What is distinction between substantive and procedural law?

Mr. Dada, argued that the amendment to Section 36
affects the substantive right of an award-debtor and hence it must
take prospective effect. He refers to the decision of the Apex Court
in Thirumala Chemicals Ltd. V/s. Union of India and Ors. reported in
(2011) 6 SCC page 739 to support his submission. In that decision,
the question considered was, whether the Appellate Tribunal
constituted under the Foreign Exchange Management Act (“FEMA”
for short) was right in dismissing an appeal preferred under Section
19(1) of FEMA by applying the first proviso to Section 52(2) and
Foreign Exchange Regulation Act, 1973 (“FERA” for short) holding
that, it had no power to condone the delay beyond 90 days. Although

the cause of action had arisen when FERA was in force, show cause
notices and impugned notices were issued, when FEMA was imposed
and appeals were also preferred under Section 19(1) of FEMA. The
Apex Court, in that decision considered, the distinction between
substantive and procedural law at paras-23 to 27. The same reads as
under :-
“23. Substantive law refers to a body of rules that
creates, defines and regulates rights and liabilities.
Right conferred on a party to prefer an appeal against
an order is a substantive right conferred by a statute
which remains unaffected by subsequent changes in
law, unless modified expressly or by necessary
implication. Procedural laws establishes a mechanism
for determining those rights and liabilities and a
machinery for enforcing them. Right of appeal being a
substantive right always act prospectively. It is trite
law that every statute is prospective unless it is
expressly or by necessary implication made to have
retrospective operation.
24. Right of appeal may be a substantive right but
the procedure for filing the appeal including the
period of limitation cannot be called a substantive
right, and an aggrieved person cannot claim any
vested right claiming that he should be governed by
the old provision pertaining to period of limitation.
Procedural law is retrospective meaning thereby that
it will apply even to acts or transactions under the
repealed Act.
25. Law on the subject has also been elaborately
dealt with by this Court in various decisions and
reference may be made to a few of those decisions.
This Court in Garikapati Veeraya v. N. Subbiah
Choudhry, reported in AIR 1957 SC 540, New India
Insurance Co. Ltd v. Shanti Misra,reported in (1975)

2 SCC page 840, Hitendra Vishnu Thakur v. State of
Maharashtra, reported in (1994) 4 SCC page 602,
Maharaja Chintamani Saran Nath Shahdeo v. State
of Bihar, reported in (1999) 8 SCC page 16 and
Shyam Sunder v. Ram Kumar, reported in (2001) 8
SCC page 24, has elaborately discussed the scope and
ambit of an amending legislation and its
retrospectivity and held that every litigant has a
vested right in substantive law but no such right exists
in procedural law. This Court has held that the law
relating to forum and limitation is procedural in
nature whereas law relating to right of appeal even
though remedial is substantive in nature.
26. Therefore, unless the language used plainly
manifests in express terms or by necessary implication
a contrary intention a statute divesting vested rights is
to be construed as prospective, a statute merely
procedural is to be construed as retrospective and a
statute which while procedural in its character, affects
vested rights adversely is to be construed as
prospective.
27. Rights of appeal conferred under Section 19(1) of
FEMA is therefore a substantive right. The procedure
for filing an appeal under sub-section (2) of Section 19
as also the proviso to sub-section (2) of Section 19
conferring power on the Tribunal to condone delay in
filing the appeal if sufficient cause is shown, are
procedural rights.”

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

CHAMBER SUMMONS NO.1530 OF 2015
IN
EXECUTION APPLICATION (L) NO.2481 OF 2015
IN
ARBITRAL AWARD DATED 22ND JUNE, 2015
In the matter between :
M/s Rendezvous Sports World 
Vs.
The Board of Control for Cricket 
in India
Coram : Smt. R.P. SondurBaldota, J.
Date : 14th June, 2016.


1 This is a common order on the above three Chamber
Summonses seeking dismissal of the applications for execution of
Arbitral awards on the ground that the same are misconceived and
not maintainable. The applicant in the first two Chamber Summonses
and the judgment debtor in the concerned execution applications is
the Board of Control for Cricket in India (“BCCI” for short). It has
filed applications under Section 34 of the Arbitration and Conciliation
Act (“Arbitration Act” for short) to challenge the very arbitral awards.
The applicants in the third Chamber Summons are the judgment
debtors under the arbitral award dtd 28th January, 2015 and the
respondent thereto is the award holder.
2 The first Chamber Summons No.1530 of 2015 arises out of
the arbitral award dtd. 22nd June, 2015 made in favour of M/s
Rendezvous Sports World (“RSW” for short) in the sum of
Rs.1,53,34,00,000/- along with interest and costs of the arbitral
proceedings of Rs.50,00,000/-. The second Chamber Summons No.
1532 of 2015 arises out of the arbitral award of the same date i.e. 22nd
June, 2015 made in favour of Kochi Cricket Private Limited (“KCPL”
for short) in the sum of Rs.3,84,83,71,842/- along with interest and
costs of the arbitral proceedings of 72,00,000/-. The third Chamber
Summons arises out of the arbitral award dtd. 28th January, 2015 as
amended on 16th February, 2015 between Global Asia Venture
Company and Reach (Cargo Movers) Pvt. Ltd. and others.
3 On 16th September, 2015, the BCCI challenged both the
awards by filing Arbitration Petition (L) No. 1844 of 2015 against
RSW and Arbitration Petition (L) No. 1843 of 2015 against KCPL and
sent intimations dtd. 21st September, 2015 to them of filing of the
petitions. The service of the arbitration petitions was however done
on 4th December, 2015. Reach Cargo has filed Arbitration Petition No.
1220 of 2015, which was admitted on 19th October, 2015. In the
meantime i.e. on 23rd October, 2015, the Arbitration and Conciliation
(Amendment) Ordinance, 2015 (No.9 of 2015) (Arbitration
Ordinance) was promulgated by the President of India. It was
published in the official Gazette on 23rd October, 2015 and came into
force from that date. On 17th December, 2015 and 23rd December,
2015, the Arbitration and Conciliation (Amendment) Bill, 2015 (Bill)
was passed by the Lok Sabha and Rajya Sabha respectively. The Bill
received assent of the President of India on 31st December, 2015 and
was notified as the Arbitration and Conciliation (Amendment) Act,
2015 (“Amending Act” for short) on 1st January, 2016.
4 One of the major amendments to the Arbitration Act is
amendment to Section 36. By the amendment, the entire Section 36
stands repealed and replaced by a new Section 36. Section 36 as it
stood prior to the amendment and as it stands today read as follows:
Pre-amendment.
“36 ENFORCEMENT :-
Where the time for making an application to set
aside the arbitral award under Section 34 has expired,
or such application having been made, it has been
refused, the award shall be enforced under the Code of
Civil Procedure, 1908 (5 of 1908) in the same manner
as if it were a decree of the Court.
Post-amendment:
36 ENFORCEMENT :-
(1) Where the time for making an application
to set aside arbitral award under Section 34 has
expired, then, subject to provisions of Sub-section (2),
such award shall be enforced in accordance with the
provisions of the Code of Civil Procedure, 1908, in the
same manner as if it were a decree of the Court.
(2) Where an application to set aside the
arbitral award has been filed in the Court under
Section 34, the filing of such application shall not by
itself render the award unenforceable, unless the Court
grants an order of stay of operation of said arbitral
award in accordance with the provisions of sub-section
(3 ), on separate application made for that purpose.
(3) Upon filing of an application, under subsection
(2) for stay of operation of the arbitral award,
the Court may subject to such conditions as it may
deem fit, grant stay of the operation of such award for
reasons to be recorded in writing:
Provided that the Court shall, while considering
the application for grant of stay in the case of an
arbitral award for payment of money, have due regard
to the provisions for grant of stay of a money decree
under the provisions of Code of Civil Procedure, 1908.
In the affidavit-in-support of the Chamber Summons, the BCCI
contends that, the applications under Section 34 of the Arbitration
Act to challenge the two arbitral awards having been filed by it, prior
to promulgation of the Arbitration Ordinance, the same would be
governed by Section 36 of the Arbitration Act, prior to it's
amendment. Therefore, the two arbitral awards will become
enforceable against it, only if and when, the petitions under Section
34 are refused and not otherwise. According to it, a substantive right
has accrued to it under Section 34 read with Section 36 of the Preamendment
Arbitration Act of protection against execution of the
awards during pendency of the applications under Section 34. Denial
of this protection would result into grave and irreparable injury to it.
The Chamber Summonses are contested by RSW and KPCL
contending that the applications under Section 34 of the Arbitration
Act filed by BCCI would be governed by the Arbitration Act as
amended by the Arbitration Ordinance.
5 If the Amended Act is held applicable, after expiry of
three months from the date of the arbitral award, it becomes
enforceable in accordance with provisions of the Civil Procedure
Code, irrespective of whether a challenge has been filed under section
34 of the Act or not. Section 36(2) of the Amended Act requires the
judgement-debtor to move a separate application, specifically seeking
stay of operation of the award in case it wishes to seek a stay of the
execution proceedings. Under section 36(3), if the Court is inclined to
grant stay of operation of the award, it has to record reasons in
writing and also have due regard to the provisions for grant of stay of
a money decree under the Civil Procedure Code. On the other hand if
the Amendment Act is held not applicable, the judgement-debtor will
continue to enjoy the protection against execution during the
pendency of the application under section 34 of the Arbitration Act.
6 The learned counsel appearing for both the sides to the
Chamber Summonses advanced extensive submissions on the
question whether the amendment under the Amendment Act to
Section 36 of the Arbitration Act, applies to the petitions under
Section 34 of the Act, already filed and pending as on the date of the
amendment. But thereafter it was felt that since the question of law
under consideration, has wider implications and since there are other
similar applications pending for consideration of the court, it would
be only appropriate to give an opportunity to the Counsel and parties
in person concerned, in similar applications, a hearing on the
question of law. Therefore, the hearing of the Chambers Summonses
was postponed and the office was directed to notify on the board of
the Cause List, the question of law under consideration for the benefit
of the members of Bar. Pursuant to that notice, the parties to
Chamber Summons (L) No. 2336 of 2015 in Execution Application (L)
No. 2748 of 2015, in Award dtd. 28th January, 2015, as amended on
16th February, 2015, appeared through their Counsel and made
submissions on the question. Mr. Gaurav Joshi, the learned Senior
Counsel appeared for the Respondent and Mr. Sharon Jagtiani for the
Applicant in the Chamber Summons.
7 The Arbitration Ordinance did not contain any saving
section. Consequently the initial submissions on the Chambers
Summonses were essentially based upon the general propositions as
regards the nature of the statutory amendments i.e. whether
prospective or retrospective. However, when the Arbitration
Ordinance was converted into Arbitration Amendment Act, with
insertion of Section 26 as the saving section, further submissions had
to be advanced in the matter, on interpretation and effect of Section
26 of the Amending Act. Accordingly, further submissions of all the
counsel were heard.
8 The Saving Section 26 of the Amending Act reads as
follows: :
“26. Nothing contained in this Act shall apply to
the arbitral proceedings commenced, in accordance
with the provisions of Section 21 of the principal
Act, before the commencement of this Act unless the
parties otherwise agree but this Act shall apply in
relation to arbitral proceedings commenced on or
after the date of commencement of this Act”.
Section 26 is seen to consist of two parts. The first part provides that
nothing contained in the Amendment Act shall apply “to the arbitral
proceedings commenced in accordance with Section 21 of the
Principal Act” before the commencement of the Amendment Act i.e.
prior to 23rd October, 2015, unless the parties agree otherwise. The
second part provides that the Amendment Act shall apply “in relation
to arbitral proceedings commenced on or after the date of
commencement of the Amendment Act” i.e. 23rd October, 2015. The
term “arbitral proceedings” has a specific meaning and duration
under the Arbitration Act, since the date of commencement of the
proceedings and the date of termination of the proceedings have been
specifically provided for. Under Section 21 of the Arbitration Act,
unless otherwise agreed by the parties, the arbitral proceedings in
respect of particular dispute commenced on the date on which a
request for that dispute to be referred to arbitration is received by the
respondent. Section 32(1) of the Arbitration Act provides that the
arbitral proceedings shall be terminated by the final award or by an
order of arbitral Tribunal under Sub-Section 2. Therefore, the term
“arbitral proceedings” would not include post-award proceedings i.e.
proceedings for enforcement of the arbitral award or proceedings to
challenge the arbitral award, which arise only after the award is made.
