TEMPORALITY AND TERMINATION: THE SUPREME COURT'S RESOLUTION OF SECTION 29A CONUNDRUM IN ROHAN BUILDERS

Anu Shrivastava (MCIArb)

I. INTRODUCTION

By the early 2010s, Indian arbitration had acquired a reputation for delays rivaling traditional litigation, undermining arbitration's fundamental promise of expeditious dispute resolution. In response, the Arbitration and Conciliation (Amendment) Act, 2015 introduced Section 29A—imposing strict time limits on arbitral tribunals.

Section 29A mandates that awards in domestic arbitrations must be made within twelve months from completion of pleadings, extendable by six months with parties' mutual consent.[1] Section 29A(4) provides that if the award is not made within this period, "the mandate of the arbitral tribunal shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period."

Section 29A's mandatory time limits are unusual and find no international precedents. Neither the UNCITRAL Model Law, the New York Convention, nor arbitration statutes in England, Singapore, or the United States impose similar deadlines.[2] India's approach reflects a uniquely interventionist policy choice addressing India's particular problem of arbitral delays.

The phrase "either prior to or after the expiry" became the subject of intense judicial debate: Can a court extend the tribunal's mandate after the stipulated time has expired, or does the mandate terminate absolutely? Indian High Courts split on this question, creating uncertainty in arbitration practice.

On 12 September 2024, the Supreme Court in Rohan Builders (India) Private Limited v. Berger Paints India Limited[3] resolved this split, holding that applications for extension can be filed and entertained even after expiry of the statutory period, provided "sufficient cause" is demonstrated.

II. LEGISLATIVE HISTORY

The genesis of Section 29A traces to the 176th Law Commission Report of 2001,[4] which recommended mandatory timelines for arbitral awards. Significantly, the Report proposed "suspension of mandate" rather than absolute termination—suspension implied temporary inoperability with possibility of revival, while termination suggested finality.

However, the enacted provision used the word "terminate"—a choice that generated extensive litigation. Following concerns about arbitration delays, exemplified by the White Industries investment treaty arbitration against India[5] and NBCC v. J.G. Engineering,[6] the 2015 Amendment introduced Section 29A. The provision was subsequently refined, but the core interpretative question remained: could extension applications be entertained post-expiry?

III. THE HIGH COURT DIVERGENCE

The Restrictive View: Calcutta High Court

In Rohan Builders (Calcutta High Court),[7] Justice Shampa Sarkar held that "terminate" signifies absolute cessation of the tribunal's mandate. Relying on the 176th Law Commission Report, the Court noted that Parliament consciously chose "terminate" over "suspension"—indicating intent for finality. The Court concluded that extension applications must be filed before the mandate expires.

The Liberal View: Delhi, Bombay, and Kerala High Courts

Several High Courts adopted a contrary position. The Delhi High Court in Ashok Kumar Gupta[8] held that Section 29A(4)'s explicit language—"either prior to or after the expiry"—clearly permits post-expiry applications. The Bombay High Court in Nikhil H. Malkan[9] reasoned that arbitration being party-driven, courts should facilitate rather than frustrate parties' intent to resolve disputes through arbitration. The Kerala High Court in Hiran Valiiyakkil Lal[10] emphasized that Section 29A's purpose is expeditious resolution, not mechanical termination of proceedings.

IV. THE SUPREME COURT'S DECISION

A. The Interpretation

The interpretation of Section 29A(4) as done by the Supreme Court requires is interesting to note. The Court differed from the literal interpretation of the provision by the Calcutta High Court, and held that any interpretative exercise should be conducted with "careful consideration of both the text and the contest of the provision." This reflects the Supreme Court's adoption of a purposive interpretation. The Court then held that the word "terminate" should not be read alone, but in conjunction with the surrounding words to find out the true legislative intent - again, a reflection of purposive interpretation. At the same time, the Court also noted the syntax of Section 29A(4) and held that:

"The absence of a full stop after the word “terminate” is noteworthy. The word “terminate” is followed by the connecting word “unless”, which qualifies the first part with the subsequent limb of the section, i.e. “unless the court has, either prior to or after the expiry of the period so specified, extended the period.” The expression “prior to or after the expiry of the period so specified” has to be understood with reference to the power of the court to grant an extension of time."

