Umediram (1976) 3 SCC 203 at 207, this Court, following
Lalji Raja (supra), held as follows:
73“8. Learned counsel appearing for the
appellant however submitted that since the
Code of Civil Procedure was not applicable to
Goa the decree became inexecutable and this
being a vested right could not be taken away
by the application of the Code of Civil
Procedure to Goa during the pendency of the
appeal before the Additional Judicial
Commissioner. It seems to us that the right of
the judgment debtor to pay up the decree
passed against him cannot be said to be a
vested right, nor can the question of
executability of the decree be regarded as a
substantive vested right of the judgment
debtor. A fortiori the execution proceedings
being purely a matter of procedure it is well
settled that any change in law which is made
during the pendency of the cause would be
deemed to be retroactive in operation and the
appellate court is bound to take notice of the
change in law.”
Since it is clear that execution of a decree pertains to the
realm of procedure, and that there is no substantive
vested right in a judgment debtor to resist execution,
Section 36, as substituted, would apply even to pending
Section 34 applications on the date of commencement of
the Amendment Act.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.2879-2880 OF 2018
(Arising out of SLP (C) Nos.19545-19546 of 2016)
BOARD OF CONTROL FOR CRICKET
IN INDIA
V
KOCHI CRICKET PVT. LTD. AND ETC.
Dated: March 15, 2018.
1. Leave granted.
2. The present batch of appeals raises an important
question as to the construction of Section 26 of the
Arbitration and Conciliation (Amendment) Act, 2015
2(hereinafter referred to as the “Amendment Act”), which
reads as follows:
“Section 26. Act not to apply to pending
arbitral proceedings.
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.”
3. The questions raised in these appeals require the
mentioning of only a few important dates. In four of these
appeals, namely, Board of Control for Cricket in India
v. Kochi Cricket Pvt. Ltd. and Ors. (SLP(C) No. 19545-
19546 of 2016), Arup Deb & Ors. v. Global Asia
Venture Company (SLP(C) No. 20224 of 2016), M/s
Maharashtra Airports Development Company Ltd. v.
M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017)
and UB Cotton Pvt. Ltd. v. Jayshri Ginning and
Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), Section
34 applications under the Arbitration and Conciliation Act,
31996 (hereinafter referred to as the “1996 Act”) were all
filed prior to the coming into force of the Amendment Act
w.e.f. 23rd October, 2015. In the other four appeals, the
Section 34 applications were filed after the Amendment
Act came into force. The question with which we are
confronted is as to whether Section 36, which was
substituted by the Amendment Act, would apply in its
amended form or in its original form to the appeals in
question.
4. The relevant facts of the first appeal namely, Board
of Control for Cricket in India v. Kochi Cricket Pvt.
Ltd. and Ors. (SLP(C) Nos. 19545-19546 of 2016), are
as follows. A notice dated 18th January, 2012 was sent by
Respondent No.1 invoking arbitration under a franchise
agreement dated 12th March, 2011. A Sole Arbitrator was
appointed, who delivered two arbitral awards dated 22nd
June, 2015 against the Appellant and in favour of the
Respondents. On 16th September, 2015, the Appellants
filed an application under Section 34 of the 1996 Act in
4the Bombay High Court challenging the aforesaid arbitral
awards. On 26th November, 2015, the Respondents filed
two execution applications in the High Court for payment
of the amounts awarded under the two awards, pending
enforcement of such awards. These were resisted by two
Chamber Summons filed by the Appellants dated 3rd
December, 2015, praying for dismissal of the aforesaid
execution applications stating that the old Section 36
would be applicable, and that, therefore, there would be
an automatic stay of the awards until the Section 34
proceedings had been decided. The Chamber Summons
were argued before a learned Single Judge, who, by the
impugned judgment in Special Leave Petition (Civil)
No.19545-19546 of 2016, dismissed the aforesaid
Chamber Summons and found that the amended Section
36 would be applicable in the facts of this case. This is
how the appeal from the aforesaid judgment has come
before us.
55. As aforementioned, the skeletal dates necessary to
decide the present appeals in the other cases would only
be that so far as two of the other appeals are concerned,
namely, Arup Deb & Ors. v. Global Asia Venture
Company (SLP(C) No.20224 of 2016) and M/s
Maharashtra Airports Development Company Ltd. v.
M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017),
the Section 34 applications were filed on 27th April, 2015,
and 25th May, 2015 respectively and the stay petitions or
execution applications in those cases filed under Section
36 were dated 16th December, 2015 and 26th October,
2016 respectively. In U.B. Cotton Pvt. Ltd. v. Jayshri
Ginning and Spinning Pvt. Ltd. (SLP(C) No.33690 of
2017), the Section 34 application was filed on 22nd
February, 2013 and the execution application was filed in
2014, which was transferred, by an order dated 12th
January, 2017, to the Commercial Court, Rajkot as
Execution Petition No. 1 of 2017. In the other cases,
namely, Wind World (India) Ltd. v. Enercon GMBH
6through its Director (SLP(C) Nos.8372-8373 of 2017),
Yogesh Mehra v. Enercon GMBH through its Director
(SLP(C) Nos.8376-8378 of 2017), Ajay Mehra v.
Enercon GMBH through its Director (SLP(C)
Nos.8374-8375 of 2017), and Anuradha Bhatia v. M/s
Ardee Infrastructure Pvt. Ltd. (SLP(C) Nos.9599-9600
of 2017), the Section 34 applications were filed after 23rd
October, 2015, viz., on 7th December, 2016 in the first two
appeals, on 6th December, 2016 in the third appeal and on
4
th January, 2016 in the last appeal.
6. Section 36, which is the bone of contention in the
present appeals, is set out hereinbelow:
PRE-AMENDED PROVISION
“Section 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.”
7AMENDED PROVISION
“Section 36. Enforcement.
(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 subsection
(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 of the Code of Civil Procedure,
1908 (5 of 1908).”
87. Wide ranging arguments have been made on behalf
of the parties before us. Shri C.A. Sundaram, learned
Senior Advocate, leading the charge on behalf of the
Appellants, has argued that Section 26 of the Amendment
Act consists of two parts. According to him, the second
part, which makes the Amendment Act applicable in
relation to arbitral proceedings commenced on or after the
date of commencement of this Act, is the principal part,
whereas the first part of Section 26 is in the nature of a
proviso or exception. It is his submission, therefore, that
so far as the first part is concerned, Section 6 of the
General Clauses Act, 1897 would be attracted, in which
event the vested right to challenge arbitral awards would
continue by virtue of the said Section under the old Act,
which would, therefore, apply to the facts of all these
cases. For this purpose, he relied upon certain passages
in Thyssen Stahlunion v. Steel Authority of India
(1999) 9 SCC 334, N.S. Nayak & Sons v. State of Goa
(2003) 6 SCC 56, and Milkfood Ltd. v GMC Ice Cream
9Pvt. Ltd. (2004) 7 SCC 288. Given the fact that the
vested right is preserved, the amendment is only
prospective in nature, and for this purpose, he has cited a
large number of judgments, starting with the celebrated
judgment in Garikapati Veeraya v. N. Subbiah
Choudhry (1957) SCR 488. He then referred to a chart
of the effect of the amendments made in general by the
Amendment Act, in which he divided the amended
sections into three parts, namely, those that are only
procedural, those that are only substantive and those that
are procedural as well as substantive. In his submission,
Section 36 is substantive in nature, in that, in place of an
automatic stay of the award under the old regime, Order
LXI, Rule 5 of the CPC will now be applicable. As a result
of this, instead of an automatic stay, a deposit of the
entire amount or substantial amount of the award would
now have to be made in the interim period between the
award and the decision in the Section 34 application. He
referred to the 246th Law Commission Report as well as
10the debates leading to the Amendment Act to buttress his
submissions. He also referred to the report of a High
Level Committee headed by Justice B.N. Srikrishna,
delivered on 30th July, 2017, in which, after referring to the
divergent views taken by the High Courts, the Committee
recommended that the Amendment Act will not apply to
arbitral proceedings as well as Court proceedings which
arise out of such arbitral proceedings, where the arbitral
proceedings themselves have commenced in accordance
with Section 21 before the commencement of the
Amendment Act. Concomitantly, according to the High
Level Committee, the Amendment Act will only apply to
arbitral proceedings commenced on or after the
commencement of the Amendment Act and to Court
proceedings that arise out of or in relation to such arbitral
proceedings.
8. Shri K.V. Viswanathan, learned Senior Advocate
appearing on behalf of the BCCI in Civil Appeal arising
out of SLP(C) No.19546 of 2016, has argued that the
11expression “arbitral proceedings” in both parts of Section
26 refers only to proceedings before an arbitrator and is
the same in both parts. Consequently, it is clear that it is
only arbitral proceedings that have commenced after 23rd
October, 2015 and Court proceedings in relation thereto,
that will be governed by the Amendment Act. If the
arbitral proceedings have commenced under the old Act,
then those proceedings as well as all Court proceedings
in relation thereto, would be governed only by the old Act.
According to him, Section 6 of the General Clauses Act
would be attracted, insofar as Court proceedings are
concerned, when the first part of Section 26 is applied.
According to him, the second part would not become
superfluous on his reading of Section 26, as the option
given to the parties would be given only on application of
the first part and not the second. According to the learned
senior counsel, the judgment in Thyssen (supra) is
determinative of the present case, inasmuch as an
entirely new challenge procedure under Section 34 is laid
12down by the amendments made in 2015, somewhat like
the challenge procedure laid down in the original Section
34 of the 1996 Act, when contrasted with Section 30 of
the Arbitration Act, 1940. According to the learned senior
counsel, party autonomy must be respected, and this
being the position, parties who have entered into
agreements in the expectation that the old regime will
apply cannot suddenly be foisted with a completely
different regime under the Amendment Act. According to
the learned senior counsel, Section 85 of the 1996 Act is
similar to Section 26 of the Amendment Act and,
therefore, the judgment in Thyssen (supra) must apply on
all fours. The learned senior counsel also forcefully put
to us a number of anomalies that would arise if the
amendment to Section 36 were to be given retrospective
operation. According to him, the right to be governed by
the broad appellate/supervisory procedure found in
sections 34 and 37 of the 1996 Act would be a vested
right, resulting in the Amendment Act not being
13applicable. Insofar as Section 36 is concerned, the
learned senior counsel made elaborate submissions on
the difference between enforceability and execution, and
stated that whereas the former dealt with substantive
rights, the latter dealt with procedural rights. Equally, the
expression “has been” contained in the amended Section
36(2) is purely contextual and equivalent to the
expression “is”. For this, he has cited certain judgments
which we will refer to in due course. According to the
learned senior counsel, the decision in National
Aluminium Co. Ltd. v. Pressteel & Fabrications (P)
Ltd. (2004) 1 SCC 540, which exhorted the legislature to
amend Section 36, cannot take the matter any further, in
that the said decision cannot be read to say that Section
36 should be substituted with retrospective effect.
9. Shri Tushar Mehta, learned Additional Solicitor
General appearing in SLP (C) No.5021 of 2017,
supported the arguments of his predecessor and added
that, given a retrospective operation of Section 36,
14various anomalies would arise, which would lead to
hardship and inconvenience and that, therefore, we
should not impart retrospective operation to the aforesaid
provision.
10. Shri Arvind Datar, learned senior advocate appearing
in SLP (C) No.20224 of 2016, supported Shri
Viswanathan in stating that the amendments made by the
Amendment Act were very far reaching and changed the
basis of challenge to arbitral awards. It would not be fair
to retrospectively change the rules of the game insofar as
such awards are concerned. According to the learned
senior counsel, the expression “in relation to” that was
used in Section 85 of the 1996 Act, as expounded in
Thyssen (supra), was because Section 85 repealed three
enactments together, and not because it sought to refer to
Court proceedings. He reiterated that in the interest of
clarity, the report of the High Level Committee, headed by
Justice B.N. Srikrishna referred to by Shri Sundaram, was
the correct position so that it clearly be delineated that the
15moment arbitral proceedings commenced before the
Amendment Act, such “proceedings”, which would include
all Court proceedings in relation thereto, would be
governed by the old Act, and only arbitral proceedings
commenced after the Amendment Act came into force,
together with related Court proceedings, would all be
governed by the Amendment Act.
11. Shri Anirudh Krishnan, learned Advocate appearing
for the intervenor in SLP (C) No.20224 of 2016, referred
to Section 85A contained in the 246th Law Commission
Report which, according to him, was given a go-by and
was not followed in Section 26. He referred to the Law
Minister’s speech stating that the amendment must be
given prospective effect and further argued that the
reason why the expression “in relation to” was used in the
second part of Section 26 was because a distinction was
made on whether the seat of the arbitral tribunal was in
India or outside India. According to the learned counsel,
since amendments have been made in Part II of the 1996
16Act as well, if a seat based categorization is seen, the
expression “in relation to” would not apply to Court
proceedings simpliciter, but to arbitral tribunals which
have their seat outside India. He further argued that
Sections 34 and 36 are part of one scheme and are the
“appeal package” insofar as arbitral proceedings are
concerned and must, therefore, go along with the arbitral
proceedings. This being the position, it is clear that the
pre-amendment position would apply in case of
arbitrations which commenced before the Amendment Act
came into force.
