Consent Under Section 29A(3) Can Be Inferred From Conduct Of Parties: Himachal Pradesh High Court

The Himachal Pradesh High Court has held that Section 29A(3) of the Arbitration and Conciliation Act, 1996 does not require parties to give written consent for extending the time limit to make an arbitral award. Consent may be inferred from the conduct of the parties.

A Bench of Justice Virender Singh allowed the appeals filed by landowners Meenakshi and Chaman Lal, set aside the District Judge's order annulling the arbitral award, and remanded the matter for consideration of the Section 34 challenge on merits. The judges held:

“The learned District Judge, in the judgment impugned herein, has adopted a hyper-technical approach while holding that 'consent', as used by the Legislature, in its wisdom, in Section 29A(3) of the Act has to be express and after being aware of the statutory provision.”

The dispute arose after the National Highways Authority of India (NHAI) acquired land belonging to Meenakshi and Chaman Lal in Mandi. Dissatisfied with the compensation awarded under Section 3G of the National Highways Act, 1956, the landowners sought enhancement of compensation before the Divisional Commissioner, who was acting as the statutory arbitrator.

The arbitral proceedings witnessed repeated adjournments because the Arbitrator's post remained vacant at various stages and due to other administrative exigencies. On 31 October 2017, the Arbitrator passed a common award enhancing the market value of the acquired land to Rs. 81,39,120 per bigha along with statutory benefits.

NHAI challenged the award under Section 34 of the Arbitration and Conciliation Act before the District Judge, Mandi. By judgment dated 4 December 2021, the District Judge set aside the award on the ground that the arbitral proceedings had continued beyond one year without written consent of the parties or an extension of the arbitrator's mandate by the Court under Section 29A of the Act.

Aggrieved by the decision, the landowners approached the High Court under Section 37 of the Arbitration and Conciliation Act. They argued that the District Judge had incorrectly interpreted Section 29A(3) by reading a requirement of written consent into the provision, although the statute only refers to consent. They further submitted that the delay was not attributable to them.

Examining Section 29A, the High Court noted that subsection (1) prescribes a period of twelve months for making an arbitral award, while subsection (3) permits the parties, by consent, to extend that period by a further six months.

It observed that the District Judge adopted a hyper-technical approach in concluding that consent under Section 29A(3) must be in writing. It observed that the provision does not stipulate that consent must be express or written.

The Bench also disagreed with the District Judge's finding that NHAI had not consented to the extension of time merely because it subsequently challenged the award. The record did not show that NHAI objected to continuation of the proceedings after expiry of the initial twelve-month period. Rather, its conduct demonstrated consent to the extension.

On the facts, the Court noted that Meenakshi initiated the arbitral reference on 7 May 2016 and Chaman Lal on 8 July 2016, while the award was passed on 31 October 2017. The Court held that the award was rendered within the period contemplated under Sections 29A(1) and 29A(3).

It further held that there is no legal requirement under Section 29A(3) for consent to be express or in writing. Finding the District Judge's judgment untenable in law, the Court set it aside.

Accordingly, the High Court allowed the appeals and remanded the matter to the District Judge, Mandi, for adjudication of NHAI's Section 34 challenge on merits.