It would also not include the proceedings prior to the commencement
of arbitral proceedings. There is no dispute between the parties as
regards the specific meaning of the term arbitral proceedings under
the Arbitration Act.
9 The two parts of saving section 26 use different
expressions to describe the proceedings to which they are meant to
apply. The description in the first part is “to arbitral proceedings” and
the description used in the second part is “in relation to arbitral
proceedings.” As regards the construction, interpretation and
meaning of the phrase used in the second part there is and there can
be no dispute between the parties. Besides, that has been the specific
subject of discussion of the Apex Court in it's decision in Thyssen
Stahlunion Gmbh vs. Steel Authority of India Ltd. reported in (1999)
9 SCC, page 334 case, when the identical phrase used in Section 85(2)
(a) of the Arbitration Act was discussed. At para-22.2 of the decision,
the Apex Court interprets the phrase in following words :-
22 For the reasons to follow, we hold:
1........
2 The phrase “ in relation to arbitral proceedings”
cannot be given a narrow meaning to mean only
pendency of the arbitration proceedings before the
arbitrator. It would cover not only proceedings
pending before the arbitrator but would also cover the
proceedings before the court and any proceedings
which are required to be taken under the old Act for
the award becoming a decree under Section 17 thereof
and also appeal arising thereunder.”
10 The first part of saving Section 26 uses the phrase “to
arbitral proceedings” which will have to be interpreted differently. It
carries a restrictive meaning i.e. the proceedings before the arbitral
tribunal, which proceedings get terminated with passing of the final
award. There is no dispute between the parties about this restrictive
meaning also. The dispute is about the effect of the use of the
restrictive phrase or expression. According to the applicants awarddebtors,
the use of the restrictive phrase renders the saving Section 26
non-exhaustive and therefore aid of Section 6 of the General Clauses
Act has to be taken. Whereas according to the respondents- award
holders, the use of restrictive phrase is not on account an inadvertent
omission or lapse, but it is a deliberate and intentional omission so as
to deliberately keep certain matters i.e. the proceedings post- final
award, outside the saving from application of the Amendment Act. In
that circumstance, by necessary implication, the saving Section
becomes exhaustive i.e. it takes within it's fold all different types of
proceedings arising out of the Arbitration Act.
11 Mr. Dada submitted that, since the first part of Section 26
of the Amendment Act does not provide for the post-award
proceedings, the section is necessarily non-exhaustive. In such
circumstances, according to him, Section 6 of the General Clauses Act
becomes applicable. The relevant provision of Section 6 of the General
Clauses Act reads as under:
“6 Effect of Repeal---
Where this Act, or any [Central Act] or Regulation
made after the commencement of this Act, repeals
any enactment hitherto made or hereafter to be
made, then, unless a different intention appears, the
repeal shall not--
(a) ...........
(b) ............
(c) affect any right, privilege, obligation or
liability acquired, accrued or incurred under any
enactment so repealed; or
(d) .............
(e) affect any investigation, legal proceedings or
remedy in respect of any such right, privilege,
obligation, liability, penalty, forfeiture or
punishment as aforesaid;
and any such investigation, legal proceedings or
remedy may be instituted, continued or enforced,
and any such penalty, forfeiture or punishment may
be imposed as if the repealing Act or Regulation
had not been passed.”
12 Mr. Dada argued that the decision of the Apex Court in
Commissioner of Income Tax, U.P. vs. M/s Shah Sadiq and Sons,
reported in (1987) 3 Supreme Court Cases, page 516 is authority for
the proposition that a savings provision is not exhaustive of the rights
that are saved and just because a right is not expressly saved by the
saving provision, it does not mean that such right stands
extinguished. A non-exhaustive savings clause leaves it to Section 6
of the General Clauses Act to determine which additional rights are
saved. According to him, unless a repealing statute expressly
extinguishes a vested right or expressly affects a pending legal
proceedings under the repealed statute, the accrued vested right, or
legal proceeding is not affected. Since neither part of the Section 26
expressly deals with post-award proceedings and appeals arising
therefrom in respect of arbitration proceedings commenced prior to
23rd October, 2015, the general law in relation to repeal would be
applicable.
13 Mr. Dada, while acknowledging the position that Section 6
of the General Clauses Act provides for “Effect of repeal” and the fact
that the Arbitration Amendment Act, does not repeal the Arbitration
Act, submitted that the same should not affect applicability of Section
6 of the General Clauses Act to Section 26. He argued that, by Section
19 of the Amendment Act, there is substitution of Section 36 of the
unamended Act by Section 36 of the amended Act. The substitution
of the Section would amount to, according to him, repeal of Section
36 and partial repeal of the Arbitration Act. On the subject of partial
repeal of a statute, Mr. Dada relies upon decisions of the Apex Court
in the case of (i) G. Ekambarappa and Others Vs. Excess Profits Tax
Officer, Bellary, reported in AIR 1967 Supreme Court page 1541 and
(ii) The State of Tamil Nadu and Others Vs. K. Shyam Sunder and
Others reported in (2011) 8 Supreme Court Cases, page 327. In the
facts of Ekambarappa's case, the appellants carried on business in
partnership in Bellary Town and the partners were also residents of
Bellary Town during the period the firm was carrying on business.
Later, the firm stood dissolved. The Bellary District was a part of old
Madras State which was a “Part-A” State under the Constitution of
India till its merger with the Mysore State on 1st October, 1953 which
was a part “B State”. When the Excess Profits Tax Act was first
promulgated, it was extended to the territory of former British India.
After the Constitution came into force, the Act was adapted so as to
extend the operation of the Act to the whole of India, except, “Part-B”
States by Adaptation of Laws Order, 1950. The result of the
adaptation was that, all the provisions of The Excess Profits Tax Act,
stood repealed so far as the District of Bellary was concerned w.e.f.
31st December, 1956. It was contended on behalf of the appellants
before the Apex Court that, it was not a case of repeal of The Excess of
Profits Tax Act, 1940 and that the Adaptation of Laws Order, 1956
only modified the provisions of Section 1(2) of the Act and the effect
of modification was that, the provisions of the Act, was no longer
applicable to Bellary District which was comprised in the territory of
“Part-B” State of Mysore. The Apex Court, rejected the contention
opining that, there was no justification for the argument put forth.
The result of the Adaptation of the Laws Order, 1956, so far as the Act
was concerned, was that, the provisions of that Act were no longer
applicable or in force in Bellary District. Thus, there was revocation
or abrogation of the Act which amounted to repeal and Section 6 of
the General Clauses Act, applied even in the case of a partial repeal or
repeal of part of Act. In Shyam Sundar's case, the Apex Court
referred to its earlier decision in State of Rajasthan V/s. Mangilal
Pindwal,reported in (1996) 5 Supreme Court Cases page 60 to observe
that substitution of a provision results in repeal of the earlier
provision and its replacement by the new provision.
14 Applying the principle in the above two decisions of the
Apex Court, Mr. Dada submits that, substitution or replacement of
Section 36 of the Arbitration Act, by the Arbitration Amendment Act
amounts to repeal of Section 36 and therefore the provision of Section
6 of the General Clauses Act, which operates in the situation of repeal
of a Statute, becomes effective and applicable.
15 In view of the two clear decisions cited and even
otherwise, I am inclined to agree with Mr. Dada that, substitution of
Section 36 of the Arbitration Act by Section 36 of the Arbitration
Amendment Act, amounts to repeal of Section 36 and part repeal of
the Arbitration Act. However, that by itself will not be sufficient to
attract the provision of Section 6 of the General Clauses Act to it since
it becomes applicable only in the absence of a different intention
appearing in the repealing Act. In other words, if the provision
inadvertently or erroneously leaves something unattended to, the
general provision of the General Clauses Act needs to be resorted to.
If the Saving Section is seen to take within it's fold, all types of
proceedings either expressly or by necessary implication, there can be
no resort to the General Clauses Act.
16 Mr. N.H. Seervai, the learned Senior Counsel appearing
for KCPL submitted on the other hand, that, the Saving Section 26 of
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the Amending Act, in fact is very clear and complete in itself and does
not need aid of the General Clauses Act. According to him, on a bare
reading of Section 26 of the Amending Act, it is ex-facie clear that the
provisions of substituted Section of 36 of the Arbitration Act are
applicable in cases where a petition under Section 34 of the
Arbitration Act has been filed before 23rd October, 2015. He refers to
the use of the phrase “to the arbitral proceedings” in the first part of
Section 26 in contradistinction to use of the phrase “in relation to
arbitral proceedings” in the second part. He argued that, this
language deliberately employed by Section 26 of the Amendment Act
would mean that it is only the arbitral proceedings, themselves i.e. the
proceedings before the Arbitrator, which have commenced prior to
23rd October, 2015, that have been kept out of the applicability of the
amendments made by the Amending Act to the Arbitration Act.
Therefore, by necessary implication, the amendments made will apply
to the proceedings other than the arbitral proceedings under the
Arbitration Act, even though the said proceedings may have
commenced prior to 23rd October, 2015. This submission was
adopted by Mr. Darius Khambhata, the learned Senior Counsel for
RSW and Mr. Sharon Jagtiani for respondent in the third Chamber
Summons.
17 The decision of Shah Sadiq's case relied upon by Mr. Dada
arose out of repeal of Income Tax Act, 1922 by Income Tax Act, 1961.
In the facts of that case, the assessee, a registered firm, suffered losses
in Assessment Years 1960-61 and 1961-62 but made profit in 1962-63
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in speculation business. In the assessment proceedings for 1962-63,
the assessee claimed that the losses suffered in the previous years
should be set off against the profit made in the succeeding year in
view of Section 24(2) of the 1922 Act. The ITO rejected the claim by
applying Section 75(2) of the 1961 Act. The 1961 Act, which came into
operation on 1st April, 1962 did not provide for such a right. It
provided an entirely new scheme under Section 75. The decision of
the ITO was carried further to the higher courts. The Apex Court held
that “the right given to the assessee for the year 1961-62 under
Section 24(2) of 1922 Act was an accrued right and a vested right. It
could have taken away expressly or by necessary implications. This
was not done so by Section 297, the savings Section of 1961 Act. Thus
the savings clause under Section 297 of the 1961 Act was held not
exhaustive of the rights which were saved or which survived the
repeal of the statute under which, such rights had accrued. The Apex
Court held that whatever rights are expressly saved by the “saving”
provisions stand saved. But that does not mean that the rights that
are not saved by the savings provisions are extinguished or stand ipso
facto terminated. The rights which are accrued are saved unless they
are taken away expressly. Section 6 (c) of the General Clauses Act
saves accrued rights unless they are taken away by the repealing
statute.
18 The Apex Court in Shah Sadiq's case does not lay down an
absolute proposition that a right or legal proceedings must be
expressly saved or taken away by the saving provision. At para 15 of
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the decision, the Apex Court held that in the case before it, the
savings provision in the repealing statute was not exhaustive of the
rights, which are saved and which survive repeal of the statute under
which such rights had accrued. It does not rule out the possibility of
repeal by necessary implication. In fact this is recognised also by
Section 6 of the General Clauses Act, which is applicable only when “a
different intention” does not appear from the Act. It is, therefore
necessary, to see whether a different intention can be said to appear
from the section of not saving the post-award proceedings filed prior
to 23rd October, 2015.
19 The first test to determine that, would be the language of
the section. The intention of the legislature is primarily to be gathered
from the language used. The statute must be read as it is. This means
attention must be paid to what has been said as also to what has not
been said. Whether the omission in the first part is conscious and
deliberate or whether it is inadvertent, unintentional, erroneous is to
be seen. Unless indicated otherwise, the language of the provision i.e.
use of a specific word or phrase or expression must be held to be
deliberate and conscious. The Legislature must be presumed to know
what it is doing and transacting it's business correctly. Therefore, use
of restrictive phrase in the first part in contradistinction to the use of
wider phrase in the second part of Section 26 must be held to be
intentional and with specific purpose i.e. to restrict the saving to
“arbitral proceedings” and anything that falls outside “arbitral
proceedings” is not saved.
