In such a situation, it would have to be considered, independent of Section 26 of the Amending Act, as to whether the amended provisions applied to the said second and third category of cases. In this regard, we may note the observations of the Supreme Court in Thyssen (supra) where, after, considering several earlier decisions, the Supreme Court observed in paragraph 32 (which we have already extracted above) that the principles enunciated in the judgments show as to when a right accrues to a party under a repealed Act. The Supreme Court observed that it is not necessary that for the right to accrue, legal proceedings must be pending when the new Act comes into force. Furthermore, and more importantly, the Supreme Court observed that to have the award enforced when arbitral proceedings commenced under the old Act under that very Act was certainly an accrued right. In other words, all the aspects of enforceability of an award entail an accrued right both in the person in whose favour the award is made and against whom the award is pronounced. It will also be noticed that the Supreme Court made it clear that for the right to accrue, there is no necessity that legal proceedings must be pending when the new Act comes into force. This exactly covers the situation as obtaining in the second category of cases, where the arbitral proceedings were commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 had not yet been filed. This is the same situation as in the present case. Thus, the pendency of any legal proceedings or otherwise would not come in the way of determining as to whether the right had accrued under the unamended provisions or not. We have already noted that the Supreme Court in Thyssen (supra) observed that the right to have the award enforced (which also comprises of the negative right of the award debtor to not have it enforced till his objections under Section 34 of the said Act are heard and decided) is certainly an accrued right. Given the fact that the amended Section 36 takes away the right of an automatic stay of enforcement of an award, it is clear that the amendment introduced in Section 36 by virtue of the Amending Act would definitely impinge upon the accrued right of the party against whom the award is given after the arbitral proceedings have been held under the unamended provisions. Since an accrued right is affected, unless a contrary intention appears in the amending statute, the amendments would have to be treated as prospective in operation. Prospective from the standpoint of commencement of the arbitral proceedings.
IN THE HIGH COURT OF CALCUTTA
IN THE HIGH COURT OF CALCUTTA
E.C. No. 1 of 2017
Decided On: 28.06.2017
Braithwaite Burn & Jessop Construction Co. Ltd. Vs. Indo Wagon Engineering Ltd.
Hon'ble Judges/Coram:
Soumen Sen, J.
Citation: AIR 2017(NOC) 923 Cal
1. The petitioner has filed an application for execution of an award dated 11th September, 2015. In column 4 of the tabular statement the petitioner has disclosed that the judgment debtor has filed an application for setting aside of the award under Section 34 of the Arbitration and Conciliation Act, 1996.
2. The judgment debtor appears and resists the execution of the award on the ground that an application under Section 34 of the Arbitration and Conciliation Act, 1996 is pending.
3. The judgment debtor contends that the application for setting aside of the award has been filed within the period of limitation. In view of unamended Section 36 of the 1996 Act the judgment debtor is not entitled to execute the award. In fact, no application for enforcement of award could be filed until the application for setting aside of the award is disposed of in favour of the award holder.
4. The argument proceeds on the unamended provision of Sections 34 and 36 of the 1996 Act.
5. Mr. S.N. Mukherjee, the learned Senior Counsel appearing on behalf of the award holder submits that the award debtor has filed an application for stay of operation of the award in the manner as indicated in Section 34(5) read with Section 36(2) of the Arbitration and Conciliation Act, 1996. Although, the said application has been filed but no stay has been granted by the Court hearing the application for setting aside of the award. In absence of such order the award is executable.
6. The Amendment Act has made a conscious distinction between a proceeding before the arbitral tribunal and a proceeding before the Court. The first limb of Section 26 of the Amendment Act is confined to a proceeding before the arbitral tribunal. The expression "in relation to arbitral proceeding commenced on or after the date of commencement of this Act" refers to a proceeding before a court of law. The proceeding before the arbitrator commences on issuance of a notice under Section 21 of the Arbitration and Conciliation Act. The arbitral proceeding in respect of a dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the other party. Legislative intent for substituting Section 36 of the old Act by a completely new provision is required to be taken into consideration and has to be interpreted to advance the object of such amendment.
7. Section 36 of the Act prior to its amendment did not confer any substantive or vested right to an award debtor. The amendments introduced to Section 36 of the Act are procedural in nature and do not impair the right to challenge the award under Section 34 of the Act.
8. The said Amending Act was needed in view of the observations made by the Apex Court in National Aluminium Co. Ltd. Vs. Pressteel & Fabrications (P) Ltd. & Anr. reported at MANU/SC/1082/2003 : (2004) 1 SCC 540 in which the Apex Court has expressed its concern with the language of Section 34 of the principal Act which makes it clear that an award challenged under Section 34 of the principal Act within the time stipulated therein becomes inexecutable. Mr. Mukherjee has drawn attention to Paragraph 11 of the said report which reads:-
"11. 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."
9. The amendment introduced to Section 36 of the Act is curative as it seeks to do away with the automatic suspension of execution of the award, the moment an application challenging the award was filed, which defeated the very objective of the alternate dispute resolution system to which arbitration belongs. The amendments to Section 36 of the Act merely bring about the required change in law as noted by the Supreme Court in National Aluminum Co. Ltd. (supra).
10. It is argued that no one can have a vested right in a procedure. The amendments to the provisions contained in Section 36 of the Act as introduced by the Amendment Act merely require the provisions contained in Order 41 Rule 5 of the Code of Civil Procedure, 1908 to be considered. The said provisions are merely procedural and even if not complied with do not prevent the appeal being heard on merits. This is because procedural provisions are directory. The decisions of the Apex Court in Vidyavati Gupta & Ors. Vs. Bhaktihari Naik & Ors. reported at MANU/SC/0921/2006 : 2006 (2) SCC 777 Paragraphs 49 and 50, and a Full Bench decision of this Court in Union of India vs. Amitava Paul reported at MANU/WB/0371/2015 : AIR 2015 Cal 89 paragraphs 1 and 42 are relied upon in support of the above submission.
11. Section 36 as it stands is only a procedural law and not a substantive provision. The court is now authorized and empowered to exercise its discretion with regard to stay of execution of an award which under the Principal Act was automatic. This change of law is required to be taken into consideration. These amended provisions according to Mr. Mukherjee are not substantive law and merely procedural. The award debtor cannot have any vested right in the procedural law. Mr. Mukherjee in this regard has relied upon the views expressed in Transmission Corporation of Andhra Pradesh Limited vs. Equipment Conductors and Cables Limited reported at MANU/AP/0993/2016, M/s. Rendezvous Sports World vs. The Board of Control for Cricket in India reported at MANU/MH/2637/2016 (paragraphs 8 to 10, 22 to 25, 34, 36, 41, 43 to 45, 47 to 48, 50, 51, 64 to 66), New Tirupur Area Development Corporation Ltd. vs. M/s. Hindustan Construction Co. Ltd. and Ors. being A. No. 7674 of 2015 in O.P. No. 931 of 2015 and A. No. 7675 of 2015 in O.P. No. 932 of 2015 dated 27th January, 2016 (paragraphs 45, 46, 57, 58, 67, 78 to 82) and Tufan Chatterjee v. Rangan Dhar reported at MANU/WB/0139/2016 : AIR 2016 Cal 213 (paragraphs 8 to 13, 15 to 21, 26 to 35 and 40 to 43).
12. The learned Senior Counsel, however, in all fairness and following the tradition of the bar has referred to three Coordinate Bench decisions of this Court and a Division Bench decision of Delhi High Court in which Section 26 of the Arbitration and Conciliation Act 1996 was considered and held to be retrospective. The four Coordinate Bench decisions of this Court are:-
i) M/s. Reliance Capital Limited vs. Chandana Creations & Ors. in E.C. 301/2012 with G.A. 1406/2016 dated 17th May, 2016;
ii) Electrosteel Castings Limited vs. Reacon Engineers (India) Private Limited in A.P. No. 1710 of 2015 reported at MANU/WB/0447/2016 : 2016 (2) Cal L.T. 277 (H.C).
iii) Sri Nitya Ranjan Jena vs. Tata Capital Financial Services Ltd. in G.A. No. 145 of 2016 with A.P. No. 15 of 2016 dated 2nd March, 2016 and
iv) Saraf Agencies Pvt. Ltd. & Anr. vs. Federal Agencies For State Property Management & Anr. in A.P. No. 1038 of 2016 reported at MANU/WB/0189/2017: AIR 2017 Cal 65.
13. It is submitted that subsequent to the decision in Electrosteel Castings Ltd. (supra), the decision was rendered in Tufan Chatterjee's case referred to above and as such, the same cannot be considered to be good law as has been held by other High Courts in the decisions referred to above.
14. The learned Judge in Electrosteel Castings Ltd. (supra) has not applied the provisions of Section 36 of the Act as amended as there was nothing in the Chapter relating to execution in the Civil Procedure Code which provides for taking security from a judgment debtor. The learned Judge, however, failed to consider Order 41 Rule 5 of the Code.
15. The decision in Saraf Agencies Pvt. Ltd. (supra) is per incuriam as it fails to take into consideration the fact that the ratio in Tufan Chatterjee (supra) was not confined to only applications under Section 9 of the Act. In Tufan Chatterjee's case it had been categorically held in Paragraph 27:-
"27. ....... Proceedings in Court under 1996 Act whether initiated before, during or after the termination of the Arbitral Proceedings, would not attract section 26 of the Amendment Act of 2015".
16. Further, in Tufan Chatterjee's case in Paragraph 28, the Division Bench categorically stated as follows:-
"28. .......The Amendment Act of 2015 would apply to all Court proceedings on and from 23rd October, 2015."
17. Further, in Saraf Agencies Pvt. Ltd. (supra) the issue pertains to proceedings for setting aside of an award.
18. The decisions relied upon by the learned Single Judge in Saraf Agencies Pvt. Ltd. (supra) were concerned with "impairment of the right of appeal". The amendments to Section 36 of the Act do not impair the right to challenge the award under Section 34 of the Act.
19. The learned Single Judge in both Electrosteel Castings Ltd. (supra) and Saraf Agencies (supra) has failed to consider the Full Bench decision of this Hon'ble Court to the effect that provisions contained in Order 41 Rule 5 of the Code of Civil Procedure are directory in nature and therefore procedural.
20. The learned Single Judge in these two decisions in Saraf Agencies case and Electrosteel castings Ltd. case has also failed to appreciate that the amendments introduced to Section 36 of the Act were curative.
21. The learned Sr. Counsel, however, in all fairness has referred to the Division Bench judgment of Delhi High Court in Ardee Infrastructure Pvt. Ltd. vs. Ms. Anuradha Bhatia reported at MANU/DE/0019/2017 and submits that the Division Bench of the Delhi High Court had differed from the view expressed in Tufan Chatterjee (supra).
22. It is submitted that the Division Bench judgment of the Delhi High Court in Ardee Infrastructure Pvt. Ltd. (supra) is not binding on this Court and in fact, had not agreed with the view taken by the Calcutta High Court in Tufan Chatterjee's case. However, Tufan Chatterjee's case is binding on this Court and ought to be followed. The entire decision in Ardee Infrastructures Pvt. Ltd. (supra) proceeds on the basis that Section 36 of the Act conferred a vested right on the award debtor. It is submitted that this is not a correct view. Further, the said decision of the Delhi High Court did not consider the case decided by the Bombay High Court in Rendezvous Sports World (supra) or the decision of the High Court of Andhra Pradesh referred to above. Further, though the decision of the Madras High Court in New Tirupur Area Development Corporation Ltd. (supra) was referred to, the same was not dealt with at all in the judgment.
23. The Shareholders Agreement dated 29th August, 2003 between the parties contain an arbitration clause.
24. The learned Senior Counsel has referred to the Arbitration Clause in the agreement and submits that the said clause clearly shows that the parties have agreed to settle their disputes by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 as amended. The Arbitration Clause is found in Schedule 12.11. Clause (b) of the said Schedule is the Arbitration Clause. The relevant portion of the said Arbitration Clause as necessary for the present purpose is set out herein below:-
"Any Dispute which is not settled after an attempt by the parties to the dispute at amicable negotiations and conciliation under Clause (a) of the Schedule 12.11 shall be resolved by final and binding arbitration held in Kolkata in accordance with the provision of the Arbitration and Conciliation Act, 1996 (of India), as amended (the "Arbitration Act")."
25. By the Arbitration Clause, in the instant case, the parties have agreed to apply the Act "as amended". Accordingly, the parties have agreed to apply the amendments to the Arbitration and Conciliation Act, 1996. That being the position, Section 36 of the Act as amended, would apply and the matter can be proceeded with.
26. The learned Senior Counsel has referred to Section 26 of the Amending Act in which the expression "unless the parties otherwise agree" is appearing. It is submitted that in view of the agreement between the parties that the amended provision of the Arbitration and Conciliation Act, 1996 shall apply, there is no requirement of any fresh agreement between the parties for this purpose.
27. The learned Counsel has submitted that the right must be accrued and not merely inchoate one. The condition of furnishing security cannot be treated as accrued right, moreover, the phrase "in relation to" arbitration proceedings cannot be given a narrow interpretation to mean only pendency of the arbitration proceedings before the arbitrator. The learned counsel has referred the case of Thyssen Stahlunion GMBH Vs. Steel Authority of India Ltd. reported at MANU/SC/0652/1999 : (1999) 9 SCC 334 paragraphs 22, 24 and 35 and submits that the similar phrase used in Section 26 of the Amendment Act should receive similar interpretation so as to include the proceedings before the Court.
28. The Arbitration and Conciliation Act, 1996 has since undergone an amendment by the Amending Act of 2015 and, accordingly, the change of law is required to be taken into consideration and the parties would be bound by the amendment made to the principal Act in relation to proceedings whether pending before the Tribunal or in Court. The learned Senior Counsel has relied upon the decision of the Delhi High Court rendered by the then Chief Justice of Delhi High Court in Jumbo Bags Ltd. VS. The New India Assurance Co. Ltd. reported at MANU/TN/0353/2016 and submits that since the parties have agreed that any subsequent amendment to the 1996 Act would apply the amended provisions of Section 26 shall apply to the execution proceeding.
