2015 Arbitration Amendment Not Applicable Though S.11 Application Was Filed After It, If Arbitration Notice Was Issued Pre-Amendment : Supreme Court

The Supreme Court has ruled that where the notice invoking arbitration is issued prior to the coming into force of the Arbitration and Conciliation (Amendment) Act, 2015, i.e., prior to 23.10.2015, and the application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking appointment of an arbitrator, is made post the enforcement of the Amendment Act, the 2015 Amendment Act shall not be applicable."It is observed and held that in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015 and the application under Section 11 for appointment of an arbitrator is made post Amendment Act, 2015, the provisions of pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015", the Court hedl. The bench of Justices M.R. Shah and C.T. Ravikumar was dealing with an appeal against the decision of the Telangana High Court, who had dismissed the Section 11 application of the appellant, by applying the A&C Act, prevailing prior to the 2015 Amendment Act, and by entering into the question of ‘accord and satisfaction’. The appellant had challenged the said decision on the ground that the court was restrained from entering into the issue of ‘accord and satisfaction’ in view of Section 11 (6A) of the A&C Act, as inserted by the 2015 Amendment Act.While upholding the decision of the High Court, the bench dismissed the contention of the appellant that the decision of the Apex Court in Union of India vs. Parmar Construction Company, (2019) 15 SCC 682 and Union of India vs. Pradeep Vinod Construction Company, (2020) 2 SCC 464 are per incuriam, as they fail to consider the top court’s decision in Board of Control for Cricket in India (BCCI) vs Kochi Cricket Private Limited and Ors., (2018) 6 SCC 287.In Parmar Construction (2019) and Pradeep Vinod Construction (2020), the Supreme Court had specifically held that where the request to refer the dispute to arbitration was made before the 2015 Amendment Act came into effect, the unamended A&C Act shall be applicable for appointment of arbitrator. The court remarked that in BCCI (2018), the Apex Court has ruled the 2015 Amendment Act to be prospective in nature only so far as the proceedings under Sections 34 and 36 of the A&C Act are concerned. Further, the application under Section 11(6) was not in issue before the court.The appellant, M/s. Shree Vishnu Constructions, entered into an agreement for some repair work with the respondent, Military Engineering Service. After some dispute arose between the parties with respect to payment of the dues under the agreement, the appellant invoked the arbitration clause. The appellant’s application under Section 11 of the A&C Act before the Telangana High Court seeking appointment of arbitrator, was opposed by the respondent on the ground that the amount due under the final bill raised by the appellant was paid, and that the appellant had also issued a “no further claim” certificate. The respondent had, therefore, pleaded that on the ground of ‘accord and satisfaction’, the dispute was not required to be sent for arbitration.The appellant, on the other hand, had contended before the High Court that in view of the 2015 Amendment Act by which Section 11(6A) came to be inserted, the court has a very limited jurisdiction while deciding the Section 11 application. The court, therefore, must only consider whether there is an existence of the arbitration agreement or not, and the issue with respect to the ‘accord and satisfaction’ has to be left to be decided by the arbitrator / arbitral tribunal.The High Court, however, concluded that the 2015 Amendment Act was not applicable to the dispute. The court thus dismissed the application by holding that there was a full and final settlement, noting that the appellant had issued a “no further claim” certificate.The appellant, M/s. Shree Vishnu Constructions, challenged the decision of the High Court before the Supreme Court.The respondent, Military Engineering Service, argued before the Apex Court that though the application under Section 11(6) of the A&C Act was filed on 27.04.2016, i.e., after the 2015 Amendment Act came into force, the notice invoking the arbitration was issued on 20.12.2013, i.e., much prior to the enforcement of the Amendment Act. Thus, the 2015 Amendment Act was not applicable.The top court observed that as per Section 11(6A), as inserted by the 2015 Amendment Act, the powers of the court while deciding an application under Section 11(6) of the A&C Act, are confined to the examination of the existence of an arbitration agreement, which powers were not restricted in the pre-amendment Act.The bench reckoned that Section 26 of the 2015 Amendment Act provides that nothing contained in the Amendment Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the A&C Act, before the commencement of the Amendment Act, unless the parties otherwise agree.Perusing Section 21 of the ...

2015 Arbitration Amendment Not Applicable Though S.11 Application Was Filed After It, If Arbitration Notice Was Issued Pre-Amendment : Supreme Court

Parina Katyal

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