REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.2879-2880   OF 2018 (Arising out of SLP (C) Nos.19545-19546 of 2016)

BOARD OF CONTROL FOR CRICKET  IN INDIA          … APPELLANT

VERSUS

KOCHI CRICKET PVT. LTD. AND ETC.     … RESPONDENTS

WITH CIVIL APPEAL NO. 2881   OF 2018

(Arising out of SLP (C) No.20224 of 2016)

WITH

CIVIL APPEAL NO. 2882   OF 2018 (Arising out of SLP (C) No.5021 of 2017)

WITH

CIVIL APPEAL NOs.  2883-2884  OF 2018 (Arising out of SLP (C) Nos.8372-8373 of 2017)

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WITH

CIVIL APPEAL NOs. 2885-2886   OF 2018 (Arising out of SLP (C) Nos.8374-8375 of 2017)

WITH

CIVIL APPEAL NOs. 2887-2889   OF 2018 (Arising out of SLP (C) Nos.8376-8378 of 2017)

WITH

CIVIL APPEAL NOs.  2890-2891   OF 2018 (Arising out of SLP (C) Nos.9599-9600 of 2017)

WITH

CIVIL APPEAL NO. 2892  OF 2018 (Arising out of SLP (C) No.33690 of 2017)

J U D G M E N T

R.F. NARIMAN, J.

1. Leave granted.

2. The  present  batch  of  appeals  raises  an  important

question  as  to  the  construction  of  Section  26  of  the

Arbitration  and  Conciliation  (Amendment)  Act,  2015

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(hereinafter referred to as the “Amendment Act”), which

reads as follows:

“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.”

3. The  questions  raised  in  these  appeals  require  the

mentioning of only a few important dates. In four of these

appeals, namely,  Board of Control for Cricket in India

v. Kochi Cricket Pvt. Ltd. and Ors. (SLP(C) No. 19545-

19546  of  2016),  Arup  Deb  &  Ors.  v.  Global  Asia

Venture  Company (SLP(C)  No.  20224  of  2016),  M/s

Maharashtra Airports Development Company Ltd.  v.

M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017)

and  UB  Cotton  Pvt.  Ltd.  v.  Jayshri  Ginning  and

Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), Section

34 applications under the Arbitration and Conciliation Act,

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1996 (hereinafter referred to as the “1996 Act”) were all

filed prior to the coming into force of the Amendment Act

w.e.f. 23rd October, 2015.   In the other four appeals, the

Section 34 applications were filed after the Amendment

Act  came into  force.   The  question with  which  we are

confronted  is  as  to  whether  Section  36,  which  was

substituted  by  the  Amendment  Act,  would  apply  in  its

amended form or  in  its  original  form to  the appeals  in

question.  

4. The relevant facts of the first appeal namely,  Board

of Control  for  Cricket  in  India v.  Kochi  Cricket  Pvt.

Ltd. and Ors. (SLP(C) Nos. 19545-19546 of 2016), are

as follows. A notice dated 18th January, 2012 was sent by

Respondent  No.1 invoking arbitration under  a franchise

agreement dated 12th March, 2011. A Sole Arbitrator was

appointed, who delivered two arbitral awards dated 22nd

June,  2015  against  the  Appellant  and  in  favour  of  the

Respondents.  On 16th September, 2015, the Appellants

filed an application under Section 34 of the 1996 Act in

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the Bombay High Court challenging the aforesaid arbitral

awards.  On 26th November, 2015, the Respondents filed

two execution applications in the High Court for payment

of the amounts awarded under the two awards, pending

enforcement of such awards.  These were resisted by two

Chamber  Summons  filed  by  the  Appellants  dated  3rd

December,  2015,  praying for  dismissal  of  the aforesaid

execution  applications  stating  that  the  old  Section  36

would be applicable, and that, therefore, there would be

an  automatic  stay  of  the  awards  until  the  Section  34

proceedings had been decided.   The Chamber Summons

were argued before a learned Single Judge, who, by the

impugned  judgment  in  Special  Leave  Petition  (Civil)

No.19545-19546  of  2016,  dismissed  the  aforesaid

Chamber Summons and found that the amended Section

36 would be applicable in the facts of this case.   This is

how the appeal from the aforesaid judgment has come

before us.  

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5. As aforementioned, the skeletal dates necessary to

decide the present appeals in the other cases would only

be that so far as two of the other appeals are concerned,

namely,  Arup  Deb  &  Ors.  v.  Global  Asia  Venture

Company (SLP(C)  No.20224  of  2016)  and  M/s

Maharashtra Airports Development Company Ltd.  v.

M/s PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017),

the Section 34 applications were filed on 27 th April, 2015,

and 25th May, 2015 respectively and the stay petitions or

execution applications in those cases filed under Section

36 were  dated  16th December,  2015  and 26th October,

2016 respectively.  In  U.B.  Cotton Pvt.  Ltd.  v.  Jayshri

Ginning and Spinning Pvt.  Ltd. (SLP(C) No.33690 of

2017),  the  Section  34  application  was  filed  on  22nd

February, 2013 and the execution application was filed in

2014,  which  was  transferred,  by  an  order  dated  12 th

January,  2017,  to  the  Commercial  Court,  Rajkot  as

Execution  Petition  No.  1  of  2017.   In  the  other  cases,

namely,  Wind  World  (India)  Ltd.  v.  Enercon  GMBH

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through its Director (SLP(C) Nos.8372-8373 of 2017),

Yogesh Mehra v. Enercon GMBH through its Director

(SLP(C)  Nos.8376-8378  of  2017),  Ajay  Mehra  v.

Enercon GMBH  through  its  Director (SLP(C)

Nos.8374-8375 of  2017),  and  Anuradha Bhatia v.  M/s

Ardee Infrastructure Pvt. Ltd. (SLP(C) Nos.9599-9600

of 2017), the Section 34 applications were filed after 23rd

October, 2015, viz., on 7th December, 2016 in the first two

appeals, on 6th December, 2016 in the third appeal and on

4th January, 2016 in the last appeal.   

6. Section 36,  which is  the bone of  contention in  the

present appeals, is set out hereinbelow:

PRE-AMENDED PROVISION

“Section 36. Enforcement. 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.”

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AMENDED PROVISION

“Section 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,  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).”

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7. Wide ranging arguments have been made on behalf

of  the parties before us.   Shri  C.A. Sundaram, learned

Senior  Advocate,  leading  the  charge  on  behalf  of  the

Appellants, has argued that Section 26 of the Amendment

Act consists of two parts.  According to him, the second

part,  which  makes  the  Amendment  Act  applicable  in

relation to arbitral proceedings commenced on or after the

date of commencement of this Act, is the principal part,

whereas the first part of Section 26 is in the nature of a

proviso or exception.  It is his submission, therefore, that

so  far  as  the  first  part  is  concerned,  Section  6  of  the

General Clauses Act, 1897 would be attracted, in which

event the vested right to challenge arbitral awards would

continue by virtue of the said Section under the old Act,

which  would,  therefore,  apply  to  the  facts  of  all  these

cases.  For this purpose, he relied upon certain passages

in  Thyssen  Stahlunion v.  Steel  Authority  of  India

(1999) 9 SCC 334, N.S. Nayak & Sons v. State of Goa

(2003) 6 SCC 56, and Milkfood Ltd. v GMC Ice Cream

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Pvt.  Ltd. (2004)  7  SCC 288.   Given  the  fact  that  the

vested  right  is  preserved,  the  amendment  is  only

prospective in nature, and for this purpose, he has cited a

large number of judgments, starting with the celebrated

judgment  in  Garikapati  Veeraya  v.  N.  Subbiah

Choudhry (1957) SCR 488.    He then referred to a chart

of the effect of the amendments made in general by the

Amendment  Act,  in  which  he  divided  the  amended

sections  into  three  parts,  namely,  those  that  are  only

procedural, those that are only substantive and those that

are procedural as well as substantive.  In his submission,

Section 36 is substantive in nature, in that, in place of an

automatic stay of the award under the old regime, Order

LXI, Rule 5 of the CPC will now be applicable. As a result

of  this,  instead  of  an  automatic  stay,  a  deposit  of  the

entire amount or substantial amount of the award would

now have to be made in the interim period between the

award and the decision in the Section 34 application.   He

referred to the 246th Law Commission Report as well as

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the debates leading to the Amendment Act to buttress his

submissions.   He also referred to the report of a High

Level  Committee  headed  by  Justice  B.N.  Srikrishna,

delivered on 30th July, 2017, in which, after referring to the

divergent views taken by the High Courts, the Committee

recommended that the Amendment Act will  not apply to

arbitral proceedings as well as Court proceedings which

arise out of such arbitral proceedings, where the arbitral

proceedings themselves have commenced in accordance

with  Section  21  before  the  commencement  of  the

Amendment  Act.  Concomitantly,  according  to  the  High

Level Committee, the Amendment Act will  only apply to

arbitral  proceedings  commenced  on  or  after  the

commencement  of  the  Amendment  Act  and  to  Court

proceedings that arise out of or in relation to such arbitral

proceedings.    

8. Shri  K.V.  Viswanathan,  learned  Senior  Advocate

appearing on behalf of the BCCI in Civil  Appeal arising

out  of  SLP(C)  No.19546  of  2016,  has  argued  that  the

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expression “arbitral proceedings” in both parts of Section

26 refers only to proceedings before an arbitrator and is

the same in both parts.   Consequently, it is clear that it is

only arbitral proceedings that have commenced after 23rd

October, 2015 and Court proceedings in relation thereto,

that  will  be  governed  by  the  Amendment  Act.    If  the

arbitral proceedings have commenced under the old Act,

then those proceedings as well as all Court proceedings

in relation thereto, would be governed only by the old Act.

According to him, Section 6 of the General Clauses Act

would  be  attracted,  insofar  as  Court  proceedings  are

concerned, when the first part of Section 26 is applied.

According  to  him,  the  second  part  would  not  become

superfluous on his reading of Section 26, as the option

given to the parties would be given only on application of

the first part and not the second.  According to the learned

senior  counsel,  the  judgment  in  Thyssen (supra)  is

determinative  of  the  present  case,  inasmuch  as  an

entirely new challenge procedure under Section 34 is laid

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down by the amendments made in 2015, somewhat like

the challenge procedure laid down in the original Section

34 of the 1996 Act, when contrasted with Section 30 of

the Arbitration Act, 1940.   According to the learned senior

counsel,  party  autonomy  must  be  respected,  and  this

being  the  position,  parties  who  have  entered  into

agreements  in  the  expectation  that  the  old  regime  will

apply  cannot  suddenly  be  foisted  with  a  completely

different regime under the Amendment Act.   According to

the learned senior counsel, Section 85 of the 1996 Act is

similar  to  Section  26  of  the  Amendment  Act  and,

therefore, the judgment in Thyssen (supra) must apply on

all fours.   The learned senior counsel also forcefully put

to  us  a  number  of  anomalies  that  would  arise  if  the

amendment to Section 36 were to be given retrospective

operation.    According to him, the right to be governed by

the  broad  appellate/supervisory  procedure  found  in

sections 34 and 37 of the 1996 Act would be a vested

right,  resulting  in  the  Amendment  Act  not  being

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applicable.  Insofar  as  Section  36  is  concerned,  the

learned senior  counsel  made elaborate submissions on

the difference between enforceability and execution, and

stated  that  whereas  the  former  dealt  with  substantive

rights, the latter dealt with procedural rights.   Equally, the

expression “has been” contained in the amended Section

36(2)  is  purely  contextual  and  equivalent  to  the

expression “is”.   For this, he has cited certain judgments

which we will  refer  to in due course.   According to the

learned  senior  counsel,  the  decision  in  National

Aluminium  Co.  Ltd.  v.  Pressteel  &  Fabrications  (P)

Ltd. (2004) 1 SCC 540, which exhorted the legislature to

amend Section 36, cannot take the matter any further, in

that the said decision cannot be read to say that Section

36 should be substituted with retrospective effect.    

9. Shri  Tushar  Mehta,  learned  Additional  Solicitor

General  appearing  in  SLP  (C)  No.5021  of  2017,

supported the arguments of his predecessor and added

that,  given  a  retrospective  operation  of  Section  36,

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various  anomalies  would  arise,  which  would  lead  to

hardship  and  inconvenience  and  that,  therefore,  we

should not impart retrospective operation to the aforesaid

provision.    

10. Shri Arvind Datar, learned senior advocate appearing

in  SLP  (C)  No.20224  of  2016,  supported  Shri

Viswanathan in stating that the amendments made by the

Amendment Act were very far reaching and changed the

basis of challenge to arbitral awards.  It would not be fair

to retrospectively change the rules of the game insofar as

such awards are concerned.   According to the learned

senior  counsel,  the expression “in  relation to”  that  was

used  in  Section  85  of  the  1996  Act,  as  expounded  in

Thyssen (supra), was because Section 85 repealed three

enactments together, and not because it sought to refer to

Court  proceedings.  He reiterated that  in  the interest  of

clarity, the report of the High Level Committee, headed by

Justice B.N. Srikrishna referred to by Shri Sundaram, was

the correct position so that it clearly be delineated that the

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moment  arbitral  proceedings  commenced  before  the

Amendment Act, such “proceedings”, which would include

all  Court  proceedings  in  relation  thereto,  would  be

governed by the old  Act,  and only  arbitral  proceedings

commenced after  the  Amendment  Act  came into  force,

together  with  related  Court  proceedings,  would  all  be

governed by the Amendment Act.  

11. Shri  Anirudh Krishnan,  learned Advocate appearing

for the intervenor in SLP (C) No.20224 of 2016, referred

to Section 85A contained in the 246th Law Commission

Report which, according to him, was given a go-by and

was not followed in Section 26.  He referred to the Law

Minister’s  speech stating  that  the  amendment  must  be

given  prospective  effect  and  further  argued  that  the

reason why the expression “in relation to” was used in the

second part of Section 26 was because a distinction was

made on whether the seat of the arbitral tribunal was in

India or outside India.   According to the learned counsel,

since amendments have been made in Part II of the 1996

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Act as well,  if  a seat based categorization is seen, the

expression  “in  relation  to”  would  not  apply  to  Court

proceedings  simpliciter,  but  to  arbitral  tribunals  which

have their  seat  outside India.    He further  argued that

Sections 34 and 36 are part of one scheme and are the

“appeal  package”  insofar  as  arbitral  proceedings  are

concerned and must, therefore, go along with the arbitral

proceedings.  This being the position, it is clear that the

pre-amendment  position  would  apply  in  case  of

arbitrations which commenced before the Amendment Act

came into force.

