AMAZON.COM Nv Investment Holdings Llc v. Future Retail Limited & Ors.
R. F. NARIMAN, J.
1. Two important questions arise in these appeals – first, as to
whether an “award” delivered by an Emergency Arbitrator und er the
Arbitration Rules of the Singapore International Arbitra tion Centre
[“SIAC Rules”] can be said to be an order under Section 17(1) of the
Arbitration and ciliation Act, 1996 [“Arbitration Act”]; and second, as
to whether an order passed under Section 17(2) of the Arbitration Act in
enforcement of the award of an Emergency Arbitrator by a learned
Single Judge of the High Court is appealable.
2. The brief facts necessary to appreciate the context in w hich
these two questions arise are as follows:
2.1. Proceedings were initiated by the Appellant, Amazon.com
NV Investment Holdings LLC [“Amazon”] before the High Court of
Delhi under Section 17(2) of the Arbitration Act to enforce the award/
order dated 25 th October, 2020 of an Emergency Arbitrator, Mr. V.K.
Rajah, SC. This order was passed in arbitration proceedings being SIAC
Arbitration No. 960 of 2020 commenced by Amazon aga inst
Respondents No. 1 to 13, who are described as under:
(i) Respondent No.1 – Future Retail Limited, India’s second-
largest offline retailer [“FRL”]
(ii) Respondent No.2 – Future Coupons Pvt. Ltd., a company
that holds 9.82% shareholding in FRL and is controlled and
majority-owned by Respondents No. 3 to 11 [“FCPL”]
(iii) Respondent No.3 – Mr. Kishore Biyani, Executiv e
Chairman and Group CEO of FRL
(iv) Respondent No.8 – Mr. Rakesh Biyani, Managing Director
of FRL
(v) Respondents No. 4 to 7 and 9 to 11 – other members of the
Biyani family, namely, Ms. Ashni Kishore Biyani, Mr. Anil
Biyani, Mr. Gopikishan Biyani, Mr. Laxminarayan Biyani,
Mr. Sunil Biyani, Mr. Vijay Biyani, and Mr. Vivek Biyani,
who are promoters and shareholders of FRL
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(vi) Respondents No. 12 and 13 – Future Corporate Resources
Pvt. Ltd. and Akar Estate and Finance Pvt. Ltd., group
companies of FRL
Respondents No. 1 to 13 are hereinafter collectively referred to
as the “Biyani Group”.
2.2. The seat of the arbitral proceedings is New Delhi, and as per
the arbitration clause agreed upon by the parties, SIAC Rules apply.
2.3. Three agreements were entered into between the parties. A
Shareholders’ Agreement dated 12 th August, 2019, was entered into
amongst the Biyani Group, i.e., Respondents No. 1 to 13 [“ FRL
Shareholders’ Agreement ”]. Under this Shareholders’ Agreement,
FCPL was accorded negative, protective, special, and materi al rights
with regard to FRL including, in particular, FRL’s retail stores [“retail
assets ”]. The rights granted to FCPL under this Sharehold ers’
Agreement were to be exercised for Amazon’s benefit and thus w ere
mirrored in a Shareholders’ Agreement dated 22nd August, 2019 entered
into between Amazon, FCPL, and Respondents No. 3 to 13 [“ FCPL
Shareholders’ Agreement ”]. Amazon agreed to invest a sum of
Rs.1431 crore in FCPL based on the rights granted to FCPL under the
FRL Shareholders’ Agreement and the FCPL Shareholders’ Agreement.
This investment was recorded in the Share Subscription Agreement dated
22nd August, 2019 entered into between Amazon, FCPL, and Respondents
No. 3 to 13 [“ Share Subscription Agreement ”]. It was expressly
stipulated that this investment in FCPL would “flow down” to FRL. It
appears that the basic understanding between the pa rties was that
Amazon’s investment in the retail assets of FRL would continue to vest
in FRL, as a result of which FRL could not transfer its reta il assets
without FCPL’s consent which, in turn, could not be granted unl ess
Amazon had provided its consent. Also, FRL was prohib ited from
encumbering/transferring/selling/divesting/disposing of its retail assets
to “restricted persons”, being prohibited entities, with whom FRL, FCPL,
and the Biyanis could not deal. A list of such restricted persons was then
set out in Schedule III of the FCPL Shareholders’ Agreement and also
under the FRL Shareholders’ Agreement vide letter dated 19th December,
2019. There is no doubt that the Mukesh Dhirubhai Ambani grou p
(Reliance Industries group) is a “restricted person” under both these
Shareholders’ Agreements.
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
2.4. On 26th December, 2019, Amazon invested the aforesaid sum
of Rs.1431 crore in FCPL which “flowed down” to FRL on the very
same day. The bone of contention between the parties is that within a
few months from the date of this investment, i.e., on 29th August, 2020,
Respondents No. 1 to 13 entered into a transaction with the Muke sh
Dhirubhai Ambani group which envisages the amalgamation of FRL with
the Mukesh Dhirubhai Ambani group, the consequential cessa tion of
FRL as an entity, and the complete disposal of its retail assets in favour
of the said group.
2.5. Amazon initiated arbitration proceedings and filed an application
on 5th October, 2020 seeking emergency interim relief under the SIAC
Rules, asking for injunctions against the aforesaid transaction. Mr. V.K.
Rajah, SC was appointed as the Emergency Arbitrator and heard detailed
oral submissions from all parties and then passed an “int erim award”
dated 25 th October, 2020, in which the learned Arbitrator issued the
following injunctions/directions:
“B. Dispositive Orders/Directions
285. In the result, I award, direct, and order as follows:
(a) the Respondents are injuncted from taking any s teps in
furtherance or in aid of the Board Resolution made by the Board
of Directors of FRL on 29 August 2020 in relation to the Disputed
Transaction, including but not limited to filing or pursuing any
application before any person, including regulatory bodies or
agencies in India, or requesting for approval at any compan y
meeting;
(b) the Respondents are injuncted from taking any steps to complete
the Disputed Transaction with entities that are part of the MD A
Group;
(c) without prejudice to the rights of any current Promoter Lenders,
the Respondents are injuncted from directly or indirectly takin g
any steps to transfer/ dispose/ alienate/ encumber FRL’ s Retail
Assets or the shares held in FRL by the Promoters in any manner
without the prior written consent of the Claimant;
(d) the Respondents are injuncted from issuing securities of FRL
or obtaining/securing any financing, directly or indirectly, from any
Restricted Person that will be in any manner contrary to Section
13.3.1 of the FCPL SHA;
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(e) the orders in (a) to (d) above are to take effect i mmediately
and will remain in place until further order from the Tribunal, when
constituted; and
(f) the Claimant is to provide within 7 days from the date hereof a
cross-undertaking in damages to the Respondents. If the Parti es
are unable to agree on its terms, they are to refer their differences
to me qua EA for resolution; and
(g) the costs of this Application be part of the cos ts of this
Arbitration.”
2.6. The Biyani Group thereafter went ahead with the impugned
transaction, describing the award as a nullity and the Emergency Arbitrator
as coram non judice in order to press forward for permissions before
statutory authorities/regulatory bodies. FRL, consistent with this stand,
did not challenge the Emergency Arbitrator’s award under Section 37 of
the Arbitration Act, but instead chose to file a civil suit before the Delhi
High Court being C.S. No. 493 of 2020, in which it sought to interdict the
arbitration proceedings and asked for interim relief to restrain Amazon
from writing to statutory authorities by relying on th e Emergency
Arbitrator’s order, calling it a “tortious interference” with its civil rights.
A learned Single Judge of the Delhi High Court, after finding a prima
facie case of tortious interference, then refused to grant any interi m
injunction as follows:
“12.3 Thus the trinity of the principles for grant of interim injunction
i.e., prima facie case, irreparable loss and balance of convenience
are required to be tested in terms of principles as not ed above.
Since this Court has held that prima facie the represent ation of
Amazon based on the plea that the resolution dated 29th August,
2020 of FRL is void and that on conflation of the FCPL SHA and
FRL SHA, the ‘control’ that is sought to be asserted by Amazon
on FRL is not permitted under the FEMA FDI Rules, without the
governmental approvals, this Court finds that FRL has made out a
prima facie case in its favour for grant of interim injunc tion.
However, the main tests in the present case are in resp ect of
“balance of convenience” and “irreparable loss”. Even if a prima
facie case is made out by FRL, the balance of convenience lies
both in favour of FRL and Amazon. If the case of FRL is that the
representation by Amazon to the statutory authorities /regulators
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
is based on illegal premise, Amazon has also based its
representation on the alleged breach of FCPL SHA and FRL SHA,
as also the directions in the EA order. Hence it cannot be said that
the balance of convenience lies in favour of FRL and not in favour
of Amazon. It would be a matter of trial after parties have led
their evidence or if decided by any other competent forum to
determine whether the representation of Amazon that the
transaction between FRL and Reliance being in breach of the
FCPL SHA and FRL SHA would outweigh the plea of FRL in the
present suit. Further in case Amazon is not permitted to represent
its case before the statutory authorities/Regulators, it will suffer
an irreparable loss as Amazon also claims to have created pre-
emptive rights in its favour in case the Indian law per mitted in
future. Further there may not be irreparable loss to FRL for the
reason even if Amazon makes a representation based on incorrect
facts thereby using unlawful means, it will be for the statuto ry
authorities/Regulators to apply their mind to the facts and le gal
issues therein and come to the right conclusion. There is yet another
aspect as to why no interim injunction can be granted in the present
application for the reason both FRL and Amazon have alrea dy
made their representations and counter representations t o the
statutory authorities/regulators and now it is for the Statuto ry
Authorities/Regulators to take a decision thereon.
Therefore, this Court finds that no case for grant of in terim
injunction is made out in favour of the FRL and against Amazon.
Conclusion
13. Consequently, the present application is disposed of, declining
the grant of interim injunction as prayed for by FRL, however, the
Statutory Authorities/Regulators are directed to take the decision
on the applications/objections in accordance with the law.”
No appeal against this order has been filed by the Biyani Group.
On the other hand, Amazon has filed an appeal again st certain
observations made in the order. This appeal is pending.
2.7. Meanwhile, Amazon went ahead with an application filed
under Section 17(2) of the Arbitration Act which was heard and disposed
of by a learned Single Judge of the Delhi High Court. On 2nd February,
2021, the learned Single Judge passed a status-quo order in whi ch he
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restrained the Biyani Group from going ahead with the impugned
transaction, stating that reasons and a detailed order will follow. An appeal
against this was filed by FRL, in which a Division Bench, vide order
dated 8th February, 2021, after setting out the facts of this case and after
reaching certain prima facie findings, stayed the operation,
implementation, and execution of the Single Judge order dated 2 nd
February, 2021 till the next date of hearing, and listed the appe al for
further hearing on 26 th February, 2021. Meanwhile, on 22 nd February,
2021, the Supreme Court allowed the amalgamation proceedings pending
before the National Company Law Tribunal to continue, bu t not to
culminate in any final order of sanction of scheme of amalgamation.