12. Leading arguments for the other side, Shri Neeraj
Kaul, learned senior counsel appearing in SLP(C)
Nos.19545-19546 of 2016, emphasized that in the first
part of Section 26, there is an absence of the mention of
Court proceedings. According to the learned senior
counsel, this was of great significance and would,
therefore, show that the Amendment Act would
retrospectively apply to Court proceedings, as
17distinguished from arbitral proceedings. On a correct
construction of Section 26, according to the learned
senior counsel, the second part of Section 26 takes within
its sweep both arbitral proceedings as well as Court
proceedings in relation thereto and would, therefore,
apply to arbitral proceedings as well as Court proceedings
in relation thereto, which have commenced after the
Amendment Act came into force. For this purpose, he
relied heavily on paragraph 23 in Thyssen (supra) and,
submitted that, therefore, on a true construction of
Section 26, Section 34 proceedings that have
commenced before the Amendment Act came into force
would be governed by the Amendment Act, and arbitral
proceedings which commenced after the Amendment Act,
together with Section 34 applications made in relation
thereto, would then be governed under the second part of
Section 26 of the Amendment Act. According to the
learned senior counsel, no vested right exists inasmuch
as Section 34 proceedings are not appellate proceedings.
18In any case, Section 26 evinces a contrary intention and
would take away any such right assuming a vested right
is involved. He countered the arguments of Shri
Viswanathan, in particular, by stating that the original
intent of the 1996 Act was to minimise Court intervention
and to restrict the grounds of challenge of arbitral awards,
and inasmuch as the decisions of this Court in ONGC v.
Saw Pipes Ltd (2003) 5 SCC 705 and ONGC Ltd.
v. Western Geco International Ltd. (2014) 9 SCC 263
had gone contrary to the original intention of the 1996 Act,
all that the Amendment Act did was to bring the 1996 Act
back, in accordance with its original intent, by nullifying
the aforesaid judgments. He added that the ground of
patent illegality that had been added by the Amendment
Act also differs from the said ground as understood in the
earlier case law, and has been added only qua domestic
and not international commercial arbitrations. Learned
senior counsel then argued that given the fact that court
proceedings in this country take an inordinately long time,
19the whole object of the amendment to Section 36 would
be stultified, if Section 36 is only to apply to court
proceedings that result from arbitral proceedings, which
have commenced on and after the commencement of the
Amendment Act. That this could never be the case is
clear from a judgment of the House of Lords, reported as
Minister of Public Works of the Government of the
State of Kuwait v. Sir Frederick Snow and Partners,
(1984) 2 WLR 340, which is strongly relied upon.
Learned senior counsel also stated that there is no
distinction between execution and enforcement, and
“enforcement” under Section 36, is nothing but execution
of an award, as if it were a decree under the Code of Civil
Procedure, 1908. He further argued that it is well settled
that execution proceedings are procedural in nature and
would be retrospective and, therefore, the substituted
Section 36 would apply even in cases where the Section
34 application is made before the commencement of the
Amendment Act. Another argument was that the
20expression “has been” contained in Section 36(2), as
amended, would, in any case, refer to Section 34
proceedings that have already been filed, even preamendment,
and for this purpose, he referred to certain
judgments.
13. Shri P. Chidambaram, learned senior counsel
appearing for the Respondents in SLP (C) Nos.8372-8373
of 2017, emphasised the word “but” that appears in
Section 26, which not only segregates the first part of
Section 36 from the second part, but also makes it clear
that the two parts apply to two different situations. The
first part, according to learned senior counsel, would
apply to the arbitral proceedings themselves i.e. from the
Section 21 stage up to the Section 32 stage of the 1996
Act, whereas the second part would include all
proceedings that begin from the Section 21 stage and all
court proceedings in relation thereto. According to Shri
Chidambaram, Section 36, in its original form, is only a
clog on the right of the decree holder. He argued that
there is no corresponding vested right in the judgment
debtor to indefinitely delay proceedings and for this
purpose, he cited several judgments. According to the
learned senior counsel, Section 36 proceedings are
entirely independent of Section 34 proceedings and the
moment Section 36 speaks of an award being
enforceable under the Code of Civil Procedure as if it
were a decree, enforceability only means execution and
nothing else. He then referred to Satish Kumar v.
Surinder Kumar, (1969) 2 SCR 244 to show that an
award is not mere waste paper when it is delivered and
before it becomes a decree, as it decides the rights of the
parties and, therefore, being final and binding on parties,
is a judgment delivered between parties, which may
become executable on certain conditions being met, but
which do not detract from the fact that the award itself has
“vitality”.
14. Shri Kapil Sibal, learned senior counsel appearing
on behalf of the Respondents in SLP (C) Nos.8374-8375
22of 2017, has argued before us that the Statement of
Objects and Reasons for the Amendment Act, in particular
paragraph 4 thereof, would make it clear that the
Amendment Act was necessitated because of India’s poor
performance in contract enforcement among the nations
in the world. For this reason, according to the learned
senior counsel, it is clear that Section 26 needs to be
interpreted in such a manner as would further the object
of the Amendment Act and that this being so, it is clear
that Section 26 must be read as being a provision which
is not a savings provision at all, but a provision which
destroys all rights, if any, that vested in the Appellants in
the 1996 Act as unamended. For this purpose, he cited
certain judgments which will be referred to in the course
of our judgment.
15. Dr. A.M. Singhvi, learned senior counsel appearing
on behalf of the Respondents in SLP (C) Nos.8376-8378
of 2017, has stated that the correct construction of
Section 26 would be the intermediate between the
23extremes that have been canvassed before us by learned
counsel appearing on behalf of the Appellants. According
to him, it is important to emphasise that the first part
applies only to arbitral proceedings before an arbitral
tribunal and the second part would apply only to court
proceedings in relation thereto. This becomes clear from
two things; one, the expression “to” appearing in the first
part as contrasted with the expression “in relation to”
appearing in the second part; and, two, the presence of
Section 21 of the 1996 Act in the first part and its absence
in the second part of Section 26. According to him, this
would be the correct interpretation of Section 26, which
would result in no anomalies, as it is clear that the date of
commencement of an arbitral proceeding would be fixed
with reference to Section 21 and the date of
commencement of a court proceeding would be fixed with
reference to the date on which the court proceeding is
filed, and it is only arbitral proceedings and court
24proceedings which are filed after the commencement of
the Amendment Act that would be so covered.
16. Shri Nakul Dewan, learned Advocate appearing on
behalf of the Respondent in SLP (C) No.20224 of 2016
has argued that the first part of Section 26 speaks of “the
arbitral proceedings” commenced in accordance with the
provisions of Section 21. The second part of Section 26
omits the word “the” as well as Section 21, making it clear
that it is the arbitral proceedings before the Arbitrator
alone that is referred to in the first part of Section 26, as
opposed to Court proceedings referred to in the second
part of Section 26, where the expression “in relation to
arbitral proceedings” does not contain the word “the”.
According to him, such interpretation is not contrary to the
doctrine of party autonomy, which is never conferred on
any party without limits, there being non-derogable
provisions in the 1996 Act from which parties, even by
agreement, cannot derogate. According to the learned
counsel, each and every Court proceeding under the
251996 Act is a separate and distinct proceeding and it is
the date of such proceeding alone which is relevant for
the purpose of determining whether the Amendment Act
applies. According to the learned counsel, there is no
vested right to resist the execution of an award merely
because an application for setting aside the award is
pending under Section 34 of the 1996 Act. Even on the
assumption that there is such a vested right, it is taken
away, given the clear legislative intent of Section 26 of the
Amendment Act. Lastly, he argued that on facts, clause
22.2(5) of the agreement between the parties
automatically brought in all amendments to the 1996 Act
and that, therefore, Section 36 in its amended form would
necessarily apply to the facts in this case.
17. Having heard extensive and wide ranging arguments
on the reach of Section 26 of the Amendment Act, it will
be important to first bear in mind the principles of
interpretation of such a provision. That an Amendment
Act does include within it provisions that may be repealed
26either wholly or partially and that the provisions of Section
6 of the General Clauses Act would generally apply to
such Amendment Acts is beyond any doubt – See Bhagat
Ram Sharma v. Union of India, 1988 (Supp) SCC 30 at
40-41. That such a provision is akin to a repeal and
savings clause would be clear when it is read with Section
27 of the Amendment Act and Section 85 of the 1996 Act,
which are set out hereinbelow:
“Section 27. Repeal and savings.
(1) The Arbitration and Conciliation
(Amendment) Ordinance, 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.
xxx xxx xxx
Section 85. Repeal and savings.—
(1) The Arbitration (Protocol and Convention)
Act, 1937 (6 of 1937), the Arbitration Act, 1940
(10 of 1940) and the Foreign Awards
(Recognition and Enforcement) Act, 1961 (45
of 1961) are hereby repealed.
(2) Notwithstanding such repeal,—
27(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;
(b) all rules made and notifications published,
under the said enactments shall, to the extent
to which they are not repugnant to this Act, be
deemed respectively to have been made or
issued under this Act.”
18. At this point, it is instructive to refer to the 246th Law
Commission Report which led to the Amendment Act.
This Report, which was handed over to the Government
in August, 2014, had this to state on why it was proposing
to replace Section 36 of the 1996 Act:
“AUTOMATIC STAY OF ENFORCEMENT OF
THE AWARD UPON ADMISSION OF
CHALLENGE
43. Section 36 of the Act makes it clear that
an arbitral award becomes enforceable as a
decree only after the time for filing a petition
under section 34 has expired or after the
section 34 petition has been dismissed. In
other words, the pendency of a section 34
petition renders an arbitral award
unenforceable. The Supreme Court, in
National Aluminum Co. Ltd. v. Pressteel &
Fabrications, (2004) 1 SCC 540 held that by
virtue of section 36, it was impermissible to
pass an Order directing the losing party to
deposit any part of the award into Court. While
this decision was in relation to the powers of
the Supreme Court to pass such an order
under section 42, the Bombay High Court in
Afcons Infrastructure Limited v. The Board of
Trustees, Port of Mumbai 2014 (1) Arb LR 512
(Bom) applied the same principle to the
powers of a Court under section 9 of the Act
as well. Admission of a section 34 petition,
therefore, virtually paralyzes the process for
the winning party/award creditor.
44. The Supreme Court, in National
Aluminium, has criticized the present situation
in the following words:
“However, we do notice that this automatic
suspension of the execution of the award, the
moment an application challenging the said
award is filed under section 34 of the Act
leaving no discretion in the court to put the
parties on terms, in our opinion, defeats the
very objective of the alternate dispute
resolution system to which arbitration belongs.
We do find that there is a recommendation
made by the concerned Ministry to the
Parliament to amend section 34 with a
proposal to empower the civil court to pass
suitable interim orders in such cases. In view
of the urgency of such amendment, we
sincerely hope that necessary steps would be
taken by the authorities concerned at the
earliest to bring about the required change in
law.”
45. In order to rectify this mischief, certain
amendments have been suggested by the
Commission to section 36 of the Act, which
29provide that the award will not become
unenforceable merely upon the making of an
application under section 34.
So far as the transitory provision, so described by the
Report, is concerned, the Report stated:
“76. The Commission has proposed to insert
the new section 85-A to the Act, to clarify the
scope of operation of each of the
amendments with respect to pending
arbitrations/proceedings. As a general rule,
the amendments will operate prospectively,
except in certain cases as set out in section
85-A or otherwise set out in the amendment
itself.”
The Report then went on to amend Section 36 as follows:
“Amendment of Section 36
19. In section 36, (i) add numbering as subsection
(1) before the words “Where the time”
and after the words “Section 34 has expired,”
delete the words “or such application having
been made, it has been refused” and add the
words “then subject to the provision of subsection
(2) hereof,”
(ii) insert sub-section “(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 the award unenforceable, unless upon
a separate application made for that purpose,
the Court grants stay of the operation of the
30award in accordance with the provisions of
sub-section (3) hereof;”
(iii) insert sub-section “(3) Upon filing of the
separate application under subsection (2) for
stay of the operation of the award, the court
may, subject to such conditions as it may
deem fit, grant stay of the operation of the
award for reasons to be recorded in writing.”
(iv) insert proviso ”Provided that the Court
shall while considering the grant of stay, in the
case of an award for money shall have due
regard to the provisions for grant of stay of
money decrees under the Code of Civil
Procedure, 1908.”
[NOTE: This amendment is to ensure that the
mere filing of an application under section 34
does not operate as an automatic stay on the
enforcement of the award. The Supreme
Court in National Aluminium Co. Ltd. v.
Pressteel & Fabrications (P) Ltd. and Anr,
(2004) 1 SCC 540, recommends that such an
amendment is the need of the hour.]”1
1 As a matter of fact, the amended Section 36 only brings back
Article 36(2) of the UNCITRAL Model Law, which is based on
Article 6 of the New York Convention, and which reads as under:
“36(2). If an application for setting aside or
suspension of an award has been made to a court
referred to in paragraph (1)(a)(v) of this article, the
court where recognition or enforcement is sought
may, if it considers it proper, adjourn its decision
and may also, on the application of the party
claiming recognition or enforcement of the award,
order the other party to provide appropriate
security.”
31The transitory provision Section 85A was then set out as
follows:
“Insertion of Section 85A
A new section Section 85A on transitory
provisions has been incorporated.
Transitory provisions.— (1) Unless otherwise
provided in the Arbitration and Conciliation
(Amending) Act, 2014, the provisions of the
instant Act (as amended) shall be prospective
in operation and shall apply only to fresh
arbitrations and fresh applications, except in
the following situations –
(a) the provisions of section 6-A shall apply to
all pending proceedings and arbitrations.