12. Leading  arguments  for  the  other  side,  Shri  Neeraj

Kaul,  learned  senior  counsel  appearing  in  SLP(C)

Nos.19545-19546 of  2016,  emphasized  that  in  the  first

part of Section 26, there is an absence of the mention of

Court  proceedings.   According  to  the  learned  senior

counsel,  this  was  of  great  significance  and  would,

therefore,  show  that  the  Amendment  Act  would

retrospectively  apply  to  Court  proceedings,  as

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distinguished  from  arbitral  proceedings.  On  a  correct

construction  of  Section  26,  according  to  the  learned

senior counsel, the second part of Section 26 takes within

its  sweep  both  arbitral  proceedings  as  well  as  Court

proceedings  in  relation  thereto  and  would,  therefore,

apply to arbitral proceedings as well as Court proceedings

in  relation  thereto,  which  have  commenced  after  the

Amendment Act came into force.   For this purpose, he

relied heavily on paragraph 23 in  Thyssen (supra) and,

submitted  that,  therefore,  on  a  true  construction  of

Section  26,  Section  34  proceedings  that  have

commenced before the Amendment Act came into force

would be governed by the Amendment Act,  and arbitral

proceedings which commenced after the Amendment Act,

together  with  Section  34  applications  made  in  relation

thereto, would then be governed under the second part of

Section  26  of  the  Amendment  Act.   According  to  the

learned senior counsel, no vested right exists inasmuch

as Section 34 proceedings are not appellate proceedings.

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In any case, Section 26 evinces a contrary intention and

would take away any such right assuming a vested right

is  involved.  He  countered  the  arguments  of  Shri

Viswanathan,  in  particular,  by  stating  that  the  original

intent of the 1996 Act was to minimise Court intervention

and to restrict the grounds of challenge of arbitral awards,

and inasmuch as the decisions of this Court in ONGC v.

Saw  Pipes Ltd (2003)  5  SCC  705 and  ONGC  Ltd.

v. Western Geco International Ltd.  (2014) 9 SCC 263

had gone contrary to the original intention of the 1996 Act,

all that the Amendment Act did was to bring the 1996 Act

back, in accordance with its original intent,  by nullifying

the aforesaid judgments.   He added that  the ground of

patent illegality that had been added by the Amendment

Act also differs from the said ground as understood in the

earlier case law, and has been added only qua domestic

and  not  international  commercial  arbitrations.  Learned

senior counsel then argued that given the fact that court

proceedings in this country take an inordinately long time,

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the whole object of the amendment to Section 36 would

be  stultified,  if  Section  36  is  only  to  apply  to  court

proceedings that  result  from arbitral proceedings,  which

have commenced on and after the commencement of the

Amendment  Act.  That  this  could  never  be  the  case  is

clear from a judgment of the House of Lords, reported as

Minister  of  Public  Works of  the Government  of  the

State of  Kuwait v. Sir Frederick Snow and Partners,  

(1984)  2  WLR  340,  which  is  strongly  relied  upon.

Learned  senior  counsel  also  stated  that  there  is  no

distinction  between  execution  and  enforcement,  and

“enforcement” under Section 36, is nothing but execution

of an award, as if it were a decree under the Code of Civil

Procedure, 1908.  He further argued that it is well settled

that execution proceedings are procedural in nature and

would  be  retrospective  and,  therefore,  the  substituted

Section 36 would apply even in cases where the Section

34 application is made before the commencement of the

Amendment  Act.  Another  argument  was  that  the

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expression  “has  been”  contained  in  Section  36(2),  as

amended,  would,  in  any  case,  refer  to  Section  34

proceedings  that  have  already  been  filed,  even  pre-

amendment, and for this purpose, he referred to certain

judgments.   

13. Shri  P.  Chidambaram,  learned  senior  counsel

appearing for the Respondents in SLP (C) Nos.8372-8373

of  2017,  emphasised  the  word  “but”  that  appears  in

Section  26,  which  not  only  segregates  the  first  part  of

Section 36 from the second part, but also makes it clear

that the two parts apply to two different situations.  The

first  part,  according  to  learned  senior  counsel,  would

apply to the arbitral proceedings themselves i.e. from the

Section 21 stage up to the Section 32 stage of the 1996

Act,  whereas  the  second  part  would  include  all

proceedings that begin from the Section 21 stage and all

court proceedings in relation thereto.  According to Shri

Chidambaram, Section 36, in its original form, is only a

clog on the right  of  the decree holder.  He argued that

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there  is  no corresponding vested right  in  the judgment

debtor  to  indefinitely  delay  proceedings  and  for  this

purpose, he cited several  judgments.   According to the

learned  senior  counsel,  Section  36  proceedings  are

entirely independent of Section 34 proceedings and the

moment  Section  36  speaks  of  an  award  being

enforceable  under  the  Code of  Civil  Procedure  as  if  it

were a decree, enforceability only means execution and

nothing  else.   He  then  referred  to  Satish  Kumar  v.

Surinder  Kumar,  (1969)  2  SCR  244  to  show that  an

award is not mere waste paper when it is delivered and

before it becomes a decree, as it decides the rights of the

parties and, therefore, being final and binding on parties,

is  a  judgment  delivered  between  parties,  which  may

become executable on certain conditions being met, but

which do not detract from the fact that the award itself has

“vitality”.

14. Shri Kapil Sibal, learned senior counsel appearing

on behalf of the Respondents in SLP (C) Nos.8374-8375

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of  2017,  has  argued  before  us  that  the  Statement  of

Objects and Reasons for the Amendment Act, in particular

paragraph  4  thereof,  would  make  it  clear  that  the

Amendment Act was necessitated because of India’s poor

performance in contract enforcement among the nations

in  the world.  For  this  reason,  according to  the learned

senior  counsel,  it  is  clear  that  Section 26 needs to  be

interpreted in such a manner as would further the object

of the Amendment Act and that this being so, it is clear

that Section 26 must be read as being a provision which

is  not  a savings provision at  all,  but  a provision which

destroys all rights, if any, that vested in the Appellants in

the 1996 Act as unamended.  For this purpose, he cited

certain judgments which will be referred to in the course

of our judgment.  

15. Dr. A.M. Singhvi, learned senior counsel appearing

on behalf of the Respondents in SLP (C) Nos.8376-8378

of  2017,  has  stated  that  the  correct  construction  of

Section  26  would  be  the  intermediate  between  the

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extremes that have been canvassed before us by learned

counsel appearing on behalf of the Appellants.  According

to  him,  it  is  important  to  emphasise  that  the  first  part

applies  only  to  arbitral  proceedings  before  an  arbitral

tribunal  and the second part  would apply only to  court

proceedings in relation thereto. This becomes clear from

two things; one, the expression “to” appearing in the first

part  as  contrasted  with  the  expression  “in  relation  to”

appearing in the second part; and, two, the presence of

Section 21 of the 1996 Act in the first part and its absence

in the second part of Section 26.  According to him, this

would be the correct interpretation of Section 26, which

would result in no anomalies, as it is clear that the date of

commencement of an arbitral proceeding would be fixed

with  reference  to  Section  21  and  the  date  of

commencement of a court proceeding would be fixed with

reference to the date on which the court  proceeding is

filed,  and  it  is  only  arbitral  proceedings  and  court

24

proceedings which are filed after the commencement of

the Amendment Act that would be so covered.  

16. Shri Nakul Dewan, learned Advocate appearing on

behalf of the Respondent in SLP (C) No.20224 of 2016

has argued that the first part of Section 26 speaks of “the

arbitral proceedings” commenced in accordance with the

provisions of Section 21.  The second part of Section 26

omits the word “the” as well as Section 21, making it clear

that  it  is  the  arbitral  proceedings  before  the  Arbitrator

alone that is referred to in the first part of Section 26, as

opposed to Court proceedings referred to in the second

part  of  Section 26,  where the expression “in relation to

arbitral  proceedings”  does  not  contain  the  word  “the”.

According to him, such interpretation is not contrary to the

doctrine of party autonomy, which is never conferred on

any  party  without  limits,  there  being  non-derogable

provisions in  the 1996 Act  from which parties,  even by

agreement,  cannot  derogate.   According to the learned

counsel,  each  and  every  Court  proceeding  under  the

25

1996 Act is a separate and distinct proceeding and it is

the date of such proceeding alone which is relevant for

the purpose of determining whether the Amendment Act

applies.   According to the learned counsel, there is no

vested right to resist the execution of  an award merely

because  an  application  for  setting  aside  the  award  is

pending under Section 34 of the 1996 Act.   Even on the

assumption that there is such a vested right, it  is taken

away, given the clear legislative intent of Section 26 of the

Amendment Act.   Lastly, he argued that on facts, clause

22.2(5)  of  the  agreement  between  the  parties

automatically brought in all amendments to the 1996 Act

and that, therefore, Section 36 in its amended form would

necessarily apply to the facts in this case.

17. Having heard extensive and wide ranging arguments

on the reach of Section 26 of the Amendment Act, it will

be  important  to  first  bear  in  mind  the  principles  of

interpretation of such a provision.  That an Amendment

Act does include within it provisions that may be repealed

26

either wholly or partially and that the provisions of Section

6 of  the General  Clauses Act  would generally  apply to

such Amendment Acts is beyond any doubt – See Bhagat

Ram Sharma v. Union of India, 1988 (Supp) SCC 30 at

40-41.   That  such  a  provision  is  akin  to  a  repeal  and

savings clause would be clear when it is read with Section

27 of the Amendment Act and Section 85 of the 1996 Act,

which are set out hereinbelow:

“Section 27. Repeal and savings.  

(1)  The  Arbitration  and  Conciliation (Amendment)  Ordinance,  2015,  is  hereby repealed.  

(2)  Notwithstanding  such  repeal,  anything done or any action taken under the principal Act, as amended by the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of  the principal Act, as amended by this Act.

xxx xxx xxx

Section 85. Repeal and savings.—

(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10  of  1940)  and  the  Foreign  Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.

(2) Notwithstanding such repeal,—

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(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before  this  Act  came into  force unless  otherwise  agreed  by  the  parties  but this  Act  shall  apply  in  relation  to  arbitral proceedings  which  commenced  on  or  after this Act comes into force;

(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively  to  have been made or issued under this Act.”

18. At this point, it is instructive to refer to the 246 th Law

Commission  Report  which  led  to  the  Amendment  Act.

This Report, which was handed over to the Government

in August, 2014, had this to state on why it was proposing

to replace Section 36 of the 1996 Act:

“AUTOMATIC STAY OF ENFORCEMENT OF THE  AWARD  UPON  ADMISSION  OF CHALLENGE  

43. Section 36 of the Act makes it clear that an arbitral award becomes enforceable as a decree only after the time for filing a petition under  section  34  has  expired  or  after  the section  34  petition  has  been  dismissed.  In other  words,  the  pendency  of  a  section  34 petition  renders  an  arbitral  award unenforceable.  The  Supreme  Court,  in National  Aluminum  Co.  Ltd.  v.  Pressteel  & Fabrications, (2004) 1 SCC 540 held that by virtue of  section 36,  it  was impermissible  to

28

pass  an  Order  directing  the  losing  party  to deposit any part of the award into Court. While this decision was in relation to the powers of the  Supreme  Court  to  pass  such  an  order under section 42, the Bombay High Court in Afcons Infrastructure Limited v. The Board of Trustees, Port of Mumbai 2014 (1) Arb LR 512 (Bom)  applied  the  same  principle  to  the powers of a Court under section 9 of the Act as  well.  Admission  of  a  section  34  petition, therefore,  virtually  paralyzes the  process  for the winning party/award creditor.  

44.  The  Supreme  Court,  in  National Aluminium, has criticized the present situation in the following words:

“However,  we  do  notice  that  this  automatic suspension of the execution of the award, the moment  an  application  challenging  the  said award  is  filed  under  section  34  of  the  Act leaving no discretion in  the court  to  put  the parties on terms, in our opinion, defeats the very  objective  of  the  alternate  dispute resolution system to which arbitration belongs. We do  find  that  there  is  a  recommendation made  by  the  concerned  Ministry  to  the Parliament  to  amend  section  34  with  a proposal  to  empower  the civil  court  to  pass suitable interim orders in such cases. In view of  the  urgency  of  such  amendment,  we sincerely hope that necessary steps would be taken  by  the  authorities  concerned  at  the earliest to bring about the required change in law.”  

45.  In  order  to  rectify  this  mischief,  certain amendments  have  been  suggested  by  the Commission to section 36 of  the Act,  which

29

provide  that  the  award  will  not  become unenforceable merely upon the making of an application under section 34.

So far  as  the transitory  provision,  so  described  by the

Report, is concerned, the Report stated:

“76. The Commission has proposed to insert the new section 85-A to the Act, to clarify the scope  of  operation  of  each  of  the amendments  with  respect  to  pending arbitrations/proceedings.  As  a  general  rule, the  amendments  will  operate  prospectively, except in certain cases as set out in section 85-A or otherwise set out in the amendment itself.”

The Report then went on to amend Section 36 as follows:

“Amendment of Section 36  

19. In section 36, (i) add numbering as sub- section (1) before the words “Where the time” and after the words “Section 34 has expired,” delete the words “or such application having been made, it has been refused” and add the words “then subject  to  the provision of  sub- section (2) hereof,”  

(ii)  insert  sub-section  “(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 the award unenforceable, unless upon a separate application made for that purpose, the Court grants stay of the operation of the

30

award  in  accordance  with  the  provisions  of sub-section (3) hereof;”  

(iii)  insert  sub-section “(3)  Upon filing of  the separate application under subsection (2) for stay of the operation of the award, the court may,  subject  to  such  conditions  as  it  may deem fit,  grant  stay  of  the  operation  of  the award for reasons to be recorded in writing.”  

(iv)  insert  proviso  ”Provided  that  the  Court shall while considering the grant of stay, in the case of an award for money shall  have due regard to  the provisions for  grant  of  stay  of money  decrees  under  the  Code  of  Civil Procedure, 1908.”  