29. In support of the aforesaid argument, the learned Senior Counsel has also referred to three Single Bench decisions of the Delhi High Court and one of the Allahabad High Court, namely:-
i) Ratna Infrastructure Projects Pvt. Ltd. Vs. Meja Urja Nigam Private Limited (MUNPL) reported at MANU/DE/0944/2017;
ii) Madhava Hytech-Rani (JV) v. Ircon International Limited reported at MANU/DE/3371/2016;
iii) Tantia-CCIL (JV) v. Union of India reported at MANU/DE/3720/2016;
iv) M/s. Shiv Shakti Enterprises Lko. Throu its Proprietor Vs. Union of India Through General Manager Northern Railways reported at 2016 SCC OnLine All 848.
30. Per contra Mr. Anirban Roy, learned Counsel appearing on behalf of the judgment debtor has argued that the amendment to Section 36 by the Amendment Act 2015 cannot affect the existing right of the award debtor to challenge the award without furnishing of any security. The learned counsel has referred to Arbitration and Conciliation (Amendment) Ordinance 2015 and submitted that the present proceeding has been initiated for enforcement of an award which admittedly was passed prior to coming into force of the said Ordinance. The award is of 11 September, 2015 whereas the Ordinance was brought into existence on 23rd October, 2015. The Ordinance was thereafter repealed by the Arbitration and Conciliation Act, 2015. The said Amendment Act dated 31st December, 2015 was given effect retrospectively only from 23rd October 2015 which coincides with the date of Ordinance coming into force. The said ordinance did not contain any provision with regard to the applicability of the amendment proposed by the Ordinance that is to say whether it is retrospective or prospective. The Ordinance does not contain any provision similar to Section 26 of the Amendment Act 2015. Section 26 is not incorporated in the Amendment Act but is a part of Amending Act. If the Amendment Act as on date is taken into consideration, there is no such Section 26 of the Amending Act.
31. By way of an amendment substantive rights cannot be taken away and the substantive rights would be governed by the pre-amended provision of the Act, that is to say, there would be an automatic stay of the award on filing of the application under Section 34 of the Arbitration and Conciliation Act, 1996.
32. The substitution of new section for Section 36 by Section 19 of the Amending Act 2015 which has taken away the right of an award debtor to enjoy an automatic stay has been curtailed and/or taken away is a substantive right and such provision cannot be applied retrospectively.
33. Section 26 of the Amending Act does not expressly or by necessary implication provides that substantive right as vested in any of the parties under the unamended Act has been taken away. The learned Counsel has referred to Section 6 of the General Clauses Act, which deals with the effect of repeal. It is submitted that Section 6(c) of the General Clauses Act clearly provides that the repeal of an Act shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed unless different intention appears. There is no provision in the Amendment Act which expressly or necessary implication provides that the substantive right prevailing prior to the amendment are clogged and/or taken away by the amendment. In view thereof Section 6(c) of the General Clauses Act applies and the substantive right of the award debtor to challenge an award without any fetters and/or any additional conditions being imposed remains unaffected.
34. There is no agreement also as contemplated under Section 26 of the Amending Act between the parties by which the award debtor has agreed to the application of the amended provision of the Act on the award passed prior to the amendment. Section 26 of the Amending Act on a plain reading of the said Section only clarifies that nothing contained in the Amending Act would apply to arbitral proceeding commenced before the commencement of this Act, i.e. the amending act, unless the parties otherwise agree but the amending act would apply in relation to arbitral proceeding commenced on or after the date of commencement of the amending act. In view of the same no part of the amending act including Section 19 therein which amends Section 36 of the principal Act would apply to an arbitral proceedings that has commenced earlier to 23rd October, 2015.
35. The intention of the legislature is absolutely clear as it only clarifies by Section 26 that the effect of the amending act would be only prospective and can be given retrospective upon a specific agreement. However, there is no such agreement between the parties agreeing to the retrospective application of the amending act by and between the parties.
36. In response to the cases cited on behalf of the award holder it is submitted that in Thyseen Stahlunion (supra) although the Supreme Court has held that "in relation to arbitral proceeding" should be given a wide interpretation but in paragraph 4 of the said judgment it has been held that even though the award was subsequent to the promulgation of the 1996 Act, the provision of the repealed Acts including the Act of 1940 would be applicable and thereby arresting the parties to their substantive right which existed on the date the arbitral proceeding had commenced.
37. It is submitted that in order to take advantage of the phrase "unless the parties otherwise agreed" so as to give effect to the newly substituted Section 36 of the 1996 Act as to enforceability of the award to apply retrospectively, it has to be established that the parties have specifically agreed to abide by the amendment to 1996 Act. It is submitted that there is no such agreement. Moreover, Section 26 of the Amendment Act clearly provides that the amendments would not be applicable to any right, accrued prior to 23rd October, 2015 but for an agreement specifically accepting application of the Amendment Act between the parties. There being no such agreement the award holder is not entitled to enforce the award in this proceeding until the application for setting aside of award is decided. The learned Counsel refers to the newly substituted Section 36 and compared it with unamended Section 36 and argued that consideration of Order 41 Rule 5 of the Code of Civil Procedure is introduced by which the Court hearing the application for setting aside of the award is now clothed with a jurisdiction like a civil Court to decide as to whether award which is a deemed decree is liable to be stayed, which was not a consideration under the unamended Section 36 of the 1996 Act. The learned Counsel in this regard has relied upon the paragraphs 7 and 57 of Saraf Agencies (supra).
38. The learned Counsel relying on the said judgment has submitted that the said judgment is binding on this Court and cannot be held to be per incuriam as the learned Single Judge has only held that the Division Bench in Tufan Chatterjee (supra) has not dealt with a matter in relation to the applicability of the Amendment Act on a substantive vested right. That this Court is required to follow Saraf Agencies (supra) as a binding reliance is placed on a decision of the Hon'ble Supreme Court in Sri Venkateswara Rice, Ginning and Groundnut Oil Mill Contractors Co. & Ors. vs. State of Andhra Pradesh & Ors. reported at MANU/SC/0629/1971 : (1971) 2 SCC 650 Paragraph 10.
39. The award debtor has also relied upon the Division Bench judgment of Delhi High Court in Ardee Infrastructure (supra) which has considered the applicability of newly substituted Section 36 in relation to an application for setting aside of an arbitration award passed prior to 23rd October, 2015.
40. The learned Counsel has referred to Videocon International Ltd. vs. Securities & Exchange Board of India Ltd. reported at MANU/SC/0023/2015 : 2015 (4) SCC 33 paragraphs 22, 38, 39, 41 and 42 for the proposition that a valid substantive right can be taken away by an amendment only when the amended provision, expressly or by necessary implication, so provides.
41. In Videocon (supra) the Apex Court was considering the amendment of Section 15Z of the SEBI Act by which the scope of appeal was restricted only on question of law and not on questions of law and facts as it existed earlier. The learned Counsel relying on the aforementioned paragraphs submitted that it is clear from the said judgment that a challenge to the final adjudication by way of appeal formed a part of one intrinsic proceeding and could not be segregated and a change of the forum does not necessarily always mean to be a procedural change but could also be treated to be a change of substantive rights. This itself runs contrary to the findings of the Tufan Chatterjee case. In view of the ratio in Videocon (supra) the existing right under Sections 34 and 36 of the Arbitration and Conciliation Act 1996 as it stood before amendment would govern the parties.
42. The learned Counsel has referred to judgment in Subhas H. Pophale vs. Oriental Insurance Co. ltd. and its Estate Officer reported at MANU/SC/0093/2014 : (2014) 4 SCC 657 paragraphs 54 to 64 and submits that in that case a tenant was sought to be evicted under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 on the ground that he became an "Unauthorized Occupants" in view of change of character and status of the landlord subsequent to the creation of the original tenancy. The landlord was, however, not permitted to evict the tenant under the 1971 Act as the protection of vested rights acquired under the State Rent Act prior to 1971 Act was held to be applicable to the premises concerned.
43. The substantive law is presumed to be prospective and such presumption is one of the facets of the rule of law and it is only when there is a clear provision in the statute that a right created is to be applied retrospectively that a substantive law could be presumed to be retrospective is the submission based on the ratio of the decision of the Supreme Court in State of Punjab and Others vs. Bhajan Kaur & Ors. reported at MANU/SC/7644/2008 : (2008) 12 SCC 112.
44. The award debtor also relies on a judgment of this Hon'ble Court in Nagendra Nath Bose v. Mon Mohan Singh, reported at MANU/WB/0170/1930 : AIR 1931 Cal 100. In the said decision, the Hon'ble Division Bench held that an amendment cannot take away a substantive right and any clog against such substantive right cannot be given effect to retrospectively.
45. That the amended provision can only operate prospectively as it affects substantive vested rights reliance has been placed on K.S. Paripoornan vs. State of Kerala & Ors. reported at MANU/SC/0200/1995 : (1994) 5 SCC 593 paragraphs 64 to 66 while discussing the effect of an amendment of the land Acquisition Act 1894 the Supreme Court in its majority view, has held that substantive rights cannot be invalidated by retrospective application of laws unless so made expressly or by necessary implication. Apex Court also held that while considering whether a particular statute operates prospectively it has to be considered as to what would be the effect of the statute on existing rights and obligation and whether it creates new obligations or levies new liabilities in relation to past transaction. The learned Counsel has invited this Court to test the present amendment in the light of the observations mode by the Apex Court in the aforementioned decision. It is submitted that new obligation has been thrust upon the award holder to secure the award amount and hence clogs and/or affects the existing substantive right which has vested in the award debtor.
46. In dealing with Nalco (supra) it is submitted that the Hon'ble Supreme Court had clearly opined that the right of challenge under Section 34 in its existing form is a substantive right. The requirement of furnishing security arises out of the substantive right to challenge the award. Hence it cannot be said that furnishing of security is procedural in nature only on the ground that it is interim in nature. The requirement of furnishing of security cannot survive on its own as a procedural requirement without the substantive right of challenge to an award. An interim right cannot be a yardstick for consideration of whether a right is substantive or procedural.
47. In dealing with three judgments of the Delhi High Court and one of Allahabad High Court of Coordinate Bench it is submitted that the aforesaid judgments has no relevance in the present case since Section 26 of the Amending Act has been considered in the aforesaid judgment in relation to Section 12 of the Arbitration and Conciliation Act, 1996. In all the aforesaid cases the facts revolved around the qualification of an Arbitrator. Section 12 read with the 5th and 7th Schedule of the Amended Act is a new right which is being created. The pre-amendment act did not provide any substantive right to any party with regard to qualification of an Arbitrator. By the new schedules the procedure laid down with regard to qualification of an arbitrator has been introduced and being procedural had been held to have a retrospective effect.
48. Toofan Chatterjee (supra) was distinguished by submitting that the said case arose from an application under Section 9 of the Arbitration and Conciliation Act, 1996. The Division Bench of this Court went on to distinguish Section 26 in light of Section 9 of the Act which after amendment required such application to be made before the learned Arbitrator. No substantive right is effected in such change of Forum and the Hon'ble Division Bench has proceeded to hold that amended provision in relation to court proceeding would have retrospective effect. However, in this case the Videocon (supra) or Dhadi Shau case has not been considered which had held that an amendment of forum would not necessarily be procedural right.
49. It is submitted that Transmission Corporation (Supra) is not binding on this court inasmuch as the said judgment did not take into consideration Saraf Agencies (supra) and has relied upon the judgment of the coordinate bench of the Bombay High Court which has observed that under Section 34 of the Act the Courts exercises supervisory jurisdiction and not appellate jurisdiction and by reason whereof the application under Section 34 could not be treated to be a continuation of the original lis. Such finding is without consideration of the fact that legislature has itself sought to incorporate provision of Order 41 of the Code of civil Procedure 1908 which relates to appeal. Even in paragraph 74 of the judgment the conclusion that Section 26 is a part of the amended Act is a patent error. In paragraph 91 it has been held that Amended Section 26 has taken away right to claim deemed stay accrued to the petitioner without considering that there has been no amendment of Section 26 of the existing Act. Rather Section 26 of the amending act is a clarification of the applicability of the amendment to the Principal Act by the amending act.
50. In dealing with Rendezvous (supra) the learned counsel has submitted that in paragraph 36 of the said judgment it has been held that an application under Section 34 is a continuation of the main lis but holds that Section 36 cannot be held to be a part of the same proceeding without giving any reason to for such conclusion. While considering Section 36 of the amended act, in paragraph 41 the Hon'ble Bombay High Court has not considered Section 26 of the Amending Act. However, in paragraph 54 the Hon'ble Judge has held that vested right are prospective in nature. In paragraph 64 it has also been held that the amended Section 36 lifts the shadow over the right of the award holder and therefore agrees that a new right is being created in favour of the award holder. However, section 6 of the General Clauses Act has not been considered which provides that a right is being created which is substantive in nature and hence could not be prospective. Furthermore, the Single Bench had also held that the effect of the operation of the amended Section 36 is prospective. The Hon'ble Bombay High Court was also considering a case where the application under Section 34 had been filed prior to promulgation of the Ordinance. Hence observation of the Bombay High Court is not a part of the ratio of the judgment and does not even have any persuasive value.
51. In dealing with the New Tirupur Development Corporation (supra) it is submitted that the Hon'ble Madras High Court has sought to rely upon the judgment passed in Thyseen's case to observe that in Section 26 of the amended Act there is a clear deletion of the words "in relation to".
52. The Court considered the effect of the deletion of the words, "in relation to" in Section 26 of the Amendment Act in contrast to Section 85(2) of the Principal Act were the legislature has categorically intended to apply all the provisions of the repeal Act in relation to the arbitral proceedings. The attention of the court is drawn to paragraph 61 of the said judgment where the learned Single Judge has considered the decision of the Hon'ble Supreme Court in NALCO (supra). It is submitted that paragraph 10 of the NALCO's judgment was not taken into consideration which makes it clear that the amendment would operate prospectively. The learned Single Judge has put Section 26 of the Amendment Act in the same pedestal as Section 85 of the 1996 Act without considering that there is a substantial difference between the two sections inasmuch as it has been held in later part of the judgment that "Section 26 is a stage post arbitral proceedings" without giving reasons for such conclusion.