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20 The decision in Thyssen's case has been referred to by
both sides for interpreting the phrase “in relation to”. In order to
correctly appreciate the decision, it is necessary to notice the facts of
that case. Thyssen had filed a petition in Delhi High Court under
Sections 14 and 17 of the Arbitration Act, 1940 for making award rule
of the court. Upon receiving notice of the petition, the respondent,
Steel Authority of India had filed objections to the award under
Section 30 of the Act. Thyssen later changed the stand and filed an
application for execution of the award under the new Arbitration Act,
1996. By then, the time limit to set aside the award under the new Act
had elapsed. The ground taken by Thyssen was that the Arbitration
proceedings had been terminated with the making of the award on
24th September, 1997 and therefore the new Arbitration Act, 1996 was
applicable for enforcement of the award. The respondent opposed the
maintainability of the Execution Application. In these facts, the Apex
Court was required to consider the question “whether the award
would be governed by the new Act for it's enforcement or whether
provisions of the old Act would apply. For that purpose, the Apex
Court considered Section 85 of the new Act, which was for repeal and
savings. It noticed that the relevant Section 85(2)(a) of the new Act is
in two limbs: (i) provisions of the old Act shall apply in relation to
arbitral proceedings, which commenced before the new Act came into
force unless otherwise agreed by the parties and (ii) a new Act shall
apply in relation to arbitral proceedings which commenced on/or
after the new Act came into force. It further bifurcated the first limb
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into (a) provisions of the old Act shall apply in relation to arbitral
proceedings commenced before the new Act came into force and (b)
the old Act will not apply in such cases where the parties agree that it
will not apply in relation to arbitral proceedings which commenced
before the new Act came into force. It then interpreted the expression
“in relation to” in following terms :
“23. …...The expression “in relation to” is of the
widest import as held by various decisions of this
Court in Daypack Systems (P) Ltd. (1988) 2 SCC 299,
Mansukhlal Dhanraj Jain (1995) 2 SCC 665,
Dharajamal Gobindram, AIR 1961 SC 1285 and
Navin Chemicals Mfg, (1993) 4 SCC 320. This
expression “in relation to” has to be given full effect to,
particularly when read in conjunction with the words
“the provisions” of the old Act. That would mean that
the old Act will apply to the whole gambit of
arbitration culminating in the enforcement of the
award. If it was not so, only the word “to” could have
sufficed and when the legislature has used the
expression “in relation to”, a proper meaning has to be
given. This expression does not admit of restrictive
meaning. The first limb of Section 85(2)(a) is not a
limited saving clause. It saves not only the proceedings
pending at the time of commencement of the new Act
but also the provisions of the old Act for enforcement
of the award under that Act”.
It held that in this view of the matter, Section 6 of the General Clauses
Act would be inapplicable. The other relevant factor that had weighed
with the Apex Court while interpreting Section 85 2(a) was that, the
two Acts i.e. the old Arbitration Act, 1940 and the new Arbitration
Act, 1996 were vastly different from each other. There was a total
regime change from the old Act and it's substitution with the new Act.
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The total regime change would present serious practical difficulties in
relation to the arbitral proceedings commenced under the old Act.
The observations of the Apex Court in this regards are :
27. “But then if the construction of the new Act
leads to inconvenient and unjust results, the concept
of a purposive approach has to be shed. Multiple and
complex problems would arise if the award given
under the old Act is said to be enforced under the new
Act. Both the Acts are vastly different to each other. It
has been rightly contended that when arbitration
proceedings are held under the old Act, the parties and
the arbitrator keep in view the provisions of that Act
for the enforcement of the award. As noted above,
under the old Act, there is no requirement for the
arbitrator to give reasons for the award. That is not
mandatory under the new Act. Section 27 of the old
Act provides that the arbitrator or umpire may, if they
think fit, make an interim award, unless of course a
different intention appears from the arbitration
agreement. An interim award is also an award and can
be enforced in the same way as the final award. It
would certainly be a paradoxical situation it for the
interim award, though given after the coming into
force of the new Act, it would still be the old Act which
would apply and for the final award, it would be the
new Act. Yet another instance would be when under
Section 13 of the old Act, the arbitrators or umpire
have power to state a special case for the opinion of
the court on any question of law involved in the
proceedings. Under sub-section (3) of Section 14 of the
old Act when the court pronounces its opinion thereon
such opinion shall be added to and shall form part of
the award. From this part of the award no appeal is
maintainable under Section 39 of the old Act. There is
no such provision under the new Act.”
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21 Mr. Seervai while making extensive submissions on
Thyssen's case has relied upon decision of Madras High Court in New
Tirupur Area Development Corporation vs. Hindustan Construction
Company Ltd. (A. No.7674 of 2015 in O.P. No.931 of 2015 – judgment
dated January 27, 2016) (“New Tirupur”), with a submission that
Madras High Court has, in it's decision highlighted the difference
between the language of Section 85(2)(a) of the Arbitration Act and
the saving Section 26 of the Amending Act. According to him, the
discussion in Thyssen's case also supports his arguments as regards
the meaning to be given to the phrase “to arbitral proceedings”.
22 In the New Tirupur's case, the petitioner after filing the
Arbitration Petition had filed an application for stay of the impugned
award in view of Section 36(2) of the Arbitration Ordinance. Later he
took a stand that by virtue of introduction of Section 26 in the
Amendment Act, which was also deemed to have come into force on
23rd October, 2015. Section 36(2) of the Arbitration Ordinance, which
stipulated a condition of filing a separate application for stay has been
taken away. According to the petitioner, the unamended provision of
Section 36 of the Principal Act alone was applicable to the case on
hand. The Madras High Court considered Section 26 of the
Amendment Act, in comparison with Section 85(2)(a) of the
Arbitration Act, several decisions cited before it and held as follows:
“58 In Section 85(2) of the Principal Act, 1996, the
positive legislature intent is to apply the provisions of
the said enactments (Repealed), “in relation to arbitral
proceedings” which commenced before 1996 Act, is
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clear. The expression, “in relation to” is incorporated
in Section 85(2) of the Principal Act, 1996. In
contrast, Section 26 of the Amendment Act, deemed to
have come into effect from 23rd October, 2015, the
expression “in relation to” has been deleted. The
Legislature has also not incorporated the words,
“Court proceedings” in Section 26 of the Amendment
Act”.
and
“67 When the legislature has expressly omitted the
words in relation to arbitration proceedings in Section
26 of the Act, there is no scope for the Court to
innovate or take upon the task of amending or altering
the statutory provision. The structure and scope of the
Arbitration and Conciliation Act, 1996 (Principal Act),
has been amended, by incorporating new provisions
by way of substitution and deletion”.
23 The observations of the Apex Court in Thyssen's case on
the possibility of use of the word “to” in the place of the words “in
relation to” can be reversed and applied to the facts of the present
case without disturbing the underlying principle. If the legislature
desired to give wider scope to the first part of the Saving Section 26, it
would have used the same expression as in the second part i.e. “in
relation to” instead of “it”. In the circumstances by the necessary
implication, the Section becomes exhaustive i.e. it covers within it's
fold all the different proceedings arising out of the Arbitration Act.
24 The deliberate intention of omission can be inferred, also
from the context of introduction of Section 26 in the Amending Act
and the context of the amendments to Section 36 of the Arbitration
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Act. It is significant to note that Report No. 246 of the Law
Commission of India that recommended amendments to the
Arbitration Act had recommended introduction of Section 85(A) tilted
“Transitory Provisions” to the Arbitration Act. Section 85(A) had
provided for prospective application of the Amending Act with three
exceptions which exceptions read as follows :
“(a) the provisions of section 6-A shall apply to all
pending proceedings and arbitrations.
Explanation : It is clarified that where the issue of
costs has already been decided by the court/tribunal,
the same shall not be opened to that extent.
(b) the provisions of section 16 sub-section (7) shall
apply to all pending proceedings and arbitrations,
except where the issue has been decided by the
court/tribunal.
(c) the provisions of second proviso to section 24
shall apply to all pending arbitrations.”
The Legislature had consciously dropped this recommendation from
the Arbitration Ordinance. As rightly pointed out by Mr. Seervai had
Section 85(A) been included in the Amending Ordinance or the
Amending Act the amended Section 36 may not have been made
applicable to post-award proceedings. Even when later, a saving
provision came to be introduced in the Amending Act it was not in
terms of recommended Section 85(A) but in the form of Section 26.
In stead of almost all pervasive saving clause at recommended Section
85(A) a limited or restricted saving clauses at Section 26 is
introduced. This would mean that the omission of all proceedings
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except “arbitral proceedings” from the first part of Saving Section 26
is conscious and deliberate which implies that the amended
provisions would apply to such proceedings.
25 The second context is the context of amendments to
Section 36 itself. The original Section 36 imposed a disability upon a
successful award-holder from enforcing the award during the
pendency of the applications under Section 34 of the Arbitration Act.
This prevented the award-holder from enjoying the fruits of his
success merely because the unsuccessful award-debtor filed an
application to challenge the award. As pointed out by Mr.
Khambhata, this position of law was adversely commented on by the
Supreme Court in National Aluminium Co. Ltd. v. Pressteel &
Fabrications (P) Ltd. (2004) 1 SCC 540 in the following words :
“However, we do notice that this automatic suspension
of the execution of the award the moment an
application challenging the said award is filed under
Section 34 of the Act leaving no discretion in the court
to put the parties on terms, in our opinion, defeats the
very objective of the alternate dispute resolution
system to which arbitration belongs. We do find that
there is a recommendation made by the concerned
Ministry to the Parliament to amend section 34 with a
proposal to empower the civil court to pass suitable
interim orders in such cases. In view of the urgency of
such amendment, we sincerely hope that necessary
steps would be taken by the authorities concerned at
the earliest to bring about the required change in law.”
This criticism was taken note of by the Law Commission at paras 43,
44 and 45 of it's 246th report.
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“43 Section 36 of the Act makes it clear that an
arbitral award becomes enforceable as a decree only
after the time for filing a petition under section 34 has
expired or after the section 34 petition has been
dismissed. In other words, the pendency of a section
34 petition renders an arbitral award unenforceable.
The Supreme Court, in National Aluminium Co. Ltd. v.
Pressteel & Fabrications, (2004) 1 SCC 540 held that
by virtue of section 36, it was impermissible to pass an
Order directing the losing party to deposit any part of
the award into Court. While this decision was in
relation to the powers of the Supreme Court to pass
such an order under section 42, the Bombay High
Court in Afcons Infrastructure Limited v. The Board of
Trustees, Port of Mumbai 2013(1) Arb LR 512 (Bom)
applied the same principle to the powers of a Court
under section 9 of the Act as well. Admission of a
section 34 petition, therefore, virtually paralyzes the
process for the winning party/award creditor.”
44 The Supreme Court, in National
Aluminium, has criticized the present situation in the
following words : “However, we do notice that the this
automatic suspension of the execution of the award,
the moment an application challenging the said award
is filed under section 34 of the Act leaving no
discretion in the court to put the parties on terms, in
our opinion, defeats the very objective of the alternate
dispute resolution system to which arbitration
belongs. We do find that there is a recommendation
made by the concerned Ministry to the Parliament to
amend section 34 with a proposal to empower the civil
court to pass suitable interim orders in such cases. In
view of the urgency of such amendment, we sincerely
hope that necessary steps would be taken by the
authorities concerned at the earliest to bring about the
required change in law”.
45 In order to rectify this mischief, certain
amendments have been suggested by the Commission
to section 36 of the Act, which provide that the award
will not become unenforceable merely upon the
making of an application under section 34.”
The above object of the amendments to Section 36 can be fulfilled
only by holding the Saving Section 26 exhaustive.
26 Mr. Dada argued that Section 34 of the Arbitration Act is
akin to a right of appeal and therefore it is continuation of the arbitral
proceedings. According to him legal pursuit of the remedy of
arbitration all the way upto the appeal is one singular proceeding.
