Jammu & Kashmir High Court
Chief Engineer System And Operation vs M/S Kec International Limited on 19 February, 2021
Author: Chief Justice
Bench: Chief Justice
Sr. No. 203 &204
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
CJ Court
Case: Arbitration Petition AA Nos. 4 - 9 of 2020
Chief Engineer System and Operation ...Petitioner(s)
Wing JKPTCL, Jammu.
Through: Sh. G. A. Lone, Advocate.
Sh. Amit Gupta, AAG
v/s
M/s KEC International Limited. .... Respondent(s)
Through: Sh. Pranav Kohli, Sr. Advocate
with Sh. Rahul Sharma, Advocate.
CORAM: HON'BLE THE CHIEF JUSTICE
ORDER
01. Heard Sh. G. A. Lone, and Sh. Amit Gupta, counsel for the petitioners and Sh. Pranav Kohli, senior counsel assisted by Sh. Rahul Sharma, counsel for the respondent.
02. All the above petitions have been preferred by the Chief Engineer System and Operation Wing Jammu and Kashmir Power Transmission Corporation Limited (JKPTCL) Jammu allegedly under Section 14 of the Arbitration and Conciliation Act 1996 read with Section 29 A (4) of the Jammu and Kashmir Arbitration and Conciliation Act 2018 for holding that the mandate of the three member arbitral tribunal be determined in conducting arbitration cases Nos. 4-9 of 2020 all titled as 'Chief Engineer System and Operation Wing JKPTCL, Jammu versus. M/s KEC International Limited' and for setting aside the order of tribunal dated 29.10.2019 and 09.11.2019 by 2 Arbitration Petition AA Nos.4 - 9 of 2020 which it has ruled that its mandate do not stand determined as alleged by the petitioner.
03. The arbitral tribunal of three arbitrators was having six identical arbitration cases being arbitration Nos. 1 to 6 titled as 'KEC International versus State and others'. The hearing of arbitration cases 1 and 2 is complete. Arguments in arbitration case 4, 5, and 6 have also been heard; the tribunal is hearing arbitration case No. 3. However, since the proceedings were considerably delayed, the applications were moved by this petitioner stating that the mandate of the arbitral tribunal stood determined by efflux of time as it had failed to make the awards within the stipulated time. These applications were rejected during the course of hearing on 29.10.2019 as recorded by the arbitral tribunal and a reasoned order was subsequently pronounced on 09.11.2019.
04. The references to the arbitral tribunal were made on 14.11.2013 and the arbitral tribunal entered into the arbitrations on 23.09.2014 where upon first sitting took place in September itself. In the meantime, the Jammu and Kashmir Arbitration Act 1996 was amended by Jammu and Kashmir Arbitration and Conciliation(Amendment) Act 2018 and notified to be enforced with effect from 1st October 2018.Itprovided for insertion of Section 29A to the principle Act after originally existing Section 29 of the said Act. The relevant part of the said newly inserted Section 29-A of the Act reads as under:
"29A Time limit for arbitral award ---(1) The
award shall be made within a period of twelve
months from the date the arbitral tribunal enters
upon the reference.
3 Arbitration Petition AA Nos.4 - 9 of 2020
Explanation :-- For the purpose of this sub-
section, an arbitral tribunal shall be deemed to have entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment."
05. The aforesaid newly inserted provision lays down the time period for making the award and provides that the award shall be made within a period of 12 months from the date arbitral tribunal enters upon the reference.
06. It is in view of the aforesaid amended provision that the petitioner submits that as no award has been made within 12 months of entering into the arbitration or from the date of commencement of the aforesaid amendment Act, the mandate of the arbitrators stands determined.
07. Sh. Lone further submits that the arbitral tribunal manifestly erred in law in rejecting the applications of the petitioner for terminating the mandate and that the aforesaid amendment is purely procedural in nature and, as such, it applies retrospectively even to matters which were pending consideration on the date of enforcement of the amended Act.
