WIRES AND FABRIKS (S A) LIMITED v. TATA BLUE SCOPE STEEL LIMITED
2018-01-15
M.N.BHANDARI
body2018
DigiLaw.ai
JUDGMENT : M.N. Bhandari, J. By this writ petition, a challenge is made to the order dated 25th September, 2017 passed by the Additional District & Sessions Judge, No.9, Jaipur Metropolitan. 2. It is a case where on a dispute between the parties, the matter was referred to the Arbitration. The award was passed by the Arbitral Tribunal on 30th July, 2015. The petitioner-company submitted objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "the Act of 1996") within the period of limitation. An amendment in the Act of 1996 was notified on 23rd October, 2015 amending various provisions including Section 36 of the Act of 1996. After amendment under Section 36, a controversy came before the court as to whether it will apply prospectively or will have application on the pending cases under Section 34 of the Act of 1996. The controversy aforesaid was considered by this court in the case of M/s. Shilpa Construction Vs. Jaipur Municipal Corporation, (2017) AIR(Rajasthan) 166. It was held that pending proceedings under Section 34 would not be governed by the amended provision of Section 36 of the Act of 1996. The detailed reasons for it have been given not only in reference to Section 21 but other provisions also, which includes certain clauses of Amending Act, 2015. 3. Section 21 of the Act of 1996 is quoted hereunder for ready reference : "21. Commencement of arbitral proceedings.-Unless 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." 4. Sections 32 and 34 of the Act of 1996, as amended, are also quoted hereunder for ready reference : 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. 34. Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only of (a) the party making the application furnishes proof that (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration : Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. [Explanation 1. For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if, (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
[Explanation 2. For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award : Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal : Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party." 5. Section 36 of the Act of 1996 (unamended) as well as Section 36 of the amending Act of 2015 are quoted hereunder for ready reference : "36.
Section 36 of the Act of 1996 (unamended) as well as Section 36 of the amending Act of 2015 are quoted hereunder for ready reference : "36. Enforcement- (1) Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court. 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).". 6. Clause 26 of the Amending Act of 2015 is of relevance and quoted hereunder which makes amending provision inapplicable to the proceedings commended as per Section 21 of the Act of 1996 : "26.
6. Clause 26 of the Amending Act of 2015 is of relevance and quoted hereunder which makes amending provision inapplicable to the proceedings commended as per Section 21 of the Act of 1996 : "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." 7. As per Section 21 of the Act of 1996, commencement of the arbitral proceedings is taken from the date on which request for reference of the dispute to the Arbitrator is received by another party unless otherwise agreed. Section 32 provides for termination of the proceedings. It is on passing of the final award or by any order of the Arbitral Tribunal under sub-section (2) of Section 32. Clause 26 of the 7th Schedule of the amending Act, 2015 provides that amending Act would not apply to the arbitral proceedings commenced in accordance to Section 21 of the principal Act. By virtue of Clause 26 of 7th Schedule to the amending Act, 2015, the provisions, so amended by the Act of 2015, cannot apply to the cases commenced before amending the Act of 2015. 8. The commencement of the proceedings as per Section 21 of the Act of 1996 is from the date when request is sent to another party for appointment of the Arbitrator. As per the unamended provision of Section 36 of the Act of 1996, the award becomes unenforceable if application under Section 34 is submitted within the period of limitation and has not been refused. 9. Sub-Section (2) of Section 36 of the amending Act of 2015 provides that where objections under Section 34 have been filed then award would not be rendered unenforceable unless court grants order on stay of the operation of the said arbitral award. In view of amending Act of 2015, it is necessary to seek an order of the court to stay operation of the arbitral award.
In view of amending Act of 2015, it is necessary to seek an order of the court to stay operation of the arbitral award. Section 36, as amended by amending the Act of 2015, would be applicable only to those proceedings which commenced subsequent to the amendment vide Notification dated 23rd March, 2015 and not to the proceedings commenced prior to it in view of Clause 26 of the amending Act of 2015. Those proceedings commenced prior to the amendment would be governed by the unamended provision of Section 36. In view of the above, impugned order is not sustainable because commencement of the proceedings in the instant case was prior to the amending Act of 2015, so notified on 23rd October, 2015, thus petitioner was not required to seek stay on operation of the award and, accordingly, impugned order is set aside. 10. With the aforesaid, writ petition is allowed, however, the court, where objections under Section 34 of the Act of 1996 are pending, is directed to expedite the proceedings and decide the objections at the earliest and preferably within a period of four months from the date of receipt of copy of this order. The respondents would be at liberty to proceed for execution thereupon subject to outcome of the objections under Section 34 of the Act of 1996.