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Browse Law School Education ADR: Arbitration Important Arbitration Cases

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In this video, we’ll discuss the famous BCCI v. Kochi Cricket Pvt. Ltd. case, which is a 2018 Supreme Court case.

BRIEF FACTS:

A notice dated 18 January 2012 was sent by respondents invoking arbitration under a franchise agreement dated 12 March 2011. A sole arbitrator was appointed, who delivered two arbitral awards dated 22 June 2015 in favour of the respondents. On 16 September 2015, the appellants filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 in the Bombay High Court challenging these arbitral awards. On 26 November 2015, the respondents filed two execution applications in the High Court for payment of the amounts awarded under the two awards, pending enforcement of such awards. These were resisted by Chamber Summons filed by the appellants, praying for the dismissal of the execution applications stating that the old Section 36 would be applicable, and that, therefore, there would be an automatic stay of the awards until Section 34 proceedings had been decided. The Single Judge ruled that the amended Section 36 would be applicable and therefore, no automatic stay could be pleaded. Hence this appeal was made. 

ISSUE: 

Now the issues over here were:

  1.  What is the interpretation of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 in cases pending prior to the coming into effect of the Amendment Act w.e.f 23 October 2015?
  2.  Whether the amended Section 36 will be applicable to a Section 34 application filed after the Commencement Date even though the arbitral proceedings commenced before such date? and
  3.  Whether the amended Section 36 will be applicable to a Section 34 application filed prior to the Commencement Date?

HELD: 

The Supreme Court held that, Section 26 is bifurcated into two partsArbitral Proceedings themselves, and Court Proceedings in relation thereto. The first part applies only to the arbitral proceedings which have been initiated in accordance with Section 21. The second part refers to Court proceedings “in relation to” arbitral proceedings. 

A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication.

The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.

In all cases where the Section 34 petition is filed, after the commencement of the Amendment Act, and an application for stay having been made under Section 36 therein, will be governed by Section 34 as amended and Section 36 as substituted. But, for Section 34 petitions that have been filed before the commencement of the Amendment Act, the Supreme Court considered Section 6 of the General Clauses Act, 1897.

The SC further observed that the automatic stay of the operation of the award under the un-amended Section 36 was not a vested right because Section 36 was an execution proceeding. Relying upon the decisions of the Supreme Court in Lalji Raja and Sons v. Hansraj Nathuram,(1971) 1 SCC 721—which is a 1971 case and Narhari Shivram Shet Narvekar v. Pannalal Umediram(1976) 3 SCC 203—which is a 1976 case, the SC concluded that the execution of a decree pertains to the realm of procedure and there is no substantive vested right in a judgment debtor to resist the execution. Also, the automatic stay under an un-amended Section 36 was more of a clog on the rights of the decree holder, as opposed to a right granted to the award debtor.

RATIO:

Now let’s come to the ratio of this case. 

The Supreme Court, in this case, has conclusively determined that Section 26 would be prospectively applied to arbitral proceedings and court proceedings in relation to arbitration proceedings filed on or after the commencement of the Amendment Act and the substituted Section 36 will be applicable to Section 34 applications filed both before and after the Commencement Date. 

Please NOTE that: Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 has been omitted under the Arbitration and Conciliation (Amendment) Act, 2019 and shall be deemed to have been omitted with effect from the 23rd October, 2015.

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