2.8. On 18 th March, 2020, the learned Single Judge passed a
detailed judgment giving reasons for an order made under Section 17(2)
read with Order XXXIX, Rule 2-A of the Code of Civil Procedure, 1908
[“Code of Civil Procedure”] in which it was held that an Emergency
Arbitrator’s award is an order under Section 17(1) of the Ar bitration
Act. Since breaches of the Agreements aforementioned were admitted,
the only plea being raised being that the Emergency Arbitrator’s award
was a nullity, the learned Single Judge held that su ch award was
enforceable as an order under the Arbitration Act, and further held that
the injunctions/directions granted by the said award were de liberately
flouted by the Biyani Group. He also found that any so-called violations
of Foreign Exchange Management Act, 1999 [“FEMA”] did not render
the Emergency Arbitrator’s award a nullity, and therefore, issued a show-
cause notice under Order XXXIX, Rule 2-A of the Code of Civil
Procedure, after imposing Rs.20 lakh as costs to be deposited with the
Prime Minister Relief Fund for being used for provid ing COVID
vaccinations to the Below Poverty Line category of senior citizens of
Delhi. The learned Single Judge then directed as follows:
“Conclusion
188. The Emergency Arbitrator is an Arbitrator for all intents and
purposes; order of the Emergency Arbitrator is an order under
Section 17(1) and enforceable as an order of this Court under
Section 17(2) of the Arbitration and Conciliation Act.
189. Respondent No.2 is a proper party to the arbitratio n
proceedings and the Emergency Arbitrator has rightly invoked
the Group of Companies doctrine by applying the well settled
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
principles laid down by the Supreme Court in Chloro Controls
(supra), Cheran Properties (supra) and MTNL (supra) . The
respondents have raised a plea contrary to the well settled l aw
relating to Group of Companies doctrine laid down by the Supreme
Court.
190. The respondents have raised a vague plea of Nullity without
substantiating the same. The interim order of the Emerge ncy
Arbitrator is not a Nullity as alleged by respondent No.2.
191. Combining/treating all the agreements as a single integrated
transaction does not amount to control of the petitioner over FRL
and therefore, the petitioner’s investment does not violate any
law.
192. All the objections raised by the respondents are hereb y
rejected with cost of Rs.20,00,000/- to be deposite d by the
respondents with the Prime Minister Relief Fund for being used
for providing COVID vaccination to the Below Poverty Line (BPL)
category - senior citizens of Delhi. The cost be deposited within a
period of two weeks and the receipt be placed on record with in
one week of the deposit.
193. The respondents have deliberately and wilfully violated the
interim order dated 25th October, 2020 and are liable for the
consequences enumerated in Order XXXIX Rule 2-A of the Code
of Civil Procedure.
194. In exercise of power under Order XXXIX Rule 2-A(1) of
the Code of Civil Procedure, the assets of respondents No.1 to 13
are hereby attached. Respondents No.1 to 13 are directed to file
an affidavit of their assets as on today in Form 16A, Appendix E
under Order XXI Rule 41(2) of the Code of Civil Procedure within
30 days. Respondent No.1, 2, 12 and 13 are directed to file an
additional affidavit in the format of Annexure B-1 and respondents
No.3 to 11 are directed to file an additional affidavit in the format
of Annexure A-1 to the judgment of M/s Bhandari Engineers &
Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture, (supra) along
with the documents mentioned therein within 30 days.
195. Show cause notice is hereby issued to respondents No.3 to
13 to show cause why they be not detained in civil prison f or a
term not exceeding three months under Order XXXIX Rule 2-
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A(1) of the Code of Civil Procedure for violation of the order
dated 25th October, 2020. Reply to the show cause notice be filed
within two weeks. Rejoinder within two weeks thereafter.
196. The respondents are directed not to take any further action
in violation of the interim order dated 25th October, 2020. The
respondents are further directed to approach all the competent
authorities for recall of the orders passed on their applications in
violation of the interim order dated 25th October, 2020 within two
weeks. The respondents are directed to file an affidavit to place
on record the actions taken by them after 25th October, 2020 and
the present status of all those actions at least three d ays before
the next date of hearing.
197. Respondents No.3 to 11 shall remain present before this
Court on the next date of hearing.”
He listed the matter for further directions on 28th April, 2021.
2.9. Against this detailed judgment, FAO No. 51 of 2021 was filed
by FRL. By the second impugned judgment in this case dated 22nd March,
2021, a Division Bench of the Delhi High Court referred to its earlier
order dated 8 th February, 2021 and stayed the learned Single Judge’s
detailed judgment and order for the same reasons given by the ear lier
order till the next date of hearing, which was 30 th April, 2021. Against
the said order, Special Leave Petitions were filed before this Court, and
this Court by its order dated 19th April, 2021 stayed further proceedings
before the learned Single Judge as well as the Division Bench of the
Delhi High Court, and set the matter down for final disposal before this
Court.
3. Mr. Gopal Subramanium, learned Senior Advocate appearing
on behalf of Amazon, took us through the record with painstaking detail.
He castigated the impugned orders of the Division Bench as suffer ing
from a complete non-application of mind in that the order da ted 8 th
February, 2021 referred to three agreements, the third being b etween
FRL and Reliance Retail Ltd., which is an error apparent on the face of
the record. Secondly, it went on to observe that in the aforesaid agreement,
Amazon is not a party. It then went on to hold that an appeal against an
order under Section 17(2) of the Arbitration Act would be maintainable
under the provisions of the Code of Civil Procedure on the basis of the
reasoning contained in a Delhi High Court judgment in South Delhi
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
Municipal Corporation v. Tech Mahindra, (2019) SCC Online Delhi
11863, relying upon paragraphs 8 to 11 thereof. Mr. Subramanium argued
that had the learned Division Bench bothered to refer to paragraphs 12
and 13 of the aforesaid judgment, it would be clear that this authority
would be an authority for exactly the opposite proposition, t hereby
rendering an appeal under Order XLIII, Rule1(r) of the Code of Civi l
Procedure non-maintainable when it is read with Sect ion 37 of the
Arbitration Act. Further observations that prima facie, the agreements
are between different parties, and therefore, the group-of- companies
doctrine cannot be invoked, without any reasoning, again betra ys a
complete non-application of mind. Since the second impugned order of
the Division Bench relies upon this very order to stay even the detailed
judgment of the Single Judge, the learned senior counsel argued that the
second order, being a reiteration of the first, suffers from the same malady.
3.1. Mr. Subramanium then referred us to Sections 2(1)(a), 2(1)(c),
2(1) (d), 2(6), 2(8) and 19(2) to argue that the Arbitration Act reflects
the grundnorm of arbitration as being party autonomy, which is respected
by these provisions and delineated in several judgments of this C ourt.
He then referred to Section 37, pointing out that an appeal under Section
37(2)(b) is restricted to granting or refusing to grant an interim measure
under Section 17, which would refer to Section 17(1) and not Sec tion
17(2). He went on to argue that the Arbitration Act is a complete code in
itself and if an appeal does not fall within the four corners of Section 37,
then it is incompetent, as has been held by several judgment s of this
Court.
3.2. He also referred to various judgments of this Court, arguing
that an Emergency Arbitrator’s award can never be charact erised as a
nullity and ignored, and cited a number of judgments to show that until
the said award is set aside, it must be obeyed. He also referred to the
important fact that the award must be taken as it sta nds as no appeal
was made therefrom by the Biyani Group and that, therefore, it was not
permissible to go behind the award.
3.3. He also cited judgments to show that non-signatories t o
arbitration agreements would nevertheless be bound thereby and on facts,
it was admitted that the “Ultimate Controlling Person” behind the entire
transaction was Mr. Kishore Biyani, who was defined as such under the
three Agreements.
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3.4. He also argued that, as has been held in the judgments of this
Court, the FEMA is wholly unlike the Foreign Exchange Regulation Act,
1973 [“FERA”] and does not contain any provision nullifying an
agreement, even assuming that there was a breach thereof.
4. Mr. Aspi Chinoy, learned Senior Advocate also appearing on
behalf of Amazon, took us through various parts of the Emerg ency
Arbitrator’s award and argued that no equity can possibly be found in
favour of the Biyani Group as the breach of the Emergency Arbitrator’s
award had been admitted by them. Thus, they have come to the Cour t
with a dishonest and immoral case and if this is appreciated, it wil l be
clear that on facts, after openly flouting the Emergency Arbitrator’s
award, they would have no case on merits to resist the directions issued
by the learned Single Judge under Section 17(2) of the Arbitration Act.
Even otherwise, he referred to Section 17(2) and argued that enforcement
orders were made under the Arbitration Act and not under the Code of
Civil Procedure, as a result of which the appeal filed under Order XLIII,
Rule 1(r) would not be maintainable. Mr. Chinoy also referre d to a
Division Bench judgment of the Bombay High Court in Kakade
Construction Co. Ltd. v. Vistra ITCL, 2019 SCC OnLine Bom 1521
: (2019) 6 Bom CR 805 [“ Kakade Construction ”] to buttress his
submission.
5. Mr. Ranjit Kumar, learned Senior Advocate appearing on behalf
of Amazon, referred to Sections 9 and 17 of the Arbitration Act and the
Arbitration and Conciliation (Amendment) Act, 2015 [“2015
Amendment Act”] which brought Section 17 into line with Section 9.
He then referred to Section 9(3) to argue that the legislative intent is to
obtain interim orders from an arbitral tribunal then constituted so as to
decongest courts and free them from the burdens of Section 9 petitions
being filed before them. If this is appreciated, then it would be clear that
an Emergency Arbitrator’s award would be a step in the right direction
under institutional rules, furthering this very objective. He also pointed
out that by the very same amendment, a non-obstante clause was added
to Section 37(1), thereby making it abundantly clear that unless an appeal
falls within the four corners of Section 37, the moment an order is passed
under the Arbitration Act, no other appeal could possibly be filed if it
was outside the four corners of Section 37.
6. Mr. Harish Salve, learned Senior Advocate appearing on behalf
of FRL, stated that he would not go to the extent of arguing th at an
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
Emergency Arbitrator’s award would be outside the ken of the Arbitration
Act, but that it was sufficient for his purpose to argue that an Emergency
Arbitrator’s award cannot be said to fall under Section 17(1) of the Act.
