2021 (8) TMI 385 - SC - Indian Laws

Scope of Arbitral award - award delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre (SIAC Rules) - order under Section 17(1) of the Arbitration and Conciliation Act, 1996 or not - order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a learned Single Judge - appealable or not. Whether an Emergency Arbitrator s award can be said to be within the contemplation of the Arbitration Act, and whether it can further be said to be an order under Section 17(1) of the Act? - HELD THAT - An arbitration proceeding can be administered by a permanent arbitral institution. Importantly, Section 2(6) makes it clear that parties are free to authorise any person including an institution to determine issues that arise between the parties. Also, under Section 2(8), party autonomy goes to the extent of an agreement which includes being governed by arbitration rules referred to in the aforesaid agreements. Likewise, under Section 19(2), parties are free to agree on the procedure to be followed by an arbitral tribunal in conducting its proceedings - Given that the definition of arbitration in Section 2(1)(a) means any arbitration, whether or not administered by a permanent arbitral institution, when read with Sections 2(6) and 2(8), would make it clear that even interim orders that are passed by Emergency Arbitrators under the rules of a permanent arbitral institution would, on a proper reading of Section 17(1), be included within its ambit. It is significant to note that the words arbitral proceedings are not limited by any definition and thus encompass proceedings before an Emergency Arbitrator, as has been held hereinabove with reference to Section 21 of the Act read with the SIAC Rules. The heart of Section 17(1) is the application by a party for interim reliefs. There is nothing in Section 17(1), when read with the other provisions of the Act, to interdict the application of rules of arbitral institutions that the parties may have agreed to. This being the position, at least insofar as Section 17(1) is concerned, the arbitral tribunal would, when institutional rules apply, include an Emergency Arbitrator, the context of Section 17 otherwise requiring the context being interim measures that are ordered by arbitrators. The same object and context would apply even to Section 9(3) which makes it clear that the court shall not entertain an application for interim relief once an arbitral tribunal is constituted unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious. In essence, what is provided by the SIAC Rules and the other institutional rules, is reflected in Sections 9(2) and 9(3) so far as interim orders passed by courts are concerned. The introduction of Sections 9(2) and 9(3) would show that the objective was to avoid courts being flooded with Section 9 petitions when an arbitral tribunal is constituted for two good reasons (i) that the clogged court system ought to be decongested, and (ii) that an arbitral tribunal, once constituted, would be able to grant interim relief in a timely and efficacious manner. Section 17, as construed in the light of the other provisions of the Act, clearly leads to the position that such emergency award is made under the provisions of Section 17(1) and can be enforced under the provisions of Section 17(2) - thus, full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as awards . Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act. Maintainability of the appeal that has been filed under Order XLIII, Rule 1(r) - HELD THAT - reading of Order XXXIX, Rule 2(3) and 2(4) as it originally stood, and Order XXXIX, Rule 2-A as it stands after the 1976 Amendment Act is to prescribe under Section 94 of the Code of Civil Procedure as to what is the consequence when a temporary injunction order and/or an order appointing a receiver of property is flouted. The consequences are mentioned in Sections 94(c) and (d) itself and fleshed out by Order XXXIX - the expressions in relation to and any proceedings would include the power to enforce orders that are made under Section 9(1), and are not limited to incidental powers to make interim orders, as was suggested by Mr. Viswanathan. Thus, if an order under Section 9(1) is flouted by any party, proceedings for enforcement of the same are available to the court making such orders under Section 9(1). These powers are, therefore, traceable directly to Section 9(1) of the Act which then takes us to the Code of Civil Procedure. Thus, an order made under Order XXXIX Rule 2-A, in enforcement of an order made under Section 9, would also be referable to Section 9(1) of the Arbitration Act. There can be no doubt that the legal fiction created under Section 17(2) for enforcement of interim orders is created only for the limited purpose of enforcement as a decree of the court. To extend this fiction to encompass appeals from such orders is to go beyond the clear intention of the legislature. Mr. Salve s argument in stressing the words under the Code of Civil Procedure in Section 17(2), thus holds no water as a limited fiction for the purpose of enforcement cannot be elevated to the level of a genie which has been released from a statutory provision and which would encompass matters never in the contemplation of the legislature. Appeal provision in the Arbitration Act - HELD THAT - There can be no doubt that Section 37 is a complete code so far as appeals from orders and awards made under the Arbitration Act are concerned. This has further been strengthened by the addition of the non-obstante clause by the Arbitration and Conciliation (Amendment) Act, 2019. In BGS SGS SOMA JV VERSUS NHPC LTD. 2019 (12) TMI 626 - SUPREME COURT , this time, the Court dealt with the maintainability of an appeal under Section 37 of the Act in a case in which an application under Section 34 of the Act was ordered to be transferred from a court which had no jurisdiction to a court which had jurisdiction - This judgment is determinative of the issue before us as it specifically ruled out appeals under Order XLIII Rule 1 of the Code of Civil Procedure when it comes to orders being made under the Arbitration Act. Despite Section 17 being amended by the same Amendment Act, by making Section 17(1) the mirror image of Section 9(1) as to the interim measures that can be made, and by adding Section 17(2) as a consequence thereof, significantly, no change was made in Section 37(2) (b) to bring it in line with Order XLIII, Rule 1(r). The said Section continued to provide appeals only from an order granting or refusing to grant any interim measure under Section 17. There can be no doubt that granting or refusing to grant any interim measure under Section 17 would only refer to the grant or non-grant of interim measures under Section 17(1)(i) and 17(1) (ii). In fact, the opening words of Section 17(2), namely, subject to any orders passed in appeal under Section 37 also demonstrates the legislature s understanding that orders that are passed in an appeal under Section 37 are relatable only to Section 17(1). It is thus concluded that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator s order made under Section 17(2) of the Act. Appeal disposed off.

