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2016 (8) TMI 1255 - HC - Indian LawsEffect of the amendment to Section 36 of the Arbitration Act - Arbitration and Conciliation (Amendment) Act, 2015 - Held that - Application of amended Section 36 to the existing matters i.e. the applications under Section 34 of the Arbitration Act, that are pending as on 23rd October, 2015 is giving prospective effect to the amendment and not retrospective effect. The most relevant consideration for applying it to the existing matters is the nature, ambit and scope of the Amending Act. Under the original Section 36, filing of an application under Section 34 had the effect of casting shadow upon the executability of the award. This act of the award-debtor disabled the award-holder from executing the award in his favour irrespective of the merit in the challenge. In this circumstance, there could be no question of any right accruing to the award-debtor by filing the application under Section 34. The Amended Section 36 lifts the shadow over the right of the award-holder. His disability gets removed. At the same time, the application under Section 34 of the award-debtor remains intact. The removal of disability is not complete. It is partial. The provision enables the award-debtor to apply to the Court for make the award inexecutable pending his application. His right to apply for interim relief during the pendency of the application under Section 34 is not affected in any way. In this way in fact the Amending Act brings in balance between the rights and liabilities of both the sides. The ambit and scope of the Amended Section 36, is to cure the defect by removing the imbalance. Thus the application of the provision on the petitions under Section 34 pending on 23rd October, 2015, is prospective. It makes no difference if the application under Section 34 filed by the award-debtor was prior to 23rd October, 2015. Removal of shadow over the rights of the award-holder cannot be said to be prejudicial to the award-debtor. He has to now only file an application for interim reliefs, which may or may not, be subject to imposition of condition. Now that effect of the operation of the amended Section 36, is held to be prospective, there is in fact no need to consider the alternate argument of justifying retrospective operation, on the ground of the amendment being curative and procedural. In any case, that the amending provision is curative cannot be disputed at all. This is evident from the observations of the Apex Court in Nalco s case indicating the defects in the Original Section 36, the imbalance caused by it and the mischief done by it. There can also be no doubt that, it is procedural in nature as it concerns only the procedural aspect of the challenge to the arbitral award. It was sought to be argued that, application of the amendment to the existing matters would bring in anomaly or absurdity or produce impracticable results. The submission would have been of some substance if the Amended Section 36 were not to provide for an application to be made by the award-debtor for interim reliefs.
Issues Involved:
1. Corrections to the minutes of the order. 2. Applicability of the amended Section 36 of the Arbitration and Conciliation Act, 1996 to pending Section 34 applications. 3. Interpretation and effect of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015. 4. Determination of vested rights under the original Section 36. 5. Prospective vs. retrospective effect of the amended Section 36. Issue-wise Detailed Analysis: 1. Corrections to the minutes of the order: The court addressed corrections pointed out by the respondents regarding the appearances and other details in the order dated 14th January 2016. The corrections included replacing "Chamber Summons (L) No. 66 of 2016" with "Chamber Summons No. 66 of 2016," correcting names and titles of the appearing advocates, and changing the instructing attorney's name from "Ms. R. Barot" to "Mr. R. Barot." The court directed these corrections to be carried out and the order to be read accordingly. 2. Applicability of the amended Section 36 of the Arbitration and Conciliation Act, 1996 to pending Section 34 applications: The court considered whether the amended Section 36 applies to Section 34 applications filed before the amendment came into force on 23rd October 2015. The applicants (BCCI) argued that their applications under Section 34 should be governed by the pre-amendment Section 36, which provided automatic stay of the award's enforcement upon filing a Section 34 application. The respondents contended that the amended Section 36, which requires a separate application for stay and does not automatically stay the award, should apply. 3. Interpretation and effect of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015: Section 26 states that the amendments do not apply to arbitral proceedings commenced before the commencement of the Amendment Act unless the parties agree otherwise. The court interpreted "arbitral proceedings" to mean proceedings before the arbitral tribunal, which terminate with the final award. Post-award proceedings, including enforcement and challenges under Section 34, were not included in this term. The court held that Section 26 is exhaustive and implies that the amended provisions apply to post-award proceedings, including those pending as of 23rd October 2015. 4. Determination of vested rights under the original Section 36: The court examined whether BCCI had any vested or accrued right under the original Section 36 against the enforcement of arbitral awards. It was determined that the original Section 36 only imposed a temporary impediment on the enforceability of the award, which did not constitute a vested or accrued right. The court noted that the original Section 36 provided an interim relief against execution, which was not a substantive right. The amended Section 36, which requires a separate application for stay, was seen as a procedural change that did not affect any substantive rights. 5. Prospective vs. retrospective effect of the amended Section 36: The court held that the application of the amended Section 36 to pending Section 34 applications is prospective, not retrospective. The amendment operates prospectively as it applies to future enforcement actions based on existing awards and pending challenges. The court also noted that the amendment is curative, addressing the imbalance created by the original Section 36, and procedural, affecting only the process of enforcement and not the substantive rights of the parties. Conclusion: The court dismissed the Chamber Summonses, holding that the amended Section 36 applies to all pending Section 34 applications as of 23rd October 2015. The parties were directed to bear their respective costs.
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