08. Sh. Kohli to counter the above submission argues that the aforesaid amendment is prospective in nature. It cannot be applied retrospectively to proceedings which were initiated or pending at the time of enforcement of the aforesaid amendment. The aforesaid amendment is not procedural and even if it is presumed to be procedural, it in effect is substantive in nature and is not applicable retrospectively. Even otherwise, the proceedings of arbitration which had commenced earlier and were pending on the date of 4 Arbitration Petition AA Nos.4 - 9 of 2020 enforcement of the aforesaid amendment stands saved by virtue of Section 6 of the General Clauses Act.
09. The parties agree that the arbitration proceedings were pending before the arbitral tribunal since 2014, i.e., prior to the enforcement of the amending Act. The amending Act was notified on 01.10.2018 and as per its Section 1(2) came into force on its publication, i.e.,on 01.10.2018 itself.
10. A bare simple reading of the amended provision, i.e., Section 29A which has been inserted reveals that it is prospective in nature and there is no intention expressed that it would apply retrospectively or even to the pending proceedings. It is well settled that every statute is deemed to be prospective unless it is expressly or by necessary implication made to have retrospective operation. In view of the above principle, the above Section 29A as inserted by the amended Act is also prima facie prospective in nature.
11. The submission that as it is a procedural provision it can be presumed to have retrospective effect has to be examined threadbare by testing whether in effect the said provision is procedural or substantive or even if procedural whether it has a substantive effect.
12. In District Collector, Vellore District Versus K. Govindaraj (2016) 4 SCC 763 it has been reiterated that the legislature has planery powers to legislate and it can legislate prospectively or retrospectively. The general Rule however is that in the absence of the enactment specifically mentioning that the legislation or legislative amendment is retrospective, the same is to be treated as prospective in nature. It would be more so when the statute is dealing with the substantive rights. However, where a statute deals with the procedural matter such a statute/amendment may be presumed to be retrospective unless 5 Arbitration Petition AA Nos.4 - 9 of 2020 such a construction is textually inadmissible. It further lays down that a particular provision in a procedural statute may sometimes be substantive in nature and such a provision cannot be given retrospective effect. It means that even a procedural statute may sometimes be of substantive nature and cannot be applied retrospectively.
13. In Thirumalai Chemicals Limited versus Union of India and others,(2011) 6 Supreme Court Cases 739, the Supreme Court considered the distinction between procedural and substantive law and held that the substantive law refers to the body of the rules that creates, defines and regulates rights and liabilities of the parties and the right of appeal conferred upon a party is a substantive right which remains unaffected with the subsequent change in law, unless a contrary intension is expressed or implied. The substantive right acts prospectively. It further laid down that unless the language used manifests in express terms or by necessary implication, a contrary intension, a statute divesting vested rights is to be construed as prospective whereas a statute merely procedural in nature may be construed as retrospective and a statute which while procedural in its character, affects the vested rights adversely, is also to be construed as prospective.
14. In other words, agreeing with the settled law that every statue is prospective unless it is expressly or by necessary implications made to have retrospective operation, it laid down that a substantive law is always prospective unless otherwise provided and that procedural law may be presumed to retrospective but sometimes a procedural law in its character when affects the vested rights has also to be construed prospectively. In short, every 6 Arbitration Petition AA Nos.4 - 9 of 2020 procedural law cannot be presumed to have retrospective effect. The test for it is whether it affects the vested rights adversely.
15. It is trite that generally a law which brings about a change in the forum does not affect the pending actions unless the intension to the contrary is expressed.
16. In Videocon International Limited Versus Securities and Exchange board of India (2015) 4 Supreme Court Cases 33 the court observed that the amendment of the statute which is not retrospective in operation, does not affect pending proceedings unless the amending provision expressly or by necessary indentment provides otherwise. The pending proceedings have to continue as if the unamended provision is still in force and the amendment has not been brought about. The court concluded that on the commencement of the lisall rights and obligations of the parties get crystallized on that very date and in view of the mandate of Section 6 of the General Clause Act, the pending proceedings under the unamended provision remain unaffected by the amendment.