The right to file application to challenge the award under Section 34
and the limits on enforceability of the award under Section 36 of the
unamended Arbitration Act form a package of rights. This package of
right became available to BCCI on the date of commencement of the
arbitral proceedings under Section 21 of the Arbitration Act. That was
several years prior to 23rd October, 2015 when the unamended
Arbitration Act was applicable. Therefore the amended Section 36
cannot be applicable to the applications of BCCI.
27 Mr. Dada seeks to draw support for the above submission
from the decisions of the Apex Court in Garikapati v. Subbiah
Choudhry and ors. reported in AIR 1957 S. C. 540, para 23 of the
decision relied upon by Mr. Dada reads as under :
“From the decisions cited above the following
principles clearly emerge :
(i) That the legal pursuit of a remedy, suit,
appeal and second appeal are really but steps in a
series of proceedings all connected by an intrinsic
unity and are to be regarded as one legal proceedings.
(ii) The right of appeal is not a mere matter of
procedure but is a substantive right.
(iii) The institution of the suit carries with it the
implication that all rights of appeal then in force are
preserved to the parties thereto till the rest of the
career of the suit.
(iv) The right of appeal is a vested right and
such a right to enter the superior Court accrues to the
litigant and exists as on and from the date the lis
commences and although it may be actually exercised
when the adverse judgment is pronounced such right
is to be governed by the law prevailing at the date of
the institution of the suit or proceeding and not by the
law that prevails at the date of its decision or at the
date of the filing of the appeal.
(v) This vested right of appeal can be taken
away only by a subsequent enactment, if it so provides
expressly or by necessary intendment and not
otherwise.”
28 In Garikapati's case, suit had been filed against the
appellant on 22nd April, 1949. By the order dated 14th November,
1950, the suit was dismissed. The plaintiff preferred an appeal
against the order of dismissal. The appeal was allowed and the suit
was decreed. The application for leave to appeal to the Apex Court
was dismissed on the ground, inter-alia, that the value of the property
was only Rs.11,400/- and did not come up to the amount of
Rs.20,000/-. In his application before the Apex Court, the appellant
contended that the order being one of reversal of the judgment and
the value of the property being above Rs.10,000/- he was entitled, as
a matter of right, to go up to the Apex Court on Appeal in view of
Clause-39 of the Letters Patent, 1865 relating to the High Courts of
the three Presidency towns. Under that clause, an appeal could be
taken to His Majesty in Council from any final judgment, decree or
order of the High Court made on appeal or in exercise of its original
jurisdiction by a majority of the full number of Judges of the said
High Court or of any Division Court provided, in either case, the sum
or matter at issue was of the amount or value of not less than 10,000
rupees or that such judgment, decree or order involved, directly or
indirectly, some claim, demand or question to or respecting property
amounting to or of the value of not less than 10,000 rupees. The
appellant had contended that, as on the date of the institution of the
suit, he had acquired a vested right to appeal to the Federal Court,
which had since then been replaced by the Supreme Court. This
vested right of appeal is a substantive right and could be taken away
only by a subsequent enactment, if it so provides expressly or by
necessary intentment and not otherwise. The Apex Court held that,
the legal pursuit of a remedy, Suit, Appeal and Second Appeal are
really but steps in a series of proceedings, all connected by an intrinsic
unity and are to be regarded as one legal proceeding. In the facts of
that case, the Apex Court noted that the Constitution of India by
Article 395 repealed the Government of India Act and thereby
abolished the Federal Court. It, however, continued the Abolition of
Privy Council Jurisdiction Act, 1949, which directed that the Federal
Court in addition to its other powers, would have the appellate
powers exercised by the Privy Council. The adaptation order
modified Sections 109 and 110 of the Code of Civil Procedure, interalia,
by raising the valuation of Rs.10,000/- to Rs.20,000/-. The
provision, however, by virtue of Clause-20 of the order, did not affect
any right, privilege, obligation or liability already acquired, accrued or
incurred under any existing law. The Apex Court, held that the true
implications of these provisions was that the pre-existing right of
appeal to the Federal Court for the appellant before it, continued to
exist and the old law which created that right of appeal also continues
to exist to support the continuation of that right and the Federal
Court having been abolished, the Supreme Court was substituted by
the Federal Court as the machinery for the purpose of giving effect to
the exercise of that right of appeal.
29 The second decision cited by Mr. Dada is in Videocon
International Limited Versus. Securities and Exchange Board of
India, reported in (2015) 4 Supreme Court Cases page 33. In the facts
of that decision, an amendment was made to Section 15-Z of the
Securities and Exchange Board of India Act, 1992 with effect from 29th
October, 2002 whereby, (i) the forum of appeal against orders of the
Securities Appellate Tribunal was changed from the High Court to the
Supreme Court; and (ii) the questions on which such appeals could be
filed was changed from any question of fact or law to any question of
law. The High Court held that the amended Section 15-Z would not
apply to appeals already filed prior to 29th October, 2002 but all
appeals filed in the High Court after that date were not maintainable.
The two questions considered by the Apex Court in the decision cited
were, (i) whether an order passed by the Securities Appellate Tribunal
prior to 29th October, 2002 would be appealable under the
unamended Section 15-Z before the High Court or under the amended
Section 15-Z before the Supreme Court; and (ii)whether the date on
which the appeals had been filed in the High Court was a relevant
consideration. The Apex Court held therein that, an appellate remedy
is available under different packages. It can be availed of only when it
is expressly conferred. When such a right is conferred, its parameters
are also laid down. A right of appeal may be absolute, i.e. without any
limitations or it may be a limited right. At para-39 of the decision, the
Apex Court further held:
“As illustrated above, an appellate remedy is available
in different packages. What falls within the
parameters of the package at the initial stage of the lis
or dispute, constitutes the vested substantive right of
the litigant concerned. An aggrieved party, is entitled
to pursue such a vested substantive right, as and
when, an adverse judgment or order is passed. Such a
vested substantive right can be taken away by an
amend-ment, only when the amended provision,
expressly or by necessary intendment, so provides.
Failing which, such a vested substantive right can be
availed of, irrespective of the law which prevails, at the
date when the order impugned is passed, or the date
when the appeal is preferred. For, it has repeatedly
been declared by this Court, that the legal pursuit of a
remedy, suit, appeal and second appeal, are steps in a
singular proceeding. All these steps, are connected by
an intrinsic unity, and are regarded as one legal
proceeding”.
Then in the facts of that case, the Apex Court held that, the
amendment to Section 15-Z of SEBI Act, having reduced the appellate
package adversely affected the vested appellate right of the litigant
concerned. The right of appeal being a vested right, the appellate
package as was available at the commencement of the proceedings
would continue to vest in the parties engaged in the lis till the
eventual culmination of the proceedings. When a lis commences, all
rights and obligations of the parties get crystallised on that date and
the mandate of the General Clauses Act simply ensures that pending
proceedings under the unamended provision shall remain unaffected.
30 The third decision cited by Mr. Dada and also by Mr.
Subramaniyam for BCCI is of the Apex Court in Snehadeep Structures
Private Limited V. Maharashtra Small-Scale Industries Development
Corporation Ltd., reported in (2010) 3 Supreme Court Cases, page 34,
in which the issue was with respect to the interpretation of the term
“appeal” in Section 7 of the Interest on Delayed Payments to SmallScale
and Ancillary Industrial Undertakings Act (“The Interest Act”
for short). The said Section provided that while preferring an appeal
against a decree, award or other order in favour of a small scale or
ancillary industrial undertaking, the appellant was required to deposit
75% of the amount payable in terms of such decree, award or other
order. An award-debtor (the award-holder being a small scale or

ancillary industrial undertaking) filed and application under Section
34 of the 1996 Act, which application was dismissed by the Single
Judge on account of non-compliance with requirement of deposit of
75% on the basis that the term 'appeal' in the said Section was wide
enough to include an application under Section 34 of the 1996 Act.
The Division Bench held to the contrary and reserved the order
passed by the Single Judge. After exhaustively examining a number of
precedents, the Hon'ble Supreme Court observed at para 36 as
follows:
“On a perusal of the plethora of decisions
aforementioned, we are of the view that “appeal” is a
term that carries a wide range of connotations with it
and that appellate jurisdiction can be exercised in a
variety of forms. It is not necessary that the exercise
of appellate jurisdiction will always involve reagitation
of entire matrix of facts and law. We have
already seen in Abhyankar that even an order passed
by virtue of limited power of revision under Section
115 of the Code is treated as an exercise of appellate
jurisdiction, though under that provision, the Court
cannot go into the questions of facts. Given the weight
of authorities in favour of giving such a wide meaning
to the term “appeal”, we are constrained to disagree
with the contention of the learned counsel for the
respondent Corporation that appeal shall mean only a
challenge to a decree or order where the entire matrix
of law and fact can be re-agitated with respect to the
impugned order/ decree. There is no quarrel that
Section 34 envisages only limited grounds of challenge
to an award; however, we see no reason why that alone
should take out an application under Section 34
outside the ambit of an appeal especially when even a
power of revision is treated as an exercise of appellate
jurisdiction by this Court and the Privy Council”.
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31 Mr. Khambhata submitted in reply that the argument
advanced that the application under Section 34 of the Arbitration Act
is akin to an appeal under Code of Civil Procedure cannot be accepted
in view of the direct decision to the contrary of the Apex Court in J.G.
Engineers Private Limited Versus. Union of India and Another,
reported in (2011) 5 Supreme Court Cases page 758. By that decision
while considering the scope of the provision of Section 34 of the
Arbitration Act, the Apex Court held that, “A civil court examining the
validity of an arbitral award under Section 34 of the Act exercises
supervisory and not appellate jurisdiction over the awards of an
Arbitral Tribunal. A court can set aside an arbitral award, only if any
of the grounds mentioned in Sections 34(2)(a)(i) to (v) or Sections
34(2)(b)(i) and (ii), or Section 28(1)(a) or 28(3) read with Section
34(2)(b)(ii) of the Act, are made out. An award adjudicating claims
which are “excepted matters” excluded from the scope of arbitration,
would violate Sections 34(2)(a)(iv) and 34(2)(b) of the Act. Making
an award allowing or granting a claim, contrary to any provision of
the contract, would violate Section 34(2)(b)(ii) read with Section
28(3) of the Act.
32 According to Mr. Khambhata, interpretation of the term
“appeal” in The Interest Act in Snehadeep's case to include
application under Section 34 of the Arbitration Act was clearly a
purposive interpretation of the term in the context of the object of
that Act. Relying upon the decision of the Apex Court in S. Mohan Lal
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vs. R. Kondiah, reported in (1979) 2 Supreme Court Cases, 616, he
argued that reference to the provisions of the statute to interpret the
same expression used in another statute is not a sound principle of
construction unless the two Acts in which the same word is used are
cognate Act. The relevant observations at para 3 of the decision cited
read as follows:
“3 …. It is not a sound principle of construction to
interpret expressions used in one Act with reference to
their use in another Act; more so if the two Acts in
which the same word is used are not cognate Acts.
Neither the meaning, nor the definition of the term in
one statute affords a guide to the construction of the
same term in another statute and the sense in which
the term has been understood in the several statutes
does not necessarily throw any light on the manner in
which the term should be understood generally. On
the other hand, it is a sound, and, indeed, a wellknown
principle of construction that meaning of
words and expressions used in an Act must take their
colour from the context in which they appear.”
33 In my considered opinion, neither the decision in
Garikapati's case which purely involves the meaning and
interpretation of the term “appeal” under Code of Civil Procedure nor
the decision in Videocon's case, which involved the term appeal in the
Securities and Exchange Board of India is relevant or of assistance in
the facts of the present case. The decision in Snehadeep's case also,
though considered application of Section 7 of The Interest Act to an
application under Section 34 of the Arbitration Act does not lay down
a general proposition that an application under Section 34 is an
appeal. Careful reading of the decision in fact indicates otherwise.
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The Apex Court has expressly stated therein that it was not
considering the meaning of the term appeal under the Arbitration Act.
