1. Breach of interim order passed by Arbitral Tribunal under Section 17, Arbitration and Conciliation Act, 1996 — Reference for contempt under Section 27(5). (Para 2 )
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2017 Supreme(SC) 1220
SUPREME COURT OF INDIA
ROHINTON FALI NARIMAN and SANJAY
KISHAN KAUL, JJ.
Alka Chandewar : Appellant
Vs.
Shamshul Ishrar Khan : Respondent
Civil Appeal No. 8720 of 2017 (Arising out of S.L.P. (Civil) No. 3576 of 2016)
Decided On : 06-07-2017
Section 27(5) of the Arbitration and Conciliation Act, 1996, empowers the Court to punish for contempt of any order passed by an Arbitral Tribunal during proceedings, including interim orders under Section 17, ensuring such orders are enforceable and not rendered ineffective.
Headnote:Arbitration and Conciliation Act, 1996–Sections 9, 17 and 27(5)–Arbitration–Contempt of order–Persons failing to attend in accordance with court process fall under a separate category from "any other default"–Section 27(5) is not confined to a person being guilty of contempt only when failing to attend in accordance with such process–Section 27(5) specifically states that persons guilty of any contempt to Arbitral Tribunal during conduct of Arbitral proceedings is within its ken–Entire object of providing that a party may approach Arbitral Tribunal instead of Court for interim reliefs would be stultified if interim orders passed by such Tribunal are toothless–It is to give teeth to such orders that an express provision is made in Section 27(5) of Act. (Para 4)
Interpretation of Statute–Marginal Note–A marginal note can be used as an internal aid to interpretation of statutes only in order to show what is general drift of the section–It may also be resorted to when plain meaning of section is not clear. (Para 4)
(2001) 8 SCC 397–Relied.2007 (13) SCC 220–Referred.
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2. Whether Section 27(5) empowers the Court to punish for contempt of interim orders passed by an Arbitral Tribunal or is limited to assistance in taking evidence. (Para 4 , 5 )
3. Literal interpretation of Section 27(5) covers any contempt of the Tribunal; interim orders must be enforceable to prevent Section 17 from becoming a dead letter. (Para 7 , 8 )
4. Section 27(5) of the Arbitration and Conciliation Act, 1996 empowers the Court to punish any contempt of the Arbitral Tribunal during the conduct of proceedings. (Para 7 )
5. Appeal allowed — High Court judgment set aside — Matter remanded to decide the alleged contempt on facts. (Para 11 )
6. Does Section 27(5) of the Arbitration and Conciliation Act, 1996 allow the Court to punish for contempt of interim orders passed by an Arbitral Tribunal?
Yes. A literal reading of Section 27(5) indicates that persons guilty of any contempt to the Arbitral Tribunal during the conduct of proceedings are subject to penalties and punishments by the Court on the Tribunal's representation. (Para 7 )
7. What is the evidentiary value of a marginal note when interpreting a statutory provision?
A marginal note is an internal aid to interpretation used only to show the general drift of a section or when the plain meaning is unclear; it cannot override the plain meaning of the text. (Para 7 )
8. Why is the enforceability of Section 17 orders crucial in relation to Section 9?
Parties must elect between seeking interim relief from the Court under Section 9 or the Tribunal under Section 17. If Tribunal orders were unenforceable, Section 17 would be a dead letter. (Para 7 , 8 )
9. How did the 2015 Amendment to the Arbitration and Conciliation Act affect the enforcement of interim orders?
Section 17(2) was inserted to provide a complete solution by deeming orders issued by the arbitral tribunal as orders of the Court, making them enforceable under the Code of Civil Procedure, 1908. (Para 9 , 10 )
R.F. NARIMAN, J.:–
Leave granted.
2. The present appeal arises from the judgment of the Bombay High Court dated 27th October, 2015, in which the High Court has construed Section 27(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) in a somewhat restrictive manner. The facts necessary to appreciate the point involved in this appeal are that on 7th October, 2010, the sole Arbitrator appointed by the parties passed an interim order under Section 17 of the said Act, in which it was mentioned that no further flats were to be disposed of without the leave of the Arbitral Tribunal. In breach of this order, it is alleged that on 14th October, 2010 the respondent in fact transferred five such flats. By the order passed on 22nd March, 2012, it was held by the learned Arbitrator that the order of 7th October, 2010 had, in fact, been breached by the respondent and certain other interim directions were made by the aforesaid order. Ultimately, by an order dated 5th May, 2014, the learned Arbitrator referred the aforesaid contempt of the order dated 7th October, 2010 to the High Court to pass necessary orders thereon under Section 27(5) of the Act.
3. In the judgment under appeal, the High Court held:—
“In view of the above discussion, Section 27(5) of the Arbitration and Conciliation Act, 1996 does not empower the Tribunal to make representation to the Court for contempt if the orders including the interim orders passed by the Arbitrator except in respect of taking evidence are violated by the party. The Contempt Petition being the representation made by the Tribunal is beyond the period of limitation and is not maintainable in law. Moreover, the final award of Rs.8 crores is granted in favour of the petitioner by the Arbitrator.”
4. We have heard learned counsel for the parties. Shri B.H. Marlapalle, learned senior counsel appearing on behalf of the appellant, has argued that Sections 9 and 17 being alternative remedies available to the parties before the Tribunal, if orders made under Section-17 were unenforceable, they would be mere ropes of sand as a result of which the provision would be rendered otiose. He also argued that Section 27 of the Act does not leave any doubt as to the scope and ambit of the Court's power to punish for contempt of orders made by the Arbitral Tribunal. He relied upon a Delhi High Court judgment, and a judgment delivered by this Court reported in 2007 (13) SCC 220.
5. On the other hand, Shri Rana Mukherjee, learned senior counsel appearing on behalf of the respondent, has supported the High Court judgment. However, he very fairly states before us that he does not support the High Court judgment on the aspect of limitation. According to him, the marginal note of Section 27 makes it clear that Section 27(5) would only apply to assistance in taking evidence and not to any other contempt that may be committed. According to him, this lacuna in the law has now been filled pursuant to the 246th Law Commission Report, which he has referred to and relied upon, after which Section 17(2) has been inserted by the Amendment Act of 2015.
6. Having heard learned counsel for the parties, we first set out the relevant statutory provisions as under:—
9. Interim measures, etc. by Court.—(1) A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court:
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:
(a) the preservation, interim custody or sale of any goods, which are the subject matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question