17. In the instant cases, the arbitral proceedings have commenced earlier and at the time of the said commencement no time limit was prescribed for making an award. The right to seek arbitration is a substantive right of the parties and the said substantive vested right is not liable to be taken away by subsequent amendment. The effect of the amendment in terms of Section 29A if applied to the pending proceedings or the proceedings initiated earlier would be to bring to an end the said substantive vested right of the parties to have their disputes adjudicated through the processes of arbitration. In this view of the matter, as right to arbitration is a substantive right and it get vested with the 7 Arbitration Petition AA Nos.4 - 9 of 2020 parties on the date of causes of action with the commencement of proceedings it cannot be taken away by applying any law or amendment with retrospective effect.
18. Sh. Lone has placed reliance upon Shiv Shakti Co-op Housing Society, Nagpur v. M/s Swaraj Developers and others, AIR 2003 Supreme Court 2434 to contend that no person has vested rights to procedure and if the procedure is altered, they have to adhere the altered procedure unless there is a different stipulation.
19. The aforesaid decision has been rendered in respect of revisional power of the court exercisable under Section 15 of the Code of Civil Procedure. The court held that as against the right of appeal, which is conferred upon the parties as a substantive right, the remedy of revision is not a substantive right of the party but a discretion of the supervisory court.
Thus the aforesaid decision is not of any much help to the petitioners.
20. Sh. Lone has further placed reliance upon a decisions rendered by a Single Judge as well as upon a Division Bench of the Delhi High Court. The Division Bench in the case of ONGC Petro Additions Limited versus Ferns Construction Co. Inc. decided on 21.07.2020 considered the amendments made in the said Act of 1996, wherein amendments were made first in 2015 and then in 2019. The said amendments provided for the period of 12 months from the date the arbitral tribunal enters upon the reference, for making the award. The said amendment came into effect with 23.10.2015 and subsequently was enforced from 01.10.2018. Thus, the court held that the amended provisions of Section 29A(1) of the Act which provided for the limitation of 12 months for 8 Arbitration Petition AA Nos.4 - 9 of 2020 making the award shall be applicable to all pending arbitrations seated in India as on 30.08.2019 and commenced after 23.10.2015. The mention of all pending arbitrations as on 30.08.2019 is qualified by the term that they should have commenced after 23.10.2015. In other words, the amended provision was not made applicable to all pending arbitration proceedings rather only to the proceedings which commenced after 23.10.2015, the date on which the aforesaid amendment was brought into operation. Accordingly, even the Delhi High Court had not applied the amended provisions in absolute retrospectivity to all pending proceedings.
21. There is another way of looking to the problem. If Section 29A of the Act is applied to the proceedings initiated before the enforcement of the said provision or to the proceedings which were pending on the date it come into force there may be several proceedings where the period of 12 months may have elapsed from the date the arbitral tribunal had entered the reference but with no award rendering all such arbitration proceedings a nullity. This could not be the legislative intention. Such proceedings could not be treated to have lapsed for want of award even within 12 months of the enforcement of the Amending Act as no such intention has been expressed therein.
22. In the event the legislature would have thought to apply the limitation of 12 months for making the award to the pending proceedings or the arbitration proceedings that have commenced earlier to the enforcement of Section 29A, it could have easily provided for the same or may have categorically stated that the award shall be made within a period of 12 months from the date the arbitral tribunal enters upon the reference or from the date of commencement of this provision. Non use of such a language clearly reveals 9 Arbitration Petition AA Nos.4 - 9 of 2020 that the legislature had no intention to apply Section 29A retrospectively to the arbitration proceedings that have commenced earlier to the enforcement of Section 29A as inserted by the Amending Act.
23. In view of the aforesaid facts and circumstances, I am of the opinion that the arbitral tribunal has not committed any error in passing the impugned orders; the amended Section 29A of the Jammu and Kashmir Arbitration and Conciliation Act is prospective in nature and would not apply to arbitration proceedings which had commenced prior to its enforcement and were pending on the said date.
24. Accordingly, the mandate of arbitral tribunal does not stand determined.
25. The petitions are devoid of merit and are rejected with no order as to costs.
(PANKAJ MITHAL) CHIEF JUSTICE Jammu 19.02.2021 Sunita.
Whether the order is speaking? Yes Whether the order is reportable? Yes