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2025 DIGILAW 305 (HP)

Keshav Ram v. National Highway Authority of India

2025-03-07

RANJAN SHARMA

body2025
JUDGMENT : Ranjan Sharma, J. 1. Petitioner [Keshav Ram], has come up, before this Court, seeking the following relief(s):- “That the period from 12-05-2020 onwards may kindly be regularized and the mandate of the Arbitrator may kindly be extended for a reasonable time.” FACTUAL MATRIX: 2. Case of petitioner [Keshav Ram] as set- up by Mr. H.S. Chandel, Learned Counsel is thatpursuant to Notification under Section 3(A) of the National Highways Act, 1956, the Central Government published a Notification to acquire the stretch of land from 106.0002 to 155.800 Kms. (Solan – Shimla Section) for four lanning etc. in State of Himachal Pradesh. Consequently, the land in 22 villages of Tehsil Shimla [Rural], including the lands of petitioner was acquired by CALA i.e. Competent Authority/Land Acquisition in terms of an Award No.4, dated 25.05.2015: (i) Feeling aggrieved against the Award dated 25.05.2015, passed by Competent Authority for Land Acquisition, the petitioner filed a reference petition before Learned Arbitrator-cum-Divisional Commissioner, Shimla, which was registered as Reference Petition No. 83/2018 , whereby, Learned Arbitrator continued the arbitral proceedings, but on 14.03.2023 [referred to as the ‘Impugned Order’ ], the arbitral proceedings were closed and the mandate of Arbitrator was treated to have been terminated on the ground that arbitral proceedings could not be completed within the time schedule as per Section 29A(1) and Section 29A(3) of the Arbitration and Conciliation Act. (ii) Consequent upon the passing of the Impugned Order on 14.03.2023, terminating the mandate of Arbitrator and in keeping the arbitral proceedings in abeyance till extension was sought from a competent Court, therefore, in these circumstances, since the petitioner was left without any remedy coupled with the fact that the delay in completion of arbitral proceedings was not attributable to the petitioner; and delay in completion of arbitral proceedings was entirely due to administrative reasons, for which, the parties should not be made to suffer, coupled with the fact that termination of mandate of Arbitrator will cause prejudice to the parties therefore, in these circumstances, it was prayed that the time for completion of arbitral proceedings may be enlarged with directions to Learned Arbitrator-cum-Divisional Commissioner concerned to conclude the proceedings. 3. 3. Upon listing of this case today and in response to a query by this Court, Learned Counsel(s) for parties, jointly represented that in similar matters, relating to Solan-Shimla, Section of NH, this Court had enlarged time for conclusion of arbitral proceedings with direction(s) to Learned Arbitrator-cum-Divisional Commissioner, Shimla [HP] to complete the arbitral proceedings within a reasonable time. 4. Heard, Mr. H.S. Chandel and Mr. Ashir Kaith, Learned Counsel for petitioner and Ms. Sneh Bhimta, Learned Counsel for contesting respondent No.1 as well as Mr. Gobind Korla, Learned Additional Advocate General for respondent No.2 and have gone through the material on record. STATUTORY PROVISION: 5. In order to appreciate the claim of the parties herein, it is necessary to have a recap of the statutory provision of Section 29A of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as ‘Act’] which reads as under:- “ 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. (2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. (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. 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. (8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this section. (9) An application filed under sub-section (5)shall be disposed of by the Court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.” UNDISPUTED FACTS 6. Undisputed facts are that though the arbitral proceedings could not be completed within maximum period of 18 months [under Section29A(1) & (3) by Arbitrator due to COVID Pandemic for almost two years from March 2020 till February 2022; coupled with the fact that the Arbitrator was Divisional Commissioner who had to look after other administrative work and related exigencies; and the fact that delay in non-completion of arbitral proceedings was attributable to respondents-NHAI, who did not file the reply and did not comply with other procedural requirements despite opportunities; and delay in timely completion of the proceedings was not attributable to petitioner who participated in the arbitral proceedings then, the petitioner cannot be made to suffer prejudice by abrupt closure of arbitral proceedings which have resulted in depriving the petitioners of the fruits of such reference. Above facts, reveal that arbitral proceedings could not be primarily completed due to administrative and bona fide reasons, which were beyond the control of the Arbitrator concerned; and the above circumstances taken collectively indicate sufficient cause and the Reference Proceedings which were closed/kept in abeyance by concerned Arbitrator may be restored in instant case. ANALYSIS 7. Taking into account the entirety of the facts