Calcutta High Court
Saraf Agencies Pvt. Ltd. & Anr vs Federal Agencies For State Property ... on 24 March, 2017
Equivalent citations: AIR 2017 CALCUTTA 65, (2017) 4 ARBILR 107, (2017) 4 CIVLJ 69, (2017) 2 CALLT 384, (2017) 2 CAL HN 432
Author: I.P. Mukerji
Bench: I.P. Mukerji
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
A.P. No. 1038 of 2016
Saraf Agencies Pvt. Ltd. & Anr.
vs.
Federal Agencies For State Property Management & Anr.
For the petitioners:- Mr. Jishnu Saha..Sr. Adv
Mr. Ishan Saha
Ms. Riti Basu ...Advocates
For the Respondents:- Mr. Ratnanko Banerjee, Sr. Adv.
Mrs. Ritu Valla
Mr. M. Manukrishnan
Ms. Prapa Ganguly ...Advocates
Judgement On: - 24th March, 2017
I.P. MUKERJI, J.
In this application, under Section 34 of the Arbitration and Conciliation Act, 1996, an interim arbitral award made on 14th October, 2016 is challenged. It was made and published by a panel of three very distinguished Judges of our country, Justice S.C. Agrawal, Justice D.P. Wadhwa and Justice S.B. Sinha.
The claimants /petitioners were directed to pay a sum of Rs. 135,16,92,947.73 to the account of TPPL within one month from the date of the award, failing which they would have to pay interest @ 24% p.a. from the date of the interim award till the date of payment. The Arbitration and Conciliation (Amendment) Act, 2015 was enacted by Parliament and came into force on 23rd October, 2015. Thus, the arbitration was commenced, held, concluded and the award passed before coming into force of the Amendment Act.
By Section 19 of the said Amendment Act 2015 Section 36 was replaced by a new Section 36 which as follows:-
"36. Enforcement.--(1) Where the time for making an application to set aside the arbitration award under Section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court. (2) where an application to set aside the arbitral award has been filed in the court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3) on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:
Provided that the court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908(5 of 1908)"
This amendment made a serious departure from the erstwhile Section 36 because under the old section filing of an application to set aside the award, within time operated as a stay of execution of the award. Under the amended provision, the petitioner, applying for setting aside of the award has to apply to the court separately for its stay. It is stated in the proviso to the said section that the court considering the application to grant of stay would have to follow the principles for grant of stay of a money decree. This means that the award debtor has to secure the awarded sum. The petitioners contend that they are entitled to determination of this Section 34 application on the same terms and conditions as provided in the Act, before its amendment.
Now, the question arises as to which proceedings, does the Amendment Act apply? Does it apply to applications to set aside awards made in relation to arbitral proceedings commenced before the Amendment act, made after coming into force of the Amendment Act? Does it relate to arbitral proceedings commenced and court proceedings relating thereto filed after coming into force of the Act? Does it apply to applications to set aside the award filed before the amendment in relation to arbitral proceedings which commenced and concluded before the amendment by publication of the award?
We have to now see to what extent the Amendment Act of 2015 has preserved the rights conferred by section 6 of the General Clauses Act, 1897?
First, let me set out section 6 of the said Act which is as follows:
"6. Effect of repeal---where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not---
(a) Revive anything not in force or existing at the time at which the repeal takes effect; or
(b) Affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder ; or
(c) Affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
(d) Affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed ; or
(e) Affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, And any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed."
When a statute is repealed or amended, the repeal and savings part of the new or Amendment Act becomes very important to understand to what extent the rights and liabilities under the old Act are saved by the new legislation. In this case Section 26 of the Amendment Act is very important. It is in the following terms:
"26. Act not to apply to pending arbitral proceedings--Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
To appreciate this section the meaning of the words "arbitral proceedings"
and "commencement of arbitration proceedings" need to be understood. Section 21 of the said Act is in the following terms.
"21. Commencement of arbitral proceedings---Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for the dispute to be referred to arbitration is received by the respondent."
In the case of Thyseen Stahlunion Gmbh v. Steel Authority of India Ltd. reported in (1999) 9 SCC 334 the Supreme Court was concerned with the interpretation of Section 85 of the Arbitration and Conciliation Act, 1996 which is similar to Section 26 of the Amendment Act. Section 85 is as follows:
"85. Repeal and Savings--(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal,--
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;
(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act."
