M/S. SHREE VISHNU CONSTRUCTIONS versus THE ENGINEER IN CHIEF MILITARY ENGINEERING SERVICE & ORS.
[2023] 5 S.C.R. 327, Supreme Court of India, 2023
Outcome: Dismissed (Dismissed)
Segment: Ratio
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M/S. SHREE VISHNU CONSTRUCTIONS
v.
THE ENGINEER IN CHIEF MILITARY ENGINEERING
SERVICE & ORS.
(Civil Appeal No. 3461 of 2023)
MAY 09, 2023
[M. R. SHAH AND C. T. RAVIKUMAR, JJ.]
Arbitration and Conciliation (Amendment) Act, 2015 – s.26 –
Applicability of Amendment Act, 2015– Whether the provisions of
the old Act (pre-Amendment Act, 2015) or the new Act (Amendment
Act, 2015) shall be applicable when the notice invoking arbitration
is issued prior to the Amendment Act, 2015 but application to appoint
arbitrator u/s.11(6), 1996 Act is filed post Amendment Act, 2015 –
Held: In a case where the notice invoking arbitration is issued prior
to the Amendment Act, 2015 and the application u/s.11(6)is filed
post Amendment Act, 2015, the Amended Act, 2015 shall not be
applicable and the parties shall be governed by the pre-amendment
Act, 2015– Arbitration and Conciliation Act, 1996 – ss.11(6), 21.
Arbitration and Conciliation (Amendment) Act, 2015 –Whether
the decision in the cases of Union of India v. Parmar Constructions
Company reported as [2019] 5 SCR 1009 and Union of India v. Pradeep
Vinod Construction Company reported as [2012] 17 SCR 64 are per
incuriam as the decision in the case of Board of Control for Cricket in
India (BCCI) v. Kochi Cricket Private Limited and Ors. reported as
[2018] 2 SCR 829 was not considered in the said decisions – Held:
No – Arbitration and Conciliation Act, 1996.
Dismissing the appeal, the Court
HELD: 1.1
Section 11(6A) has been inserted by Amendment
Act, 2015, by which the powers of the Court dealing with an
application under Section 11(6) of the Act are restricted and as
per section 11(6A), the powers of the Court while deciding
application under Section 11(6) of the Act are confined to the
examination of the existence of an arbitration agreement, which
powers were not restricted in the pre-amendment Act, 2015.
However, Section 26 of the Amendment Act, 2015 provides that
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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. At this stage, it is
required to be noted that as per Section 21 of the principal Act,
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 the arbitration is
received by the respondent. Therefore, as per section 21 of the
principal Act, the arbitral proceedings can be said to have
commenced on the date on which a request for the dispute to be
referred to the arbitration is received by the respondent.
Therefore, as per section 21 of the principal Act the arbitral
proceedings can be said to have commenced on the date on which
a request for the dispute 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. [Para 6.1][343-A-E]
1.2 This Court is required to consider whether the decision
in the cases of Parmar Constructions Company and Pardeep Vinod
Construction Company can be said to be per incuriam as the
decision of this Court in the
case of BCCI has not been considered
by this Court in the said decisions. However, on a fair reading of
the decisions in the case of BCCI and the observations made in
paragraphs 37 to 39 and on a fair reading of decisions in the cases
of Parmar Constructions Company and Pardeep Vinod Construction
Company, this Court in the case of BCCI has held that the
Arbitration Amendment Act, 2015 is prospective in nature insofar
as the proceedings under sections 34 & 36 are concerned. It is
required to be noted that in the case of BCCI, application under
section 11(6) was not the subject matter and there was no issue
before the Court that even in a case where the notice invoking
the arbitration is issued prior to the Amendment Act, 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
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in the case of Parmar Constructions Company is directly on the
point, namely, the application under section 11(6) of the Act. In
the case of Parmar Constructions Company , 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.The submission on behalf of the appellant cannot be
accepted for the simple reason that this Court in the case of BCCI
was considering the court proceedings under sections 34 and
36. To that, this Court interpreted section 26 in paragraphs 37 to
39, and held that the Amendment Act is prospective in nature,
and will apply to those arbitral proceedings that are commenced
as understood by section 21 of the principal Act, on or after the
Amendment Act, 2015 and to court proceedings which have
commenced on or after the Amendment Act, 2015 came into force.
Therefore, any observations made by this Court in paragraphs
37 to 39 in the case of BCCI shall be understood and construed
with respect to court proceedings which have commenced on or
after the Amendment Act coming into
force, namely, the
proceedings under sections 34 & 36. Therefore, the decisions of
this Court in the cases of Parmar Constructions Company and
Pardeep Vinod Construction Company cannot be said to be per
incuriam and/or in conflict with the decision of this Court in the
case of BCCI. In the case of Parmar Constructions Company
which is directly on the point, it isspecifically observed and held
that the 2015 Amendment Act, which came into force w.e.f.
