Pandemic pause saved this arbitration from dying

The High Court said the deadline had passed. But the Supreme Court found a hidden 23-month gap nobody counted.

An arbitration that was all but dead in the Gujarat High Court — its mandate expired, its arbitrator powerless, the award impossible — came back to life in the Supreme Court in November 2024. The case, M/s Ajay Protech Pvt. Ltd. v. General Manager & Anr., turned on a simple question: when a pandemic froze the world for nearly two years, should the clock on an arbitration keep ticking?

When the contract went sour

A private company entered a works contract with a government entity. Like many such contracts, it had an arbitration clause — a pre-agreed mechanism to resolve disputes outside court through a private judge called an arbitrator. Disputes arose, and the company invoked arbitration in February 2018. The Gujarat High Court appointed a sole arbitrator in early 2019 under Section 11 of the Arbitration and Conciliation Act, 1996 (the provision that lets courts appoint an arbitrator when parties cannot agree on one).

The arbitrator got to work. Pleadings — the formal written statements where each side lays out its case — were completed by October 9, 2019. The arbitrator framed the issues to be decided and scheduled hearings for late 2019 and early 2020. Everything was on track.

The day everything stopped

Then COVID-19 struck. India went into one of the world's strictest lockdowns in March 2020. Courts shut down. Arbitrations stalled. The hearings scheduled for early 2020 never happened. The arbitrator's mandate — the legal authority to hear and decide the dispute — was governed by a strict timeline under Section 29A of the Arbitration Act.

Section 29A(1) gives an arbitrator 12 months from the completion of pleadings to deliver the award. That period can be extended by another six months under Section 29A(3) if both parties consent. After that, only a court can grant further extensions under Section 29A(4), and only if the applicant shows "sufficient cause" for the delay under Section 29A(5).

For the Ajay Protech arbitration, the 12-month clock started ticking on October 9, 2019. It should have expired in October 2020. But by then, the country was in the grip of a pandemic.

The Supreme Court's pandemic pause

The Supreme Court itself recognised the problem. In a landmark order called In re: Cognizance for Extension of Limitation, it declared that the period from March 15, 2020 to February 28, 2022 — a span of 23 months — would be excluded from all limitation periods (the legally fixed time limits within which actions must be taken). This applied to arbitration timelines under Section 29A as well.

When hearings finally resumed in 2022, the arbitrator and both parties worked quickly. The hearings concluded on May 5, 2023. Both parties agreed: they needed a court to formally extend the arbitrator's mandate so the award could be delivered. The company filed an extension application under Section 29A(4) in the Gujarat High Court in August 2023.

The High Court's arithmetic error

The Gujarat High Court dismissed the application. Its reasoning was straightforward and devastating: the arbitrator's mandate had expired years earlier, and the company had offered no justification for the delay in seeking an extension. The court computed the timeline from October 2019, added the 12-month statutory period and the six-month consensual extension, and concluded the mandate had died long ago. The application, filed in August 2023, was far too late.

What the High Court missed was the pandemic exclusion. It had not subtracted the 23 months that the Supreme Court had explicitly carved out. The clock should have been paused from March 2020 to February 2022, then restarted. When you do that arithmetic, the mandate was still alive when the hearings concluded in May 2023, and the August 2023 application was well within time.

Why the Supreme Court reversed

The company appealed to the Supreme Court. A bench of Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta heard the case and delivered judgment on November 22, 2024.

The Supreme Court identified two errors in the High Court's approach. First, the pandemic exclusion period had been completely ignored. "When computing the statutory period under Section 29A(1) and (3), the COVID pandemic exclusion period declared by the Supreme Court must be excluded," the bench held. "Any assessment of delay must be reckoned only from the reconstituted expiry date."

Second, the court clarified that an application under Section 29A(4) can be filed even after the mandate has expired. The provision explicitly empowers the court to extend the period "either prior to or after the expiry of the period so specified." The Supreme Court had already settled this point in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., decided earlier in 2024.

What "sufficient cause" means after a pandemic

The court also addressed the "sufficient cause" requirement under Section 29A(5). The High Court had found no justification for the delay. The Supreme Court disagreed. The delay was substantially attributable to an extraordinary circumstance — a global pandemic that shut down the entire legal system. The hearings had been concluded. Both parties had mutually agreed to seek an extension. Under these facts, sufficient cause was clearly established.

"The expression 'sufficient cause' must take colour from the underlying purpose of the arbitration process — facilitating effective dispute resolution through the agreed mechanism," the bench observed.

The Supreme Court set aside the High Court's order and extended the arbitrator's mandate until December 31, 2024 — giving the tribunal just over a month to deliver the award that had been stalled for nearly five years.

The parties were directed to bear their own costs.

THE PLAY: When computing limitation under Section 29A of the Arbitration Act, always subtract the Supreme Court's pandemic exclusion period (March 15, 2020 to February 28, 2022) before determining whether the mandate has expired.

The award was due by New Year's Eve. The clock, finally, was running again.