53. The executability of the award is thus, resisted by the award debtor at this stage.
54. The short question arises in this proceeding is the applicability of Section 26 of the Amendment Act 2015 in relation to enforceability of the award passed prior to 23rd October, 2015.
55. If the matter in question is a matter of procedure only and does not touch and/or affect a right in existence at the time of passing of the Amendment Act, 2015 the provision of Section 26 of the Amendment Act would apply retrospectively. Therefore, the only question is, was the executably of an award passed prior to 23rd October, 2015 but challenged after the Amendment Act 2015 had come into operation without furnishing security is a vested right, in other word, whether Section 36(2) and Section 36(3) of the 1996 Act read with Section 26 of the Amendment Act, 2015 deal with procedural law and would operate retrospectively.
56. However, this question needs to be answered keeping in mind the argument that the arbitration clause which provides that the Arbitration and Conciliation Act, 1996 as amended shall apply.
57. The Arbitration and Conciliation (Amendment) Ordinance, 2015 is repealed by the Arbitration and Conciliation Act, 2015 which has come into force on 23rd October, 2015, that is to say, the day when the Ordinance was promulgated. The Amendment Act was given a retrospective effect on and from 23rd October, 2015. Section 27 of the Amendment Act, 2015 is the repeal and savings clause which reads:-
"S. 27. (1) The Arbitration and Conciliation (Amendment) Ordinance, 2015, (Ord. 9 of 2015), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the principal Act, as amended by the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of the principal Act, as amended by this Act."
58. In the year 2001. The Government made a reference to the Law Commission to undertake a comprehensive review of the Arbitration and Conciliation Act, 1996 in view of various shortcomings observed in its working and also various representations received by the Government in this regard. After an in-depth study of the law of the subject, the Commission made its recommendations for bringing amendments in the Arbitration and Conciliation Act, 1996 in its 176th Report. The Report was submitted on 12th September, 2001 under the Chairmanship of Justice B.P. Jeevan Reddy. The Government considered the recommendations of 176th Report and after consulting the State Governments and various institutions decided to accept almost all the recommendations and, accordingly, the Arbitration and Conciliation (Amendment) Bill, 2003 was introduced in the Rajya Sabha on 22nd December, 2003. Subsequently, on July 22, 2004, the Government constituted a Committee known as the "Justice Saraf Committee on Arbitration" under the Chairmanship of Dr. Justice B.P. Saraf to make an in-depth study of the analysis of the recommendations of the 176th Report of the Law Commission and all aspects relating to the Arbitration and Conciliation (Amendment) Bill, 2003. Justice Saraf Committee gave a detailed reported on January 12, 2005. In the Report amongst others, proposed substitution of Section 36 was considered by the Committee and the Committee observed:-
"Section 36 deals with enforcement of an award. It reads:
"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."
Section 36, as it stands now, provides that the enforcement of the award will come to a stop upon the filing of an application under sub-section (1) of section 34 to set aside the award.
The Law Commission observed that parties are filing applications to set aside the award even though there is no substance whatsoever in such applications and, to put a stop to this practice, proposed the amendment of section 36 by deleting the words which say that the award will not be enforced once an application is filed under sub-section (1) of section 34.
To give effect to the above recommendation of the Law Commission, the Amendment Bill seeks to substitute the existing section 36 by the following:
"36.(1) Where the time for making an application to set aside the arbitral award under sub-Section (1) of Section 34 has expired, then, subject to the provisions of sub-sections (2) to (4), the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court.
(2) Where an application is filed in the Court under sub-section (1) of section 34 to set aside an arbitral award, the filing of such an application shall not by itself operate as a stay of the award unless, upon a separate application made for that purpose, the Court grants stay of the operation of the award in accordance with the provisions of sub-section (3).
(3) Upon filing of the separate application under sub-section (2) for stay of the operation of the award, the Court may, without prejudice to any action it may take under sub-section (1) of section 37C and subject to such conditions as it may deem fit to impose, grant stay of the operation of the arbitral award for reasons in brief to be recorded in writing:
Provided that the Court shall, while considering the grant of stay, keep the grounds for setting aside the award in mind.
(4) The power to impose conditions referred to in sub-section (3) includes the power to grant interim measures not only against the parties to the award or in respect of the property which is the subject-matter of the award but also to issue ad interim measures against third parties or in respect of property which is not the subject-matter of the award, in so far as it is necessary to protect the interests of the party in whose favour the award is passed.
(5) The ad interim measures granted under sub-section (4) may be confirmed, modified, or vacated, as the case may be, by the Court subject to such conditions, if any, as it may, after hearing the affected parties, deem fit."
This is a very good provision. It will have a salutary effect on the expeditious execution of the awards. It provides that an award will be enforceable after the period fixed for filing applications under section 34 has expired, unless the court stays its enforcement. The court is vested with powers to refuse stay or grant stay subject to conditions. While granting stay, the court can impose conditions, keeping the scope of interference in applications under sub-section (1) of section 34 in mind. The manner of imposing conditions and interim measures has also been specified.
The Committee is of the opinion that this amendment may be accepted."
59. On consideration of the Report of the Departmental Related Standing Committee on Personnel, Public Grievance, Law and Justice by which various amendments were recommended by the said Committee, the above Bill was withdrawn from the Rajya Sabha. Thereafter, on 8th April, 2010, the Ministry of Law and Justice issued a consultative paper inviting suggestions, commenced from eminent lawyers, judges, industry members, institutions and various other sections of the Government and other stakeholders in order to undertake a study for suggesting amendment to the 1996 Act. After considering the suggestions received from various sections, the Law Commission has prepared the 246th Report of Arbitration and Conciliation Act, 1996 in 2014 and submitted its report on 5th August, 2014 under the Chairmanship of Justice Ajit Prakash Shah. The said report was accepted and subsequently on 23rd October, 2015, the President promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2015 amended the Arbitration and Conciliation Act, 1996. The Ordinance amended, amongst others, Section 34 and Section 36 of the 1996 Act. In fact, Section 36 of the principal Act was substituted by a new provision.
60. The legislature was aware of the defects to be cured in the earlier legislation as unmeritorious applications for setting aside of the award were filed to delay enforcement of the award and defeat the object of the 1996 Act but has consciously not put any such conditions in the Amendment Act, 2015 affecting proceedings commenced prior to 23rd October, 2015.
61. The argument of Mr. Mukherjee is mainly based on the observation of the Hon'ble Supreme Court in National Aluminium Co. Ltd. (supra) where it was observed that the legislature must reconsider the provision with regard to the enforcement of an award as automatic suspension of the execution of the award as soon as application filed under section 34 of the Act leaving no discretion in the court to put the parties on terms, defeats the very objective of the alternate dispute resolution system to which arbitration belongs. Parliament is presumed to know the law.
62. Repeal of an Act divesting vested rights is always disfavoured. Presumption is against repeal by implication and the reason is based on the theory that the legislation, while enacting a law, has complete knowledge of the pre-existing law on the same subject-matter. (Preddinti Venkata Murali Ranganatha Desika Iyengar & Ors. Vs. Govt. of A.P. & Anr. reported at MANU/SC/0255/1996 : (1996) 3 SCC 75)
63. Section 26 of the Amendment Act has no corresponding provision in the Ordinance. The plain and simple reading of Section 26 of the Amendment Act makes it clear that the provisions of the Amendment Act would apply prospectively.
64. Arguments have been advanced on either side with regard to the nature of the rights that a litigant enjoyed under the Principal Act, 1996 with regard to the enforceability of the award. While the award-debtor would contend that reading into the section a condition with regard to furnishing of security would fetter a substantive right to challenge the award unconditionally under the Parent Act, the contention of the award-holder is that the newly substituted Section 36 deals with procedural law inasmuch as newly substituted Section does not say that the Court, in all cases, may require furnishing of security and may, in appropriate cases, while considering an application for setting aside of the award, if satisfied with the merits of the claim, even dispense with furnishing of security. The rigours of Order 41 Rule 5 of the Code of Civil Procedure may not apply strictly although the Court would have due regard to the said provisions for grant of stay while considering an application for grant of stay in the case of arbitral award for payment of money.
65. The phrase "vested right" has been considered by the Apex Court in the case of Bibi Sayeeda v. State of Bihar, MANU/SC/0481/1996 : (1996) 9 SCC 516 as:
"17. The word 'vested' is defined in Black's Law Dictionary (6th Edn.) at p. 1563 as:
"Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent."
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. In Webster's Comprehensive Dictionary, (International Edn.) at p. 1397 'vested' is defined as:
"[L]aw held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests."
66. "Substantive law", is that part of the law which creates, defines and regulates rights in contrast to what is called adjective or remedial law which provides the method of enforcing rights. (See Executive Engineer, Dhenkanal Minor Irrigation Division v. N.C. Budharaj, MANU/SC/0016/2001 : (2001) 2 SCC 721)
67. In Thirumalai Chemicals Limited v. Union of India, MANU/SC/0427/2011 : (2011) 6 SCC 739, the Hon'ble Apex Court had the occasion to compare substantive law with procedural law and after taking into consideration the earlier decisions, the Apex Court had stated:-
"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 law establishes a mechanism for determining those rights and liabilities and a machinery for enforcing them. 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."
68. The aspect of retrospectivity came up for consideration in K. Kapen Chako v. Provident Investment Co. (P) Ltd., MANU/SC/0481/1976 : (1977) 1 SCC 593, where it was observed:-
"37. A statute has to be looked into for the general scope and purview of the statute and at the remedy sought to be applied. In that connection the former state of the law is to be considered and also the legislative changes contemplated by the statute. Words not requiring retrospective operation so as to affect an existing statutory provision pre-judicially ought not be so construed. It is a well recognised rule that statute should be interpreted if possible so as to respect vested rights. Where the effect would be to alter a transaction already entered into, where it would be to make that valid which was previously invalid, to make an instrument which had no effect at all, and from which the party was at liberty to depart as long as he pleased, binding, the prima facie construction of the Act is that it is not to be retrospective. (See Gardner v. Lucas).
38. In Moon v. Durden a question arose as to whether Section 18 of the Gaming Act, 1845 which came into effect in August 1845 was retrospective so as to defeat an action which had been commenced in June 1845. The relevant section provided that no suit shall be brought or maintained for recovering any such sum of money alleged to have been won upon a wager. It was held that it was not retrospective. Parke, B. said: "It seems a strong thing to hold that the legislature could have meant that a party who under a contract made prior to the Act, had as perfect a title to recover a sum of money as he had to any of his personal property, should be totally deprived of it without compensation.
39. Again in Smithies v. National Union of Operative Plasterers Section 4 of the Trade Disputes Act, 1906 which enacted that an action for tort against a trade union shall not be entertained by any court was held not to prevent the courts from hearing and giving judgment in actions of that kind begun before the passing of the Act. It is a general rule that when the legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them. But there is an exception to this rule, namely, where enactments merely affect procedure and do not extend to rights of action. See Re Joseph Suche & Co. Ltd. If the legislature forms a new procedure alterations in the form of procedure are retrospective unless there is some good reason or other why they should not be. In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future."
69. The exact nature of the distinction between the substantive law and the law of procedure cannot be precisely defined. Administration of justice consists first in determination of rights and secondly, in the application of remedies. That branch which defines the rights is said to be substantive law. The other branch which determines the remedies to the violation of such rights is called procedural law. But such a distinction is too naive to be good as a juristic norm. There are many rights which really are integral parts of the procedure. They are, for instance, right of appeal, right to give evidence on one's behalf, a right to interrogate the other party and similar rights. On the other hand remedies may be a part of substantive law. What then, is a true distinction, is discussed in detail by Professor P.J. Fitzgerald, Editor of the Salmond on Jurisprudence, 12th Edn. at pages 461 and 462 in these words:-
"What, then, is the true nature of the distinction? The law of procedure may be defined as that branch of the law which governs the process of litigation. It is the law of actions - jus quod ad actiones pertinent - using the term action in a wide sense to include all legal proceedings, civil or criminal. All the residue is substantive law, and relates, not to the process of litigation, but to its purposes and subject-matter. Substantive law is concerned with the ends which the administration of justice seeks; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated.
So far as the administration of justice is concerned with the application of remedies to violated rights, we may say that the substantive law defines the remedy and the right, while the law or procedure defines the modes and conditions of the application of the one to the other."
70. Justice P.B. Mukharji in his Tagore Law Lectures on the New Jurisprudence has suggested that a three-fold approach is possible while scrutinizing substantive jurisprudence and procedural jurisprudence. It is stated:-
"In the first place it is even found that a contract can be proved only by writing. This is usually regarded as a rule of evidence and therefore procedural. But the corresponding rule of substantive law is that a contract is void in certain cases unless reduced to writing. That is substantive law. Secondly, conclusive presumption, as distinguished from rebuttable presumption although appears in the garb of procedure, yet it is in effect essentially substantive law. The procedural jurisprudence makes it a rule of evidence that a minor under eight is incapable of criminal intention but the other side of the picture that such a minor is not punishable for crime is substantive law. Salmond gives two more illustrations on this branch of the difference. The act of a servant done in the course of the master's business with the master's authority is conclusive presumption of law within the realm of procedure. But it is pointed out that it is the forerunner of the modern substantive law of employer's liability. Similarly a bond was a conclusive proof of the existence of the debt but in the modern jurisprudence the bond itself creates a debt. Even a promissory note or a bill of exchange is a separate cause of action independent of the original consideration. Salmond therefore points out that it has passed from the domain of procedure into the domain of substantive law. Thirdly, the limitation of action is regarded as the procedural equivalent of the substantive law of prescription.
Procedural jurisprudence includes the making of claim, the issue of summons, the answer, the discovery and inspection of documents, proof, judgment and execution.
Procedure usually is said to include actionability, limitation, estoppels, the question of proper parties, evidence and remedies. The question of procedure becomes one of practical importance in dispute involving problems of conflict of laws. On each one of the topics about procedure just mentioned illustration from the conflict of laws can be drawn from such instances (1) actionability, (2) limitation, (3) estoppels, (4) proper parties. Normally the procedural jurisprudence is enclosed within the doctrine of lex fori. If the courts decide that the question is one of substance then it is no longer lex fori but the proper law of transaction will apply. The ferment in procedural jurisprudence has become intense in the modern age."