23.10.2015 shall not apply to the arbitral proceedings which are
commenced in accordance with the provisions of section 21 of
the principal Act, 1996 before the coming into force the 2015
Amendment Act, unless parties otherwise agree (para 27). Similar
view has been expressed in the case of S.P. Singla Constructions
Private Limited. [Paras 9, 9.1][351-E-H; 352-A-C, D-G]
M/S. SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
CHIEF MILITARY ENGINEERING SERVICE
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Union of India Vs. Parmar Construction Company,
(2019) 15 SCC 682 : [2019] 5 SCR 1009; Union of
India Vs. Pradeep Vinod Construction Company, (2020)
2 SCC 464 : [2012] 17 SCR 64; S.P. Singla
Constructions Private Limited Vs. State of Himachal
Pradesh and Anr. (2019) 2 SCC 488 : [2018 14 SCR
1005 – relied on.
1.3 In the present case the notice invoking arbitration clause
was issued on 26.12.2013, i.e., much prior to the Amendment
Act, 2015 and the application under Section 11(6) of the Act has
been preferred/filed on 27.04.2016, i.e., much after the
amendment Act came into force, the law prevailing prior to the
Amendment Act, 2015 shall be applicable and therefore the High
Court has rightly entered into the question of accord and
satisfaction and has rightly dismissed the application under section
11(6) of the Act applying the principal Act, namely, the Arbitration
and Conciliation Act, 1996, prevailing prior to the Amendment
Act, 2015. This Court is in complete agreement with the view
taken by the High Court. In a case where the notice invoking
arbitration is issued prior to the Amendment Act, 2015 and the
application under Section 11 for appointment of an arbitrator is
made post Amendment Act, 2015, the provisions of pre-
Amendment Act, 2015 shall be applicable and not the Amendment
Act, 2015. [Para 10][353-A-D]
Board of Control for Cricket in India (BCCI) Vs. Kochi
Cricket Private Limited and Ors., (2018) 6 SCC 287
:
[2018] 2 SCR 829; Aravali Power Company Private
Limited Vs. Era Infra Engineering Limited, (2017) 15
SCC 32 : [2017] 11 SCR 497; Ssangyong Engineering
and Construction Company Limited Vs. National
Highways Authority of India (NHAI), (2019) 15 SCC
131 : [2019] 7 SCR 522; Hindustan Construction
Company Limited and Anr. Vs. Union of India and Ors.,
(2020) 17 SCC 324; Government of India Vs. Vedanta
Limited, (2020) 10 SCC 1; Patel Engineering Limited
Vs. North Eastern Electric Power Corporation Limited,
(2020) 7 SCC 167 : [2020] 4 SCR 156; Mayawati
Trading v. Pradyut Debbarman, (2019) 8 SCC 714 :
[2019] 12 SCR 123 – referred to.
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Case Law Reference
[2018] 2 SCR 829
referred to
Para 3.2
[2019] 5 SCR 1009
relied on
Para 3.6
[2012] 17 SCR 64
relied on
Para 3.6
[2017] 11 SCR 497
referred to
Para 3.7
[2018 14 SCR 1005
relied on
Para 3.8
[2019] 7 SCR 522
referred to
Para 3.9
[2020] 4 SCR 156
referred to
Para 3.12
[2019] 12 SCR 123
referred to
Para 7(i)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3461
of 2023.
From the Judgment and Order dated 30.06.2020 of the High Court
for the State of Telangana at Hyderabad in ARBA No. 151 of 2016.
K. Parameshwar, Ms. Arti Gupta, Ms. Kanti, Advs. for the
Appellant.
Padmesh Mishra, Anukalp Jain, Yuvraj Sharma, Akshay Nain,
Arvind Kumar Sharma, Ms. Megha Karnwal, Gopal Jha, Advs. for the
Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court for the State of Telangana at
Hyderabad in ARBA No. 151 of 2016by which the High Court has
dismissed the said application filed under Section 11 of the Arbitration
Act, 1996 (hereinafter referred to as “Act, 1996”) and has refused to
appoint an arbitrator on the ground that earlier the appellant had accepted
the amount as per the final bill in full and final settlement and without
raising any dispute and also signed and issued “no further claim
certificate”, the original applicant has preferred the present appeal.