Note the use of one preposition "in relation to" to link the arbitral proceedings to the old and new Act. Section 85 (2) enacted that the provisions of the repealed enactments would apply "in relation to arbitral proceedings" which commenced before the Act. But the Act would apply "in relation to" arbitral proceedings which commenced on or after the Act came into force. The Supreme Court held that "in relation to arbitral proceedings" should not be given a narrow meaning to mean only the arbitration proceedings before the arbitrator but would cover proceedings in court also and any proceedings which were required to be taken under the old Act for the award becoming a decree of the court under Section 17 of the 1940 Act and also to appeals arising there under. You will notice that in Section 26 it is provided that nothing in the Amendment Act would apply "to" the arbitral proceedings commenced before the commencement of the Act, but would apply "in relation to"
arbitral proceedings commenced after commencement of the Act. Why this change in preposition? Three courts made their interpretations. CALCUTTA, DELHI, MADRAS In Tufan Chatterjee v. Rangan Dhar reported in AIR 2016 Cal 213 a Division Bench of our court, presided over by Justice Indira Banerjee an application under Section 9 of the 1996 Act praying for an order of injunction was filed in August 2015 before the learned District Judge, Alipur. An injunction was granted. During the pendency of the said order, the Arbitral Tribunal was constituted and arbitration proceedings commenced. Parliament enacted the Arbitration and Conciliation (Amendment) Act, 2015 with effect from 23rd October, 2015. Section 9 (3) was added by the Amendment Act by which once the Arbitral Tribunal had been constituted, the court shall not entertain an application under sub- section-1 but the parties would have to apply to the arbitrator under Section 17. The Division Bench held: (a) The 1996 Act, in particular Sections 21 and 32 made it clear that 'arbitral proceedings' in Section 26 could be construed to include proceedings in a court, including proceedings under Section 9 of the 1996 Act instituted in a court before a request for reference of dispute to arbitration was made.
(b) The Amendment Act 2015 would apply to court proceedings filed on and from 23rd October, 2015. There was a significant difference between the language of Section 85 (2) (a) of the 1996 Act and Section 26 of the Amendment Act. Section 85 (2) (a) made the provisions of the repealed enactments applicable "in relation to" arbitral proceedings whereas Section 26 of the Amendment Act said that the section shall apply "to" the arbitral proceedings.
(c) Even though an earlier application for interim relief may have been filed in court, once the arbitral proceedings had commenced before the Arbitral Tribunal, the interim relief would have to be sought before the learned arbitrator. No person had any vested right in procedure. The law relating to forum was procedural in nature. The court would be denuded of its power to grant interim relief unless the court was satisfied that the circumstances existed.
HOW FAR TOOFAN CHATTERJE IS BINDING ON THIS COURT?
First of all, this case was concerned with a pending Section 9 application on the date of Amendment of the Act. The court construed the determination of this Section 9 application by an authority, whether Court or Arbitral Tribunal, as a procedural matter. It did not matter whether an amendment dealing with procedure had retrospective effect. It analysed the case of Thyseen only to explain the point that the "arbitral proceedings" in Section 26 referred to proceedings before the arbitrator. The case said nothing about the effect of the Section 34 application filed after the Amendment Act came into force in relation to the arbitration proceedings which commenced before coming into force of the Act. In other words, the court did not have the occasion to deal with such an application involving substantive rights of the parties. The court had no occasion to consider the effect of the General Clauses Act, 1897. It only said that the General Clauses Act did not normally preserve any procedure as there could be no vested right in procedure.
Therefore, any observation made in the judgement is to be strictly confined to the facts of that case. Any ratio except the analysis of arbitral proceedings should not be extended so as to be applicable in a Section 34 proceeding, by implication.
