Himachal Pradesh High Court: In a case wherein, an appeal was filed by the applicants under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (‘A&C Act, 1996’) against the judgment passed by the District Judge, Jyotsna Rewal Dua, J.*, opined that the consent of the parties under Section 29-A(3) of the Arbitration and Conciliation (Amendment) Act, 2015 (‘A&C (Amendment) Act, 2015’), for extending the arbitral period need not necessarily be either express or in writing and thus, the Court remanded the matter back to the District Judge, Mandi for afresh consideration.
Background
In the present case, the trees, land, building, etc. of the applicants-appellants, were acquired by the respondent, National Highways Authority of India (NHAI) and the acquisition was for the construction of building and maintaining the four-lane road i.e., NH-21. Thereafter, an award was passed under Section 3G of the National Highways Act, 1956 (‘NH Act’) and the market value of the acquired land was determined at Rs. 5,68,000 per bigha irrespective of its classification.
The applicants-appellants, along with people whose lands were acquired petitioned under Section 3-G(5) of the NH Act before the Arbitrator, Divisional Commissioner Mandi, for enhancement of compensation. Thereafter, the arbitrator passed an award dated 05-09-2017 and enhanced the market value of the acquired land to Rs. 17,00,000 per bigha along with all statutory benefits.
Subsequently, the respondent filed an application under Section 34 of the A&C Act, 1996 before the District Judge, Mandi, with a prayer to set aside the award dated 05-09-2017. Accordingly, the District Judge, Mandi, on 07-01-2022 set aside the award and held that the Arbitrator had erred in proceeding ahead with the matter after expiry of one year from the date of entering the reference without taking either the express consent of the parties or without seeking an extension from the Court as required under Section 29-A of the A&C Act.
Analysis, Law, and Decision
The Court analyzed Section 29-A of the A&C (Amendment) Act, 2015 and opined that an arbitral award could be made within a period of 12 months from the date the Arbitrator entered upon the reference and this period could be extended for further six months by the consent of the parties. Also, an award made beyond 12 months under Section 29A(1) or 18 months under Section 29A(3) shall not be valid. The Court could further extend the mandate of the Arbitral Tribunal as per Section 29A(4) of the A&C (Amendment) Act, 2015.
The Court noted that in the instant case, the permissible period of twelve months within which the award could be validly pronounced under Section 29A(1) of the A&C (Amendment) Act, 2015 lapsed on 07-07-2017. However, both the parties did not object to the arbitration proceedings conducted beyond 07-07-2017 and continued with the proceedings. The Court opined that from the conduct of the parties, a tactic consent on their part for extending the period of arbitration could be inferred.
The Court relied on Inder Sain Mittal v. Housing Board, Haryana, (2002) 3 SCC 175 and SARA International Pvt. Ltd. v. South Eastern Railways, 2020 SCC OnLine Ori 973 and opined that the consent of the parties under Section 29A(3) of the (Amendment) A&C Act, 2015, for extending the arbitral period need not necessarily be either express or in writing. There could be deemed consent, an implied consent of the parties which could be gathered from their act and conduct.
The Court opined that the compliance to proceed with the arbitration beyond twelve months without raising any objection to continuation of proceeding did amount to consent and based on such consent, the arbitral award if passed after six months would be a valid award. The Court further opined that the award was saved by Section 29A(3) of the A&C (Amendment) Act, 2015 as it was passed within the period permitted under Section 29A(3) of the A&C (Amendment) Act, 2015.
Therefore, the Court allowed the appeals and opined that the judgments passed by the District Judge, Mandi could not be sustained and remanded the matter back to District Judge, Mandi for afresh consideration and decision of applications moved by the parties under Section 34 of the A&C, 1996 on their own merits in accordance with law.
[Balak Ram v. NHAI, 2023 SCC OnLine HP 944, decided on 31-07-2023]
*Judgment by- Justice Jyotsna Rewal Dua
Advocates who appeared in this case:
For the Applicants-Appellants: Varun Rana, Advocate;
For the Respondent: Shreya Chauhan, Advocate.
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