2. The facts leading to the present appeal in nutshell are as under:-
2.1 That the
appellant herein and the respondents entered into an
agreement vide agreement dated 22.07.2010 for additions/alterations to
M/S. SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
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Senior Non-Commissioned Officers mess and repairs/renewals to floors
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 whether there is an existence of the arbitration agreement or not
and no further inquiry is permissible at the stage of deciding the application
under Section 11(6) and the issue
with respect to the “accord and
satisfaction” has to be left to be decided by the arbitrator / arbitral tribunal.
Therefore, it was the case on behalf of the appellant that the provisions
of the Amendment Act, 2015 shall be applicable.
2.3 It was the case on behalf of the respondents that as per Section
26 read with Section 21 of the Amendment Act, 2015, Amendment Act,
2015 shall not be applicable in a case where arbitration proceedings as
per Section 21 of the Arbitration Act, has been commenced prior to the
Amendment Act, 2015.
2.4 By the impugned judgment and order, the High Court has
dismissed the arbitration petition and has refused to appoint the arbitrator
/ arbitral tribunal on the ground that the Amendment Act, 2015 shall not
be applicable and the Act, pre-amendment, 2015, shall be applicable.
That thereafter, after holding that there was a full and final settlement of
the payment as per the final bill as far as back on 29.04.2013 and even
the appellant issued the “no further claim” certificate and even the
application under Section 11(6) of the Act, 1996 was filed after a period
of approximately three years, the High Court has dismissed the said
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arbitration application. The impugned judgment and order passed by the
High Court is the subject matter of present appeal.
3. Shri K. Parameshwar, learned counsel has appeared on behalf
of the appellant.
3.1 it is submitted by Shri Parameshwar, learned counsel appearing
on behalf of the appellant that the issue that arises for consideration in
the present appeal is the interpretation of Section 26 of the Amendment
Act, 2015 insofar as the applicability of the amended provisions, more
specifically, insertion of Section 11(6A) and its applicability to judicial
proceedings initiated after the Amendment Act, 2015 came into force
w.e.f. 23.10.2015.
3.2 Shri Parameshwar, learned counsel appearing on behalf of
the appellant has vehemently submitted that as such the aforesaid issue
is squarely covered by the decision of this Court in the case of Board of
Control for Cricket in India (BCCI) Vs. Kochi Cricket Private
Limited and Ors., (2018) 6 SCC 287(paras 37 and 39).
3.3  Relying upon the aforesaid decision, it is submitted 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 to notice is that these proceedings alone
M/S. SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
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are referred to, the expression “to” as contrasted with the
expression “in relation to” making this clear. Also, the reference
to Section 21 of the 1996 Act, which appears in Chapter V, and
which speaks of the arbitral proceedings commencing on the date
on which a request for a dispute to be referred to arbitration is
received by the respondent, would also make it clear that it is
these proceedings, and no others, that form the subject-matter of
the first part of Section 26. Also, since the conduct of arbitral
proceedings is largely procedural in nature, parties may “otherwise
agree” and apply the Amendment Act to arbitral proceedings that
have commenced before the Amendment Act came into force. [
Section 29-A of the Amend (sic Amended) Act provides for time-
limits within which an arbitral award is to be made. In Hitendra
Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602 at
p. 633 : 1994 SCC (Cri) 1087, this Court stated: (SCC p. 633, para
26)”26. … (iii) Every litigant has a vested right in substantive
law but no such right exists in procedural law.(iv) A procedural
statute should not generally speaking be applied retrospectively
where the result would be to create new disabilities or obligations
or to impose new duties in respect of transactions already
accomplished.(v) A statute which not only changes the procedure
but also creates new rights and liabilities shall be construed to be
prospective in operation,
unless otherwise provided, either
expressly or by necessary implication.” It is, inter alia, because
timelines for the making of an arbitral award have been laid down
for the first time in Section 29-A of the Amendment (sic Amended)
Act that parties were given the option to adopt such timelines
which, though procedural in nature, create new obligations in
respect of a proceeding 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
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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 remains the same, the negative
form conveying exactly what could have been stated positively,
with the necessary proviso. Obviously, “arbitral proceedings” having
been subsumed in the first part cannot re-appear in the second
part, and the expression “in relation to arbitral proceedings” would,
therefore, apply only to court proceedings which relate to the
arbitral proceedings. The scheme of Section 26 is thus clear :
that
the Amendment Act is prospective in nature, and will apply to
those arbitral proceedings that are commenced, as understood by
Section 21 of the principal Act, on or after the Amendment Act,
and to court proceedings which have commenced on or after the
Amendment Act came into force.”