and circumstances, this Court is of the considered view, that the Impugned Order dated 14.03.2023 terminating the mandate of Arbitrator and in keeping the arbitral proceedings in abeyance deserves to be set-aside; and the claim of petitioner for enlargement of time for concluding the arbitral proceedings needs to be accepted , for the following reasons:- (i) Object of the arbitral proceedings is consensual entrustment of parties to an Arbitrator who is bound to complete the arbitral proceedings within a period of 12 months under Section 29A(1) and within extendable period of 06 months under Section 29(A)(3) of the Act. Meaning thereby, that arbitral proceeding are to be completed by an Arbitrator within a period of 18 months in totality.Though, the arbitral proceedings under Section 29A(1) and Section 29A(3) are to be completed within 18 months period yet in case due to unforeseen eventualities the arbitral proceedings are not completed within 18 months, then the law-makers were conscious enough by prescribing a remedy under Section 29A(5), for extending the period of arbitral proceedings, only for sufficient cause and on such terms and conditions, as may be imposed by the Court. SUFFICIENT CAUSE FOR EXTENSION (ii) Factual matrix and material on record in instant case, indisputably indicate that the arbitral proceedings could not be completed within the maximum stipulated period of 18 months by the Arbitrator concerned, on account of the COVID Pandemic during the years 2020-2022 and thereafter due to administrative reasons as the arbitrator happened to be Divisional Commissioner of concerned Division and also due to non filing of reply and non-compliance of procedural requirements by Respondent-NHAI despite several opportunities; and the fact that the parties to the arbitral proceedings could not be made to suffer due to the reasons which were not attributable to petitioner; and when, the petitioner and respondent-NHAI have participated in arbitral proceedings without any objection beyond the maximum period of 18 months and in order to prevent any prejudice to petitioner, who had been litigating since the passing of Award in 2015 and even in Reference Proceedings before the arbitrator since 2018 till the passing of Impugned Order on 14.03.2023, then, once the totality of the circumstances detailed hereinabove indicate sufficient cause, which appears to be bona fide, therefore, the Impugned Order deserves to be set aside by directing Learned Arbitrator to conclude the arbitral proceedings within a reasonable period. PETITIONER CANNOT BE MADE TO SUFFER DUE TO ABRUPT TERMINATION OF MANDATE (iii) Once the parties to arbitral proceedings have consensually participated in arbitral proceedings since 2018 till March, 2023 then, the Impugned Order terminating the mandate of Arbitrator and keeping the arbitral proceedings in abeyance by passing the Impugned Order on 14.03.2023 , has certainly prejudiced the parties to the arbitral proceedings which cannot be permitted to operate, resulting in prejudice to the parties herein. (iv) Once the statute enables the Court to enlarge time for completion of arbitral proceedings subject to its satisfaction based on sufficient cause and such others terms and conditions as the Court deems fit and proper. (iv) Once the statute enables the Court to enlarge time for completion of arbitral proceedings subject to its satisfaction based on sufficient cause and such others terms and conditions as the Court deems fit and proper. In the instant case, since non-completion of arbitral proceedings were on account of COVID Pandemic w.e.f. March 2020 [due to Lockdown] till February 2022 and thereafter due to non-filing of reply and non-completion of procedural requirements as required by norms by NHAI and also due to other administrative reasons as the Arbitrator was the Divisional Commissioner, then, once the above reasons spell out sufficient cause, which appears to be bonafide, therefore, the prayer for extending the mandate of Arbitrator has force, in view of the law declared by the Hon’ble Supreme Court in TATA Sons Pvt. Ltd. (Formerly TATA Sons Ltd.) vs. Siva Industries and Holdings Ltd. and others, 2023 (1) SCALE 793 , under Section 29A(4) and 29A(5) of the Act, in the following terms:- “24. The provisions of Section 29A, as originally introduced into the statute, mandated that all awards shall be made within a period of twelve months from the date on which the arbitral tribunal enters upon the reference. The explanation clarified when the arbitral tribunal would be deemed to have entered upon the reference, namely, the date on which the arbitrator has received written notice of the appointment. The mandatory nature of the provisions of Section 29A(1) and their application to all arbitrations conducted under the Act, domestic or international commercial, was evident from the use of the word “shall.” In terms of Section 29A(4), in case the arbitral award was not rendered within the twelve or eighteen month period as the case may be, the mandate of the arbitrator(s) would stand terminated, unless on an application made by any of the parties, the court extended time on sufficient cause being shown. xxxx. xxx… xxx.. 26. Sub-section (3) of Section 29A