2016 (1) TMI 1383 - HC - Indian Laws

Arbitration and Conciliation (Amendment) Ordinance 2015 - Ordinance was repealed by the Arbitration and Conciliation (Amendment) Act 2015, which received the assent of the President on 31st December, 2015 and was published in the Gazette of India on 1st January, 2016 - enforce-ability of an award during pendency of a setting aside application - Held that - Section 36 of the 1996 Act only stipulated that the award would be enforced in accordance with the Code of Civil Procedure. This simply meant that the award would be executed in accordance with the provisions in that behalf in the said code. There is nothing in the Chapter relating to execution in the Civil Procedure Code which provides for taking security from a judgement debtor - the repeal and savings clause of the Amendment Act of 2015 did not make applicable the amendment Act in case of arbitration which commenced before its enactment. Since the subject arbitration commenced much prior to coming into force of the Amendment Act, nothing in it applies to the subject arbitration. The law in force before 31st December, 2015 did not recognise taking of security from the award debtor for staying of operation of the award. The award was stayed automatically upon making of the application to set aside the award.

Summary

Issues: Interpretation of the Arbitration and Conciliation (Amendment) Act 2015, Applicability of the Act to arbitral proceedings commenced before its enactment, Requirement of security for setting aside an award, Enforcement of an award under Section 36 of the Arbitration and Conciliation Act 1996.

The judgment delivered by Justice I. P. Mukerji of the Calcutta High Court pertains to the interpretation and application of the Arbitration and Conciliation (Amendment) Act 2015. The court highlighted the key changes brought by the amendment, particularly focusing on Section 19(2) which made an award enforceable after the filing of a setting aside application unless a stay was granted by the court. The provision for obtaining a stay was subject to certain terms and conditions, emphasizing that it was not automatic and required an application. The court noted that the grant of stay should consider relevant sections of the Code of Civil Procedure, indicating that stay could be obtained by securing the awarded amount.

The central issue addressed in the judgment was the requirement of security for setting aside an award under the amended Act. The respondent argued that the awarded sum had to be secured by the petitioner before the application could be admitted. However, the petitioner contended that the proceedings in this case commenced before the Amendment Act came into force, and therefore, the provisions of the Act did not apply. The court examined the Repeal and Savings clause in the Amendment Act, specifically Section 26, which clarified that the Act did not apply to arbitral proceedings commenced before its enactment unless agreed otherwise by the parties.

Justice Mukerji disagreed with the respondent's argument that security was mandatory under the previous Act, stating that Section 36 of the 1996 Act only required enforcement in accordance with the Code of Civil Procedure, which did not mandate security from a judgment debtor. The court emphasized that the law before December 31, 2015, did not recognize the necessity of security for staying the operation of an award, as the award was automatically stayed upon the filing of the application to set it aside. The court further noted that the application in this case was filed within the specified timeframe, with sufficient cause shown for the delay, and thus, the court condoned the delay and admitted the application.

In conclusion, the judgment clarifies the applicability of the Arbitration and Conciliation (Amendment) Act 2015 to arbitral proceedings commenced before its enactment, emphasizing the absence of a mandatory requirement for security under the previous Act and the automatic stay provision upon the filing of a setting aside application. The court's decision to admit the application without requiring security underscores the interpretation of the law in force before the amendment, highlighting the procedural aspects and timelines involved in enforcing and setting aside arbitral awards.