Explanation: It is clarified that where the issue
of costs has already been decided by the
court/tribunal, the same shall not be opened to
that extent.
(b) the provisions of section 16 sub-section (7)
shall apply to all pending proceedings and
arbitrations, except where the issue has been
decided by the court/tribunal.
(c) the provisions of second proviso to section
24 shall apply to all pending arbitrations.
(2) For the purposes of the instant section,—
(a) “fresh arbitrations” mean arbitrations
where there has been no request for
appointment of arbitral tribunal; or application
for appointment of arbitral tribunal; or
appointment of the arbitral tribunal, prior to the
date of enforcement of the Arbitration and
Conciliation (Amending) Act, 2014.
32(b) “fresh applications” mean applications to a
court or arbitral tribunal made subsequent to
the date of enforcement of the Arbitration and
Conciliation (Amending) Act, 2014.
[NOTE: This amendment is to clarify the
scope of operation of each of the proposed
amendments with respect to pending
arbitrations/proceedings.]”
19. The debates in Parliament in this context were
referred to by counsel on both sides. Shri T. Satpathy
(Dhenkanal) stated:
“You have brought in an amendment to
Section 25 (a) saying that this Act will not be
retrospective. When the Bill for judges’
pension and salary could be retrospective,
why can you not amend it with retrospective
effect so that ONGC-RIL case could be
brought under this Act and let it be adjudicated
as early as possible within 18 months and let
the people of this country get some justice
some time. Let us be fair to them.”
To similar effect is the speech of Shri APJ Reddy, which
reads as under:
“It is unclear whether the amended provisions
shall apply to pending arbitration proceedings.
The Law Commission of India, in its 246th
Report, which recommended amendments to
the Arbitration & Conciliation Act, 1996, had
proposed to insert a new Section 85-A to the
Act, which would clarify the scope of operation
33to each amendment with respect to pending
arbitration proceedings. However, this specific
recommendation has not been incorporated
into the Ordinance. One of the reasons for
bringing about this ordinance is to instill a
sense of confidence in foreign investors in our
judicial process, with regard to certainty of
implementation in practice and ease of doing
business. Therefore, it is strongly urged to
incorporate Section 85A as proposed by the
246th Report of the Law Commission of India,
where it clearly states the scope of operation
of the amended provisions.”
The Law Minister in response to the aforesaid speeches
stated:
“Nobody has objected to this Bill but some of
our friends have observed certain things. They
have said that the Bill is the need of the hour
and that a good Bill has been brought. A few
suggestions have been given by them. One of
the suggestions was that it should have
retrospective effect. If the parties agree, then
there will be no problem. Otherwise, it will only
have prospective effect.”
20. Finally, Section 26 in its present form was tabled as
Section 25A at the fag end of the debates, and added to
the Bill. A couple of things may be noticed on a
comparison of Section 85A, as proposed by the Law
Commission, and Section 26 as ultimately enacted. First
34and foremost, Section 85A states that the amendments
shall be prospective in operation and then bifurcates
proceedings into two parts – (i) fresh arbitrations, and (ii)
fresh applications. Fresh arbitrations are defined as
various proceedings before an arbitral tribunal that is
constituted, whereas fresh applications mean applications
to a Court or Tribunal, made subsequent to the date of
enforcement of the Amendment Act. Three exceptions are
provided by Section 85A, to which the Amendment Act will
apply retrospectively. The first deals with provisions
relating to costs, the second deals with the new provision
contained in Section 16(7) (which has not been adopted
by the Amendment Act) and the third deals with the
second proviso to Section 24, which deals, inter alia, with
oral hearings and arguments on a day-to-day basis and
the non-grant of adjournments, unless sufficient cause is
made out.
21. What can be seen from the above is that Section 26
has, while retaining the bifurcation of proceedings into
35arbitration and Court proceedings, departed somewhat
from Section 85A as proposed by the Law Commission.
22. That a provision such as Section 26 has to be
construed literally first, and then purposively and
pragmatically, so as to keep the object of the provision
also in mind, has been laid down in Thyssen (supra) in
paragraph 26 as follows:
“26. Present-day courts tend to adopt a
purposive approach while interpreting the
statute which repeals the old law and for that
purpose to take into account the objects and
reasons which led to the enacting of the new
Act. We have seen above that this approach
was adopted by this Court in M.M.T.C. Ltd.
case [(1996) 6 SCC 716]. Provisions of both
the Acts, old and new, are very different and it
has been so observed in Sundaram Finance
Ltd. case [(1999) 2 SCC 479]. In that case,
this Court also said that provisions of the new
Act have to be interpreted and construed
independently and that in fact reference to the
old Act may actually lead to misconstruction of
the provisions of the new Act. The Court said
that it will be more relevant, while construing
the provisions of the new Act, to refer to the
UNCITRAL Model Law rather than the old Act.
In the case of Kuwait Minister of Public Works
v. Sir Frederick Snow and Partners [(1984) 1
All ER 733 (HL)] the award was given before
Kuwait became a party to the New York
36Convention recognised by an Order in Council
in England. The House of Lords held that
though a foreign award could be enforced in
England under the (U.K.) Arbitration Act, 1975
as when the proceedings for enforcement of
the award were initiated in England Kuwait
had become a party to the Convention. It
negatived the contention that on the date the
award was given Kuwait was not a party to the
New York Convention.”
(at pages 370-371)
Similarly, in Milkfood Limited (supra) at 315, this Court,
while construing Section 85 of the 1996 Act, had this to
say:
“70. Section 85 of the 1996 Act repeals the
1940 Act. Sub-section (2) of Section 85
provides for a non obstante clause. Clause (a)
of the said sub-section provides for saving
clause stating that the provisions of the said
enactments shall apply in relation to arbitral
proceedings which commenced before the
said Act came into force. Thus, those arbitral
proceedings which were commenced before
coming into force of the 1996 Act are saved
and the provisions of the 1996 Act would
apply in relation to arbitral proceedings which
commenced on or after the said Act came into
force. Even for the said limited purpose, it is
necessary to find out as to what is meant by
commencement of arbitral proceedings for the
purpose of the 1996 Act wherefor also
necessity of reference to Section 21 would
arise. The court is to interpret the repeal and
savings clauses in such a manner so as to
37give a pragmatic and purposive meaning
thereto. It is one thing to say that
commencement of arbitration proceedings is
dependent upon the facts of each case as that
would be subject to the agreement between
the parties. It is also another thing to say that
the expression “commencement of arbitration
proceedings” must be understood having
regard to the context in which the same is
used; but it would be a totally different thing to
say that the arbitration proceedings
commence only for the purpose of limitation
upon issuance of a notice and for no other
purpose. The statute does not say so. Even
the case-laws do not suggest the same. On
the contrary, the decisions of this Court
operating in the field beginning from Shetty's
Constructions [(1998) 5 SCC 599] are ad idem
to the effect that Section 21 must be taken
recourse to for the purpose of interpretation of
Section 85(2)(a) of the Act. There is no
reason, even if two views are possible, to
make a departure from the decisions of this
Court as referred to hereinbefore.”
23. All learned counsel have agreed, and this Court has
found, on a reading of Section 26, that the provision is
indeed in two parts. The first part refers to the
Amendment Act not applying to certain proceedings,
whereas the second part affirmatively applies the
Amendment Act to certain proceedings. The question is
what exactly is contained in both parts. The two parts are
separated by the word ‘but’, which also shows that the
two parts are separate and distinct. However, Shri
Viswanathan has argued that the expression “but” means
only that there is an emphatic repetition of the first part of
Section 26 in the second part of the said Section. For this,
he relied upon the Concise Oxford Dictionary on Current
English, which states:
“introducing emphatic repetition; definitely
(wanted to see nobody, but nobody)”.
Quite obviously, the context of the word “but” in Section
26 cannot bear the aforesaid meaning, but serves only to
separate the two distinct parts of Section 26.
24. What will be noticed, so far as the first part is
concerned, which states, “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…” is that: (1) “the arbitral
proceedings” and their commencement is mentioned in
39the context of Section 21 of the principal Act; (2) the
expression used is “to” and not “in relation to”; and (3)
parties may otherwise agree. So far as the second part of
Section 26 is concerned, namely, the part which reads,
“…but this Act shall apply in relation to arbitral
proceedings commenced on or after the date of
commencement of this Act” makes it clear that the
expression “in relation to” is used; and the expression
“the” arbitral proceedings and “in accordance with the
provisions of Section 21 of the principal Act” is
conspicuous by its absence.
25. That the expression “the arbitral proceedings” refers
to proceedings before an arbitral tribunal is clear from the
heading of Chapter V of the 1996 Act, which reads as
follows:
“Conduct of Arbitral Proceedings”
The entire chapter consists of Sections 18 to 27 dealing
with the conduct of arbitral proceedings before an arbitral
tribunal. What is also important to notice is that these
proceedings alone are referred to, the expression “to” as
contrasted with the expression “in relation to” making this
clear. Also, the reference to Section 21 of the 1996 Act,
which appears in Chapter V, and which speaks of the
arbitral proceedings commencing on the date on which a
request for a dispute to be referred to arbitration is
received by the respondent, would also make it clear that
it is these proceedings, and no others, that form the
subject matter of the first part of Section 26. Also, since
the conduct of arbitral proceedings is largely procedural in
nature, parties may “otherwise agree” and apply the
Amendment Act to arbitral proceedings that have
commenced before the Amendment Act came into force.2
2 Section 29A of the Amendment Act provides for time limits
within which an arbitral award is to be made. In Hitendra
Vishnu Thakur v. State of Maharashtra (1994) 4 SCC 602 at
633, this Court stated:
“(iii) Every litigant has a vested right in
substantive law but no such right exists in
procedural law.
(iv) A procedural statute should not generally
speaking be applied retrospectively where the
result would be to create new disabilities or
obligations or to impose new duties in respect of
transactions already accomplished.
41In stark contrast to the first part of Section 26 is the
second part, where the Amendment Act is made
applicable “in relation to” arbitral proceedings which
commenced on or after the date of commencement of the
Amendment Act. What is conspicuous by its absence in
the second part is any reference to Section 21 of the 1996
Act. Whereas the first part refers only to arbitral
proceedings before an arbitral tribunal, the second part
refers to Court proceedings “in relation to” arbitral
proceedings, and it is the commencement of these Court
proceedings that is referred to in the second part of
Section 26, as the words “in relation to the arbitral
(v) A statute which not only changes the
procedure but also creates new rights and liabilities
shall be construed to be prospective in operation,
unless otherwise provided, either expressly or by
necessary implication.”
It is, inter alia, because timelines for the making of an
arbitral award have been laid down for the first time in Section
29A of the Amendment Act that parties were given the option to
adopt such timelines which, though procedural in nature, create
new obligations in respect of a proceeding already begun under
the unamended Act. This is, of course, only one example of why
parties may otherwise agree and apply the new procedure laid
down by the Amendment Act to arbitral proceedings that have
commenced before it came into force.
proceedings” in the second part are not controlled by the
application of Section 21 of the 1996 Act. Section 26,
therefore, bifurcates proceedings, as has been stated
above, with a great degree of clarity, into two sets of
proceedings – arbitral proceedings themselves, and Court
proceedings in relation thereto. The reason why the first
part of Section 26 is couched in negative form is only to
state that the Amendment Act will apply even to arbitral
proceedings commenced before the amendment if parties
otherwise agree. If the first part of Section 26 were
couched in positive language (like the second part), it
would have been necessary to add a proviso stating that
the Amendment Act would apply even to arbitral
proceedings commenced before the amendment if the
parties agree. In either case, the intention of the
legislature remains the same, the negative form
conveying exactly what could have been stated positively,
with the necessary proviso. Obviously, “arbitral
proceedings” having been subsumed in the first part
cannot re-appear in the second part, and the expression
“in relation to arbitral proceedings” would, therefore, apply
only to Court proceedings which relate to the arbitral
proceedings. The scheme of Section 26 is thus clear: that
the Amendment Act is prospective in nature, and will
apply to those arbitral proceedings that are commenced,
as understood by Section 21 of the principal Act, on or
after the Amendment Act, and to Court proceedings which
have commenced on or after the Amendment Act came
into force.
26. We now consider some of the submissions of learned
counsel for the parties as to what ought to be the true
construction of Section 26. According to Shri Sundaram,
the second part of Section 26 should be taken to be the
principal part, with the first part being read as an
exception to the principal part. This is so that Section 6 of
the General Clauses Act then gets attracted to the first
part, the idea being to save accrued rights. Section 6
applies unless a contrary intention appears in the
enactment in question. The plain language of Section 26
would make it clear that a contrary intention does so
appear, Section 26 being a special provision having to be
applied on its own terms.
27. Thus, in Transport and Dock Workers' Union &
others v. New Dholera Steamship Ltd., Bombay and
others, (1967) 1 LLJ 434, a Five Judge Bench of this
Court held:
“6. It was contended before us that as an
appeal is a continuation of the original
proceeding the repeal should not affect the
enforcement of the provisions of the
Ordinance in this case. Reliance is placed
upon Section 6 of the General Clauses Act,
1897 wherein is indicated the effect of repeal
of an enactment by another. It is contended
that as the Payment of Bonus Ordinance has
been repealed by Section 40(1), the
consequences envisaged in Section 6 of the
General Clauses Act must follow and the
present matter must be disposed of in
accordance with the Ordinance as if the Act
had not been passed. It is submitted that there
was a right and a corresponding obligation to
pay bonus under Section 10 of the Ordinance
and that right and obligation cannot be
obliterated because of the repeal of the
Ordinance. This argument is not acceptable
because of the provisions of the second sub-
45section of Section 40. That sub-section reads
as follows:
“40. Repeal and saving.
