1. Application for appointment of arbitrator under Section 11, Arbitration Act, 1996 — Notice invoking arbitration issued prior to 2015 Amendment — Application filed post-amendment. (Para 1 , 2 )
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2023 Supreme(SC) 490
SUPREME COURT OF INDIA
M.R. Shah, C.T. Ravikumar, JJ.
M/s. Shree Vishnu Constructions – Appellant
Versus
The Engineer in Chief Military Engineering Service & Ors. – Respondents
Civil Appeal No. 3461 of 2023 (@ SLP (C) No. 5306 of 2022)
Decided On : 09-05-2023
Important Points
The Amendment Act, 2015 is prospective in nature and will apply to arbitral proceedings commenced after its commencement. The notice invoking arbitration issued prior to the Amendment Act, 2015 and the application under Section 11 filed post Amendment Act, 2015, the pre-Amendment Act, 2015 shall be applicable.
Subject
Arbitration Law - Applicability of Amendment Act, 2015
Act Referred
Headnote
Arbitration - Applicability of Amendment Act, 2015 - Section 11(6A) - Sections 21 and 26 - The court held that the Amendment Act, 2015 is prospective in nature and will apply to arbitral proceedings commenced after its commencement. The notice invoking arbitration issued prior to the Amendment Act, 2015 and the application under Section 11 filed post Amendment Act, 2015, the pre-Amendment Act, 2015 shall be applicable.
Fact of the Case:
The appellant and respondents entered into an agreement for additions/alterations and repairs/renewals. The appellant invoked the arbitration clause and filed an application under Section 11(6) of the Arbitration Act, 1996. The High Court dismissed the application, holding that the pre-Amendment Act, 2015 shall be applicable.
Finding of the Court:
The court found that the Amendment Act, 2015 is prospective in nature and will apply to arbitral proceedings commenced after its commencement. The notice invoking arbitration issued prior to the Amendment Act, 2015 and the application under Section 11 filed post Amendment Act, 2015, the pre-Amendment Act, 2015 shall be applicable.
Issues: The interpretation of Section 26 of the Amendment Act, 2015 in relation to the applicability of the amended provisions, specifically Section 11(6A), to judicial proceedings initiated after the Amendment Act, 2015 came into force.
Ratio Decidendi: The court held that the Amendment Act, 2015 is prospective in nature and will apply to arbitral proceedings commenced after its commencement. The notice invoking arbitration issued prior to the Amendment Act, 2015 and the application under Section 11 filed post Amendment Act, 2015, the pre-Amendment Act, 2015 shall be applicable.
Final Decision: The present appeal was dismissed, and the court held that the pre-Amendment Act, 2015 shall be applicable. No order as to costs was made.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) :Mr. K. Parameshwar, AOR Ms. Arti Gupta, Adv. Ms. Kanti, Adv. For the Respondent(s): Mr. Padmesh Mishra, Adv. Mr. Arvind Kumar Sharma, AOR Ms. Megha Karnwal, AOR
For the Appellant(s) :Mr. K. Parameshwar, AOR Ms. Arti Gupta, Adv. Ms. Kanti, Adv. For the Respondent(s): Mr. Padmesh Mishra, Adv. Mr. Arvind Kumar Sharma, AOR Ms. Megha Karnwal, AOR
Table of Contents
2. Whether the 2015 Amendment Act, specifically Section 11(6A), applies to Section 11 applications filed after the amendment where arbitration was invoked before the amendment. (Para 3 , 4 )
3. The 2015 Amendment Act does not apply to arbitral proceedings commenced under Section 21 before its commencement, and Section 11 applications are governed by this commencement date. (Para 6 , 7 , 9 )
4. Where notice invoking arbitration is issued prior to the 2015 Amendment, the pre-amendment law applies to Section 11 applications, regardless of when the application is filed. (Para 10 )
5. Appeal dismissed; High Court's refusal to appoint an arbitrator based on accord and satisfaction upheld. (Para 11 )
6. Does the Arbitration and Conciliation (Amendment) Act, 2015 apply to Section 11 applications if the arbitration was invoked before the amendment?
