2016 (11) TMI 1701 - SC - Indian Laws

Maintainability of a cross-objection - Code of Civil Procedure is applicable to an appeal preferred Under Section 37 of the Act - HELD THAT - In juxtaposition with the provisions contained in 1996 Act, it seems that the legislature has intentionally not kept any provision pertaining to the applicability of the Code of Civil Procedure. On the contrary, Section 5 of 1996 Act lays the postulate, that notwithstanding anything contained in any other law for the time being in force in matters covered by Part I, no judicial authority shall intervene except so provided wherever under this Act. In International Security Intelligence Agency Ltd. 2003 (2) TMI 498 - SUPREME COURT , a three-Judge bench was dealing with maintainability of a cross objection under Order XLI Rule 22 of the Code of Civil Procedure. It is apt to mention here that the controversy arose in the context of 1940 Act. While dealing with the same, the three-Judge bench ruled thus a cross objection can be preferred if the applicant could have sought for the same relief by filing an appeal in conformity with the provisions of Section 39(1) of the Act. If the subject-matter of the cross objection is to impugn such an order which does not fall within the purview of any of the categories contemplated by Clauses (i) to (vi) of Sub-section (1) of Section 39 of the Act, the cross objection shall not be maintainable. As is manifest, a person grieved by the award can file objection Under Section 34 of the 1996 Act, and if aggrieved on the order passed thereon, can prefer an appeal. The court can set aside the award or deal with the award as provided by the 1996 Act. If a corrective measure is thought of, it has to be done in accordance with the provision as contained in Section 37 of the 1996 Act, for Section 37(1) stipulates for an appeal in case of any grievance which would include setting aside of an arbitral award Under Section 34 of the Act. Section 5 which commences with a non-obstante Clause clearly stipulates that no judicial authority shall interfere except where so provided in Part 1 of the 1996 Act. As we perceive, the 1996 Act is a complete Code and Section 5 in categorical terms along with other provisions, lead to a definite conclusion that no other provision can be attracted. Thus, the application of Code of Civil Procedure is not conceived of and, therefore, as a natural corollary, the cross-objection cannot be entertained. The analysis made in ITI Ltd. 2002 (5) TMI 706 - SUPREME COURT to the effect that merely because the 1996 Act does not provide Code of Civil Procedure to be applicable, it should not be inferred that the Code is inapplicable seems to be incorrect, for the scheme of the 1996 Act clearly envisages otherwise and the legislative intendment also so postulates - As we are unable to follow the view expressed in ITI Ltd. (supra) and we are of the considered opinion that the said decision deserves to be re-considered by a larger Bench. Let the papers be placed before the Hon'ble the Chief Justice of India for constitution of an appropriate larger Bench.

Summary

Issues Involved:
1. Applicability of the Code of Civil Procedure, 1908 (CPC) to proceedings under the Arbitration and Conciliation Act, 1996.
2. Maintainability of cross-objections under Order XLI Rule 22 CPC in appeals under Section 37 of the Arbitration and Conciliation Act, 1996.
3. Interpretation of Section 5 of the Arbitration and Conciliation Act, 1996 concerning judicial intervention.
4. Distinction between the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996 regarding procedural applicability.

Detailed Analysis:

1. Applicability of the Code of Civil Procedure, 1908 (CPC) to Proceedings under the Arbitration and Conciliation Act, 1996:

The Supreme Court examined whether the CPC is applicable to proceedings under the Arbitration and Conciliation Act, 1996 (the 1996 Act). The High Court of Delhi had opined that the CPC was applicable based on precedents like *Satpal P. Malhotra v. Puneet Malhotra* and *MCD v. International Security & Intelligence Agency Ltd.* The Appellant argued that the 1996 Act does not accommodate the CPC, unlike the Arbitration Act, 1940 (the 1940 Act), and Sections 5, 34, 37, and 50 of the 1996 Act form a complete code. The Supreme Court noted that the 1996 Act is designed to minimize judicial intervention and expedite arbitration processes, thus implying that the CPC's applicability is not intended.

2. Maintainability of Cross-Objections under Order XLI Rule 22 CPC in Appeals under Section 37 of the Arbitration and Conciliation Act, 1996:

The Supreme Court analyzed whether cross-objections under Order XLI Rule 22 of the CPC are maintainable in appeals under Section 37 of the 1996 Act. The High Court had entertained cross-objections, but the Appellant contended that the 1996 Act does not permit such a procedure. The Court referred to *International Security & Intelligence Agency Ltd.*, which dealt with the 1940 Act and allowed cross-objections, but distinguished it as the 1996 Act does not explicitly incorporate the CPC. The Court concluded that the legislative intent behind the 1996 Act does not support the maintainability of cross-objections.

3. Interpretation of Section 5 of the Arbitration and Conciliation Act, 1996 Concerning Judicial Intervention:

Section 5 of the 1996 Act restricts judicial intervention to instances explicitly provided within the Act. The Supreme Court emphasized that Section 5's language is clear and purposeful, aiming to limit judicial interference to ensure the efficiency and finality of arbitration proceedings. The Court highlighted that the 1996 Act's framework, including Sections 34 and 37, provides specific avenues for challenging awards and orders, reinforcing the Act's self-contained nature.

4. Distinction between the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996 Regarding Procedural Applicability:

The Supreme Court underscored the differences between the 1940 Act and the 1996 Act. The 1940 Act explicitly applied the CPC to arbitration proceedings, as seen in Section 41(a). In contrast, the 1996 Act deliberately omits such a provision, indicating a legislative intent to exclude the CPC. The Court referenced *Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.*, which affirmed that the 1996 Act is a self-contained code, implying that only the procedures outlined within the Act are permissible.

Conclusion:

The Supreme Court concluded that the 1996 Act is a self-contained code that does not incorporate the CPC, and thus cross-objections under Order XLI Rule 22 CPC are not maintainable in appeals under Section 37 of the Act. The judgment in *ITI Ltd. v. Siemens Public Communications Network Ltd.*, which suggested otherwise, was deemed incorrect and referred for reconsideration by a larger bench. The interim order was directed to continue.

Separate Judgments:

The judgment was delivered collectively, without separate opinions from the judges.