At para 40 it says :
“Hence, the right context in which the meaning of the
term “appeal” should be interpreted is the Interest Act
itself. The meaning of this term under the Arbitration
Act or the Code of Civil Procedure would have been
relevant if the Interest Act had made a reference to
them. For this very reason, we also do not find it
relevant that the Arbitration Act deals with
applications and appeals in two different chapters.
We are concerned with the meaning of the term
“appeal” in the Interest Act, and not in the Arbitration
Act”.
It reiterates at para 43 that the word appeal appearing in Section 7 of
the Interest Act need not be necessarily interpreted within the
meaning of that word in Code of Civil Procedure. This view gets
fortified by the reasons stated by the Apex Court at paras 46 and 47,
which read as under :
“46 Further, if the word “appeal” is not construed as
including an application under Section 34 of the
Arbitration Act, we are afraid that it would render the
term “award” redundant and the requirement of
predeposit a total nullity with respect to all cases
where a small-scale industry undertaking preferred
arbitral proceedings, prior to the incorporation of the
reference procedure in 1908. Arbitration necessarily
has to result in an award. The only way of challenging
an award in a court, in accordance with Section 5 read
with the opening clause of Section 34 is by filing an
application under the latter section. If such challenge
is not construed as an “appeal”, the requirement of
predeposit of interest before the buyer challenging an
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award passed against him, becomes a total nullity. The
fact that an order passed on such application/
challenge under Section 34 is appealable under
Section 37 is of no consequence. As the learned
counsel for the appellant Company rightly argued,
such appeal is filed against an order passed by the
court under Section 34, not against an award passed
against the buyer and in favour of the small-scale
industry undertaking. In all cases where the smallscale
industry undertaking enters into arbitration
proceedings to obtain payment of interest, if we limit
the requirement of predeposit to appeal under Section
37, therefore, we will be rendering the term “award” a
nullity, which we are not empowered to do.
47 The requirement of predeposit of interest is
introduced as a disincentive to prevent dilatory tactics
employed by the buyers against whom the small-scale
industry might have procured an award, just as in
cases of a decree or order. Presumably, the legislative
intent behind Section 7 was to target buyers, who, only
with the end of pushing off the ultimate event of
payment to the small-scale industry undertaking,
institute challenges against the award/ decree / order
passed against them. Such buyers cannot be allowed
to challenge arbitral awards indiscriminately,
especially when the section requires predeposit of 75%
interest even when appeal is preferred against an
award, as distinguished from an order or decree.”
34 Thus the only decision that operates in the field is the
direct decision in J.G. Engineer's case, which holds that a Civil Court
examining the validity of an arbitral award under Section 34 of the
Arbitration Act; exercises supervisory and not appellate jurisdiction.
There are several distinguishing factors between an application under
Section 34 of the Arbitration Act and an appeal under Code of Civil
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Procedure. In arbitral reference, unlike in civil matters there is total
freedom available to the parties as regards the choice of the process of
adjudication of dispute. The choice is as regards the forum, as well as
the strength of the forum. The parties can further choose the place of
adjudication, the time of adjudication and the procedure for
adjudication. In arbitral proceedings the parties can represent
themselves or be represented by anyone of their choice. With this
extent of freedom of choice available, the parties are ordinarily
expected to accept, the decision of the forum of their choice.
Therefore, the Arbitration Act provides for a very restricted challenge
to the arbitral award in a civil Court. A glance at the grounds of
challenge specified in Section 34 of the Arbitration Act is sufficient to
note that each ground goes to the root of the matter. While exercising
the jurisdiction under Section 34 the civil court cannot correct the
errors of the arbitrator in the award or remit the award for
reconsideration or modify the award or set aside part of the award.
The jurisdiction of the civil court is only to set aside the award
provided any of the grounds specified in Section 34 is established.
The emphasis in the section is to maintain the award. Hence the
general approach of a civil court expected is to uphold the arbitral
award. This view gets support from the following observations in the
decision of the Apex Court in Union of India Vs. A.L. Rallia Ram,
reported in AIR 1963 Supreme Court page 1685 relied upon by Mr.
Khambhata.
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“The award is the decision of a domestic tribunal
chosen by the parties, and the Civil Courts which are
entrusted with the power to facilitate arbitration and
to effectuate the awards, cannot exercise appellate
powers over the decision. Wrong or right, the decision
is binding if it be reached fairly after giving adequate
opportunity to the parties to place their grievances in
the manner provided by the arbitration agreement.”
Unlike the application under Section 34 of Arbitration Act, the court
of appeal under Civil Procedure Code has power to pass any decree,
make any order which ought to have been passed or made and to pass
or make such further or other decree or order as the case may require.
It can modify the decree, remit it entirely or in part for
reconsideration and set it aside in whole or in part. The appellate
court can frame additional issues. It can accept additional evidence
as provided in the Civil Procedure Code. In view of such extensive
power of the Court of appeal and the scope of enquiry the original
decree or order gets merged in the appellate decision. The arbitral
award does not get merged in the Court's judgement under Section 34
of the Arbitration Act.
35 Mr. Dada sought to submit that in the present case, the
question is not whether an application under Section 34 of the 1996
Act is an 'appeal' under the Act but whether the legal pursuit of the
remedy of arbitration by way of (i) arbitral proceedings before an
arbitral tribunal; (ii) an application under Section 34 of the 1996 Act
to set aside the arbitral award passed by the arbitral tribunal; and (iii)
an appeal under Section 37 of the 1996 Act against the order of the
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Court under Section 34; can be regarded as steps in one 'singular
proceeding'. According to him the sole remedy available to a party
who is aggrieved by arbitral award is to file an application under
Section 34 of the Act. It has to be treated as a continuation of the
arbitral proceedings and hence a package of rights is available to the
litigant of arbitral proceeding, application under Section 34 of
Arbitration Act and appeal under Section 37 of the Arbitration Act.
36 In my considered opinion, it is not possible to agree with
Mr. Dada that, an application under Section 34 of the Arbitration Act
is a continuation of the arbitral proceedings. As provided in the
Arbitration Act itself, the arbitral proceedings terminate on passing of
the final award. The challenge to the arbitral award provided for in
the Act is minimal. The only order that can be passed on the
challenge under Section 34 is either of upholding the Award as it is or
of setting it aside in its entirety, except where parts of the award are
separable. The continuation of the proceedings and the package of
rights available could at the highest be for the proceedings under
Section 34 and Section 37 of the Arbitration Act. Section 36 which is
about enforceability of the arbitral award cannot go along with the
application for challenge to the arbitral award so as to form a package
of rights.

37 Mr. Seervai submitted that, on a bare reading of the
substituted Section 36 of the Arbitration Act, it is clear that the said
provision is applicable to cases where a petition under Section 34 of
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the Arbitration Act has been filed before 23rd October, 2015 and
pending as on that date. According to him, this contention is ex-facie
borne out by the language of the substituted Section 36 itself i.e. dehors
reference to Saving Section 26 of the Amending Act. He points
out that the language of Section 36(2) of the Amended Act uses the
phrase “has been filed” by way of description to the application under
Section 34 of the Arbitration Act, to provide that such an application
shall not by itself render, that award unenforceable, unless the Court
grants an order of stay of the operation of arbitral award. The verb
“has been” used in the section is in “present perfect tense” and as such
would be applicable to the proceedings already filed and pending in
Court.” Mr. Seervai argues that the meaning and scope of words “has
been” was considered by the Apex Court in it's decision in The State of
Bombay (now Maharashtra) vs. Vishnu Ramchandra, reported in AIR
1961 Supreme Court, page 307. By that decision, the verb “has been”
is held to be in the present perfect tense describing past actions.
38 In it's decision in Vishnu Ramchandra's case, the Apex
Court was considering whether Section 57 of the Bombay Police Act,
1951 was retrospective in it's operation. Section 57 empowered the
Commissioner of Police, the District Magistrate or a specially
empowered Sub-Divisional Magistrate to direct a person to remove
himself to outside the local limits of jurisdiction of the said
authorities, by such route and within such time as prescribed and not
to return to the area from where the person was directed to remove
himself. This order of externment could be passed if the authority
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had reason to believe that such externed person was likely to engage
himself in the commission of an offence similar to that for which he
was convicted. Language used in Section 57 was if a person “has been
convicted” of the enumerated offence under Indian Penal Code, an
order of externment could be passed. It was contended before the
Apex Court that the legislature had used the present participle “has
been” and not the past participle in the opening portion of the Section
and this indicated that the section was intended to be used only where
a person was convicted subsequent to coming into force of the Act.
The Apex Court noted that Section 57 of the Bombay Police Act does
not create a new offence nor makes punishable that which was not an
offence. It is designed to protect the public from the activities of
undesirable persons who have been convicted of the offences of a
particular kind. The Section only enables the authorities to take note
of their convictions and to put them outside the area of their activities
so that the public may be protected against the repetition of such
activities. In that circumstance, it held that the verb “has been” is in
“present perfect tense” and may mean either “shall have been” or
“shall be”. Looking to the scheme of the enactment as a whole and
particularly the other portions of it, it was manifest that the former
meaning is intended and the verb “has been” describes past actions.
It is used to express a hypothesis without regard to time.
39 Mr. Subramaniyam, submitted in reply that the use of
verb “has been” will not necessarily be determinative of the fact
whether the amendment be applicable to pending proceedings. In
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this connection, he relied upon the following observations of Queen's
Bench Division in the case of In re ATHLUMNEY Ex parte WILSON
reported in 2Q.B page 547 :-
“No doubt the words “where a debt has been proved
under the principal act” are capable of such a meaning.
But this form of words is often used to refer, not to a
past time which preceded the enactment, but to a time
which is made past by anticipation a time which will
have become a past time only when the event occurs
on which the statute is to operate. In former times
draftsmen would have used the words “where a debt
shall have been proved,” but in modern Acts the past
tense is frequently used where no retrospective
operation can be intended.
These observations are required to be appreciated in the facts of the
decision cited. The Queens Bench Division was considering, The
Bankruptcy Act, 1890 which provided that, where a debt, including
interest “has been proved” on a debtor's interest, such interest shall
for the purposes of be calculated at a rate not exceeding 5% p.a.
without prejudice to the right of the creditor to receive out of the
estate any higher rate of interest to which he may be entitled after all
the debts have been paid in full. In the facts of the case, the Queens
Bench Division noted that, the enactment did not merely affect
procedure. If the section was construed retrospectively, it would
postpone the creditor's right to dividend beyond 5% and would protanto
deprive him of the vested right of action which he possessed at
the commencement of the Act and when the bankruptcy occurred.
Therefore, retrospective force was not given to the section. In the
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facts of the case on hand, there is no such deprival of vested right of
action to BCCI.
40 The other decision cited Mr. Subramaniyam on use of the
verb “has been” is the decision of the Apex Court in the case of The
Workmen of M/s. Firestone Tyre and Rubber Co. of India (Pvt.) Ltd.
Versus. The Management and Others, reported in (1973) 1 Supreme
Court Cases page 813. In that decision the apex court was considering
section 11A incorporated in the Industrial Disputes Act, 1947 by the
Industrial Disputes Amendment Act, 1971. Section 11A provided, for
the powers of the Labour Court, Tribunals and National Tribunals to
give appropriate reliefs in case of discharge or dismissal of workmen.
It provided that, where an industrial dispute relating to dismissal of a
workman “has been referred” to a Labour Court etc. for adjudication,
if the Court is satisfied that the order of dismissal is not justified, it
may set aside the order of dismissal and direct reinstatement. It was
contended that, the words in the section clearly show that, it applies
only to disputes in respect of which a reference is made after the
section has come into force and that the expression only signifies that
on the happening of a particular event, namely a reference made in
future the powers given to the Court can be exercised. The Apex
Court held that, the question whether the expression relates to past or
future events, is to be gathered from the context in which they appear,
as well as, the scheme of the particular legislation. Further, at para-
59 it observes :
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“The words 'has been referred' in Section 11-A are no
doubt capable of being interpreted as making the
section applicable to references made even prior to
December 15, 1971. But is the section so expressed as
to plainly make it applicable to such references ? In
our opinion, there is no such indication in the section.
In the first place, as we have already pointed out, the
section itself has been brought into effect only some
time after the Act had been passed. The proviso to
Section 11-A, which is as much part of the section,
refers to “in any proceeding under this section”.
