C. Velusamy Vs K Indhera (Supreme Court of India)
Whether an arbitral award passed after expiry of the mandate is void or capable of validation through extension?
The Arbitration and Conciliation Act, 1996 (“Act”) treats arbitration as a time-bound means of resolving disputes. With delays becoming a recurring issue in practice, Section 29A was introduced to fix timelines for the completion of arbitral proceedings. However, situations often arise where awards are delivered after the prescribed period.
In C. Velusamy v. K. Indhera, the Supreme Court examined the consequences of such delay and, in particular, whether the court can extend the arbitrator’s mandate even after expiry of the statutory period and after an award has already been passed.
Brief Facts
The dispute arose out of three agreements to sell between the parties. When disputes turned up, arbitration was invoked, and a sole arbitrator was appointed by the Madras High Court by order dated 19 April 2022. The proceedings then continued in the usual course, and pleadings were completed on 20 August 2022, which marked the start of the twelve-month period under Section 29A(1) for making the award.
Before the expiry of the initial period, the parties agreed to extend the mandate of the arbitral tribunal by a further six months under Section 29A(3), thereby extending the deadline for the award until 20 February 2024. Arguments were concluded, and the matter was reserved for award on 9 September 2023. However, the proceedings were adjourned on several occasions as the parties continued their settlement discussions, and the matter was reopened more than once in the process.