At any rate, I have followed the substantial ratio of this case that the Amendment Act did not apply to arbitral proceedings which commenced prior to the Amendment Act. This decision is sub silentio with regard to the observations that I shall be making in the course of this judgement. A Division Bench of the High Court of Delhi headed by Mr. Justice Ahmed had to consider this point. The issue was more direct before it as an application to set aside the award under Section 34 of the said Act was involved. The Section 21 notice was dated 7th June, 2011. The Statement of claim was filed in February 2013; an interim award was made on 10th July, 2014. The final award was made on 13th October, 2015. The Section 34 application was filed on 4th January, 2016. We may note that the Amendment Act came into effect from 23rd October, 2015. Therefore, the facts of the Delhi case, in this respect were similar to ours. The arbitral proceedings and the award had been published before the commencement of the Amendment Act, but the Section 34 application was made after its commencement. Exactly, the same question arose as to whether the petitioner could be compelled to furnish security to obtain stay of execution of the award. The Court considered the effect of Section 6 of the General Clauses Act, 1897 which our High Court did not have occasion to consider. The ruling of the Supreme Court in the case of Thyseen Stahlunion Gmbh v. Steel Authority of India Limited reported in 1999 (9) SCC 334 was considered. The judgement of this court in Tufan Chatterjee v. Rangan Dhar reported in AIR 2016 Cal 213 and of the Madras High Court a New Tirupur Area Development Corporation Limited v. Hindustan Construction Company Limited (unreported application No. 7674 of 2015 in O.P. No. 931 of 2015) were referred to.
The Delhi High Court opined that there was no difference between "to" and "in relation to". On interpretation of Section 26 of the Amendment Act, the Amendment Act would not apply to both arbitration and court proceeding if the Arbitration commenced before coming into force of the amendment. Following the dictum in Thyseen the court observed that when arbitral proceedings commenced under the old Act the right to have an award was an accrued right at the point of time the Amendment Act was amended. For this accrued right legal proceedings need not be pending. Even if it was assumed that the first part of Section 26 referred to arbitral proceedings then also it did not affect the accrued rights for enforcement of an award passed in an arbitral proceedings commenced prior to coming into force of the amendment. But this judgement did not specifically deal with the observation in Tufan Chatterjee in relation to the second part of Section 26 that it covered arbitral as well as court proceedings (including Section 34 proceedings) commenced after commencement of the Act. According to Tufan Chatterjee even if the arbitral proceedings commenced prior to the Amendment Act, it would apply to legal proceedings filed after commencement of the Act.
The Bombay High Court in Rendezvous Sports World v. Board of Control for Cricket in India (unreported) decided on 14th June, 2016 opined:
78. Coming to the facts of the present case, in view of the above position in law, application amended Section 36 to the existing matters i.e. the applications under Section 34 of the Arbitration Act, that are pending as on 23rd October, 2015 is giving prospective effect to the amendment and not retrospective effect. The most relevant consideration for applying it to the existing matters is the nature, ambit and scope of the Amending Act.
Under the original Section 36, filing of an application under Section 34 had the effect of casting shadow upon the executability of the award. This as of the award-debtor disabled the award-holder from executing the award in his favour irrespective of the merit in the challenge. In this circumstance, there could be no question of any right accruing to the award-debtor by filing the application under Section 34. The Amended Section 36 lifts the shadow over the right of the award-holder. His disability gets removed. At the same time, the application under Section 34 of the award-debtor remains intact. The removal of disability is not complete. It is partial. The provision enables the award-debtor to apply to the court for make the award in executable pending his application. His right to apply for interim relief during the pendency of the application under Section 34 is not affected in any way. In this way in fact the Amending Act bring in balance between the rights and liabilities of both the sides. The ambit and scope of the Amended Section 36, is to cure the defect by removing the imbalance. Thus the application of the provision on the petitions under Section 34 pending on 23rd October, 2015, is prospective. It makes no difference if the application under Section 34 filed by the award-debtor was prior to 23rd October, 2015. Removal of shadow over the rights of the award-holder cannot be said to be prejudicial to the award-debtor. He has to now only file an application for interim reliefs, which may or may not be subject to imposition of condition."
A learned single Judge of the Madras High Court has in New Tirupur Area Development Corporation Limited v. Hindustan Construction Company Limited decided on 27th January, 2016 opined as follows:-
"79. Sub-Sections (2) and (3) of the Amendment Act, applies to post arbitral proceedings. It is distinct. So also the arbitration proceedings, which is prior to the passing of award. The procedure to be applied during the stage of arbitration proceedings is, prior to the award, and the procedure to be followed, after the award, are distinct. A challenge to the award, with regard to the procedure followed and the rights accrued during in the arbitral proceedings, are protected in Section 26 of the Amendment Act, 2015, to the effect, "Nothing contained in this Act shall apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the Principal Act, before the commencement of the Amendment Act, unless the parties otherwise agree, but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
Section 26 of the Amendment Act cannot be extended to include post arbitration proceedings, when the award is passed, before the commencement of the Amendment Act.