3.5 It is further submitted that it is specifically held that the phrase
‘in relation to arbitral proceedings’ appearing in the second part of Section
26 refers to commencement of court proceedings and are not controlled
by Section 21 of the principal Act. It is submitted that in such
circumstances, the relevant date so far as the applicability of Section
11(6A) is concerned, is not the date of invocation of arbitration but the
date of commencement of judicial proceedings before a court under
Section 11. It is submitted that therefore viewed in this light, the finding
of the High Court that Section 11(6A) shall not be applicable in the
present case is clearly erroneous.
M/S. SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
CHIEF MILITARY ENGINEERING SERVICE [M. R. SHAH, J.]
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3.6 It is submitted that in the case of Union of India Vs. Parmar
Construction Company, (2019) 15 SCC 682 (Two Judge Bench)
(paras 25-27), without noticing the judgment in BCCI (supra), a
coordinate Bench has held, relying on Section 21, that, the relevant date
for applicability of Section 26 of the Amendment Act, 2015 is the date
when request for appointment of arbitrator was made. It is further
submitted that this has been followed in the judgment in the case of
Union of India Vs. Pradeep Vinod Construction Company, (2020)
2 SCC 464 (Three Judge Bench), which also did not refer to the case
of BCCI (supra) but has only followed the judgment in Parmar
Construction Company (supra).
3.7 It is submitted that the judgment in BCCI (supra) was
rendered in the context of Section 36 of the Act and not in the context of
Section 11. Both Pradeep Vinod Construction Company (supra)
and Parmar Construction Company (supra) were cases relating to
Section 11. However, neither of the case distinguished 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 Pradesh and Anr., (2019) 2
SCC 488 (Para 16) is again misplaced because in S.P. Singla
Constructions Private Limited (supra) issue also involved was
disqualifications of an arbitrator under Section 12 and consequent filing
of Section 11 petitions prior to coming into force of the Amendment Act,
2015.
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3.9 It is submitted that on the other hand, this Court in Ssangyong
Engineering and Construction Company Limited Vs. National
Highways Authority of India (NHAI), (2019) 15 SCC 131 (Para
19), has held that, Section 34 as amended in 2015, will apply only to
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 and while doing so, this Court followed
the judgment in BCCI (supra).
3.10 It is submitted that in order to get over the judgment in BCCI
(supra), the Parliament omitted Section 26 of the Amendment Act, 2015
w.e.f. 23.10.2015 by way of Section 15 of the Arbitration and Conciliation
(Amendment) Act, 2019, which was notified on 30.08.2019. It is further
submitted that the validity of Section 15 was inter alia challenged in
Hindustan Construction Company Limited and Anr. Vs. Union of
India and Ors., (2020) 17 SCC 324 (Three Judge Bench). It is
submitted that this Court held that, though the basis for the judgment in
BCCI (supra) was removed, but still found that Section 15 of the
Amendment Act, 2019 was unconstitutional as being manifestly arbitrary.
What is noteworthy is that despite having noticed that the Justice
Srikrishna committee report held that the Amendment Act, 2015 must
apply to arbitrations, which commenced on or after 23.10.2015 and related
court proceedings, the Court struck down the amendment and resurrected
the law
as stated in BCCI (supra). The Court emphatically held that,
“66. The result is that Kochi Cricket [BCCI v. Kochi Cricket (P)
Ltd., (2018) 6 SCC] judgment will therefore continue to apply so
as to make applicable the salutary amendments made by the 2015
Amendment Act to all court proceedings initiated after 23-10-
2015.”
3.11 It is further submitted that the judgment in BCCI (supra),
so far as it differentiated between arbitral proceedings and court
proceedings, was followed in Government of India Vs. Vedanta
Limited, (2020) 10 SCC 1 (Three Judge Bench), and the Court
emphasized that the Amendment Act, 2015 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
M/S. SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
CHIEF MILITARY ENGINEERING SERVICE [M. R. SHAH, J.]
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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 three-judge 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 decisions in
Aravali Power Company Private Limited(supra) and S.P. Singla
Constructions Private Limited (supra), neither of which concerned
judicial proceedings as they were rendered on the issue of qualification
or disqualification of the arbitrator. It is further submitted that the decision
in the case of Parmar Construction Company (supra) was followed
by the three-judge bench in Pradeep Vinod Construction Company
(supra) without any reference to BCCI (supra).
3.14 It is therefore, the submission on behalf of the appellant that
the decision of this Court
in the case of BCCI (supra) was binding on
the coordinate bench which rendered the decision in the case of Parmar
Construction Company (supra), this Court has not noticed the said
decision and therefore, the decision in the case of Parmar Construction
Company (supra) can be said to be per incuriam and/or sub silentio.
It is submitted that therefore, the decision in the case of Parmar
Construction Company (supra) being per incuriam, the larger Bench,
which rendered the decision in the case of Pradeep Vinod Construction
Company (supra) ought not to have placed reliance on Parmar
Construction Company (supra) . Therefore, relying upon the decision
of this Court in the case of BCCI (supra), which has been subsequently
followed in other decisions referred to hereinabove, it is prayed to allow
the present appeal.