[NOTE: This amendment is to ensure that the mere filing of an application under section 34 does not operate as an automatic stay on the enforcement  of  the  award.  The  Supreme Court  in  National  Aluminium  Co.  Ltd.  v. Pressteel  &  Fabrications  (P)  Ltd.  and  Anr, (2004) 1 SCC 540, recommends that such an amendment is the need of the hour.]”1

1 As a matter of fact, the amended Section 36 only brings back Article  36(2)  of  the  UNCITRAL Model  Law,  which  is  based on Article 6 of the New York Convention, and which reads as under:

“36(2). If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if  it considers it proper, adjourn its decision and  may  also,  on  the  application  of  the  party claiming recognition or enforcement of the award, order  the  other  party  to  provide  appropriate security.”

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The transitory provision Section 85A was then set out as

follows:

“Insertion of Section 85A  

A  new  section  Section  85A  on  transitory provisions has been incorporated.  

Transitory provisions.— (1) Unless otherwise provided  in  the  Arbitration  and  Conciliation (Amending)  Act,  2014,  the  provisions  of  the instant Act (as amended) shall be prospective in  operation  and  shall  apply  only  to  fresh arbitrations and fresh applications,  except  in the following situations –  

(a) the provisions of section 6-A shall apply to all  pending  proceedings  and  arbitrations. Explanation: It is clarified that where the issue of  costs  has  already  been  decided  by  the court/tribunal, the same shall not be opened to that extent.  

(b) the provisions of section 16 sub-section (7) shall  apply  to  all  pending  proceedings  and arbitrations, except where the issue has been decided by the court/tribunal.  

(c) the provisions of second proviso to section 24 shall apply to all pending arbitrations.  

(2) For the purposes of the instant section,—  

(a)  “fresh  arbitrations”  mean  arbitrations where  there  has  been  no  request  for appointment of arbitral tribunal; or application for  appointment  of  arbitral  tribunal;  or appointment of the arbitral tribunal, prior to the date  of  enforcement  of  the  Arbitration  and Conciliation (Amending) Act, 2014.  

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(b) “fresh applications” mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.  

[NOTE:  This  amendment  is  to  clarify  the scope of  operation of  each of  the proposed amendments  with  respect  to  pending arbitrations/proceedings.]”

19. The  debates  in  Parliament  in  this  context  were

referred to by counsel on both sides.  Shri  T.  Satpathy

(Dhenkanal) stated:

“You  have  brought  in  an  amendment  to Section 25 (a) saying that this Act will not be retrospective.  When  the  Bill  for  judges’ pension  and  salary  could  be  retrospective, why can you not amend it with retrospective effect  so  that  ONGC-RIL  case  could  be brought under this Act and let it be adjudicated as early as possible within 18 months and let the  people  of  this  country  get  some  justice some time. Let us be fair to them.”

To similar effect is the speech of Shri APJ Reddy, which

reads as under:

“It is unclear whether the amended provisions shall apply to pending arbitration proceedings. The  Law  Commission  of  India,  in  its  246th Report, which recommended amendments to the Arbitration & Conciliation Act,  1996,  had proposed to insert a new Section 85-A to the Act, which would clarify the scope of operation

33

to each amendment with respect to pending arbitration proceedings. However, this specific recommendation  has  not  been  incorporated into  the  Ordinance.  One  of  the  reasons  for bringing  about  this  ordinance  is  to  instill  a sense of confidence in foreign investors in our judicial  process,  with  regard  to  certainty  of implementation in practice and ease of doing business.  Therefore,  it  is  strongly  urged  to incorporate Section 85A as proposed by the 246th Report of the Law Commission of India, where it clearly states the scope of operation of the amended provisions.”

The Law Minister in response to the aforesaid speeches

stated:

“Nobody has objected to this Bill but some of our friends have observed certain things. They have said that the Bill is the need of the hour and that a good Bill has been brought. A few suggestions have been given by them. One of the  suggestions  was  that  it  should  have retrospective effect. If the parties agree, then there will be no problem. Otherwise, it will only have prospective effect.”

20. Finally, Section 26 in its present form was tabled as

Section 25A at the fag end of the debates, and added to

the  Bill.  A  couple  of  things  may  be  noticed  on  a

comparison  of  Section  85A,  as  proposed  by  the  Law

Commission, and Section 26 as ultimately enacted.   First

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and foremost,  Section 85A states that  the amendments

shall  be  prospective  in  operation  and  then  bifurcates

proceedings into two parts – (i) fresh arbitrations, and (ii)

fresh  applications.   Fresh  arbitrations  are  defined  as

various  proceedings  before  an  arbitral  tribunal  that  is

constituted, whereas fresh applications mean applications

to a Court or Tribunal, made subsequent to the date of

enforcement of the Amendment Act. Three exceptions are

provided by Section 85A, to which the Amendment Act will

apply  retrospectively.   The  first  deals  with  provisions

relating to costs, the second deals with the new provision

contained in Section 16(7) (which has not been adopted

by  the  Amendment  Act)  and  the  third  deals  with  the

second proviso to Section 24, which deals, inter alia, with

oral hearings and arguments on a day-to-day basis and

the non-grant of adjournments, unless sufficient cause is

made out.  

21. What can be seen from the above is that Section 26

has,  while  retaining  the  bifurcation  of  proceedings  into

35

arbitration  and  Court  proceedings,  departed  somewhat

from Section 85A as proposed by the Law Commission.  

22. That  a  provision  such  as  Section  26  has  to  be

construed  literally  first,  and  then  purposively  and

pragmatically,  so as to keep the object of the provision

also in mind, has been laid down in  Thyssen (supra) in

paragraph 26 as follows:

“26.  Present-day  courts  tend  to  adopt  a purposive  approach  while  interpreting  the statute which repeals the old law and for that purpose to take into account the objects and reasons which led to the enacting of the new Act. We have seen above that this approach was adopted by this  Court  in  M.M.T.C.  Ltd. case  [(1996) 6 SCC 716]. Provisions of both the Acts, old and new, are very different and it has been so observed in  Sundaram Finance Ltd.  case  [(1999) 2 SCC 479].  In that  case, this Court also said that provisions of the new Act  have  to  be  interpreted  and  construed independently and that in fact reference to the old Act may actually lead to misconstruction of the provisions of the new Act. The Court said that it will be more relevant, while construing the provisions of the new Act, to refer to the UNCITRAL Model Law rather than the old Act. In the case of Kuwait Minister of Public Works v.  Sir Frederick Snow and Partners  [(1984) 1 All ER 733 (HL)] the award was given before Kuwait  became  a  party  to  the  New  York

36

Convention recognised by an Order in Council in  England.  The  House  of  Lords  held  that though a foreign award could be enforced in England under the (U.K.) Arbitration Act, 1975 as when the proceedings for enforcement of the  award  were  initiated  in  England  Kuwait had  become  a  party  to  the  Convention.  It negatived the contention that on the date the award was given Kuwait was not a party to the New York Convention.”

(at pages 370-371)

Similarly, in Milkfood Limited (supra) at 315, this Court,

while construing Section 85 of the 1996 Act, had this to

say:

“70. Section  85  of  the  1996 Act  repeals  the 1940  Act.  Sub-section  (2)  of  Section  85 provides for a non obstante clause. Clause (a) of  the  said  sub-section  provides  for  saving clause stating that the provisions of the said enactments shall  apply  in  relation to arbitral proceedings  which  commenced  before  the said Act came into force. Thus, those arbitral proceedings  which  were  commenced before coming into force of the 1996 Act are saved and  the  provisions  of  the  1996  Act  would apply in relation to arbitral proceedings which commenced on or after the said Act came into force. Even for the said limited purpose, it is necessary to find out as to what is meant by commencement of arbitral proceedings for the purpose  of  the  1996  Act  wherefor  also necessity  of  reference  to  Section  21  would arise. The court is to interpret the repeal and savings clauses in  such a manner  so as to

37

give  a  pragmatic  and  purposive  meaning thereto.  It  is  one  thing  to  say  that commencement  of  arbitration proceedings is dependent upon the facts of each case as that would be subject  to the agreement between the parties. It is also another thing to say that the expression “commencement of arbitration proceedings”  must  be  understood  having regard  to  the  context  in  which  the  same  is used; but it would be a totally different thing to say  that  the  arbitration  proceedings commence only for  the purpose of  limitation upon issuance of  a  notice  and  for  no  other purpose. The statute does not say so. Even the case-laws do not suggest the same. On the  contrary,  the  decisions  of  this  Court operating in the field beginning from Shetty's Constructions [(1998) 5 SCC 599] are ad idem to the effect  that  Section 21 must  be taken recourse to for the purpose of interpretation of Section  85(2)(a)  of  the  Act.  There  is  no reason,  even  if  two  views  are  possible,  to make a departure from the decisions of  this Court as referred to hereinbefore.”

23.  All learned counsel have agreed, and this Court has

found, on a reading of Section 26, that the provision is

indeed  in  two  parts.   The  first  part  refers  to  the

Amendment  Act  not  applying  to  certain  proceedings,

whereas  the  second  part  affirmatively  applies  the

Amendment Act to certain proceedings.  The question is

38

what exactly is contained in both parts. The two parts are

separated by the word ‘but’,  which also shows that  the

two  parts  are  separate  and  distinct.    However,  Shri

Viswanathan has argued that the expression “but” means

only that there is an emphatic repetition of the first part of

Section 26 in the second part of the said Section. For this,

he relied upon the Concise Oxford Dictionary on Current

English, which states:

“introducing  emphatic  repetition;  definitely (wanted to see nobody, but nobody)”.  

Quite obviously, the context of the word “but” in Section

26 cannot bear the aforesaid meaning, but serves only to

separate the two distinct parts of Section 26.  

24.   What  will  be  noticed,  so  far  as  the  first  part  is

concerned, which states,  “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

39

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.  

25. 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

40

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.2

2 Section 29A of  the Amendment 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 633, this Court stated:

“(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.

41

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

(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 29A of the Amendment 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.  

42

proceedings” in the second part are not controlled by the

application of  Section 21 of  the 1996 Act.   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

43

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.

26. We now consider some of the submissions of learned

counsel for the parties as to what ought to be the true

construction of Section 26.  According to Shri Sundaram,

the second part of Section 26 should be taken to be the

principal  part,  with  the  first  part  being  read  as  an

exception to the principal part. This is so that Section 6 of

the General Clauses Act then gets attracted to the first

part,  the idea being to save accrued rights.   Section 6

applies  unless  a  contrary  intention  appears  in  the

44

enactment in question. The plain language of Section 26

would  make  it  clear  that  a  contrary  intention  does  so

appear, Section 26 being a special provision having to be

applied on its own terms.  

27. Thus, in  Transport and Dock Workers' Union &

others v. New Dholera Steamship Ltd., Bombay and

others, (1967)  1 LLJ 434,  a Five Judge Bench of  this

Court held:    

“6. It  was  contended  before  us  that  as  an appeal  is  a  continuation  of  the  original proceeding  the  repeal  should  not  affect  the enforcement  of  the  provisions  of  the Ordinance  in  this  case.  Reliance  is  placed upon Section 6 of  the General  Clauses Act, 1897 wherein is indicated the effect of repeal of  an enactment by another. It  is  contended that as the Payment of Bonus Ordinance has been  repealed  by  Section  40(1),  the consequences envisaged in Section 6 of the General  Clauses  Act  must  follow  and  the present  matter  must  be  disposed  of  in accordance with the Ordinance as if  the Act had not been passed. It is submitted that there was a right and a corresponding obligation to pay bonus under Section 10 of the Ordinance and  that  right  and  obligation  cannot  be obliterated  because  of  the  repeal  of  the Ordinance.  This  argument  is  not  acceptable because of the provisions of the second sub-

45

section of Section 40. That sub-section reads as follows:

“40. Repeal and saving.  (1)*** (2)  Notwithstanding  such  repeal, anything done or any action taken under the said Ordinance shall be deemed  to  have  been  done  or taken under this Act as if this Act had commenced on the 29th May, 1965.”

Section 6 of the General Clauses Act applies ordinarily  but  it  does not  apply  if  a  different intention appears in the repealing Act. Here a different intention is made to appear expressly and  the  special  saving  incorporated  in  the repealing Act  protects only anything done or any action taken under the Ordinance which is deemed to  have  been done or  taken  under this Act as if the Act had commenced on 29th May, 1965. Nothing had been done under the Ordinance  and  no  action  was  taken  which needs protection;  nor  was  anything  pending under  the  Ordinance  which  could  be continued as if the Act had not been passed. There  was  thus  nothing  which  was  to  be saved after the repeal of the Ordinance and this question which might have arisen under the Ordinance now ceases to exist.”

In  Kalawati Devi Harlalka v. CIT (1967) 3 SCR 833, a

repeal and savings provision contained in Section 297 of

the  Income  Tax  Act,  1961  was  held  to  evidence  an

46

intention to the contrary under Section 6 of the General

Clauses Act as follows:

“14.  The  learned  counsel  for  the  appellant submits that Parliament had Section 6 of the General Clauses Act in view, and therefore no express  provision  was  made  dealing  with appeals  and  revisions,  etc.  In  our  view, Section 6 of the General Clauses Act would not apply because Section 297(2) evidences an  intention  to  the  contrary.  In Union  of India v. Madan Gopal Kabra [25 ITR 5] while interpreting  Section  13  of  the  Finance  Act, 1950,  already  extracted  above,  this  Court observed at p. 68:

“Nor can Section 6 of the General Clauses Act, 1897, serve to keep alive the liability to pay tax on the income  of  the  year  1949-50 assuming it to have accrued under the  repealed  State  law,  for  a “different intention” clearly appears in  Sections  2  and  13  of  the Finance  Act  read  together  as indicated above.”

It  is  true  that  whether  a  different  intention appears or not must depend on the language and content of Section 297(2). It seems to us, however,  that  by  providing  for  so  many matters  mentioned  above,  some  in  accord with what would have been the result  under Section  6  of  the  General  Clauses  Act  and some contrary to what would been the result under  Section  6,  Parliament  has  clearly evidenced an intention to the contrary.”

47

28. Shri  Sundaram’s  submission  is  also  not  in

consonance  with  the  law  laid  down  in  some  of  our

judgments.   The  approach  to  statutes,  which  amend a

statute by way of repeal, was put most felicitously by B.K.