Those words are very significant. There cannot be a
“proceedings under this section”, before the section
itself has come into force. A proceeding under that
section can only be on or after December 15, 1971.
That also gives an indication that Section 11-A applies
only to disputes which are referred for adjudication
after the section has come into force.”
Bare reading of the observations quoted above, is sufficient to know
that the special circumstance of the proviso to Section 11-A, was
determinative of the meaning given to the words “has been referred”.
There is no such special circumstance available in the facts of the case
herein.
41 I find substance in the submission advanced by Mr.
Seervai particularly in view of the object and purpose of amendments
to Section 36 of the Act. Plain literal meaning, will have to be given to
the provision in the absence of any special circumstance available to a
party under the provision and use of verb “has been” must be held to
be in present perfect tense. If use of verb “has been” is held to be in
“present perfect tense”, Section 36 of the Arbitration Act will be
applicable not only to cases where a petition under Section 34 of the
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Arbitration Act is filed after 23rd October, 2015 but also to cases where
a petition has been filed before 23rd October, 2015. In other words, all
the applications under Section 34 pending in the court for
consideration will attract Section 36(2) of the Amended Act.

42 The contention of BCCI is that, it has a vested and accrued
right as an award-debtor, to have the validity of the arbitral award,
adjudicated by the Court, before the same can be enforced. This claim
is disputed by the award holders, according to whom BCCI never had
any right, let alone, a vested or accrued right under Section 36 of
unamended Arbitration Act, against the enforcement of arbitral
awards. According to BCCI, its accrued right is saved by Section 6 of
the General Clauses Act. The argument of vested right, therefore, in
fact, goes along with the application of Section 6 of the General
Clauses Act. It has already been held hereinabove that, two other
conditions under Section 6 of the General Clauses Act, namely the
saving clause being non-exhaustive and absence of different intention
appearing in the saving section are not satisfied. Section 26 of the
Amending Act is exhaustive as by necessary implication, the
proceedings other than “arbitral proceedings” are covered by the first
part of Section 36 of the Amended Act. Nonetheless, considering the
exhaustive submissions advanced, it will be only appropriate to see
whether any right is accrued or vested in BCCI under Section 36 of the
unamended Arbitration Act against enforcement of arbitral awards.
43 Before adverting to several decisions, cited on behalf of
both the sides, it would be convenient to look into the two relevant
provisions, both pre-amendment and post-amendment, for what is
available thereunder to the award-holder and award-debtor. A
reference to the Arbitration Act,l 1940 is also inevitable.
44 Under Arbitration Act, 1940 before an award could be
made enforceable, the intervention of Court was essential. First, an
award had to be filed in Court under Section 14 of the 1940 Act with
the record of proceedings that had been filed before the Arbitrator.
Then the Court had to be satisfied under Section 17 of the 1940 Act
that a judgment in terms of the award could be given including
disposing of any challenges under Section 30 of the 1940 Act. It was
only after this process was complete and a judgment given that, a
decree in terms of the award followed. The award then became
executable as a decree of the Court. This position changed under the
Arbitration and Conciliation Act, 1996. With the enactment of
Section 35 thereunder, an arbitral award on it's passing became final
and binding on the parties. There was no requirement to file the
award or the proceedings in Court. The compulsory judicial scrutiny
of the award, before it became enforceable, was done away with. It's
judicial scrutiny is only on the award-debtor filing application under
Section 34 and is limited to the grounds stated therein. The
enforceability of the award was, however, postponed under the preamendment
Section 36, to 3 months after passing of the award or
until after refusal of the application to challenge the award, if filed, by
the award-debtor. In other words, the moment an application under
Section 34 was filed, there was automatic suspension of the execution
of the arbitral award. As already noted earlier, such automatic
suspension of execution was strongly disapproved by the Apex Court
in Nalco's case which led to the amendments to Section 36. By the
amendments, the effect of automatic suspension has been removed.
The award-debtor, has to file an application for stay of execution of
the award. Now, the question to be considered is, whether the preamendment
Section 36 created any right, vested or accrued or even
otherwise in favour of the award-debtor. The Apex Court in
Purbanchal Cables & Conductors Pvt. Ltd V/s. Assam State Electricity
Board, reported in AIR 2012 SC 3167 has noted the definition of
vested right as, rights are “vested” when right to enjoyment, present
or prospective, has become property of some particular person, or
persons as present interest. Mere expectancy of future benefits, or
contingent interest in property founded on anticipated continuance of
existing laws, does not constitute vested rights.”
45 Mr. Dada submitted that, Section 34 of the Arbitration
Act, vests a substantive right in the award-debtor to have the validity
of the arbitral award tested before a Court of law. Further, on filing
an application under the Original Section 34 within the time limit
stipulated therein, the Original Section 36, conferred upon the
applicant, the privilege of not having the arbitral award under
challenge executed/enforced against the applicant, unless and until,
the said application was dismissed. This privilege accrued to the
applicant immediately upon the application under the Original
Section 34 being filed. Per-contra, Mr. Khambhata and Mr. Seervai
submitted that, original Section 36 cast only a shadow or an
impediment on the enforceability of an arbitral award and imposed a
disability on a successful claimant from being able to enjoy the fruits
of his success by enforcing the arbitral award merely because a
petition was filed under Section 34. It is their argument that, this
shadow or impediment created by original Section 36, can never be
termed a “right” let alone as an “accrued” or “vested” right and at the
highest, it can be termed as an “existing right”.
46 Mr. Dada, referred to the decision of the Delhi High Court
dated 8
th
 December, 2015 in O.M.P. No. 408 of 2007 (viz. Ministry of
Defence, Government of India v. Cenrex SP. Z.O.O. & Ors.), to submit
that, applicability of the Amendment Act to the applications already
filed under the unamended Section 34, has already been considered
therein. The observations relied upon by Mr. Dada, read as under :-
“The argument urged on behalf of the respondent no.1
to decide the case as per the amended Section 34 of
the Act has no merits because Section 6 of the General
Clauses Act, 1897 provides that an Act (or an
Ordinance for that matter) does not have retrospective
operation unless so provided and vested rights are not
deemed to be taken away by means of the amending or
the repealing Act. Once the objections are filed under
a wider provision as existing of Section 34 of the Act
when objections were filed, such vested rights to have
the Award set aside on the basis of Section 34 which
existed on the date of filing of the objection, petition
cannot be taken away by holding that by the 2015
amendment Ordinance such a vested right has been
impliedly taken away. Section 6 of the General
Clauses Act talks of vested rights being protected and
therefore unless such rights are expressly or by
necessary implications taken away, it cannot be held
that an amending Act will have a retrospective
application to the pending litigation. I do not find any
express or implied retrospective operation of the
newly amended Section 34 of the Act so that this Court
should hold that even pending litigations under
Section 34 of the Act should not be governed by the
said provision as applicable on the date of filing but
should be decided on the basis of the Section 34 of the
Act as existing after passing of the 2015 amendment
Ordinance. Reliance placed upon a provision of
Section 85A which has not been introduced by the
Legislature cannot assist the respondent no.1 to claim
retrospective operation of amended Section 34 of the
Act.”
This decision is seen to relate only to the continued applicability of
the original Section 34 to the applications filed under that Section
prior to commencement of the Amending Act. It does not consider
the effect of amendments to Section 36.
47 Mr. Khambhata submitted that, a mere right to take
advantage of the old law in a repealed statute that exists on the date of
Repealing or Amending Act is not a vested or accrued right. He refers
to the decision of the Apex Court in Lalji Raja and Sons vs. Firm
Hansraj Nathuram, reported in 1971(1) Supreme Court Cases, page
721. In the facts of that case, the decree holders who had obtained the
decree in the court at Bankura, West Bengal had applied for its
transfer for execution to Morena in the then state of Madhya Bharat
for execution. On transfer of the decree when the execution
proceedings commenced in the court at Morena, the judgment-debtor
resisted on the ground that the Court had no jurisdiction to execute
the same as the decree was of foreign court and that the same had
been passed ex-parte. This contention was accepted by the court and
execution petition dismissed. Later the Code of Civil Procedure
(Amendment Act) came into force as a result of which the Code of
Civil Procedure was extended to the state of Madhya Bharat as well as
various other places. The decree-holders then appealed against the
order of the execution application. It was contended on behalf of the
judgment debtors that when the decree was passed, they had a right
to resist it in the court at Morena in view of the provisions of Indian
Code of Civil Procedure then in force and the same was a vested right.
It was further contended that the right was preserved by the Saving
Section of the Code of Civil Procedure (Amendment Act), 1950. While
rejecting the contention, the Apex Court held that:
“It is difficult to consider the non-executability of the
decree in Madhya Bharat as a vested right of the
judgment-debtors. The non-executability, in question
pertains to the jurisdiction of certain courts and not to
the rights of the judgment-debtors. Further the
relevant provisions of the Civil Procedure Code in
force in Madhya Bharat did not confer the right
claimed by the judgment debtors. All that has
happened in view of the extension of ‘the Code’ to the
whole of India in 1951 is that the decree which could
have been executed only by courts in British India are
now made executable in the whole of India. The
change made is one relating to procedure and
jurisdiction. Even before ‘the Code’ was extended to
Madhya Bharat the decree in question could have been
executed either against the person of the judgmentdebtors
if they had happened to come to British India
or against any of their properties situate in British
India. The execution of the decree within the State of
Madhya Bharat was not permissible because the arm
of ‘the Code’ did not reach Madhya Bharat. It was the
invalidity of the order transferring the decree to the
Morena Court that stood in the way of the decreeholders
in executing their decree in that court on the
earlier occasion and not because of any vested rights
of the judgtment-debtors. Even if the judgmentdebtors
had not objected to the execution of the
decree, the same could not have been executed by the
court at Morena on the previous occasion as that court
was not properly seized of the execution proceedings.
By the extension of ‘the Code’ to Madhya Bharat, want
of jurisdiction on the part of the Morena Court was
remedied and that court is now made competent to
execute the decree.”
48 The second decision cited by Mr. Khambhata, of the
Constitution Bench of the Apex Court, in Bansidhar and Others vs.
State of Rajasthan and Others, reported in (1989) 2 Supreme Court
Cases, page 557, arose out of the right of State of Rajasthan to take
over, certain surplus or excess land, under Rajasthan Tenancy Act,
1955 after the commencement of the Rajasthan Imposition of Ceiling
on Agricultural Holdings Act, 1973. The Apex Court considered the
question whether the proceedings before it involved any “rights
accrued” or “obligation incurred” so as to attract old law to them to
support initiation or continuation to the proceedings against the
landholders after the repeal. It was contended that even if the
provisions of the old Act were held to have been saved, it could not be
said that there was any right accrued in favour of the State or any
liability incurred by the landholders in the matter of determination of
“ceiling area” so as to attract to their cases, the provisions of the old
law. It was sought to be emphasized before the court that the excess
land would vest in the state only after completion of the proceedings
and upon the landholder signifying his choice as to the identity of the
land to be surrendered. The Apex Court while rejecting the
application as regards the right claimed by the landholders observed
as follows:
“30 For purposes of these clauses the “right” must
be “accrued” and not merely an inchoate one. The
distinction between what is and what is not a right
preserved by Section 6 of the General Clauses Act, it is
said, is often one of great fineness. What is unaffected
by the repeal is a right ‘acquired’ or ‘accrued’ under the
repealed statute and not “a mere hope or expectation”
of acquiring a right or liberty to apply for a right.”