4. Present appeal is vehemently opposed by Shri Padmesh Mishra,
learned counsel appearing on behalf of the respondents.
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4.1 It is vehemently submitted by the learned counsel appearing
on behalf of the respondents that as such the Hon’ble High Court has
rightly dismissed the Section 11(6) application by observing and holding
that the pre-amendment Arbitration Act, 2015 shall be applicable.
4.2 It is submitted that in the present case, admittedly the notice
invoking the arbitration was issued on 20.12.2013, i.e., much prior to the
Amendment Act, 2015. It is further submitted that admittedly the
application under Section 11(6) of the Act, 1996 was preferred and filed
on 27.04.2016, i.e., much after the Amendment Act, 2015 came into
force. It is submitted that therefore, taking into consideration section 26
of the Amendment Act, 2015 and when the notice invoking the arbitration
was issued much prior to the Amendment Act, 2015, therefore, the
arbitration proceedings can be said to have commenced 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
invoking the arbitration is invoked prior to the Amendment Act, 2015,
pre Amendment Act, 2015 shall be applicable. It is submitted that as
such the decision of this Court in the case of Parmar Construction
Company (supra), which is a Two Judge Bench decision has been
subsequently considered and followed by a Three Judge Bench in the
case of Pradeep Vinod Construction Company (supra).
4.4 It is further submitted that in the case of BCCI (supra), this
Court has unequivocally held that from the scheme contained in Section
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26 of the Amendment Act, it is clear that the Amendment Act is
prospective in nature and will only apply to those arbitral proceedings
that commence in terms of Section 21 of the Act, on or after the
Amendment Act, and to Court proceedings, which have commenced on
or after the Amendment Act came into force. It is submitted that it
necessarily follows that in such cases, where the arbitration proceedings
have been initiated prior to 23.10.2015, it will continue to be governed by
the legal position as it existed prior to the coming into force of the
Amendment Act, 2015.
4.5 It is submitted that as submitted hereinabove, the judgments in
Parmar Construction Company (supra) and Pradeep Vinod
Construction Company (supra) are with respect to the applications
under Section 11(6) and the decision of this Court in the case of BCCI
(supra) is with respect to the proceedings under Sections 34 and 36 and
even the observations made in paragraphs 37 to 39 are with respect to
the “court proceedings” and therefore, the aforesaid two decisions cannot
be said to be in conflict with the judgment in the case of BCCI (supra).
4.6 It is submitted that the reliance by the appellant on the
expression “court proceedings in relation thereto” as it occurs in Section
26 of the Amendment Act, 2015 to contend that applications under Section
11 of the Act, 1996 would fall in such category is misplaced. It is submitted
that it must be borne in mind
that this Hon’ble Court was called upon to
interpret Section 26 of the Amendment Act, 2015, to answer as to whether
applications under Section 36, which was amended by the Amendment
Act, 2015 would apply in its amended form in respect of Section 34/36
proceedings initiated before the commencement of the Amendment Act,
2015. It is submitted that, thus, any observation in BCCI (supra) ought
to be understood in the context in which 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).
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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 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 present
case, the proviso in Clause (65) of the general conditions of the
contract cannot be taken to be the agreement between the parties
so as to apply the provisions of the amended Act. As per Section
26 of the Act, the provisions of the Amendment Act, 2015 shall
apply in relation to
arbitral proceedings commenced on or after
the date of commencement of the Amendment Act, 2015 (w.e.f.
23-10-2015). In the present case, arbitration proceedings
commenced way back in 2013, much prior to coming into force of
the amended Act and therefore, provisions of the amended Act
cannot be invoked.
17. In BCCI v. Kochi Cricket (P) Ltd. [(2018) 6 SCC 287], this
Court has held that the provisions of the Amendment Act, 2015
(with effect from 23-10-2015) cannot have retrospective operation
in the arbitral proceedings already commenced unless the parties
otherwise agree and held as under :
…………………………..”
4.9 It is submitted that it is a settled law that arbitration commences
upon invocation of the notice as per Section 21 of the Act, 1996. It is
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submitted that therefore, in a case where the notice invoking the arbitration
has been issued prior to the Amendment Act, 2015, on true interpretation
of Section 26 read with Section 21 of the Amendment Act, 2015, the
Amendment Act, 2015 shall not be applicable and the arbitration would
be governed by the unamended provision.
4.10 Making above submissions and relying upon the decisions of
this Court in the case of Parmar Construction Company (supra);
Pradeep Vinod Construction Company (supra) and S.P. Singla
Constructions Private Limited (supra), it is prayed to dismiss the
present appeal.