He placed before us an extract of the 246th Law Commission Report, in
which the Law Commission advocated the amendment of Section 2 of
the Arbitration Act, to include within sub-section (1)(d) a provision for
the appointment of an Emergency Arbitrator. He said that despit e this
suggestion being made, Parliament did not adopt the same w hen it
amended the Arbitration Act by the 2015 Amendment Act, t hereby
indicating that such orders would not fall within Section 17( 1) of the
Arbitration Act. He then took us through the definition sections in the
Arbitration Act and read out Sections 10 to 13, 16, 17, 21, 23, 27, 29A,
and 30, in particular, to argue that an arbitral tribunal as defined by Section
2(1) (d) of the Act can only mean a tribunal that is constituted between
the parties, which then decides the disputes between the parties finally
and cannot, given the scheme of the Act, include an Emergency Arbitrator
who is not an “arbitral tribunal” but a person who only decides, at best,
an interim dispute between the parties which never culminates in a final
award. He argued that Mr. Subramanium was trying to fit a square peg
in a round hole as the Arbitration Act only speaks of arb itral tribunals
that are constituted between the parties and that can finall y decide the
disputes between the parties. As an example, if the tribunal rules on its
own jurisdiction and rejects a plea stating it has no jurisdiction, it must
only continue with the arbitral proceedings and make a final ar bitral
award, which can never be done by an Emergency Arbitrator . The
scheme, therefore, of the entirety of Part I of the Act, would show that
an Emergency Arbitrator is a foreigner to the Indian Arbitration Act and
cannot fit within its scheme unless an amendment is made by Parliament.
6.1. He further argued, pointing to section 25.2 of the arbitral
agreement contained in the FCPL Shareholders’ Agreement (w hich is
mirrored in the FRL Shareholders’ Agreement as section 15.2), that in
any case, the provisions of the SIAC Rules relating to an Emergency
Arbitrator’s award, which were agreed to between the partie s, were
subject to the provisions of the Arbitration Act; and since the Arbitration
Act did not provide for Emergency Arbitrators, this part of the SIAC
Rules would not apply, making it clear that an Emergency Arbitrator’s
award cannot fall within Section 17(1) of the Act. He also arg ued that
the scheme of Section 17(1) made it clear that a party may, during arbitral
proceedings, apply to the arbitral tribunal. Even under the SIAC Rules,
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an Emergency Arbitrator is appointed before the arbitral tribunal is
constituted, as is clear from Rule 30 read with Schedule 1. This being
the case, an Emergency Arbitrator, not being appointed during arbitral
proceedings, falls outside Section 17(1).
6.2. He also contrasted the Arbitration Act with pr ovisions
contained in the Singapore, New Zealand, Hong Kong, and English
statutes which made it clear that under those statutes, an Emergency
Arbitrator’s awards were expressly included and could thus be enforced
under their provisions.
6.3. Mr. Salve made it clear that the appeal that was filed in the
present case was not under Section 37 of the Arbitration Act but was
under Order XLIII, Rule 1(r) of the Code of Civil Procedure. He then
read Section 9 together with Section 37 of the Arbitration Act to stress
that orders may be made under Section 9 until enforcement of an award
in accordance with Section 36, and then read Section 36 to make it clear
that the contours of Section 37 did not go beyond orders and awards
made under the Arbitration Act. Since orders made in e nforcement
proceedings are not under the Arbitration Act but only under the Code
of Civil Procedure, therefore, in enforcement proceedings – both under
Section 17(2) and under Section 36(1) – appeals can be filed from such
orders under the Code of Civil Procedure. He stressed upon the language
of Section 36(1), which made it clear that when a final award is made, it
shall be enforced in accordance with the provisions of the Code of Civil
Procedure in the same manner as if it were a decree of the court, thereby
arguing that by a legal fiction, an award is deemed to be a decree for the
purposes of enforcement, which would include all purposes, including
appeals from orders passed in enforcement proceedin gs. He also
stressed upon the language of Section 17(2) to indicate that an order
passed under Section 17(1) is deemed to be an order of the court for all
purposes and shall be enforceable under the Code of Civil Procedure in
the same manner as if it were an order of the court, making it clear that
enforcement is not under the Arbitration Act but only under the Code of
Civil Procedure. He stressed the fact that the order of the learned Single
Judge also made it abundantly clear that he was exercising powers only
under Order XXXIX, Rule 2-A of the Code of Civil Procedure and not
under the Arbitration Act. He then pointed out that there would be various
anomalies which cannot be addressed if we were to a ccept the
construction suggested by Mr. Subramanium. As is well known, third-
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
party objectors may object to an order under Section 17(2) or an award.
If their rights are affected, it cannot be that they would have no right of
appeal, as a perverse order against their interests would certainly be
appealable. He also pointed out that, as of today, the ap plication for
modification/setting aside of the Emergency Arbitrator’s award had been
argued before a regularly constituted arbitral tribunal, which would issue
its order either agreeing with or rejecting the Emergency A rbitrator’s
award, from which either his clients or Mr. Subramanium’s clients would
file appeals, depending upon the orders so passed. He referr ed to a
number of judgments to buttress his submissions.
7. Mr. K.V. Viswanathan, learned Senior Advocate also appearing
on behalf of FRL, argued that four rules of interpretation of statutes in
this case would necessarily require us to allow these appeals in favour
of the Respondents. First, he argued that the words “as if” contained in
Section 17(2) of the Act contain a legal fiction which, when taken to its
logical conclusion, would necessarily mean that enforcement proceedings
would be outside the pale of the Arbitration Act and within the confines
of the Code of Civil Procedure. Further, he argued that the use of the
expression “under the Code of Civil Procedure” in Section 17(2) is
legislation by reference and not by incorporation, leading to the conclusion
that it is the Code of Civil Procedure alone under whi ch enforcement
takes place. He then reiterated that the expression “due regard” contained
in Section 36(3) is fundamentally different from the expression “under
the Code of Civil Procedure”, and that Section 36(1) and Section 17(2)
are pari materia provisions, distinct from Section 36(3), under which a
stay of an award may be granted under the Arbitration Act with “due
regard to the Code of Civil Procedure”. He then added that when different
words are used in different provisions, they are meant to be differentiated.
He also cited judgments to buttress each one of these submissions. He
then went on to discuss various High Court judgments which show that,
in practice, appeals that are filed against orders and awards sought to be
enforced are filed under the Code of Civil Procedure and not under the
Arbitration Act.
7.1. He then referred to Section 17(1) and, in particular, to the
expression “ and the arbitral tribunal shall have the same power for
making orders, as the court has for the purpose of, and in re lation
to, any proceedings before it ” and argued that the expression “in
relation to” refers only to incidental powers given to the tribunal and not
799
to powers of enforcement. He also argued that the expression “arbitral
tribunal” in Section 17(1) is to be read as defined by Section 2(1)(d),
there being nothing in the context of Section 17(1) to the contrary which
would obviate the application of Section 2(1)(d) in the context of Section
17(1). He then referred to the arbitration clause between the pa rties to
argue that the parties contemplated, by virtue of section 25 .2 of the
FCPL Shareholders’ Agreement, that only civil courts could pass interim
orders until the arbitral tribunal is properly constituted by the parties. He
then referred to a recent judgment of this Court, namel y National
Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC
473 [“NHAI”], arguing that Section 17 was like Section 34(1) of the
Arbitration Act in that nothing could be read into Section 17 s o as to
incorporate awards made by an Emergency Arbitrator.
7.2. He then argued that on a reading of Schedule 1 of the SIAC
Rules, an Emergency Arbitrator cannot be said to be like an arbitral
tribunal in that, under Rule 3, the President of the SIAC must first accept
as to whether or not an Emergency Arbitrator be appointed at all. Also,
under Rule 9, an administrative authority alone is given the pow er to
extend time in the circumstances mentioned in the Rule, and under Rule
10, an Emergency Arbitrator has no power to act after the arbitral tribunal
is constituted, the tribunal not being bound by any reasons given by the
Emergency Arbitrator. From this, he argued that an Emergency Arbitrator
does not fit within the Arbitration Act as such arbi trator is not an
independent quasi-judicial body under the Rules.
7.3. He then referred to certain judgments and authorities for the
proposition that a proper reading of Exception 1 to Section 28 of the
Indian Contract Act, 1872 would show that the civil court’s jurisdiction is
ousted and that only what is expressly provided for by the ouster provisions
can be given effect to as nothing can be implied therein. He then argued
that the learned Single Judge was in a great hurry to decide the case and
did not even give sufficient time to the Respondents to file objections to
the enforcement application, though he did concede that notes of written
arguments, including the objection as to an award by an Emergen cy
Arbitrator being a nullity, were raised before the learned Single Judge.
He also cited various judgments to show that this was a c ase in which
the Emergency Arbitrator lacked inherent jurisdiction, as a result of which
his clients were justified in ignoring the award passed by the Emergency
Arbitrator.
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
8. Mr. Vikram Nankani, learned Senior Advocate appearing on
behalf of Respondents No. 1 to 12 in Civil Appeal Nos. 4496-4497 of
2021 and Respondents No. 2 to 13 in Civil Appeal Nos. 4494-4495 of
2021, was at pains to point out that in the enforcement applicat ion, on
the facts of this case, it was specifically pleaded that the High Court
was being approached as a civil court, and that the application was filed
only under Order XXXIX, Rule 2-A. He also cited judgments to show
that the provisions of Order XXXIX, Rule 2-A, being punitive in nature
and requiring a heightened standard of wilful disobedience to be applied
cannot be applied routinely or in the cavalier manner in which the learned
Single Judge has applied the said provision. He also referred to the fact
that only the SIAC Rules pertaining to “arbitration” stricto sensu were
agreed to between the parties, which would exclude rules r elating to
awards by an Emergency Arbitrator. He then distinguished the judgment
in Kakade Construction (supra) relied upon by Mr. Chinoy and the
judgment in Jet Airways (India) Ltd. v. Subrata Roy Sahara , 2011
SCC OnLine Bom 1379 : 2012 (2) AIR Bom 855 [“ Jet Airways”],
stating that they applied only to Section 36 of the Act an d are not
authorities qua Section 17, which is the subject matter of argum ent in
the facts of the present case.
9. Having heard learned counsel for the parties, the first question
to be determined by this Court is whether an Emergency Arbitr ator’s
award can be said to be within the contemplation of the Arbitration Act,
and whether it can further be said to be an order under Section 17(1) of
the Act.
10. The relevant provisions of the Arbitration Act, so far a s this
contention is concerned, are as follows:
“2. Definitions.—(1) In this Part, unless the context otherwise
requires,—
(a) “arbitration” means any arbitration whether or not
administered by permanent arbitral institution;
* * *
(c) “arbitral award” includes an interim award;
(d) “arbitral tribunal” means a sole arbitrator or a pan el
of arbitrators;”
* * *
801
(6) Construction of references .—Where this Part, except
Section 28, leaves the parties free to determine a cert ain issue,
that freedom shall include the right of the parties to authorise any
person including an institution, to determine that issue.”
