13 September 2024 - Legal Updates

1. Arbitration | Application to Extend Time to Pass Arbitral Award Maintainable Even After Expiry of Period Under Section 29A (4) : Supreme Court

In an important ruling Concerning the Arbitration and Conciliation Act, the Supreme Court held that an application for extending the time for passing of an arbitral award can be filed even after the expiry of the twelve-month or the extended six-month period.

We hold that an application for extension of the time period for passing an arbitral award under section 29A (4) read with section 29A (5) is maintainable even after the expiry of the twelve month or the extended six-month period, as the case may be, the bench comprising Justices Sanjiv Khanna and R. Mahadevan.

As per section 29A, arbitral awards should be made within twelve months of completing pleadings. This can be further extended by six months more with the consent of the parties. So, the upper limit is 18 months. Section 29A (4) adds that if the awards is not passed within this timeframe, the arbitral mandate will stand terminated unless it is extended by a court order.

The decision of the Supreme Court came as a clarification on the largely contested issue in the domain of arbitration which is encountered by the litigants in routine fashion. Till now, there's no authoritative ruling of the Supreme Court on the aforementioned issue of “whether an application for extension of a time period for passing an arbitral award is maintainable under Section 29A (4) read with Section 29A (5) even after the expiry of the mandated period.” However, there were varied views of the High Courts on the aforesaid issue which required a clarification from the Top Court.

On one hand, the High Courts of Calcutta and Patna held that the application for extension of time under Sections 29A (4) and 29A (5) of the Arbitration & Conciliation Act can only be entertained if filed before the expiry of the mandate of the arbitral tribunal. The High Court at Calcutta held that once the mandate of the arbitral tribunal is terminated by afflux of time of twelve months, or when so consented to by the parties after a further six-month extension, the power of the court to extend time under Section 29A (4) cannot be invoked.

Whereas an opposite view was taken by the High Courts of Delhi, Bombay, Jammu & Kashmir, Kerala, and Madras. They have held that an application for an extension of the time limit for the arbitral award can be filed by a party even after the expiry of the term of twelve months or the extended period of six months. Recently, the Calcutta High Court in a subsequent decision of the single Judge in Ashok Kumar Gupta v. M.D. Creations and Others (2024) on elaborated examination, has concurred with this view.

'Termination' Of Arbitral Tribunal upon Non-Filing of Application for Extension of Time Limit for Passing of Award Wouldn't Mean 'Suspension' Of Arbitral Tribunal

It was contended that if the application for extension of the time period was not filed within the mandated period prescribed under Section 29A (4) of the Act than the courts could not extend the time period as the mandate of the arbitral tribunal was deemed to be terminated.

Rejecting such contention, the Court rather than doing a strict interpretation of the word 'terminate' mentioned under Section 29A (4) did the purposive interpretation.

“The word “terminate” in Section 29A (4) makes the arbitral tribunal functus officio, but not in absolute terms. The true purport of the word “terminate” must be understood in light of the syntax of the provision. 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 Court observed.

According to the Court, the termination of the arbitral mandate is conditional upon the non-filing of an extension application and cannot be treated as termination stricto sensu.

“The word “terminate” in the contextual form does not reflect termination as if the proceedings have come to a legal and final end, and cannot continue even on filing of an application for extension of time. Therefore, termination under Section 29A (4) is not set in stone or absolutistic in character”, the Court added.

Essentially, the Court refrained from adopting narrow and restrictive meaning to Section 29A (4) because “a rigid interpretation would amount to legislating and prescribing a limitation period for filing an application under Section 29A, when the section does not conspicuously so state.”

The Court reasoned that “we must strive to give meaningful life to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios.”

“Section 29A (4) is the provision which requires interpretation. It states that where the award is not made within the specified period of twelve or eighteen months, the mandate of the arbitral tribunal will terminate. However, this provision does not apply if the court has extended the period, either before or after the expiry of the initial or the extended term. In other words, Section 29A(4) empowers the court to extend the period for making of the arbitral award beyond a period of twelve months or eighteen months, as the case may be. The expression “either prior to or after the expiry of the period so specified” is unambiguous. It can be deduced by the language that the court can extend the time where an application is filed after the expiry of the period under subsection (1) or the extended period in terms of sub-section (3). The court has the power to extend the period for making an award at any time before or after the mandated period”, the Court held.

Case- Rohan Builders (India) Private Limited vs. Berger Paints India Limited

2. Alleged Involvement in Crime No Ground to Demolish Legally Constructed Property, Such Demolitions Against Rule of Law : Supreme Court

The Supreme Court observed that alleged involvement in a crime is no ground for demolishing a legally constructed property, and the court cannot ignore such demolition threats in a nation governed by the rule of law.

In a country where actions of the state are governed by the rule of law, the transgression by a family member cannot invite action against other members of the family or their legally constructed residence. Alleged involvement in crime is no ground for demolition of a property. Moreover the alleged crime has to be proved through due legal process in a court of law. The court cannot be oblivious to such demolition threats inconceivable in a nation where law is Supreme. Otherwise such actions may be seen as running a bulldozer over the laws of the land, the court observed.