empowers parties, by consent, to extend the period specified in sub-section (1) for making the award by a further period not exceeding six months. Thereafter, if the award is not made within the period which is specified in sub-section (1) or the extended period specified in sub-section (3), the mandate of the arbitrator shall terminate unless the court has extended the period either prior to or after the expiry of the period so specified. Thereafter, if the award is not made within the period which is specified in sub-section (1) or the extended period specified in sub-section (3), the mandate of the arbitrator shall terminate unless the court has extended the period either prior to or after the expiry of the period so specified. In other words, the timeline of twelve months for making the award (in matters other than international commercial arbitration), is qualified by the consensual entrustment to the parties under sub-section (3) to extend the period by six months after which the court is empowered in terms of sub-section (4) to extend the period for making the award. The submission of the second respondent is that the provisions of sub-section (3) and sub-section (4) must also apply to an international commercial arbitration. This would merit close scrutiny. The legislature has not expressly excluded the applicability of sub-sections (3) and (4) of Section 29A to an international commercial arbitration. But, at the same time, it must be noticed that the rationale underlying sub-section (3) is to ensure that despite the stipulation of twelve months for the making of an arbitral award in the domestic context, parties may by consent agree to an extension of time by a further period of six months. Such an extension of six months is envisaged in the case of a domestic arbitration since there is a mandate that the award shall be made within a period of twelve months. A further extension has, however, been entrusted to the court in terms of sub-section (4) of Section 29A However, insofar as an international commercial arbitration is concerned, the statutory regime is clear by the substantive part of sub-section 1 of Section 29A in terms of which the timeline of twelve months for making an arbitral award is not applicable to it. In an international commercial arbitration, the legislature has only indicated that the award should be made as expeditiously as possible and that an endeavour may be made to dispose of the matter within a period of twelve months from the completion of pleadings.”(Underlining Ours) (v) While dealing with a similar situation, the Hon’ble Supreme Court, in Civil Appeal No..........of 2024 [Arising out of Special Leave Petition (Civil) No. 23320 of 2023] titled as Rohan Builders (India) Private Limited vs. Berger Paints India Limited decided on 12.09.2024, has reiterated that the mandate of an Arbitrator is liable to be extended, in view of sufficient cause, to the satisfaction of the Court, in the following terms:- “15. Rohan Builders (India) Pvt. Ltd. (supra)highlights that an interpretation allowing an extension application post the expiry period would encourage rogue litigants and render the timeline for making the award inconsequential. However, it is apposite to note that under Section 29A(5), the power of the court to extend the time is to be exercised only in cases where there is sufficient cause for such extension. Such extension is not granted mechanically on filing of the application The judicial discretion of the court in terms of the enactment acts as a deterrent against any party abusing the process of law or espousing a frivolous or vexatious application. Further, the court can impose terms and conditions while granting an extension. Delay, even on the part of the arbitral tribunal, is not countenanced.28 The first proviso to Section 29A(4) permits a fee reduction of up to five percent for each month of delay attributable to the arbitral tribunal. 16. Lastly, Section 29A(6) does not support the narrow interpretation of the expression “terminate”. It states that the court – while deciding an extension application under Section 29A(4) – may substitute one or all the arbitrators. Section 29A(7) states that if a new arbitrator(s) is appointed, the reconstituted arbitral tribunal shall be deemed to be in continuation of the previously appointed arbitral tribunal. This obliterates the need to file a fresh application under Section 11 of the A & C Act for the appointment of an arbitrator. In the event of substitution of arbitrator(s), the arbitral proceedings will commence from the stage already reached. Evidence or material already on record is deemed to be received by the newly constituted tribunal. This obliterates the need to file a fresh application under Section 11 of the A & C Act for the appointment of an arbitrator. In the event of substitution of arbitrator(s), the arbitral proceedings will commence from the stage already reached. Evidence or material already on record is deemed to be received by the newly constituted tribunal. The aforesaid deeming provisions underscore the legislative intent to effectuate efficiency and expediency in the arbitral process. This intent is also demonstrated in Sections 29A(8) and 29A(9). The court in terms of Section 29A(8) has the power to impose actual or exemplary costs upon the parties. Lastly, Section 29A(9) stipulates that an application for extension under sub-section (5) must be disposed of expeditiously, with the endeavour of doing so within sixty days from the date of filing. 