Mukherjea, J. in State of Punjab v. Mohar Singh, 1955 1

SCR 893 at 899-900, thus:

“In our opinion the approach of the High Court to the question is not quite correct. Whenever there  is  a  repeal  of  an  enactment,  the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section  itself  says,  a  different  intention appears. In the case of a simple repeal there is  scarcely  any  room  for  expression  of  a contrary  opinion.  But  when  the  repeal  is followed  by  fresh  legislation  on  the  same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive  old  rights  and  liabilities  but  whether  it manifests  an  intention  to  destroy  them. We cannot  therefore  subscribe  to  the  broad proposition  that  Section  6  of  the  General Clauses Act is ruled out when there is repeal of  an  enactment  followed  by  a  fresh legislation.  Section 6 would be applicable in such  cases  also  unless  the  new  legislation manifests  an  intention  incompatible  with  or contrary to the provisions of the section. Such incompatibility  would have to be ascertained

48

from  a  consideration  of  all  the  relevant provisions  of  the  new  law  and  the  mere absence  of  a  saving  clause  is  by  itself  not material.  It  is  in  the light  of  these principles that we now proceed to examine the facts of the present case.”

(Emphasis Supplied)

This statement of the law has subsequently been followed

in  Transport and Dock Workers Union & Ors. v. New

Dholera Steamships Ltd., Bombay and Ors.  (supra) at

paragraph 6 and T.S. Baliah v. T.S. Rengachari, 1969 3

SCR 65 at 71-72.  

29. Equally,  the  suggested  interpretation  of  Shri

Viswanathan  would  not  only  do  violence  to  the  plain

language of Section 26, but would also ignore the words

“in relation to” in the second part of Section 26, as well as

ignore the fact that Section 21 of the 1996 Act,  though

mentioned in the first part, is conspicuous by its absence

in the second part.  According to Shri Viswanathan, the

expression “arbitral proceedings commenced” is the same

in  both  parts  and,  therefore,  the  commencement  of

arbitral proceedings under Section 21 is the only thing to

49

be looked at in both parts.  Thus, according to the learned

senior counsel, if arbitral proceedings have commenced

prior to coming into force of the Amendment Act, the said

proceedings,  together  with  all  proceedings  in  Court  in

relation thereto, would attract only the provisions of the

unamended 1996 Act. Similarly, when arbitral proceedings

have commenced under Section 21 after the coming into

force of the Amendment Act, those proceedings, including

all  courts  proceedings  in  relation  thereto,  would  be

governed by the Amendment Act. This is not the scheme

of  Section  26  at  all,  as  has  been  pointed  out  above.

Further,  this  argument  is  more  or  less  the  conclusion

reached  by  the  report  of  the  High  Level  Committee,

headed by Justice B.N. Srikrishna, to    amend the 1996

Act.3  It  can be seen from the report of the High Level

3 Shri  Tushar Mehta,  learned ASG,  referred to a press release from  the  Government  of  India,  dated  March  7th,  2018,  after arguments have been concluded, in a written submission made to  us.   According  to  him,  the  press  release  refers  to  a  new Section 87 in a proposed amendment to be made to the 1996 Act.  The press release states that the Union Cabinet, chaired by the Prime Minister, has approved the Arbitration and Conciliation (Amendment) Bill, 2018 in which a new Section 87 is proposed to be inserted as follows:

50

Committee  that  an  amendment  would  be  required  to

Section 26 to incorporate its findings. Section 87 of the

proposed Arbitration and Conciliation (Amendment)  Bill,

2018  cannot  be  looked  at,  at  this  stage,  for  the

interpretation of Section 26 of the Amendment Act for two

“A new section 87 is proposed to be inserted to  clarify  that  unless  parties  agree otherwise the Amendment Act 2015 shall not apply to (a) Arbitral proceedings  which  have  commenced  before  the commencement of the Amendment Act of 2015 (b) Court  proceedings  arising out  of  or  in  relation to such  arbitral  proceedings  irrespective  of  whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall  apply only to Arbitral  proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising  out  of  or  in  relation  to  such  Arbitral proceedings.”

The Srikrishna Committee had recommended the following:

“The  Committee  feels  that  permitting  the 2015  Amendment  Act  to  apply  to  pending  court proceedings  related  to  arbitrations  commenced prior  to  23  October  2015  would  result  in uncertainty and prejudice to parties, as they may have  to  be  heard  again.  It  may  also  not  be advisable  to  make  the  2015  Amendment  Act applicable to fresh court proceedings in relation to such arbitrations, as it may result in an inconsistent position. Therefore, it is felt that it may be desirable to limit  the applicability  of  the 2015 Amendment Act  to  arbitrations  commenced  on  or  after  23 October 2015 and related court proceedings.   

Recommendations

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reasons: (i) Section 87, as ultimately enacted, may not be

in the form that is referred to in the press release; and (ii)

a proposed Bill, introducing a new and different provision

of  law  can  hardly  be  the  basis  for  interpretation  of  a

provision of  law as it  now stands. Obviously,  therefore,

1.  Section  26 of  the 2015 Amendment Act may be amended to provide that:  

a. unless parties agree otherwise, the 2015 Amendment  Act  shall  not  apply  to:  (a)  arbitral proceedings  commenced,  in  accordance  with section 21 of the ACA, before the commencement of  the  2015  Amendment  Act;  and  (b)  court proceedings  arising  out  of  or  in  relation  to  such arbitral  proceedings  irrespective  of  whether  such court proceedings are commenced prior to or after the commencement of the 2015 Amendment Act; and  

b. the 2015 Amendment Act shall apply only to arbitral proceedings commenced on or after the commencement of the 2015 Amendment Act and to court  proceedings  arising  out  of  or  in  relation  to such arbitral proceedings.  

2.  The  amended  Section  26  shall  have retrospective  effect  from  the  date  of commencement of the 2015 Amendment Act.”

The  High  Level  Committee  recommended  this  after referring to divergent views taken by various High Courts. This included the interpretation given by the Calcutta High Court in Electrosteel Castings Limited v. Reacon Engineers (India) Pvt. Ltd.  (A.P. No. 1710 of 2015 decided on 14.01.2016) and Tufan  Chatterjee  v.  Rangan  Dhar,  (FMAT  No.  47  of  2016 decided  on  02.03.2016),  the  Madhya  Pradesh  High  Court  in Pragat Akshay Urja Limited Company v. State of M.P and Ors.,  (Arbitration  Case  Nos.  48,  53  and 54/2014,  decided  on 30.06.2016),  the  Madras  High  Court  in  New  Tirupur  Area Development  v.  Hindustan  Construction  Co.  Limited,

52

Shri Viswanathan’s approach leads to an amendment of

Section  26,  as  recommended  by  the  Srikrishna

Committee, and not interpretation thereof.  For all these

reasons, his argument must, therefore, be rejected.  Shri

Datar’s  argument  is  more  or  less  the  same  as  Shri

(Application No. 7674 of 2015 in O.P. No. 931 of 2015) and the Bombay  High  Court  in  Rendezvous  Sports  World  v.  BCCI (Chamber Summons No. 1530 of 2015 in Execution Application (L) No. 2481 of 2015, Chamber Summons No. 1532 of 2015 in Execution Application (L) No. 2482 and Chamber Summons No. 66 of 2016 in Execution Application (L) No. 2748 of 2015 decided on 08.08.2016).

In addition to this, the following decisions by various High Courts also deal with the applicability of the Amendment Act:  i. Calcutta High Court: Nitya Ranjan Jena v. Tata Capital

Financial  Services  Ltd.,  GA  No.  145/206  with  AP  No. 15/2016,  West  Bengal  Power  Development Corporation  Ltd.  v.  Dongfang  Electric  Corporation, 2017  SCCOnline  Cal  9388,  Saraf  Agencies  v.  Federal Agencies for  State Property Management,  AIR  2017 Cal. 65,  Reliance Capital Ltd. v. Chandana Creations, 2016  SCC  Cal.  9558  and  Braithwaite  Burn  &  Jessop Construction  Company  Ltd.  v.  Indo  Wagon Engineering Ltd., AIR 2017 (NOC 923) 314.

ii. Bombay  High  Court:  M/s.  Maharashtra  Airport Development  Company  Ltd.  v.  M/s.  PBA Infrastructure  Ltd.,  2017  SCCOnline  Bom  (7840), Enercon GmbH v. Yogesh Mehra, 2017 SCC Bom 1744 and  Global  Aviation  Services  Pvt.  Ltd.  v.  Airport Authority  of  India,  Commercial  Arbitration  Petition  No. 434/2017,  

iii. Madras  High  Court:  Jumbo  Bags  Ltd.  v.  New  India Assurance Company Limited, 2016 (3) CTC 769.

iv. Delhi  High  Court:  ICI  Soma  JV  v.  Simplex Infrastructures Ltd., 2016 SCC Online Del 5315, Tantia- CCIL (JV) v. Union of India,  ARB.  P.  615/2016,  Raffles Design  International  India  Pvt.  Ltd.  v.  Educomp

53

Viswanathan’s, and suffers from the same infirmity as Shri

Viswanathan’s interpretation.  Shri A. Krishnan, in bringing

in the concept of “seat”, is again doing complete violence

to the language of Section 26, as “place of arbitration” is a

Professional Education Ltd. and Ors., OMP (I) (COMM.) 23/2015, Orissa Concrete and Allied Industries Ltd. v. Union  of  India  and  Ors.,  Arb.  P.  No.  174  of  2016, Takamol  Industries  Pvt.  Ltd.  v.  Kundan  Rice  Mills Ltd.,  EX.  P.  422/2014 &  EA  No.  739/2016,  Apex Encon Projects Pvt. Ltd. v. Union of India & Anr., 2017 SCC Online Del. 9779 and Ratna Infrastructure Projects Pvt. Ltd. v. Meja Urja Nigam Pvt. Ltd., 2017 SCC Online Del 7808.

v. Patna  High  Court:  SPS  v.  Bihar  Rajya  Pul  Nirman Nigam Ltd., Request Case No. 14 of 2016 and Kumar and Kumar Associates v. Union of India, 2017 1 PLJR 649.

vi. Gujarat  High  Court:  OCI  Corp.  v.  Kandla  Export Corporation  &  Ors.,  2017  GLH  (1)  383,  Abhinav Knowledge  Services  Pvt.  Ltd.  v.  Babasaheb Amdebdkar Open University, AIR 2017 (NOC 1012) 344 and  Pallav  Vimalbhai  Shah  v.  Kalpesh  Sumatibhai Shah, O/IAAP/15/2017.

vii. Kerala  High  Court:  Shamsudeen  v.  Shreeram Transport  Finance Ltd.,  ILR  2017 Vol.  1,  Ker.  370 and Jacob Mathew v. PTC Builders, 2017 (5) KHC 583.

viii. Tripura  High  Court:  Subhash  Podder  v.  State  of Tripura, 2016 SCC Tri. 500.

ix. Chhatisgarh  High  Court:  Orissa  Concrete  and  Allied Industries  Limited  v.  Union  of  India  and  Ors., Arbitration Application No. 34/2014.

x. Rajasthan  High  Court:  Dwarka  Traders  Pvt.  Ltd.  v. Union of India, S.B., Arbitration Application No. 95/2013 and  Mayur Associates, Engineers and Contractors v. Gurmeet Singh & Ors.,  S.B.  Arbitration Application No. 74/2013.

xi. Himachal Pradesh High Court:  RSWM v. The Himachal Pradesh State Supplies Co. Ltd., Arb Case No. 104/2016

54

well-known concept contained in Section 20 of the 1996

Act, which finds no mention whatsoever in Section 26 of

the Amendment Act.  For these reasons, his interpretation

cannot also be accepted.  

30. Shri  Neeraj  Kishan  Kaul,  learned  senior  counsel

appearing  on  behalf  of  Respondents  in  SLP(C)

Nos.19545-19546 of 2016, has argued that the first part

of Section 26 does not apply to Court proceedings at all,

thereby indicating that the Amendment Act must be given

retrospective  effect  insofar  as  Court  proceedings  in

relation  to  arbitral  proceedings  are  concerned.  For  this

purpose, he relied on  Minister of Public Works of the

Government of the State of Kuwait (supra).  

31. In that case, the question that arose was as to the

correct construction of Section 7(1) of the U.K. Arbitration

Act, 1975. The said section was given retrospective effect

and  P.K. Construction Co. & Ors. v. Shimla Municipal Co. & Ors., Civil Writ Petition No. 2322/2016.

xii. Punjab & Haryana High Court:  Alpine Minmetals India Pvt. Ltd. v. Noble Resources Ltd., LPA No. 917/2017.

55

in  applying  the  New  York  Convention  to  arbitration

agreements that were entered into before the convention

was made applicable, for the reason that nobody had an

accrued right/defence which was taken away. All defences

available in a common law action on the award would be

available  and continued to  be  available.  Hence,  it  was

held that the award could always have been enforced by

one form of procedure and that it subsequently became

enforceable  by  an  alternative  form.  This  judgment  can

have no application to the present case, inasmuch as the

Amendment Act, as applicable to Court proceedings that

arose in relation to arbitral proceedings, cannot be said to

apply  to  mere  forms  of  procedure,  but  also  includes

substantive  law  applicable  to  such  Court  proceedings

post the Amendment Act.  Also,  it  is wholly fallacious to

say that since the first part of Section 26 does not refer to

Court proceedings in relation to arbitral proceedings, the

Amendment  Act  is  retrospective  insofar  as  such

proceedings are concerned. The second part of Section

56

26 would then have to be completely ignored, which, as

has been seen hereinabove, applies to Court proceedings

in relation to arbitral proceedings only prospectively, i.e. if

such  Court  proceedings  are  commenced  after  the

Amendment  Act  comes  into  force.  For  these  reasons,

such an interpretation of Section 26 is unacceptable.  

32. Shri Chidambaram, appearing on behalf of some of

the  Respondents,  has  argued  that  the  interpretation

accepted by this Court supra is the correct interpretation.

