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TMI Blog2023 (5) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute to be referred to the arbitration is received by the respondent. At this stage, it is required to be noted that by Amendment Act, 2015, Sections 34 and 36 of the Arbitration Act also came to be amended and the interference of the Court in challenge to the award has been restricted and/or narrowed down. The question of applicability of the Arbitration Amendment Act, 2015 fell for consideration before this Court in catena of decisions - In the case of M/S MAYAVTI TRADING PVT. LTD. VERSUS PRADYUAT DEB BURMAN [ 2019 (9) TMI 1548 - SUPREME COURT ], it is observed and held that the position of law that prevails after insertion of section 11(6A) is that Supreme Court or, as the case may be, the High Court, while considering any application under Sections 11(4) to 11(6) is to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by arbitrator. In the case of BCCI [ 2018 (3) TMI 812 - SUPREME COURT ], it is observed and held that the Amendment Act, 2015 is prospective in nature. However, it is required to be noted that in the case of BCCI, this Court was considering the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in tech area at Air Force Academy, Hyderabad. The appellant raised a revised final bill for the aforesaid work on 10.07.2012. The payment in respect of the final bill was made to the appellant on 29.04.2013. The appellant also issued no further claim certificate. 2.2 The appellant sent a notice dated 20.12.2013 invoking the arbitration clause. The appellant preferred an application under Section 11(6) of the Act, 1996 before the High Court on 27.04.2016 and prayed to appoint an arbitrator. The application was opposed by the respondents inter alia on the ground that the entire amount due and payable under the final bill was paid as far as back on 29.04.2013 and that even the appellant issued the no further claim certificate and therefore, on the ground of accord and satisfaction , the dispute is not required to be sent for arbitration. However, it was the case on behalf of the appellant that in view of the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as Amendment Act, 2015 ) by which Section 11(6A) came to be inserted, while deciding the application under Section 11(6), the Court would have a very limited jurisdiction and to consider only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the said decision it is specifically observed and held by this Court that the Amendment Act, 2015 shall be applicable prospectively and that even in a case where the arbitration proceedings were initiated as per Section 21 of the Act, prior to the Amendment Act, 2015, the Amendment Act, 2015 shall be applicable. 3.4 It is further submitted that this Court in BCCI (supra) had the occasion to analyse and interpret Section 26 of the Amendment Act, 2015. The Court specifically traced the legislative history and thereafter came to the conclusion that Section 26 is divided into two parts. The first part applies to arbitral proceedings before the arbitrator and the second part applies to the proceedings in relation to arbitral proceedings, which means judicial proceedings. The Court held as follows: 38. That the expression the arbitral proceedings refers to proceedings before an Arbitral Tribunal is clear from the heading of Chapter V of the 1996 Act, which reads as follows: Conduct of arbitral proceedings The entire chapter consists of Sections 18 to 27 dealing with the conduct of arbitral proceedings before an Arbitral Tribunal. What is also important t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to Section 21 of the 1996 Act. Whereas the first part refers only to arbitral proceedings before an Arbitral Tribunal, the second part refers to court proceedings in relation to arbitral proceedings, and it is the commencement of these court proceedings that is referred to in the second part of Section 26, as the words in relation to the arbitral proceedings in the second part are not controlled by the application of Section 21 of the 1996 Act. 39. Section 26, therefore, bifurcates proceedings, as has been stated above, with a great degree of clarity, into two sets of proceedings arbitral proceedings themselves, and court proceedings in relation thereto. The reason why the first part of Section 26 is couched in negative form is only to state that the Amendment Act will apply even to arbitral proceedings commenced before the amendment if parties otherwise agree. If the first part of Section 26 were couched in positive language (like the second part), it would have been necessary to add a proviso stating that the Amendment Act would apply even to arbitral proceedings commenced before the amendment if the parties agree. In either case, the intention of the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the second part of Section 26 of the Amendment Act, 2015 as relating to judicial proceedings. It is further submitted that, in Parmar Construction Company (supra), reliance was placed on Aravali Power Company Private Limited Vs. Era Infra Engineering Limited, (2017) 15 SCC 32 (Para 22), to examine the effect of Section 21 of the principal Act read with Section 26 of the Amendment Act, 2015. It is submitted that the reliance placed on Aravali Power Company Private Limited (supra) in the case of Parmar Construction Company (supra) is completely misplaced. Firstly, neither Section 21 of the principal Act nor Section 26 of the Amendment Act, 2015 were discussed in Aravali Power Company Private Limited (supra). Secondly, the decision in Aravali Power Company Private Limited (supra) did not concern judicial proceedings but applications filed before the arbitrator challenging his qualification under Sections 12 and 13. It is submitted that therefore, the second part of Section 26 did not come for consideration at all. 3.8 It is submitted that similarly, the reliance placed in Parmar Construction Company (supra) on S.P. Singla Constructions Private Limited Vs. State of Himachal Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 would be applicable to court proceedings arising out of arbitration proceedings, irrespective of whether such arbitration proceedings commenced prior to or after the Amendment Act, 2015. 