* * *
(8) Where this Part—
(a) refers to the fact that the parties have agreed or th at
they may agree, or
(b) in any other way refers to an agreement of the
parties, that agreement shall include any arbitration
rules referred to in that agreement.”
“19. Determination of rules of procedure .—
* * *
(2) Subject to this Part, the parties are free to a gree on the
procedure to be followed by the arbitral tribunal in conducting its
proceedings.”
“21. Commencement of arbitral proceedings .—Unless
otherwise agreed by the parties, the arbitral proceedings in respect
of a particular dispute commence on the date on which a request
for that dispute to be referred to arbitration is rece ived by the
respondent.”
11. A reading of these provisions would show that an arbitration
proceeding can be administered by a permanent arbitral i nstitution.
Importantly, Section 2(6) makes it clear that parties are free to authorise
any person including an institution to determine issues that arise between
the parties. Also, under Section 2(8), party autonomy goes to the extent
of an agreement which includes being governed by arbitration rules
referred to in the aforesaid agreements. Likewise, under Section 19(2),
parties are free to agree on the procedure to be followed by an a rbitral
tribunal in conducting its proceedings.
12. Section 21 provides that arbitral proceedings in respect of a
particular dispute commence on the date on which a request for that
dispute to be referred to arbitration is received by the respondent. This
Section is expressly subject to agreement by the parties. Rule 3.3 of the
SIAC Rules reads as follows:
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
“Rule 3: Notice of Arbitration
* * *
3.3 The date of receipt of the complete Notice of Arbitration by
the Registrar shall be deemed to be the date of commence ment
of the arbitration. For the avoidance of doubt, the Notic e of
Arbitration is deemed to be complete when all the requirements
of Rule 3.1 and Rule 6.1(b) (if applicable) are fulfilled or w hen
the Registrar determines that there has been substantial compliance
with such requirements. SIAC shall notify the parties of the
commencement of the arbitration.”
By agreeing to the application of the SIAC Rules, the arb itral
proceedings in the present case can be said to have commenc ed from
the date of receipt of a complete notice of arbitration by the Registrar of
the SIAC, which would indicate that arbitral proceedings under the SIAC
Rules commence much before the constitution of an arbitral tribunal
under the said Rules. This being the case, when Section 17(1) uses the
expression “during the arbitral proceedings”, the said expression would
be elastic enough, when read with the provisions of Section 21 of the
Act, to include emergency arbitration proceedings, which only commence
after receipt of notice of arbitration by the Registrar under R ule 3.3 of
the SIAC Rules as aforesaid.
13. A conjoint reading of these provisions coupled with there being
no interdict, either express or by necessary implicati on, against an
Emergency Arbitrator would show that an Emergency Arbitrator’s orders,
if provided for under institutional rules, would be co vered by the
Arbitration Act.
14. As a matter of fact, a number of judgments of this Court have
referred to the importance of party autonomy as being one of the pillars
of arbitration in the Arbitration Act. Thus, in Antrix Corporation Ltd.
v. Devas Multimedia Pvt. Ltd., (2014) 11 SCC 560, this Court held as
follows:
“35. In view of the language of Article 20 of the arbitration
agreement which provided that the arbitration proceedings would
be held in accordance with the rules and procedures of the
International Chamber of Commerce or UNCITRAL, Devas was
803
entitled to invoke the Rules of Arbitration of ICC for the conduct
of the arbitration proceedings. Article 19 of the agreement provided
that the rights and responsibilities of the parties thereunder would
be subject to and construed in accordance with the laws of India.
There is, therefore, a clear distinction between the law which
was to operate as the governing law of the agreement and the
law which was to govern the arbitration proceedings. Once the
provisions of the ICC Rules of Arbitration had been invoked by
Devas, the proceedings initiated thereunder could not be interfered
with in a proceeding under Section 11 of the 1996 Act . The
invocation of the ICC Rules would, of course, be subjec t to
challenge in appropriate proceedings but not by way of an
application under Section 11(6) of the 1996 Act. Where the parties
had agreed that the procedure for the arbitration would be governed
by the ICC Rules, the same would necessarily includ e the
appointment of an Arbitral Tribunal in terms of the arb itration
agreement and the said Rules. Arbitration Petition No. 20 of 2011
under Section 11(6) of the 1996 Act for the appointment of an
arbitrator must, therefore, fail and is rejected, but this will not
prevent the petitioner from taking recourse to other provisions of
the aforesaid Act for appropriate relief.”
Similarly, in Bharat Aluminium Co. v. Kaiser Aluminium
Technical Services Inc., (2016) 4 SCC 126 [“Balco”], this Court stated
thus:
“5. Party autonomy being the brooding and guiding spirit in
arbitration, the parties are free to agree on application of three
different laws governing their entire contract — ( 1) proper law
of contract, (2) proper law of arbitration agreement, and (3) proper
law of the conduct of arbitration, which is popularly and in legal
parlance known as “curial law”. The interplay and application of
these different laws to an arbitration has been succinctly explained
by this Court in Sumitomo Heavy Industries Ltd. v. ONGC Ltd.
[Sumitomo Heavy Industries Ltd. v. ONGC Ltd., (1998) 1 SCC
305], which is one of the earliest decisions in that direction and
which has been consistently followed in all the subsequent decisions
including the recent Reliance Industries Ltd. v. Union of India
[Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603
: (2014) 3 SCC (Civ) 737].”
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
* * *
“10. In the matter of interpretation, the court has to make different
approaches depending upon the instrument falling for interpretation.
Legislative drafting is made by experts and is subjected to scrutiny
at different stages before it takes final shape of an Ac t, Rule or
Regulation. There is another category of drafting by lawmen or
document writers who are professionally qualified and experienced
in the field like drafting deeds, treaties, settlements in court, etc.
And then there is the third category of documents made by laymen
who have no knowledge of law or expertise in the field. The legal
quality or perfection of the document is comparatively low in the
third category, high in second and higher in first. No doubt, in the
process of interpretation in the first category, the courts do make
an attempt to gather the purpose of the legislation, its context and
text. In the second category also, the text as well as the purpose
is certainly important, and in the third category of documents like
wills, it is simply intention alone of the executor that is relevant. In
the case before us, being a contract executed between the t wo
parties, the court cannot adopt an approach for interpreti ng a
statute. The terms of the contract will have to be understood i n
the way the parties wanted and intended them to be. In that context,
particularly in agreements of arbitration, where party autonomy is
the grund norm, how the parties worked out the agreement, is one
of the indicators to decipher the intention, apart from the plain or
grammatical meaning of the expressions and the use of the
expressions at the proper places in the agreement.”
The importance of party autonomy in arbitration and commercial
contracts was further delineated in the judgment of Centrotrade
Minerals & Metal Inc. v. Hindustan Copper Ltd. , (2017) 2 SCC
228 [“Centrotrade”] as follows:
“38. Party autonomy is virtually the backbone of arbitrations. This
Court has expressed this view in quite a few decisions. I n two
significant passages in Balco [Bharat Aluminium Co. v. Kaiser
Aluminium Technical Services Inc., (2016) 4 SCC 126] this Court
dealt with party autonomy from the point of view of the contracting
parties and its importance in commercial contracts. In par a 5 of
the Report, it was observed: (SCC p. 130)
805
“5. Party autonomy being the brooding and guiding spirit
in arbitration, the parties are free to agree on application of
three different laws governing their entire contract— (1) proper
law of contract, (2) proper law of arbitration agreement, and
(3) proper law of the conduct of arbitration, which is popularly
and in legal parlance known as “curial law”. The interplay and
application of these different laws to an arbitration has been
succinctly explained by this Court in Sumitomo [Sumitomo
Heavy Industries Ltd. v. ONGC Ltd. , (1998) 1 SCC 305]
which is one of the earliest decisions in that direction and which
has been consistently followed in all the subsequent decisions
including the recent Reliance Industries Ltd. v. Union of India
[Reliance Industries Ltd. v. Union of India , (2014) 7 SCC
603 : (2014) 3 SCC (Civ) 737].”
(emphasis in original)
Later in para 10 of the Report, it was held: (SCC pp. 131-32)
“10. In the matter of interpretation, the court has to make
different approaches depending upon the instrument falling for
interpretation. Legislative drafting is made by experts and is
subjected to scrutiny at different stages before it takes f inal
shape of an Act, Rule or Regulation. There is another category
of drafting by lawmen or document writers who are
professionally qualified and experienced in the field like drafting
deeds, treaties, settlements in court, etc. And then there is the
third category of documents made by laymen who have no
knowledge of law or expertise in the field. The legal quality or
perfection of the document is comparatively low in the third
category, high in second and higher in first. No doubt, in the
process of interpretation in the first category, the c ourts do
make an attempt to gather the purpose of the legislation, it s
context and text. In the second category also, the text as well
as the purpose is certainly important, and in the third category
of documents like wills, it is simply intention alone of the
executor that is relevant. In the case before us, being a
contract executed between the two parties, the court cannot
adopt an approach for interpreting a statute. The terms of
the contract will have to be understood in the way the
parties wanted and intended them to be. In that contex t,
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
particularly in agreements of arbitration, where pa rty
autonomy is the grund norm, how the parties worked out the
agreement, is one of the indicators to decipher the intention,
apart from the plain or grammatical meaning of the expressions
and the use of the expressions at the proper places in t he
agreement.”
(emphasis in original)
* * *
“42. Be that as it may, the legal position as we understand it is
that the parties to an arbitration agreement have the autonomy to
decide not only on the procedural law to be followed but also the
substantive law. The choice of jurisdiction is left to the contracting
parties. In the present case, the parties have agreed on a two-tier
arbitration system through Clause 14 of the agreement and Clause
16 of the agreement provides for the construction of the contract
as a contract made in accordance with the laws of India. We see
nothing wrong in either of the two clauses mutually agreed upon
by the parties.”
* * *
“46. For the present we are concerned only with the fundamental
or public policy of India. Even assuming the broad delineation of
the fundamental policy of India as stated in Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204] we do not find anything fundamentally objectionable in
the parties preferring and accepting the two-tier arbitration system.
The parties to the contract have not by-passed any mandatory
provision of the A&C Act and were aware, or at least ought to
have been aware that they could have agreed upon the finality of
an award given by the arbitration panel of the Indian Council of
Arbitration in accordance with the Rules of Arbitration of the
Indian Council of Arbitration. Yet they voluntarily and deliberately
chose to agree upon a second or appellate arbitration in London,
UK in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce. There is nothing in
the A&C Act that prohibits the contracting parties from agreeing
upon a second instance or appellate arbitration — either explicitly
or implicitly. No such prohibition or mandate can be read into the
807
A&C Act except by an unreasonable and awkward
misconstruction and by straining its language to a vanishing point.
