KMP EXPRESSWAYS LTD vs IDBI BANK LIMITED

2024-03-20 Information

$~23
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 20.03.2024
+ O.M.P.(MISC.)(COMM.) 553/2023
KMP EXPRESSWAYS LTD ….. Petitioner
Through: Mr. Deepak Khurana, Advocate.

Versus
IDBI BANK LIMITED ….. Respondent

Through: Mr. Gopal Jain, Sr.Advocate with Mr. Raunak Dhillon, Ms. Madhavi Khanna, Ms. Isha Malik, Advocates.

CORAM:
HON’BLE MR. JUSTICE JASMEET SINGH

: JASMEET SINGH, J (ORAL)

1. This petition is filed under Section 29A(4) and 29A(5) seeking extension of time for making the arbitral award by the tribunal till 25.09.2024 with effect from 11.12.2022.
2. In the present case, the mandate of the Arbitral Tribunal expired on 11.12.2022. Thereafter, the petitioner wrote an e-mail dated 13th March, 2023 to the respondent seeking consent over extension of the mandate of the Arbitral Tribunal for a period of 6 months. The said e-mail was not responded to by the respondent.
3. The petitioner thereafter filed the present petition under Section 29A on 30.09.2023 (after expiry of the mandate).
4. It is stated by Mr. Jain, learned senior counsel for the respondent that the essence of Section 29A is speedy time bound disposal of the arbitration proceedings. He states that there is no explanation that as to why this petition was not filed prior to 11.12.2022, or as to why it has been filed after nine months, i.e. on 30th September, 2023.
5. Mr. Khurana, learned counsel for the petitioner states that even though it took nine months to file the petition, if it is seen in the present case the conduct of the respondent has resulted in delay in the arbitration proceedings including that the respondent initially filed an application under section 16 of the Arbitration and Conciliation Act, 1996 challenging the jurisdiction of the Arbitral Tribunal on the ground that the petitioner had forfeited his right to appoint the nominee arbitrator. The said application was dismissed unanimously.
6. Thereafter, the respondent filed another application under Section 16 of the Arbitration Act stating that the Arbitral Tribunal had no jurisdiction to entertain the claim on the ground that the proceedings in DRT initiated by the respondent against the petitioner was already pending. The proceedings on the said application took more than seven months and eight hearings.
7. In addition, the respondent did not pay the fee of the Arbitral Tribunal and the petitioner paid a fee of Rs.70,00,000/- approximately towards the respondents share of the arbitral fee.
8. The reasons in approaching the court after delay of nine months from expiry of the mandate of the arbitral tribunal and the reasons for petition being in defect for one and a half month have been explained in the rejoinder. It has been stated that firstly the respondent did not respond to the petitioners email for extension of time. Secondly, it has been stated that the parties herein along with another party, i.e. HSIIDC, are embroiled in multiple disputes and litigations before the DRT and before this court. The matters were being heard which led to a delay in filing of the petition under Section 29A.
9. This Court in ATS Infrastructure vs. Rasbehari Traders, OMP(T)(COMM) 91/2023 has held as under:-
6. The Court has considered the aforenoted submissions, and it is not inclined to accept that Section 29A bars applications submitted after the expiry of the mandate from being entertained. The language of the provision is clear; the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period, which plainly provides that an application under Section 29A may be allowed even after the expiry of the mandate. Relevant portions of Section 29A is reproduced below to aid the reading of our analysis:
29A.Time limit for arbitral award.–(1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:
Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23
.
(3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.
(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:
Provided that while extending the period under this sub-section, if the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s) by not exceeding five per cent. for each month of such delay.
Provided further that where an application under sub-section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application: Provided also that the arbitrator shall be given an opportunity of being heard before the fees is reduced.
(5) The extension of period referred to in sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.
(6) While extending the period referred to in sub-section (4), it shall be open to the Court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.
(7) In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal
. (emphasis supplied)
7. Our observations are supported by ATC Telecom Infrastructure Private Limited v. Bharat Sanchar Nigam Limited, whereby this Court has categorically held that grant of extension of time is permissible even if the petition under Section 29A has been filed after the expiry of the time period. The judgment in ATC Telecom (supra) categorically disagreed with the findings in Rohan Builders (supra) relied upon by the ATS Group. The Calcutta High Court in Rohan Builders (supra) held that petitions seeking extension of time cannot be entertained after the expiry of the mandate, on grounds that the legislature has explicitly introduced the word terminate in Section 29A(5), as opposed to revival or renewal of arbitral proceedings upon filing of the extension application. The Court also drew attention to the proposed provisions in 176th Law Commission Report, the language of suspension of mandate was deliberately not chosen in favor of termination.
8. This Court, in ATC Telecom, disagreed with the view taken in Rohan Builders, observing that no explicit outer limits have been prescribed in Section 29A, and that it clearly provides for extension in appropriate cases. Indeed, the intention is evidently not to prescribe inflexible timelines and eliminate the discretion of the Court; if it were so, specifying that explicitly would have been simple. The recommendations of the Law Commission could not be relied upon and interpreted against the plain words of the statute.
9. The judgment of Datar Switchgears (supra) advanced by ATS Group is also wholly inapplicable to the present case. The dispute before the Supreme Court was based on an arbitration clause whereby unilateral right to nominate the arbitrator was given to one party, and the legal issue was whether such a right is forfeited when 30 days have elapsed, the party has not appointed an arbitrator before the other party has filed an application under Section 11. The provisions of Section 11 and Section 29A are not pari materia and the words of Section 29A(4) clearly provides for extension after the expiry of the period.