3.12 It is further submitted that the judgment in BCCI (supra) has also been followed in Patel Engineering Limited Vs. North Eastern Electric Power Corporation Limited, (2020) 7 SCC 167 (Para 15) (Three Judge Bench). 3.13 In light of this brief conspectus of the aforesaid decisions, it is submitted that, the decision in BCCI (supra), regarding judicial proceedings referred to in Section 26 not being controlled by Section 21 of the principal Act, has been followed by a coordinate bench of this Hon ble Court in Ssangyong Engineering and Construction Company Limited (supra) and the threejudge benches in Hindustan Construction Company Limited and Anr. (supra), Vedanta Limited (supra) and Patel Engineering Limited (supra). It is further submitted that on the other hand, the decision by the coordinate bench in Parmar Construction Company (supra) was rendered in ignorance of the decision in BCCI (supra). Further, the coordinate bench in Parmar Construction Company (supra) placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 20.12.2013 and therefore, pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015. 4.3 Now, insofar as the reliance placed upon the decision of this Court in the case of BCCI (supra) relied upon on behalf of the appellant is concerned, it is submitted that the decision in the case of BCCI (supra) and the subsequent decisions following the BCCI (supra) are all with respect to the proceedings under Sections 34 and 36 of the Act, 1996. It is submitted that therefore, considering Sections 34 and 36 proceedings as judicial/court proceedings, this Hon ble Court has interpreted Section 26, bifurcating Section 26 into two parts and to that it is observed and held that with respect to judicial proceedings under Sections 34 and 36, the Amendment Act, 2015 shall be applicable. It is submitted that, however, on the other hand, there is a direct decision of this Hon ble Court in the case of Parmar Construction Company (supra) dealing with the very issue of application under Section 11(6) of the Act, 1996 and in the said decision it is specifically observed and held that so far as the application under Section 11(6) of the Act, 1996 is concerned, in case the notice inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the issue arose therein and the same cannot be said to have laid down the law as regards applicability of the Amendment Act, 2015 to Section 11 applications. 4.7 It is submitted that the judgment in Parmar Construction Company (supra) follows the judgment of this Hon ble Court in S.P. Singla Constructions Private Limited (supra) in order to conclude that Section 11 petitions in respect of proceedings initiated prior to the commencement of the Amendment Act, 2015, would be governed by the pre-amended legal position. It is submitted that the said judgment in S.P. Singla Constructions Private Limited (supra) in turn follows the observations of this Hon ble Court in BCCI (supra). 4.8 It is further submitted that the issue as to whether the Amendment Act, 2015 would apply to proceedings under Section 11, with respect to arbitration commenced prior to 23.10.2015 (the date on which the Amendment Act, 2015 came into force) has been elaborately dealt with by a Three Judge Bench in the case of S.P. Singla Constructions Private Limited (supra), after analysing threadbare the judgment in BCCI (supra) to conclude as under:- 16. Considering the facts and circumstances of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective parties at length. The short question which is posed for the consideration of this Court is, in relation to the arbitration proceedings, in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015, the old Act shall be applicable (pre-amendment 2015) or the new Act? 6. While considering the aforesaid issue the relevant provisions of the Amendment Act, 2015 are required to be referred to, namely, Sections 11(6A), 21 and 26, which are as under: (6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or subsection (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. 21. Commencement of arbitral proceedings Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. 26. Act not to apply to pending arbitral proceedings Nothing contained in this Act shall apply to the arbitral proceedings commenced, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 11(4) to 11(6) is to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by arbitrator; ii) In the case of BCCI (supra), while interpreting section 26 of the Amended Act, 2015, this Court has observed in paragraphs 37 to 39 as under: 37. What will be noticed, so far as the first part is concerned, which states 26. Act not to apply to pending arbitral proceedings. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree. is that: (1) the arbitral proceedings and their commencement is mentioned in the context of Section 21 of the principal Act; (2) the expression used is to and not in relation to ; and (3) parties may otherwise agree. So far as the second part of Section 26 is concerned, namely, the part which reads, but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act makes it clear that the expression in relation to is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding already begun under the unamended Act. This is, of course, only one example of why parties may otherwise agree and apply the new procedure laid down by the Amendment Act to arbitral proceedings that have commenced before it came into force.] In stark contrast to the first part of Section 26 is the second part, where the Amendment Act is made applicable in relation to arbitral proceedings which commenced on or after the date of commencement of the Amendment Act. What is conspicuous by its absence in the second part is any reference to Section 21 of the 1996 Act. Whereas the first part refers only to arbitral proceedings before an Arbitral Tribunal, the second part refers to court proceedings in relation to arbitral proceedings, and it is the commencement of these court proceedings that is referred to in the second part of Section 26, as the words in relation to the arbitral proceedings in the second part are not controlled by the application of Section 21 of the 1996 Act. 39. Section 26, therefore, bifurcates proceedings, as has been stated above, with a great degree of clarity, into two sets of proceedings arbitral proceedings themselves, and court proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Section 21 of the 1996 Act clearly envisages that unless otherwise agreed by the parties, the arbitral proceedings in respect of a dispute shall commence from the date on which a request for that dispute to be referred to arbitration is received by the respondent and the plain reading of Section 26 of the 2015 Amendment Act is self-explicit, leaves no room for interpretation. Sections 21 and 26 of the 1996 Act/the 2015 Amendment Act relevant for the purpose are extracted hereunder: 21. Commencement of arbitral proceedings. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. *** 26. Act not to apply to pending arbitral proceedings. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act. 26. The conjoint readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, the appointment of the arbitrator even if apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the court would be within its powers to appoint such arbitrator(s) as may be permissible. which has been further considered in S.P. Singla Constructions (P) Ltd. case [S.P. Singla Constructions (P) Ltd. v. State of H.P., (2019) 2 SCC 488 : (2019) 1 SCC (Civ) 748] : (SCC p. 495, para 16) 16. Considering the facts and circumstances of the present case, we are not inclined to go into the merits of this contention of the appellant nor examine the correctness or otherwise of the above view taken by the Delhi High Court in Ratna Infrastructure Projects case [Ratna Infrastructure Projects (P) Ltd. v. Meja Urja Nigam (P) Ltd., 2017 SCC OnLine Del 7808] ; suffice it to note that as per Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015, the provisions of the amended 2015 Act shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the principal Act before the commencement of the Amendment Act unless the parties otherwise agree. In the facts and circumstances of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction Co. Ltd. (supra), in which the decision in the case of BCCI (supra) was followed, it is observed and held that section 34, as amended, will apply to only section 34 applications that have been made to the Court on or after 23.10.2015 irrespective of the fact that the arbitration proceedings may have commenced prior to that date. (See para 19). However, it is required to be noted that in the case of Ssangyong Engg. Construction Co. Ltd. (supra), this Court has followed the decision in the case of BCCI (supra) (See para 17). 8. It is the case on behalf of the appellant that therefore in the case of BCCI (supra), the decision which has been subsequently followed in the case of Ssangyong Engg. Construction Co. Ltd. (supra) and other decisions, it has been specifically observed and held that the Amendment Act, 2015 is prospective in nature. It is the case on behalf of the appellant that while taking a contrary view in the cases of Parmar Constructions Company (supra) and Pardeep Vinod Construction Company (supra), this Court had not noticed and/or considered the binding decision of this Court in the case of BCCI (supra) and therefore the decisions of this Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, but the application under section 11(6) is filed post Amendment Act, 2015, what will be the position and whether the old Act will be applicable or the amended Act. On the other hand, the decisions in the case of Parmar Constructions Company (supra) is directly on the point, namely, the application under section 11(6) of the Act. In the case of Parmar Constructions Company (supra), it is specifically observed and held that in a case where notice invoking arbitration is issued prior to Amendment Act, 2015 and the application under section 11(6) is filed post amendment, as per section 21 of the principal Act, the date of issuance of the notice invoking arbitration shall be considered as commencement of the arbitration proceedings and therefore as per section 26 of the Amendment Act, 2015, the Amended Act, 2015 shall not be applicable and the parties shall be governed by the pre-amendment Act, 2015. 9.1 The submission on behalf of the appellant, as above, cannot be accepted for the simple reason that this Court in the case of BCCI (supra) was considering the court proceedings under sections 34 and 36. To that, this Court interpreted section 26 in paragraphs 37 to 39, reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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