We are not concerned with the reason why the parties (including
HCL) agreed to a second instance arbitration — the fact is t hat
they did and are bound by the agreement entered into by them.
HCL cannot wriggle out of a solemn commitment made by it
voluntarily, deliberately and with eyes wide open.”
(emphasis supplied)
The principle of party autonomy, as delineated in Balco (supra)
and Centrotrade (supra), has recently been quoted with approval by
this Court in PASL Wind Solutions Pvt. Ltd. v. GE Power
Conversion India Pvt. Ltd., 2021 SCC OnLine SC 331 (see paragraphs
101 and 102).
15. A recent judgment in NHAI v. M. Hakeem (supra) dealt
with certain provisions of the National Highways Act, 1956, which laid
down a scheme of acquisition different from that contained in the Land
Acquisition Act, 1984. As part of the said scheme, arbitral awards passed
under the National Highways Act were challengeable only under Section
34 of the Arbitration Act. The question squarely raised before this Court
was as to whether, when a court was empowered to “set aside” awards
under Section 34 of the Act, would this power include the power to
modify an award.
16. In answering this question, this Court referred to Article 34 of
the UNCITRAL Model Law on International Commercial Arbitration,
1985 [“Model Law”], and came to the conclusion that given the fact
that Section 34 is a verbatim reproduction of Article 34 of t he Model
Law, it would not contain any power to modify an arbitral award. In this
case, since the parliamentary intention was crystal clear, and there was
no play in the joints to apply purposive or creative interp retation, this
Court came to the conclusion that only an amendment of the Arbitration
Act could set right the position as otherwise, the Court would be guilty
of altering the material of which the Act was woven and not merely
ironing out creases which were found in the statute.
17. By way of contrast, the present is a case akin to Centrotrade
(supra). As has been pointed out in Centrotrade (supra), the parties to
the contract, in the present case, by agreeing to the SIAC Rules and the
award of the Emergency Arbitrator, have not bypassed any mandatory
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
provision of the Arbitration Act. There is nothing in the Arbitration Act
that prohibits contracting parties from agreeing to a provision providing
for an award being made by an Emergency Arbitrator. On the contrary,
when properly read, various Sections of the Act which speak of party
autonomy in choosing to be governed by institutional rules would make it
clear that the said rules would apply to govern the rights between the
parties, a position which, far from being prohibited by the Arbitration
Act, is specifically endorsed by it. This judgment is, therefore, entirely
distinguishable from the fact situation in the present case.
18. However, Mr. Salve argued, relying strongly upo n the
provisions of Sections 10 to 13, 16, 17, 21, 23, 27, 29A, and 30 of the
Arbitration Act, in particular, that the “arbitral tribu nal” spoken of in
these provisions, and referable to Section 2(1)(d) of the Act, is
exhaustively defined, which means a sole arbitrator or a panel of
arbitrators, which, when read with these provisions, would only include
an arbitral tribunal which can not only pass interim orders, but which is
constituted between the parties so that interim and/or final awards can
be passed by this very tribunal. He also argued, contrasting the language
of Section 9(1) with the language of Section 17(1), that Sect ion 17(1)
would only apply where a party, during arbitral proceedings, applies to
an arbitral tribunal (as defined) for interim relief, which cannot possibly
apply to an Emergency Arbitrator who is admittedly appointed only before
an arbitral tribunal is properly constituted. By way of contrast, he argued
that under Section 9(1), an interim measure by the courts may be availed
by a party even before arbitral proceedings commence, up to the stage
of enforcement in accordance with Section 36.
19. There can be no doubt that the “arbitral tribunal” as defined in
Section 2(1)(d) speaks only of an arbitral tribunal that is co nstituted
between the parties and which can give interim and final relief, “given
the scheme of the Act”, as Mr. Salve puts it, as co ntained in the
aforementioned Sections. However, like every other definition section,
the definition contained in Section 2(1)(d) only applies “unless the context
otherwise requires”. Given that the definition of “arbitration” in Section
2(1)(a) means any arbitration, whether or not administered by a permanent
arbitral institution, when read with Sections 2(6) and 2(8), would make it
clear that even interim orders that are passed by Emergency Arbitrators
under the rules of a permanent arbitral institution would, on a proper
reading of Section 17(1), be included within its ambit. It is significant to
809
note that the words “arbitral proceedings” are not limited by any definition
and thus encompass proceedings before an Emergency Arbitrat or, as
has been held hereinabove with reference to Section 21 of the Act read
with the SIAC Rules. The short point is as to whether the definition of
“arbitral tribunal” contained in Section 2(1)(d) should so constrict Section
17(1), making it apply only to an arbitral tribunal that can give final reliefs
by way of an interim or final award.
20. The heart of Section 17(1) is the application by a party for
interim reliefs. There is nothing in Section 17(1), when read w ith the
other provisions of the Act, to interdict the application of rules of arbitral
institutions that the parties may have agreed to. This being the position,
at least insofar as Section 17(1) is concerned, the “arbitr al tribunal”
would, when institutional rules apply, include an Emergency Arbitrator,
the context of Section 17 “otherwise requiring” – the context being interim
measures that are ordered by arbitrators. The same objec t and context
would apply even to Section 9(3) which makes it clear that the c ourt
shall not entertain an application for interim relief once an arbitral tribunal
is constituted unless the court finds that circumstances exist which may
not render the remedy provided under Section 17 efficacious. Since
Section 9(3) and Section 17 form part of one scheme, it is clear that an
“arbitral tribunal” as defined under Section 2(1)(d) would not apply and
the arbitral tribunal spoken of in Section 9(3) would be like the “arbitral
tribunal” spoken of in Section 17(1) which, as has been held above ,
would include an Emergency Arbitrator appointed under institutional rules.
21. However, Mr. Salve relied upon Firm Ashok Traders v.
Gurumukh Das Saluja, (2004) 3 SCC 155 and, in particular, the following
passage:
“18. Under the A&C Act, 1996, unlike the predecessor Act of
1940, the Arbitral Tribunal is empowered by Section 17 of the Act
to make orders amounting to interim measures. The need fo r
Section 9, in spite of Section 17 having been enacted, is that Section
17 would operate only during the existence of the Arbitral Tribunal
and its being functional. During that period, the power conferred
on the Arbitral Tribunal under Section 17 and the power conferred
on the court under Section 9 may overlap to some extent but so
far as the period pre- and post- the arbitral proce edings is
concerned, the party requiring an interim measure of protecti on
shall have to approach only the court. …”
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
This judgment also does not carry the Respondents’ case any
further as the question for decision in this case is whether the Emergency
Arbitrator’s award can be said to be by an “arbitral tribunal” as defined,
and does not have any reference to when a party may approach a court
under Section 9.
22. Mr. Salve then argued that in any case, the arbi tration
agreement between the parties, contained in section 25.2 of th e FCPL
Shareholders’ Agreement (pari materia with section 15.2 of the FRL
Shareholders’ Agreement), makes it clear that the SIAC Rules would
be subject to the Indian Arbitration Act, and being so subject, the provisions
governing an award made by an Emergency Arbitrator under the SIAC
Rules would not be applicable between the parties. Sectio ns 25.1 and
25.2 of the FCPL Shareholders’ Agreement (pari materia with sections
15.1 and 15.2 of the FRL Shareholders’ Agreement) read as follows:
“25.1. Governing Law
This Agreement shall be governed by and construed in accordance
with the Laws of India. Subject to the provisions of Section 25.2
(Dispute Resolution), the courts at New Delhi, India shall have
exclusive jurisdiction over any matters or Dispute (here inafter
defined) relating or arising out of this Agreement.
“25.2. Dispute Resolution
25.2.1. Arbitration
Any dispute, controversy, claim or disagreement of any ki nd
whatsoever between or among the Parties in connection with or
arising out of this Agreement or the breach, termination or invalidity
thereof (hereinafter referred to as a “Dispute”), failing amicable
resolution through negotiations, shall be referred to and finall y
resolved by arbitration irrespective of the amount in Dispute or
whether such Dispute would otherwise be considered justifiable
or ripe for resolution by any court. The parties agree t hat they
shall attempt to resolve through good faith consultation, any such
Dispute between any of the Parties and such consultation shall
begin promptly after a Party has delivered to another Par ty a
written request for such consultation. In the event the Dispute is
not resolved by means of negotiation within a period of 30 (thirty)
days or such different period mutually agreed between the Parties,
such Dispute shall be referred to and finally resolved by Arbitration
811
in accordance with the arbitration rules of the Sin gapore
International Arbitration Centre (“SIAC”), and such rul es (the
“Rules”) as may be modified by the provisions of this Section 25
(Governing Law and Dispute Resolution). This Agreement and
the rights and obligations of the Parties shall remain in full force
and effect pending the award in such arbitration providing, which
award, if appropriate, shall determine whether and when any
termination shall become effective.”
As has been held by us above, it is wholly incorrect to say that
Section 17(1) of the Act would exclude an Emergency Arbitrator’s orders.
This being the case, even if section 25.2 of the FCPL Shar eholders’
Agreement (pari materia with section 15.2 of the FRL Shareholders’
Agreement) makes the SIAC Rules subject to the Arbitrati on Act, the
said Act, properly construed, would include an Emergency Arbitrator’s
awards/orders, there being nothing inconsistent in the SIAC Rules when
read with the Act.
23. Also, Mr. Nankani’s argument that the arbitration agreement
contained in section 25.2 of the FCPL Shareholders’ Agreement referred
to hereinabove would indicate that the SIAC Rules were only agreed
upon insofar as arbitration alone is concerned is wholly incorrect. Rule
1.3 of the SIAC Rules indicates that an award of an Emergency Arbitrator
is included within the ambit of these Rules, and that an Emerge ncy
Arbitrator, as defined, means an arbitrator appointed in accordance with
paragraph 3 of Schedule 1. This makes it clear beyond dou bt that
“arbitration” mentioned in section 25.2 of the FCPL Share holders’
Agreement would include an arbitrator appointed in accordance wit h
the SIAC Rules which, in turn, would include an Emergency Arbitrator.