71. The true principle is that lex prospicit non respicit (law looks forward not back). Retrospective legislation is 'contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law'. (Phillips v. Eyre (1870) LR 6 QB) The basis of the principle against retrospectivity 'is no more than simple fairness, which ought to be the basis of every legal rule'. (L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. [1994] 1 AC 486, per Lord Mustill at 525)
Example 97.1 It was held that the principle of fairness would be infringed if it were found that the Social Security Act 1986 s. 53 (repealed) was retrospective, since in some circumstances it would render third parties liable to make reimbursement in respect of past payments when they were not so liable under the previous law. It would also remove a defence previously available. (Plewa v. Chief Adjudication Officer [1995] 1 AC 249)
72. Retrospectivity is artificial, deeming a thing to be what it was not. Artificiality and make-believe are generally repugnant to law as the servant of human welfare. So it follows that the courts apply the general presumption that an enactment is not intended to have retrospective effect. As always, the power of Parliament to produce such an effect where it wishes to do so is nevertheless undoubted.
73. The general presumption, which applies only unless the contrary intention appears, is stated in Maxwell on the Interpretation of Statutes in the following emphatic terms:
'It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication'.
74. Maxwell's statement has received frequent judicial approval. (See eg Carson v. Carson [1964] 1 WLR 511 at 516) It is however too dogmatically framed, and describes as a rule what is really no more than a presumption which, in a particular case, may be outweighed by other factors. Where, on a weighing of the factors, it seems that some retrospective effect was intended, the general presumption against retrospectivity indicates that this should be kept to as narrow a compass as will accord with the legislative intention. (Lauri v. Renad [1892] 3 Ch 402 at 421)
75. There is of course no room for the presumption where the enactment is expressly stated to be retrospective.
76. The retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards a matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. (Re Athlumney, 1898 (2) QB 547 at 551 & 552) This is because a procedural change is expected to improve matters for everyone concerned (or at least to improve matters for some, without inflicting detriment on anyone else who uses ordinary care, vigilance and promptness). (L'Office Cherifien (supra) at page 495) The question therefore is whether, on the facts of the instant case, the enactment is substantive or merely procedural.
77. Procedural provisions expected to be beneficial Procedure and practice is the mere machinery of law enforcement.
'The object of all procedural rules is to enable justice to be done between the parties consistently with the public interest'. (Imperial Tobacco Ltd. v. A-G [1979] QB 555, per Ormrod LJ at 581)
78. If the procedural rules are defective, the legal apparatus works less efficiently and the public interest suffers. The appropriate authorities then seek to remedy the defect by changing, or persuading Parliament to change, the inadequate rule. If no one suffers thereby, it is sensible to apply this improvement to pending proceedings. (See Bennion on Statutory Interpretation, 5th Edition)
79. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. In Gardner v. Lucas, (1878) 3 App. Cas. 582 at page 601 Lord O'Hagan said "Unless there is declared intention of the legislature-clear and unequivocal - unless there are circumstances rendering it inevitable that it should take the other view we are to presume that the Act is prospective and not retrospective". In Reid v. Reid, (1886) 31 Ch D 402 Bowen L.J. said "The particular rule of construction which has been referred to, but which is valuable only when the words of an act of parliament are not plain, is embodied in the well known maxim, Omnis nova constitution futuris temporibus formam imponere debet non praeteritis - that is, except in special cases, the new law ought to be construed so as to interfere as little as possible with vested rights. It seems to me that even in construing an Act which is to a certain extent retrospective, and in construing a section which is to a certain extent retrospective, we ought, nevertheless, to bear in mind that maxim as applicable whenever we reach the line at which the words of the section cease to be plain. That is necessary and logical corollary of the general proposition, that you ought not to give a larger retrospective power to a section, even in an Act which is to some extent intented to be retrospective, than you can plainly see the legislature meant". (Cf. R. V. Ipswich Union (1877) 2 Q.B.D. 269, 270)
80. Professor S.G.G. Edgar, Editor of Craise on Statute Law, 7th Edition, has expressed the view that retrospectivity should not be ordinarily presumed and the general rule of law that statutes are not to operate retrospectively unless there is an express enactment or could be inferred from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation. A statute is not to be read retrospectively except of necessity. There are views which suggest that the court must look to the general scope and purview of the statute, and the remedy sought to be applied, and to consider what was the former state of the law, and what was it that the legislature contemplated. In Main v. Stark, (1890) 15 App. Cas. 384 at page 388 Lord Selborne said: Their lordships, of course, do not say that there might not be something in the context of an Act of Parliament, or to be collected from its language, which might give to words prima facie prospective a larger operation, but they ought not to receive a larger operation unless you find some reason for giving it.....In all cases it is desirable to ascertain the intention of the legislature. He went on: Words not requiring a retrospective operation, so as to affect an existing statute prejudicially, ought not to be so construed.
81. So careful are the courts in endeavouring to protect vested rights that we find that in several cases judges have refused to allow statutes to have a retrospective operation, although their language seemed to imply that such was the intention of the legislature, because, if the statutes had been so construed, vested rights would be defeated. In Gardner v. Lucas (supra), Lord Blackburn stated this rule of law in the following way with regard to the effect of a statute upon a transaction past and closed. "Where" said he, the effect would be to alter a transaction already entered into, where it would be to make that valid which was previously invalid, to make an instrument which had no effect at all, and from which the party was at liberty to depart as long as he pleased, binding-I think the prima facie construction of the Act is that it is not to be retrospective and it would require strong reasons to show that it is not the case. It is a general rule that when the legislature alters the right of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them. But there is an exception to this rule, namely, where enactments merely affect procedure and do not extend to rights of action. For it is perfectly settled that if the legislature forms a new procedure, that, instead of proceeding in this form or that, you should proceed in another and a different way, clearly bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be. In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties, it will be held to apply prima facie to all actions, pending as well as future. (See Craies on Statute Law, 7th Edition)
82. As a logical corollary of the general rule, that retrospective operation is not taken to be intended unless that intention is manifested by express words or necessary implication, there is a subordinate rule to the effect that a statute or a section in it is not to be construed so as to have larger retrospective operation than its language renders necessary.
83. In other words close attention must be paid to the language of the statutory provision for determining the scope of the retrospectivity intended by Parliament. But if the literal reading of the provision giving retrospectivity produces absurdities and anomalies, a case not prima facie within the words may be taken to be covered, if the purpose of the provision indicates that the intention was to cover it. The inhibition against retrospective construction is not a rigid rule and must vary secundum materiam. It has been said that "the basis of the rule is no more than simple fairness which ought to be the basis of every legal rule." [L' Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd., MANU/UKHL/0046/1993 : (1994) 1 All ER 20, p. 29(J)]
84. The presumption against retrospective operation is, however, not applicable to declaratory statutes which, however, is not the case here. In Purbanchal Cables & Conductors (P) Ltd. v. Assam SEB, MANU/SC/0540/2012 : (2012) 7 SCC 462, the Apex Court was deciding whether the Interest on Delayed Payments to Small Scale and 19 Page 20 Ancillary Industrial Undertakings Act, 1993 could be said to be retrospective. After a review of various judgments it was held:-
"There is no doubt about the fact that the Act is a substantive law as vested rights of entitlement to a higher rate of interest in case of delayed payment accrues in favour of the supplier and a corresponding liability is imposed on the buyer. This Court, time and again, has observed that any substantive law shall operate prospectively unless retrospective operation is clearly made out in the language of the statute. Only a procedural or declaratory law operates retrospectively as there is no vested right in procedure. In the absence of any express legislative intendment of the retrospective application of the Act, and by virtue of the fact that the Act creates a new liability of a high rate of interest against the buyer, the Act cannot be construed to have retrospective effect. Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only be said to accrue for sale agreements after the date of commencement of the Act i.e. 23-9-1992 and not any time prior." [paras 51 and 52].
85. Similarly, in CIT v. Vatika Township (P) Ltd., MANU/SC/0810/2014 : (2015) 1 SCC 1, the Apex Court held that the proviso to Section 113 of the Indian Income Tax Act, 1961 was prospective and not retrospective. In so holding, the Constitution Bench adverted to certain general principles as under:-
"Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basis of every legal rule as was observed in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. [MANU/UKHL/0046/1993 : (1994) 1 AC 486 : (1994) 2 WLR 39 : (1994) 1 All ER 20 (HL)] Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later." [paras 28 and 29]
86. The Principal Act that is the 1996 Act was amended by the Ordinance. The Ordinance, however, is silent about its retrospective operation. Section 26 of the Amendment Act, for the first time, clarified that the provisions of the Arbitration and Conciliation (Amendment) Act, 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the Principal Act before the commencement of the Amendment Act, 2015 unless the parties otherwise agree. However, the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act. It is a golden rule of interpretation that natural and ordinary meaning of words should not be departed from unless it can be shown that the legal context in which the words are used requires a different meaning. The plain meaning rule was expressed by Lord Reid as follows:
'In determining the meaning of any word or phrase in a statute the first question to ask always is what is the natural or ordinary meaning of that word or phrase in its context in the statute. It is only when that meaning leads to some result which cannot reasonably be supposed to have been the intention of the legislature that it is proper to look for some other possible meaning of the word or phrase.' (Pinner v. Everett [1969] 1 WLR 1266 at 1273)
This may be compared to the following dicta by Lawton LJ:
'The only safe and correct way of construing statutes is to apply the plain meaning of the words'. (McCormick v. Horsepower Ltd. [1981] 1 WLR 993 at 999)
'As the meaning of the words ... is clear, and no ambiguity, whether patent or latent, lurks within them, under our rules for the construction of Acts of Parliament the statutory intention must be found within those words.' (Macarthys Ltd. v. Smith [1979] 3 All ER 325 at 332)
87. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. There is a presumption of prospectivity articulated in the legal maxim 'nova constitution futuris formam imponere debet non praeteritis', i.e. 'a new law ought to regulate what is to follow, not the past', and this presumption operates unless shown to the contrary by express provision in the statute or is otherwise discernible by necessary implication. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is "deemed to be prospective only - 'nova constitution futuris formam imponere debet non praeteritis'." In the words of LORD BLANESBURG, "Provisions which tough a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment." "Every statute, it has been said", observed LOPES, L.J., "which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already past, must be presumed to be intended not to have a retrospective effect". (See Principles of Statutory Interpretation by Justice GP Singh, 14th Edition)
88. If rights created in favour of any person, whether they are property rights or rights arising from a transaction in the nature of a contract or rights protected under a statute, are to be taken away by any legislation, then that legislation will have to say so specifically by giving its provision a retrospective effect. This principle was applied by the Supreme Court to protect a 'deemed tenant' under section 15A of the Bombay Rent Act, 1947, from eviction as an 'unauthorised occupant, under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. The Supreme Court held that a 'deemed tenant' under the 1947 Act continued to be protected under its succeeding Act, being the Maharashtra Rent Control Act, 1999, in view of the definition of 'tenant' under section 7(15)(a)(ii), thereof, and he therefore cannot be said to be in 'unauthorised occupation' of the premises. His right as a 'deemed tenant' cannot be destroyed by giving retrospective effect to the provisions of the Public Premises Act since there is neither such express provision therein, nor is it warranted by any implication. [Suhas H. Pophale (supra)]
89. The rule against retrospective construction is not applicable to a statute merely "because a part of the requisites for its action is drawn from a time antecedent to its passing". If that were not so, every statute will be presumed to apply only to persons born and things come into existence after its operation and the rule may well result in virtual nullification of most of the statutes. An amending Act is, therefore, not retrospective merely because it applies also to those to whom pre-amended Act was applicable if the amended Act has operation from the date of its amendment and not from an anterior date. (Bishun Narain Misra v. State of U.P., MANU/SC/0280/1964 : AIR 1965 SC 1567) A statute which takes away or impairs any vested right acquired under existing laws or which creates a new obligation or imposes a new burden in respect of past transactions will not be treated as retrospective. (K.S. Paripoornan v. State of Kerala, MANU/SC/0200/1995 : JT 1994 (6) SC 182 pp. 213, 214 : AIR 1995 SC 1012 at 1034 and 1035) Thus, to apply an amending Act, which creates a new obligation to pay additional compensation, or which reduces the rate of compensation, to pending proceedings for determination of compensation for acquisitions already made, will be to construe it retrospectively which cannot be done unless such a construction follows from express words or necessary implication. Similarly, a new law enhancing compensation payable in respect of an accident arising out of use of motor vehicle will not be applicable to accidents taking place before its enforcement and pending proceedings for assessment of compensation will not be affected by such a law unless by express words or necessary implication the new law is retrospective. It makes no difference in application of these principles that the amendment is by substitution or otherwise.
90. Another principle flowing from presumption against retrospectivity is that "one does not expect rights conferred by the statute to be destroyed by events which took place before it was passed." (Birmingham City Council v. Walker, (2007) 3 All ER 445, p. 449 (para 11) (HL)
91. In contrast, that an Act is not to be given a retrospective effect applies only to statutes which affect vested rights. It does not apply to statutes which only alter the forum of procedure or admissibility of evidence, or the effect which the courts give to evidence. If a new Act affects matters of procedure only, then, prima facie, it applies to all actions pending as well as future. In stating the principle that a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective, the Supreme Court in Anant Gopal Sheorey v. State of Bombay reported at MANU/SC/0046/1958 : AIR 1958 SC 915 has quoted with approval the reason of the rule as expressed in MAXWELL: "No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner prescribed for the time being by or for the court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode". Relying upon this principle it has been held that "if a court has jurisdiction to try the suit, when it comes for disposal, it cannot refuse to assume jurisdiction by reason of the fact that it had no jurisdiction to entertain it at the time when it was instituted." (Sudhir G. Angur v. M. Sanjeev, MANU/SC/1647/2005 : (2006) 1 SCC 141) It has been said that law relating to forum and limitation is procedural in nature whereas law relating to right of action and right of appeal even though remedial is substantive in nature; that a procedural statute should not generally speaking be applied retrospectively where the result would be create new disabilities or obligations or to impose new duties in respect of transactions already accomplished; that a statute which not only changes the procedure but also creates new rights and obligations shall be construed to be prospective, unless otherwise provided either expressly or by necessary implication. (Hitendra Vishnu Thakur v. State of Maharashtra, MANU/SC/0526/1994 : AIR 1994 SC 2623)
92. Any change in the law relating to appeals, after institution of original proceedings, which adversely touches this vested right is presumed not to be retrospective. (Colonial Sugar Refining Company v. Irving, (1905) AC 369 (PC) and Garikapati v. Subbiah Choudhry, MANU/SC/0008/1957 : AIR 1957 SC 540)
93. The principle laid down in Colonial Sugar (supra) has been accepted by the Hon'ble Supreme Court in Garikapati (supra) where, on a review of earlier authorities, S.R. Das, C.J. deduced the following five propositions: "(i) 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; (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 carrier 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 filing of 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."