The extract above shows that the Court's findings were supported by a literal interpretation of the provision, in addition to the purposive interpretation which is to ensure the timely completion of arbitral proceedings while allowing courts the flexibility to grant extensions when warranted.

B. The Court's findings

Justices Sanjiv Khanna and R. Mahadevan unanimously held:

1. Extension Applications are Maintainable Post-Expiry

The plain language of Section 29A(4)—"either prior to or after the expiry of the period so specified"—unambiguously permits courts to extend the tribunal's mandate even after the stipulated period has expired. To hold otherwise would render the phrase "after the expiry" redundant, violating the cardinal principle that every word in a statute must be given meaning.

2. "Terminate" Does Not Mean Absolute Termination

The word "terminate" makes the arbitral tribunal functus officio, but not in absolute terms. The termination is conditional upon non-filing of an extension application and cannot be treated as "termination stricto sensu." The Court emphasized that the legislature, by using "terminate," intended to affirm the principle of party autonomy.

3. Rejection of the "Suspension" Theory

The Court rejected the argument that Parliament's departure from the "suspension" language indicated intent for absolute termination. Instead, "terminate" was deliberate to avoid confusion about the tribunal's status during the interim period. If the legislature had used "suspend," questions would arise about the tribunal's powers during suspension.

4. Safeguards Against Abuse

Post-expiry extensions should not be granted mechanically. Section 29A(5) requires "sufficient cause," and courts must exercise discretion judiciously. Built-in safeguards include fee reduction for tribunal-attributable delays (Section 29A(6)) and exemplary costs (Section 29A(8)).

5. Continuing Arbitration During Pendency

Arbitral proceedings may continue during pendency of an extension application, but no award shall be passed until the application is decided.

V. "SUFFICIENT CAUSE": THE LIMITATION ACT FRAMEWORK

A. The Standard

Section 29A(5) provides that extension may be granted "only for sufficient cause." While undefined in the Arbitration Act, "sufficient cause" is well-established in limitation jurisprudence under Section 5 of the Limitation Act, 1963.

The Supreme Court in Rohan Builders emphasized that "sufficient cause" must take color from the underlying purpose of the arbitration process—facilitating effective dispute resolution. While limitation jurisprudence provides guidance, the standard must be applied with sensitivity to arbitration's unique characteristics.

B. Limitation Act Principles

1. Liberal Interpretation

In GMG Engg. Industries [11] the Supreme Court held that "sufficient cause" should receive liberal construction to advance substantial justice, and the discretion to condone delay should be exercised with vigilance, circumspection and in a non-arbitrary manner. What is important to note is that the sufficient cause should be shown for not filing the application until the last day of the prescribed period and explain the delay caused thereafter.[12]

2. Bona Fide Conduct

Courts have held that in order to make out sufficient cause, the applicant must show that it has not acted with mala fides and that no negligence, inaction or want of bona fides is imputable to the applicant.[13]

3. Explanation Required

Postmaster General v. Living Media India Ltd.[14] requires that where delay is substantial, the applicant must explain the delays properly and vague explanations are insufficient. It has also been held that the length of delay is secondary and it is the cause of delay which is primary. If the cause falls within the four corners of "sufficient cause", the delay would be condoned irrespective of the period of delay.[15]

4. Pragmatic approach and a preference for substantial justice

In State of Nagaland v. Lipok AO,[16] the Supreme Court held that no hard and fast rules could be laid down while considering the meaning of "sufficient cause", and the expression should be considered with pragmatism in a justice-oriented approach. The court also held that substantial justice should be preferred over procedural technicalities.

C. Application to Section 29A

Courts considering extension applications must:

1. Examine Cause of Delay: Complexity, volume of evidence, witnesses, parties' conduct, tribunal's conduct, force majeure events, and interlocutory applications.

2. Assess Bona Fides: Whether the application is bona fide or dilatory. Indicators include timely filing, advanced stage of proceedings, joint application, and genuine reasons.

3. Consider Stage of Proceedings: In Ajay Protech Pvt. Ltd. v. General Manager,[17] the Supreme Court held that where proceedings are at an advanced stage, refusing extension would cause wastage of time and resources.

4. Distinguish Tribunal from Party Delay: Section 29A(6) addresses tribunal delays through fee reduction. Party-caused delays may justify refusal or cost orders.

D. Ajay Protech Application

In Ajay Protech, the Supreme Court applied the standard post-Rohan Builders. Facts: 12-month period expired 09.04.2021; COVID-19 pandemic commenced before expiry; hearings concluded 05.05.2023; extension application filed August 2023.