24. The SIAC Rules, with which we are immediately concerned,
deal with the concept of an Emergency Arbitrator as follows:
“Rule 1: Scope of Application and Interpretation
* * *
1.3 In these Rules:
“Award” includes a partial, interim or final award and an award
of an Emergency Arbitrator;
* * *
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
“Emergency Arbitrator” means an arbitrator appointe d in
accordance with paragraph 3 of Schedule 1;”
“Rule 30: Interim and Emergency Relief
30.1. The Tribunal may, at the request of a party, issue an order
or an Award granting an injunction or any other interim relief it
deems appropriate. The Tribunal may order the party requesting
interim relief to provide appropriate security in connection with
the relief sought.
30.2. A party that wishes to seek emergency interim relief pri or
to the constitution of the Tribunal may apply for such relief pursuant
to the procedures set forth in Schedule 1.
30.3. A request for interim relief made by a party to a j udicial
authority prior to the constitution of the Tribunal, or in exceptional
circumstances thereafter, is not incompatible with these Rules.”
“SCHEDULE 1 EMERGENCY ARBITRATOR
1. A party that wishes to seek emergency interim relief may,
concurrent with or following the filing of a Notice of Arbitration
but prior to the constitution of the Tribunal, file an application for
emergency interim relief with the Registrar. The party shall, at
the same time as it files the application for emergency interim
relief, send a copy of the application to all other parti es. The
application for emergency interim relief shall include:
a. the nature of the relief sought;
b. the reasons why the party is entitled to such relief; and
c. a statement certifying that all other parties have bee n
provided with a copy of the application or, if not, an
explanation of the steps taken in good faith to provide a
copy or notification to all other parties.
* * *
3. The President shall, if he determines that SIAC should accept
the application for emergency interim relief, seek to appoi nt an
Emergency Arbitrator within one day of receipt by the Registrar
of such application and payment of the administration fee and
deposits.
813
4. If the parties have agreed on the seat of the arbitrat ion, such
seat shall be the seat of the proceedings for emergenc y interim
relief. Failing such an agreement, the seat of the proceedings for
emergency interim relief shall be Singapore, without prejudice to
the Tribunal’s determination of the seat of the arbitration under
Rule 21.1.
5. Prior to accepting appointment, a prospective Emergen cy
Arbitrator shall disclose to the Registrar any circumstance s that
may give rise to justifiable doubts as to his impart iality or
independence. Any challenge to the appointment of the Emergency
Arbitrator must be made within two days of the communication
by the Registrar to the parties of the appointment of the Emergency
Arbitrator and the circumstances disclosed.
6. An Emergency Arbitrator may not act as an arbitrator in any
future arbitration relating to the dispute, unless otherwise agreed
by the parties.
* * *
8. The Emergency Arbitrator shall have the power to order or
award any interim relief that he deems necessary, incl uding
preliminary orders that may be made pending any hea ring,
telephone or video conference or written submissions by the
parties. The Emergency Arbitrator shall give summary rea sons
for his decision in writing. The Emergency Arbitrator may modify
or vacate the preliminary order, the interim order or Award for
good cause.
9. The Emergency Arbitrator shall make his interim order or Award
within 14 days from the date of his appointment unl ess, in
exceptional circumstances, the Registrar extends the time. No
interim order or Award shall be made by the Emergency Arbitrator
until it has been approved by the Registrar as to its form.
10. The Emergency Arbitrator shall have no power to act aft er
the Tribunal is constituted. The Tribunal may reconsider, modify
or vacate any interim order or Award issued by the Emergenc y
Arbitrator, including a ruling on his own jurisdiction. The Tribunal
is not bound by the reasons given by the Emergency Arbitrator.
Any interim order or Award issued by the Emergency Arbitrator
shall, in any event, cease to be binding if the Tribunal is not
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constituted within 90 days of such order or Award or when the
Tribunal makes a final Award or if the claim is withdrawn.
* * *
12. The parties agree that an order or Award by an Emer gency
Arbitrator pursuant to this Schedule 1 shall be binding on the parties
from the date it is made, and undertake to carry out the in terim
order or Award immediately and without delay. The parties also
irrevocably waive their rights to any form of appeal, re view or
recourse to any State court or other judicial authority with respect
to such Award insofar as such waiver may be validly made.”
25. A reading of the aforesaid Rules indicates that even before an
arbitral Tribunal is constituted under the Rules, urgent interim reliefs can
be granted by what is termed as an “Emergency Arbitr ator”. An
“Emergency Arbitrator” is defined by Rule 1.3 of these Rules as meaning
an arbitrator appointed in accordance with paragraph 3 of Schedule 1.
Under paragraph 7 of Schedule 1, the Emergency Arbitrator has all the
powers vested in the arbitral tribunal pursuant to SIAC Rules, including
the authority to rule on his own jurisdiction. Importantly, under paragraph
8 of Schedule 1 to the SIAC Rules, the Emergency Arbitrator shall have
the power to order such interim relief that he deems necessary, and is to
give summary reasons for his decision in writing. Under parag raph 9,
the interim order is to be made within 14 days of his appointment, unless
time is extended. Importantly, once the arbitral tribunal is constituted
under paragraph 10, the tribunal may reconsider, modify, or vacate any
such interim order. Such interim order or award issued by the Emergency
Arbitrator will continue to bind the parties unless it is modified or vacated
by the arbitral tribunal, once it is constituted, until the tribunal makes a
final award or until the claim is withdrawn. Paragraph 10 of Schedule 1
also provides that any interim order or award made by the Emerg ency
Arbitrator shall cease to be binding only if the tribunal is not constituted
within 90 days of such order or award. Under paragraph 12, the parties
agree that such orders shall be binding on the parties from the date it is
made and undertake to carry out the interimorder immediately and without
delay.
26. No doubt, as has been submitted, the 246th Law Commission
Report did provide for the insertion of an Emergency Arbitrator’s orders
into Section 2(1)(d) of the Arbitration Act as follows:
815
“Amendment of Section 2
1. In section 2 of the Arbitration and Conciliation Act, 1996,–
(i) In sub-section (1), clause (d), after the words “…pa nel of
arbitrators” add “and, in the case of an arbitration conducted under
the rules of an institution providing for appointme nt of an
emergency arbitrator, includes such emergency arbitrator;”
[NOTE: This amendment is to ensure that institutional rules such
as the SIAC Arbitration Rules which provide for an emerg ency
arbitrator are given statutory recognition in India.]”
27. As has been held in Avitel Post Studioz Ltd. & Ors. v.
HSBC PI Holdings (Mauritius) Ltd. , (2021) 4 SCC 713, the mere
fact that a recommendation of a Law Commission Report is not followed
by Parliament, would not necessarily lead to the conclusion that what
has been suggested by the Law Commission cannot form part of the
statute as properly interpreted. This Court held:
“27. Mr Saurabh Kirpal took exception to Sikri, J.’s judgment in
that Sikri, J. did not refer to Para 52 of the 246th Law Commission
Report and its aftermath. Para 52 of the 246th Law Commission
Report reads as follows:
“52. The Commission believes that it is important to set th is
entire controversy to a rest and make issues of fraud expressly
arbitrable and to this end has proposed amendments to Section
16.”
The Law Commission then added, by way of amendment, a
proposed Section 16(7) as follows:
“Amendment of Section 16
10. In Section 16,
After sub-section (6), insert sub-section “(7) The Arb itral
Tribunal shall have the power to make an award or give a
ruling notwithstanding that the dispute before it involves a
serious question of law, complicated questions of fa ct or
allegations of fraud, corruption, etc.”
[Note: This amendment is proposed in the light of the Supreme
Court decisions (e.g. N. Radhakrishnan v. Maestro
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Engineers [N. Radhakrishnan v. Maestro Engineers, (2010)
1 SCC 72 : (2010) 1 SCC (Civ) 12]) which appear to denude
an Arbitral Tribunal of the power to decide on issues of fraud,
etc.]”
28. Mr Saurabh Kirpal then referred to the fact that the aforesaid
sub-section was not inserted by Parliament by the 2 015
Amendment Act, which largely incorporated other amendments
proposed by the Law Commission. His argument therefore was
that N. Radhakrishnan [N. Radhakrishnan v. Maestro
Engineers, (2010) 1 SCC 72] not having been legislatively
overruled, cannot now be said to be in any way deprived of its
precedential value, as Parliament has taken note of the proposed
Section 16(7) in the 246th Law Commission Report, and has
expressly chosen not to enact it. For this proposition, he referred
to La Pintada [President of India v. La Pintada Compania
Navigacion SA, 1985 AC 104 : (1984) 3 WLR 10 (HL)]. This
judgment related to a challenge to an award granting compound
interest, inter alia, in a case where a debt is paid late, but before
any proceedings for its recovery had begun.
28. He then referred to the fact that the aforesaid sub-section
was not inserted by Parliament by the 2015 Amendment Ac t,
which largely incorporated other amendments proposed by the
Law Commission. His argument therefore was that N.
Radhakrishnan [N. Radhakrishnan v. Maestro Engineers ,
(2010) 1 SCC 72] not having been legislatively overruled, cannot
now be said to be in any way deprived of its precedential value,
as Parliament has taken note of the proposed section 16(7) in the
246th Law Commission Report, and has expressly chosen not to
enact it. For this proposition, he referred to La Pintada (supra).
This judgment related to a challenge to an award gr anting
compound interest, inter alia, in a case where a debt is paid late,
but before any proceedings for its recovery had begun.
29. Lord Brandon of Oakbrook, who wrote the main judgment in
this case, stated: ( La Pintada case [President of India v. La
Pintada Compania Navigacion SA , 1985 AC 104 : (1984) 3
WLR 10 (HL)] , AC p. 122)
“There are three cases in which the absence of any common
law remedy for damage or loss caused by the late payment of
817
a debt may arise, cases which I shall in what follows describe
for convenience as Case 1, Case 2 and Case 3. Case 1 is
where a debt is paid late, before any proceedings fo r its
recovery have been begun. Case 2 is where a debt is paid late,
after proceedings for its recovery have been begun, but before
they have been concluded. Case 3 is where a debt remains
unpaid until as a result of proceedings for its recovery being
brought and prosecuted to a conclusion, a money judgment is
given in which the original debt becomes merged.”
* * *
“32. It is a little difficult to apply this case to resurrect the ratio of
N. Radhakrishnan [N. Radhakrishnan v. Maestro Engineers ,
(2010) 1 SCC 72] as a binding precedent given the advance made
in the law by this Court since N. Radhakrishnan was decided.
Quite apart from what has been stated by us in paras 17 to 21
above, as to how N. Radhakrishnan cannot be considered to be
a binding precedent for the reasons given in the said paragrap h,
we are of the view that the development of the law by this Court
cannot be thwarted merely because a certain provisi on
recommended in a Law Commission Report is not enacted by
Parliament. Parliament may have felt, as was mentioned by Lord
Reid in British Railways Board v. Herrington [British Railways
Board v. Herrington, 1972 AC 877 : 1972 2 WLR 537 (HL)] ,
that it was unable to make up its mind and instead, leave it to the
courts to continue, case by case, deciding upon what sh ould
constitute the fraud exception. [This case is referred to in Lord
Brandon’s judgment in La Pintada, 1985 AC 104 : (1984) 3 WLR
10 (HL) and distinguished at AC p. 130 of his judgme nt.]