He has also argued that, alternatively, the expression “in

relation  to  arbitral  proceedings”  in  the  second  part  of

Section  26  would  also  include  within  it  arbitral

proceedings  before  the  arbitral  tribunal,  as  otherwise

Section 26 would not apply the Amendment Act to such

arbitral proceedings.  We are afraid that this alternative

interpretation does not appeal to us, for the simple reason

that when the first part of Section 26 makes it clear that

arbitral proceedings commenced before the Amendment

Act would not be governed by the Amendment Act, it is

57

clear that arbitral proceedings that have commenced after

the  Amendment  Act  comes  into  force  would  be  so

governed  by  it,  as  has  been  held  by  us  above.   The

negative  form  of  the  language  of  the  first  part  only

becomes necessary to indicate that parties may otherwise

agree to apply the Amendment Act to arbitral proceedings

commenced even before the Amendment Act comes into

force. The absence of any reference to Section 21 of the

1996  Act  in  the  second  part  of  Section  26  of  the

Amendment Act is also a good reason as to why arbitral

proceedings  before  an  arbitral  tribunal  are  not

contemplated in the second part.   

33. Shri Sibal has argued that Section 26 is not a savings

clause at all and cannot be construed as such. According

to  the  learned  senior  counsel,  Section  26  manifests  a

clear intention to destroy all rights, vested or otherwise,

which have accrued under the unamended 1996 Act. We

are unable to accept these submissions as it is clear that

the intendment of Section 26 is to apply the Amendment

58

Act  prospectively  to  arbitral  proceedings  and  to  court

proceedings  in  relation  thereto.   This  approach  again

does not commend itself to us.   

34. Dr. Singhvi has, however, argued that the approach

indicated  by  us  above  could  be  termed  as  an

“intermediate approach”, i.e. it is an approach which does

not  go  to  either  of  the  extreme  approaches  of  Shri

Sundaram,  Shri  Viswanathan and Shri  Datar  or  that  of

Shri  Sibal.   Further,  according  to  the  learned  senior

counsel,  this  approach has the merit  of  both clarity,  as

well as no anomalies arising as a result, as it is clear that

the Amendment  Act  is  to  be applied only prospectively

with effect from the date of its commencement, and only

to  arbitral  proceedings  and  to  court  proceedings  in

relation thereto, which have commenced on or after the

commencement of the Amendment Act.  We think this is

the correct approach as has already been indicated by us

above.  

59

35. The judgment in Thyssen (supra), was strongly relied

upon by counsel on both sides.  It is, therefore, important

to deal with this judgment in a little detail.  In  Thyssen

(supra),  Section  85  of  the  1996  Act  came  up  for

consideration.  What is clear is that Section 85(2)(a) had

the expression “in relation to arbitral proceedings” in both

parts  of  sub-section  (2)(a).  When  speaking  of  the

repealed  enactments,  it  stated  that  they  will  apply  “in

relation to” arbitral proceedings which commenced before

the 1996 Act came into force, but that otherwise the 1996

Act shall apply “in relation to” arbitral proceedings, which

commenced on or after the 1996 Act came into force.   

36. The judgment in Thyssen (supra) construed Section

85 as follows:

“23. Section 85(2)(a) of the new Act is in two limbs: (1) provisions of the old Act shall apply in  relation  to  arbitral  proceedings  which commenced  before  the  new  Act  came  into force unless otherwise agreed by the parties, and (2) the new Act shall apply in relation to arbitral proceedings which commenced on or after  the new Act  came into  force.  The first limb  can  further  be  bifurcated  into  two:  (a)

60

provisions of the old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force, and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings  which  commenced  before  the new Act came into force. The expression “in relation to” is of the widest import as held by various  decisions  of  this  Court  in Doypack Systems  (P)  Ltd. [(1988)  2  SCC 299], Mansukhlal Dhanraj Jain [(1995) 2 SCC 665], Dhanrajamal  Gobindram [AIR  1961  SC 1285  :  (1961)  3  SCR  1020]  and Navin Chemicals  Mfg.  [(1993)  4  SCC  320]  This expression “in relation to” has to be given full effect to, particularly when read in conjunction with the words “the provisions” of the old Act. That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only  the  word  “to”  could  have  sufficed  and when the legislature has used the expression “in relation to”,  a proper  meaning has to be given.  This  expression  does  not  admit  of restrictive meaning.  The first  limb of  Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of  the old  Act  for  enforcement  of the award under that Act.”         

(at page 369) [Emphasis Supplied]

The judgment then goes on to refer to Section 48 of the

Arbitration Act, 1940, which is set out therein as follows:  

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“48. Saving  for  pending  references.—The provisions of  this  Act  shall  not  apply  to any reference  pending  at  the  commencement  of this Act, to which the law in force immediately before  the  commencement  of  this  Act  shall notwithstanding any repeal effected by this Act continue to apply.”

(at page 349)

Paragraph  33  goes  on  to  state  the  difference  between

Section 85(2)(a) of the 1996 Act and the earlier Section 48

of the 1940 Act, as follows:

“33. Because of the view of Section 85(2)(a) of the new Act which we have taken, it is not necessary for us to consider difference in the repealing provisions as contained in Section 48 of the old Act and Section 85 of the new Act.  We  may,  however,  note  that  under Section  48  of  the  old  Act  the  concept  is  of “reference”  while  under  the  new  Act  it  is “commencement”. Section 2(e) of the old Act defines  “reference”.  Then  under  Section  48 the word used is “to” and under Section 85(2) (  a  )  the  expression  is  “in  relation  to”.  It, therefore,  also  appears  that  it  is  not  quite relevant to consider the provision of  Section 48 of the old Act to interpret Section 85(2)(a).”

(at page 375)         [Emphasis Supplied]

Paragraph  25  specifically  states  that  Section  6  of  the

General Clauses Act will not apply, inasmuch as a different

62

intention does appear from the plain language of Section

85(2)(a).  Ultimately,  after  stating  seven  conclusions  in

paragraph 22, this Court went on to state that enforcement

of an award under the 1940 Act would be an accrued right

for the reason that the challenge procedure under Section

30 of the 1940 Act was wider and completely different from

the challenge procedure under Section 34 of the 1996 Act,

and  that  to  avoid  confusion  and  hardship,  it  would  be

important  to  refer  to  the  expression  “in  relation  to”  as

meaning  the  entire  gamut  of  arbitral  proceedings,

beginning  with  commencement  and  ending  with

enforcement of an award.  

37. The  judgment  in  Thyssen  (supra)  dealt  with  a

differently  worded  provision,  and  emphasized  the

difference  in  language between the expression  “to”  and

the expression “in relation to”.   In reference to the Acts

which were repealed under Section 85, proceedings which

commenced before the 1996 Act were to be governed by

the repealed Acts. These proceedings would be the entire

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gamut  of  proceedings,  i.e.  from  the  stage  of

commencement of arbitral proceedings until the challenge

proceedings  against  the  arbitral  award  had  been

exhausted.  Similar was the position with respect to the

applicability of the 1996 Act, which would again apply to

the entire  gamut  of  arbitral  proceedings,  beginning  with

commencement  and  ending  with  enforcement  of  the

arbitral award.  It is clear, therefore, that Section 85(2)(a)

has two major  differences in  language with  Section 26:

one, that the expression “in relation to” does not appear in

the first  part  of  Section 26 and only the expression “to”

appears;  and,  second,  that  “commencement”  in  the first

part of Section 26 is as is understood by Section 21 of the

1996 Act.  The second part of Section 85(2)(a) is couched

in language similar to the second part of Section 26 with

this difference, that Section 21 contained in the first part of

Section 26 is conspicuous by its absence in the second

part.

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38. The  judgment  in  Thyssen  (supra)  was  followed  in

N.S. Nayak (supra). After setting out paragraph 32 of the

judgment in Thyssen (supra) and paragraphs 22 and 23

of the aforesaid judgment, this Court concluded:

“13. As stated in paragraph 22, Conclusion 1 without  any  reservation  provides  that  the provisions of the old Act shall apply in relation to  the  arbitral  proceedings  which  have commenced before  coming into  force of  the new Act. Conclusion 2, in our view, is required to be read in context with Conclusion 1, that is to  say,  the  phrase  “in  relation  to  arbitral proceedings”  cannot  be  given  a  narrow meaning  to  mean  only  pendency  of  the proceedings  before  the  arbitrator.  It  would cover not only proceedings pending before the arbitrator  but  would  also  cover  the proceedings  before  the  court  and  any proceedings which are  required to  be taken under the old Act for the award becoming a decree  under  Section  17  thereof  and  also appeal  arising  thereunder.  Hence, Conclusions 1 and 2 are to be read together which unambiguously reiterate that  once the arbitral  proceedings  have  started  under  the old Act, the old Act would apply for the award becoming a decree and also for appeal arising thereunder.

14. Conclusion  3  only  reiterates  what  is provided in various sections of the Arbitration Act, which gives option to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the arbitrator.

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The phrase “unless otherwise agreed by the parties” used in various sections, namely, 17, 21, 23(3), 24(1), 25, 26, 29, 31, 85(2)(a) etc. indicates that it is open to the parties to agree otherwise.  During  the  arbitral  proceedings, right is given to the parties to decide their own procedure.  So  if  there  is  an  agreement between  the  parties  with  regard  to  the procedure to be followed by the arbitrator, the arbitrator  is  required  to  follow  the  said procedure.  Reason  being,  the  arbitrator  is appointed  on  the  basis  of  the  contract between the parties and is required to act as per  the  contract.  However,  this  would  not mean that in appeal parties can contend that the appellate procedure should be as per their agreement. The appellate procedure would be governed as per the statutory provisions and parties have no right to change the same. It is also settled law that the right to file an appeal is  accrued  right  that  cannot  be  taken  away unless  there  is  specific  provision  to  the contrary.  There  is  no  such  provision  in  the new Act.  In  the  present  cases,  the  appeals were pending before the High Court under the provisions  of  the  old  Act  and,  therefore, appeals  are  required  to  be  decided  on  the basis  of  the  statutory  provisions  under  the said Act. Hence, there is no substance in the submission made by the learned counsel for the appellant.”

(at pages 63-64)

The majority judgment in Milkfood Limited (supra), after

referring to the judgments in  Thyssen  (supra) and  N.S.

Nayak (supra), concluded that, on the facts of that case,

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the  1940  Act  will  apply  and  not  the  1996  Act.   These

judgments are distinguishable for the same reasons, as

they only follow and apply Thyssen (supra).

39. From a reading of Section 26 as interpreted by us, it

thus becomes clear that in all cases where the Section 34

petition  is  filed  after  the  commencement  of  the

Amendment Act, and an application for stay having been

made  under  Section  36  therein,  will  be  governed  by

Section 34 as amended and Section 36 as substituted.

But, what is to happen to Section 34 petitions that have

been filed before the commencement of the Amendment

Act, which were governed by Section 36 of the old Act?

Would Section 36, as substituted, apply to such petitions?

To answer this question, we have necessarily to decide

on what is meant by “enforcement” in Section 36. On the

one  hand,  it  has  been  argued  that  “enforcement”  is

nothing  but  “execution”,  and  on  the  other  hand,  it  has

been  argued  that  “enforcement”  and  “execution”  are

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different  concepts,  “enforcement”  being substantive and

“execution” being procedural in nature.  

40. At this stage, it is necessary to set out the scheme of

the 1996 Act.  An arbitral proceeding commences under

Section 21, unless otherwise agreed by parties, when a

dispute arises between the parties for which a request for

the dispute to be referred to arbitration is received by the

respondent.  The  arbitral  proceedings  terminate  under

Section 32(1) by the delivery of a final arbitral award or by

the  circumstances  mentioned  in  Section  32(2).  The

mandate  of  the  arbitral  tribunal  terminates  with  the

termination of arbitral proceedings, save and except for

correction  and  interpretation  of  the  award  within  the

bounds  of  Section  33,  or  the  making  of  an  additional

arbitral award as to claims presented in the proceedings,

but omitted from the award. Once this is over, in cases

where an arbitral award is delivered, such award shall be

final  and  binding  on  the  parties  and  persons  claiming

under  them,  under  Section  35  of  the  1996  Act.  Under

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Section 36, both pre and post amendment, such award

shall be “enforced” in accordance with the provisions of

the Code of Civil Procedure, 1908, in the same manner

as if  it  were a decree of  the Court.  It  is  clear  that  the

scheme of  the 1996 Act  is materially  different  from the

scheme of the 1940 Act. Under Section 17 of the 1940

Act,  once  an  award  was  delivered,  the  Court  had  to

pronounce  judgment  in  accordance  with  the  award,

following which a decree would be drawn up, which would

then be executable under the Code of  Civil  Procedure.

Under  Section 36 of  the 1996 Act,  the Court  does not

have to deliver judgment in terms of the award, which is

then followed by a decree, which is the formal expression

of the adjudication between the parties.  Under Section 36

of the 1996 Act, the award is deemed to be a decree and

shall be enforced under the Code of Civil Procedure as

such.  

41. This  brings  us  to  the  manner  of  enforcement  of  a

decree under the Code of Civil Procedure.  A decree is

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enforced under the Code of Civil Procedure only through

the execution process – see Order XXI of the Code of

Civil Procedure. Also, Section 36(3), as amended, refers

to the provisions of the Code of Civil Procedure for grant

of stay of a money decree. This, in turn, has reference to

Order LXI, Rule 5 of the Code of Civil Procedure, which

appears under the Chapter heading, “Stay of Proceedings

and of Execution”. This being so, it is clear that Section

36 refers  to  the execution of  an award as if  it  were a

decree, attracting the provisions of Order XXI and Order

LXI,  Rule 5 of  the Code of  Civil  Procedure and would,

therefore,  be  a  provision  dealing  with  the  execution  of

arbitral awards.  This being the case, we need to refer to

some judgments in order to determine whether execution

proceedings  and  proceedings  akin  thereto  give  rise  to

vested rights, and whether they are substantive in nature.

42. In Lalji Raja and Sons v. Hansraj Nathuram, (1971)

1  SCC  721 at  728,  this  Court  was  concerned  with  a

judgment debtor’s  right  to resist  execution of  a decree.