The Court held that: (1) the pandemic period should be excluded; (2) there was agreement between parties to jointly seek extension; (3) proceedings were at advanced stage. These factors constituted "sufficient cause."

The Court emphasized: "The meaning of 'sufficient cause' for extending time to make an award must take colour from the underlying purpose of the arbitration process—facilitating effective dispute resolution."

VI. CONCLUSION

Courts have applied Rohan Builders variably. The Delhi High Court in Reliance Infrastructure[18] and Kerala High Court in Hiran Valiiyakkil Lal[19] granted extensions where proceedings were at advanced stages.

While the interpretative uncertainty on Section 29A(4) has been put to a rest, it remains to be seen how courts interpret "sufficient cause" in the context of arbitration proceedings. Guidelines under Section 5 of the Limitation Act, 1963 are available, but at the same time, practitioners need to be aware of the peculiar nature of modern-day arbitrations and the nature of parties being large commercial enterprises with sufficient bandwidth to file timely applications. Given these considerations, the determining factor for courts in granting extensions under Section 29A might end up becoming the effectiveness, efficacy and efficiency of the arbitral process. Questions do however remain if this factor would outweigh and replace the "sufficient cause" guidance under the Limitation Act. A trend towards this has already been seen in the order dated 23rd October 2024 passed by the Supreme Court in Civil Appeal No. 10622/2024 in Rohan Builders where the mandate of the arbitrator was not extended due to the inordinate delay of about 6 months between reserving the award and its pronouncement.

The decision clarifies that Section 29A's time limits, while mandatory, are not absolutist. The Court's invocation of Limitation Act principles provides a familiar framework for assessing extension applications. However, the Court's subsequent refusal to grant extension in Rohan Builders itself demonstrates that the standard requires rigorous justification.

Rohan Builders will be remembered as a watershed moment bringing clarity to Section 29A while affirming that procedural rules must serve—not subvert—arbitration's core purpose of effective, consensual dispute resolution. The decision's success will depend on how judiciously courts apply the "sufficient cause" standard in the years ahead, respecting party autonomy while demanding accountability.

ENDNOTES

[1] Section 29A(1) and (3), Arbitration and Conciliation Act, 1996 (as amended)

[2] Gary Born, International Commercial Arbitration (2014), p. 2471

[3] Rohan Builders (India) Private Limited v. Berger Paints India Limited, SLP (C) No. 23320 of 2023, decided on 12 September 2024

[4] Law Commission of India, 176th Report (2001)

[5] White Industries Australia Limited v. Republic of India, UNCITRAL Arbitration, Final Award dated 30 November 2011

[6] NBCC Ltd. v. J.G. Engineering Pvt. Ltd., (2010) 2 SCC 385

[7] Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., GA No. 1732 of 2021, Calcutta High Court (2023)

[8] Ashok Kumar Gupta v. Mayur Vatika, 2024 SCC OnLine Cal 587

[9] Nikhil H. Malkan & Ors. v. Standard Chartered Investment and Loans (India) Limited, Arb. Pet. (L) No. 1228 of 2021, Bombay High Court (2023)

[10] Hiran Valiiyakkil Lal and others v. Vineeth M.V., Arb. A. No. 61 of 2021, Kerala High Court

[11] GMG Engg. Industries v. ISSA Green Power, (2015) 15 SCC 659

[12] DDA v. Tejpal, (2024) 7 SCC 433

[13] Indian Oil Corpn. Ltd. v. Subrata Borah Chowlek, (2010) 14 SCC 419; Ramlal v. Rewa Coalfields Ltd., AIR 1962 SC 361; Balwant Singh v. Jagdish Singh, (2010) 8 SCC 685

[14] Postmaster General v. Living Media India Ltd., (2012) 3 SCC 563

[15] State of Nagaland v. Lipok Ao, (2005) 3 SCC 752

[16] Mool Chandra v. UOI, (2025) 1 SCC 625

[17] M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr., SLP (C) No. 2272 of 2024, decided on 25 November 2024

[18] Reliance Infrastructure Ltd. v. Bharat Sanchar Nigam Ltd., Delhi High Court

[19] Hiran Valiiyakkil Lal and others v. Vineeth M.V., Arb. A. No. 61 of 2021, Kerala High Court