Can Arbitral Tribunal whose mandate is extinguished by Section 29A continue arbitration? SC asks Gujarat HC to decide

The Supreme Court has directed the Gujarat High Court to decide a matter involving Section 29A of the Arbitration Act, which imposes a time limit within which an arbitration is to be decided..In doing so, the Apex Court has modified an order passed by the Gujarat High Court by which it stayed the proceedings of the arbitration in question..By way of background, various disputes had arisen between Col. Manbhupinder Singh Atwal and the erstwhile partners of C2R Projects LLP. Atwal, along with two other partners of the LLP, invoked arbitration proceedings against the Neeraj Kumarpal Shah and other partners, seeking recovery of sums to the tune of about Rs. 76.34 crore..The Supreme Court in 2017 had directed that the arbitration between the two parties in question would commence from the date on which the first sitting of the Arbitral Tribunal takes place. That date, according to the petitioners before the High Court (NK Shah and others), was February 1, 2018. The Tribunal was presided by former Gujarat High Court judge, Justice MB Shah..As per Section 29A(1), the arbitral tribunal is required to pass the award within twelve months from the date on which it begins proceedings. Section 29A(3) allows for an extension of this time period by six months, provided there is consent by both parties..Around ten months into the arbitration, the respondent before the High Court (Atwal) wrote a letter making allegations against the Tribunal, and refusing to take part in the proceedings. He had further refused to give his consent for extension for the time period of the arbitration. Thus, he filed an application under Section 17 for interim measures..Two members of the Tribunal - Justice Shah and Justice GD Nanavati - however, passed a standing order rejecting the Section 17 application. On the day the order was sent to Justice JM Panchal - the third arbitrator - he decided to resign from the Tribunal. Former Supreme Court judge Panchal J had cited the respondents’ constant attempt to delay the proceedings as the reason for his resignation. Shortly after, the presiding arbitrator, Justice Shah, also resigned..The respondent then chose Singaporean Senior Counsel Andrew Yeap as his nominee for the Tribunal, insisting that the presiding arbitrator must be from a neutral nationality. This was objected to by the petitioner before the High Court. It was eventually decided that a non-Indian national can be appointed to the Tribunal. Vinayak Pradhan was then appointed as the presiding arbitrator..Pradhan then wrote to the parties detailing the new fees that the Tribunal would charge. The petitioner then objected to the exorbitant fees being charged..On January 3 this year, the Arbitral Tribunal had fixed the next schedule of hearing between February 13-20.However, Shah approached the Gujarat High Court seeking a direction to quash the mandate of the Tribunal..Taking note of the facts surrounding the case, the High Court order passed by Justice AY Kogje states,“A simple fact of ascertaining date on which the arbitration started, there is no clarity, prima facie leading this Court to believe the contention of the learned Senior Advocate for the petitioner that international arbitration is foisted upon the petitioner with a forgone conclusion of resisting the claim of the petitioner on his inability to pay the somewhat exorbitant arbitration costs, little remains to arbitrate.The manner in which arbitration is proceeding, the outcome is also not far to imagine. In background of the peculiar facts of the case, the Court finds that the petitioner has made a ground to interfere.”.The High Court also noted the “shifting stand of the presiding arbitrator” as cause to create doubt about the ability of the Tribunal to continue proceedings..“This, in the opinion of the Court, creates doubt about the jurisdiction of the Tribunal to arbitrate beyond the period during which mandate is operational. Prima facie, no amount concession or participation of the petitioner in the arbitration proceedings can confer jurisdiction and similarly, no amount of expenditure incurred in the present arbitration proceedings can also confer jurisdiction.”Gujarat High Court.The Court thus directed that no further proceedings would take place after February 13. It also issued notice returnable by February 26..Aggrieved by this order, Atwal approached the Supreme Court. After hearing the parties, the Bench of Justices Rohinton Nariman and Ravindra Bhat modified the High Court order. It was directed that the Arbitral Tribunal may continue the hearing from February 15 to 18. It was also ordered,“The Arbitral Tribunal will, for the time being, confine itself to taking evidence and hearing the parties.”.The Apex Court also directed the Gujarat High Court to take up the matter on February 26 and to complete the hearing and deliver a judgment “as soon as practically possible”.It was further clarified,“This order substitutes the order that has been passed on 12.02.2020.”The Court will next take up the matter on March 16, 2020..The petitioner before the Supreme Court was represented by Senior Advocates Abhishek Manu Singhvi and Nakul Dewan. They were briefed by a team from DSK Legal comprising Kirat Singh Nagra, Kartik Yadav, Pranav Vyas, Manhar Singh Saini, Parinay Vasandani, and Karanvir Singh Goraya.The respondents were represented by Senior Advocates Shyam Divan and Maninder Singh, along with Advocates Gursharan Virk, Masoom Shah, Aastha Mehta and others..[Read the Supreme Court order].[Read the Gujarat High Court order]