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Section  20(1)(b)  of  the  Code  of  Civil

Procedure (Amendment) Act, 1951 was  extended  to

Madhya Bharat and other areas, as a result of which the

judgment  debtor’s  right  to  resist  execution  of  a  decree

was protected.  In  this  context,  this  Court  held  that  the

Amendment Act of 1951 made decrees, which could have

been executed only by courts in British India, executable

in the whole of India. Stating that the change made was

one relating to procedure only, this Court held:

“15. This  provision  undoubtedly  protects  the rights acquired and privileges accrued under the  law  repealed  by  the  Amending  Act. Therefore the question for decision is whether the  non-executability  of  the  decree  in  the Morena  Court  under  the  law  in  force  in Madhya Bharat  before  the extension of  “the Code” can be said to be a right accrued under the repealed law. We do not think that even by straining the language of the provision it can be said that the non-executability of a decree within a particular territory can be considered as a privilege. Therefore the only question that we  have  to  consider  is  whether  it  can  be considered  as  a  “right  accrued”  within  the meaning of  Section 20(1)(b)  of  the Code of Civil  Procedure  (Amendment)  Act,  1950.  In the first  place,  in order to get  the benefit  of that  provision,  the  non-executability  of  the decree must be a right and secondly it must

71

be  a  right  that  had  accrued  from  the provisions of the repealed law. It is contended on behalf of the judgment-debtors that when the decree was passed,  they had a right  to resist the execution of the decree in Madhya Bharat in view of the provisions of the Indian Code of  Civil  Procedure (as adapted)  which was in force in the Madhya Bharat at that time and the same is a vested right. It was further urged  on  their  behalf  that  that  right  was preserved by Section 20(1)(b) of the Code of Civil Procedure (Amendment) Act, 1950. It is difficult to consider the non-executability of the decree in Madhya Bharat as a vested right of the judgment-debtors. The non-executability in question pertains to the jurisdiction of certain courts and not to the rights of the judgment- debtors. Further the relevant provisions of the Civil  Procedure  Code  in  force  in  Madhya Bharat did not confer the right claimed by the judgment-debtors.  All  that  has  happened  in view  of  the  extension  of  “the  Code”  to  the whole  of  India  in  1951  is  that  the  decrees which  could  have  been  executed  only  by courts  in  British  India  are  now  made executable in the whole of India. The change made  is  one  relating  to  procedure  and jurisdiction.  Even  before  “the  Code”  was extended  to  Madhya  Bharat  the  decree  in question  could  have  been  executed  either against the person of the judgment-debtors if they had happened to come to British India or against  any  of  their  properties  situated  in British  India.  The  execution  of  the  decree within  the  State  of  Madhya  Bharat  was  not permissible because the arm of “the Code” did not reach Madhya Bharat. It was the invalidity of  the  order  transferring  the  decree  to  the

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Morena  Court  that  stood  in  the  way  of  the decree-holders  in  executing  their  decree  in that  court  on  the  earlier  occasion  and  not because of any vested rights of the judgment- debtors. Even if the judgment-debtors had not objected to the execution of  the decree, the same could not  have been executed by the court at Morena on the previous occasion as that  court  was  not  properly  seized  of  the execution  proceedings.  By  the  extension  of “the  Code”  to  Madhya  Bharat,  want  of jurisdiction on the part  of  the Morena Court was  remedied  and  that  court  is  now  made competent to execute the decree.

16. That  a  provision  to  preserve  the  right accrued  under  a  repealed  Act  “was  not intended  to  preserve  the  abstract  rights conferred by the repealed Act.... It only applies to specific rights given to an individual upon happening of one or the other of the events specified  in  statute”  —  See  Lord  Atkin’s observations in Hamilton Gell v. White. [(1922) 2 KB 422]. The mere right, existing at the date of  repealing  statute,  to  take  advantage  of provisions  of  the  statute  repealed  is  not  a “right accrued” within the meaning of the usual saving  clause  —  See Abbot v. Minister  for Lands [(1895)  AC  425]  and G.  Ogden Industries Pvt. Ltd. v. Lucas. [(1969) 1 All ER 121]”

In  Narhari  Shivram  Shet  Narvekar  v.  Pannalal

Umediram (1976) 3 SCC 203 at 207, this Court, following

Lalji Raja (supra), held as follows:

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“8. Learned  counsel  appearing  for  the appellant  however  submitted  that  since  the Code of Civil Procedure was not applicable to Goa the decree became inexecutable and this being a vested right could not be taken away by  the  application  of  the  Code  of  Civil Procedure to Goa during the pendency of the appeal  before  the  Additional  Judicial Commissioner. It seems to us that the right of the  judgment  debtor  to  pay  up  the  decree passed against  him cannot  be said  to  be a vested  right,  nor  can  the  question  of executability of the decree be regarded as a substantive  vested  right  of  the  judgment debtor. A  fortiori the  execution  proceedings being purely a matter of procedure it  is well settled that any change in law which is made during the pendency of  the cause would be deemed to be retroactive in operation and the appellate court is bound to take notice of the change in law.”

Since it is clear that execution of a decree pertains to the

realm  of  procedure,  and  that  there  is  no  substantive

vested  right  in  a  judgment  debtor  to  resist  execution,

Section 36, as substituted, would apply even to pending

Section 34 applications on the date of commencement of

the Amendment Act.  

43. The matter  can also  be looked at  from a slightly

different angle.  Section 36, prior to the Amendment Act,

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is  only  a  clog  on  the  right  of  the  decree  holder,  who

cannot  execute  the  award  in  his  favour,  unless  the

conditions of this section are met.  This does not mean

that there is a corresponding right in the judgment debtor

to stay the execution of such an award. Learned  counsel

on behalf of the Appellants have, however, argued that a

substantive change has been made in the award, which

became an executable decree only  after the Section 34

proceedings  were  over,  but  which  is  now  made

executable as if  it  was a decree with immediate effect,

and that this change would, therefore, take away a vested

right or accrued privilege in favour of the Respondents. It

has been argued, relying upon a number of judgments,

that since Section 36 is a part of the enforcement process

of awards, there is a vested right or at least a privilege

accrued  in  favour  of  the  Appellants  in  the  unamended

1996  Act  applying  insofar  as  arbitral  proceedings  and

court  proceedings in  relation thereto have commenced,

prior to the commencement of the Amendment Act.  The

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very judgment strongly relied upon by senior counsel for

the appellants, namely Garikapati Veeraya (supra), itself

states in proposition (v) at page 515, that the vested right

of  appeal  can  be  taken  away  only  by  a  subsequent

enactment, if  it  so provides specifically or by necessary

intendment and not otherwise. We have already held that

Section  26  does  specifically  provide  that  the  court

proceedings  in  relation  to  arbitral  proceedings,  being

independent  from  arbitral  proceedings,  would  not  be

viewed  as  a  continuation  of  arbitral  proceedings,  but

would  be  viewed separately.  This  being  the  case,  it  is

unnecessary  to  refer  to  judgments  such  as  Union  of

India v. A.L. Rallia Ram, (1964) 3 SCR 164 and NBCC

Ltd.  v.  J.G.  Engineering (P)  Ltd.,  (2010)  2 SCC 385,

which state that a Section 34 proceeding is a supervisory

and not an appellate proceeding. Snehadeep Structures

(P)  Ltd.  v.  Maharashtra  Small-Scale  Industries

Development Corpn. Ltd.,  (2010) 3 SCC 34 at 47-49,

which was cited for the purpose of stating that a Section

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34 proceeding could be regard as an “appeal” within the

meaning  of  Section  7  of  the  Interest  on  Delayed

Payments To  Small  Scale  and  Ancillary  Industrial

Undertakings Act, 1993,  is  obviously  distinguishable  on

the  ground  that  it  pertains  to  the  said  expression

appearing in a beneficial enactment, whose object would

be defeated if the word “appeal” did not include a Section

34  application.  This  is  made  clear  by  the  aforesaid

judgment itself as follows:

“36. On a perusal of the plethora of decisions aforementioned,  we  are  of  the  view  that “appeal” is a term that carries a wide range of connotations  with  it  and  that  appellate jurisdiction  can  be  exercised  in  a  variety  of forms. It is not necessary that the exercise of appellate  jurisdiction  will  always  involve  re- agitation of entire matrix of facts and law. We have  already  seen  in Abhayankar [(1969)  2 SCC 74] that even an order passed by virtue of limited power of revision under Section 115 of  the  Code  is  treated  as  an  exercise  of appellate  jurisdiction,  though  under  that provision,  the  Court  cannot  go  into  the questions  of  facts.  Given  the  weight  of authorities  in  favour  of  giving  such  a  wide meaning  to  the  term  “appeal”,  we  are constrained to disagree with the contention of the  learned  counsel  for  the  respondent Corporation  that  appeal  shall  mean  only  a

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challenge  to  a  decree  or  order  where  the entire matrix of law and fact can be re-agitated with  respect  to  the  impugned  order/decree. There is no quarrel that Section 34 envisages only limited grounds of challenge to an award; however,  we see no reason why that  alone should take out an application under Section 34 outside the ambit of an appeal especially when even a power of revision is treated as an  exercise  of  appellate  jurisdiction  by  this Court and the Privy Council.

xxx xxx xxx

40. It  may  be  noted  that  Section  6(1) empowers  the  buyer  to  obtain  the  due payment by way of any proceedings. Thus the proceedings that the buyer can resort to, no doubt,  includes  arbitration  as  well.  It  is pertinent to note that as opposed to Section 6(2), Section 6(1) does not state that in case the parties choose to resort to arbitration, the proceedings  in  pursuance  thereof  will  be governed  by  the  Arbitration  Act.  Hence,  the right context in which the meaning of the term “appeal” should be interpreted is the Interest Act itself. The meaning of this term under the Arbitration Act or the Code of Civil Procedure would have been relevant  if  the Interest  Act had made a reference to them. For this very reason, we also do not find it relevant that the Arbitration  Act  deals  with  applications  and appeals  in  two  different  chapters.  We  are concerned  with  the  meaning  of  the  term “appeal”  in  the  Interest  Act,  and  not  in  the Arbitration Act.”

78

44. Learned senior counsel appearing on behalf of the

Respondents,  has also argued that  the expression “has

been” in Section 36(2), as amended, would make it clear

that  the  section  itself  refers  to  Section  34  applications

which have been filed prior to the commencement of the

Amendment Act and that, therefore, the said section would

apply,  on  its  plain  language,  even  to  Section  34

applications  that  have  been  filed  prior  to  the

commencement of the Amendment Act. For this purpose,

the judgment in State of Bombay v. Vishnu Ramchandra

(1961)  2  SCR  26,  was  strongly  relied  upon.  In  that

judgment, it was observed, while dealing with Section 57

of the Bombay Police Act, 1951, that the expression “has

been punished” is  in the present perfect  tense and can

mean either “shall have been” or “shall be”.  Looking to the

scheme of the enactment as a whole, the Court felt that

“shall have been” is more appropriate. This decision was

referred  to  in  paragraphs  60  and  61  of  Workmen  v.

Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1

79

SCC 813 at 838 and the ratio culled out was that such

expression may relate to past or future events, which has

to be gathered from the context, as well as the scheme of

the particular legislation. In the context in which Section

11A of the Industrial Disputes Act, 1947 was enacted, this

Court held that Section 11A has the effect of altering the

law by abridging the rights of the employer.  This being so,

the  expression  “has  been”  would  refer  only  to  future

events and would have no implication to disputes prior to

December 15, 1971. However, in a significant paragraph,

this Court held:

“63. It  must  be  stated  at  this  stage  that procedural  law  has  always  been  held  to operate even retrospectively, as no party has a vested right in procedure.…”

45. Being a procedural provision, it is obvious that the

context of Section 36 is that the expression “has been”

would  refer  to  Section  34  petitions  filed  before  the

commencement of the Amendment Act and would be one

pointer  to  the  fact  that  the  said  section  would  indeed

apply, in its substituted form, even to such petitions.  The

80

judgment  in  L’Office  Cherifien  Des  Phosphates  and

another v.  Yamashita-Shinnihon Steamship Co. Ltd.,

(1994) 1 AC 486 is instructive.   A new Section 13A was

introduced with effect  from 1st January,  1992,  by which

Arbitrators were vested with the power  of  dismissing a

claim if there is no inordinate or an inexcusable delay on

the  part  of  the  claimant  in  pursuing  the  claim.   This

Section was enacted because the House of  Lords in a

certain  decision  had  suggested  that  such  delays  in

arbitration could not  lead to a rejection of  the claim by

itself.   What led to the enactment of the Section was put

by Lord Mustill thus:

“My Lords,  the  effect  of  the  decision  of  the House  in  the  Bremer  Vulkan  case,  coupled with the inability of the courts to furnish any alternative  remedy  which  might  provide  a remedy for the abuse of stale claims, aroused a  chorus  of  disapproval  which  was  forceful, sustained and (so far as I am aware) virtually unanimous.  There  is  no  need  to  elaborate. The  criticisms  came  from  every  quarter. Several  Commonwealth  countries  hastily introduced legislation conferring on the court, or  on the arbitrator,  a  jurisdiction to  dismiss stale claims in arbitration. The history of the matter, and the reasons why the question was

81

not as easy as it might have appeared, were summarized in an article published in 1989 by Sir Thomas Bingham (Arbitration International, vol. 5, pp. 333 et seq.), and there is no need to  rehearse  them  here.  Taking  account  of various apparent difficulties the Departmental Advisory  Committee  on  Arbitration  hesitated for a time both as to the principle and as to whether  the  power  to  dismiss  should  be vested in  the court  or  the arbitrator,  but  the pressure from all quarters became irresistible and in 1990 the Courts and Legal Services Act inserted, through the medium of Section 102, a  new  Section  13A  in  the  Arbitration  Act, 1950.”

(at page 522)

The question which arose in that case was whether delay

that had taken place before the Section came into force

could be taken into account by an arbitrator in order to

reject the claim in that case. The House of Lords held that

given the clamor for change and given the practical value

and nature of the rights involved, it would be permissible

to look at delay caused even before the Section came into

force.  In his concluding paragraph, Lord Mustill held:

“In this light, I turn to the language of Section 13A construed, in case of doubt, by reference to  its  legislative  background.  The  crucial words are:  “(a). . . there has been inordinate and inexcusable delay . .  .  “ Even if  read in

82

isolation  these  words  would  I  believe  be sufficient, in the context of Section 13A as a whole,  to  demonstrate  that  the  delay encompasses all the delay which has caused the substantial risk of unfairness. If there were any doubt about this the loud and prolonged chorus of complaints about the disconformity between  practices  in  arbitration  and  in  the High Court, and the increasing impatience for something  to  be  done  about  it,  show  quite clearly that Section 13A was intended to bite in  full  from  the  outset.  If  the  position  were otherwise  it  would  follow  that,  although Parliament  has  accepted  the  advice  of  all those who had urged that  this  objectionable system should be brought to an end, and has grasped the nettle and provided a remedy, it has  reconciled  itself  to  the  continuation  of arbitral  proceedings  already  irrevocably stamped  with  a  risk  of  injustice.  I  find  it impossible to accept that Parliament can have intended any such thing, and with due respect to those who have suggested otherwise I find the meaning of Section 13A sufficiently clear to persuade me that in the interests of reform Parliament  was  willing  to  tolerate  the  very qualified  kind  of  hardship  involved  in  giving the legislation a partially retrospective effect. Accordingly, I agree with Beldam L.J. that the arbitrator  did  have  the  powers  to  which  he purported to exercise. I would therefore allow the  appeal  and  restore  the  award  of  the arbitrator.”  