94. Garikapati (supra) has approved the law laid down by this Court in Nagendra Nath Bose v. Mon Mohan Singh, MANU/WB/0170/1930 : AIR 1931 Cal 100 where change in law imposing condition of deposit of decretal amount before exercise of right of appeal for setting aside an execution sale was held to be prospective.
95. The effect of substitution of a provision results in repeal of the old provision and replacement of a new provision. The Hon'ble Supreme Court in State of Rajasthan Vs. Mangilal Pindwal reported at MANU/SC/0549/1996 : (1996) 5 SCC 60 quoted with approval and has placed reliance on the following passages from Craies on Statute Law and Sutherland on Statutory Construction:-
"When an Act of Parliament is repealed, "said Lord Tenterden in Surtees v. Ellison, "it must be considered (except as to transactions past and closed) as if it had never existed. That is the general rule. Tindal C.J. stated title exception more widely. He said: "The effect of repealing a statute is to obliterate it as completely from the records of the Parliament as if it had never been passed and it must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law." (Craies on Statute Law, 7th Edn. Pp. 411-412)
"Since an amendatory act alters, modifies, or adds to a prior statute, all courts hold that a repealed act cannot be amended that is, no court will give effect to a repealed law because the legislature attempted to amend it." (Sutherland on Statutory Construction, Vol. I Para 1903, pp. 328-329)
96. Thereafter, it is stated:-
"9. As pointed out by this Court, the process of a substitution of statutory provision consists of two Steps first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. [see Koteshwar Vittal Kamath v. K. Rangappa, MANU/SC/0036/1968 : 1969 (3) SCR 40, at p. 48] In other words, the Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. As regards repeal of a statute the law is thus stated in Sutherland on Statutory Construction:
"The effect of the repeal of a statute where neither a saving clause nor a general saving statute exists to prescribed the governing rule for the effect of the repeal, is to destroy the effectiveness of the repealed act in future and to divest the right to proceed under the statute, which, except as to proceedings past and closed, is considered as if it had never existed." [Vol. I, para 2042, pp. 522-523]
10. Similarly in Crawford's Interpretation of Laws it has been said:
"Effect of Repeal, Generally. - In the first place, an outright repeal will destroy the effectiveness of the repealed act in future and operate to destroy inchoate rights dependent on it, as a general rule. In many cases, however, where statutes are repealed, they continue to be the law of the period during which they were in force with reference to numerous matters." [pp. 640-641]
11. The Observations of Lord Tenterden and Tindal C.J. referred in the abovementioned passages in Craies on Statute Law also indicate that the principle that on repeal a statute is obliterated is subject to the exception that it exists in respect of transactions past and closed. To the same effect is the Jaw laid down by this Court. [See: Qudrat Ullah v. Municipal Board. Bareilly. MANU/SC/0418/1973 : 1974 (2) SCR 530, at p. 539]
12. This means that as a result of repeal of a statute the statute as repealed ceases to exist with effect from the date of such repeal but the repeal does not affect the previous operation of the law which has been repealed during the period it was operative prior to the date of such repeal."
97. The case of Nogendra Nath Bose (supra) is indeed very much to the point. In that case the plaintiffs instituted a suit for rent valued at Rs. 1,306/15 and obtained a decree. In execution of that decree the defaulting tenure was sold on 20.11.1928, for Rs. 1,600. On 19.12.1928, an application was made, under O. XXI, R. 90, Civil PC, by the present petitioner, who was one of the judgment-debtors, for setting aside the sale. That application having been dismissed for default of his appearance the petitioner preferred an appeal to the District Judge of Hoogly who refused to admit the appeal on the ground that the amount recoverable in execution of the decree had not been deposited as required by the proviso to S. 174, Cl. (c), of the Bengal Tenancy Act as amended by an amending Act in 1928. The contention of the petitioner was that the amended provision which came into force on 21.2.1929, could not affect the right of appeal from a decision on an application made on 19.12.1928, for setting aside the sale. Mitter J. said at pp. 101-102:-
"We think the contention of the petitioner is well-founded and must prevail. That a right of appeal is a substantive right cannot now be seriously disputed. It is not a mere matter of procedure. Prior to the amendment of 1928, there was an appeal against an order refusing to set aside a sale (for that is the effect also where the application to set aside the sale is dismissed for default) under the provisions of O. 43, R. (1), Civil PC. That right was unhampered by any restriction of the kind now imposed by S. 174(5), Proviso. The Court was bound to admit the appeal whether appellant deposited the amount recoverable in execution of the decree or not. By requiring such deposit as a condition precedent to the admission of the appeal, a new restriction has been put on the right of appeal, the admission of which is now hedged in with a condition. There can be no doubt that the right of appeal has been affected by the new provision and in the absence of an express enactment this amendment cannot apply to proceedings pending at the date when the new amendment came into force. It is true that the appeal was filed after the Act came into force, but that circumstance is immaterial - for the date to be looked into for this purpose is the date of the original proceeding which eventually culminated in the appeal."
98. The newly inserted Section 36 cannot be read in isolation dehors Section 34. It is a continuation of the same proceeding, that is to say, intrinsically connected with the setting aside of an award. The application for setting aside of the award and its enforcement can be regarded as one legal proceeding having regard to the language employed in the said two sections. The right to prefer an application for setting aside without furnishing security prior to the amendment constitutes a vested substantive right and such a vested substantive right can be taken away by an amendment only when the amended provision expressly or by necessary intendment so provides.
99. In Tufan Chatterjee (supra) the Court was not invited to decide the issue that came up for consideration in Saraf Agency (supra) or before this Court. Although there are observations in Paragraphs 27 and 28 of the judgment to which Mr. Mukherjee has drawn my attention that the Amendment Act, 2015, would apply to all Court proceedings on and from 23rd October, 2015, in my respectful reading of the said judgment, it appears that the said observation was made in relation to an application under Section 9 of the Arbitration and Conciliation Act, 1996. The Division Bench was considering as to whether in a pending reference, the Court would entertain an application under Section 9 of the Arbitration and Conciliation Act when the Arbitrator has been conferred with similar powers under the amended Section 17 of the 1996 Act. Change of forum is always a matter of procedure and facet of procedural law. The judgment has to be read contextually. It is well-settled that a judgment cannot be read as an Euclid's Theorene. The judgment is an authority for what it decides and not what logically follows from it.
100. In Saraf Agency (supra), the learned Judge held that the decision in Tufan Chatterjee (supra) was a decision sub-silentio and hence not binding. This Court is also of the same opinion.
101. As to what constitutes a binding precedent or a decision sub-silentio came up for consideration in several decisions to which reference may be made to a few.
102. In Additional District Magistrate, Jabalpur v. Shivakant Shukla, MANU/SC/0062/1976 : (1976) 2 SCC 521 has observed:-
"394. . ....... The Earl of Halsbury, L.C. said in Quinn v. Leathem, 1901 AC 495, 506 that the generality of the expressions which may be found in a judgment are not intended to be expositions of the whole law but are governed and qualified by the particular facts of the case in which such expressions are to be found. This Court in the State of Orissa v. Sudhansu Sekhar Misra, MANU/SC/0047/1967 : (1968) 2 SCR 154, 163, uttered the caution that it is not a profitable task to extract a sentence here and there from a judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein.......... "
474. . ..... when we are considering the observations of a high judicial authority like this Court, the greatest possible care must be taken to relate the observations of a judge to the precise issues before him and to confine such observations, even though expressed in broad terms, in the general compass of the question before him, unless he makes it clear that he intended his remarks to have a wider ambit. It is not possible for judges always to express their judgments so as to exclude entirely the risk that in some subsequent case their language may be misapplied and any attempt at such perfection of expression can only lead to the opposite result of uncertainty and even obscurity as regards the case in hand...
103. In Municipal Corporation, Delhi v. Gurnam Kaur reported at MANU/SC/0323/1988 : (1989) 1 SCC 101, the Hon'ble Supreme Court held:-
"11. Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivered without argument, without reference to the relevant provisions of the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavements or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in these words:
A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio."
"12. In Gerard v. Worth of Paris Ltd. (k)., the only point argued was on the question of priority of the claimant's debt, and, on this argument being heard, the court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd., the court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority."
104. In Union of India and Others v. Dhanwanti Devi and Others, MANU/SC/1272/1996 : (1996) 6 SCC 44, it has been observed:-
"9. .....It is not everything said by a Judge while giving judgment that constitutes a precedent. The only thing in a Judges decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding. It is only the principle laid down in the judgment that is binding law under Article 141 of the Constitution. A deliberate judicial decision arrived at after hearing an argument on a question which arises in the case or is put in issue may constitute a precedent, no matter for what reason, and the precedent by long recognition may mature into rule of stare decisis. It is the rule deductible from the application of law to the facts and circumstances of the case which constitutes its ratio decidendi.
10. Therefore, in order to understand and appreciate the binding force of a decision it is always necessary to see what were the facts in the case in which the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and therefore, Judges are to employ an intelligent technique in the use of precedents...."
105. Similarly, in Director of Settlements, A.P. and Others v. M.R. Apparao and Another, MANU/SC/0219/2002 : (2002) 4 SCC 638, a Bench comprising of three Judges of the Apex Court has observed:-
"7. .....But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence ....... A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An "obiter dictum" as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision..."
106. The right to execute an award in absence of any stay by the Court hearing the application for setting aside of an award stems from an interpretation of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015. The said Section reads:-
"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."
107. The said section came into operation on and from 23rd October, 2015. The Amendment Act has consequently amended amongst other Section 34 and 36 of the Principal Act. In fact, Section 36 of the Principal Act has been substituted in its entirety.
108. If the interpretation of the said Section is that the phrase "in relation to arbitral proceedings commenced on or after the date of commencement of the Act" means and includes proceedings before the Court and not before the arbitral tribunal one might perhaps be inclined to hold that an application filed under Section 34 of the Arbitration and Conciliation Act against an award passed prior to 23rd October, 2015 would have to follow the procedure under Section 34(5) and Section 36(2) and 36(3) of the present Act meaning thereby the amended provision introduced by the Amendment Act on 23rd October, 2015 would apply to such proceeding and the award debtor would not be entitled to an automatic stay of the award.
109. Under the Principal Act there was no requirement of award debtor to file an application separately for stay of operation of the arbitral award. An award debtor enjoys an automatic stay of operation of the award provided he files an application for setting aside the award within 3 months from the date on which he had received the arbitral award. The Court, however, can extend the period for making the application by a further period of 30 days provided sufficient cause is shown for not being able to make the application within the aforesaid period of 3 months. The Court, however, does not have any power to extend the time beyond the period of 30 days. This provision, however, has remained unamended. However, Section 36 has been completely deleted, erased and substituted by a new provision by the Amendment Act of 2015.
110. The old and new Section 36 of the Arbitration and Conciliation Act, 1996 are set out in the following table.
Pre-amendment
Post-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.
36. (1) Where the time for making an application to set aside the arbitral award under Section 34 has expired, then, subject to the 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 an application shall not by itself render that award unenforceable, unless the court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay of the 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 for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908.
111. Section 26 of the Amendment Act used the phrase "in relation to arbitral proceedings" a similar expression which is also found in Section 85(2) of the 1996 Act. Section 85 is the repeal and savings clause which repeals 3 acts namely - (i) The Arbitration (Protocol and Convention) Act, 1937, (ii) The Arbitration Act, 1940 and (iii) the Foreign Awards (Recognition and Enforcement) Act, 1961.
112. The comparison of the two sections is set out in the following table:
Section 26 under the 2015 Act
Section 85(2)(a) under the 1996 Act
"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."
"(2) Notwithstanding such repeal, (a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force."
113. The aforesaid provisions are referred as the learned Counsel for the parties had relied upon the said provision in support of their respective contention.
114. The views with regard to the interpretation of Section 26 in relation of Section 36 are also divergent.
115. Four Co-ordinate Bench decisions of this Court in:
1. M/s. Reliance Capital Limited vs. Chandana Creations & Ors. in E.C. 301/2012 with G.A. 1406/2016 dated 17th May, 2016.
2. Electrosteel Castings Limited vs. Reacon Engineers (India) Private Limited reported in MANU/WB/0447/2016 : 2016 (2) Cal L.T. 277 (H.C).
3. Sri Nitya Ranjan Jena vs. Tata Capital Financial Services Ltd. in G.A. No. 145 of 2016 with A.P. No. 15 of 2016 dated 2nd March, 2016 and
4. Saraf Agencies Pvt. Ltd. & Anr. vs. Federal Agencies For State Property Management & Anr. reported at MANU/WB/0189/2017 : AIR 2017 Cal 65 have held that the repeal and savings clause of the amendment Act 2015 does not apply to an award passed prior to 23rd October, 2015. However, a Division Bench of this Court in Sri Tufan Chatterjee (supra) has held that proceedings in court under the 1996 Act whether initiated before, during or after termination of the arbitral proceeding would not attract Section 26 of the Amendment Act, 2015.