49 Mr. Seervai submitted that the question as to whether
inexecutability arising from disability imposed by law on a decreeholder
from being able to execute the decree against judgment-debtor
provides a vested or accrued right to the judgment-debtor, not to have
the decree executed against him, on account of change in law has
already been considered by the Apex Court in it’s decision in Narhari
Shivram Shet Narvekar Vs. Pannalal Umediaram, reported in (1976) 3
Supreme Court Cases, page 203. In that decision, the Apex Court was
considering whether a decree of the Bombay High court of the year
1960, which was held to be inexecutable in Goa by the executing court
at Panjim in the year 1965 could be executed after Code of Civil
Procedure was extended to Goa in the year 1967. Contention was
raised before Goa High Court that the inexecutability of the decree on
account of disability imposed by the law on the decreeholder granted
a vested right to the judgment-debtor not to have the decree executed
against him, when the law changed and removed the disability against
execution. The Apex Court negatived the propositions with the
following observations at paras 10 and 11 of its decision :
“10 As regards the argument of the learned counsel
for the appellant that the executability of the decree
was a vested right which could not be taken away by
the applicability of the Code of Civil Procedure to Goa
during the pendency of the appeal, the decision of this
court in Lalji Raja & Sons’ case (supra) is a clear
authority against the proposition adumbrated by the
learned counsel for the appellant. In that case, this
court appears to have considered this point in all its
comprehensive aspects and was of the opinion that the
executability of the decree could not be considered to
be a vested right. In this connection, this Court made
the following observations:
 “Therefore, the question for decision is
whether the non-executability of the decree in
the Morena court under the law in force in
Madhya Bharat before the extension of ‘the
Code’ can be said to be a right accrued under
the repealed law. We do not think that even by
straining the language of the provision, it can
be said that the non- executability of a decree
within a particular territory can be considered
as a privilege. All that has happened in view of
the extension of ‘the Code’ to the whole of India
in 1951 is that the decree which could have been
executed only by courts in British India are now
made executable in the whole of India. The
change made is one relating to procedure and
jurisdiction..… It was the invalidity of the order
transferring the decree to the Morena court that
stood in the way of the decree holders in
executing their decree in that court on the
earlier occasion and not because of any vested
rights of the judgment-debtors…… By the
extension of ‘the Code’ to Madhya Bharat, want
of jurisdiction on the part of the Morena court
was remedied and that court is now made
competent to execute the decree.”
“11 It was then argued that as the Code of Civil
Procedure was not applicable to Goa at the time when
the Bombay High Court passed the order transferring
the decree to the Goa court, the order of transfer was
absolutely without jurisdiction. We are, however,
unable to agree with this contention. To begin with, as
the decree was passed by the Bombay High Court.
Section 38 of the Code of Civil Procedure would clearly
apply because the decree passed by the Bombay High
Court was not a foreign decree. It is true that at the
time when the Bombay High Court passed the order of
transfer, the Code of Civil Procedure had not been
applied to Goa. But that does not put the respondent/
decreeholder out of court. The decree could be
transferred and was valid and executable. But because
of an impediment or an infirmity, it could not be
executed so long as the Code of Civil Procedure was
not made applicable to Goa. Thus the only bar which
stood in the way of the execution of the decree was the
non-applicability of the provisions of the Code of Civil
Procedure to Goa. This was, however, not an
insurmountable bar or an obstacle and the bar or the
obstacle disappeared the moment the Code of Civil
Procedure was applied to Goa on June 15, 1966. It is
common ground that this was done during the
pendency of the appeal before the Additional Judicial
Commissioner passed the impugned order on June 28,
1967. In these circumstances, therefore, it seems to us
that this is a fit case in which the doctrine of eclipse
would apply and the wall or the bar which separated
Bombay from Goa having disappeared there was no
impediment in the execution of the decree. The decree
lay dormant only so far as no bridge was built between
Bombay and Goa but as soon as the bridge was
constructed in the shape of the application of the
provisions of the Code of Civil Procedure to Goa, the
decree became at once executable.”
50 I find that, the two decisions cited by Mr. Khambhata are
perfectly applicable to the facts of the case on hand. The remedy
available to an aggrieved award-debtor is under Section 34 of the
Arbitration Act. This remedy has not been taken away by the
Amending Act. A vested right available to the award-debtor would be
only in the matter of challenge to the arbitral award which has
remained intact. Section 36 of the Arbitration Act pertains only to the
enforcement of an award and its executability. The original Section
34, imposed a disability on the award-holder in executing the award
during pendency of the challenge to the award. This disability
provided only an interim relief against execution of the award to the
award-debtor, until his challenge to the award was decided. The right
to interim relief cannot be a vested or accrued substantive right. In
any case, even this interim advantage is not completely taken away.
The disability imposed on the award-holder under original Section 36
was absolute. The award was simply not executable during pendency
of the challenge to it. Under the amended Section 36, this disability
has been only made relative. Firstly, what was available earlier on a
platter has to be now asked for. Secondly, grant of it can be
conditional.
51 Extensive arguments have been advanced on the effect of
the amendment to Section 36 of the Arbitration Act. Is the effect
prospective or it is retrospective. BCCI obviously contended that, the
amendment is prospective in nature and hence applicable only to
such applications under Section 34 as filed after 23rd October, 2015.
The argument on behalf of KPCL and RSW is two-fold. Firstly, that
the application of the amendment to the pending matters would be
prospective in nature. If the first argument is not acceptable, the
second argument is that, it is retrospective in nature. The further
arguments to support the retrospective effect are (i)the amendment is
curative and (ii)the amendment is in respect of procedural matters.
52 Mr. Dada, argued that the amendment to Section 36
affects the substantive right of an award-debtor and hence it must
take prospective effect. He refers to the decision of the Apex Court
in Thirumala Chemicals Ltd. V/s. Union of India and Ors. reported in
(2011) 6 SCC page 739 to support his submission. In that decision,
the question considered was, whether the Appellate Tribunal
constituted under the Foreign Exchange Management Act (“FEMA”
for short) was right in dismissing an appeal preferred under Section
19(1) of FEMA by applying the first proviso to Section 52(2) and
Foreign Exchange Regulation Act, 1973 (“FERA” for short) holding
that, it had no power to condone the delay beyond 90 days. Although
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the cause of action had arisen when FERA was in force, show cause
notices and impugned notices were issued, when FEMA was imposed
and appeals were also preferred under Section 19(1) of FEMA. The
Apex Court, in that decision considered, the distinction between
substantive and procedural law at paras-23 to 27. The same reads as
under :-
“23. Substantive law refers to a body of rules that
creates, defines and regulates rights and liabilities.
Right conferred on a party to prefer an appeal against
an order is a substantive right conferred by a statute
which remains unaffected by subsequent changes in
law, unless modified expressly or by necessary
implication. Procedural laws establishes a mechanism
for determining those rights and liabilities and a
machinery for enforcing them. Right of appeal being a
substantive right always act prospectively. It is trite
law that every statute is prospective unless it is
expressly or by necessary implication made to have
retrospective operation.
24. Right of appeal may be a substantive right but
the procedure for filing the appeal including the
period of limitation cannot be called a substantive
right, and an aggrieved person cannot claim any
vested right claiming that he should be governed by
the old provision pertaining to period of limitation.
Procedural law is retrospective meaning thereby that
it will apply even to acts or transactions under the
repealed Act.
25. Law on the subject has also been elaborately
dealt with by this Court in various decisions and
reference may be made to a few of those decisions.
This Court in Garikapati Veeraya v. N. Subbiah
Choudhry, reported in AIR 1957 SC 540, New India
Insurance Co. Ltd v. Shanti Misra,reported in (1975)
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2 SCC page 840, Hitendra Vishnu Thakur v. State of
Maharashtra, reported in (1994) 4 SCC page 602,
Maharaja Chintamani Saran Nath Shahdeo v. State
of Bihar, reported in (1999) 8 SCC page 16 and
Shyam Sunder v. Ram Kumar, reported in (2001) 8
SCC page 24, has elaborately discussed the scope and
ambit of an amending legislation and its
retrospectivity and held that every litigant has a
vested right in substantive law but no such right exists
in procedural law. This Court has held that the law
relating to forum and limitation is procedural in
nature whereas law relating to right of appeal even
though remedial is substantive in nature.
26. Therefore, unless the language used plainly
manifests in express terms or by necessary implication
a contrary intention a statute divesting vested rights is
to be construed as prospective, a statute merely
procedural is to be construed as retrospective and a
statute which while procedural in its character, affects
vested rights adversely is to be construed as
prospective.
27. Rights of appeal conferred under Section 19(1) of
FEMA is therefore a substantive right. The procedure
for filing an appeal under sub-section (2) of Section 19
as also the proviso to sub-section (2) of Section 19
conferring power on the Tribunal to condone delay in
filing the appeal if sufficient cause is shown, are
procedural rights.”
53 The reliance on this decision is based on the argument
that, original Section 34 and original Section 36 together constitute a
right of an award-debtor to have the validity of an arbitral award
examined and upheld by the Court before the award becomes
enforceable. Hence, it constitutes substantive accrued vested right.
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In other words, there is a package of rights available under Section 34
and Section 36 to the award-debtor. This argument has already been
negatived. Besides, it is also seen above that, the vested right of the
award-debtor under Section 34 of the Arbitration Act is unaffected by
the amendment to Section 36 of the Arbitration Act. Hence, the
decision cited cannot help BCCI.
54 The second decision cited by Mr. Dada is of Messers
Hoosein Kasam Dada (India) Ltd., v. The State of Madhya Pradesh &
Others, reported in A.I.R. 1953, Supreme Court, page 221 to submit
that the right of appeal is not merely a matter of procedure, but it is a
matter substantive right. This right of appeal becomes vested in a
party when proceedings are first initiated and/or before a decision is
given by inferior court. Such vested right cannot be taken away by
express enactment or necessary intendment. As regards the right of
BCCI to file an application under Section 34 of the Arbitration Act to
challenge the arbitral award, there is no dispute whatsoever that the
same would be vested right or an accrued right, since that is the only
provision available to an award-debtor to challenge the arbitral
award. That right is already seen to be entirely different from
enforceability of the arbitral award.
55 Mr. Seervai submitted that there is a fundamental error in
the submissions on behalf of the BCCI namely the application of the
amended Section 36 of the Arbitration Act to the applications filed
under Section 34 of the Arbitration Act before 23rd October, 2015
constitutes a retrospective operation of that provision. According to
him, the application of the amended Section 36 in fact constitutes a
prospective operation of the provision. Mr. Seervai argued that as
already seen above original Section 36 of the Arbitration Act cast a
shadow or an impediment on the enforceability of the arbitral award
and imposed a disability on the successful claimant as regards
enforcement of the award. Even under the original section, the
shadow cast on the arbitral award would be removed by the period of
limitation for filing petition under Section 34 of the Arbitration Act
expiring or dismissal of the petition filed under Section 34 of the
Arbitration. Under the Amended Section 34 of the Arbitration Act, the
shadow or impediment on the enforceability of the arbitral award has
been removed to enable a successful claimant to enforce the arbitral
award, unless the award-debtor obtains an order of interim stay from
the Court under Section 36(3) of the Arbitration Act. The lifting of
this shadow or impediment, on the enforceability of the arbitral
award operates only in future i.e. after 23rd October, 2015 on the basis
of an existing state of affairs, even if the award was passed or the
petition under Section 34 of the Arbitration Act was filed before 23rd
October, 2015. Therefore, the Amended Section 36 of the Arbitration
Act cannot be said to operate retrospectively, its operation is
prospective in nature.
56 Mr. Seervai takes support from the following para in
Bennion on Statutory Interpretation (Fifth Ed.), at page 317, on the
effect of the amendments :
“It is important to grasp the true nature of
objectionable retrospectivity, which is that the legal
effect of an act or omission is retroactively altered by a
later change in the law. However, the mere fact that a
change is operative with regard to past events does not
mean that it is objectionably retrospective. Changes
relating to the past are objectionable only if they alter
the legal nature of a past act or omission in itself. A
change in the law is not objectionable merely because
it takes note that a past event has happened, and bases
new legal consequences on it”.
57 Mr. Seervai next relies upon the following three English
decisions in support of his submissions :-
1 In the Queen v. The Inhabitants of St. Mary
Whitechapel (1848) 12 QBR 120, Lord
Denman C.J.
2 In West v. Gwynne [1911] 2 Ch. D.1 CozensHardy
M.R.