5. We have heard learned counsel for the respective 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 sub-
section (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 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.”
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6.1 Section 11(6A) has been inserted by Amendment Act, 2015,
by which the powers of the Court dealing with an application under
Section 11(6) of the Act are restricted and as per section 11(6A), the
powers of the Court while deciding application under Section 11(6) of
the Act are confined to the examination of the existence of an arbitration
agreement, which powers were not restricted in the pre-amendment
Act, 2015. However, Section 26 of the Amendment Act, 2015 provides
that 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. At this stage, it is required to be noted that as per
Section 21 of the principal Act, 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 the arbitration
is received by the respondent. Therefore, as per section 21 of the principal
Act, the arbitral proceedings can be said to have commenced on the
date on which a request for the dispute to be referred to the arbitration
is received by the respondent. Therefore, as per section 21 of the principal
Act the arbitral proceedings can be said to have commenced on the date
on which a request for the dispute 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.
7. The question of applicability of the Arbitration Amendment Act,
2015 fell for consideration before this Court in catena of decisions, few
of them are as under:
i) In the case of Mayawati Trading v. Pradyut Debbarman,
(2019) 8 SCC 714, 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;
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:
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“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 used;
and the expression “the” arbitral proceedings and “in accordance
with the provisions of Section 21 of the principal Act” is
conspicuous by its absence.
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 to notice is that these proceedings alone
are referred to, the
expression “to” as contrasted with the
expression “in relation to” making this clear. Also, the reference
to Section 21 of the 1996 Act, which appears in Chapter V,
and which speaks of the arbitral proceedings commencing on
the date on which a request for a dispute to be referred to
arbitration is received by the respondent, would also make it
clear that it is these proceedings, and no others, that form the
subject-matter of the first part of Section 26. Also, since the
conduct of arbitral proceedings is largely procedural in nature,
parties may “otherwise agree” and apply the Amendment Act
to arbitral proceedings that have commenced before the
Amendment Act came into force. [ Section 29-A of the Amend
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(sic Amended) Act provides for time-limits within which an
arbitral award is to be made. In Hitendra Vishnu Thakur v.
State of Maharashtra, (1994) 4 SCC 602 at p. 633 : 1994
SCC (Cri) 1087, this Court stated: (SCC p. 633, para
26)”26. … (iii) Every litigant has a vested right in substantive
law but no such right exists in procedural law.(iv) A procedural
statute should not generally speaking be applied retrospectively
where the result would be to create new disabilities or
obligations or to impose new duties in respect of transactions
already accomplished.(v) A statute which not only changes
the procedure but also creates new rights and liabilities shall
be construed to be prospective in operation, unless otherwise
provided, either expressly or by necessary implication.” It is,
inter alia, because timelines for the making of an arbitral award
have been laid down for the first time in Section 29-A of the
Amendment (sic Amended) Act that parties were given the
option to adopt such timelines which, though procedural in
nature, create new obligations in respect of a proceeding 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
proceedings in relation thereto. The reason why the first part
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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
remains the same, the negative form conveying exactly what
could have been stated positively, with the necessary proviso.
Obviously, “arbitral proceedings” having been subsumed in the
first part cannot re-appear in the second part, and the
expression “in relation to arbitral proceedings” would, therefore,
apply only to court proceedings which relate to the arbitral
proceedings. The scheme of Section 26 is thus clear: that the
Amendment Act is prospective in nature, and will apply to those
arbitral proceedings that are commenced, as understood by
Section 21 of the principal Act, on or after the Amendment
Act, and to court proceedings which have commenced on or
after the Amendment Act came into force.”
Thus, in the case of BCCI (supra), 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 (supra), this Court
was considering the proceedings under
sections 34 and 36 of the
Amendment Act, 2015 and to that while interpreting section 26, it
is observed that the Amendment Act is prospective in nature, and
will apply even to those arbitral proceedings that are commenced,
as understood by section 21 of the principal Act, prior to the
Amendment Act, and to Court proceedings which have
commenced on or after the Amendment Act came into force.
