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The controversy pertaining to the amended provisions of Section 36 of the Arbitration and Conciliation (Amendment) Act, 2015 (“The Amendment Act”) has finally seen the dawn of the day, settling the existing ambiguity with regard to Section 36 and the mishmashes arising out of the judgment of Delhi High Court (“HC”) titled, “Ardee Infrastructure Pvt. Ltd. v. Ms. Anuradha Bhatia and Ardee Infrastructure Pvt. Ltd. v. Yashpal & Sons” which was discussed in detail in our previous write-up article on the same subject.
Recently the Supreme Court (“SC”) in the judgment titled, “Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd” has at last settled the on-going divergence of various High Courts by deciding the Moot Question in hand: ‘Whether Section 36, as substituted by the Amendment Act, 2015 would apply in its amended form or original form to pending appeals instituted under Section 34 before the date of amendment, i.e. 23.10.2015?’
The bone of contention arising out of the foregoing Moot Question stands finally settled by the Supreme Court vide the present verdict, wherein the SC has observed that all petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“The Act”) prior to the amendment i.e. 23.10.2015, would now be covered under the amended provisions of the Act and consequently, the contesting party would thereby not be entitled to automatic stay of enforcement of the award till the disposal of the said petitions.
Keeping Section 26 of The Amendment Act as the axis of the dispute, the SC not only discusses the applicability of the amended Section 34 and Section 36(2), 36(3) of The Amendment Act, but also hinges a clear and much awaited interpretation of Section 26 of The Amendment Act in regard to arbitral and court proceedings.
The case comprises of the following 8 appeals in totality, out of which four (4) appeals pertain to Section 34 applications which were filed before the cut-off date of 23.10.2015, and the remaining four (4) appeals pertain to those Section 34 applications which were filed after the said cut-off date.
The Appellants contended that their petitions under Section 34 of The Act shall be governed by the un-amended provisions of Section 36 and they shall thus have the right to an automatic stay on the award upon filing the said petitions. Whereas the Respondents argued that the amended provisions of Section 36 shall apply thereby denying an automatic stay to the Appellants. The pre-amended and the amended provision of Section 36 of the Act are reproduced as under:
Amended Section 36
(1) Where the time for making an application to set aside the arbitral 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, 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 subsection (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).”
ARGUMENTS BY THE APPELLANTS:
ARGUMENTS BY THE RESPONDENTS:
The SC categorises the judgment to deal with four major facets which provide detailed insights into the withstanding dispute. These facets are discussed as follows;
“…57. The Government will be well-advised in keeping the aforesaid Statement of Objects and Reasons in the forefront, if it proposes to enact Section 87 on the lines indicated in the Government’s press release dated 7th March, 2018. The immediate effect of the proposed Section 87 would be to put all the important amendments made by the Amendment Act on a back-burner, such as the important amendments made to Sections 28 and 34 in particular, which, as has been stated by the Statement of Objects and Reasons, “…have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act”, and will now not be applicable to Section 34 petitions filed after 23rd October, 2015, but will be applicable to Section 34 petitions filed in cases where arbitration proceedings have themselves commenced only after 23rd October, 2015 .This would mean that in all matters which are in the pipeline, despite the fact that Section 34 proceedings have been initiated only after 23rd October, 2015, yet, the old law would continue to apply resulting in delay of disposal of arbitration proceedings have been initiated only after 23rd October, 2015, yet, the old law would continue to apply resulting in delay of disposal of arbitration proceedings by increased interference of Courts, which ultimately defeats the object of the 1996 Act…”
Although the judgment does create a rippling effect on all pending Section 34 applications filed prior to the commencement of the Amendment Act who have been savouring the leverage of an automatic stay, yet the intent of such a decision speaks volumes of Court’s intention to increase compliance of parties of an arbitral award, even in respect of arbitrations initiated prior to the cut-off date. The ball now lies in Government’s court which may or may not accept the recommendation of the Court and still proceed ahead to enact Section 87 as proposed under the Arbitration Amendment Bill, 2018. The Court held that a copy of the judgment is to be sent to the Ministry of Law and Justice and the Learned Attorney General for India but the Court did not itself express any speculation on the amendments made to Section 34 as the same were not diametrically before the Bench. However, The Court observed that, “it is enough to state that Section 26 of the Amendment Act makes it clear that the Amendment Act, as a whole, is prospective in nature”.
 FAO(OS) no. 221/2016 and FAO(OS) No.222/2016, judgment delivered on 06.01.2017
 ‘ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015, THE FATE OF AUTOMATIC STAY ON SECTION 34 PETITIONS FILED POST AMENDMENT’ dated 02.02.2017.
 Civil Appeal Nos. 2879-2880 of 2018, decided on 15.03.2018
 Section 26 – 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.
 Narhari Shivram Shet Narvekar v. Pannalal Umediram [(1976) 3 SCC 203]
 http://pib.nic.in/newsite/erelease.aspx?relid=177117 – A new section 87 is proposed to be inserted to clarify that unless parties agree otherwise the Amendment Act 2015 shall not apply to (a) Arbitral proceedings .which have commenced before the commencement of the Amendment Act of 2015 (b) Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall apply only to Arbitral proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such Arbitral proceedings.
Thank you for the informative and important article.
My personal complements and congratulations to Mdhuji.
Appreciate the timely receipt of notification and judgment update
With reference to 36(2), can Executing Court consider / grant STAY of execution of Arbitral Award when there is no STAY by the court where application u/s 34 is pending and the JD having filed STAY applications in both the courts ?