116. The Hon'ble Division Bench was considering the power of the Court to grant interim relief under Section 9 of the 1996 Act vis-Ã -vis the power of the arbitral tribunal to grant such interim reliefs under the amended Section 17 of the 1996 Act after the Amendment Act of 2015 came into force in respect of arbitral proceedings which had commenced before the Amendment Act of 2015 came into force.
117. In paragraph 12 of the said report the Division Bench has formulated the question which reads:
"12. The short question in this appeal is, whether the Court has been denuded of power to grant interim relief to the appellant under Section 9 of the 1996 Act, from the date on which the Amendment Act of 2015 came into force, since an Arbitral Tribunal has been constituted, and arbitral proceedings have commenced."
118. The said issue was answered in paragraphs 24, 26, 27, 28, 29, 36, 37, 38, 39, 40, 41, 42 and 43 which reads:-
"24. Arbitral proceedings are proceedings before an Arbitral Tribunal, and no proceedings in Court under the provisions of the 1996 Act. Section 21 of the 1996 Act creates a legal fiction by which the arbitral proceedings commence on the date of receipt, by the respondent, of a request to refer the dispute to arbitration. Thus for the purpose inter alia of limitation the Arbitration proceedings commence on the date of receipt of a request by the respondent, to refer the dispute to arbitration, so that a claim is not defeated merely by delaying the reference.
26. A careful reading of the provisions of the 1996 Act, and in particular Sections 21 and 32 thereof, makes it amply clear that the expression 'arbitral proceedings' in Section 26 of the Amendment Act of 2015 cannot be construed to include proceedings in a Court under the provisions of the 1996 Act, and definitely not any proceedings under Section 9 of the 1996 Act, instituted in a Court before a request for reference of disputes to arbitration is made.
27. Arbitral proceedings can be said to commence, when a request for reference to arbitration is received by the respondent and/or the authority competent under the arbitration agreement, upon notice to the respondent. The arbitral proceedings, which so commence, terminate with a final award as provided in Section 32(1) of the 1996 Act or with an order under Section 32(2) of the 1996 Act Proceedings in Court under the 1996 Act whether initiated before, during or after the termination of the arbitral proceedings, would not attract Section 26 of the Amendment Act of 2015.
28. The amendment Act of 2015, which came into force with effect from 23rd October, 2015, would apply to arbitral proceedings which commenced after 23rd October, 2015 but not to arbitral proceedings which commenced before 23rd October, 2015. The Amendment Act of 2015 would apply to all Court proceedings on and from 23rd October, 2015.
29. The amendment Act of 2015 has retrospective operation from 23rd October, 2015. After 23 rd October, 2015, the Court cannot entertain an application for interim relief under Section 9(1) of the 1996 Act, once the arbitral tribunal has been constituted, unless the Court is satisfied that circumstances exist, which may not render the remedy provided under Section 17 efficacious.
36. After amendment by the Amendment Act of 2015, the scope of Section 17 has considerably been widened and the Arbitral Tribunal has expressly been conferred the same power, as the Court under Section 9. An order of the Tribunal under Section 17 is also enforceable in the same manner as an order of Court under Section 9, under the provisions of the Civil Procedure Code.
37. Mr. Chowdhury questioned the power of the Arbitral Tribunal to grant the interim reliefs contemplated in Section 17 of the 1996 Act, as amended by the Amendment Act of 2015, in case of arbitral proceedings which had commenced before the Amendment Act of 2015 came into force.
38. Mr. Chowdhury submitted that, since the Amendment Act did not apply to arbitral proceedings that had already commenced before the said Act came into force the arbitral tribunal lacked power to grant those reliefs. The only remedy available to the appellant was to approach Court under Section 9 of the 1996 Act.
39. The power of the Arbitral Tribunal under Section 17 of the 1996 Act was always of the widest amplitude. From the inception, the Arbitral Tribunal had power under the 1996 Act to order a party to take any interim measure of protection, as the Arbitral Tribunal might consider necessary, in respect of the subject matter of the disputes. The Arbitral Tribunal, therefore, all along had all the powers of Court under Section 9 of the 1996 Act. The Amendments to Section 17 of the 1996 Act by the Amendment Act of 2015 are only clarificatory. The amendments have possibly been made only by way of abundant caution.
40. It is a cardinal principle of construction that every statute is prospective unless it is expressly or by necessary implication made to have retrospective operation, but the rule in general is applicable when the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only.
41. In contrast to statutes dealing with substantive rights, statutes dealing with merely matters of procedure are presumed to be retrospective, unless such a construction is textually inadmissible. As held by the Supreme Court in Anant Gopal Sheorey Vs. State of Bombay reported in MANU/SC/0046/1958 : AIR 1958 SC 915 no person has vested right in any course of procedure. He has only the right of prosecution or defence in the manner prescribed for the time being by law in the Court in which the case is pending and if by an Act of Parliament the mode of procedure is altered he has no other right than to proceed according to the altered mode. Law relating to forum is procedural in nature.
42. If, therefore, during the pendency of proceedings in the Civil Court, a new law is enacted, which is worded as to denude the Civil Court of jurisdiction except in specified circumstances, the Civil Court will be debarred from exercising jurisdiction unless the conditions precedent for exercise of jurisdiction by the Civil Court exist. This proposition finds support from the judgment of the Supreme Court in Inacio Martines Vs. Narayan Hari Naik reported in MANU/SC/0288/1993 : AIR 1993 SC 1756. Reference may also be made to United Bank of India, Calcutta Vs. Abhijit Tea Co. Pvt. Ltd. reported in MANU/SC/0551/2000 : AIR 2000 SC 2957.
43. Even though an earlier application for interim relief may have been filed in Court, once arbitral proceedings have commenced and an arbitral tribunal has been appointed, interim relief would have to be sought before the learned Arbitrator. The Court would be denuded of its power to grant interim relief unless the Court is satisfied that circumstances exist, which may not render the remedy provided under Section 17 efficacious.
(emphasis supplied)
119. The Court had taken into consideration the Amendment to Sections 9 and 17 of the Principal Act. In the Principal Act by an amendment two provisions have been added, namely, Sub-sections 9(2) and 9(3). The power of the arbitral tribunal was enlarged. The arbitral tribunal now enjoys same and similar power that of a court under Section 9 of the principal act. Section 17 of the Principal Act was substituted by Section 10 of the Arbitration and Conciliation Act, 2015 with effect from 23rd October, 2015.
120. The said judgment was referred to and relied upon in AP No. 955 of 2015, AP No. 956 of 2015 and AP No. 957 of 2015 in the matter of Unitech Developers & Projects Limited vs. Sreei Infrastructure Finance Limited dated 21st July, 2016.
121. In Saraf Agencies Pvt. Ltd. (supra) the Division Bench judgment in Tufan Chatterjee was considered in the context of an application under Section 34 of the Arbitration and Conciliation Act in relation to an interim arbitral award published on 14th October, 2016. The issue arose as to whether an application for setting aside of an award passed prior to 23rd October, 2015 shall be governed by the amended provision of Section 36 of the 1996 Act. The Ld. Judge held that in Tufan Chatterjee (supra) the Division Bench did not consider the effect of an application under Section 34 filed after the Amendment Act has come into force in relation to arbitration proceeding commenced prior to coming into force of the said Act and the said decision cannot be considered to be an authority for the proposition that the amended provision of Section 36 should be applicable in relation to an award passed prior to coming into force of the amendment act but filed subsequent thereto. The issue raised before the learned Single Judge is formulated in paragraph 7 which reads:
"In Tufan Chatterjee v. Rangan Dhar reported in MANU/WB/0139/2016 : AIR 2016 Cal 213 Division Bench of our Court, presided over by Justice Indira Banerjee an application under Section 9 of the 1996 Act praying for an order of injunction was filed in August, 2015 before the learned District Judge, Alipur. An injunction was granted. During the pendency of the said order, the Arbitral Tribunal was constituted and arbitration proceedings commenced. Parliament enacted the Arbitration and Conciliation (Amendment) Act, 2015 with effect from 23rd October, 2015. Section 9(3) was added by the Amendment Act by which once the Arbitral Tribunal had been constituted, the Court shall not entertain an application under sub-section 1 but the parties would have to apply to the arbitrator under Section 17. The Division Bench held (a) The 1996 Act, in particular Sections 21 and 32 made it clear that arbitral proceedings in Section 26 could be construed to include proceedings in a court, including proceedings under Section 9 of the 1996 Act instituted in a court before a request for reference of dispute to arbitration was made. (b) The Amendment Act 2015 would apply to court proceedings filed on and from 23rd October, 2015. There was a significant difference between the language of Section 85(2)(a) of the 1996 Act and Section 26 of the Amendment Act. Section 85(2)(a) made the provisions of the repealed enactments applicable "in relation to" arbitral proceedings whereas Section 26 of the Amendment Act said that the section shall apply "to" the arbitral proceedings. (c) Even though an earlier application for interim relief may have been filed in court, once the arbitral proceedings had commenced before the Arbitral Tribunal, the interim relief would have to be sought before the learned arbitrator. No person had any vested right in procedure. The law relating to forum was procedural in nature. The court would be denuded of its power to grant interim relief unless the court was satisfied that the circumstances existed.
How far Tufan Chatterjee is Binding on This Court?
First of all, this case was concerned with a pending Section 9 application on the date of Amendment of the Act. The court construed the determination of this Section 9 application by an authority whether court or Arbitral Tribunal as a procedural matter. It did not matter whether an amendment dealing with procedure had retrospective effect. It analysed the case of Thyseen only to explain the point that the "arbitral proceedings" in Section 26 referred to proceedings before the arbitrator.
The case said nothing about the effect of the Section 34 application filed after the Amendment Act came into force in relation to the arbitration proceedings which commenced before coming into force of the Act. In other words, the court did not have the occasion to deal with such an application involving substantive rights of the parties. The court had no occasion to consider the effect of the General Clauses Act, 1897. It only said that the General Clauses Act did not normally preserve any procedure as there could be no vested right in procedure.
Therefore, any observation made in the judgment is to be strictly confined to the facts of that case. Any ratio except the analysis of arbitral proceedings should not be extended so as to be applicable in a Section 34 proceeding, by implication.
At any rate, I have followed the substantial ratio of this case that the Amendment Act did not apply to arbitral proceedings which commenced prior to the Amendment Act. This decision is sub silentio with regard to the observations that I shall be making in the course of this judgment."
57. SUMMARY OF MY FINDINGS
a. The draftsman took into account the case of Thyseen Stahlunion Gmbh v. Steel Authority of India Ltd. reported in MANU/SC/0652/1999: (1999) 9 SCC 334 while drafting Section 26. Hence, in the first limb he consciously used the words 'to' arbitral proceedings and not "in relation to arbitral proceedings". This was to dispel any notion created on an interpretation of Thyseen that the words "in relation to arbitral proceedings" would relate to arbitral reference as well as court proceedings. By use of the word 'to' in the first limb of Section 26 the legislature meant reference to arbitration proceedings before the learned Arbitrator. Section 21 and Section 32 of the Act support this interpretation.
b. The first limb is silent about the rights of a party to approach the court in proceedings to set aside the award arising out of the aforesaid arbitral proceeding.
c. In my opinion, the right of a party under given conditions to challenge the award upto the highest level, is a vested right which vested in the parties when a request was made under Section 21 of the Act to refer the dispute to arbitration. The Amendment Act did not take away this right by any express terms. Therefore this right and remedy are preserved under Clause-6 of the General Clauses Act, 1897.
d. On the contrary, the use of "in relation to" in the second limb of Section 26 is to be given the meaning attributed to it in Thyseen. The legislature is deemed to have full knowledge of this decision while framing the enactment and is deemed to have used it in the context of the judgment to mean arbitration proceedings before the Arbitrator as well as in court.
e. The phrase "shall apply in relation to arbitral proceedings which commenced after the date of commencement of this Act" in the Second limb of Section 26 has to be given a wide and meaningful interpretation. Considering the interpretation I have made of the first limb of Section 26, the Amendment Act would apply in relation to arbitral proceedings as well as court proceedings following the interpretation of "in relation to arbitral proceedings" in Thyseen. Furthermore, the arbitral proceedings in court should arise out of arbitral proceedings before the learned Arbitrator commenced after coming into force of the Amendment Act.
58. Therefore, the preliminary question raised in this application is answered by stating that the Act before amendment would apply in relation to the subject Arbitral proceedings and the Court proceedings, and that no application for stay or furnishing of security by the award debtor is necessary.
The application to set aside the award (AP 1038 of 2016) is admitted. Let affidavits be exchanged according to the following directions. Affidavit-in-opposition to be filed by 17th April, 2017. Listed this application on 27th April, 2017. Affidavit in reply may be filed in the mean time. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
122. The Co-ordinate Bench in Saraf Agencies Private Limited (supra) has referred to the views of Delhi and Madras High Court on this issue and has accepted the Division bench judgment of Delhi High Court in Ardee Infrastructure Pvt. Ltd. vs. Ms. Anuradha Bhatia reported at MANU/DE/0019/2017.
123. In Thyssen (supra) Section 85(2)(a) was held to be savings clause. It exempts the old Act from complete obliteration so far as pending arbitration proceedings are concerned. That would include saving of whole of the old Act up till the time of the enforcement of the award. Thus, Section 85(2)(a) prevents the accrued right under the old Act from being affected. This would be clear from the observation made by the Hon'ble Supreme Court in paragraph 22, 24, 28 and 35 of the said report which read:
"22. For the reasons to follow, we hold:
1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before coming into force of the new Act (The Arbitration and Conciliation Act, 1996).
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 award becoming decree under Section 17 thereof and also appeal arising thereunder.
3. In cases where arbitral proceedings have commenced before coming into force of the new Act and are pending before the Arbitrator, it is open to the parties to agree that new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act.
4. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act comes into force.
5. Once the arbitral proceedings have commenced, it cannot be stated that right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act that some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force.
6. If narrow meaning of the phrase "in relation to arbitral proceedings" is to be accepted, it is likely to create great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the New Act. Challenge of award can be with reference to the conduct of arbitral proceedings. An interpretation which leads to unjust and inconvenient results cannot be accepted.
7. A foreign award given after the commencement of the new Act can be enforced only under the new Act. There is no vested right to have the foreign award enforced under the Foreign Awards Act (Foreign Awards (Recognition and Enforcement) Act, 1961)."