80. In the Principal Act, 1996 (in Section 85(2) of the Act 1996) the Legislature has used the expression "in relation to arbitration proceedings"
and thus, the Hon'ble Supreme Court was called upon to interpret the same with reference to the repeal and saving clause. But in the Amendment Act, 2015 deemed to have come into force, from 23.10.2015 the legislature has conspicuously deleted the expression, "in relation to the arbitral proceedings" in the opening sentence in Section 26 of the Amendment Act, 2016. It is to be noted that unlike in Section 85 (2) of the Principal Act, 1996 where the legislature has said that the provisions of the old enactments shall apply in relation to arbitral proceedings which commenced before 1996 Act, there is no such usage in Section 26 of the Amendment Act, 2015. Therefore, the court has to consider as to whether it has been done with a specific intent and whether such change has been taken to have been made deliberately or otherwise it would give rise to assumptions and presumptions that the statute, remained unchanged. While doing so, this court is of the humble view that amendments made with reference to the applicability of the provisions of the Amendment Act, should be read and construed with the new provisions and not with reference to the provisions which existed before the amendment.
81. When the Legislature, in the Amendment Act, has deleted the words, "in relation to "in the first part of Section 26 of the Amendment Act, this court is of the humble view that the court has no power to add the words, "in relation to" into the said Section and expand the scope of the said provision, to court proceedings also.
82. in the Arbitration and conciliation (Amendment ) Ordinance, 2015 (9/15), there are several amendments, by way of substitution and insertion of Sections 2,9,11,12,14,23,24,25,28,29,31 and 34. Having regard to the changes made to the Principal Act, 1996, by Ordinance, 2015 and consequently, when the Principal Act, 1996 has been amended, retaining Section 36 92), in its original form and by consciously deleting the words, "in relation to the arbitral proceedings" in Section 26 of the Amended Act, the intention of the Legislature is explicit."
MY ANALYSIS Let us come back to Section 26 again.
What is the meaning that is to be ascribed to the phrase "arbitral proceedings".
Chapter-V of the Act contains the heading "CONDUCT OF ARBITRAL PROCEEDINGS". This Chapter relates to the proceedings and procedure before an arbitrator. In fact, Section 21 refers to the commencement of arbitral proceedings before an arbitrator. However, Section 43 refers to "arbitration" and says that the Limitation Act applies to arbitration as it applies to proceedings in court. In Section 32 of the said Act it is said that the arbitral proceedings shall be terminated by the final arbitral award. The Oxford dictionary very categorically describes proceedings as inter alia proceedings in a court of law. The definition in Black`s Law Dictionary is no different.
Therefore in its plain and ordinary meaning arbitral proceedings would seem to include court proceedings. But it is not unknown that quite often than not words or phrases are used with a special meaning or context. By usage and interpretation the word or phrase becomes a term of art and its meaning has to be understood in that way.
Hence, if one considers the context in which "arbitral proceedings" have been used in the Arbitration and Conciliation Act one would tend to think the expression refers to proceedings before the Arbitral Tribunal only. Moreover, that is the interpretation of arbitral proceedings made in the Toofan Chatterjee case, which binds me.
Thus, under the first part of Section-26 the old Act would apply to those arbitral proceedings, which commenced before coming into force of the amendment Act.
Now, come to the second part. It enacts that the Amended Act shall apply "in relation to arbitral proceedings" commenced on or after the date of commencement of his Act.
Now, the legislature is deemed to have been conscious of Section-85 of the Act and the dictum of the Supreme Court in the Thyseen case. Therefore, "in relation to arbitral proceedings" was used in that context to cover arbitral and court proceedings.
