Expiry Of Arbitrator's Mandate Due To Lapse Of Time Does Not End Arbitration: Delhi High Court

The Delhi High Court has observed that when an arbitrator's mandate expires due to lapse of time, it does not amount to termination of proceedings under Section 32, Arbitration and Conciliation Act.

A Single-Judge Bench of Justice Harish Vaidyanathan Shankar additionally held that the expiry of mandate by lapse of time is curable and extended the arbitrator's mandate for a further period of six months from the date of the order for making the arbitral award.

The Court noted:

“...that both parties are ad idem that the pleadings in the arbitration stand completed and that the matter has reached the stage of evidence. In such circumstances, the interests of justice would be better served by facilitating the continuation and culmination of the arbitral proceedings rather than relegating the parties to a fresh round of litigation.”

The arbitrator had entered reference in 2019 in disputes between Telexcell Information Systems Limited ( Telexcell) and Tata Advanced Systems Limited (Tata). Pleadings were completed and the matter had progressed to the stage of evidence. Since the statutory time limit for making the award was expiring, Tata approached the High Court, which by order dated 1 February 2021 extended the arbitrator's mandate until 1 June 2021 due to delays caused by the COVID-19 pandemic.

Subsequently, insolvency proceedings were initiated against Telexcell, and a moratorium under Section 14 of the Insolvency and Bankruptcy Code came into force, preventing further progress in the arbitration. The arbitrator thereafter recorded on 22 September 2022 that the mandate had expired even after accounting for limitation extensions granted during the pandemic.

Tata later filed a petition seeking extension of the mandate. However, the petition was dismissed as withdrawn on 12 December 2023 without adjudication on merits and without any finding that the arbitral proceedings had terminated or been abandoned. Thereafter, on 22 December 2023, the arbitrator recorded that since the mandate had expired and no extension order was in force, the scheduled hearing stood cancelled.

Telexcell subsequently filed the present petition under Section 29A seeking extension of the mandate, contending that it had acted diligently and had not abandoned the arbitration proceedings.

Tata opposed the petition, arguing that the arbitrator's mandate had terminated on 22 December 2023 and could not be revived, and that Telexcell's conduct showed lack of intent to pursue the arbitration.

Rejecting this contention, the Court held that the arbitrator's order dated 22 December 2023 merely recorded expiry of mandate and cancellation of hearings and did not record withdrawal of claims or termination of proceedings under Section 32 of the Act. The Court further held that the record did not indicate abandonment of proceedings and that sufficient cause existed to extend the mandate.

It added that:

“In the present matter, this Court does not find any material to conclude that the Petitioner acted with mala fides or with an intent to stall or abuse the arbitral process. While the petition under Sections 14 and 15 of the Act may not have been the most appropriate remedy, the filing of the same cannot, by itself, be construed as evidence of abandonment or lack of diligence.”

Further, the Court relied upon the decision of the Supreme Court in Rohan Builders (India) Pvt. Ltd. v Berger Paints India Ltd. which held that courts retain the power to extend the mandate even after its expiry, provided sufficient cause is shown and the proceedings have not been abandoned.

Accordingly, the Court extended the arbitrator's mandate for a further period of six months from the date of the order for making the arbitral award.

For Petitioner - Mr. Rizwan, Ms. Sachi Chopra and Ms. Kriti, Advocates