10. The said judgment was cited with approval by this court in PSA Protech and Infralogistics Pvt. Ltd., OMP(MISC)(COMM) 517/2023 dated 21.02.2024.
11. Therefore, it is clear that mandate of arbitral tribunal is extendable even after expiry of the mandate of the tribunal. This court while extending the mandate of the arbitral tribunal is only required to see if there is sufficient cause. The parties have invested considerable time, effort, energy and finances in prosecuting the arbitration proceedings. The sufficient cause as mandated in section 29A(5) of the Arbitration and Conciliation Act, 1996 has to be construed in this regard. Reliance is placed upon the dicta of this court in Iqbal Singh v Naresh Kumar, 2023 SCC OnLine Del 7587. The operative portion reads as under:-
12. The arbitration proceedings between the parties have consumed a substantial amount of time. It is also a fact that the present petition has been filed with some delay. There is no gainsaying that the petitioner has displayed laxity in pursuing the matter.
13. However, since the arbitration proceedings, albeit protracted, have advanced to the stage of adducing of claimant’s evidence, this Court is inclined to grant a suitable time extension to ensure that the elaborate arbitral exercise is not rendered futile, and the arbitration is taken to its logical conclusion.
14. In the aforesaid conspectus, while expressing anguish at the inordinate delay that has taken place in completion of arbitral proceedings, in order to ensure that the elaborate arbitral exercise is not rendered futile, this Court extends the time period for completion of arbitration proceedings and making of the arbitral award till 30.06.2024.

