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2017 DIGILAW 1206 (RAJ)

Shilpa Construction v. Jaipur Municipal Corporation, Jaipur Through Chief Executive Officer

2017-05-11

M.N.BHANDARI

body2017
JUDGMENT : M.N. Bhandari, J. By this writ petition, a challenge is made to the order dated 14.2.2017 passed by the Commercial Court (Additional District Judge No.1), Jaipur Metropolitan. 2. It is a case where arbitration proceedings were initiated between the parties followed by an award on 18.7.2016. The objections against the award were submitted under section 34 of the Arbitration And Conciliation Act, 1996 (in short "the Act of 1996"). 3. A question came up for consideration before the court below was as to whether an application under section 36(2), amended by the Arbitration and Conciliation (Amendment) Act, 2015 (in short "the Act of 2015") is required for interim order or it would be governed by the provisions of section 36, pre-amendment. The court below found that commencement of the arbitral proceedings were prior to Amending Act, 2015. As per section 26 of the Amending Act of 2015, section 36(2) would not apply. The consequence of the order is that till the objections are decided, award would not be executable in view of section 36, pre-amended thus interim order was passed. 4. Learned counsel for petitioner submits that commencement of arbitral proceedings was prior to the amendment in the Act of 1996 but after passing of the award, it gets terminated as per section 32 of the Act of 1996. Once arbitral proceedings were terminated, that too, subsequent to the amending Act of 2015, section 36(2) of the Act would apply. Reference of following judgments has been given to support the argument:- 1. National Aluminium Co. Ltd. v. Pressteel and Fabrications Pvt. Ltd. & anr, AIR 2005 SC 1514 2. Mehta Teja Singh and Company v. Grindlays Bank Limited, (1982) 3 SCC 199 3. Jai Parshad v. Ram Singh & ors, (1982) 84 PLR 505 4. Steel Authority of India Ltd v. Steel Strips Limited, (2005) 140 PLR 157 5. Mohd. Abdus Samad v. Mahboobunnisa Begum, AIR 1970 AP 210 6. M/s Indiabulls Housing Finance Ltd v. Leema Mary Rose. S & anr, CRP(NPD) No.1079 to 1081 of 2016, decided on 8.6.2016 by Madras High Court 7. Rendezvous Sports World and ors v. The Board of Control for Cricket in India & ors, 2017(2)Bom CR 113 8. Enercon GmbH and ors v. Yogesh Mehra & ors and 9. M/s PFS Shipping (India) Ltd v. Capt. S & anr, CRP(NPD) No.1079 to 1081 of 2016, decided on 8.6.2016 by Madras High Court 7. Rendezvous Sports World and ors v. The Board of Control for Cricket in India & ors, 2017(2)Bom CR 113 8. Enercon GmbH and ors v. Yogesh Mehra & ors and 9. M/s PFS Shipping (India) Ltd v. Capt. VK Gupta & anr, Commercial Arbitration Application No. 54/2016, decided on 16.12.2016 by Bombay High Court. 5. A specific reference of the judgment of the Bombay High Court in the case of "Enercon Gmb H & ors v. Yoges Mehra & ors", Execution Application No.8/2017, decided on 3.3.2017 has been given. Therein, similar issue was considered in the light of the judgment of the Apex Court. It is by making distinction between the words "in relation to the arbitration proceedings" and "nothing in this section shall apply to the arbitral proceedings". It was held that Amending Act of 2015 would apply if the objections under section 34 are submitted subsequent to the amending Act of 2015. 6. Learned counsel for respondents Dr. PC Jain has contested the writ petition. It is stated that arbitration proceedings commenced prior to the Amending Act of 2015. It is as per section 26 of the Amending Act, 2015. In support of his arguments, he has placed reliance on following judgments:- 1. Andee Infrastructure Pvt. Ltd v. Ms. Anuradha Bhatia, FAO (OS) No.221/2016, decided on 6.1.2017 by the High Court of Delhi 2. Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd, Appeal (Civil) No.7419/2001, decided on 17.4.2003 by the Apex Court, and 3. M/s Rendezvous Sports World v. The Board of Control for Cricket in India, Chamber Summons No.1530/2015 in Execution Application (L) No.2481/2015, decided on 14.6.2016 by the Bombay High Court 7. I have considered rival submissions of the parties and perused the record. 8. The argument has been raised in reference to sections 21 and 32 of the Act of 1996 and section 26 and 36(2) of the Amending Act of 2015. Section 21 and 32 of the Act of 1996 are reproduced here-as-under for ready reference - "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. 32. Termination of proceedings. 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. 32. Termination of proceedings. - (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2). (2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where- (a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings." 9. Section 26 and 36 of the Amending Act of 2015 are also reproduced here-as-under - "Section 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. "36. Enforcement.