The Gujarat High Court recently pondered on whether the timeframe for passing an arbitral award will begin afresh on the substitution of an arbitrator on the arbitration panel [Kamal Sewaram Jadhwani v. Manbhupinder Singh Atwal and Ors].
The issue cropped up before a Division Bench of Chief Justice Sunita Agarwal and Justice Pranav Trivedi on September 26 while hearing a petition challenging the validity of an arbitral award.
Senior Advocate Kapil Sibal appeared for the appellant who challenged the arbitral award.
Sibal submitted that the arbitral reference in this case was on February 1, 2018, and that the deadline to complete arbitration expired on January 31, 2019. Despite this, the arbitration proceedings continued even though objections were made, he said.
The Court noted that the arbitrators in this case had been substituted from time to time due to resignations. In this context, the Court queried whether the time limit for completing arbitration would also get renewed.
"Once an arbitrator for whatever reason is unable to perform his functions or he withdraws, the mandate of that arbitrator is terminated... Once substitute arbitrator is appointed, that mandate of the previous arbitrator would not continue. This would be an arbitral tribunal which would enter into the award and continue. This is my understanding," Chief Justice Agarwal observed.
Sibal argued that when there is a panel of arbitrators and one of them resigns, there would not be any fresh lease of life to the arbitration.
"Section 14 (termination of arbitrator's mandate for failure or impossibility to act) does not take away the consequence of termination mandated by 29A (deadline for arbitration). 29A is a Section that comes subsequently. The mandate of that arbitrator is over but the mandate of that arbitration is not over," he submitted.
Sibal also argued there would be disastrous effects on arbitration otherwise, as an arbitrator may be made to resign (by the party who nominates him) for the process to start afresh.
"Every time a judge resigns, it is not a new arbitration. As far as 29A is concerned, that period is not automatically extended because somebody resigns. Otherwise, there would be no end to this. Anybody before the end of term would resign," Sibal submitted.
The Court also asked whether the appellant had withdrawn from the arbitration on the expiry of the time limit. Sibal replied that a letter was written to the presiding arbitrator for the cessation of proceedings.
The Court proceeded to question whether there had been any consensus among the parties over the continuation of arbitration proceedings after the reconstitution of the arbitral tribunal.
Sibal maintained that there was no such consensus from the side of the appellant.
"And even if there was consensus my lords, it can't defeat the law because the process of arbitration starts on the first sitting," Sibal added.
Notably, Section 29A of the Arbitration and Conciliation Act of 1996 deals with the time frame for arbitral awards and the extension of that time frame limit.
Before an amendment in 2019, arbitral proceedings were required to be completed within twelve months from the date of arbitral reference.
After the amendment, the deadline has become twelve months after the completion of pleadings. However, the time limit can be extended by six months on mutual consent between the parties or through a court order.
Sibal told the Court on Thursday that the 2019 amendment would not apply to the present case.
The Court will hear the matter next on September 30.
Senior Advocate Kapil Sibal and advocate Masoom K Shah appeared for the appellant Kamal Sewaram Jadhwani.
Senior Advocate S Muralidhar and advocate Parth Contractor appeared for respondents.