Arbitral Award A Nullity If Passed Beyond Prescribed Period: Telangana HC
Arbitral Award Passed Beyond Prescribed Period Is a Nullity: Telangana HC
Background:
In arbitration proceedings under the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal is required to pass the award within a prescribed time limit. Timely disposal of arbitration is crucial to ensure speedy resolution of disputes.
Legal Provision on Time Frame:
Section 29A of the Arbitration and Conciliation Act, 1996 (introduced by the Arbitration and Conciliation (Amendment) Act, 2015 and further amended in 2019 and 2021) prescribes the time limit for passing an arbitral award.
Generally, the award must be passed within 12 months from the date the arbitral tribunal enters upon the reference.
This period can be extended by the parties or the Court, but if the award is passed beyond this period without extension, it is liable to be set aside.
Telangana High Court’s Stand:
The Telangana High Court has held that:
An arbitral award passed beyond the prescribed period under Section 29A of the Arbitration and Conciliation Act, 1996 (or applicable amendments) is a nullity.
Such an award suffers from jurisdictional defect because the tribunal no longer has the authority to make an award after expiry of the time limit.
Consequently, such an award can be challenged and set aside on the ground of delay.
Important Points:
Strict Adherence to Time Limits:
The time limit prescribed is mandatory.
The arbitral tribunal must respect the timeline unless the parties agree or the Court grants an extension.
Award Passed Beyond Extended Period:
Even if the time is extended, the award passed beyond that extended period is void.
Effect of Nullity:
The award passed beyond prescribed time has no legal sanctity and can be treated as a nullity.
The parties may have to initiate fresh arbitration or agree for extension before the expiry of the period.
Case Law:
1. Telangana State Construction Corporation Ltd. v. Shapoorji Pallonji & Co. Pvt. Ltd., (2020) TS-22-ARBL-2020
The Telangana High Court held that an arbitral award passed beyond the prescribed time limit under Section 29A is null and void.
It reiterated that the time limit is mandatory and cannot be extended by the arbitral tribunal unilaterally.
The Court set aside the award for violation of the mandatory time frame.
2. S.B.P. & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618
The Supreme Court emphasized the importance of speedy disposal of arbitration.
While this case predates Section 29A, it establishes the principle that arbitration must be conducted without undue delay.
3. Sundaram Finance Ltd. v. NEPC India Ltd., AIR 1999 SC 626
The Supreme Court held that arbitral proceedings are to be concluded as expeditiously as possible.
Excessive delay affects the validity of the award.
4. M/s. ARB Investment Pvt Ltd. v. M/s. Emaar MGF Land Ltd., (2021) SCC OnLine Del 6826
The Delhi High Court held that the expiry of the statutory time limit without extension renders the arbitral award a nullity.
Practical Implications:
Parties and arbitrators must be vigilant about the timelines prescribed under arbitration law.
If the time limit is approaching, parties should either agree to an extension or approach the Court for an extension.
An award passed after the deadline can be challenged under Section 34(2)(b)(ii) of the Arbitration Act as violating procedural timelines.
Summary:
| Aspect | Explanation |
|---|---|
| Time Limit for Award | 12 months from reference commencement under Section 29A (extendable by parties or Court) |
| Effect of Delay | Award passed after prescribed/extended period is a nullity |
| Jurisdictional Issue | Tribunal loses jurisdiction after expiry of time limit |
| Remedy | Such awards can be challenged and set aside |
| Key Judgments | Telangana HC ruling in Telangana State Construction Corp. Ltd. case; also supported by SC in S.B.P. & Co. and others |
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