Section 26 of Amendment Act No. 3 of 2016 clearly
made the amendments incorporated in the principal Act
prospective in nature and would apply only to those arbitration
and court proceedings, which have commenced after coming
into force of Act No.3 of 2016 w.e.f. 23.10.2015.
13. The question, thus, arises whether for the purpose of
present appeal, the court proceedings will be taken to have
commenced on 10.07.2015 i.e. on the date of filing of
application under Section 8 of 1996 Act or on the date, when
impugned order was passed?
14. In our considered view, there is no escape from the
conclusion that the date of commencement of court
proceedings, in the instant case shall be 10.07.2015 when the
application under Section 8 of 1996 Act was filed by the
appellant/defendant in Civil Suit No.16 of 2015, for the reason
that the appeal is continuation of original proceedings.
Reference in this regard can be made to para-13 of the
judgement passed by Hon'ble Supreme Court in Malluru
Mallappa (dead) through Legal representatives vs.
Kuruvathappa and others, reported in (2020)4 SCC 313, which
read as under:-
“14. It is a settled position of law that an appeal
is a continuation of the proceedings of the original
court. Ordinarily, the appellate jurisdiction involves
a re-hearing on law as well as on fact and is invoked
by an aggrieved person.
15. Viewed from another angle, there is no difficulty to
uphold the contention of respondents/plaintiffs as the appeal is
a right created by a statute. Section 37(1)(a) was incorporated in
the principal Act w.e.f. 25.10.2015, meaning thereby that before
the said date no right existed to file an appeal against the order
refusing to refer the parties to arbitration under Section 8 of the
1996 Act.
16. In view of the interpretation provided to Section 26
of the Amendment Act 6 of 2016 by the Hon'ble Supreme Court
in Kochi Cricket's case (supra) , the appellant/defendant had
no right to file an appeal at the time of commencement of court
proceedings on 10.07.2015.
IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA
Arbitration Appeal No. 10 of 2016.
Graviss Foods Private Limited Vs M/s Ice Cream Garden & Anr.
Coram:
Ms. Justice Sabina, Acting Chief Justice.
Mr. Justice Satyen Vaidya, Judge.
Author: Satyen Vaidya, Judge.
Date of Decision : 12 th April, 2023.
Citation: 2023 Lawweb (HP ) 1.
By way of instant appeal, the appellant has assailed
order dated 18.04.2016 passed by learned Single Judge in OMP
No. 221 of 2015 in Civil Suit No. 16 of 2015, whereby the
application of appellant filed under Section 8 of the Arbitration
and Conciliation Act, 1996 (for short “1996 Act”) has been
rejected.
2. Brief facts necessary for adjudication of this appeal
are that respondents herein have filed a suit for recovery of
Rs.60,00,000/- on account of damages against the appellant
herein. The suit was registered as Civil Suit No. 16 of 2015 in
this Court. The appellant/defendant filed an application under
Section 8 of 1996 Act in Civil Suit No. 16 of 2015 seeking
reference of the matter to arbitration, basing its claim on an
arbitration clause allegedly existing in an agreement between
the parties. Respondents/plaintiffs resisted the application and
finally learned Single Judge dismissed the application of
appellant/defendant and held the suit to be maintainable.
3. Respondents/plaintiffs at the out set have challenged
the maintainability of instant appeal. As per
respondents/plaintiffs, order refusing to refer the parties to
Arbitration under Section 8 of 1996 Act has been made
appealable w.e.f. 23.10.2015, whereas the application under
Section 8 of 1996 Act was filed by the appellant/defendant on
10.07.2015, therefore, the court proceedings out of which the
instant appeal has arisen, had commenced prior to inclusion of
right of appeal. By virtue of Section 26 of Act No.3 of 2016, the
amendments made in 1996 Act have been made applicable
prospectively.
4. Learned Senior Counsel representing the
appellant/defendant has contested the plea of
respondents/plaintiffs by contending that the impugned order
was passed by learned Single Judge on 18.04.2016 i.e. after
coming into force of Amendment Act No. 3 of 2016. As per his
contention, the right to file an appeal had accrued in favour of
appellant/defendant on 18.04.2016 i.e. after commencement of
Amendment Act No. 3 of 2016 and thus, the appellant/defendant
had a right to maintain the instant appeal.
5. We have heard Mr. K.D. Sood, Senior Advocate, for
the appellant/defendant and Mr. Mohit Thakur, Advocate, for the
respondents/plaintiffs and have also gone through the entire
record carefully.
6. It is not in dispute that the appellant/defendant filed
an application under Section 8 of 1996 Act in Civil Suit No. 16 of
2015 on 10.07.2015.
7. Before 23.10.2015, there was no provision in 1996
Act under which an appeal could be filed against an order
refusing reference of matter to Arbitration, passed under
Section 8 of 1996 Act. It was after coming into force of
Arbitration and Conciliation Amendment Act 2015 that an order
refusing to refer the matter to Arbitration under Section 8 of
1996 Act was made appealable under Section 37 (1)(a) of Act
ibid.