(1)***
(2) Notwithstanding such repeal,
anything done or any action taken
under the said Ordinance shall be
deemed to have been done or
taken under this Act as if this Act
had commenced on the 29th May,
1965.”
Section 6 of the General Clauses Act applies
ordinarily but it does not apply if a different
intention appears in the repealing Act. Here a
different intention is made to appear expressly
and the special saving incorporated in the
repealing Act protects only anything done or
any action taken under the Ordinance which is
deemed to have been done or taken under
this Act as if the Act had commenced on 29th
May, 1965. Nothing had been done under the
Ordinance and no action was taken which
needs protection; nor was anything pending
under the Ordinance which could be
continued as if the Act had not been passed.
There was thus nothing which was to be
saved after the repeal of the Ordinance and
this question which might have arisen under
the Ordinance now ceases to exist.”
In Kalawati Devi Harlalka v. CIT (1967) 3 SCR 833, a
repeal and savings provision contained in Section 297 of
the Income Tax Act, 1961 was held to evidence an
46intention to the contrary under Section 6 of the General
Clauses Act as follows:
“14. The learned counsel for the appellant
submits that Parliament had Section 6 of the
General Clauses Act in view, and therefore no
express provision was made dealing with
appeals and revisions, etc. In our view,
Section 6 of the General Clauses Act would
not apply because Section 297(2) evidences
an intention to the contrary. In Union of
India v. Madan Gopal Kabra [25 ITR 5] while
interpreting Section 13 of the Finance Act,
1950, already extracted above, this Court
observed at p. 68:
“Nor can Section 6 of the General
Clauses Act, 1897, serve to keep
alive the liability to pay tax on the
income of the year 1949-50
assuming it to have accrued under
the repealed State law, for a
“different intention” clearly appears
in Sections 2 and 13 of the
Finance Act read together as
indicated above.”
It is true that whether a different intention
appears or not must depend on the language
and content of Section 297(2). It seems to us,
however, that by providing for so many
matters mentioned above, some in accord
with what would have been the result under
Section 6 of the General Clauses Act and
some contrary to what would been the result
under Section 6, Parliament has clearly
evidenced an intention to the contrary.”
4728. Shri Sundaram’s submission is also not in
consonance with the law laid down in some of our
judgments. The approach to statutes, which amend a
statute by way of repeal, was put most felicitously by B.K.
Mukherjea, J. in State of Punjab v. Mohar Singh, 1955 1
SCR 893 at 899-900, thus:
“In our opinion the approach of the High Court
to the question is not quite correct. Whenever
there is a repeal of an enactment, the
consequences laid down in Section 6 of the
General Clauses Act will follow unless, as the
section itself says, a different intention
appears. In the case of a simple repeal there
is scarcely any room for expression of a
contrary opinion. But when the repeal is
followed by fresh legislation on the same
subject we would undoubtedly have to look to
the provisions of the new Act, but only for the
purpose of determining whether they indicate
a different intention. The line of enquiry would
be, not whether the new Act expressly keeps
alive old rights and liabilities but whether it
manifests an intention to destroy them. We
cannot therefore subscribe to the broad
proposition that Section 6 of the General
Clauses Act is ruled out when there is repeal
of an enactment followed by a fresh
legislation. Section 6 would be applicable in
such cases also unless the new legislation
manifests an intention incompatible with or
contrary to the provisions of the section. Such
incompatibility would have to be ascertained
48from a consideration of all the relevant
provisions of the new law and the mere
absence of a saving clause is by itself not
material. It is in the light of these principles
that we now proceed to examine the facts of
the present case.”
(Emphasis Supplied)
This statement of the law has subsequently been followed
in Transport and Dock Workers Union & Ors. v. New
Dholera Steamships Ltd., Bombay and Ors. (supra) at
paragraph 6 and T.S. Baliah v. T.S. Rengachari, 1969 3
SCR 65 at 71-72.
29. Equally, the suggested interpretation of Shri
Viswanathan would not only do violence to the plain
language of Section 26, but would also ignore the words
“in relation to” in the second part of Section 26, as well as
ignore the fact that Section 21 of the 1996 Act, though
mentioned in the first part, is conspicuous by its absence
in the second part. According to Shri Viswanathan, the
expression “arbitral proceedings commenced” is the same
in both parts and, therefore, the commencement of
arbitral proceedings under Section 21 is the only thing to
49be looked at in both parts. Thus, according to the learned
senior counsel, if arbitral proceedings have commenced
prior to coming into force of the Amendment Act, the said
proceedings, together with all proceedings in Court in
relation thereto, would attract only the provisions of the
unamended 1996 Act. Similarly, when arbitral proceedings
have commenced under Section 21 after the coming into
force of the Amendment Act, those proceedings, including
all courts proceedings in relation thereto, would be
governed by the Amendment Act. This is not the scheme
of Section 26 at all, as has been pointed out above.
Further, this argument is more or less the conclusion
reached by the report of the High Level Committee,
headed by Justice B.N. Srikrishna, to amend the 1996
Act.3
It can be seen from the report of the High Level
3 Shri Tushar Mehta, learned ASG, referred to a press release
from the Government of India, dated March 7th, 2018, after
arguments have been concluded, in a written submission made
to us. According to him, the press release refers to a new
Section 87 in a proposed amendment to be made to the 1996
Act. The press release states that the Union Cabinet, chaired by
the Prime Minister, has approved the Arbitration and Conciliation
(Amendment) Bill, 2018 in which a new Section 87 is proposed
to be inserted as follows:
50Committee that an amendment would be required to
Section 26 to incorporate its findings. Section 87 of the
proposed Arbitration and Conciliation (Amendment) Bill,
2018 cannot be looked at, at this stage, for the
interpretation of Section 26 of the Amendment Act for two
“A new section 87 is proposed to be inserted
to clarify that unless parties agree otherwise the
Amendment Act 2015 shall not apply to (a) Arbitral
proceedings which have commenced before the
commencement of the Amendment Act of 2015 (b)
Court proceedings arising out of or in relation to
such arbitral proceedings irrespective of whether
such court proceedings are commenced prior to or
after the commencement of the Amendment Act of
2015 and shall apply only to Arbitral proceedings
commenced on or after the commencement of the
Amendment Act of 2015 and to court proceedings
arising out of or in relation to such Arbitral
proceedings.”
The Srikrishna Committee had recommended the following:
“The Committee feels that permitting the
2015 Amendment Act to apply to pending court
proceedings related to arbitrations commenced
prior to 23 October 2015 would result in
uncertainty and prejudice to parties, as they may
have to be heard again. It may also not be
advisable to make the 2015 Amendment Act
applicable to fresh court proceedings in relation to
such arbitrations, as it may result in an inconsistent
position. Therefore, it is felt that it may be desirable
to limit the applicability of the 2015 Amendment
Act to arbitrations commenced on or after 23
October 2015 and related court proceedings.
Recommendations
51reasons: (i) Section 87, as ultimately enacted, may not be
in the form that is referred to in the press release; and (ii)
a proposed Bill, introducing a new and different provision
of law can hardly be the basis for interpretation of a
provision of law as it now stands. Obviously, therefore,
1. Section 26 of the 2015 Amendment Act
may be amended to provide that:
a. unless parties agree otherwise, the 2015
Amendment Act shall not apply to: (a) arbitral
proceedings commenced, in accordance with
section 21 of the ACA, before the commencement
of the 2015 Amendment Act; and (b) court
proceedings arising out of or in relation to such
arbitral proceedings irrespective of whether such
court proceedings are commenced prior to or after
the commencement of the 2015 Amendment Act;
and
b. the 2015 Amendment Act shall apply only
to arbitral proceedings commenced on or after the
commencement of the 2015 Amendment Act and to
court proceedings arising out of or in relation to
such arbitral proceedings.
2. The amended Section 26 shall have
retrospective effect from the date of
commencement of the 2015 Amendment Act.”
The High Level Committee recommended this after
referring to divergent views taken by various High Courts. This
included the interpretation given by the Calcutta High Court in
Electrosteel Castings Limited v. Reacon Engineers (India)
Pvt. Ltd. (A.P. No. 1710 of 2015 decided on 14.01.2016) and
Tufan Chatterjee v. Rangan Dhar, (FMAT No. 47 of 2016
decided on 02.03.2016), the Madhya Pradesh High Court in
Pragat Akshay Urja Limited Company v. State of M.P and
Ors., (Arbitration Case Nos. 48, 53 and 54/2014, decided on
30.06.2016), the Madras High Court in New Tirupur Area
Development v. Hindustan Construction Co. Limited,
52Shri Viswanathan’s approach leads to an amendment of
Section 26, as recommended by the Srikrishna
Committee, and not interpretation thereof. For all these
reasons, his argument must, therefore, be rejected. Shri
Datar’s argument is more or less the same as Shri
(Application No. 7674 of 2015 in O.P. No. 931 of 2015) and the
Bombay High Court in Rendezvous Sports World v. BCCI
(Chamber Summons No. 1530 of 2015 in Execution Application
(L) No. 2481 of 2015, Chamber Summons No. 1532 of 2015 in
Execution Application (L) No. 2482 and Chamber Summons No.
66 of 2016 in Execution Application (L) No. 2748 of 2015 decided
on 08.08.2016).
In addition to this, the following decisions by various High
Courts also deal with the applicability of the Amendment Act:
i. Calcutta High Court: Nitya Ranjan Jena v. Tata Capital
Financial Services Ltd., GA No. 145/206 with AP No.
15/2016, West Bengal Power Development
Corporation Ltd. v. Dongfang Electric Corporation,
2017 SCCOnline Cal 9388, Saraf Agencies v. Federal
Agencies for State Property Management, AIR 2017
Cal. 65, Reliance Capital Ltd. v. Chandana Creations,
2016 SCC Cal. 9558 and Braithwaite Burn & Jessop
Construction Company Ltd. v. Indo Wagon
Engineering Ltd., AIR 2017 (NOC 923) 314.
ii. Bombay High Court: M/s. Maharashtra Airport
Development Company Ltd. v. M/s. PBA
Infrastructure Ltd., 2017 SCCOnline Bom (7840),
Enercon GmbH v. Yogesh Mehra, 2017 SCC Bom 1744
and Global Aviation Services Pvt. Ltd. v. Airport
Authority of India, Commercial Arbitration Petition No.
434/2017,
iii. Madras High Court: Jumbo Bags Ltd. v. New India
Assurance Company Limited, 2016 (3) CTC 769.
iv. Delhi High Court: ICI Soma JV v. Simplex
Infrastructures Ltd., 2016 SCC Online Del 5315, TantiaCCIL
(JV) v. Union of India, ARB. P. 615/2016, Raffles
Design International India Pvt. Ltd. v. Educomp
53Viswanathan’s, and suffers from the same infirmity as Shri
Viswanathan’s interpretation. Shri A. Krishnan, in bringing
in the concept of “seat”, is again doing complete violence
to the language of Section 26, as “place of arbitration” is a
Professional Education Ltd. and Ors., OMP (I) (COMM.)
23/2015, Orissa Concrete and Allied Industries Ltd. v.
Union of India and Ors., Arb. P. No. 174 of 2016,
Takamol Industries Pvt. Ltd. v. Kundan Rice Mills
Ltd., EX. P. 422/2014 & EA No. 739/2016, Apex Encon
Projects Pvt. Ltd. v. Union of India & Anr., 2017 SCC
Online Del. 9779 and Ratna Infrastructure Projects Pvt.
Ltd. v. Meja Urja Nigam Pvt. Ltd., 2017 SCC Online Del
7808.
v. Patna High Court: SPS v. Bihar Rajya Pul Nirman
Nigam Ltd., Request Case No. 14 of 2016 and Kumar and
Kumar Associates v. Union of India, 2017 1 PLJR 649.
vi. Gujarat High Court: OCI Corp. v. Kandla Export
Corporation & Ors., 2017 GLH (1) 383, Abhinav
Knowledge Services Pvt. Ltd. v. Babasaheb
Amdebdkar Open University, AIR 2017 (NOC 1012) 344
and Pallav Vimalbhai Shah v. Kalpesh Sumatibhai
Shah, O/IAAP/15/2017.
vii. Kerala High Court: Shamsudeen v. Shreeram
Transport Finance Ltd., ILR 2017 Vol. 1, Ker. 370 and
Jacob Mathew v. PTC Builders, 2017 (5) KHC 583.
viii. Tripura High Court: Subhash Podder v. State of
Tripura, 2016 SCC Tri. 500.
ix. Chhatisgarh High Court: Orissa Concrete and Allied
Industries Limited v. Union of India and Ors.,
Arbitration Application No. 34/2014.
x. Rajasthan High Court: Dwarka Traders Pvt. Ltd. v.
Union of India, S.B., Arbitration Application No. 95/2013
and Mayur Associates, Engineers and Contractors v.
Gurmeet Singh & Ors., S.B. Arbitration Application No.