Parliament may also have thought that Section 16(7), propos ed
by the Law Commission, is clumsily worded as it speaks of “a
serious question of law, complicated questions of fact, or allegations
of fraud, corruption, etc.” N. Radhakrishnan did not lay down
that serious questions of law or complicated questions of fact are
non-arbitrable. Further, “allegations of fraud, corruption, etc.” is
vague. For this reason also, Parliament may have left it to the
courts to work out the fraud exception. In any case, we have
pointed out that dehors any such provision, the rat io in N.
Radhakrishnan, being based upon a judgment under the 1940
Act, and without considering Sections 5, 8 and 16 of the 1996 Act
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in their proper perspective, would all show that the law laid down
in this case cannot now be applied as a precedent for application
of the fraud mantra to negate arbitral proceedings. For the reasons
given in this judgment, the House of Lords’ decision would have
no application inasmuch as N. Radhakrishnan has been tackled
on the judicial side and has been found to be wanting.”
28. It is pertinent to note that the High-Level Com mittee
constituted by the Government of India under the chairmanship of Justice
B.N. Srikrishna (Retd.) to review the institutionalisation of arb itration
mechanism in India and look into the provisions of the Arbitration Act
after the 2015 Amendment Act, submitted a report on 30 th July, 2017
[“Srikrishna Committee Report”], in which it is stated as follows:
“16. Enforcement of emergency awards
There is significant uncertainty in the law regardi ng the
enforceability of emergency awards in arbitrations seated in India.
The LCI in its 246 th Report had recommended recognising the
concept of emergency arbitrator by widening the definition of
arbitral tribunal under section 2(d) of the ACA to include emergency
arbitrator. However, this recommendation was not incorporated
in the 2015 Amendment Act.
While one could possibly rely on section 17(2) of the ACA to
enforce emergency awards for arbitrations seated in India, the
Delhi High Court decision in Raffles Design International India
Pvt. Ltd.& Anr. v. Educomp Professional Education L td. &
Ors., (2016) 234 DLT 349 held that an emergency award in an
arbitration seated outside India is not enforceable in India.
India’s approach differs from that of developed arb itration
jurisdictions such as Singapore and Hong Kong which have
recognised the enforceability of orders given by an emerg ency
arbitrator. Singapore amended the IAA in 2012 to broaden the
definition of ‘arbitral tribunal’ in section 2(1) to include emergency
arbitrator(s). Hong Kong amended the AO in 2013 to include Part
3A which deals with the enforcement of emergency relief. Section
22B provides that emergency relief granted by an emergency
arbitrator shall with the leave of the Court of First Instance of the
High Court be enforceable in the same manner as an order or
direction of the Court.
819
Given that international practice is in favour of e nforcing
emergency awards (Singapore, Hong Kong and the Unit ed
Kingdom all permit enforcement of emergency awards), it is time
that India permitted the enforcement of emergency awards in all
arbitral proceedings. This would also provide legislative support
to rules of arbitral institutions that presently provide for emergency
arbitrators ( See Dennis Nolan and Roger Abrams, ‘Arbitral
Immunity’, Berkeley Journal of Employment and Labour Law,
Vol. 11 Issue 2 (1989), pp.228–266). For this purpo se, the
recommendation made by the LCI in its 246 th Report may be
adopted.”
29. The Delhi High Court judgment in Raffles Design
International India Pvt. Ltd. v. Educomp Professional Edu cation
Ltd., 2016 SCC OnLine Del 5521 : (2016) 234 DLT 349 dealt with an
award by an Emergency Arbitrator in an arbitration seated outside India
(as was mentioned in Srikrishna Committee Report). What is of
significance is that the said Report laid down that it is possible to interpret
Section 17(2) of the Act to enforce emergency awards for arbitrations
seated in India, and recommended that the Act be amended only so that
it comes in line with international practice in favour of recognising and
enforcing an emergency award.
30. It is relevant to note that the 246 th Law Commission Report
also recommended the insertion of Section 9(2) and 9(3) as follows:
“Amendment of Section 9
6. In section 9,
(i) before the words “A party may, before” add sub-section “(1)”
(ii) after the words “any proceedings before it” add sub-sec tion
“(2) Where, before the arbitral proceedings, a Court grant s any
interim measure of protection under sub-section (1), the arbitral
proceedings shall be commenced within 60 days from the date of
such grant or within such shorter or further time as indicated by
the Court, failing which the interim measure of protecti on shall
cease to operate.
[NOTE: This amendment is to ensure the timely initiation of
arbitration proceedings by a party who is granted an inter im
measure of protection.]
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(iii) Add sub-section “(3) Once the Arbitral Tribunal has been
constituted, the Court shall, ordinarily, not entertain an Application
under this provision unless circumstances exist owing to which
the remedy under section 17 is not efficacious.”
[NOTE: This amendment seeks to reduce the role of the Court in
relation to grant of interim measures once the Arbitral Tr ibunal
has been constituted. After all, once the Tribunal is seized of the
matter it is most appropriate for the Tribunal to hear al l interim
applications. This also appears to be the spirit of the UNCITRAL
Model Law as amended in 2006.
Accordingly, section 17 has been amended to provide the Arbitral
Tribunal the same powers as a Court would have under secti on
9]”
31. The 2015 Amendment Act, therefore, introduced sub-sections
(2) and (3) To Section 9, which read as follows:
“9. Interim measures, etc. by Court .—
* * *
(2) Where, before the commencement of the arbitral proceedings,
a court passes an order for any interim measure of protection
under sub-section (1), the arbitral proceedings shall be commenced
within a period of ninety days from the date of such order or
within such further time as the court may determine.
(3) Once the arbitral tribunal has been constituted, the court shall
not entertain an application under sub-section (1), unless the court
finds that circumstances exist which may not render the remedy
provided under Section 17 efficacious.”
32. In essence, what is provided by the SIAC Rules and the other
institutional rules, is reflected in Sections 9(2) and 9(3) so far as interim
orders passed by courts are concerned. The introduction of S ections
9(2) and 9(3) would show that the objective was to avoid courts being
flooded with Section 9 petitions when an arbitral tribunal is constituted
for two good reasons – (i) that the clogged court system ought to be
decongested, and (ii) that an arbitral tribunal, once constituted, would be
able to grant interim relief in a timely and efficacious manner.
821
33. Similarly, the 246th Law Commission Report recommended
the amendment of Section 17 as follows:
“Amendment of Section 17
11. In section 17
* * *
(vi) In sub-section (1), after sub-clause “(d)”, insert sub- clause
“(e) such other interim measure of protection as may appear to
the Arbitral Tribunal to be just and convenient, and the arbi tral
tribunal shall have the same power for making orders as the Court
has for the purpose of, and in relation to, any proceedings before
it.”
[NOTE: This is to provide the arbitral tribunal the same powers
as a civil court in relation to grant of interim measures. When this
provision is read in conjunction with section 9(2), parties will by
default be forced to approach the Arbitral Tribunal for int erim
relief once the Tribunal has been constituted. The Arbitral Tribunal
would continue to have powers to grant interim relief post-award.
This regime would decrease the burden on Courts. Further, this
would also be in tune with the spirit of the UNCITRAL Mo del
Law as amended in 2006.]
(vii) delete words in sub-section (2) and add the words “(2) Subject
to any orders passed in appeal under section 37, any order issued
by the arbitral tribunal under this section shall be deemed to be an
Order of the Court for all purposes and shall be enforceable under
the Code of Civil Procedure, 1908 in the same manner as if it
were an Order of the Court.”
[NOTE: This is to ensure the effective enforcement of interim
measures that may be ordered by an arbitral tribunal.]”
34. Section 17 was then amended by the very same 20 15
Amendment Act (which brought in sub-sections (2) and (3) to Section
9) to substitute Section 17 so that Section 17(1) would be a mirror image
of Section 9(1), making it clear that an arbitral tribunal is fully clothed
with the same power as a court to provide for interim relief. Also, Section
17(2) was added so as to provide for enforceability of such orders, again,
as if they were orders passed by a court, thereby bringing Section 17 on
par with Section 9.
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35. An Emergency Arbitrator’s “award”, i.e., order, would
undoubtedly be an order which furthers these very objectives, i.e., to
decongest the court system and to give the parties urgent interim relief
in cases which deserve such relief. Given the fact that party autonomy
is respected by the Act and that there is otherwise no inte rdict against
an Emergency Arbitrator being appointed, as has been he ld by us
hereinabove, it is clear that an Emergency Arbitrator’s or der, 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 the institutional rules to which the parties have agreed, and would
consequently be covered by Section 17(1), when read with the other
provisions of the Act, as delineated above.
36. 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 E mergency
Arbitrator’s ruling. As we have seen hereinabove, having agreed to
paragraph 12 of Schedule 1 to the SIAC Rules, it cannot lie in the mouth
of a party to ignore an Emergency Arbitrator’s award by stating that it is
a nullity when such party expressly agrees to the binding nature of such
award from the date it is made and further undertakes to carry out the
said interim order immediately and without delay.
37. However, Mr. Viswanathan argued that an Emergen cy
Arbitrator under the SIAC Rules is not an independent judicial body like
an arbitral tribunal constituted under the very Rules, and referred to and
relied upon Rules 3, 9, and 10 to buttress this proposition. Rule 3 merely
states that the President may appoint an Emergency Arbitra tor if he
determines that the SIAC should accept the application for emergency
interim relief. Once the Emergency Arbitrator enters upon the reference,
he is given all the powers of an arbitral tribunal under Rule 7 and is to
decide completely independently of any other administrative authority
under the SIAC Rules. Equally, Rule 9 does not, in any manner, impinge
upon the independence of the Emergency Arbitrator as it only lays down
the timeframe within which an interim order or award is to be made,
which time is extendable by the Registrar. The interim orde r or award
that is finally made by the Emergency Arbitrator has only to be approved
by the Registrar as to its “form” and not on merits. Further, Rule 10 also
does not, in any manner, interfere with the independence of the decision
of the Emergency Arbitrator. This argument is, therefore, rejected.