Let us think of an arbitration proceedings like ours which commenced before, the award was made before and the application to set aside the award, was filed after coming into force of the Amendment Act. The application to set aside the award cannot by application of the above interpretation be called a part of those proceedings. Justice Indira Banerjee delivering the judgement of the Division Bench in the Tufan Chatterjee observed obiter that the legislature consciously used the word 'to arbitration proceedings' in the first limb of Section 26 instead of "in relation to arbitral proceedings" used in Section 85 to overcome the effect of the Thyseen case. From those observations, it is quite clear that the Amended Act would not apply to arbitral proceedings before the Arbitral Tribunal which commenced before the Amendment Act. On the basis of these observations an argument was made that the Amended Act applied even to court proceedings in relation to arbitrations which commenced before the Amendment Act. It also applied to any court proceedings commenced including a Section 34 application filed after the Amendment Act irrespective of the fact whether the arbitration commenced before or after the amendment.
When a statute is amended or repealed and replaced by a new Act all vested rights and liabilities and remedies which accrued during continuance of the Act are preserved unless expressly stated by the amending or repealing Act to be taken away.
As pronounced by Mr. Justice S.R. Das in paragraph 11 of Hoosein Kasam Dada (India) ltd. v. The State of Madhya Pradesh and Ors. reported in AIR 1953 SC 221 an amendment normally cannot be given retrospective effect and that to determine the vesting of rights inter alia the date of institution of the suit " was the determining factor". (see also Lakshmi Narain vs. First Additional District Judge, Allahabad reported in AIR 1964 SC 489, Jose Costa and Anr. Vs. Bascora Sadasiva Sinai Narcornim and ors. reported in AIR 1975 SC 1843) His lordship remarked in Garikapati Veerayas v. N. Subiah Choudhry and ors. reported in AIR 1957 SC 540 as follows:
"23 From the decisions cited above the following principles clearly emerge:
(i)That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding.
(ii) The right of appeal is not a mere matter of procedure but is a substantive right.
(iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit.
(iv) The right of appeal is a vested right and such a right to enter the superior Court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgement is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal.
(v) This vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise."
In Glaxo Smith Kline PLC and Ors. v. Controller of Patents and Designs and Ors. reported in (2008) 17 SCC 416 Mr. Justice Arijit Pasayat remarked in paragraph 7 of the judgement that when the right of appeal was preserved by the amendment the old law which created the right of appeal also existed to support the continuation of that right and hence the old right must govern the exercise and enforcement of that right. Section 26 is silent as to whether the provisions of the Amendment Act would apply or would not apply to applications related to those arbitral proceedings commenced before the Act filed in court after commencement of the new Act or to court proceedings concerning the same filed before coming into force of the new Act.
There are some golden rules for construction of a statute. An enactment has first to be given its ordinary or literary meaning. Its words have to be carefully read to understand what these words mean. Every word has a meaning attached to it. The legislature does not include any verbiage or superfluous words in an enactment. If the plain or ordinary reading of the Act conveys a particular meaning to the reader that is the meaning to be ascribed to the enactment. Quite often a plain and simple reading of an enactment or a part of it does not make its meaning clear. Then, arises the question of ascertaining the intention of the legislature. There are expressions which are called terms of art or words which have a special meaning, when interpreted in a technical sense or a special context. When exact words of an enactment are not absolutely clear external aids may be taken to interpret the enactment or to ascertain the intention of the legislature.
Furthermore, recourse may be taken to have a look at various materials which were before the legislature or the draftsman at the time of drafting of the statute. Resort may only be taken to them when an ordinary or literal interpretation of an enactment or external aids to its interpretation do not yield a satisfactory result.
In paragraph-44 of the report of the Law Commission of India published in August, 2014 (Report No. 246), it criticised the old Section 36 of the said Act on the ground that it did not permit the court to compel the award debtor make a deposit into the court. The Commission remarked "admission of a Section 34 petition, therefore, virtually paralyzes the process for the winning party/award creditor." In order to rectify this mischief, certain amendments were suggested by the Commission to Section 36 of the said Act. Paragraph-76 of the report suggested that the amendments would generally operate prospectively. The Law Commission also recommended the insertion of Section 85(A) in the following manner.
"Insertion of Section 85A A new section 85A on transitory provisions has been incorporated. Transitory provisions.--(1) Unless otherwise provided in the Arbitration and Conciliation (Amending) Act, 2014, the provisions of the instant Act (as amended) 59 shall be prospective in operation and shall apply only to fresh arbitrations and fresh applications, except in the following situations -
(a) the provisions of section 6-A shall apply to all pending proceedings and arbitrations.
Explanation: It is clarified that where the issue of costs has already been decided by the court/tribunal, the same shall not be opened to that extent.