46. In  2004,  this  Court’s  Judgment  in  National

Aluminium  Company  (supra)  had  recommended  that

83

Section 36 be substituted, as it defeats the very objective

of the alternative dispute resolution system, and that the

Section should be amended at the earliest to bring about

the required change in law.  It would be clear that looking

at the practical aspect and the nature of rights presently

involved,  and  the  sheer  unfairness  of  the  unamended

provision, which granted an automatic stay to execution of

an award before the enforcement process of Section 34

was  over  (and  which  stay  could  last  for  a  number  of

years) without having to look at the facts of each case, it

is  clear  that  Section  36  as  amended  should  apply  to

Section 34 applications filed before the commencement of

the Amendment Act also for the aforesaid reasons.  

47. Both sides locked horns on whether a proceeding

under Section 36 could be said to be a proceeding which

is independent of a proceeding under Section 34.  In view

of what has been held by us above, it is unnecessary for

us to go into this by-lane of forensic argument.

84

48. However, Shri Viswanathan strongly relied upon the

observations made in paragraph 32 in  Thyssen  (supra)

and the judgment in  Hameed Joharan v. Abdul Salam,

(2001) 7 SCC 573.  It is no doubt true that paragraph 32

in  Thyssen  (supra) does,  at  first  blush,  support  Shri

Viswanathan’s  stand.   However,  this  was  stated  in  the

context of the machinery for enforcement under Section

17 of the 1940 Act which, as we have seen, differs from

Section 36 of the 1996 Act, because of the expression “in

relation to arbitral proceedings”, which took in the entire

gamut, starting from the arbitral proceedings before the

arbitral  tribunal  and ending up with  enforcement  of  the

award.  It was also in the context of the structure of the

1940 Act being completely different from the structure of

the 1996 Act, which repealed the 1940 Act. In the present

case, it is clear that “enforcement” in Section 36 is to treat

the award as if it were a decree and enforce it as such

under  the  Code  of  Civil  Procedure,  which  would  only

mean that such decree has to be executed in the manner

85

indicated.   Also,  a  stray  sentence  in  a  judgment  in  a

particular context cannot be torn out of such context and

applied  in  a  situation  where  it  has  been  argued  that

enforcement  and  execution  are  one  and  the  same,  at

least  for  the  purpose  of  the  1996  Act.   In  Regional

Manager & Anr. v. Pawan Kumar Dubey (1976) 3 SCR

540, at 544 it was held:

“We  think  that  the  principles  involved  in applying Article 311(2) having been sufficiently explained in Shamsher Singh's case (supra) it should  no  longer  be  possible  to  urge  that Sughar Singh's case (supra) could give rise to some misapprehension of the law. Indeed, we do not think that the principles of law declared and applied so often have really changed. But, the application of the same law to the differing circumstances  and  facts  of  various  cases which have come up to this Court could create the impression sometimes that there is some conflict  between  different  decisions  of  this Court.  Even  where  there  appears  to  some conflict,  it  would,  we think,  vanish when the ratio  decidendi of  each  case  is  correctly understood. It  is the rule deducible from the application  of  law  to  the  facts  and circumstances of a case which constitutes its ratio  decidendi and  not  some  conclusion based  upon  facts  which  may  appear  to  be similar.  One  additional  or  different  fact  can make  a  world  of  difference  between conclusions in two cases even when the same

86

principles are applied in each case to similar facts.”

49. For the same reason, it is clear that the judgment in

Hameed Joharan (supra),  which  stated  that  execution

and enforcement were different concepts in law, was in

the context of Article 136 of the Limitation Act, 1963, read

with Section 35 of the Indian Stamp Act, 1899, which is

wholly  different.   The  argument  in  that  case  was  that

Article 136 of the Limitation Act prescribes a period of 12

years  for  the  execution  of  a  decree  or  order,  after  it

becomes enforceable. What was argued was that it would

become enforceable only when stamped and Section 35

of the Stamp Act was referred to for the said purpose.  In

this context, this Court held:

“And it is on this score it has been contended that  the  partition  decree  thus  even  though already passed cannot be acted upon, neither becomes  enforceable  unless  drawn  up  and engrossed  on  stamp  papers.  The  period  of limitation, it has been contended in respect of the partition decree, cannot begin to run till it is engrossed on requisite stamp paper. There is  thus,  it  has been contended,  a legislative bar under Section 35 of the Indian Stamp Act

87

for enforceability of partition decree. Mr Mani contended  that  enforcement  includes  the whole process of getting an award as well as execution  since  execution  otherwise  means due performance of all formalities, necessary to  give  validity  to  a  document.  We  are, however,  unable  to  record  our  concurrence therewith. Prescription of a twelve-year period certain  cannot  possibly  be obliterated by an enactment  wholly  unconnected  therewith. Legislative  mandate  as  sanctioned  under Article 136 cannot be kept in abeyance unless the  selfsame  legislation  makes  a  provision therefor.  It  may also  be  noticed  that  by  the passing  of  a  final  decree,  the  rights  stand crystallised  and  it  is  only  thereafter  its enforceability  can  be  had,  though  not otherwise.”

(at page 593)

It is for this reason that it was stated that enforceability of

a decree under the Limitation Act cannot be the subject

matter of Section 35 of the Stamp Act. Therefore, Section

35 of the Stamp Act could not be held to “overrun” the

Limitation  Act  and  thus,  give  a  complete  go-by  to  the

legislative intent of Article 136 of the Limitation Act. Here

again,  observations  made  in  a  completely  different

context have to be understood in that context and cannot

be applied to a totally different situation.

88

50. As a matter of fact, it was noticed that furnishing of

stamp paper was an act entirely within the domain and

control of the Appellant in that case, and any delay in the

matter of furnishing the same cannot possibly be said to

stop limitation, as no one can take advantage of his own

wrong (see paragraph 13).   As a matter of fact, the Court

held  that  unless  a  distinction  was  made  between

execution and enforcement, the result in that case would

lead to an “utter absurdity”.   The Court held, “absurdity

cannot  be  the  outcome of  an  interpretation  of  a  Court

order  and wherever  there is  even a  possibility  of  such

absurdity, it would be a plain exercise of judicial power to

repeal  the  same  rather  than  encouraging  it”  (see

paragraph  38).

51. Shri  Viswanathan then  referred us  to  this  Court’s

judgment  in  Akkayanaicker  v.  A.A.A.  Kotchadainaidu

and Anr. (2004) 12 SCC 469, which, according to him,

has followed the judgment in  Hameed Joharan (supra).

This judgment  again would have no application for  the

89

simple reason that the narrow point that was decided in

that case was whether the time period for execution of a

decree under Section 136 of the Limitation Act would start

when the decree was originally made or whether a fresh

period  of  limitation  would  begin  after  the  decree  was

amended  having  been  substantially  scaled  down  by  a

Debt Relief Act. This Court held that as the original decree

could  not  be  enforced  and  only  the  amended  decree

could be enforced, 12 years has to be counted from the

date  of  the  amended  decree.    It  is  clear  that  this

judgment also does not carry the matter further.   

52. It  was also argued that  an award by itself  had no

legal  efficacy,  until  it  became  enforceable,  and  that,

therefore,  until  it  could  be  enforced as  a  decree of  the

Court, it would continue to remain suspended. Here again,

the  judgment  in  Satish  Kumar  (supra) is  extremely

instructive.  The question in that case was as to whether,

under  the  1940  Act,  an  award  had  any  legal  efficacy

before a judgment followed thereupon and it  was made

90

into a decree.  A Full Bench of the Punjab and Haryana

High Court held that until it is made a rule of the Court,

such  an  award  is  waste  paper.   This  Court  strongly

disagreed and followed its unreported decision in  Uttam

Singh Dugal & Co. v. Union of India as follows:

“It seems to us that the main reason given by the two Full  Benches for  their  conclusion is contrary to what was held by this Court in its unreported decision in Uttam Singh Dugal & Co. v. Union of India [ Civil Appeal No. 162 of 1962—judgment  delivered  on  11-10-1962]  . The facts in this case, shortly stated, were that Uttam Singh Dugal & Co. filed an application under Section 33 of the Act in the Court of the Subordinate Judge, Hazaribag. The Union of India, Respondent 1, called upon Respondent 2,  Col.  S.K.  Bose,  to  adjudicate  upon  the matter in dispute between Respondent 1 and the  appellant  Company.  The  case  of Uttam Singh  Dugal  &  Co.was  that  this  purported reference to Respondent 2 for adjudication on the matters alleged to be in dispute between them and Respondent 1 was not competent because by an award passed by Respondent 2 on April  23, 1952 all  the relevant disputes between them had been decided.  The  High Court held inter alia that the first award did not create any bar against the competence of the second reference. On appeal this Court after holding that the application under Section 33 was competent observed as follows:

91

“The true legal  position in regard to the effect of an award is not in dispute. It is well settled that as a general rule, all  claims which are the  subject-matter  of  a  reference to arbitration merge in the award which  is  pronounced  in  the proceedings  before  the  arbitrator and that after an award has been pronounced,  the  rights  and liabilities of  the parties in respect of  the  said  claims  can  be determined  only  on  the  basis  of the said award. After an award is pronounced,  no  action  can  be started on the original claim which had been the subject-matter of the reference. As has been observed by  Mookerjee,  J.,  in  the  case of Bhajahari  Saha  Banikya  v.  Behary Lal Basak [33 Cal. 881 at p. 898] the award is, in fact, a final adjudication  of  a  Court  of  the parties  own  choice,  and  until impeached  upon  sufficient grounds  in  an  appropriate proceeding, an award, which is on the fact of it regular, is conclusive upon the merits of the controversy submitted,  unless  possibly  the parties  have  intended  that  the award  shall  not  be  final  and conclusive … in reality,  an award possesses  all  the  elements  of vitality,  even  though  it  has  not been formally enforced, and it may be  relied  upon  in  a  litigation between the parties relating to the

92

same  subject-matter”.  This conclusion,  according  to  the learned Judge, is based upon the elementary  principle  that,  as between  the  parties  and  their privies, an award is entitled to that respect  which  is  due  to  the judgment of a court of last resort. Therefore, if the award which has been  pronounced  between  the parties has in fact, or can, in law, be deemed to have dealt with the present  dispute,  the  second reference  would  be  incompetent. This  position  also  has  not  been and cannot be seriously disputed.”

This Court then held on the merits “that the dispute in regard to overpayments which are sought  to  be  referred  to  the  arbitration  of Respondent  2  by  the  second  reference  are not new disputes; they are disputes in regard to  claims  which  the  Chief  Engineer  should have  made  before  the  arbitration  under  the first  reference”.  This  Court  accordingly allowed the  appeal  and  set  aside  the  order passed by the High Court.

This judgment is binding on us. In our opinion this  judgment  lays  down  that  the  position under the Act is in no way different from what it was before the Act came into force, and that an award has some legal force and is not a mere waste paper. If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of Section 17(1)(b) of the Registration Act.”

93

(at pages 248-249)

53. Justice Hegde, in a separate concurring judgment,

specifically stated that an award creates rights in property,

but  those  rights  cannot  be  enforced  until  the  award  is

made a decree of the Court.  The Learned Judge put it

very well when he said, “It is one thing to say that a right

is not created, it is an entirely different thing to say that

the  right  created  cannot  be  enforced  without  further

steps”.   The Amendment  Act  has only  made an award

executable conditionally after it is made, like a judgment

of a Court, the only difference being that a decree would

not  have to  be  formally  drawn following the making of

such award.   

54. Shri  Viswanathan  then  argued,  relying  upon  R.

Rajagopal Reddy v. Padmini Chandrasekharan (1995)

2 SCC 630, Fuerst Day Lawson Ltd. v. Jindal Exports

Ltd. (2001) 6 SCC 356, Sedco Forex International Drill.

Inc. v. CIT (2005) 12 SCC 717 and  Bank of Baroda v.

Anita Nandrajog (2009) 9 SCC 462, that a clarificatory

94

amendment  can  only  be  retrospective,  if  it  does  not

substantively change the law, but merely clarifies some

doubt which has crept into the law.  For this purpose, he

referred us to the amendments made in Section 34 by the

Amendment  Act  and  stated  that  despite  the  fact  that

Explanations 1 and 2 to Section 34(2) stated that “for the

avoidance of any doubt, it is clarified”, this is not language

that is conclusive in nature, but it is open to the Court to

go into whether there is, in fact, a substantive change that

has  been  made  from the  earlier  position  or  whether  a

doubt  has  merely  been  clarified.  According  to  learned

senior  counsel,  since  fundamental  changes  have  been

made,  doing  away  with  at  least  two  judgments  of  this

Court, being  Saw Pipes Ltd (supra) and Western Geco

(supra),  as  has  been  held  in  paragraph  18  in  HRD

Corporation  (Marcus  Oil  and  Chemical

Division) v. Gail  (India)  Limited  (Formerly  Gas

Authority  of  India  Ltd.)  2017  SCC Online  1024,  it  is

clear that such amendments would only be prospective in

95

nature. We do not express any opinion on the aforesaid

contention since the amendments made to Section 34 are

not directly before us.  It is enough to state that Section

26  of  the  Amendment  Act  makes  it  clear  that  the

Amendment  Act,  as  a  whole,  is  prospective  in  nature.

Thereafter,  whether  certain  provisions  are  clarificatory,

declaratory or procedural and, therefore, retrospective, is

a separate and independent  enquiry,  which we are not

required to undertake in the facts of the present cases,

except to the extent indicated above, namely, the effect of

the substituted Section 36 of the Amendment Act.  

