2023 (5) TMI 426 - SC - Indian Laws

Supreme Court clarifies application of pre-Amendment Act to Section 11(6) applications under Arbitration Act

The Supreme Court upheld the High Court's decision that the pre-Amendment Act, 2015 should apply to a Section 11(6) application under the Arbitration Act, ... Applicability of Arbitration and Conciliation (Amendment) Act, 2015 - Section 11(6A) - limited jurisdiction of court in appointment of arbitrator - Section 26 - Act not to apply to pending arbitral proceedings / prospective operation - Section 21 - commencement of arbitral proceedings - accord and satisfaction as bar to arbitration - prospective versus retrospective application of procedural amendmentsSection 21 - commencement of arbitral proceedings - Section 26 - Act not to apply to pending arbitral proceedings / prospective operation - applicability of Arbitration and Conciliation (Amendment) Act, 2015 - Section 11(6A) - limited jurisdiction of court in appointment of arbitrator - Whether the Amendment Act, 2015 (including Section 11(6A)) applies where the notice invoking arbitration was given before 23.10.2015 but the Section 11 petition for appointment of arbitrator was filed after that date. - HELD THAT: - The Court examined the interplay between Section 21 (which fixes commencement of arbitral proceedings as the date a request for arbitration is received) and Section 26 of the Amendment Act, 2015. Having considered prior decisions, the Court held that Parmar Construction Company and Pradeep Vinod Construction Company directly address applications under Section 11(6) and rule that where the notice invoking arbitration was received before the Amendment Act came into force, the pre-amendment law governs such arbitral proceedings unless the parties otherwise agree. Observations in BCCI regarding bifurcation of 'arbitral proceedings' and 'court proceedings in relation thereto' (paras 37-39 in that decision) relate to the context in which they arose (challenges under Sections 34/36) and do not displace the specific holding applicable to Section 11 petitions. Applying these principles to the facts - notice received in 2013 but Section 11 petition filed in 2016 - the Court concluded that the unamended 1996 Act governs the matter and that the High Court was entitled to examine defences such as 'accord and satisfaction' while deciding the Section 11 petition. [Paras 9, 10, 11]Where a request for reference to arbitration was received before 23.10.2015, the pre Amendment Act governs Section 11 proceedings filed thereafter; the High Court rightly applied the pre amendment law and adjudicated the plea of accord and satisfaction.Final Conclusion: The appeal is dismissed. The Court affirms that when the notice invoking arbitration was received prior to 23.10.2015, the pre Amendment Arbitration Act, 1996 governs Section 11 applications filed after that date, and consequently the High Court correctly refused appointment of an arbitrator after finding accord and satisfaction; no order as to costs. Issues Involved:1. Applicability of the Amendment Act, 2015 to Section 11(6) applications.2. Interpretation of Section 26 of the Amendment Act, 2015.3. Relevance of previous judgments, including BCCI v. Kochi Cricket and Parmar Construction Company, in determining the applicable law.Summary:1. Applicability of the Amendment Act, 2015 to Section 11(6) Applications:The Supreme Court examined whether the Amendment Act, 2015 should apply to an application under Section 11(6) of the Arbitration Act, 1996, when the notice invoking arbitration was issued before the Amendment Act but the application was filed after the Amendment Act came into force. The Court upheld the High Court's decision that the pre-Amendment Act, 2015, should apply, as the arbitration proceedings commenced with the notice invoking arbitration, which was issued before the Amendment Act.2. Interpretation of Section 26 of the Amendment Act, 2015:The Court analyzed Section 26 of the Amendment Act, 2015, which states that the Amendment Act shall not apply to arbitral proceedings commenced before its enactment unless the parties agree otherwise. The Court emphasized that the term 'arbitral proceedings' refers to proceedings before an Arbitral Tribunal, while 'court proceedings in relation to arbitral proceedings' refer to judicial proceedings. The Court concluded that the Amendment Act is prospective and applies to court proceedings initiated after its commencement date.3. Relevance of Previous Judgments:The appellant argued that the decision in BCCI v. Kochi Cricket, which held the Amendment Act, 2015 to be prospective, should apply. However, the Court noted that BCCI dealt with Sections 34 and 36, not Section 11(6). The Court found that Parmar Construction Company, which directly addressed Section 11(6) applications, was more relevant. Parmar held that the pre-Amendment Act applies if the arbitration notice was issued before the Amendment Act. The Court also referenced other cases like S.P. Singla Constructions and Pradeep Vinod Construction Company, which supported this view.Conclusion:The Supreme Court dismissed the appeal, affirming that the pre-Amendment Act, 2015, applies to the Section 11(6) application, as the arbitration notice was issued before the Amendment Act. The Court upheld the High Court's decision to consider the issue of 'accord and satisfaction' under the pre-Amendment Act.