(b) the provisions of section 16 sub-section (7) shall apply to all pending proceedings and arbitrations, except where the issue has been decided by the court/tribunal.
(c) the provisions of second proviso to section 24 shall apply to all pending arbitrations.
(2) For the purposes of the instant section,--
(a) "fresh arbitrations" mean arbitrations where there has been no request for appointment of arbitral tribunal; or application for appointment of arbitral tribunal; or appointment of the arbitral tribunal, prior to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.
(b) "fresh applications" mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014. [NOTE: This amendment is to clarify the scope of operation of each of the proposed amendments with respect of pending arbitrations/proceedings.]"
Many recommendations have not been enacted. There is no suggestion of any retrospective effect of Section 36.
As I have said an amending or repealing Act does not touch vested rights, obligation, remedies and liabilities unless expressly provided. There is no absolute principle on which it could be determined that a right has vested in a person. We have been told by the above authorities that when one files a suit one acquires the right to prosecute the said suit right upto the last stage of appeal and the circumstances which are present at the time of filing of the suit should ordinarily not be changed by the amending or repealing Act and if proposed to be changed it should be expressly done.
The Colonial Sugar Refining Company, Limited And Irving reported in (1905) AC 369 arose under Section 154 of the Excise Act, 1901 for recovery of money paid as excise duty on sugar levied under the Excise Tariff Act (No. 11 of 1902) in Queensland Australia. By a recent amendment appeal lay to the High Court of Australia and that the Supreme Court had no power to grant leave to appeal to the King in Council. Lord Macnaghten delivering the judgement of the Privy Council laid down the following dictum.
"As regards the general principles applicable to the case there was no controversy. On the one hand, it was not disputed that if the matter in question be a matter of procedure only, the petition is well founded. On the other hand, if it be more than a matter of procedure, if it touches a right in existence at the passing of the Act, it was conceded that, in accordance with a long line of authorities extending from the time of Lord Coke to the present day, the appellants would be entitled to succeed. The Judiciary Act is not retrospective by express enactment or by necessary intendment. And therefore the only question is, what the appeal to His Majesty in Council a right vested in the appellants at the date of the passing of the Act, or was it a mere matter of procedure? It seems to their Lordships that the question that the question does not admit of doubt. To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as of right is a very different thing from regulating procedure. In principle, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal. In either case there is an interference with existing rights contrary to the well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested."
The Brihan Maharastra Sugar Syndicate Ltd. v. Janardan Ramchandra Kulkarni and Ors. reported in AIR 1960 SC 794 was concerned with repeal of the 1913 Companies Act and its replacement by the 1956 Companies Act. It was said that Section 153-C of the 1913 Act had not saved any of the provisions of the new Act. The Supreme Court said that the new Act must show "the contrary intention..................that the rights under the old Act were intended to be destroyed in order to prevent the application of Section 6 of the General Clauses Act." The court held that Section 153-C proceeding may be continued before the District Judge at Puna.
Now, it is argued, applying the Thyseen principle and the observation in the Toofan Chatterjee case that the second part of Section 26 inter alia relates to a court proceeding commenced after commencement of the Act. This is so because in that case the Supreme Court said "in relation to arbitral proceedings" meant both arbitral and court proceedings and, therefore, the second part of the said Act would apply to a Section 34 application commenced after the Act. Therefore, if an application was filed to set aside an award after commencement of the Act to set aside an award, the Amendment Act would govern its consideration. This would mean that by deletion of a preposition "in relation to" used in the first limb of Section 85 and replacing it with the preposition "to" in Section 26 of the Amendment Act and by retention of the first preposition "in relation to" in the Second limb of Section 26, by implication, all vested rights under the Act before amendment have been swept away. An award debtor in an arbitration which commenced before the Amendment Act would have to file the Section 34 application to challenge the award, with the added burden of obtaining a stay of the award upon furnishing of security on the same principles as security is taken in an appeal. While preserving the right of appeal under the repealed enactment, State of Bombay v. Supreme General Films Exchange Ltd. reported in AIR 1960 SC 980 added a very important principle that new conditions cannot be attached to the filing of the appeal, by an amendment, unless expressly stated to be so.