55. Learned counsel for the Appellants have painted a

lurid  picture  of  anomalies  that  would  arise  in  case  the

Amendment Act were generally to be made retrospective

in  application.  Since  we  have  already  held  that  the

Amendment  Act  is  only  prospective  in  application,  no

such anomalies can possibly arise.  It may also be noted

that  the  choosing  of  Section  21  as  being  the  date  on

which  the  Amendment  Act  would  apply  to  arbitral

96

proceedings that have been commenced could equally be

stated  to  give  rise  to  various  anomalies.  One  such

anomaly  could  be  that  the  arbitration  agreement  itself

may have been entered into years earlier, and disputes

between the parties could have arisen many years after

the said arbitration agreement. The argument on behalf of

the Appellants is that parties are entitled to proceed on

the basis of the law as it exists on the date on which they

entered into an agreement to refer disputes to arbitration.

If  this  were  to  be  the  case,  the  starting  point  of  the

application  of  the  Amendment  Act  being  only  when  a

notice to arbitrate has been received by the respondent,

which as has been stated above, could be many years

after  the  arbitration  agreement  has  been  entered  into,

would itself give rise to the anomaly that the amended law

would  apply  even  to  arbitration  proceedings  years

afterwards as and when a dispute arises and a notice to

arbitrate has been issued under  Section 21.  In  such a

case,  the  parties,  having  entered  into  an  arbitration

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agreement years earlier, could well turn around and say

that they never bargained for the change in law that has

taken  place  many  years  after,  and  which  change  will

apply to them, since the notice, referred to in Section 21,

has been issued after the Amendment Act has come into

force.  Cut off  dates,  by their  very nature,  are bound to

lead to certain anomalies, but that does not mean that the

process of interpretation must be so twisted as to negate

both  the  plain  language  as  well  as  the  object  of  the

amending statute.  On this ground also, we do not see

how an emotive argument can be converted into a legal

one, so as to interpret Section 26 in a manner that would

be contrary to both its plain language and object.  

56. However,  it  is  important  to  remember  that  the

Amendment Act was enacted for the following reasons, as

the  Statement  of  Objects  and  Reasons  for  the

Amendment Act states:

“2. The Act was enacted to provide for speedy disposal  of  cases  relating  to  arbitration  with least  court  intervention.  With  the  passage  of

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time, some difficulties in the applicability of the Act  have  been  noticed.  Interpretation  of  the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings  and  increase  in  interference  of courts  in  arbitration  matters,  which  tend  to defeat  the  object  of  the  Act. With  a  view  to overcome  the  difficulties,  the  matter  was referred to the Law Commission of India, which examined the issue in detail and submitted its 176th Report. On the basis of the said report, the  Arbitration  and  Conciliation  (Amendment) Bill,  2003 was introduced in the Rajya Sabha on  22nd  December,  2003.  The  said  Bill  was referred  to  the  Department-related Parliamentary  Standing  Committee  on Personnel, Public Grievances, Law and Justice for  examination  and  Report.  The  said Committee,  submitted  its  Report  to  the Parliament  on  4th  August,  2005,  wherein  the Committee  recommended  that  since  many provisions of the said Bill were contentious, the Bill  may be withdrawn and a fresh legislation may  be  brought  after  considering  its recommendations.  Accordingly,  the  said  Bill was withdrawn from the Rajya Sabha.  

3. On a reference made again in pursuance of the above, the Law Commission examined and submitted its 246th Report on “Amendments to the  Arbitration  and  Conciliation  Act,  1996”  in August,  2014  and  recommended  various amendments  in  the  Act.  The  proposed amendments  to  the  Act  would  facilitate  and encourage  Alternative  Dispute  Mechanism, especially arbitration, for settlement of disputes in  a  more  user-friendly,  cost  effective  and expeditious  disposal  of  cases  since  India  is

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committed  to  improve  its  legal  framework  to obviate in disposal of cases.

4. As India has been ranked at 178 out of 189 nations in the world in contract enforcement, it is  high  time  that  urgent  steps  are  taken  to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered and reduce the pendency of cases in courts and hasten the process  of  dispute  resolution  through arbitration, so as to encourage investment and economic activity.  

5.  As  Parliament  was  not  in  session  and immediate steps were required to be taken to make necessary amendments to the Arbitration and  Conciliation  Act,  1996  to  attract  foreign investment  by  projecting  India  as  an  investor friendly  country  having  a  sound  legal framework,  the  President  was  pleased  to promulgate  the  Arbitration  and  Conciliation (Amendment) Ordinance, 2015.  

6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the  Arbitration  and  Conciliation  (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely:—  

(i) to amend the definition of “Court” to provide that  in  the  case  of  international  commercial arbitrations,  the  Court  should  be  the  High Court;  

(ii) to ensure that an Indian Court can exercise jurisdiction  to  grant  interim  measures,  etc., even where the seat of the arbitration is outside India;

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 (iii)  an  application  for  appointment  of  an arbitrator shall be disposed of by the High Court or  Supreme  Court,  as  the  case  may  be,  as expeditiously  as  possible  and  an  endeavour should be made to dispose of the matter within a period of sixty days;

(iv)  to  provide  that  while  considering  any application  for  appointment  of  arbitrator,  the High Court or the Supreme Court shall examine the  existence  of  a  prima  facie  arbitration agreement and not other issues;   (v)  to  provide  that  the  arbitral  tribunal  shall make  its  award  within  a  period  of  twelve months  from  the  date  it  enters  upon  the reference  and that  the  parties  may,  however, extend such period up to six months,  beyond which period any extension can only be granted by the Court, on sufficient cause;  

(vi) to provide that a model fee Schedule on the basis of which High Courts may frame rules for the purpose of determination of fees of arbitral tribunal, where a High Court appoints arbitrator in terms of section 11 of the Act;  

(vii) to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast track procedure and the award  in  such  cases  shall  be  made within  a period of six months;

(viii) to provide for neutrality of arbitrators, when a  person  is  approached  in  connection  with possible appointment as an arbitrator;  

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(ix) to provide that application to challenge the award is to be disposed of by the Court within one year.  

7.  The  amendments  proposed  in  the  Bill  will ensure that arbitration process becomes more user-friendly,  cost  effective  and  lead  to expeditious disposal of cases.”

(Emphasis Supplied)

57. The Government will be well-advised in keeping the

aforesaid  Statement  of  Objects  and  Reasons  in  the

forefront, if it proposes to enact Section 87 on the lines

indicated  in  the  Government’s  press  release  dated  7th

March,  2018.  The  immediate  effect  of  the  proposed

Section 87 would be to put all the important amendments

made by the Amendment Act on a back-burner, such as

the important amendments made to Sections 28 and 34 in

particular, which, as has been stated by the Statement of

Objects  and  Reasons,  “…have  resulted  in  delay  of

disposal  of  arbitration  proceedings  and  increase  in

interference of courts in arbitration matters, which tend to

defeat  the  object  of  the  Act”,  and  will  now  not  be

applicable to Section 34 petitions filed after 23rd October,

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2015, but will be applicable to Section 34 petitions filed in

cases  where  arbitration  proceedings  have  themselves

commenced only after 23rd October, 2015.   This would

mean that in all matters which are in the pipeline, despite

the fact that Section 34 proceedings have been initiated

only  after  23rd October,  2015,  yet,  the  old  law  would

continue  to  apply  resulting  in  delay  of  disposal  of

arbitration  proceedings  by  increased  interference  of

Courts,  which ultimately  defeats the object  of  the 1996

Act.4  It  would be important to remember that the 246 th

4 These  amendments  have  the  effect,  as  stated  in  HRD Corporation  (Marcus  Oil  and  Chemical  Division) v. Gail (India)  Limited  (Formerly  Gas  Authority  of  India  Ltd.) 2017 SCC Online 1024 (at paragraph 18) of limiting the grounds of challenge to awards as follows:

“…In fact, the same Law Commission Report has amended Sections 28 and 34 so as to narrow grounds of challenge available under the Act. The judgment in ONGC v. Saw Pipes Ltd, (2003) 5 SCC 705, has been expressly done away with.  So has the  judgment  in  ONGC  v.  Western  Geco International Ltd., (2014) 9 SCC 263. Both Sections 34 and 48 have been brought back to the position of law contained in Renusagar Power Plant Co. Ltd. v. General  Electric Co.,  (1994) Supp (1) SCC 644, where “public policy” will now include only two of the three things set out therein, viz., “fundamental policy of Indian law” and “justice or morality”. The ground relating to “the interest of India” no longer obtains. “Fundamental policy of Indian law” is now to  be  understood  as  laid  down  in  Renusagar (supra).  “Justice  or  morality”  has  been  tightened and is now to be understood as meaning only basic

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Law Commission Report has itself bifurcated proceedings

into two parts, so that the Amendment Act can apply to

Court proceedings commenced on or after 23rd October,

2015.   It  is  this  basic  scheme which is  adhered  to  by

Section 26 of the Amendment Act, which ought not to be

displaced  as  the  very  object  of  the  enactment  of  the

Amendment Act would otherwise be defeated.   

58. At the fag end of the arguments, Shri Viswanathan,

in rejoinder, raised another point which arises only in Civil

Appeals arising out of SLP(C) No. 8374-8375 of 2017 and

8376-8378  of  2017.   According  to  him,  the  impugned

judgment, when it dealt with the majority award in favour

of respondent Enercon GmbH, went behind the award in

ordering execution of a portion of the award in favour of

Enercon, when the majority award, in paragraph 331(3)

notions of justice and morality i.e. such notions as would  shock  the  conscience  of  the  Court  as understood  in  Associate  Builders  v.  Delhi Development Authority,  (2015) 3 SCC 49. Section 28(3) has also been amended to bring it in line with the  judgment  of  this  Court  in  Associate  Builders (supra), making it clear that the construction of the terms of the contract is primarily for the arbitrator to decide unless it is found that such a construction is not a possible one.”

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(b), specifically ordered the 2nd and 3rd defendants to pay

to  WWIL,  which  is  a  joint  venture  company,  a  sum of

Rs.6,77,24,56,570/-.  The  majority  award  of  the  tribunal

had specifically stated, in paragraph 298, as follows:

“Enercon’s claim is first pleaded as damages payable  by  the  Mehra  directors  directly  to Enercon. It also pleads an alternative claim for such  further  or  other  relief  as  the  Tribunal considers  appropriate  (paragraph  18  of  the application  of  13  December  2015  and paragraph  323.4  of  its  closing  written submission  dated  13  May 2016,  as  also  its Statement of Claim of 30 September 2014, at paragraph  102(M).)  In  the  Tribunal’s  view, given  that  WWIL  is  only  part  owned  by Enercon  (hence  Enercon’s  pecuniary disadvantage  resulting  from  the  Mehra directors’ wrongdoing is not the same as that of WWIL) and further that WWIL remains the person  most  immediately  affected  by  such wrongdoing, the liability of the Mehra directors is  best  discharged  by  requiring  them  to deciding upon such relief in favour of WWIL (as  distinct  from  direct  relief  in  favour  of Enercon),  the  Tribunal  sees  no  material disadvantage  to  Enercon,  and,  as  for  the Mehra  directors,  no  possible  prejudice  or other  unfairness,  whether  as  a  matter  of pleading, the form of relief or otherwise.”

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It  is  only  thereafter  that  the  Tribunal  awarded  the  aforesaid

amount in paragraph 331(3)(b) as follows:

“(b)     Jointly and severally-

(i)  to  pay  to  WWIL  the  sum  of  INR 6,772,456,570, being the profit made by Vish Wind on the sale of allotment rights to WWIL in the years ending 31 March 2011 and 2012 together with interest thereon at the rate of 3% over European Central Bank rate from those dates until the date of this Award.

(ii)  To  pay  to  the  Claimants  their  legal  and other costs in the sum of €3,794,970.”

59. It is thus Shri Viswanathan’s contention that it is the

decree holder alone who can execute such decree in its

favour, and that in the present case it is WWIL who is the

decree  holder,  insofar  as  paragraph  331(3)(b)  is

concerned  and,  that,  therefore,  Enercon’s  Chamber

Summons,  to  execute  this  portion  of  the  award,  is

contrary  to  the  Code  of  Civil  Procedure  as  well  as  a

number of judgments construing the Code.   

60. On the other hand, the submission of the other side

is  that  the  Mehra  brothers,  who  are  the  2nd and  3rd

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defendants in the arbitration proceedings, are in control

and management of WWIL, and have wrongfully excluded

Enercon  from  such  control  and  management.  WWIL,

therefore, will never put this decree into execution.  This

being so, the interest of justice requires that we should

not interfere with the High Court judgment as there is no

person that would be in a position to enforce the award

apart from Enercon.

61. We are of  the opinion that  even though the High

Court may not be strictly correct in its appreciation of the

law, yet it has attempted to do justice on the facts of the

case as follows:

“These last words are important.  If  what Mr. Mehta says is correct and the decree was in favour  of  WWIL  and  not  Enercon,  that necessarily  posits  a  rejection of  Enercon’s claim for damages and, therefore, a material disadvantage to Enercon. But this is not what the  Arbitral  Tribunal  did  at  all.  It  accepted Enercon's plea. It accepted its argument that the  Mehras  were  guilty  of  wrongdoing.  It accepted that the Mehras were liable to make good  any  advantage  or  benefit  they  have received.  The  Arbitral  Tribunal  merely changed the vehicle or direction by which that

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recompense, restitution or recovery was to be made. The nomenclature is immaterial. Given the  nature  of  disputes,  indeed,  WWIL could never put this decree into execution. It never sought this relief. It could not have. This is not in  fact,  as  paragraph  298,  says  a  relief  in favour  of  WWIL at  all  although  WWIL may benefit  from it.  It  is a relief and a decree in favour of and only of Enercon.”

In this view of the matter, we do not think it appropriate, in

the  interest  of  justice,  to  interfere  with  the  impugned

judgment on this count.  

62. In view of the above, the present batch of appeals is

dismissed. A copy of the judgment is to be sent to the

Ministry  of  Law  and  Justice  and  the  Learned  Attorney

General for India in view of what is stated in paragraphs

56 and 57 supra.

……………………………J. (R.F. Nariman)

……………………………J. (Navin Sinha)

New Delhi; March 15, 2018.   

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