74/2013.
xi. Himachal Pradesh High Court: RSWM v. The Himachal
Pradesh State Supplies Co. Ltd., Arb Case No. 104/2016
54well-known concept contained in Section 20 of the 1996
Act, which finds no mention whatsoever in Section 26 of
the Amendment Act. For these reasons, his interpretation
cannot also be accepted.
30. Shri Neeraj Kishan Kaul, learned senior counsel
appearing on behalf of Respondents in SLP(C)
Nos.19545-19546 of 2016, has argued that the first part
of Section 26 does not apply to Court proceedings at all,
thereby indicating that the Amendment Act must be given
retrospective effect insofar as Court proceedings in
relation to arbitral proceedings are concerned. For this
purpose, he relied on Minister of Public Works of the
Government of the State of Kuwait (supra).
31. In that case, the question that arose was as to the
correct construction of Section 7(1) of the U.K. Arbitration
Act, 1975. The said section was given retrospective effect
and P.K. Construction Co. & Ors. v. Shimla Municipal
Co. & Ors., Civil Writ Petition No. 2322/2016.
xii. Punjab & Haryana High Court: Alpine Minmetals India
Pvt. Ltd. v. Noble Resources Ltd., LPA No. 917/2017.
55in applying the New York Convention to arbitration
agreements that were entered into before the convention
was made applicable, for the reason that nobody had an
accrued right/defence which was taken away. All defences
available in a common law action on the award would be
available and continued to be available. Hence, it was
held that the award could always have been enforced by
one form of procedure and that it subsequently became
enforceable by an alternative form. This judgment can
have no application to the present case, inasmuch as the
Amendment Act, as applicable to Court proceedings that
arose in relation to arbitral proceedings, cannot be said to
apply to mere forms of procedure, but also includes
substantive law applicable to such Court proceedings
post the Amendment Act. Also, it is wholly fallacious to
say that since the first part of Section 26 does not refer to
Court proceedings in relation to arbitral proceedings, the
Amendment Act is retrospective insofar as such
proceedings are concerned. The second part of Section
5626 would then have to be completely ignored, which, as
has been seen hereinabove, applies to Court proceedings
in relation to arbitral proceedings only prospectively, i.e. if
such Court proceedings are commenced after the
Amendment Act comes into force. For these reasons,
such an interpretation of Section 26 is unacceptable.
32. Shri Chidambaram, appearing on behalf of some of
the Respondents, has argued that the interpretation
accepted by this Court supra is the correct interpretation.
He has also argued that, alternatively, the expression “in
relation to arbitral proceedings” in the second part of
Section 26 would also include within it arbitral
proceedings before the arbitral tribunal, as otherwise
Section 26 would not apply the Amendment Act to such
arbitral proceedings. We are afraid that this alternative
interpretation does not appeal to us, for the simple reason
that when the first part of Section 26 makes it clear that
arbitral proceedings commenced before the Amendment
Act would not be governed by the Amendment Act, it is
57clear that arbitral proceedings that have commenced after
the Amendment Act comes into force would be so
governed by it, as has been held by us above. The
negative form of the language of the first part only
becomes necessary to indicate that parties may otherwise
agree to apply the Amendment Act to arbitral proceedings
commenced even before the Amendment Act comes into
force. The absence of any reference to Section 21 of the
1996 Act in the second part of Section 26 of the
Amendment Act is also a good reason as to why arbitral
proceedings before an arbitral tribunal are not
contemplated in the second part.
33. Shri Sibal has argued that Section 26 is not a savings
clause at all and cannot be construed as such. According
to the learned senior counsel, Section 26 manifests a
clear intention to destroy all rights, vested or otherwise,
which have accrued under the unamended 1996 Act. We
are unable to accept these submissions as it is clear that
the intendment of Section 26 is to apply the Amendment
58Act prospectively to arbitral proceedings and to court
proceedings in relation thereto. This approach again
does not commend itself to us.
34. Dr. Singhvi has, however, argued that the approach
indicated by us above could be termed as an
“intermediate approach”, i.e. it is an approach which does
not go to either of the extreme approaches of Shri
Sundaram, Shri Viswanathan and Shri Datar or that of
Shri Sibal. Further, according to the learned senior
counsel, this approach has the merit of both clarity, as
well as no anomalies arising as a result, as it is clear that
the Amendment Act is to be applied only prospectively
with effect from the date of its commencement, and only
to arbitral proceedings and to court proceedings in
relation thereto, which have commenced on or after the
commencement of the Amendment Act. We think this is
the correct approach as has already been indicated by us
above.
5935. The judgment in Thyssen (supra), was strongly relied
upon by counsel on both sides. It is, therefore, important
to deal with this judgment in a little detail. In Thyssen
(supra), Section 85 of the 1996 Act came up for
consideration. What is clear is that Section 85(2)(a) had
the expression “in relation to arbitral proceedings” in both
parts of sub-section (2)(a). When speaking of the
repealed enactments, it stated that they will apply “in
relation to” arbitral proceedings which commenced before
the 1996 Act came into force, but that otherwise the 1996
Act shall apply “in relation to” arbitral proceedings, which
commenced on or after the 1996 Act came into force.
36. The judgment in Thyssen (supra) construed Section
85 as follows:
“23. Section 85(2)(a) of the new Act is in two
limbs: (1) provisions of the old Act shall apply
in relation to arbitral proceedings which
commenced before the new Act came into
force unless otherwise agreed by the parties,
and (2) the new Act shall apply in relation to
arbitral proceedings which commenced on or
after the new Act came into force. The first
limb can further be bifurcated into two: (a)
60provisions of the old Act shall apply in relation
to arbitral proceedings commenced before the
new Act came into force, and (b) the old Act
will not apply in such cases where the parties
agree that it will not apply in relation to arbitral
proceedings which commenced before the
new Act came into force. The expression “in
relation to” is of the widest import as held by
various decisions of this Court in Doypack
Systems (P) Ltd. [(1988) 2 SCC
299], Mansukhlal Dhanraj Jain [(1995) 2 SCC
665], Dhanrajamal Gobindram [AIR 1961 SC
1285 : (1961) 3 SCR 1020] and Navin
Chemicals Mfg. [(1993) 4 SCC 320] This
expression “in relation to” has to be given full
effect to, particularly when read in conjunction
with the words “the provisions” of the old Act.
That would mean that the old Act will apply to
the whole gambit of arbitration culminating in
the enforcement of the award. If it was not so,
only the word “to” could have sufficed and
when the legislature has used the expression
“in relation to”, a proper meaning has to be
given. This expression does not admit of
restrictive meaning. The first limb of Section
85(2)(a) is not a limited saving clause. It saves
not only the proceedings pending at the time
of commencement of the new Act but also the
provisions of the old Act for enforcement of
the award under that Act.”
(at page 369)
[Emphasis Supplied]
The judgment then goes on to refer to Section 48 of the
Arbitration Act, 1940, which is set out therein as follows:
61“48. Saving for pending references.—The
provisions of this Act shall not apply to any
reference pending at the commencement of
this Act, to which the law in force immediately
before the commencement of this Act shall
notwithstanding any repeal effected by this Act
continue to apply.”
(at page 349)
Paragraph 33 goes on to state the difference between
Section 85(2)(a) of the 1996 Act and the earlier Section 48
of the 1940 Act, as follows:
“33. Because of the view of Section 85(2)(a)
of the new Act which we have taken, it is not
necessary for us to consider difference in the
repealing provisions as contained in Section
48 of the old Act and Section 85 of the new
Act. We may, however, note that under
Section 48 of the old Act the concept is of
“reference” while under the new Act it is
“commencement”. Section 2(e) of the old Act
defines “reference”. Then under Section 48
the word used is “to” and under Section 85(2)
( a) the expression is “in relation to”. It,
therefore, also appears that it is not quite
relevant to consider the provision of Section
48 of the old Act to interpret Section 85(2)(a).”
(at page 375)
[Emphasis Supplied]
Paragraph 25 specifically states that Section 6 of the
General Clauses Act will not apply, inasmuch as a different
62intention does appear from the plain language of Section
85(2)(a). Ultimately, after stating seven conclusions in
paragraph 22, this Court went on to state that enforcement
of an award under the 1940 Act would be an accrued right
for the reason that the challenge procedure under Section
30 of the 1940 Act was wider and completely different from
the challenge procedure under Section 34 of the 1996 Act,
and that to avoid confusion and hardship, it would be
important to refer to the expression “in relation to” as
meaning the entire gamut of arbitral proceedings,
beginning with commencement and ending with
enforcement of an award.
37. The judgment in Thyssen (supra) dealt with a
differently worded provision, and emphasized the
difference in language between the expression “to” and
the expression “in relation to”. In reference to the Acts
which were repealed under Section 85, proceedings which
commenced before the 1996 Act were to be governed by
the repealed Acts. These proceedings would be the entire
63gamut of proceedings, i.e. from the stage of
commencement of arbitral proceedings until the challenge
proceedings against the arbitral award had been
exhausted. Similar was the position with respect to the
applicability of the 1996 Act, which would again apply to
the entire gamut of arbitral proceedings, beginning with
commencement and ending with enforcement of the
arbitral award. It is clear, therefore, that Section 85(2)(a)
has two major differences in language with Section 26:
one, that the expression “in relation to” does not appear in
the first part of Section 26 and only the expression “to”
appears; and, second, that “commencement” in the first
part of Section 26 is as is understood by Section 21 of the
1996 Act. The second part of Section 85(2)(a) is couched
in language similar to the second part of Section 26 with
this difference, that Section 21 contained in the first part of
Section 26 is conspicuous by its absence in the second
part.
6438. The judgment in Thyssen (supra) was followed in
N.S. Nayak (supra). After setting out paragraph 32 of the
judgment in Thyssen (supra) and paragraphs 22 and 23
of the aforesaid judgment, this Court concluded:
“13. As stated in paragraph 22, Conclusion 1
without any reservation provides that the
provisions of the old Act shall apply in relation
to the arbitral proceedings which have
commenced before coming into force of the
new Act. Conclusion 2, in our view, is required
to be read in context with Conclusion 1, that is
to say, the phrase “in relation to arbitral
proceedings” cannot be given a narrow
meaning to mean only pendency of the
proceedings before the arbitrator. It would
cover not only proceedings pending before the
arbitrator but would also cover the
proceedings before the court and any
proceedings which are required to be taken
under the old Act for the award becoming a
decree under Section 17 thereof and also
appeal arising thereunder. Hence,
Conclusions 1 and 2 are to be read together
which unambiguously reiterate that once the
arbitral proceedings have started under the
old Act, the old Act would apply for the award
becoming a decree and also for appeal arising
thereunder.
14. Conclusion 3 only reiterates what is
provided in various sections of the Arbitration
Act, which gives option to the parties to opt for
the procedure as per their agreement during
the arbitral proceedings before the arbitrator.
65The 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.”
(at pages 63-64)
The majority judgment in Milkfood Limited (supra), after
referring to the judgments in Thyssen (supra) and N.S.
Nayak (supra), concluded that, on the facts of that case,
66the 1940 Act will apply and not the 1996 Act. These
judgments are distinguishable for the same reasons, as
they only follow and apply Thyssen (supra).
39. From a reading of Section 26 as interpreted by us, it
thus becomes clear that in all cases where the Section 34
petition is filed after the commencement of the
Amendment Act, and an application for stay having been
made under Section 36 therein, will be governed by
Section 34 as amended and Section 36 as substituted.
But, what is to happen to Section 34 petitions that have
been filed before the commencement of the Amendment
Act, which were governed by Section 36 of the old Act?
Would Section 36, as substituted, apply to such petitions?
To answer this question, we have necessarily to decide
on what is meant by “enforcement” in Section 36. On the
one hand, it has been argued that “enforcement” is
nothing but “execution”, and on the other hand, it has
been argued that “enforcement” and “execution” are
67different concepts, “enforcement” being substantive and
“execution” being procedural in nature.
40. At this stage, it is necessary to set out the scheme of
the 1996 Act. An arbitral proceeding commences under
Section 21, unless otherwise agreed by parties, when a
dispute arises between the parties for which a request for
the dispute to be referred to arbitration is received by the
respondent. The arbitral proceedings terminate under
Section 32(1) by the delivery of a final arbitral award or by
the circumstances mentioned in Section 32(2). The
mandate of the arbitral tribunal terminates with the
termination of arbitral proceedings, save and except for
correction and interpretation of the award within the
bounds of Section 33, or the making of an additional
arbitral award as to claims presented in the proceedings,
but omitted from the award. Once this is over, in cases
where an arbitral award is delivered, such award shall be
final and binding on the parties and persons claiming
under them, under Section 35 of the 1996 Act. Under
68Section 36, both pre and post amendment, 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. It is clear that the
scheme of the 1996 Act is materially different from the
scheme of the 1940 Act. Under Section 17 of the 1940
Act, once an award was delivered, the Court had to
pronounce judgment in accordance with the award,
following which a decree would be drawn up, which would
then be executable under the Code of Civil Procedure.
Under Section 36 of the 1996 Act, the Court does not
have to deliver judgment in terms of the award, which is
then followed by a decree, which is the formal expression
of the adjudication between the parties. Under Section 36
of the 1996 Act, the award is deemed to be a decree and
shall be enforced under the Code of Civil Procedure as
such.
