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Tata Sons Pvt. Ltd. (formerly Tata Sons Ltd.) vs Siva Industries and Holdings Ltd. & Ors.

Not available · 2023 INSC 13Decided 5 Jan 2023
Not available
Dr. Dhananjaya Y. Chandrachud · Pamidighantam Sri Narasimha

Background

Tata Sons, Siva Industries and its promoter C. Sivasankaran (a resident of Seychelles) were parties to an "inter se" agreement connected with NTT Docomo's shareholding in Tata Teleservices; when Docomo exercised its sale option and won an arbitration award against Tata Sons, Tata Sons called on Siva Industries to proportionately buy back the shares, which it did not do. Tata Sons invoked arbitration and, since one party was foreign, the Supreme Court appointed Justice S.N. Variava (retired) as sole arbitrator in January 2018. The parties had consented to a six-month extension beyond the original 12 months, taking the deadline for the award to 14 August 2019, but in July 2019 the NCLT admitted Siva Industries into insolvency and imposed a moratorium that stalled the arbitration. Tata Sons then applied to the Supreme Court for an extension of the arbitrator's mandate; after the insolvency proceedings ended in June 2022, it also argued that under the amended Section 29A no extension was needed at all.

Decision Breakdown

The Court compared Section 29A before and after the 2019 amendment (effective 30 August 2019) and held that the amended Section 29A(1) expressly applies the mandatory 12-month deadline only to "matters other than international commercial arbitration"; for international commercial arbitrations the proviso merely says the award "may be made as expeditiously as possible" and an "endeavour may be made" to finish within 12 months of completion of pleadings, which is directory, not mandatory. The Court traced this to the Justice B.N. Srikrishna Committee report, which found that rigid court-monitored timelines had made international arbitral institutions wary of India-seated arbitrations, and concluded the legislature deliberately took such arbitrations out of the timeline regime, including the court-extension mechanism in sub-sections (3) and (4). On the question of retrospectivity, it noted that the 2019 Amendment Act, unlike the 2015 Act, contains no provision restricting it to future proceedings, and that the amended provision is remedial and creates no new rights or liabilities, so it applies to all arbitrations pending on 30 August 2019. It approved the Delhi High Court's line of decisions in Shapoorji Pallonji and ONGC Petro Additions to the same effect. The applications were allowed: the sole arbitrator himself is competent to decide on any further extension of time and should endeavour to conclude the arbitration expeditiously.

Lesson Learnt

After the 2019 amendment, the strict 12-month deadline (with court-approved extensions) for arbitral awards applies only to domestic arbitrations; in an international commercial arbitration seated in India the tribunal manages its own timeline and need not approach a court for extensions. A remedial procedural amendment that creates no new rights or liabilities generally applies to pending proceedings too.

Official source (sci.gov.in)View Judgment (PDF)

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