24. The contention that if it is accepted that the expression "in relation to" arbitral proceedings would include proceedings for the enforcement of the award as well, the second limb of Section 85(2)(a) would become superfluous. We do not think that would be so. The second limb also takes into account the arbitration agreement entered into under the old Act when the arbitral proceedings commenced after the coming into force of the new Act. Reference in this connection be made to a decision of this Court in MMTC Ltd. v. Sterlite Industries (India) Ltd., MANU/SC/1298/1996 : [1996] 6 SCC 716 where this Court held that validity of an arbitration agreement did not depend on the number of arbitrators specified in Section 7 of the new Act and that the number of arbitrators is dealt with separately under Section 10 of that Act which is a part of machinery provision for working of the arbitration agreement. In this case the question which came up for decision was the effect of the new Act on the arbitration agreement made prior to the commencement of the new Act which provided for appointment of one arbitrator by each of the parties who shall appoint an umpire before proceeding with the reference. The agreement was entered into on December 14, 1993 before the coming into force of the new Act. Section 10 of the new Act provides that parties are free to determine the number of arbitrators, provided that such number shall not be an even number. Further failing the determination of odd number of arbitrators, the arbitral tribunal shall consist of a sole arbitrator. This Court upheld the validity of the arbitration agreement dated December 14, 1993 and directed the Chief Justice of the High Court concerned to appoint the third arbitrator under Section 11(4)(b) of the new Act in view of the failure of the two appointed arbitrators to appoint the third arbitrator. In this case it may be noticed that the respondent had invoked arbitration clause in the agreement by letter dated January 19, 1996 which was received by the appellant on January 31, 1996. The arbitral proceedings would, therefore, commence under Section 21 of the new Act on January 31, 1996 as by that time new Act had come into force.
28. Section 85(2)(a) is the saving clause. It exempts the old Act from complete obliteration so far as pending arbitration proceedings are concerned. That would include saving of whole of the old Act uptill the time of the enforcement of the award. This Section 85(2)(a) prevents the accrued right under the old Act from being affected. Saving provision preserves the existing right accrued under the old Act. There is a presumption that Legislature does not intend to limit or take away vested rights unless the language clearly points to the contrary. It is correct that the new Act is a remedial statute and, therefore, Section 85(2)(a) calls for strict construction, it being a repealing provision. But then as stated above where one interpretation would produce an unjust or an inconvenient result and another would not have those effects, there is then also a presumption in favour of the latter".
35. Parties can agree to the applicability of the new Act even before the new act comes into force and when the old Act is still holding the field. There is nothing in the language of Section 85(2)(a) which bars the parties from so agreeing. There is, however, a bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitral proceedings under the old Act have not commenced though the arbitral agreement was under the old Act. Arbitration clause in the contract in the case of Rani Construction (Civil Appeal No. 61 of 1999) uses the expression "for the time being in force" meaning thereby that provision of that Act would apply to the arbitration proceedings which will be in force at the relevant time when arbitration proceedings are held. We have been referred to two decisions - one of the Bombay High Court and the other of the Madhya Pradesh High Court on the interpretation of the expression "for the time being in force" and we agree with them that the expression aforementioned not only refers to the law in force at the time the arbitration agreement was entered into but also to any law that may be in force for the conduct of arbitration proceedings, which would also include the enforcement of the award as well. The expression "unless otherwise agreed" as appearing in Section 85(2)(a) of the new Act would clearly apply in the case of Rani Constructions in Civil Appeal No. 61 of 1999. Parties were clear in their minds that it would be the old Act or any statutory modification or re enactment of that Act which would govern the arbitration. We accept the submission of the appellant Rani Construction that parties could anticipate that the new enactment may come into operation at the time the disputes arise. We have seen Section 28 of the Contract Act. It is difficult for us to comprehend that arbitration agreement could be said to be in restraint of legal proceedings. There is no substance in the submission of the respondent that parties could not have agreed to the application of the new Act till they knew the provisions thereof and that would mean that any such agreement as mentioned in the arbitration clause could be entered into only after the new Act had come into force. When the agreement uses the expressions "unless otherwise agreed" and "law in force" it does give an option to the parties to agree that the new Act would apply to the pending arbitration proceedings. That agreement can be entered into even before the new Act comes into force and it cannot be said that agreement has to be entered into only after the coming into force of the new Act."
124. In Thyssan (supra) the Supreme Court observed that the parties had anticipated that the new Act may come into operation at the time the disputes arise, and held that an agreement could be entered into for application of the new Act. The High Court had held that the agreement could be entered only after the coming into force of the new Act. The Hon'ble Supreme Court disagreed and observed, "It cannot be said that such an agreement is hit by sec. 28 of Contract Act. The agreement can be entered into even before or after the new Act came into force". Thus the arbitral proceeding could be conducted under the new Act.
125. The expression "unless otherwise agreed by the parties" had come up for consideration in a later judgment in N.S. Nayak and Sons vs. State of Goa reported at MANU/SC/0398/2003 : (2003) 6 SCC 56. In paragraph 14 and 16 the said expression was discussed after taken into consideration Thyssen (supra). The said paragraphs read:
"14. Conclusion 3 only reiterates what is provided in various sections of the Arbitration Act, which given option to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the arbitrator. The phrase "unless otherwise agreed by the parties" used in various sections, namely 17, 21, 23(3), 24(1), 25, 26, 29, 31, 85(2)(a) etc. indicates that it is open to the parties to agree otherwise. During the arbitral proceedings, right is given to the parties to decide their own procedure. So if there is an agreement between the parties with regard to the procedure to be followed by the arbitrator, the arbitrator is required to follow the said procedure. Reason being, the arbitrator is appointed on the basis of the contract between the parties and is required to act as per the contract. However, this would not mean that in appeal parties can contend that the appellate procedure should be as per their agreement. The appellate procedure would be governed as per the statutory provisions and parties have no right to change the same. It is also settled law that the right to file an appeal is accrued right that cannot be taken away unless there is specific provision to the contrary. There is no such provision in the new Act. In the present cases, the appeals were pending before the High Court under the provisions of the old Act and, therefore, appeals are required to be decided on the basis of the statutory provisions under the said Act. Hence there is no substance in the submission made by the learned counsel for the appellant."
"16. The aforesaid discussion only deals with the contention that parties could not have agreed to the application of the new Act till they had the knowledge about the provisions thereof and, therefore, the agreement to the effect that to the arbitral proceedings, the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof would be applicable, is not valid. The Court negative the said contention by interpreting the expression "unless otherwise agreed". The court held that such agreement could be entered into even before coming into force of the new Act. However, it nowhere lays down that in a pending arbitral proceeding, which was being conducted as per the procedure prescribed under the old Act, the parties have option of changing the procedure."
126. In New Tirupur (supra) the learned Single Judge was considering the effect of the deletion of the words "in relation to" in the opening words of Section 26 and comparing it with Section 85 of the principal Act where similar phrase occurs. The learned Judge applied the legislative intend to interpret the said phrase and accordingly held that the said Section would apply provision in respect of the application filed challenging the award passed prior to the date of amendment that is to say giving retrospective effect to Section 26 of the Amendment Act. The reason appears to be that the Court did not accept the literal construction and held that the court should have due regard to the object and reason for such amendment and the intention of the legislature has to be deduced from the scheme of that. The amendment by way of substitution and deletion has been examined keeping in mind the changes made from the existing law, however, in paragraph 67 of the judgment it is observed:
"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."
127. Thereafter, the Court interpreted Section 26 of the Amendment Act by considering the legislative history of the enactment and the reason for such amendment. In paragraph 73 the Court says:
"73. The ambiguity in the language in Section 85(2) of the Act, was capable or interpretation of more than one meaning, which was cleared in Thyssen Stahlunion GMBH's case, cited supra. Now the legislature has deleted the words "in relation to" with a clear intent to regulate the proceedings, after the termination of the arbitration proceedings and there is restructuring of the scheme of 1996 Act, with the introduction of Sub-Sections (2) and (3) of Section 36 of the Principal Act, 1996. If Sub-sections (2) and (3) of Amendment Act to Section 36 of the Principal Act, is conjointly read with Section 26 of the Amended Act, both deemed to have come into force of the Act, from 23.10.2015, then the Court has to consider, as to whether, construction and giving effect to both provisions from the same date, would lead to inconsistency or repugnancy between the two Sections and also the other parts of the statute and at this stage, it is the duty of the Court to consider, as to whether, said provisions, either in clear terms, appear to be inconsistent or there is a possibility of harmonising both to give effect to the provisions. Now, after the Arbitration and conciliation (Amendment) Ordinance, 2015 and the subsequent amendment the ambiguity no longer exists, as the legislature has deleted the words in relation to arbitral proceedings in the first part of Section 26 of the Amendment Act. Deletion or exclusion reflects the legislature intent."
128. However, in paragraph 79 it was observed that Section 26 of the Amendment Act cannot be extended to include the post arbitration proceedings when the award is passed before the commencement of the Amendment Act and then in the subsequent paragraphs it proceeds to hold that the amendments made with reference to the applicability of the provision of the Amending Act should be read and construed with the new provisions and not with reference to the provisions which existed before the amendment. The relevant paragraphs are 78, 79, 80, 81 and 82:-
"78. From the introduction of Sub-Section (2) and (3) to Section 36 of the Principal Act, 1996 and giving effect to the provisions from 23.10.2015, legislature has intended to rectify the defect when the award is challenged. During the arbitral proceedings the Hon'ble Supreme Court has consistently held that there must be a little interference from courts. Section 26 is a stage post arbitral proceedings. There is a distinction between the two stages. In the new Section 26 of the Amendment Act, the Parliament has made it clear that nothing in this (Amendment) Act, shall apply to Section 21 of the Act, and prior to the introduction of proceedings would be governed by the provisions of the Principal Act 1996 and insofar as the proceedings commenced after the commencement of the Amendment Act, the amended provisions would apply. If the words, "in relation to arbitral proceedings" have to be read into Section 26 of the Amended Act, it would only revert to the original form, as found in Section 85(2) of the Principal Act and that in the humble opinion of this Court it be an insertion of the words, by this court which is not permissible.
79. Sub-Section (2) and (3) of the Amendment Act applies to post arbitral proceedings. It is distinct. So also the arbitration proceedings which is prior to the passing of award. The procedure to be applied during the stage of arbitration proceedings i.e. prior to the award and the procedure to be followed after the award are distinct. A challenge to the award with regard to the procedure followed and the rights accrued during in the arbitral proceedings are protected in Section 26 of the Amendment Act, 2015 to the effect "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 the Amendment Act unless the parties otherwise agree but his Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act". Section 26 of the Amendment Act cannot be extended to include post arbitration proceedings when the award is passed before the commencement of the Amendment Act.
80. In the Principal Act, 1996 [in Section 85(2) of the Act 1996] the legislature has used the expression "in relation to arbitration proceedings" and thus the Hon'ble Supreme Court was called upon to interpret the same with reference to the repeal and saving clause. But in the Amendment Act, 2015 deemed to have come into force from 23.10.2015 the legislature has conspicuously deleted the expression "in relation to the arbitral proceeding" in the opening sentence in Section 26 of the Amendment Act, 2016. It is to be noted that unlike in Section 85(2) of the Principal Act, 1996 where the legislature has said that the provisions of the old enactments shall apply in relation to arbitral proceedings which commenced before 1996 Act there is no such usage in Section 26 of the Amendment Act 2015. Therefore, the Court has to consider as to whether it has been done with a specific intent and whether such change has been taken to have been made deliberately or otherwise it would give rise to assumptions and presumptions that the statute, remained unchanged. While doing so, this Court is of the humble view that amendments made with reference to the applicability of the provisions of the Amendment Act should be read and construed with the new provisions and not with reference to the provisions which existed before the amendment.
81. When the legislature, in the Amendment Act has deleted the words "in relation to" in the first part of Section 26 of the Amendment Act this court is of the humble view that the Court has no power to add the words "in relation to" into the said Section and expand the scope of the said provision to court proceedings also.
82. In the Arbitration and Conciliation (Amendment) Ordinance 2015 (9/15) there are several amendments by way of substitution and insertion of Sections 2, 9, 11, 12, 14, 23, 24, 25, 28, 29, 31 and 34. Having regard to the changes made to the Principal Act 1996 by Ordinance 2015 and consequently when the Principal Act 1996 has been amended, retaining Section 36(2) in its original form and by consciously deleting the words, "in relation to the arbitral proceedings" in Section 26 of the Amended Act, the intention of the Legislature is explicit."
129. In Rendezvous (supra) the Bombay High Court was of the view that the condition for furnishing security does not affect any substitutive right of an award debtor to challenge the award and the Amendment Act merely strikes a balance between the two competing rights and accordingly it may not be necessary at all to consider if the amendment Act has any prospective effect. This would be clear from paragraphs 64 and 65 of the said judgment which reads:
"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 award holder. 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."