Summary

Issues:
1. Whether an "award" delivered by an Emergency Arbitrator under the SIAC Rules can be considered an order under Section 17(1) of the Arbitration and Conciliation Act, 1996.
2. Whether an order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a Single Judge of the High Court is appealable.

Detailed Analysis:

Issue 1: Emergency Arbitrator's Award under Section 17(1)
Context and Arguments:
- The case involved proceedings initiated by Amazon to enforce an award by an Emergency Arbitrator under the SIAC Rules.
- The Biyani Group argued that the Emergency Arbitrator's award is a nullity and coram non judice, and not enforceable under Section 17(1) of the Arbitration Act.
- Amazon contended that party autonomy under the Arbitration Act allows for such awards to be enforceable.

Legal Provisions and Interpretation:
- Section 2(1)(a), 2(1)(c), 2(1)(d), 2(6), 2(8), and 19(2) of the Arbitration Act emphasize party autonomy and the ability to agree on procedural rules, including those of SIAC.
- Section 21 of the Act, read with Rule 3.3 of the SIAC Rules, indicates that arbitral proceedings commence upon receipt of a notice of arbitration by the SIAC Registrar.
- Section 17(1) allows a party to apply for interim measures during arbitral proceedings, which can include those conducted under institutional rules like SIAC.

Judgment:
- The Court held that an Emergency Arbitrator's orders are covered by the Arbitration Act, particularly under Section 17(1). Party autonomy permits the inclusion of such awards within the scope of the Act.
- The Court emphasized that the Arbitration Act does not prohibit Emergency Arbitrators and that such awards further the objectives of decongesting courts and providing timely interim relief.

Issue 2: Appealability of Orders under Section 17(2)
Context and Arguments:
- The Biyani Group argued that an appeal should be maintainable under Order XLIII, Rule 1(r) of the Code of Civil Procedure, citing that enforcement proceedings are separate from interim orders.
- Amazon contended that Section 37 of the Arbitration Act is exhaustive regarding appeals and does not include appeals from enforcement orders under Section 17(2).

Legal Provisions and Interpretation:
- Section 9(1) and Section 17(1) both provide for interim measures and use the expression "in relation to any proceedings," which includes enforcement.
- Section 37 specifies appealable orders and does not list enforcement orders under Section 17(2) as appealable.
- The Court referenced Paramjeet Singh Patheja v. ICDS Ltd. and Union of India v. Vedanta Ltd., emphasizing that legal fictions for enforcement do not extend to allow appeals.

Judgment:
- The Court declared that no appeal lies under Section 37 against an order of enforcement of an Emergency Arbitrator's order made under Section 17(2).
- The Court vacated all interim orders and set aside the impugned judgments of the Division Bench.

Conclusion:
- The Supreme Court affirmed that an Emergency Arbitrator's award under the SIAC Rules is enforceable under Section 17(1) of the Arbitration Act.
- It also held that enforcement orders under Section 17(2) are not appealable under Section 37, thereby providing clarity on the scope of appealable orders within the Arbitration Act.