No. If the notice invoking arbitration was issued prior to the 2015 Amendment, the proceedings are governed by the pre-amendment law, as the arbitration is deemed to have commenced on the date the request for arbitration was received by the respondent. (Para 9 , 10 )
7. How does Section 26 of the Amendment Act, 2015 determine the applicability of the amended provisions?
Section 26 provides that the Amendment Act shall not apply to arbitral proceedings commenced in accordance with Section 21 of the principal Act before the commencement of the Amendment Act, unless the parties otherwise agree. (Para 6 , 9 )
8. What is the limited jurisdiction of the Court under Section 11(6A) of the Arbitration Act?
Under Section 11(6A), the Supreme Court or High Court, while considering an application for the appointment of an arbitrator, is confined strictly to the examination of the existence of an arbitration agreement, leaving all other preliminary issues to be decided by the arbitrator. (Para 6 , 7 )
JUDGMENT
M.R. Shah, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court for the State of Telangana at Hyderabad in ARBA No. 151 of 2016 by which the High Court has dismissed the said application filed under Section 11 of the Arbitration Act, 1996 (hereinafter referred to as “Act, 1996”) and has refused to appoint an arbitrator on the ground that earlier the appellant had accepted the amount as per the final bill in full and final settlement and without raising any dispute and also signed and issued “no further claim certificate”, the original applicant has preferred the present appeal.
2. The facts leading to the present appeal in nutshell are as under:-
2.1 That the appellant herein and the respondents entered into an agreement vide agreement dated 22.07.2010 for additions/alterations to Senior Non- Commissioned Officers mess and repairs/renewals to floors in tech area at Air Force Academy, Hyderabad. The appellant raised a revised final bill for the aforesaid work on 10.07.2012. The payment in respect of the final bill was made to the appellant on 29.04.2013. The appellant also issued “no further claim” certificate.
2.2 The appellant sent a notice dated 20.12.2013 invoking the arbitration clause. The appellant preferred an application under Section 11(6) of the Act, 1996 before the High Court on 27.04.2016 and prayed to appoint an arbitrator. The application was opposed by the respondents inter alia on the ground that the entire amount due and payable under the final bill was paid as far as back on 29.04.2013 and that even the appellant issued the “no further claim” certificate and therefore, on the ground of “accord and satisfaction”, the dispute is not required to be sent for arbitration. However, it was the case on behalf of the appellant that in view of the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as “Amendment Act, 2015”) by which Section 11(6A) came to be inserted, while deciding the application under Section 11(6), the Court would have a very limited jurisdiction and to consider only whether there is an existence of the arbitration agreement or not and no further inquiry is permissible at the stage of deciding the application under Section 11(6) and the issue with respect to the “accord and satisfaction” has to be left to be decided by the arbitrator/arbitral tribunal. Therefore, it was the case on behalf of the appellant that the provisions of the Amendment Act, 2015 shall be applicable.
2.3 It was the case on behalf of the respondents that as per Section 26 read with Section 21 of the Amendment Act, 2015, Amendment Act, 2015 shall not be applicable in a case where arbitration proceedings as per Section 21 of the Arbitration Act, has been commenced prior to the Amendment Act, 2015.
2.4 By the impugned judgment and order, the High Court has dismissed the arbitration petition and has refused to appoint the arbitrator/arbitral tribunal on the ground that the Amendment Act, 2015 shall not be applicable and the Act, pre-amendment, 2015, shall be applicable. That thereafter, after holding that there was a full and final settlement of the payment as per the final bill as far as back on 29.04.2013 and even the appellant issued the “no further claim” certificate and even the application under Section 11(6) of the Act, 1996 was filed after a period of approximately three years, the High Court has dismissed the said arbitration application. The impugned judgment and order passed by the High Court is the subject matter of present appeal.
3. Shri K. Parameshwar, learned counsel has appeared on behalf of the appellant.
3.1 it is submitted by Shri Parameshwar, learned counsel appearing on behalf of the appellant that the issue that arises for consideration in the present appeal is the interpretation of Section 26 of the Amendment Act, 2015 insofar as the applicability of the amended provisions, more specifically, insertion of Section 11(6A) and its applica