41. This brings us to the manner of enforcement of a
decree under the Code of Civil Procedure. A decree is
69enforced under the Code of Civil Procedure only through
the execution process – see Order XXI of the Code of
Civil Procedure. Also, Section 36(3), as amended, refers
to the provisions of the Code of Civil Procedure for grant
of stay of a money decree. This, in turn, has reference to
Order LXI, Rule 5 of the Code of Civil Procedure, which
appears under the Chapter heading, “Stay of Proceedings
and of Execution”. This being so, it is clear that Section
36 refers to the execution of an award as if it were a
decree, attracting the provisions of Order XXI and Order
LXI, Rule 5 of the Code of Civil Procedure and would,
therefore, be a provision dealing with the execution of
arbitral awards. This being the case, we need to refer to
some judgments in order to determine whether execution
proceedings and proceedings akin thereto give rise to
vested rights, and whether they are substantive in nature.
42. In Lalji Raja and Sons v. Hansraj Nathuram, (1971)
1 SCC 721 at 728, this Court was concerned with a
judgment debtor’s right to resist execution of a decree.
70Section 20(1)(b) of the Code of Civil
Procedure (Amendment) Act, 1951 was extended to
Madhya Bharat and other areas, as a result of which the
judgment debtor’s right to resist execution of a decree
was protected. In this context, this Court held that the
Amendment Act of 1951 made decrees, which could have
been executed only by courts in British India, executable
in the whole of India. Stating that the change made was
one relating to procedure only, this Court held:
“15. This provision undoubtedly protects the
rights acquired and privileges accrued under
the law repealed by the Amending Act.
Therefore the question for decision is whether
the non-executability of the decree in the
Morena Court under the law in force in
Madhya Bharat before the extension of “the
Code” can be said to be a right accrued under
the repealed law. We do not think that even by
straining the language of the provision it can
be said that the non-executability of a decree
within a particular territory can be considered
as a privilege. Therefore the only question that
we have to consider is whether it can be
considered as a “right accrued” within the
meaning of Section 20(1)(b) of the Code of
Civil Procedure (Amendment) Act, 1950. In
the first place, in order to get the benefit of
that provision, the non-executability of the
decree must be a right and secondly it must
71be a right that had accrued from the
provisions of the repealed law. It is contended
on behalf of the judgment-debtors that when
the decree was passed, they had a right to
resist the execution of the decree in Madhya
Bharat in view of the provisions of the Indian
Code of Civil Procedure (as adapted) which
was in force in the Madhya Bharat at that time
and the same is a vested right. It was further
urged on their behalf that that right was
preserved by Section 20(1)(b) of the Code of
Civil Procedure (Amendment) Act, 1950. It is
difficult to consider the non-executability of the
decree in Madhya Bharat as a vested right of
the judgment-debtors. The non-executability in
question pertains to the jurisdiction of certain
courts and not to the rights of the judgmentdebtors.
Further the relevant provisions of the
Civil Procedure Code in force in Madhya
Bharat did not confer the right claimed by the
judgment-debtors. All that has happened in
view of the extension of “the Code” to the
whole of India in 1951 is that the decrees
which could have been executed only by
courts in British India are now made
executable in the whole of India. The change
made is one relating to procedure and
jurisdiction. Even before “the Code” was
extended to Madhya Bharat the decree in
question could have been executed either
against the person of the judgment-debtors if
they had happened to come to British India or
against any of their properties situated in
British India. The execution of the decree
within the State of Madhya Bharat was not
permissible because the arm of “the Code” did
not reach Madhya Bharat. It was the invalidity
of the order transferring the decree to the
72Morena Court that stood in the way of the
decree-holders in executing their decree in
that court on the earlier occasion and not
because of any vested rights of the judgmentdebtors.
Even if the judgment-debtors had not
objected to the execution of the decree, the
same could not have been executed by the
court at Morena on the previous occasion as
that court was not properly seized of the
execution proceedings. By the extension of
“the Code” to Madhya Bharat, want of
jurisdiction on the part of the Morena Court
was remedied and that court is now made
competent to execute the decree.
16. That a provision to preserve the right
accrued under a repealed Act “was not
intended to preserve the abstract rights
conferred by the repealed Act.... It only applies
to specific rights given to an individual upon
happening of one or the other of the events
specified in statute” — See Lord Atkin’s
observations in Hamilton Gell v. White. [(1922)
2 KB 422]. The mere right, existing at the date
of repealing statute, to take advantage of
provisions of the statute repealed is not a
“right accrued” within the meaning of the usual
saving clause — See Abbot v. Minister for
Lands [(1895) AC 425] and G. Ogden
Industries Pvt. Ltd. v. Lucas. [(1969) 1 All ER
121]”
In Narhari Shivram Shet Narvekar v. Pannalal
Umediram (1976) 3 SCC 203 at 207, this Court, following
Lalji Raja (supra), held as follows:
73“8. Learned counsel appearing for the
appellant however submitted that since the
Code of Civil Procedure was not applicable to
Goa the decree became inexecutable and this
being a vested right could not be taken away
by the application of the Code of Civil
Procedure to Goa during the pendency of the
appeal before the Additional Judicial
Commissioner. It seems to us that the right of
the judgment debtor to pay up the decree
passed against him cannot be said to be a
vested right, nor can the question of
executability of the decree be regarded as a
substantive vested right of the judgment
debtor. A fortiori the execution proceedings
being purely a matter of procedure it is well
settled that any change in law which is made
during the pendency of the cause would be
deemed to be retroactive in operation and the
appellate court is bound to take notice of the
change in law.”
Since it is clear that execution of a decree pertains to the
realm of procedure, and that there is no substantive
vested right in a judgment debtor to resist execution,
Section 36, as substituted, would apply even to pending
Section 34 applications on the date of commencement of
the Amendment Act.
43. The matter can also be looked at from a slightly
different angle. Section 36, prior to the Amendment Act,
74is only a clog on the right of the decree holder, who
cannot execute the award in his favour, unless the
conditions of this section are met. This does not mean
that there is a corresponding right in the judgment debtor
to stay the execution of such an award. Learned counsel
on behalf of the Appellants have, however, argued that a
substantive change has been made in the award, which
became an executable decree only after the Section 34
proceedings were over, but which is now made
executable as if it was a decree with immediate effect,
and that this change would, therefore, take away a vested
right or accrued privilege in favour of the Respondents. It
has been argued, relying upon a number of judgments,
that since Section 36 is a part of the enforcement process
of awards, there is a vested right or at least a privilege
accrued in favour of the Appellants in the unamended
1996 Act applying insofar as arbitral proceedings and
court proceedings in relation thereto have commenced,
prior to the commencement of the Amendment Act. The
75very judgment strongly relied upon by senior counsel for
the appellants, namely Garikapati Veeraya (supra), itself
states in proposition (v) at page 515, that the vested right
of appeal can be taken away only by a subsequent
enactment, if it so provides specifically or by necessary
intendment and not otherwise. We have already held that
Section 26 does specifically provide that the court
proceedings in relation to arbitral proceedings, being
independent from arbitral proceedings, would not be
viewed as a continuation of arbitral proceedings, but
would be viewed separately. This being the case, it is
unnecessary to refer to judgments such as Union of
India v. A.L. Rallia Ram, (1964) 3 SCR 164 and NBCC
Ltd. v. J.G. Engineering (P) Ltd., (2010) 2 SCC 385,
which state that a Section 34 proceeding is a supervisory
and not an appellate proceeding. Snehadeep Structures
(P) Ltd. v. Maharashtra Small-Scale Industries
Development Corpn. Ltd., (2010) 3 SCC 34 at 47-49,
which was cited for the purpose of stating that a Section
7634 proceeding could be regard as an “appeal” within the
meaning of Section 7 of the Interest on Delayed
Payments To Small Scale and Ancillary Industrial
Undertakings Act, 1993, is obviously distinguishable on
the ground that it pertains to the said expression
appearing in a beneficial enactment, whose object would
be defeated if the word “appeal” did not include a Section
34 application. This is made clear by the aforesaid
judgment itself as follows:
“36. On a perusal of the plethora of decisions
aforementioned, we are of the view that
“appeal” is a term that carries a wide range of
connotations with it and that appellate
jurisdiction can be exercised in a variety of
forms. It is not necessary that the exercise of
appellate jurisdiction will always involve reagitation
of entire matrix of facts and law. We
have already seen in Abhayankar [(1969) 2
SCC 74] that even an order passed by virtue
of limited power of revision under Section 115
of the Code is treated as an exercise of
appellate jurisdiction, though under that
provision, the Court cannot go into the
questions of facts. Given the weight of
authorities in favour of giving such a wide
meaning to the term “appeal”, we are
constrained to disagree with the contention of
the learned counsel for the respondent
Corporation that appeal shall mean only a
challenge to a decree or order where the
entire matrix of law and fact can be re-agitated
with respect to the impugned order/decree.
There is no quarrel that Section 34 envisages
only limited grounds of challenge to an award;
however, we see no reason why that alone
should take out an application under Section
34 outside the ambit of an appeal especially
when even a power of revision is treated as
an exercise of appellate jurisdiction by this
Court and the Privy Council.
xxx xxx xxx
40. It may be noted that Section 6(1)
empowers the buyer to obtain the due
payment by way of any proceedings. Thus the
proceedings that the buyer can resort to, no
doubt, includes arbitration as well. It is
pertinent to note that as opposed to Section
6(2), Section 6(1) does not state that in case
the parties choose to resort to arbitration, the
proceedings in pursuance thereof will be
governed by the Arbitration Act. Hence, the
right context in which the meaning of the term
“appeal” should be interpreted is the Interest
Act itself. The meaning of this term under the
Arbitration Act or the Code of Civil Procedure
would have been relevant if the Interest Act
had made a reference to them. For this very
reason, we also do not find it relevant that the
Arbitration Act deals with applications and
appeals in two different chapters. We are
concerned with the meaning of the term
“appeal” in the Interest Act, and not in the
Arbitration Act.”
7844. Learned senior counsel appearing on behalf of the
Respondents, has also argued that the expression “has
been” in Section 36(2), as amended, would make it clear
that the section itself refers to Section 34 applications
which have been filed prior to the commencement of the
Amendment Act and that, therefore, the said section would
apply, on its plain language, even to Section 34
applications that have been filed prior to the
commencement of the Amendment Act. For this purpose,
the judgment in State of Bombay v. Vishnu Ramchandra
(1961) 2 SCR 26, was strongly relied upon. In that
judgment, it was observed, while dealing with Section 57
of the Bombay Police Act, 1951, that the expression “has
been punished” is in the present perfect tense and can
mean either “shall have been” or “shall be”. Looking to the
scheme of the enactment as a whole, the Court felt that
“shall have been” is more appropriate. This decision was
referred to in paragraphs 60 and 61 of Workmen v.
Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1
79SCC 813 at 838 and the ratio culled out was that such
expression may relate to past or future events, which has
to be gathered from the context, as well as the scheme of
the particular legislation. In the context in which Section
11A of the Industrial Disputes Act, 1947 was enacted, this
Court held that Section 11A has the effect of altering the
law by abridging the rights of the employer. This being so,
the expression “has been” would refer only to future
events and would have no implication to disputes prior to
December 15, 1971. However, in a significant paragraph,
this Court held:
“63. It must be stated at this stage that
procedural law has always been held to
operate even retrospectively, as no party has
a vested right in procedure.…”
45. Being a procedural provision, it is obvious that the
context of Section 36 is that the expression “has been”
would refer to Section 34 petitions filed before the
commencement of the Amendment Act and would be one
pointer to the fact that the said section would indeed
apply, in its substituted form, even to such petitions. The
judgment in L’Office Cherifien Des Phosphates and
another v. Yamashita-Shinnihon Steamship Co. Ltd.,
(1994) 1 AC 486 is instructive. A new Section 13A was
introduced with effect from 1st January, 1992, by which
Arbitrators were vested with the power of dismissing a
claim if there is no inordinate or an inexcusable delay on
the part of the claimant in pursuing the claim. This
Section was enacted because the House of Lords in a
certain decision had suggested that such delays in
arbitration could not lead to a rejection of the claim by
itself. What led to the enactment of the Section was put
by Lord Mustill thus:
“My Lords, the effect of the decision of the
House in the Bremer Vulkan case, coupled
with the inability of the courts to furnish any
alternative remedy which might provide a
remedy for the abuse of stale claims, aroused
a chorus of disapproval which was forceful,
sustained and (so far as I am aware) virtually
unanimous. There is no need to elaborate.
The criticisms came from every quarter.
Several Commonwealth countries hastily
introduced legislation conferring on the court,
or on the arbitrator, a jurisdiction to dismiss
stale claims in arbitration. The history of the
matter, and the reasons why the question was
81not as easy as it might have appeared, were
summarized in an article published in 1989 by
Sir Thomas Bingham (Arbitration International,
vol. 5, pp. 333 et seq.), and there is no need
to rehearse them here. Taking account of
various apparent difficulties the Departmental
Advisory Committee on Arbitration hesitated
for a time both as to the principle and as to
whether the power to dismiss should be
vested in the court or the arbitrator, but the
pressure from all quarters became irresistible
and in 1990 the Courts and Legal Services Act
inserted, through the medium of Section 102,
a new Section 13A in the Arbitration Act,
1950.”