130. For the reasons mentioned above in my view the amended Act if given retrospective effect even in respect of award passed prior to the date of amendment would affect vested rights and cannot have any retrospective effect. The right to challenge the award by the award debtor even during the Ordinance period was not required to furnish any security for awards passed prior to the Ordinance as Section 26 of the Amendment Act was not present in the ordinance. Moreover, the condition imposed for furnishing security would certainly affect the vested right of the award debtor to change the award without security. The said unamended provisions certainly had its pitfalls as it encouraged unmeritorious matters being filed with a view to frustrate an award and defeat the object of the Principal Act as the stay was automatic and such automatic stay specially in respect of money claim has only benefited unscrupulous litigants but curiously the legislature took 20 years to bring such change however, no such provision for furnishing security giving retrospective effect has been inserted either in the ordinance or in the Amendment Act. The right to challenge an award without security is not a procedural matter and if the interpretation given by the award holder is accepted then it would mean that even for an application for setting aside the award filed prior to the amendment the award debtor by reason of the amendment would be require to filed an application afresh or amend the existing prayers to include prayer separately for stay of the award. In Ardee Infrastructure Pvt. Ltd. (supra) three categories of cases were graphically represented at paragraph 27 and the consequence of the amendment on the pending proceedings have been discussed in the subsequent paragraphs. The relevant paragraphs are set out below:
"27. To illustrate, all the arbitral proceedings, which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, can be classified into three categories. The first category being where the arbitral proceedings commenced prior to 23.10.2015 and were pending before an arbitral tribunal on 23.10.2015; the second category would be of those cases where arbitral proceedings commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 seeking the setting aside of the award was made after 23.10.2015; the third category would be comprised of those cases where the arbitral proceedings commenced prior to 23.10.2015 and not only the award was made prior to 23.10.2015, but the petition under Section 34 had also been instituted before court prior to 23.10.2015. The three categories can be graphically represented as follows:-
"Category I - Arbitral proceedings 23/10/2015 commence award S. 34 petition t0 t1 t2 Time Proceedings before Proceedings before court Arbitral Tribunal
Category II - Arbitral Proceedings 23/10/2015 commence award S. 34 petition t0 t1 t2 Time Proceedings before Proceedings before court Arbitral Tribunal
Category III - Arbitral Proceedings 23/10/2015 commence award S. 34 petition t0 t1 t2 Time Proceedings before Proceedings before court Arbitral Tribunal
t0 = date on which arbitral proceedings commence
t1 = date of award
t2 = date of filing of petition under Section 34 of the said Act
23.10.2015 = date on which amending act commenced."
28. Given the three categories of cases, if the interpretation of the respondents is accepted, then the first part of Section 26 would only deal with the first category. In other words, there would be nothing in Section 26 of the Amending Act which pertained to the second and third categories of cases.
29. In such a situation, it would have to be considered, independent of Section 26 of the Amending Act, as to whether the amended provisions applied to the said second and third category of cases. In this regard, we may note the observations of the Supreme Court in Thyssen (supra) where, after, considering several earlier decisions, the Supreme Court observed in paragraph 32 (which we have already extracted above) that the principles enunciated in the judgments show as to when a right accrues to a party under a repealed Act. The Supreme Court observed that it is not necessary that for the right to accrue, legal proceedings must be pending when the new Act comes into force. Furthermore, and more importantly, the Supreme Court observed that to have the award enforced when arbitral proceedings commenced under the old Act under that very Act was certainly an accrued right. In other words, all the aspects of enforceability of an award entail an accrued right both in the person in whose favour the award is made and against whom the award is pronounced. It will also be noticed that the Supreme Court made it clear that for the right to accrue, there is no necessity that legal proceedings must be pending when the new Act comes into force. This exactly covers the situation as obtaining in the second category of cases, where the arbitral proceedings were commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 had not yet been filed. This is the same situation as in the present case. Thus, the pendency of any legal proceedings or otherwise would not come in the way of determining as to whether the right had accrued under the unamended provisions or not. We have already noted that the Supreme Court in Thyssen (supra) observed that the right to have the award enforced (which also comprises of the negative right of the award debtor to not have it enforced till his objections under Section 34 of the said Act are heard and decided) is certainly an accrued right. Given the fact that the amended Section 36 takes away the right of an automatic stay of enforcement of an award, it is clear that the amendment introduced in Section 36 by virtue of the Amending Act would definitely impinge upon the accrued right of the party against whom the award is given after the arbitral proceedings have been held under the unamended provisions. Since an accrued right is affected, unless a contrary intention appears in the amending statute, the amendments would have to be treated as prospective in operation. Prospective from the standpoint of commencement of the arbitral proceedings.
30. Now, if the argument of the respondents is to be accepted that the first limb of Section 26 applies only to arbitral proceedings in the sense of proceedings before arbitral tribunals and not to court proceedings, then, it is obvious that Section 26 is silent with regard to the second and third categories of cases to which we have already referred above. In other words, in respect of these categories, no contrary intention of retrospectivity is evinced upon a reading of Section 26 of the Amending Act. Therefore, even if we take the argument of the respondents to be correct, the result would still be the same and, that is, that in respect of all the arbitral proceedings commenced prior to 23.10.2015, the unamended provisions of the said Act would continue to operate till the enforcement of the award.
31. We may also notice that in case the argument of the respondents is to be accepted that where arbitral proceedings commenced prior to 23.10.2015, the unamended provisions would be saved only in respect of the proceedings before the arbitral tribunal and would not extend to court proceedings, the same would result in serious anomalies. This is so because the Amending Act has sought to bring about amendments in Section 9 as well as Section 17 of the said Act. While Section 9 pertains to interim measures which may be directed by the court prior, during arbitral proceedings or after the making of the award, Section 17 deals with the interim measures which may be ordered by an arbitral tribunal. If the interpretation of the respondents is to be accepted, then, in respect of arbitral proceedings commenced prior to 23.10.2015, the amended provisions would apply to proceedings under Section 9 of the said Act, but not to Section 17 thereof. This would result in a serious anomaly.
32. On the other hand, if the expression --to the arbitral proceedings' used in the first limb of Section 26 is given the same expansive meaning as the expression --in relation to arbitration proceedings' as appearing in the second limb of Section 26, then, the matter becomes very simple and does not result in any anomaly. All the arbitral proceedings (and here we mean the entire gamut, including the court proceedings in relation to proceedings before the arbitral tribunal), which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, would be governed, subject to an agreement between the parties to the contrary, by the unamended provisions and all those, in terms of the second part of Section 26, which commenced on or after 23.10.2015 would be governed by the amended provisions.
33. In view of the above analysis and discussion, we regret our inability to agree with the view taken by the Calcutta High Court in Tufan Chatterjee (supra). It must be reiterated that in the said Calcutta High Court decision, the second and third categories of cases mentioned above was not considered at all. Consequently, the arguments of the respondents based on the reasoning adopted in Tufan Chatterjee (supra) cannot be accepted.
34. The conclusions that we can draw from the above analysis and discussion are:-
1) Section 26 of the Amending Act, if a narrow view of the expression--to the arbitral proceedings is to be taken, is silent on those categories of cases where the arbitral proceedings commenced prior to 23.10.2015 and where even the award was made prior to 23.10.2015, but where either a petition under Section 34 was under contemplation or was already pending on 23.10.2015;
2) In such eventuality, the amended provisions pertaining to those categories would apply only if they were merely procedural and did not affect any accrued right;
3) In the facts of the present case, the amendment to Sections 34 and 36, which pertain to the enforceability of an award, certainly affect the accrued rights of the parties;
4) As a result, the petitions filed by the appellants under Section 34 of the said Act would have to be considered under the unamended provisions of the said Act and consequently, the appellants would be entitled to automatic stay of enforcement of the award till the disposal of the said petitions."
131. The three Single Bench decisions of the Delhi High Court has interpreted Section 26 of the Amending Act to the effect that, in the event, in the arbitration clause contain words and/or phrase which shows that the parties have agreed that statutory modification or re-enactment thereof shall apply to the arbitration and it does not require a fresh agreement to be made between the parties and the amended provision would apply to arbitral proceedings. As long as the parties agree to such an arbitration clause the amending Act shall apply in relation to arbitration proceeding commenced on or after the date of amendment of the 1996 Act.
132. In the instant case as referred earlier the arbitration clause reads:
"Any dispute which is not settled after an attempt by the parties to the dispute at amicable negotiations and conciliation under Clause (a) of the Schedule 12.11 shall be resolved by final and binding arbitration held in Kolkata in accordance with the provision of the Arbitration and Conciliation Act, 1996 (of India), as amended (the "Arbitration Act")."
133. In Ratna Infrastructure (supra) the relevant portion of the arbitration clause is set out hereinbelow:
"Subject as aforesaid the provisions of Arbitration Act 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration under this Clause."
134. In Madhava Hytech Rani (JV) (supra) the relevant clause reads:
"72.2.5 The Conciliation and/or Arbitration proceedings shall be governed by the provisions of the Indian Arbitration and Conciliation Act 1996 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the conciliation and arbitration proceedings under this clause."
135. In Tantia CCIL (supra) the clause 64(7) is the relevant which reads:
"64(7). Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules there under and any statutory modifications thereof shall apply to the arbitration proceedings under this clause."
136. In M/s. Shiv Shakti Enterprise (supra) clause 64(7) contain similar clause which reads:
"64(7). Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules there under and any statutory modifications thereof shall apply to the arbitration proceedings under this clause."
137. In Ratna Infrastructure (supra), the learned Single Judge was considering the implication of Section 12(5) as amended with effect from 23rd October, 2015 in relation to an arbitration proceeding that had commended in 2014. The allegation of bias was taken against the sole arbitration during the pendency of the proceeding. The petitioners, in fact, filed an application under Sections 12 and 13 of the Act challenging the office of the arbitrator. The application was dismissed by the arbitrator on 19th February, 2016. Thereafter, the erstwhile arbitrator ceased to continue as an arbitrator as he had vacated the office. The CEO of the respondent was required to appoint an arbitrator within 30 days from 1st June, 2016, the date from which the said Officer function as Arbitrator ceased to be the Project in-charge. The CEO has failed to do so. Accordingly, the application was filed on 26th August, 2016. One of the arguments appear to have been made is that in view of the amendment of the principal Act with effect from 23rd October, 2015, the appointment of a General Manager of the respondent as a sole arbitrator cannot be legally sustained as Fifth Schedule of the amended provision would come in the way. The argument of the respondent that the parties would again have to agree after coming into force of the Amending Act, 2015 that the said Amending Act would apply to the pending arbitration proceeding was rejected on the ground that in view of the wordings of the Clause 56 of the GCC there is no requirement of any fresh agreement. The words "any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration..." forming part of Clause 56 satisfies the requirement of Section 26 of there being an agreement between the parties that the Act as amended with effect from 23rd October 2015 would apply. Once the amendment to the Clause clearly stated that all statutory modifications and re-enactments would apply, then there is no need for further agreement in that respect after 23rd October 2015.
138. In Madhava Hytech (supra) and Tantia-CCIL (supra) similar clause came up for consideration. The learned Single Judge on interpretation of Section 26 of the Amending Act held that although the amendment does not apply to arbitral proceedings that had commenced in accordance with the provisions of Section 21 of the principal Act prior to the commencement of the Amending Act, however, this is clearly qualified by the words "unless the parties otherwise agreed" and since in the present case relevant clause of GCC clearly indicates that the parties have expressly agreed that any statutory modification of the Act would be applicable, the objection raised on behalf of the respondent that the arbitral proceedings would be governed by the provisions of the Act as un-amended by the amending Act is unmerited. That was also a case under Section 12(1)(b) read with 5th Schedule as well as the provisions of Section 12(5) of the Act.
139. In M/s. Shiv Shakti Enterprises (supra) the learned Single Judge of the Allahabad High Court was considering an application under Section 11(6) of the un-amended Arbitration and Conciliation Act, 1996 filed on 31st January, 2014 that is prior to coming into force of the Amending Act No. 3 of 26 notified on 31st December, 2015 but made applicable with effect from 31st October, 2015 when an ordinance was issued almost on the same terms. Clause 64(7) was the Arbitration Clause reads:-
"64(7). Subject to the provisions of the aforesaid Arbitration and Conciliation Act 1996 and the rules there under and any statutory modifications thereof shall apply to the arbitration proceedings under this clause."
140. This clause was interpreted to mean that the statutory modifications are required to be taken into consideration in interpreting the arbitration Clause. The learned Single Judge has referred to the decision of the Hon'ble Supreme Court in Thyseen case (supra) where the Hon'ble Supreme Court considered Section 85 of the 1996 Act and a clause similar to Clause 64(7) and held that the parties can always agree that the provisions of the Arbitration law existing at the point of time when the future dispute arose the existing law at that time would apply to such arbitration proceedings. It is not necessary for the parties to know what the law would be in force at the time of the conduct of the arbitration proceedings. They can always agree that the provisions of law in force at that time would apply. The learned Single Judge is of the view that the difference in Section 26 of the Amending Act, 2015 which used the phrase "unless the parties otherwise agree" instead of "unless otherwise agreed by the parties" is of no significance for the reason that a past agreement which subsists on the date of coming into force of the Amending Act, 2015 and also at present would also be an agreement in praesenti. The said arbitration clause was interpreted to mean that the Amending Act is applicable to the arbitral proceedings in the present case.
141. The qualifying words "as amended" relates to the present state of affairs existing on the date of the agreement or at the highest on the date of commencement of the proceeding. Plain and simple it means that the 1996 Act with all its amendment shall apply to such a dispute when the cause of action arises, that is, to say the notice under Section 21 of the 1996 Act by which an arbitration proceeding commence under the 1996 Act. The four judgments cited by the decree holder contain sweeping and omnibus clause even to cover statutory modifications that might take place after commencement and hence there would be no requirement to enter into any fresh agreement. I am unable to read the present arbitration clause to include future modifications. A reading of Section 26 of the Amendment Act, 2015 makes it clear that the Amendment Act even can apply to a proceeding initiated prior to the commencement of the Amendment Act, if the parties otherwise agree which may be discernable either from conduct or from the agreement containing the arbitration clause itself, like the clauses, the four High Courts had the occasion to consider in the decisions mentioned (supra). However, irrespective of any agreement commencement of arbitration proceeding in accordance with the provision of Section 21 after October 23, 2015 shall be governed by the provisions of the Amendment Act. Since the arbitration clause requires meeting of mind of the parties and the language of the arbitration clause does not clearly indicate any agreement to include future modifications, the benefit should go to the party who is opposing retrospectivity of the statute. There cannot be any doubt that there is an arbitration clause, but, it is not sufficiently clear that it includes all future modification and statutory enactment so as to affect any vested right. My reading of Thyssen (supra) and N.S. Nayak (supra) also lends to the view I have taken. For the reasons mentioned aforesaid I am of the view that this execution application is not maintainable and accordingly stands dismissed. The department shall return the original award duly signed by the learned Arbitrator to the award holder upon furnishing a duly authenticated copy thereof.
142. However, this shall not prevent the award holder to apply a fresh for execution of the award if the award is ultimately upheld.
143. E.C.1 of 2017 stands dismissed.
144. However, there shall be no order as to costs.
145. Urgent Photostat certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
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