12. The Honble Supreme Court in Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619 has examined the principle of purposive interpretation or purposive construction to interpret a provision. The operative portion reads as under:-
31. The aforesaid two reasons given by me, in addition to the reasons already indicated in the judgment of my learned Brother, would clearly demonstrate that the provisions of Section 15(2) of the Act require purposive interpretation so that the aforesaid objective/purpose of such a provision is achieved thereby. The principle of purposive interpretation or purposive construction is based on the understanding that the court is supposed to attach that meaning to the provisions which serve the purpose behind such a provision. The basic approach is to ascertain what is it designed to accomplish? To put it otherwise, by interpretative process the court is supposed to realise the goal that the legal text is designed to realise. As Aharon Barak puts it:
Purposive interpretation is based on three components: language, purpose, and discretion. Language shapes the range of semantic possibilities within which the interpreter acts as a linguist. Once the interpreter defines the range, he or she chooses the legal meaning of the text from among the (express or implied) semantic possibilities. The semantic component thus sets the limits of interpretation by restricting the interpreter to a legal meaning that the text can bear in its (public or private) language. [ Aharon Barak, Purposive Interpretation in Law (Princeton University Press, 2005).]
32. Of the aforesaid three components, namely, language, purpose and discretion of the court, insofar as purposive component is concerned, this is the ratio juris, the purpose at the core of the text. This purpose is the values, goals, interests, policies and aims that the text is designed to actualise. It is the function that the text is designed to fulfil.
33. We may also emphasise that the statutory interpretation of a provision is never static but is always dynamic. Though the literal rule of interpretation, till some time ago, was treated as the golden rule, it is now the doctrine of purposive interpretation which is predominant, particularly in those cases where literal interpretation may not serve the purpose or may lead to absurdity. If it brings about an end which is at variance with the purpose of statute, that cannot be countenanced. Not only legal process thinkers such as Hart and Sacks rejected intentionalism as a grand strategy for statutory interpretation, and in its place they offered purposivism, this principle is now widely applied by the courts not only in this country but in many other legal systems as well.
13. Applying the above principle of interpretation, the language of section 29A of the Arbitration and Conciliation Act, 1996 has to be interpreted keeping in mind the purpose it has sought to achieve. The purpose of section 29A is notably for speedy resolution and speedy disposal of arbitral proceedings, as provided for in the 176th Law Commission Report of 2001. Sufficient cause as mandated in section 29A(5) of the Arbitration and Conciliation Act, 1996 therefore will have to be interpreted to advance this objective as envisaged in the Arbitration and Conciliation (Amendment) Act, 2015. The operative portion of the report reads as under:-
Proposals are also being made to keep delays before the arbitral tribunal totally under control, by amending sections 23, 24 and 82 as also and inserting new sections 24A, 24B, 29A, 37A. Time limits are proposed to be imposed for passing awards subject to extension by Courts, however, providing that that, pending disposal of the application by the Court, the arbitration shall continue. Chapter XI is introduced for Fast Track Arbitration. Sections 34 and 35 of the Amending Act are proposed to be introduced to speed up arbitrations, applications and appeals under the Act of 1996 and also under the old Act of 1940. We shall advert to these provisions in para 1.8 hereinafter. Therefore, it is not as if, the proposed amendments will increase court intervention or thereby delay arbitration. On the other hand, the proposed amendments will speed up pending and future arbitrations.
14. Therefore, in my view, if sufficient reasons are shown time must be extended so the learned Arbitrator who has been conducting proceedings for over a year can conclude and pass a speaking award. In case the same is not done, the parties will have to initiate fresh steps under the Arbitration and Conciliation Act, 1996 which will cause further delay, costs and loss of judicial time.
15. In the present case, the parties have spent more than 12 months before the learned Arbitrator. The respondent moved two applications under section 16 of the Arbitration and Conciliation Act, 1996 which consumed considerable time. The petitioner also paid a fee of Rs. 70,00,000/- approximately towards respondent share of the arbitral fee. The said reasons also persuade me to allow the present petition.
16. For the reasons noted above, I am inclined to grant an extension so as to not render the earlier arbitration proceedings futile.
17. The petition is allowed. The time for concluding and making and publishing the award is extended for the period of one year from 11.12.2022.
18. Mr. Jain, learned senior counsel states that the above observations shall have no bearing on the merits of the arbitration proceedings, it is accordingly so directed.

MARCH 20, 2024/K JASMEET SINGH, J
(Corrected & released on 4th April 2024)

O.M.P.(MISC.)(COMM.) 553/2023 Page 1 of 9