2016 (3) TMI 1324 - HC - Indian Laws

Arbitration Act 2015: Court Limits Interim Relief Post-Tribunal, Maintains Status Quo

The court held that the Arbitration and Conciliation (Amendment) Act, 2015 applies to court proceedings initiated after its commencement, including ... Jurisdiction - Whether the Court has been denuded of power to grant interim relief to the appellant under Section 9 of the 1996 Act, from the date on which the Amendment Act of 2015 came into force, since an Arbitral Tribunal has been constituted, and arbitral proceedings have commenced? Held that:- A careful reading of the provisions of the 1996 Act, and in particular Sections 21 and 32 thereof, makes it amply clear that the expression ‘arbitral proceedings’ in Section 26 of the Amendment Act of 2015 cannot be construed to include proceedings in a Court under the provisions of the 1996 Act, and definitely not any proceedings under Section 9 of the 1996 Act, instituted in a Court before a request for reference of disputes to arbitration is made. The amendment Act of 2015, which came into force with effect from 23rd October, 2015, would apply to arbitral proceedings which commenced after 23rd October, 2015 but not to arbitral proceedings which commenced before 23rd October, 2015. The Amendment Act of 2015 would apply to all Court proceedings on and from 23rd October, 2015. The power of the Arbitral Tribunal under Section 17 of the 1996 Act was always of the widest amplitude. From the inception, the Arbitral Tribunal had power under the 1996 Act to order a party to take any interim measure of protection, as the Arbitral Tribunal might consider necessary, in respect of the subject matter of the disputes. The Arbitral Tribunal, therefore, all along had all the powers of Court under Section 9 of the 1996 Act. The Amendments to Section 17 of the 1996 Act by the Amendment Act of 2015 are only clarifactory - It is a cardinal principle of construction that every statute is prospective unless it is expressly or by necessary implication made to have retrospective operation, but the rule in general is applicable when the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. In contrast to statutes dealing with substantive rights, statutes dealing with merely matters of procedure are presumed to be retrospective, unless such a construction is textually inadmissible. If, therefore, during the pendency of proceedings in the Civil Court, a new law is enacted, which is worded as to denude the Civil Court of jurisdiction except in specified circumstances, the Civil Court will be debarred from exercising jurisdiction unless the conditions precedent for exercise of jurisdiction by the Civil Court exist - In this case there are no such circumstances. However, considering that the application for interim relief had been entertained long before the amendment and an interim order had been in force, the Court might have passed limited interim relief and remitted the parties to proceedings under Section 17 before the Arbitral Tribunal. The appeal and the application are disposed of accordingly. Issues Involved:1. Applicability of the Arbitration and Conciliation (Amendment) Act, 2015 to ongoing arbitral and court proceedings.2. Court's jurisdiction to grant interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 after the constitution of an Arbitral Tribunal.3. Interpretation of Section 26 of the Amendment Act of 2015 concerning ongoing proceedings.Issue-wise Detailed Analysis:1. Applicability of the Arbitration and Conciliation (Amendment) Act, 2015 to ongoing arbitral and court proceedings:The core issue was whether the Amendment Act of 2015 would apply to arbitral proceedings and court proceedings that commenced before the Amendment Act came into force. The appellant argued that the Amendment Act should not apply to proceedings initiated before its commencement. The court clarified that Section 26 of the Amendment Act of 2015 provides that the amendments do not apply to arbitral proceedings commenced before the Amendment Act came into force unless the parties agree otherwise. However, the Amendment Act would apply to all court proceedings initiated on or after 23rd October 2015, including those related to Section 9 applications for interim relief.2. Court's jurisdiction to grant interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 after the constitution of an Arbitral Tribunal:The court examined whether it had the authority to grant interim relief under Section 9 of the 1996 Act after the Arbitral Tribunal had been constituted. Section 9(3) of the 1996 Act, as amended by the Amendment Act of 2015, restricts the court from entertaining applications under Section 9 once the Arbitral Tribunal is constituted unless the court finds that circumstances exist which may not render the remedy under Section 17 efficacious. The court concluded that after the Amendment Act of 2015, the court's power to grant interim relief under Section 9 is limited once the Arbitral Tribunal is constituted, and parties should seek such relief from the Arbitral Tribunal under Section 17.3. Interpretation of Section 26 of the Amendment Act of 2015 concerning ongoing proceedings:The court interpreted Section 26 of the Amendment Act of 2015, which states that the amendments do not apply to arbitral proceedings commenced before the Amendment Act unless the parties agree otherwise. The court clarified that 'arbitral proceedings' refer to proceedings before an Arbitral Tribunal and not to court proceedings under the 1996 Act. Therefore, the Amendment Act applies to court proceedings initiated after its commencement date, including applications under Section 9 filed before the amendment but decided afterward. The court emphasized that the Amendment Act's retrospective application from 23rd October 2015 means that courts cannot entertain Section 9 applications once the Arbitral Tribunal is constituted unless the remedy under Section 17 is deemed inefficacious.Conclusion:The court upheld the dismissal of the appellant's application under Section 9 of the 1996 Act, noting that the court's power to grant interim relief was restricted by the Amendment Act of 2015 once the Arbitral Tribunal was constituted. The court directed that the status quo regarding the properties and assets in question be maintained for six weeks or until the Arbitral Tribunal takes up any application under Section 17, whichever is earlier. The appeal and the application were disposed of accordingly.