedi and Mr. Hem Lall Manger