17. As per the second proviso to Section 29A(4), the mandate of the arbitral tribunal continues where an application under sub- section (5) is pending. However, an application for extension of period of the arbitral tribunal is to be decided by the court in terms of sub-section (5), and sub-sections (6) to (8) may be invoked. The power to extend time period for making of the award vests with the court, and not with the arbitral tribunal. Therefore, the arbitral tribunal may not pronounce the award till an application under Section 29A(5) of the A & C Act is sub-judice before the court. In a given case, where an award is pronounced during the pendency of an application for extension of period of the arbitral tribunal, the court must still decide the application under sub-section (5), and may even, where an award has been pronounced, invoke, when required and justified, sub-sections (6) to (8), or the first and third proviso to Section 29A(4) of the A & C Act. 18. While interpreting a statute, we must strive to give meaningful life to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios. An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic.” PETITIONER CANNOT SUFFER DUE TO PENDENCY OF PROCEEDINGS: 8. In instant case, the arbitral proceedings continued since 2018 till March 2023, in which the petitioner and respondents participated without any objection. These proceedings stretched over for almost six years. In instant case, the arbitral proceedings continued since 2018 till March 2023, in which the petitioner and respondents participated without any objection. These proceedings stretched over for almost six years. Once the Learned Arbitrator permitted the parties to participate in arbitral proceedings beyond the permissible period of 18 months then, the Impugned Order passed by Arbitrator on 14.03.2023, that he cannot proceed because his mandate stood terminated and the arbitral proceedings were kept in abeyance, certainly amounts to prejudicing the petitioner due to an act Arbitrator herein which defeats the principle of “ Actus Curiae Neminem Gravabit. ” EXTENSION GIVEN IN OTHER CASES BY CO-ORDINATE BENCH AND THIS COURT IN SIMILAR FACT-SITUATION: 9. Similar issue came up for discussion and Co-ordinate Bench(es) of this Court, granted enlargement-extension of time to Learned Arbitrator to conclude the arbitral proceedings, in the following cases: (i) Arb. Case No. 2 of 2023, titled as Prakash Chand vs. LAC & Others decided on 13.01.2023. (ii) Arb. Case No. 44 of 2023, titled as Nand Lal alias Nand Lal Vardhan vs. Land Acquisition Collector and others decided on 18.04.2023. (iii) Arb. Case No. 122 of 2022, titled as Dinesh Kumar vs. Land Acquisition Officer and another decided on 07.07.2023. (iv) Arb. Case No. 43 of 2019, titled as Devki Nand Thakur vs. State of H.P. through Secretary (PW) decided on 12.07.2019. (i) Recently, the Co-ordinate Bench of this Court granted extension of time to complete the arbitral proceedings within six months, in respect of same subject road in Arbitration Case No. 30 of 2025 , titled as Ramesh Kumar vs. NHAI & Ors. decided on 28.02.2025, in the following terms :- “3. From the averments made in the petition, I am fully satisfied that the petitioner has been pursuing his case honestly, diligently and sincerely by taking all necessary and requisite steps for the progress of the case and has not sought any un-necessary adjournments. 4. Therefore, in the given facts and circumstances, the petition for extension of time deserves to be allowed. 5. 4. Therefore, in the given facts and circumstances, the petition for extension of time deserves to be allowed. 5. Accordingly, the petition is allowed and the time limit for completing the arbitration proceedings in Arbitration Reference Case No. 394 of 2018, in case titled as Ramesh Kumar vs. National Highway Authority of India and others, pending before the learned Divisional Commissioner-cum- Arbitrator, Shimla, District Shimla, H.P. is extended by a period of six months and the Arbitrator shall now ensure that the proceedings are completed by passing an award by or before31.08.2025.” CONCLUSION & DIRECTIONS: 10. In view of the above discussion and for the reasons recorded hereinabove, the instant petition is allowed, in the following terms :- (i) Impugned Order dated 14.03.2023 passed in Arbitration Reference Petition No.83/2018, by Learned Divisional Commissioner-cum-Arbitrator, Shimla, is quashed and set-aside; (ii) Arbitration Reference Petition as in (i)supra, shall stand restored to their original position; (iii) Learned Divisional Commissioner-cum-Arbitrator, Shimla, is mandated to complete the arbitral proceedings and to pass the Award in accordance with law within six months from the date of receipt of certified/downloaded copy of this judgment; (iv) Costs made easy for respective parties. 11. In aforesaid terms, the instant petitions and all pending application(s) if any, shall stand disposed of.