Special Appeal Against Arbitration Act Sec 11 Order Not Maintainable Due to Statutory Bar: Allahabad High Court - 2024-05-08

Covering Law & Justice.

Allahabad High Court Upholds Statutory Bar on Special Appeals in Arbitration Cases

Lucknow, India - The Allahabad High Court, in a recent judgment, has reiterated the statutory bar on filing special appeals against orders passed under Section 11 of the Arbitration and Conciliation Act, 1996. The Division Bench, comprising Justices Rajan Roy and Om Prakash Shukla, dismissed a special appeal filed by M/S Moksh Innovations Inc., affirming that Section 11(7) of the Act continues to prohibit such appeals despite amendments to the legislation.

Case Overview: Challenge to Arbitration Order and Maintainability Dispute

The case arose from a special appeal filed by M/S Moksh Innovations Inc. against an order of a Single Judge of the Allahabad High Court, which pertained to an Arbitration and Conciliation Application under Section 11(4) of the Arbitration Act. The respondent, E City Property Management and Services (P) Ltd., raised a preliminary objection regarding the maintainability of the special appeal itself, citing Section 11(7) of the Arbitration Act.

Arguments Presented: Appellant Attempts to Overcome Statutory Bar

Counsel for the appellant, Mr. Desh Mitra Anand, argued that the special appeal was maintainable under Chapter VIII Rule 5 of the Allahabad High Court Rules, asserting it did not fall under any excluded categories. He further contended that Section 11(7) of the Arbitration Act, which bars appeals, had been omitted by the Arbitration and Conciliation (Amendment) Act, 2019, thus removing the statutory impediment.

Ms. Pushpila Bisht, representing the respondent, countered by emphasizing the explicit bar in Section 11(7). She argued that despite the 2019 Amendment Act, the specific provision omitting Section 11(7) had not yet been brought into force through official notification, meaning the bar remained legally in effect.

Court's Reasoning: Section 11(7) Still in Force

The High Court meticulously examined the Arbitration and Conciliation (Amendment) Act, 2019 and the notifications issued regarding its implementation. The court noted that while the Amendment Act intended to omit Section 11(7) through Section 3 of the amending legislation, the crucial notification bringing Section 3 into force was absent.

The judgment highlighted:

> "Now, when we peruse the Amending Act 2019, we find that no date has been appointed for coming into force of Section 3 of the Amending Act 2019 by which Section 11 (7) of the original Act 1996 is sought to be omitted, meaning thereby, sub-Section (7) of Section 11 of the Act 1996 barring a Letters Patent Appeal/Special Appeal against an order passed under Section 11 (4) (5) (6) of the Act 1996, still exists, therefore, the bar continues so long as Section 3 of the Amending Act 2019 is not notified."

The bench firmly rejected the appellant's reliance on the High Court Rules, stating that these rules cannot override the express provisions of a special enactment like the Arbitration Act. The court underscored the primacy of the statutory bar imposed by Section 11(7).

Decision and Implications: Special Appeal Dismissed

Ultimately, the Allahabad High Court dismissed the special appeal as not maintainable due to the statutory bar under Section 11(7) of the Arbitration and Conciliation Act, 1996. The court clarified that until Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019 is officially notified and brought into effect, the prohibition on appeals against orders under Section 11 of the Arbitration Act remains valid.

This ruling reinforces the finality intended for decisions made under Section 11 of the Arbitration Act, aiming to expedite arbitration proceedings and minimize judicial intervention at the stage of arbitrator appointment. While the appellant is left with the option to pursue other legally permissible remedies, this judgment firmly establishes that special appeals are not an available avenue in such matters under the current legal framework.