2021 Supreme(SC) 430

SUPREME COURT OF INDIA
R.F. NARIMAN, B.R. GAVAI, JJ.
Amazon.Com NV Investment Holdings LLC – Appellant
Versus
Future Retail Limited and Others – Respondents
Civil Appeal Nos. 4492-4493, 4494-4495, 4496-4497 of 2021
Decided On : 06-08-2021

IMPORTANT POINTS
(1) There is nothing in Arbitration Act that prohibits contracting parties from agreeing to a provision providing for an award being made by an Emergency Arbitrator.
(2) No appeal lies under Section 37 of Arbitration Act against an order of enforcement of an Emergency Arbitrator’s order made under Section 17(2) of Act.
(3) A party cannot be heard to say, after it participates in an Emergency Award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an Emergency Arbitrator’s ruling.
(4) Mere fact that a recommendation of a Law Commission Report is not followed by Parliament, would not necessarily lead to conclusion that what has been suggested by Law Commission cannot form part of statute as properly interpreted.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Section 17(1) – Award delivered by Emergency Arbitrator under Arbitration Rules of Singapore International Arbitration Centre{SIAC} – Legal status – Arbitration proceeding can be administered by a permanent arbitral institution – Parties are free to authorise any person including an institution to determine issues that arise between parties – Parties are free to agree on procedure to be followed by an arbitral tribunal in conducting its proceedings – There being no interdict, either express or by necessary implication, Emergency Arbitrator’s orders, if provided for under institutional rules, would be covered by Arbitration Act – Parties to contract, by agreeing to SIAC Rules and award of Emergency Arbitrator, have not bypassed any mandatory provision of Arbitration Act – There is nothing in Arbitration Act that prohibits contracting parties from agreeing to a provision providing for an award being made by an Emergency Arbitrator – Full party autonomy is given by Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as “awards” – Such orders are an important step in aid of decongesting civil courts and affording expeditious interim relief to parties – Such orders are referable to and are made under Section 17(1) of Arbitration Act. (Paras 11, 13, 17 and 41)

(B) Arbitration and Conciliation Act, 1996 – Sections 9(3) and 17(1) read with Section 2(1)(d) – Arbitral Tribunal – Ambit of – Heart of Section 17(1) is application by a party for interim reliefs – There is nothing in Section 17(1), when read with other provisions of Act, to interdict application of rules of arbitral institutions that parties may have agreed to – Insofar as Section 17(1) is concerned, “arbitral tribunal” would, when institutional rules apply, include an Emergency Arbitrator, context of Section 17 “otherwise requiring” – the context being interim measures that are ordered by arbitrators – Same object and context would apply even to Section 9(3) – Court shall not entertain an application for interim relief once an arbitral tribunal is constituted unless court finds that circumstances exist which may not render remedy provided under Section 17 efficacious – Since Section 9(3) and Section 17 form part of one scheme, an “arbitral tribunal” as defined under Section 2(1)(d) would not apply and arbitral tribunal spoken of in Section 9(3) would be like “arbitral tribunal” spoken of in Section 17(1) which would include an Emergency Arbitrator appointed under institutional rules. (Para 20)

(C) Statute Law – Law Commission Report – Mere fact that a recommendation of a Law Commission Report is not followed by Parliament, would not necessarily lead to conclusion that what has been suggested by Law Commission cannot form part of statute as properly interpreted. (Para 27)

(D) Arbitration and Conciliation Act, 1996 – Section 17(1) – Emergency Arbitrator’s Award – Enforcement of – An Emergency Arbitrator’s order, which is exactly like an order of an arbitral tribunal once properly constituted, in that parties have to be heard and reasons are to be given, would fall within institutional rules to which parties have agreed, and would consequently be covered by Section 17(1) – A party cannot be heard to say, after it participates in an Emergency Award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an Emergency Arbitrator’s ruling – Having agreed to paragraph 12 of Schedule 1 to SIAC Rules, it cannot lie in mouth of a party to ignore an Emergency Arbitrator’s award by stating that it is a nullity when such party expressly agrees to binding nature of such award from the date it is made and further undertakes to carry out the interim order immediately and without delay – Arbitration and Conciliation Act, 1996 is a complete break with past and is no longer to be viewed as an ouster statute but as a statute which favours remedy of arbitration so as to de-clog civil courts which are, in today’s milieu, extremely burdened – Arbitration Act turns principle of ouster on its head when it comes to arbitration as a favoured means of resolving civil disputes.. (Paras 35, 36 and 38)

(E) Administration of Justice – Judicial Orders – No order bears the stamp of invalidity on its forehead and has to be set aside in regular court proceedings as being illegal – Even if an order is later set aside as having been passed without jurisdiction, for period of its subsistence, it is an order that must be obeyed. (Paras 39)

(F) Civil Procedure Code, 1908 – Order XXXIX, Rule 2-A – Arbitration and Conciliation Act, 1996 – Sections 9(1) and 17(2) – Enforcement of interim orders – If an order under Section 9(1) is flouted by any party, proceedings for enforcement of same are available to court making such orders under Section 9(1) – These powers are traceable directly to Section 9(1) of Act – An order made under Order XXXIX Rule 2-A, in enforcement of an order made under Section 9, would also be referable to Section 9(1) of Arbitration Act – Section 17(2) creates a legal fiction – This fiction is created only for the purpose of enforceability of interim orders made by arbitral tribunal – To extend it to appeals being filed under Code of Civil Procedure would be a big leap not envisaged by legislature at all in enacting said fiction. (Paras 54, 57 and 59)

(G) Arbitration and Conciliation Act, 1996 – Section s 37 and 17(2) – Appeal against arbitral award – No appeal lies under Section 37 of Arbitration Act against an order of enforcement of an Emergency Arbitrator’s order made under Section 17(2) of Act – Section 37 is a complete code so far as appeals from orders and awards made under Arbitration Act are concerned. (Paras 69 and 76)

Facts of the case:

Two important questions arise in these appeals – first, as to whether an “award” delivered by an Emergency Arbitrator under Arbitration Rules of the Singapore International Arbitration Centre [SIAC Rules] can be said to be an order under Section 17(1) of Arbitration and Conciliation Act, 1996 ; and second, as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of award of an Emergency Arbitrator by a Single Judge of High Court is appealable.

Findings of Court:

Despite Section 17 being amended by the same Amendment Act, by making Section 17(1) mirror image of Section 9(1) as to the interim measures that can be made, and by adding Section 17(2) as a consequence thereof, significantly, no change was made in Section 37(2) (b) to bring it in line with Order XLIII, Rule 1(r). The said Section continued to provide appeals only from an order granting or refusing to grant any interim measure under Section 17. Granting or refusing to grant any interim measure under Section 17 would only refer to grant or non-grant of interim measures under Section 17(1)(i) and 17(1) (ii). Opening words of Section 17(2), namely, “subject to any orders passed in appeal under Section 37…” also demonstrates legislature’s understanding that orders that are passed in an appeal under Section 37 are relatable only to Section 17(1).

Result : Appeals disposed of.