iii) In the case of Parmar Construction Company (supra), in
relation to application under section 11(6) of the Act, in a case
where notice for arbitration is received/invoked prior to the
Amendment Act, 2015, but the application under section 11(6) of
the Act is filed post Amendment Act, 2015, it is observed in
paragraphs 25 to 28 as under:
“25. As on 1-1-2016, the 2015 Amendment Act was gazetted
and according to Section 1(2) of the 2015 Amendment Act, it
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was deemed to have come into force on 23-10-2015. 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 reading of Section 21 read with Section 26
leaves no manner of doubt that the provisions of the 2015
Amendment Act shall not apply to such of the arbitral
proceedings which have commenced in terms of the provisions
of Section 21 of the principal Act unless the
parties otherwise
agree. The effect of Section 21 read with Section 26 of the
2015 Amendment Act has been examined by this Court in
Aravali Power Co. (P) Ltd. v. Era Infra Engg. Ltd. [Aravali
Power Co. (P) Ltd. v. Era Infra Engg. Ltd., (2017) 15 SCC
32 : (2018) 2 SCC (Civ) 642] and taking note of Section 26 of
the 2015 Amendment Act laid down the broad principles as
under : (SCC p. 53, para 22)
“22. The principles which emerge from the decisions
referred to above are:
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22.1. In cases governed by the 1996 Act as it stood before
the Amendment Act came into force:
22.1.1. The fact that the named arbitrator is an employee
of one of the parties is not ipso facto a ground to raise a
presumption of bias or partiality or lack of independence on
his part. There can however be a justifiable apprehension
about the independence or impartiality of an employee
arbitrator, if such person was the controlling or dealing
authority in regard to the subject contract or if he is a direct
subordinate to the officer whose decision is the subject-
matter of the dispute.
22.1.2. Unless the cause of action for invoking jurisdiction
under clauses (a), (b) or (c) of sub-section (6) of Section
11 of the 1996 Act arises, there is no question of the Chief
Justice or his designate exercising power under sub-section
(6) of Section 11.
22.1.3. The Chief Justice or his designate while exercising
power under sub-section (6) of Section 11 shall endeavour
to give effect to the appointment procedure prescribed in
the arbitration clause.
22.1.4. While exercising such power under sub-section (6)
of Section 11, if circumstances exist, giving rise to justifiable
doubts as to the independence and impartiality of the person
nominated, or if other circumstances warrant appointment
of an independent arbitrator by ignoring the procedure
prescribed, the Chief Justice or his designate may, for
reasons to be recorded ignore the
designated arbitrator and
appoint someone else.
22.2. In cases governed by the 1996 Act after the
Amendment Act has come into force : If the arbitration
clause finds foul with the amended provisions, 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)
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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
present case, the proviso in Clause (65) of the general
conditions of the contract cannot be taken to be the
agreement between the parties so as to apply the provisions
of the amended Act. As per Section 26 of the Act, the
provisions of the 2015 Amendment Act shall apply in relation
to arbitral proceedings commenced on or after the date of
commencement of the 2015 Amendment Act (w.e.f. 23-
10-2015). In the present case, arbitration proceedings
commenced way back in 2013, much prior to coming into
force of the amended Act and therefore, provisions of the
amended Act cannot be invoked.”
27. We are also of the view that the 2015
Amendment Act
which came into force i.e. on 23-10-2015, shall not apply to
the arbitral proceedings which have commenced in accordance
with the provisions of Section 21 of the principal Act, 1996
before the coming into force of the 2015 Amendment Act,
unless the parties otherwise agree.
28. In the instant case, the request was made and received by
the appellants in the appeal concerned much before the 2015
Amendment Act came into force. Whether the application was
pending for appointment of an arbitrator or in the case of
rejection because of no claim as in the instant case for
appointment of an arbitrator including change/substitution of
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arbitrator, would not be of any legal effect for invoking the
provisions of the 2015 Amendment Act in terms of Section 21
of the principal Act, 1996. In our considered view, the
applications/requests made by the respondent contractors
deserve to be examined in accordance with the principal Act,
1996 without taking resort to the 2015 Amendment Act which
came into force from 23-10-2015.”
In the case of Parmar Construction Company (supra), this
Court heavily relied upon para 16 of the decision in the case of
S.P. Singla Constructions Private Limited (supra).
iv) Then comes the decision of this Court in the case of Pradeep
Vinod Construction Company (supra). In the said case, a three
Judge Bench of this Court has followed the decision in the case
of Parmar Construction Company (supra) and in the said
decision it is specifically observed that unamended 1996 Act, i.e.,
prior to Amendment Act, 2015 for appointment of arbitrator shall
be applicable where the request to refer the dispute to arbitration
was made before 2015 amendment came into effect.
