Supreme Court: In a petition for special leave to appeal filed by Vrindavan Advisory Services LLP (petitioner) against a Calcutta High Court judgment, wherein the Court held that the Application under Section 29-A(4) of Arbitration and Conciliation Act 1996 (‘Act, 1996’) cannot be filed post expiry of the term of the Tribunal, the division bench of Sanjiv Khanna and S.V.N. Bhatti, JJ. issued notice and stayed the operation of the impugned order.
An Agreement was entered into between the parties, whereby the petitioner had agreed to take a loan of Rs.30 crores from the respondent. In lieu of the same, the petitioner has placed shares of Adhunik Industries Ltd. as security of equivalent value with the respondent. The respondent, in breach of the agreement, had sold some parts of the shares without seeking authorisation from the petitioner. Thus, the parties were referred to arbitration. An application under Section 9 of the 1996 Act was filed, restraining the respondent from selling the balance shares of Adhunik Industries to any third party, which was successfully granted by the Court. Simultaneously, an application under Section 11 of the 1996 Act was filed for commencement of the arbitration proceedings and appointment of an arbitrator. The High Court appointed a Sole Arbitrator.
The first mandate was terminated on 20-01-2018. Thereafter, the parties filed an application under Section 29-A of the Act, 1996, which was allowed, and the mandate of the Arbitral Tribunal was extended for a period of eight months, and publishing the award stood extended till 30-05-2019. During the said mandate, the parties were in the process of settlement and sought time to produce written terms of settlement. Further, the second mandate of the Arbitrator expired on 30-05-2019. Again, an application was filed under Section 29A of the 1996 Act for extension of the mandate of the arbitrator which was allowed and the mandate of the arbitrator for making and publishing the award was extended till 24-02-2020. During this mandate, the proposed settlement terms which were contemplated to be executed were discussed in the sittings before the Arbitral Tribunal. The pleadings were completed in the month of January,2020. Thereafter, due to Covid-19 pandemic, the proceedings were in abeyance during that time. In the meantime, the mandate of the arbitrator also expired on 24-02-2020. Thereafter, the parties filed another application under Section 29-A(4) of the 1996 Act, which was allowed, and the mandate of the arbitrator was extended by a further period of six months till 11-03-2023.
The petitioner forwarded the copy of the order dated 12-09-2022, to the Arbitrator, however, due to the prolonged illness of the Arbitrator, no steps could be taken for publishing the award and the mandate expired on 11-03-2023. After the termination of the mandate, the petitioner also suffered a stroke which left his 80% body paralyzed. After having recovered from the same, the petitioner made another application under Section 29A(4) of the 1996 for extension of the mandate of the Arbitrator to make and publish the award which was dismissed by the High Court on the ground that the court has no power to extend the arbitrator’s mandate after the mandate has already terminated and such extension will only be granted if appropriate application for extension was filed before the expiry of the mandate of the Arbitrator. Thus, the petitioner filed the present SLP.
The High Court dismissed the Arbitration Petition by disallowing the petitioner’s prayer to extend the mandate of arbitration and refused to exercise its powers as laid down under Section 29-A(4) and 29-A(5) of the Arbitration & Conciliation Act, 1996. The High Court has remarked that as the mandate terminated on 11-03-2023 and the present application was made four months thereafter; therefore, the scheme of the 1996 Act does not permit the Court to extend the mandate any further.
[Vrindavan Advisory Services LLP v Deep Shambhulal Bhanushali, 2023 SCC OnLine SC 1466, Order dated 06-11-2023]
Advocates who appeared in this case :
For Petitioner(s): Advocate-On-Record Swarnendu Chatterjee, Advocate Deepakshi Garg, Advocate Yashwardhan Singh, Advocate Megha Saha, Advocate Nilay Sengupta, Advocate Ankit Agarwal, Advocate Deepakshi Garg, Advocate Yashwardhan Singh, Advocate Megha Saha