(at page 522)
The question which arose in that case was whether delay
that had taken place before the Section came into force
could be taken into account by an arbitrator in order to
reject the claim in that case. The House of Lords held that
given the clamor for change and given the practical value
and nature of the rights involved, it would be permissible
to look at delay caused even before the Section came into
force. In his concluding paragraph, Lord Mustill held:
“In this light, I turn to the language of Section
13A construed, in case of doubt, by reference
to its legislative background. The crucial
words are: “(a). . . there has been inordinate
and inexcusable delay . . . “ Even if read in
82isolation these words would I believe be
sufficient, in the context of Section 13A as a
whole, to demonstrate that the delay
encompasses all the delay which has caused
the substantial risk of unfairness. If there were
any doubt about this the loud and prolonged
chorus of complaints about the disconformity
between practices in arbitration and in the
High Court, and the increasing impatience for
something to be done about it, show quite
clearly that Section 13A was intended to bite
in full from the outset. If the position were
otherwise it would follow that, although
Parliament has accepted the advice of all
those who had urged that this objectionable
system should be brought to an end, and has
grasped the nettle and provided a remedy, it
has reconciled itself to the continuation of
arbitral proceedings already irrevocably
stamped with a risk of injustice. I find it
impossible to accept that Parliament can have
intended any such thing, and with due respect
to those who have suggested otherwise I find
the meaning of Section 13A sufficiently clear
to persuade me that in the interests of reform
Parliament was willing to tolerate the very
qualified kind of hardship involved in giving
the legislation a partially retrospective effect.
Accordingly, I agree with Beldam L.J. that the
arbitrator did have the powers to which he
purported to exercise. I would therefore allow
the appeal and restore the award of the
arbitrator.”
46. In 2004, this Court’s Judgment in National
Aluminium Company (supra) had recommended that
Section 36 be substituted, as it defeats the very objective
of the alternative dispute resolution system, and that the
Section should be amended at the earliest to bring about
the required change in law. It would be clear that looking
at the practical aspect and the nature of rights presently
involved, and the sheer unfairness of the unamended
provision, which granted an automatic stay to execution of
an award before the enforcement process of Section 34
was over (and which stay could last for a number of
years) without having to look at the facts of each case, it
is clear that Section 36 as amended should apply to
Section 34 applications filed before the commencement of
the Amendment Act also for the aforesaid reasons.
47. Both sides locked horns on whether a proceeding
under Section 36 could be said to be a proceeding which
is independent of a proceeding under Section 34. In view
of what has been held by us above, it is unnecessary for
us to go into this by-lane of forensic argument.
8448. However, Shri Viswanathan strongly relied upon the
observations made in paragraph 32 in Thyssen (supra)
and the judgment in Hameed Joharan v. Abdul Salam,
(2001) 7 SCC 573. It is no doubt true that paragraph 32
in Thyssen (supra) does, at first blush, support Shri
Viswanathan’s stand. However, this was stated in the
context of the machinery for enforcement under Section
17 of the 1940 Act which, as we have seen, differs from
Section 36 of the 1996 Act, because of the expression “in
relation to arbitral proceedings”, which took in the entire
gamut, starting from the arbitral proceedings before the
arbitral tribunal and ending up with enforcement of the
award. It was also in the context of the structure of the
1940 Act being completely different from the structure of
the 1996 Act, which repealed the 1940 Act. In the present
case, it is clear that “enforcement” in Section 36 is to treat
the award as if it were a decree and enforce it as such
under the Code of Civil Procedure, which would only
mean that such decree has to be executed in the manner
indicated. Also, a stray sentence in a judgment in a
particular context cannot be torn out of such context and
applied in a situation where it has been argued that
enforcement and execution are one and the same, at
least for the purpose of the 1996 Act. In Regional
Manager & Anr. v. Pawan Kumar Dubey (1976) 3 SCR
540, at 544 it was held:
“We think that the principles involved in
applying Article 311(2) having been sufficiently
explained in Shamsher Singh's case (supra) it
should no longer be possible to urge that
Sughar Singh's case (supra) could give rise to
some misapprehension of the law. Indeed, we
do not think that the principles of law declared
and applied so often have really changed. But,
the application of the same law to the differing
circumstances and facts of various cases
which have come up to this Court could create
the impression sometimes that there is some
conflict between different decisions of this
Court. Even where there appears to some
conflict, it would, we think, vanish when the
ratio decidendi of each case is correctly
understood. It is the rule deducible from the
application of law to the facts and
circumstances of a case which constitutes its
ratio decidendi and not some conclusion
based upon facts which may appear to be
similar. One additional or different fact can
make a world of difference between
conclusions in two cases even when the same
86principles are applied in each case to similar
facts.”
49. For the same reason, it is clear that the judgment in
Hameed Joharan (supra), which stated that execution
and enforcement were different concepts in law, was in
the context of Article 136 of the Limitation Act, 1963, read
with Section 35 of the Indian Stamp Act, 1899, which is
wholly different. The argument in that case was that
Article 136 of the Limitation Act prescribes a period of 12
years for the execution of a decree or order, after it
becomes enforceable. What was argued was that it would
become enforceable only when stamped and Section 35
of the Stamp Act was referred to for the said purpose. In
this context, this Court held:
“And it is on this score it has been contended
that the partition decree thus even though
already passed cannot be acted upon, neither
becomes enforceable unless drawn up and
engrossed on stamp papers. The period of
limitation, it has been contended in respect of
the partition decree, cannot begin to run till it
is engrossed on requisite stamp paper. There
is thus, it has been contended, a legislative
bar under Section 35 of the Indian Stamp Act
for enforceability of partition decree. Mr Mani
contended that enforcement includes the
whole process of getting an award as well as
execution since execution otherwise means
due performance of all formalities, necessary
to give validity to a document. We are,
however, unable to record our concurrence
therewith. Prescription of a twelve-year period
certain cannot possibly be obliterated by an
enactment wholly unconnected therewith.
Legislative mandate as sanctioned under
Article 136 cannot be kept in abeyance unless
the selfsame legislation makes a provision
therefor. It may also be noticed that by the
passing of a final decree, the rights stand
crystallised and it is only thereafter its
enforceability can be had, though not
otherwise.”
(at page 593)
It is for this reason that it was stated that enforceability of
a decree under the Limitation Act cannot be the subject
matter of Section 35 of the Stamp Act. Therefore, Section
35 of the Stamp Act could not be held to “overrun” the
Limitation Act and thus, give a complete go-by to the
legislative intent of Article 136 of the Limitation Act. Here
again, observations made in a completely different
context have to be understood in that context and cannot
be applied to a totally different situation.
8850. As a matter of fact, it was noticed that furnishing of
stamp paper was an act entirely within the domain and
control of the Appellant in that case, and any delay in the
matter of furnishing the same cannot possibly be said to
stop limitation, as no one can take advantage of his own
wrong (see paragraph 13). As a matter of fact, the Court
held that unless a distinction was made between
execution and enforcement, the result in that case would
lead to an “utter absurdity”. The Court held, “absurdity
cannot be the outcome of an interpretation of a Court
order and wherever there is even a possibility of such
absurdity, it would be a plain exercise of judicial power to
repeal the same rather than encouraging it” (see
paragraph 38).
51. Shri Viswanathan then referred us to this Court’s
judgment in Akkayanaicker v. A.A.A. Kotchadainaidu
and Anr. (2004) 12 SCC 469, which, according to him,
has followed the judgment in Hameed Joharan (supra).
This judgment again would have no application for the
89simple reason that the narrow point that was decided in
that case was whether the time period for execution of a
decree under Section 136 of the Limitation Act would start
when the decree was originally made or whether a fresh
period of limitation would begin after the decree was
amended having been substantially scaled down by a
Debt Relief Act. This Court held that as the original decree
could not be enforced and only the amended decree
could be enforced, 12 years has to be counted from the
date of the amended decree. It is clear that this
judgment also does not carry the matter further.
52. It was also argued that an award by itself had no
legal efficacy, until it became enforceable, and that,
therefore, until it could be enforced as a decree of the
Court, it would continue to remain suspended. Here again,
the judgment in Satish Kumar (supra) is extremely
instructive. The question in that case was as to whether,
under the 1940 Act, an award had any legal efficacy
before a judgment followed thereupon and it was made
90into a decree. A Full Bench of the Punjab and Haryana
High Court held that until it is made a rule of the Court,
such an award is waste paper. This Court strongly
disagreed and followed its unreported decision in Uttam
Singh Dugal & Co. v. Union of India as follows:
“It seems to us that the main reason given by
the two Full Benches for their conclusion is
contrary to what was held by this Court in its
unreported decision in Uttam Singh Dugal &
Co. v. Union of India [ Civil Appeal No. 162 of
1962—judgment delivered on 11-10-1962] .
The facts in this case, shortly stated, were that
Uttam Singh Dugal & Co. filed an application
under Section 33 of the Act in the Court of the
Subordinate Judge, Hazaribag. The Union of
India, Respondent 1, called upon Respondent
2, Col. S.K. Bose, to adjudicate upon the
matter in dispute between Respondent 1 and
the appellant Company. The case of Uttam
Singh Dugal & Co.was that this purported
reference to Respondent 2 for adjudication on
the matters alleged to be in dispute between
them and Respondent 1 was not competent
because by an award passed by Respondent
2 on April 23, 1952 all the relevant disputes
between them had been decided. The High
Court held inter alia that the first award did not
create any bar against the competence of the
second reference. On appeal this Court after
holding that the application under Section 33
was competent observed as follows:
91“The true legal position in regard
to the effect of an award is not in
dispute. It is well settled that as a
general rule, all claims which are
the subject-matter of a reference
to arbitration merge in the award
which is pronounced in the
proceedings before the arbitrator
and that after an award has been
pronounced, the rights and
liabilities of the parties in respect
of the said claims can be
determined only on the basis of
the said award. After an award is
pronounced, no action can be
started on the original claim which
had been the subject-matter of the
reference. As has been observed
by Mookerjee, J., in the case
of Bhajahari Saha Banikya v.
Behary Lal Basak [33 Cal. 881 at
p. 898] the award is, in fact, a final
adjudication of a Court of the
parties own choice, and until
impeached upon sufficient
grounds in an appropriate
proceeding, an award, which is on
the fact of it regular, is conclusive
upon the merits of the controversy
submitted, unless possibly the
parties have intended that the
award shall not be final and
conclusive … in reality, an award
possesses all the elements of
vitality, even though it has not
been formally enforced, and it may
be relied upon in a litigation
between the parties relating to the
92same subject-matter”. This
conclusion, according to the
learned Judge, is based upon the
elementary principle that, as
between the parties and their
privies, an award is entitled to that
respect which is due to the
judgment of a court of last resort.
Therefore, if the award which has
been pronounced between the
parties has in fact, or can, in law,
be deemed to have dealt with the
present dispute, the second
reference would be incompetent.
This position also has not been
and cannot be seriously disputed.”
This Court then held on the merits “that the
dispute in regard to overpayments which are
sought to be referred to the arbitration of
Respondent 2 by the second reference are
not new disputes; they are disputes in regard
to claims which the Chief Engineer should
have made before the arbitration under the
first reference”. This Court accordingly
allowed the appeal and set aside the order
passed by the High Court.
This judgment is binding on us. In our opinion
this judgment lays down that the position
under the Act is in no way different from what
it was before the Act came into force, and that
an award has some legal force and is not a
mere waste paper. If the award in question is
not a mere waste paper but has some legal
effect it plainly purports to or affects property
within the meaning of Section 17(1)(b) of the
Registration Act.”
93(at pages 248-249)
53. Justice Hegde, in a separate concurring judgment,
specifically stated that an award creates rights in property,
but those rights cannot be enforced until the award is
made a decree of the Court. The Learned Judge put it
very well when he said, “It is one thing to say that a right
is not created, it is an entirely different thing to say that
the right created cannot be enforced without further
steps”. The Amendment Act has only made an award
executable conditionally after it is made, like a judgment
of a Court, the only difference being that a decree would
not have to be formally drawn following the making of
such award.
54. Shri Viswanathan then argued, relying upon R.
Rajagopal Reddy v. Padmini Chandrasekharan (1995)
2 SCC 630, Fuerst Day Lawson Ltd. v. Jindal Exports
Ltd. (2001) 6 SCC 356, Sedco Forex International Drill.
Inc. v. CIT (2005) 12 SCC 717 and Bank of Baroda v.
Anita Nandrajog (2009) 9 SCC 462, that a clarificatory
amendment can only be retrospective, if it does not
substantively change the law, but merely clarifies some
doubt which has crept into the law. For this purpose, he
referred us to the amendments made in Section 34 by the
Amendment Act and stated that despite the fact that
Explanations 1 and 2 to Section 34(2) stated that “for the
avoidance of any doubt, it is clarified”, this is not language
that is conclusive in nature, but it is open to the Court to
go into whether there is, in fact, a substantive change that
has been made from the earlier position or whether a
doubt has merely been clarified. According to learned
senior counsel, since fundamental changes have been
made, doing away with at least two judgments of this
Court, being Saw Pipes Ltd (supra) and Western Geco
(supra), as has been held in paragraph 18 in HRD
Corporation (Marcus Oil and Chemical
Division) v. Gail (India) Limited (Formerly Gas
Authority of India Ltd.) 2017 SCC Online 1024, it is
clear that such amendments would only be prospective in
nature. We do not express any opinion on the aforesaid
contention since the amendments made to Section 34 are
not directly before us. It is enough to state that Section
26 of the Amendment Act makes it clear that the
Amendment Act, as a whole, is prospective in nature.