3 In Re A Solicitor's Clerk [1957] 1 W.L.R. 1219
The facts of the first decision cited were that a pauper was
residing in the concerned parish alongwith her husband at the time of
his death, which happened on 6th June, 1846. The parish obtained an
order for her removal and served notice of chargeability. On 3rd
September in the same year, the pauper and her children were
removed from the residence. But before the actual removal took
place, Statute No. 9 & 10 Vict. c.66 was passed. Section 2 of Stat. 9
and 10 Vict c.66 provided “that no woman residing in any parish with
her husband at the time of his death shall be removed, nor shall any
warrant be granted for her removal, from such parish, for twelve
calendar months next after his death, if she so long continue a
widow.” An appeal was preferred against the order of removal. The
pauper had continued to be a widow thereby satisfying the conditions
irremovability within the period of one year. During the hearing of the
appeal, since the widow was already removed, question of
construction of the statute arose namely whether the statute was to be
construed retrospectively. Lord Demnan CJ considered the effect of
the statute observed as follows:
“In this case a valid order of removal was made before
the passing of the statute; and the removal took place
after that time. The pauper had become a widow on
the 6th June 1846, before the passing of the Act, and
was removed on the 3rd of September, 1846. The
sessions confirmed the order of removal, subject to
two questions, of which we take the effect, and not the
precise terms.
First: was the pauper irremoveable by stat. 9 and 10
Vict. c.66, s.2, which enacted that no woman residing
in any parish with her husband at the time of his death
shall be removed, nor shall any warrant be granted for
her removal, from such parish for twelve months next
after his death if she so long continue a widow? If was
said that the operation of the statute was confined to
persons who had become widows after the Act passed,
and that the presumption against a retrospective
statute being intended supported this construction;
but we have before shewn that the statute is in its
direct operation prospective, as it relates to future
removals only, and that it is not properly called a
retrospective statute because a part of the requisites
for its action is drawn from time antecedent to its
passing. The clause is general, to prevent all removals
of the widows described therein after the passing of
the Act; the description of the widow does not at all
refer to the time when she became widow; and we are
therefore of opinion that the pauper was irremovable
at the time she was removed”.
58 In West v. Gwynne's case, in the year 1892 the Registry
with the intent to prevent in future the exaction of a fine by the lessor
for giving the lessee a licence to assign and so Section 3 of the
Conveyancing and Law of Property Act, 1892, was enacted. The
question was raised, whether the operation of this Section, must not,
by construction be restricted to cases where the lease was granted
after the commencement of the Act. Cozens-Hardy M.R. L.J.
observed in the decision as under :-
“It was forcibly argued by Mr. Hughes that a statute is
presumed not to have a retrospective operation unless
the contrary appears by express language or by
necessary implication. I assent to this general
proposition, but I fail to appreciate its application to
the present case. “Retrospective operation” is an
inaccurate term. Almost every statute affects rights
which would have been in existence but for the statute.
Sect.46 of the Settled Estates Act, 1877, above referred
to, is a good example of this. Sect. 3 does not annul or
make void any existing contract; it only provides that
in the future, unless there is found an express
provision authorizing it, there shall be no right to exact
a fine. I doubt whether the power to refuse consent to
an assignment except upon the terms of paying a fine
can fairly be called a vested right or interest.”
In his concurring judgment, Buckley L.J. observed as follows :-
“During the argument the words “retrospective” and
“retroactive” have been repeatedly used, and the
question has been stated to be whether s.3 of the
Conveyancing Act, 1892, is retrospective. To my mind
the word “retrospective” is inappropriate, and the
question is not whether the section is retrospective.
Retrospective operation is one matter. Interference
with existing rights is another. If an Act provides that
as at a past date the law shall be taken to have been
that which it was not, that Act I understand to be
retrospective. That is not this case. The question here
is whether a certain provision as to the contents of
leases is addressed to the case of all leases or only of
some, namely, leases executed after the passing of the
Act. The question is as to the ambit and scope of the
Act, and not as to the date as from which the new law,
as enacted by the Act, is to be taken to have been the
law.”
AND
There is, so to speak, a presumption that it speaks only
as to the future. But there is no like presumption that
an Act is not intended to interfere with existing rights.
Most Acts of Parliament, in fact, do interfere with
existing rights. To construe this section I have simply
to read it, and, looking at the Act in which it is
contained, to say what is its fair meaning.”
59 In the third decision in In re A SOLICITOR'S CLERK,
reported in [1957] 1 W.L.R. Queen's Bench Division page 1219, the
Court was concerned with the question, as to whether the
disqualification added in the year 1956 by which a person was
disqualified from acting as a solicitor's clerk if he was convicted of
larceny, embezzlement or fraudulent conversion of any property
irrespective of whether it belonged to his employee or one of his
clients could be applied to a person who was convicted of larceny in
the year 1953 i.e. before the disqualification was added. The Court
followed the decision in West and Gwynne's case to observe as
follows :-
“But in my opinion this Act is not in truth
retrospective. It enables an order to be made
disqualifying a person from acting as a solicitor's clerk
in the future and what happened in the past is the
cause or reason for the making of the order, but the
order has no retrospective effect. It would be
retrospective if the Act provided that anything done
before the Act came into force or before the order was
made should be void or voidable, or if a penalty were
inflicted for having acted in this or any other capacity
before the Act came into force or before the order was
made. This Act simply enables a disqualification to be
imposed for the future which in no way affects
anything done by the appellant in the past.”
60 The Constitution Bench of the Apex Court, in Trimbak
Damodhar Raipurkar vs. Assaram Hiraman Patil & Others, reported
in 1962 Supp. (1) SCR page 700 referred with approval the judgment
in West v. Gwynne's case to observe that it is relevant to distinguish
between an existing right and the vested right. Whereas the Statute
operates in future, it cannot be said to be retrospective merely
because within the sweep of its operation all existing rights are
included. In Trimbak's case, by the amendments to Bombay Tenancy
and Agricultural Lands Act, the tenancy of the ordinary tenants as
distinct from protected tenants could not be terminated on the expiry
of their tenancy except by giving one year's notice and that too on the
ground that the lands were required by the landlords for bonafide
personal cultivation and that the income of the said lands would be
the main source of the income of the landlord. The relevant
averments about grounds had to be made by the landlords in issuing
the notice to the tenants for terminating their tenancy. Mr. Dada
countered that the analogy sought to be drawn by on behalf of KCPL
and RSW between issuance of notice of termination by the landlord
and filing of an application under Section 34 of the Arbitration Act is
inappropriate. As the nature of rights accruing upon issuance of
notice to the tenants cannot be equated with the nature of rights
accruing upon the filing of proceedings in court. According to him,
the analogy would have been appropriate if the Amendment Act had
been passed after making of the arbitral award but before filing of an
application under Section 34.
61 The decisions in West V/s. Gwyne's case and Trimbak's
case has been referred with approval by the Apex Court in one of it's
latest decisions also. In P. Susheela V/s. University Grants
Commission reported in (2015) 8 SCC page 129, the Apex Court was
considering applicability of the Regulation promulgated by University
Grants Commission prescribing minimum qualifications as eligibility
condition for recruitment and appointment of Lecturers in
Universities/Colleges/Institutions. While distinguishing between
existing right and vested right, the Apex Court held that, merely
because the regulation laid down additional eligibility condition, it
does not mean that any vested right of the appellants was affected,
nor does it mean that the regulation is, retrospective in operation. A
vested right would arise only if the appellant had actually been
appointed to the post. Till then, there was no vested right and the
only right was to be considered for the post. The condition therefore
was, prospective in action as it would apply only at the stage of
appointment.
62 In yet another decision, the Apex Court, in similar
situation, has referred with approval, the decision in West V/s.
Gwyne's case. In New India Sugar Works V/s. State of Uttar Pradesh
& Others reported in (1981) 2 SCC page 293, it was considering order
of U.P. Government imposing levy on 50% of sugar produced by
manufacturers. It was submitted that, the order could not have any
retrospective operation so as to apply to the stock of sugar
manufactured prior to the date of the order and would apply only to
the sugar produced after coming into force of the impugned
notification. The Apex Court rejected the submission and held that
once the Notification for imposing the levy was made, it will naturally
apply to the stock of sugar which was with the manufacturers
irrespective of the fact that it was manufactured before or after the
order. The reasons stated therefor at para-2 of the decision, read as
under :-
“So far as this argument is concerned we find no
substance in the same because it is not a question of
retrospectivity of the stature but its actual working.
Once the notification imposing the levy was made it
will obviously apply to stock of Khandsari produced
by the petitioners either before or after the order.
This principle has been clearly laid down by the
Constitution Bench of this Court in the case of
Trimbak Damodhar Raipurkar v. Assaram Hiraman
Patil, 1962 Supp 1 SCR 700, where Gajendragadkar, J.
speaking for the court regarding the scope of a Rent
Act and amendment in Rent Act observed as follows :
In this connection it is relevant to distinguish
between an existing right and a vested right.
Where a statute operates in future it cannot
be said to be retrospective merely because
within the sweep of its operation all existing
rights are included.”
63 The observations of the Buckley L.J. in West vs.
Gwynne's, which have been quoted with approval in many of the
decisions of the Apex Court, bring forth with complete clarity, the
retrospective and prospective effect of operation of a Statute. It is
said that, retrospective operation is one matter and interference with
existing rights is another. If an Act provides that as at a past date the
law shall be taken to have been that which it was not, that Act would
be retrospective. In that case, it is effective on a date prior to the date
on which the Act is made applicable. When it is applied to the
existing matters, it's effect is necessarily prospective. The question is
as to the ambit and scope of the Act, and not as to the date as from
which the new law, as enacted by the Act, is to be taken to have been
the law. The further relevant observations of Buckley L.J are : “As
matter of principle an Act of Parliament is not without sufficient
reason taken to be retrospective. There is, so to speak, a presumption
that it speaks only as to the future. But there is no like presumption
that an Act is not intended to interfere with existing rights. Most Acts
of Parliament, in fact, do interfere with existing rights. To construe
this section, I have simply to read it, and, looking at the Act in which
it is contained, to say what is its fair meaning.”
64 Coming to the facts of the present case, in view of the
above position in law, application of amended Section 36 to the
existing matters i.e. the applications under Section 34 of the
Arbitration Act, that are pending as on 23rd October, 2015 is giving
prospective effect to the amendment and not retrospective effect. The
most relevant consideration for applying it to the existing matters is
the nature, ambit and scope of the Amending Act. Under the original
Section 36, filing of an application under Section 34 had the effect of
casting shadow upon the executability of the award. This act of the
award-debtor disabled the award-holder from executing the award in
his favour irrespective of the merit in the challenge. In this
circumstance, there could be no question of any right accruing to the
award-debtor by filing the application under Section 34. The
Amended Section 36 lifts the shadow over the right of the awardholder.
His disability gets removed. At the same time, the application
under Section 34 of the award-debtor remains intact. The removal of
disability is not complete. It is partial. The provision enables the
award-debtor to apply to the Court for make the award inexecutable
pending his application. His right to apply for interim relief during
the pendency of the application under Section 34 is not affected in
any way. In this way in fact the Amending Act brings in balance
between the rights and liabilities of both the sides. The ambit and
scope of the Amended Section 36, is to cure the defect by removing
the imbalance. Thus the application of the provision on the petitions
under Section 34 pending on 23rd October, 2015, is prospective. It
makes no difference if the application under Section 34 filed by the
award-debtor was prior to 23rd October, 2015. Removal of shadow
over the rights of the award-holder cannot be said to be prejudicial to
the award-debtor. He has to now only file an application for interim
reliefs, which may or may not, be subject to imposition of condition.
65 Now that effect of the operation of the amended Section
36, is held to be prospective, there is in fact no need to consider the
alternate argument of justifying retrospective operation, on the
ground of the amendment being curative and procedural. In any case,
that the amending provision is curative cannot be disputed at all.
This is evident from the observations of the Apex Court in Nalco's
case indicating the defects in the Original Section 36, the imbalance
caused by it and the mischief done by it. There can also be no doubt
that, it is procedural in nature as it concerns only the procedural
aspect of the challenge to the arbitral award. It was sought to be
argued that, application of the amendment to the existing matters
would bring in anomaly or absurdity or produce impracticable results.
The submission would have been of some substance if the Amended
Section 36 were not to provide for an application to be made by the
award-debtor for interim reliefs.
66 For the reasons stated above, the Chamber Summonses
are dismissed. The parties shall bear their respective costs.
 (Smt. R.P. SondurBaldota, J.)