v) In the case of Ssangyong Engg. & Construction 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)
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and therefore the decisions of this Court in the cases of Parmar
Constructions Company (supra) and Pardeep Vinod Construction
Company (supra) are per incuriam. It is also the case on behalf of the
appellant that so far as the decision in the case of Aravali Power
Company Private Limited (supra), which was considered by this Court
in the case of Parmar Constructions Company (supra) is concerned,
in the said decision also, there is no reference to the decision in the case
of BCCI (supra). It is also the case on behalf of the appellant that
though in the case of S.P. Singla Constrictions Private Limited (supra),
there is a reference to the decision in the case of BCCI (supra), but in
the said decision paragraphs 38 and 39 are not referred to and/or
considered and except reproduction of para 37, there is no further
discussion in the case of BCCI (supra). Therefore, it is the specific
case on behalf of the appellant that as the decisions in the cases of
Parmar Constructions Company (supra) and Pardeep Vinod
Construction Company (supra) are per incuriam, we must hold that
in the present case Amendment Act, 2015 shall be applicable and therefore
the High Court has committed a very serious error in opining on accord
and satisfaction which is not permissible as per the Amendment Act,
2015, i.e., Section 11(6A).
9. Submission on behalf of the appellant, as above, seems to be
attractive but has no substance. This Court is required to consider whether
the decision in
the cases of Parmar Constructions Company (supra)
and Pardeep Vinod Construction Company (supra) can be said to be
perincuriam as the decision of this Court in the case of BCCI (supra)
has not been considered by this Court in the said decisions. However, on
a fair reading of the decisions in the case of BCCI (supra) and the
observations made in paragraphs 37 to 39 and on a fair reading of
decisions in the cases of Parmar Constructions Company (supra)
and Pardeep Vinod Construction Company (supra), we are of the
opinion that this Court in the case of BCCI (supra) has held that the
Arbitration Amendment Act, 2015 is prospective in nature insofar as the
proceedings under sections 34 & 36 are concerned. It is required to be
noted that in the case of BCCI (supra), application under section 11(6)
was not the subject matter and there was no issue before the Court that
even in a case where the notice invoking the arbitration is issued prior to
the Amendment Act, 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,
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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,
reproduced hereinabove, and held that the Amendment Act is prospective
in nature, and will apply to those arbitral proceedings that are commenced
as understood by section 21 of the principal Act, on or after the
Amendment Act, 2015 and to court proceedings which have commenced
on or after the Amendment Act, 2015 came into force. Therefore, any
observations made by this Court in paragraphs 37 to 39 in the case of
BCCI (supra) shall be
understood and construed with respect to court
proceedings which have commenced on or after the Amendment Act
coming into force, namely, the proceedings under sections 34 & 36.
Therefore, the decisions of this Court in the cases of Parmar
Constructions Company (supra) and Pardeep Vinod Construction
Company (supra) cannot be said to be per incuriam and/or in conflict
with the decision of this Court in the case of BCCI (supra). As observed
hereinabove, in the case of Parmar Constructions Company (supra)
which is directly on the point, it is specifically observed and held that the
2015 Amendment Act, which came into force w.e.f. 23.10.2015 shall
not apply to the arbitral proceedings which are commenced in accordance
with the provisions of section 21 of the principal Act, 1996 before the
coming into force the 2015 Amendment Act, unless parties otherwise
agree (para 27). Similar view has been expressed in the case of S.P.
Singla Constructions Private Limited (supra).
10. Applying the law laid down by this Court in the cases of
Parmar Constructions Company (supra) and Pardeep Vinod
A
B
C
D
E
F
G
H
353
Construction Company (supra) and S.P. Singla Constructions Private
Limited (supra) to the facts of the case on hand as in the present case
the notice invoking arbitration clause was issued on 26.12.2013, i.e.,
much prior to the Amendment Act, 2015 and the application under Section
11(6) of the Act has been preferred/filed on 27.04.2016, i.e., much after
the amendment Act came into force, the law prevailing prior to the
Amendment Act, 2015 shall be applicable and therefore the High Court
has rightly entered into the question of accord and satisfaction and has
rightly dismissed the application under section 11(6) of the Act applying
the principal Act, namely, the Arbitration and Conciliation Act, 1996,
prevailing prior to the Amendment Act, 2015. We are in complete
agreement with the view taken by the High Court. It is observed and
held that in a case where the notice invoking arbitration is issued prior to
the Amendment Act, 2015 and the application under Section 11 for
appointment of an arbitrator is made post Amendment Act, 2015, the
provisions of pre-Amendment Act, 2015 shall be applicable and not the
Amendment Act, 2015.
11. In view of the above and for the reasons stated above, the
present appeal fails and the same deserves to be dismissed and is
accordingly dismissed. However, in the facts and circumstances of the
case, there shall be no order as to costs.
Divya Pandey
Appeal dismissed.
(Assisted by : Abhishek Agnihotri and Shevali Monga, LCRAs)
M/S.
SHREE VISHNU CONSTRUCTIONS v. THE ENGINEER IN
CHIEF MILITARY ENGINEERING SERVICE [M. R. SHAH, J.]