Thereafter, whether certain provisions are clarificatory,
declaratory or procedural and, therefore, retrospective, is
a separate and independent enquiry, which we are not
required to undertake in the facts of the present cases,
except to the extent indicated above, namely, the effect of
the substituted Section 36 of the Amendment Act.
55. Learned counsel for the Appellants have painted a
lurid picture of anomalies that would arise in case the
Amendment Act were generally to be made retrospective
in application. Since we have already held that the
Amendment Act is only prospective in application, no
such anomalies can possibly arise. It may also be noted
that the choosing of Section 21 as being the date on
which the Amendment Act would apply to arbitralproceedings that have been commenced could equally be
stated to give rise to various anomalies. One such
anomaly could be that the arbitration agreement itself
may have been entered into years earlier, and disputes
between the parties could have arisen many years after
the said arbitration agreement. The argument on behalf of
the Appellants is that parties are entitled to proceed on
the basis of the law as it exists on the date on which they
entered into an agreement to refer disputes to arbitration.
If this were to be the case, the starting point of the
application of the Amendment Act being only when a
notice to arbitrate has been received by the respondent,
which as has been stated above, could be many years
after the arbitration agreement has been entered into,
would itself give rise to the anomaly that the amended law
would apply even to arbitration proceedings years
afterwards as and when a dispute arises and a notice to
arbitrate has been issued under Section 21. In such a
case, the parties, having entered into an arbitration
agreement years earlier, could well turn around and say
that they never bargained for the change in law that has
taken place many years after, and which change will
apply to them, since the notice, referred to in Section 21,
has been issued after the Amendment Act has come into
force. Cut off dates, by their very nature, are bound to
lead to certain anomalies, but that does not mean that the
process of interpretation must be so twisted as to negate
both the plain language as well as the object of the
amending statute. On this ground also, we do not see
how an emotive argument can be converted into a legal
one, so as to interpret Section 26 in a manner that would
be contrary to both its plain language and object.
56. However, it is important to remember that the
Amendment Act was enacted for the following reasons, as
the Statement of Objects and Reasons for the
Amendment Act states:
“2. The Act was enacted to provide for speedy
disposal of cases relating to arbitration with
least court intervention. With the passage of
98time, some difficulties in the applicability of the
Act have been noticed. Interpretation of the
provisions of the Act by courts in some cases
have resulted in delay of disposal of arbitration
proceedings and increase in interference of
courts in arbitration matters, which tend to
defeat the object of the Act. With a view to
overcome the difficulties, the matter was
referred to the Law Commission of India, which
examined the issue in detail and submitted its
176th Report. On the basis of the said report,
the Arbitration and Conciliation (Amendment)
Bill, 2003 was introduced in the Rajya Sabha
on 22nd December, 2003. The said Bill was
referred to the Department-related
Parliamentary Standing Committee on
Personnel, Public Grievances, Law and Justice
for examination and Report. The said
Committee, submitted its Report to the
Parliament on 4th August, 2005, wherein the
Committee recommended that since many
provisions of the said Bill were contentious, the
Bill may be withdrawn and a fresh legislation
may be brought after considering its
recommendations. Accordingly, the said Bill
was withdrawn from the Rajya Sabha.
3. On a reference made again in pursuance of
the above, the Law Commission examined and
submitted its 246th Report on “Amendments to
the Arbitration and Conciliation Act, 1996” in
August, 2014 and recommended various
amendments in the Act. The proposed
amendments to the Act would facilitate and
encourage Alternative Dispute Mechanism,
especially arbitration, for settlement of disputes
in a more user-friendly, cost effective and
expeditious disposal of cases since India iscommitted to improve its legal framework to
obviate in disposal of cases.
4. As India has been ranked at 178 out of 189
nations in the world in contract enforcement, it
is high time that urgent steps are taken to
facilitate quick enforcement of contracts, easy
recovery of monetary claims and award of just
compensation for damages suffered and reduce
the pendency of cases in courts and hasten the
process of dispute resolution through
arbitration, so as to encourage investment and
economic activity.
5. As Parliament was not in session and
immediate steps were required to be taken to
make necessary amendments to the Arbitration
and Conciliation Act, 1996 to attract foreign
investment by projecting India as an investor
friendly country having a sound legal
framework, the President was pleased to
promulgate the Arbitration and Conciliation
(Amendment) Ordinance, 2015.
6. It is proposed to introduce the Arbitration and
Conciliation (Amendment) Bill, 2015, to replace
the Arbitration and Conciliation (Amendment)
Ordinance, 2015, which inter alia, provides for
the following, namely:—
(i) to amend the definition of “Court” to provide
that in the case of international commercial
arbitrations, the Court should be the High
Court;
(ii) to ensure that an Indian Court can exercise
jurisdiction to grant interim measures, etc.,
even where the seat of the arbitration is outside
India;
100(iii) an application for appointment of an
arbitrator shall be disposed of by the High Court
or Supreme Court, as the case may be, as
expeditiously as possible and an endeavour
should be made to dispose of the matter within
a period of sixty days;
(iv) to provide that while considering any
application for appointment of arbitrator, the
High Court or the Supreme Court shall examine
the existence of a prima facie arbitration
agreement and not other issues;
(v) to provide that the arbitral tribunal shall
make its award within a period of twelve
months from the date it enters upon the
reference and that the parties may, however,
extend such period up to six months, beyond
which period any extension can only be granted
by the Court, on sufficient cause;
(vi) to provide that a model fee Schedule on the
basis of which High Courts may frame rules for
the purpose of determination of fees of arbitral
tribunal, where a High Court appoints arbitrator
in terms of section 11 of the Act;
(vii) to provide that the parties to dispute may at
any stage agree in writing that their dispute be
resolved through fast track procedure and the
award in such cases shall be made within a
period of six months;
(viii) to provide for neutrality of arbitrators, when
a person is approached in connection with
possible appointment as an arbitrator;
101(ix) to provide that application to challenge the
award is to be disposed of by the Court within
one year.
7. The amendments proposed in the Bill will
ensure that arbitration process becomes more
user-friendly, cost effective and lead to
expeditious disposal of cases.”
(Emphasis Supplied)
57. The Government will be well-advised in keeping the
aforesaid Statement of Objects and Reasons in the
forefront, if it proposes to enact Section 87 on the lines
indicated in the Government’s press release dated 7th
March, 2018. The immediate effect of the proposed
Section 87 would be to put all the important amendments
made by the Amendment Act on a back-burner, such as
the important amendments made to Sections 28 and 34 in
particular, which, as has been stated by the Statement of
Objects and Reasons, “…have resulted in delay of
disposal of arbitration proceedings and increase in
interference of courts in arbitration matters, which tend to
defeat the object of the Act”, and will now not be
applicable to Section 34 petitions filed after 23rd October,
1022015, but will be applicable to Section 34 petitions filed in
cases where arbitration proceedings have themselves
commenced only after 23rd October, 2015. This would
mean that in all matters which are in the pipeline, despite
the fact that Section 34 proceedings have been initiated
only after 23rd October, 2015, yet, the old law would
continue to apply resulting in delay of disposal of
arbitration proceedings by increased interference of
Courts, which ultimately defeats the object of the 1996
Act.4
It would be important to remember that the 246th
4 These amendments have the effect, as stated in HRD
Corporation (Marcus Oil and Chemical Division) v. Gail
(India) Limited (Formerly Gas Authority of India Ltd.)
2017 SCC Online 1024 (at paragraph 18) of limiting the grounds
of challenge to awards as follows:
“…In fact, the same Law Commission Report
has amended Sections 28 and 34 so as to narrow
grounds of challenge available under the Act. The
judgment in ONGC v. Saw Pipes Ltd, (2003) 5 SCC
705, has been expressly done away with. So has
the judgment in ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263. Both Sections
34 and 48 have been brought back to the position
of law contained in Renusagar Power Plant Co. Ltd.
v. General Electric Co., (1994) Supp (1) SCC 644,
where “public policy” will now include only two of
the three things set out therein, viz., “fundamental
policy of Indian law” and “justice or morality”. The
ground relating to “the interest of India” no longer
obtains. “Fundamental policy of Indian law” is now
to be understood as laid down in Renusagar
(supra). “Justice or morality” has been tightened
and is now to be understood as meaning only basic
103Law Commission Report has itself bifurcated proceedings
into two parts, so that the Amendment Act can apply to
Court proceedings commenced on or after 23rd October,
2015. It is this basic scheme which is adhered to by
Section 26 of the Amendment Act, which ought not to be
displaced as the very object of the enactment of the
Amendment Act would otherwise be defeated.
58. At the fag end of the arguments, Shri Viswanathan,
in rejoinder, raised another point which arises only in Civil
Appeals arising out of SLP(C) No. 8374-8375 of 2017 and
8376-8378 of 2017. According to him, the impugned
judgment, when it dealt with the majority award in favour
of respondent Enercon GmbH, went behind the award in
ordering execution of a portion of the award in favour of
Enercon, when the majority award, in paragraph 331(3)
notions of justice and morality i.e. such notions as
would shock the conscience of the Court as
understood in Associate Builders v. Delhi
Development Authority, (2015) 3 SCC 49. Section
28(3) has also been amended to bring it in line with
the judgment of this Court in Associate Builders
(supra), making it clear that the construction of the
terms of the contract is primarily for the arbitrator
to decide unless it is found that such a construction
is not a possible one.”
104(b), specifically ordered the 2nd and 3rd defendants to pay
to WWIL, which is a joint venture company, a sum of
Rs.6,77,24,56,570/-. The majority award of the tribunal
had specifically stated, in paragraph 298, as follows:
“Enercon’s claim is first pleaded as damages
payable by the Mehra directors directly to
Enercon. It also pleads an alternative claim for
such further or other relief as the Tribunal
considers appropriate (paragraph 18 of the
application of 13 December 2015 and
paragraph 323.4 of its closing written
submission dated 13 May 2016, as also its
Statement of Claim of 30 September 2014, at
paragraph 102(M).) In the Tribunal’s view,
given that WWIL is only part owned by
Enercon (hence Enercon’s pecuniary
disadvantage resulting from the Mehra
directors’ wrongdoing is not the same as that
of WWIL) and further that WWIL remains the
person most immediately affected by such
wrongdoing, the liability of the Mehra directors
is best discharged by requiring them to
deciding upon such relief in favour of WWIL
(as distinct from direct relief in favour of
Enercon), the Tribunal sees no material
disadvantage to Enercon, and, as for the
Mehra directors, no possible prejudice or
other unfairness, whether as a matter of
pleading, the form of relief or otherwise.”
It is only thereafter that the Tribunal awarded the aforesaid
amount in paragraph 331(3)(b) as follows:
“(b) Jointly and severally-
(i) to pay to WWIL the sum of INR
6,772,456,570, being the profit made by Vish
Wind on the sale of allotment rights to WWIL
in the years ending 31 March 2011 and 2012
together with interest thereon at the rate of 3%
over European Central Bank rate from those
dates until the date of this Award.
(ii) To pay to the Claimants their legal and
other costs in the sum of €3,794,970.”
59. It is thus Shri Viswanathan’s contention that it is the
decree holder alone who can execute such decree in its
favour, and that in the present case it is WWIL who is the
decree holder, insofar as paragraph 331(3)(b) is
concerned and, that, therefore, Enercon’s Chamber
Summons, to execute this portion of the award, is
contrary to the Code of Civil Procedure as well as a
number of judgments construing the Code.
60. On the other hand, the submission of the other side
is that the Mehra brothers, who are the 2nd and 3rd
defendants in the arbitration proceedings, are in control
and management of WWIL, and have wrongfully excluded
Enercon from such control and management. WWIL,
therefore, will never put this decree into execution. This
being so, the interest of justice requires that we should
not interfere with the High Court judgment as there is no
person that would be in a position to enforce the award
apart from Enercon.
61. We are of the opinion that even though the High
Court may not be strictly correct in its appreciation of the
law, yet it has attempted to do justice on the facts of the
case as follows:
“These last words are important. If what Mr.
Mehta says is correct and the decree was in
favour of WWIL and not Enercon, that
necessarily posits a rejection of Enercon’s
claim for damages and, therefore, a material
disadvantage to Enercon. But this is not what
the Arbitral Tribunal did at all. It accepted
Enercon's plea. It accepted its argument that
the Mehras were guilty of wrongdoing. It
accepted that the Mehras were liable to make
good any advantage or benefit they have
received. The Arbitral Tribunal merely
changed the vehicle or direction by which that
107recompense, restitution or recovery was to be
made. The nomenclature is immaterial. Given
the nature of disputes, indeed, WWIL could
never put this decree into execution. It never
sought this relief. It could not have. This is not
in fact, as paragraph 298, says a relief in
favour of WWIL at all although WWIL may
benefit from it. It is a relief and a decree in
favour of and only of Enercon.”
In this view of the matter, we do not think it appropriate, in
the interest of justice, to interfere with the impugned
judgment on this count.
62. In view of the above, the present batch of appeals is
dismissed. A copy of the judgment is to be sent to the
Ministry of Law and Justice and the Learned Attorney
General for India in view of what is stated in paragraphs
56 and 57 supra.
……………………………J.
(R.F. Nariman)
……………………………J.
(Navin Sinha)
New Delhi;
March 15, 2018.
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