- (1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court. (2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose. (3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing: Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908)." 10. The first issue for determination is as to whether commencement of the arbitration proceedings in the instant case was prior to the amending Act or subsequent thereto. As per section 21 of the Act of 1996, commencement of the proceedings is taken from the date when request for reference of the dispute to the Arbitrator is received by the respondents. In the present case, request to refer the case to the Arbitrator was received prior to Amending Act, 2015 thus commencement of the proceedings is prior to the amendment in the Act of 1996. 11. The next question is the effect of termination of the proceedings as per section 32 of the Act of 1996. It is submitted that subsequent to the amending Act, award was passed and with passing of the award, arbitration proceedings were terminated. Once the proceedings are terminated, the Amending Act, 2015 would apply. 12. It would be necessary to consider section 26 of the Amending Act, 2015. It provides as to when Amending Act of 2015 would apply. The amending Act would not apply to the arbitration proceedings commenced as per section 21 of the Act of 1996, prior to the amendment. It can apply with the agreement of the parties even if commencement of proceedings is prior to the Amending Act of 2015. It is a fact that no agreement exist between the parties to apply the Amended Act of 2015. The last part provides that it would apply to the proceedings commenced subsequent to the amendment in the Act. Section 26 of the Act of 2015 nowhere makes a reference of section 32 or termination of the proceedings with its consequential effect. 13. The last part provides that it would apply to the proceedings commenced subsequent to the amendment in the Act. Section 26 of the Act of 2015 nowhere makes a reference of section 32 or termination of the proceedings with its consequential effect. 13. If the intention of the legislature would have been that even if commencement of proceedings is prior to the Amending Act of 2015, it would not apply if the proceedings are terminated, it would have framed the provision accordingly. If this court hold that even if proceedings commenced prior to the Amending Act of 2015, if it get terminated with passing of the award then amending Act of 2015 would apply, it would be nothing but rewriting of the provision. It cannot be that amending Act would not apply at one stage and would become inapplicable thereupon. Section 26 does not provide that amending Act would not apply to the proceedings commenced as per section 21 prior to the amendment but would apply after passing of the award. In the light of the discussion made above, section 32 of the Act cannot have significance so far as application of Amending Act of 2015 is concerned. 14. In view of the interpretation given above, I am unable to accept the judgments cited by the counsel for the petitioner. It is not only for the reason that the judgments referred by the learned counsel for petitioner either do not make a reference of section 21 while drawing conclusions or if it has been considered in reference to section 32 without taking note that it has not been mentioned in section 26 of the Amending Act. For application of Amending Act of 2015, commencement of the proceedings is crucial. If it commenced prior to Amending Act then amended provision would not apply and if it is subsequent then amended provision would apply other than the cases of agreement between the parties. 15. It is settled law that the courts cannot re-write the provision. Even if t is taken to be a case of termination of proceedings under section 32, what is relevant for the application of the Amending Act is commencement of the proceedings and no the termination. 15. It is settled law that the courts cannot re-write the provision. Even if t is taken to be a case of termination of proceedings under section 32, what is relevant for the application of the Amending Act is commencement of the proceedings and no the termination. The application of the Amending Act is possible only in two events; firstly if the commencement of the proceedings is subsequent to the Amending Act or there is an agreement between the parties. It would not apply to any proceedings initiated prior to commencement of the Act as given under section 21. 16. In the light of the discussion made above, I do not find any merit in the arguments raised by learned counsel for the petitioner. Hence, the writ petition is dismissed.