Calcutta High Court
M/S. Reliance Capital Limited vs Chandana Creations & Ors on 17 May, 2016
Author: Harish Tandon
Bench: Harish Tandon
ORDER SHEET
EC 301/2012
GA 1406/2016
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
M/S. RELIANCE CAPITAL LIMITED
Versus
CHANDANA CREATIONS & ORS.
BEFORE:
The Hon'ble JUSTICE HARISH TANDON
Date : 17th May, 2016.
Mr. Anubhav Sinha, Mr. Chiranjib Sinha, Ms. Radhika Mishra, Advs., for the judgment-debtor.
Mr.Debdutta Ghosh, Mr.Avijit Dey, Advs., for the award-holder.
The Court : The judgment-debtors have appeared and submitted to the Court that an application under Section 34 of the Arbitration and Conciliation Act, 1996 is still pending. According to the judgment-debtors, the execution application cannot be proceeded with until a final determination is made by the competent court in the said application.
In course of hearing, the attention of this court is drawn to an amendment having brought in the year 2015. In the said Act whereby and whereunder the entire Section 36 was substituted containing sub-section 2 thereof which clearly provides that mere filing an application for setting aside the award under Section 34 does not itself render the award unenforceable. In other words, it is indicated that unless the court grants the stay of the arbitral award in a proceeding under Section 34 of the Act, the enforceability of the arbitral 2 award cannot be postponed. It is not in dispute that the said application under Section 34 of the Act had been taken out in the year 2013 and is still pending. The newly substituted provision of Section 36 can apply to a pending proceeding or is made operative prospectively.
In this regard, reference can be safely made to Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 which came into effect on and from 23rd October, 2015 providing that nothing contained under the said amended Act shall apply to an arbitral proceeding commenced in accordance with the provisions of Section 21 of the Principal Act before the commencement of the said amended Act unless the party agree that the amended Act will apply to such arbitral proceedings. The bare look of the said provision gives an impression that the arbitral proceedings which commenced before coming in the said amended Act shall still be regularized and guided by the unamended provisions unless the parties agree that the amended provisions would apply.
Section 34, as it stood originally, does not contain any provision like Subsection (2) or Subsection (3) of the amended provision and there are plethora of judgments wherein it is uniformly held that the filing of an application under Section 34 of the Act would constitute an implied stay of the execution proceedings; in other words, the award holder is precluded from enforcing the said award under Section 36 of the Act.
The coordinate bench, in case of Electrosteel Castings Limited vs. Reacon Engineers (India) Private Limited (AP No. 1710 of 2015, decided on 14th January 2016), was confronted with the similar point and answered the same in the following:
"In my opinion the repeal and savings clause of the Amendment Act of 2015 did not make applicable the amendment Act in case of arbitration which commenced before its enactment. Since the subject arbitration commenced 3 much prior to coming into force of the Amendment Act, nothing in it applies to the subject arbitration.
I emphasise that the law in force before 31st December, 2015 did not recognise taking of security from the award debtor for staying of operation of the award. The award was stayed automatically upon 'making' of the application to set aside the award."
Another coordinate bench, in case of Shri Nitya Ranjan Jena vs. Tata Capital Financial Services Limited (AP No. 15 of 2016, GA No. 145 of 2016, decided on 2nd March 2016), accepted and concurred with the view of the above noted decision and held that if the arbitral proceeding had commenced prior to coming in force of the said amended Act, the substituted provision of Section 36 of the Act shall not apply.
In the instant case, the proceeding originating from an application under Section 34 of the Act was taken out well before the coming into force of the said amended provision and in view of Section 26 of the amended Act, the present execution application cannot be proceeded with, despite the fact that there is no express order for stay passed by the competent court.
In view of the above, execution application is adjourned sine die. Liberty to mention.
(HARISH TANDON, J.) sd/sk.