8. Section 26 of Amendment Act of 3 of 2016 reads as
under:-
“26. Nothing contained in this Act shall apply to
the arbitral proceedings commenced in accordance
with the provisions of Section 21 of the principal Act,
before the commencement of this Act unless the
parties otherwise agree but this Act shall apply in
relation to arbitral proceedings commenced on or
after the date of commencement of this Act.”
9. On the strength of aforesaid provisions of
Amendment Act No. 3 of 2016, the respondents/plaintiffs
contend that the right to appeal under Section 37(1)(a) of 1996
Act is not available to the appellant/defendant as the
proceedings had commenced on 10.07.2015, when an
application under Section 8 of 1996 Act was filed in Civil Suit No.
16 of 2015. Section 26 of Amendment Act No. 3 of 2016 clearly
made the amendments incorporated in the principal Act
prospective in nature and would apply only to those arbitration
and court proceedings, which have commenced after coming
into force of Act No.3 of 2016 w.e.f. 23.10.2015.
10. Learned counsel for the respondents/plaintiffs to
support his arguments has placed reliance upon a judgment
passed by the Hon'ble Supreme Court in a case titled as Board
of Control For Cricket in India vs. Kochi Cricket Private
Limited & Ors., reported in (2018)6 SCC 287. He has drawn
our attention to para 39 of above noted judgment which reads
as under:-
“39. 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 frst 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
frst 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
frst 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.”
11. In Kochi Ciricket's case (supra) Hon'ble Supreme
Court while considering the question as to construction of
Section 26 of Act No.3 of 2016, observed as under:-
“36. 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.
37. 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 the 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.
38. 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 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. 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 page 633, this Court stated:
“26....(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.
(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. ”
In 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 proceedings” in the
second part are not controlled by the application of
Section 21 of the 1996 Act.”
After the aforesaid observations, it was specifically held that “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.”
12. Thus, there remains no doubt as to the construction
of Section 26 of Act No. 3 of 2016. Undoubtedly, the
amendment carried in principal Act by virtue of Act No. 3 of
2016 including amendment in Section 37 thereof, are
prospective and by necessary implications will apply to court
proceedings which have commenced on or after the
Amendment Act came into force.
13. The question, thus, arises whether for the purpose of
present appeal, the court proceedings will be taken to have
commenced on 10.07.2015 i.e. on the date of filing of
application under Section 8 of 1996 Act or on the date, when
impugned order was passed?
14. In our considered view, there is no escape from the
conclusion that the date of commencement of court
proceedings, in the instant case shall be 10.07.2015 when the
application under Section 8 of 1996 Act was filed by the
appellant/defendant in Civil Suit No.16 of 2015, for the reason
that the appeal is continuation of original proceedings.
Reference in this regard can be made to para-13 of the
judgement passed by Hon'ble Supreme Court in Malluru
Mallappa (dead) through Legal representatives vs.
Kuruvathappa and others, reported in (2020)4 SCC 313, which
read as under:-
“14. It is a settled position of law that an appeal
is a continuation of the proceedings of the original
court. Ordinarily, the appellate jurisdiction involves
a re-hearing on law as well as on fact and is invoked
by an aggrieved person. The first appeal is a
valuable right of the appellant and therein all
questions of fact and law decided by the trial court
are open for re-consideration. Therefore, the first
appellate court is required to address itself to all the
issues and decide the case by giving reasons. The
court of first appeal must record its findings only
after dealing with all issues of law as well as fact and
with the evidence, oral as well as documentary, led
by the parties. The judgment of the first appellate
court must display conscious application of mind
and record findings supported by reasons on all
issues and contentions [see: Santosh Hazari v.
Purushottam Tiwari (Deceased) By Lrs. (2001)3 SCC
179, Madhukar and others v. Sangram and Others
(2001)4 SCC 756, B. M. Narayana Gowda v.
Shanthamma (Dead) By Lrs. and Another(2011) 15
SCC 476, H. K. N. Swami v. Irshad Basith (Dead) By
Lrs. (2005)10 SCC 243 and M/s. Sri Raja Lakshmi
Dyeing Works v. Rangaswamy Chettiar (1980) 4 SCC
259.”
15. Viewed from another angle, there is no difficulty to
uphold the contention of respondents/plaintiffs as the appeal is
a right created by a statute. Section 37(1)(a) was incorporated in
the principal Act w.e.f. 25.10.2015, meaning thereby that before
the said date no right existed to file an appeal against the order
refusing to refer the parties to arbitration under Section 8 of the
1996 Act.
16. In view of the interpretation provided to Section 26
of the Amendment Act 6 of 2016 by the Hon'ble Supreme Court
in Kochi Cricket's case (supra) , the appellant/defendant had
no right to file an appeal at the time of commencement of court
proceedings on 10.07.2015.
17. In the light of above discussion, the instant appeal
filed by the appellant/defendant is held to be not maintainable
and is accordingly dismissed.
(Sabina)
Acting Chief Justice
(Satyen Vaidya)
Judge
12th April, 2023.
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