2011 (7) TMI 1275 - SC - Indian Laws

Letters Patent Appeal not maintainable against orders excluded from appeal under section 50 of Arbitration Act 1996

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The SC held that no Letters Patent Appeal lies against orders not appealable under section 50 of the Arbitration and Conciliation Act, 1996. The Court ... Maintainability of appeal in view of section 50 of the Arbitration and Conciliation Act, 1996 ('1996 Act') - Availability of an appeal under the relevant clause of the Letters Patent - Arbitration proceedings - application for enforcement of two foreign awards - jurisdiction of the High Court under the Letters Patent - meaning and use of parenthesis - nature of the Arbitration and Conciliation Act, 1996 as a self-contained code - HELD THAT:- Having regard to the grammatical use of brackets or parentheses, if the words, '(and from no others)' occurring in section 39 of the 1940 Act or section 37 of the 1996 Act are viewed as `an explanation or afterthought' or extra information separate from the main context, then, there may be some substance in Mr. Dave's submission that the words in parentheses are surplusage and in essence the provisions of section 39 of the 1940 Act or section 37 of the 1996 Act are the same as section 50 of the 1996 Act. Section 39 of the 1940 Act says no more and no less than what is stipulated in section 50 of the 1996 Act. Under section 6 of the 1961 Act, the Court on being satisfied that the foreign award was enforceable under the Act, would first order the award to be filed and then proceed to pronounce judgment according to the award. The judgment would lead to a decree against which no appeal would lie except insofar as the decree was in excess of or not in accordance with the award. Section 49 of the present Act makes a radical change in that where the court is satisfied that the foreign award is enforceable, the award itself would be deemed to be a decree of the Court. It, thus, not only omits the procedural formality for the court to pronounce judgment and a decree to follow on that basis but also completely removes the possibility of the decree being in excess of, or not in accordance with the award. Thus, even the limited basis on which an appeal would lie under sub-section (2) of section 6 of the 1961 Act, is taken away. There is, thus, no scope left for an appeal against an order of the court for the enforcement of a foreign award. It is for this reason that section 50(1)(b) provides for an appeal only against an order refusing to enforce a foreign award under section 48. There can be no doubt that under section 6, except on the very limited ground, no appeal including a Letters Patent Appeal was maintainable against the judgment and decree passed by the Court under section 6(1). It would be futile, therefore, to contend that though the present Act even removes the limited basis on which the appeal was earlier maintainable, yet a Letters Patent Appeal would lie notwithstanding the limitations imposed by section 50 of the Act. The scheme of sections 49 and 50 of the 1996 Act is devised specially to exclude even the limited ground on which an appeal was earlier provided for under section 6 of the 1961 Act. The exclusion of appeal by section 50 is, thus, to be understood in light of the amendment introduced in the previous law by section 49 of the Act. It is, thus, to be seen that Arbitration Act 1940, from its inception and right through 2004 in P.S. Sathappan [2004 (10) TMI 605 - SUPREME COURT], was held to be a self-contained code. Now, if Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is a self- contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it 'a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done'. In other words, a Letters Patent Appeal would be excluded by application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded. We, thus, arrive at the conclusion regarding the exclusion of a letters patent appeal in two different ways; one, so to say, on a micro basis by examining the scheme devised by sections 49 and 50 of the 1996 Act and the radical change that it brings about in the earlier provision of appeal under section 6 of the 1961 Act and the other on a macro basis by taking into account the nature and character of the 1996 Act as a self-contained and exhaustive code in itself. Thus, it must be held that no letters patent appeal will lie against an order which is not appealable under section 50 of the Arbitration and Conciliation Act, 1996. In the result, Civil Appeal is allowed and the division bench order, holding that the letters patent appeal is maintainable, is set aside. Appeals arising from SLP (C) are dismissed. Issues Involved:1. Whether an order, not appealable under section 50 of the Arbitration and Conciliation Act, 1996, is subject to appeal under the Letters Patent of the High Court.2. Whether the jurisdiction of the High Court under the Letters Patent is excluded by the 1996 Act either expressly or impliedly.3. The nature of the Arbitration and Conciliation Act, 1996 as a self-contained code.Issue-Wise Detailed Analysis:1. Appealability of Orders under Section 50 of the 1996 Act:The primary question was whether an order, though not appealable under section 50 of the Arbitration and Conciliation Act, 1996, could still be appealed under the Letters Patent of the High Court. The Court examined if the 1996 Act constitutes a complete code for arbitration matters. If so, it would exclude other jurisdictions, including the Letters Patent jurisdiction of the High Court. The Court concluded that no letters patent appeal would lie against an order not appealable under section 50 of the 1996 Act. This conclusion was reached by analyzing the scheme of sections 49 and 50 of the 1996 Act, which significantly changed the previous law under the Foreign Awards (Recognition and Enforcement) Act, 1961, by making the award itself a decree of the court, thereby removing the possibility of an appeal.2. Exclusion of High Court's Letters Patent Jurisdiction:The Court considered whether the 1996 Act expressly or impliedly excludes the jurisdiction of the High Court under its Letters Patent. It was argued that the jurisdiction under the Letters Patent is independent and should remain unless expressly excluded. However, the Court found that the 1996 Act, being a self-contained code, implicitly excludes the applicability of the general law procedure, including the Letters Patent jurisdiction. The Court relied on the principle that when a special Act sets out a self-contained code, the general law procedure is impliedly excluded.3. Nature of the 1996 Act as a Self-Contained Code:The Court examined the Arbitration and Conciliation Act, 1996, and concluded that it is a self-contained code. This conclusion was supported by the legislative history and the comprehensive nature of the Act, which consolidates and amends the law relating to arbitration, including domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards. The Court noted that the 1996 Act, like its predecessor, the Arbitration Act, 1940, is designed to be exhaustive and comprehensive, thereby excluding any other jurisdiction not provided within the Act.Conclusion:The Supreme Court held that no letters patent appeal would lie against an order not appealable under section 50 of the Arbitration and Conciliation Act, 1996. The Court emphasized that the 1996 Act is a self-contained code that implicitly excludes the applicability of the general law procedure, including the Letters Patent jurisdiction. Consequently, the appeals in Civil Appeal No.36 of 2010 and the appeals arising from SLP (C) No.31068 of 2009 and SLP (C) No.4648 of 2010 were dismissed. The SLP (C) Nos.13626-13629 of 2010 and SLP (C) Nos.22318-22321 of 2010 were dismissed insofar as they challenged the orders of the division bench holding that the letters patent appeals were not maintainable.