A bench of Justice Hrishikesh Roy, Justice Sudhanshu Dhulia and Justice SVN Bhatti issued notice returnable in four weeks on a petition by a man against potential demolition of his family home by Municipal authorities due to alleged involvement of a family member in a crime.

The court also directed that status quo be maintained regarding the petitioner’s property until further orders are issued.

An FIR was registered against a family member of the petitioner on September1, 2024. Following this Municipal authority allegedly threatened to demolish the petitioner’s residence. Thus, he approached the Supreme Court.

Senior counsel Iqbal Syed for the petitioner highlighted the recent order of the Supreme Court indicating that similar threats of demolition would be addressed with pan-India action.

Syed cited revenue records showing that the petitioner is a co-owner of the land in Village Kathlal, Kheda District. He also referred to a resolution from the Kathlal Gram Panchayat dated August 21, 2004, which granted permission for the construction of residential houses on the land. The petitioner stated that his family has resided in these houses for approximately two decades.

Syed told the Court that the petitioner has filed a complaint under Section 333 of the Bharatiya Nyaya Sanhita, 2023, to the Deputy SP, Nadiad, Kheda District on September 6, 2024. The petitioner has stated in the complaint that the law should take its course against the accused but there is no reason to threaten or demolish the petitioner's legally constructed and occupied residence.

The Supreme Court stressed that any alleged criminal activity must be addressed through due legal process, and such threats of demolition are contrary to the rule of law.

Another bench of the Supreme Court recently expressed concerns about the demolition of properties based on criminal allegations. On September 2, 2024, a bench of Justice BR Gavai and Justice KV Viswanathan in a batch of petitions challenging "bulldozer actions" indicated that the Court is considering framing pan-India guidelines to address the issue of authorities demolishing homes as a punitive measure.

Case- Javedali Mahebubmiya Saiyed vs. State of Gujarat & Anr.

3. Section 319 CrPC | Order to Summon Additional Accused Passed After Acquittal/conviction of Co-Accused is Unsustainable : Supreme Court

The Supreme Court recently quashed an order under section 319 of the CrPC summoning a man for a murder trial after the trial of the original accused persons had already concluded.

Section 319 of the CrPC grants the trial court the power to summon any person, not being an accused, to face trial if it appears from the evidence collected during the trial that such a person is also involved in the offence.

A bench of Justice BR Gavai and Justice KV Viswanathan set aside Allahabad High Court judgment upholding the summoning order observing that the summoning of the appellant was not in accordance with the law laid down by a constitution bench in Sukhpal Singh Khaira vs. State of Punjab.

The constitution bench has clearly held that if such a summoning order is passed, either after the order of acquittal or imposing of sentence in the conviction, the same may not be sustainable the court observed.

In the present case, the Additional Sessions Judge convicted some of the accused under Section 302 of the IPC and acquitted others on March 21, 2012. The Trial Court passed the conviction orders for the accused found guilty and acquitted the remaining accused. After recording the sentence for the convicted accused on the same day, the Trial Court invoked Section 319 of the CrPC, summoning the appellant to stand trial for the offence.

This order was upheld by the Allahabad HC. Thus, the appellant approached the Supreme Court

Advocate Puneet Singh Bindra for the appellant argued that the summoning of the appellant after the conclusion of the trial with respect to the other accused was not legally sustainable. He relied on the judgment in Sukhpal Singh Khaira v. State of Punjab and contended that since the order of conviction and sentence had already been passed, the invocation of Section 319 was not valid.

Advocate Vishnu Shankar Jain for the State argued that the summoning order was issued on the same date as the order of conviction and sentence. He submitted that the summoning order was passed in the same breath as the order of sentence, making it legally sustainable.

The Supreme Court Constitution Bench decision in Sukhpal Singh Khaira v. State of Punjab, addressed the issue of whether a trial court has the power under Section 319 of the CrPC to summon additional accused after the conclusion of the trial with respect to other accused.

According to the judgment, the power under Section 319 of the CrPC must be invoked before the pronouncement of the sentence in cases of conviction. If an order of acquittal is involved, the power must be exercised before the pronouncement of acquittal.

The Constitution Bench provided guidelines for cases where the summoning order and the judgment of conviction are passed on the same day, stating that the facts and circumstances of each case would need to be examined.

The Supreme Court in the present appeal observed that the trial court, on March 21, 2012, had first passed the conviction and acquittal orders in the first half of the day, followed by the sentencing order in the second half. Only after pronouncing the sentence did the trial court issue the summoning order under Section 319 of the CrPC to summon the appellant.

In light of the Sukhpal Singh Khaira decision, the Court held that since the summoning order was passed after the imposition of the sentence, it was not sustainable.

Therefore, the Court allowed the appeal and set aside the judgment of the Allahabad HC and the order of the Additional Sessions Judge summoning the appellant.

Case- Devendra Kumar Pal vs. State of U.P. and Anr.