If according to the above authorities, the filing of a suit, resulted in a vested rights the date when arbitral proceedings commenced may be taken as the date when similar very valuable rights vested in a party. According to the authorities this set of rights continued till a party exhausted his right of appeal to the most superior Court or Tribunal. There is no reason why the right of an award debtor to approach a court under Section 34 of the Arbitration and Conciliation Act, 1996 cannot be seen as a right to approach a superior court. Therefore, the right to approach a court under that Section can only be taken away by express enactment. Following the principles in State of Bombay v. Supreme General Films Exchange Ltd. reported in AIR 1960 SC 980, just like a new condition cannot be attached to the filing of an appeal, a party cannot be compelled to obtain stay of the award by furnishing security in a setting aside application, in relation to arbitral proceedings commenced under the unamended Act, after its amendment, in the absence of an express provision. In my opinion, a harmonious construction can be made by arguing that the new Act has not been made applicable to proceedings before the arbitrator which commenced before the Act. But all other rights and remedies relating to the challenge procedure in court to set aside the awards made in arbitral proceedings which commenced before this amendment or any other applications made or pending or to be made under those proceedings before the court have been preserved under the General Clauses Act, 1897 save and except those expressly taken away (example Section 9).
"In relation to arbitral proceedings" in the second limb of Section 26 has been interpreted to mean proceedings before the Arbitral Tribunal and proceedings in a court of law. Therefore, the stipulation in the second limb of Section 26 that the Amendment Act will apply "in relation to arbitral proceedings" after its commencement has also caused an interpretation to be made that a Section 34 application filed after coming into force of the Amendment Act, even relating to arbitral proceedings commenced before the Amendment Act, would be governed by it. In that case the above interpretation that I have made that the Amendment Act protects legal proceedings in relation to arbitration commenced before coming into force of the Amendment Act might seen to be out of place. But in my opinion a harmonious construction should be made of the second limb of Section 26. The court proceedings referred to therein would only mean legal proceedings in relation to arbitration which has commenced after coming into force of the Amendment Act.
This in my opinion would render Section 26 free from ambiguity. SUMMARY OF MY FINDINGS a. The draftsman took into account the case of Thyseen Stahlunion Gmbh v. Steel Authority of India Ltd. reported in (1999) 9 SCC 334 while drafting Section 26. Hence, in the first limb he consciously used the words 'to' arbitral proceedings and not "in relation to arbitral proceedings". This was to dispel any notion created on an interpretation of Thyseen that the words "in relation to arbitral proceedings" would relate to arbitral reference as well as court proceedings. By use of the word 'to' in the first limb of Section 26 the legislature meant reference to arbitration proceedings before the learned Arbitrator. Section 21 and Section 32 of the Act support this interpretation.
b. The first limb is silent about the rights of a party to approach the court in proceedings to set aside the award arising out of the aforesaid arbitral proceeding.
c. In my opinion, the right of a party under given conditions to challenge the award upto the highest level, is a vested right which vested in the parties when a request was made under Section 21 of the Act to refer the dispute to arbitration. The Amendment Act did not take away this right by any express terms. Therefore this right and remedy are preserved under Clause-6 of the General Clauses Act, 1897. d. On the contrary, the use of "in relation to" in the second limb of Section 26 is to be given the meaning attributed to it in Thyseen. The legislature is deemed to have full knowledge of this decision while framing the enactment and is deemed to have used it in the context of the judgement to mean arbitration proceedings before the Arbitrator as well as in court.
e. The phrase "shall apply in relation to arbitral proceedings which commenced after the date of commencement of this Act" in the Second limb of Section 26 has to be given a wide and meaningful interpretation. Considering the interpretation I have made of the first limb of Section 26, the Amendment Act would apply in relation to arbitral proceedings as well as court proceedings following the interpretation of "in relation to arbitral proceedings" in Thyseen. Furthermore, the arbitral proceedings in court should arise out of arbitral proceedings before the learned Arbitrator commenced after coming into force of the Amendment Act.
Therefore, the preliminary question raised in this application is answered by stating that the Act before amendment would apply in relation to the subject Arbitral proceedings and the Court proceedings, and that no application for stay or furnishing of security by the award debtor is necessary.
The application to set aside the award (AP 1038 of 2016) is admitted. Let affidavits be exchanged according to the following directions. Affidavit- in-opposition to be filed by 17th April, 2017. Listed this application on 27th April, 2017. Affidavit in reply may be filed in the mean time. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)