2016 (12) TMI 1747 - HC - Companies Law

Arbitration and Conciliation - Scope of amended provision - Interpretation of amendment to Section 36 by virtue of Section 26 of Act 3 of 2016 and applicability of Section 36 of Act, 1996 (pre-amended Act) - Held that - When a specific language is used in the amended provisions of the Act and the intention of the legislature in incorporating such provision is to take away the right whatever accrued to the parties, such statutes can be interpreted without causing any violence, either by addition or by subtracting any words, to the language used in the statute, without frustrating the intention of the legislature considering the plaint language used in the amended Act. In the present case, the arbitral proceedings commenced before the Council in the year 2008 and terminated on 21.06.2010 by passing an award by the Council. Hence, the proceedings in the present case were commenced and also terminated prior to the commencement of amended Act 3 of 2016. It is clear from the language used in Section 85 (2) (a) of 1996 Act and Section 26 of Act 3 of 2016, the amended provisions are not applicable if the arbitral proceedings before the arbitral Tribunal commenced before the commencement of Act 3 of 2016 and pending before arbitral tribunal. If commenced and terminated before the commencement of Act 3 of 2016 the new provisions alone are applicable but not the old provisions. Consequently, section 36 of the old Act cannot be applied to the present facts since the right accrued to the petitioner i.e. deemed stay under Section 36 of the Act was taken away by virtue of amendment to Section 36 by its substitution read with Section 26 of the Act 3 of 2016. Hence, the petitioner is not entitled to claim benefit under Section 36 of pre-amended Act, as such right was taken away by amendment to declaratory statute substituting new section in the place of old section. On an over all analysis of the law laid down by various Courts and the principles of interpretation laid down by Court, the following conclusions are arrived (1) Section 26 of Act 3 of 2016 made it clear that the amended provisions shall not apply to all the pending arbitration proceedings commenced before 23.10.2015 and if the arbitration proceedings before the Arbitral Tribunal are terminated before the commencement of the Act, the provisions of new Act i.e. Act 3 of 2016 alone shall apply though any incidental or consequential proceedings are pending before objecting Court i.e. District Court or any other Court. Award need not be transferred, on that ground the garnishee order cannot be set aside. In view of the applicability of provisiosn of amended Act 3 of 2016 the remedy open to the petitioner is to file an application under Section 36 of the amended Act 3 of 2016 and on filing of such application, the objecting Court has to pass appropriate order subject to compliance of requirement of 75% under MSMED Act, 2006. Hence, leaving it open to the petitioner to move appropriate application before the objecting Court under Section 36 of the Act as amended by Act 3 of 2016. Thus find no ground to set aside the award pertaining to item Nos.26 to 45. Consequently, filing of E.P. for the award in respect of item Nos.1 to 25 and garnishee order issued by the II Additional Chief Judge, City Civil Court, Hyderabad for recovery of amount covered by item Nos.1 to 25 is illegal since there is no executable award in view of the order of High Court of Punjab and Haryana. Consequently, the garnishee order to the extent of amount covered by item Nos.1 to 25 is hereby set aside while upholding the impugned garnishee order in respect of item Nos.26 to 45. Accordingly, the points are answered.

Summary

Issues Involved:
1. Applicability of amended provisions of Arbitration and Conciliation Act by Act 3 of 2016 to the proceedings under Section 34 of Arbitration and Conciliation Act 1996.
2. Competence of the Court to set aside the order dated 30.06.2016 passed in E.P.No.33 of 2016 by the II Additional Chief Judge, City Civil Court, Hyderabad.
3. Execution of the award in respect of items covered by Sl.Nos.1 to 25 and 26 to 45 of annexure A.W.1.
4. Requirement of transferring the decree for execution from Chandigarh Court to City Civil Court, Hyderabad.

Issue-wise Detailed Analysis:

1. Applicability of Amended Provisions:
The primary issue was whether the amended provisions of the Arbitration and Conciliation Act by Act 3 of 2016, effective from 23.10.2015, apply to proceedings under Section 34 of the Arbitration and Conciliation Act 1996. The Court noted that the arbitral proceedings commenced before the amendment and were terminated on 21.06.2010 by the Council. The Court determined that the amended provisions are not applicable to proceedings already terminated before the commencement of Act 3 of 2016. The judgment emphasized that the amended Section 36 requires an application for stay of the award, unlike the pre-amended Act which allowed deemed stay upon filing an application under Section 34. Thus, the petitioner cannot claim the benefit of deemed stay under the pre-amended Act.

2. Competence to Set Aside the Order:
The Court examined its competence to set aside the order dated 30.06.2016 passed in E.P.No.33 of 2016 by the II Additional Chief Judge, City Civil Court, Hyderabad. The Court concluded that since the High Court of Punjab and Haryana had set aside the order of the objecting Court in respect of item Nos.1 to 25 and remanded the matter for fresh adjudication, there was no executable award for these items. Consequently, the garnishee order issued for these items was unsustainable under law and was set aside. However, the garnishee order for item Nos.26 to 45 was upheld.

3. Execution of the Award:
The Court addressed the execution of the award concerning items covered by Sl.Nos.1 to 25 and 26 to 45. It was noted that the award for item Nos.1 to 25 was set aside by the High Court of Punjab and Haryana, and the matter was remanded for fresh adjudication. Therefore, there was no executable order for these items. The execution petition filed by the respondent for these items was deemed illegal. On the other hand, the award for item Nos.26 to 45 was upheld, and the execution petition for these items was valid.

4. Requirement of Transferring the Decree:
The Court examined whether the award needed to be transferred from Chandigarh Court to City Civil Court, Hyderabad, for execution. It was determined that an arbitral award does not require transfer like a civil court decree under Section 40 of C.P.C. The Court relied on judgments from the High Courts of Madras and Delhi, which held that an arbitral award is executable without such transfer. Consequently, the garnishee order could not be set aside on this ground.

Conclusion:
The revision was allowed in part. The order dated 30.06.2016 in E.P.No.33 of 2016 was set aside concerning item Nos.1 to 25 while confirming the order for item Nos.26 to 45. The Court left it open for the petitioner to file an application under the amended Section 36 of the Act for stay of the award. The miscellaneous petitions pending were also closed.