823
38. Mr. Viswanathan also went on to argue, relying upon Section
28 of the Contract Act, Justice R.S. Bachawat’s Law of Arbitration
and Conciliation (Sixth Ed., LexisNexis), and the Chancery Division
judgment of In Re Franklin and Swathling’s Arbitration , [1929] 1
Ch. 238, for the proposition that arbitration, conceptually, is an ouster of
the civil court’s jurisdiction and that, therefore, only what is expressly
provided in the ouster provisions can be followed – there is no room for
any implication here. This argument may have found favour with a court
if it were dealing with Arbitration Act, 1940. As has been held in several
decisions of this Court, the Arbitration and Conciliation Act, 1996 is a
complete break with the past and is no longer to be viewed as an ouster
statute but as a statute which favours the remedy of arbitration so as to
de-clog civil courts which are, in today’s milieu, extremely burdened. As
a matter of fact, Section 5 of the Arbitration Act puts paid to the
submission when it overrides all other laws for the time being in force
and goes on to state that in matters governed by Part I of the Act, no
judicial authority shall intervene except where so provided in that Part.
The Arbitration Act, therefore, turns the principle of ouster on its head
when it comes to arbitration as a favoured means of reso lving civil
disputes. This argument also, therefore, stands rejected.
39. Even otherwise, as has been correctly pointed out by Mr.
Subramanium, no order bears the stamp of invalidity on its forehead and
has to be set aside in regular court proceedings as being illegal. This is
felicitously stated in several judgments – See Krishnadevi Malchand
Kamathia v. Bombay Environmental Action Group, (2011) 3 SCC
363 (at paragraphs 16 to 19), and Anita International v. Tungabadra
Sugar Works Mazdoor Sangh , (2016) 9 SCC 44 (at paragraphs 54
and 55). As a matter of fact, in Tayabbhai M. Bagasarwalla v. Hind
Rubber Industries (P) Ltd. , (1997) 3 SCC 443, this Court has
unequivocally held that even if an order is later set aside as having been
passed without jurisdiction, for the period of its subsistence, it is an order
that must be obeyed. This Court held:
“15. The next thing to be noticed is that certain interim orders
were asked for and were granted by the Civil Court during this
period. Would it be right to say that violation of and disobedience
to the said orders of injunction is not punishable becaus e it has
been found later that the Civil Court had no jurisdiction to entertain
the suit. Mr Sorabjee suggests that saying so would be subversive
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of the Rule of Law and would seriously erode the majesty and
dignity of the courts. It would mean, suggests the learned counsel,
that it would be open to the defendants-respondents to decide for
themselves whether the order was with or without jurisdicti on
and act upon that belief. This can never be, says the lea rned
counsel. He further suggests that if any party thinks that an order
made by the Civil Court is without jurisdiction or is contr ary to
law, the appropriate course open to him is to approach that court
with that plea and ask for vacating the order. But it is not open to
him to flout the said order assuming that the order is without
jurisdiction. It is this principle which has been recognise d and
incorporated in Section 9-A of Civil Procedure Code (inserted by
Maharashtra Amendment Act No. 65 of 1977), says Mr Sorabjee.
Section 9-A reads as follows:
“9-A. Where at the hearing of an application relating
to interim relief in suit, objection to jurisdiction is tak en, such
issue to be decided by the Court as a preliminary issue. —(1)
Notwithstanding anything contained in this Code or any other law
for the time being in force, if, at the hearing of any application for
granting or setting aside an order granting any interim relief, whether
by way of stay injunction, appointment of a receiver or otherwise,
made in any suit, an objection to the jurisdiction of the Court to
entertain such suit is taken by any of the parties to the suit, the
Court shall proceed to determine at the hearing of such application
the issue as to the jurisdiction as a preliminary issue before granting
or setting aside the order granting the interim relief. Any s uch
application shall be heard and disposed of by the C ourt as
expeditiously as possible and shall not in any case be adjourned to
the hearing of suit.
(2) Notwithstanding anything contained in sub-section (1),
at the hearing of any such application, the Court may grant such
interim relief as it may consider necessary, pending determination
by it of the preliminary issue as to the jurisdiction.”
16. According to this section, if an objection is raised to the
jurisdiction of the court at the hearing of an application for grant
of, or for vacating, interim relief, the court should determine that
issue in the first instance as a preliminary issue before granting or
setting aside the relief already granted. An application raisi ng
825
objection to the jurisdiction to the court is directed to be heard
with all expedition. Sub-rule (2), however, says that the command
in sub-rule (1) does not preclude the court from granting su ch
interim relief as it may consider necessary pending the decision
on the question of jurisdiction. In our opinion, the provision merely
states the obvious. It makes explicit what is implicit in law. Just
because an objection to the jurisdiction is raised, the court does
not become helpless forthwith — nor does it become incompetent
to grant the interim relief. It can. At the same time, it should also
decide the objection to jurisdiction at the earliest possible moment.
This is the general principle and this is what Section 9-A reiterates.
Take this very case. The plaintiff asked for temporary injunction.
An ad interim injunction was granted. Then the defendants came
forward objecting to the grant of injunction and also raising a n
objection to the jurisdiction of the court. The court overruled the
objection as to jurisdiction and made the interim injunction absolute.
The defendants filed an appeal against the decision on the question
of jurisdiction. While that appeal was pending, several other interim
orders were passed both by the Civil Court as well as by the High
Court. Ultimately, no doubt, the High Court has found that t he
Civil Court had no jurisdiction to entertain the suit but all this took
about six years. Can it be said that orders passed by the Ci vil
Court and the High Court during this period of six years were all
non est and that it is open to the defendants to flout them merrily,
without fear of any consequence. Admittedly, this could not be
done until the High Court’s decision on the question of jurisdiction.
The question is whether the said decision of the High Court means
that no person can be punished for flouting or disobeying the
interim/interlocutory orders while they were in force, i.e ., for
violations and disobedience committed prior to the decision of the
High Court on the question of jurisdiction. Holding that by virtue
of the said decision of the High Court (on the ques tion of
jurisdiction), no one can be punished thereafter for disobedience
or violation of the interim orders committed prior to the said
decision of the High Court, would indeed be subversive of the
Rule of Law and would seriously erode the dignity and the authority
of the courts. We must repeat that this is not even a ca se where
a suit was filed in the wrong court knowingly or only with a view
to snatch an interim order. As pointed out hereinabove, the suit
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was filed in the Civil Court bona fide. We are of the opinion that in
such a case the defendants cannot escape the consequences of
their disobedience and violation of the interim injunction committed
by them prior to the High Court’s decision on the question of
jurisdiction.
* * *
“27. The learned counsel for Defendants 1 and 2 submitted that
this is not a proceeding for contempt but a proceeding under Rule
2-A of Order 39 of the Civil Procedure Code. The learned counsel
submitted that proceedings under Order 39 Rule 2-A are a part of
the coercive process to secure obedience to its injunction and that
once it is found that the Court has no jurisdiction, question of
securing obedience to its orders any further does not arise . The
learned counsel also submitted that enforcing the interim orde r
after it is found that the Court had no jurisdiction to try the said
suit would not only be unjust and illegal but would also reflect
adversely upon the dignity and authority of the Court. It is also
suggested that the plaintiff had instituted the present suit in the
Civil Court knowing fully well that it had no jurisdiction to try it. It
is not possible to agree with any of these submissions not only on
principle but also in the light of the specific provision contained in
Section 9-A of the Code of Civil Procedure (Maharas htra
Amendment). In the light of the said provision, it would not be
right to say that the Civil Court had no jurisdiction to pass interim
orders or interim injunction, as the case may be, pending decision
on the question of jurisdiction. The orders made were within the
jurisdiction of the Court and once this is so, they have to be obeyed
and implemented. It is not as if the defendants are being sought to
be punished for violations committed after the decision of the
High Court on the question of jurisdiction of the Civil Court. Here
the defendants are sought to be punished for the disobedience
and violation of the order of injunction committed before the
decision of the High Court in Vishanji Virji Mepani [AIR 1996
Bom 366]. According to Section 9-A, the Civil Court and the High
Court did have the power to pass interim orders until that decision.
If they had that power, they must also have the power to enforce
them. In the light of the said provision, it cannot also be held that
those orders could be enforced only till the said decision but not
827
thereafter. The said decision does not render them (the inter im
orders passed meanwhile) either non est or without jurisdiction.
Punishing the defendants for violation of the said orders committed
before the said decision ( Vishanji Virji Mepani [AIR 1996 Bom
366]) does not amount, in any event, to enforcing them after the
said decision. Only the orders are being passed now. The violations
are those committed before the said decision.”
40. However, learned counsel for the Respondents referred to
and relied upon the classic passage in Kiran Singh v. Chaman Paswan,
(1955) 1 SCR 117 (at page 122) and various other judgments following it
to contend that in cases of inherent lack of jurisdiction, it would be open
to a party to ignore an award by an Emergency Arbitrator . They also
referred to the judgment in CIT v. Pearl Mechanical Engineering &
Foundry Works (P) Ltd., (2004) 4 SCC 597, where this Court spoke
of the jurisdiction of a court or tribunal by stating that such jurisdiction
only subsists when a court or tribunal exercises such jurisdict ion from
the law. It is a power which nobody on whom the law is not conferred
can exercise. None of these judgments are applicable in the fact situation
of the present case. On the contrary, we have pointed out that no party,
after agreeing to be governed by institutional rules, can participate in a
proceeding before an Emergency Arbitrator and, after losing, turn around
and say that the award is a nullity or coram non judice when there is
nothing in the Arbitration Act which interdicts an Emergency Arbitrator’s
order from being made. As has been pointed out, Section 17, as construed
in the light of the other provisions of the Act, clearly leads to the position
that such emergency award is made under the provisions of Se ction
17(1) and can be enforced under the provisions of Section 17(2).
41. We, therefore, answer the first question by declaring that full
party autonomy is given by the Arbitration Act to have a dispute decided
in accordance with institutional rules which can include Emer gency
Arbitrators delivering interim orders, described as “awards”. Such orders
are an important step in aid of decongesting the civil courts and affording
expeditious interim relief to the parties. Such orders are referable to and
are made under Section 17(1) of the Arbitration Act.
42. We now come to the question as to the maintainability of the
appeal that has been filed under Order XLIII, Rule 1(r). Or der XLIII,
Rule 1(r) reads as under:
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
“ORDER XLIII – Appeals from Orders
1. Appeals from orders.—An appeal shall lie from the following
orders under the provisions of Section 104, namely:—
* * *
(r) an order under Rule 1, Rule 2, Rule 2-A, Rule 4 or Rule 10 of
Order XXXIX;”
43. In order to answer this question, it is important to advert to
Sections 9, 17, and 37 of the Arbitration Act. Section 9(1) reads as follows:
“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 a 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
may arise therein and authorising for any of the
aforesaid purposes any person to enter upon any land
or building in the possession of any party, or
authorising any samples to be taken or any observation
to be made, or experiment to be tried, which may be
necessary or expedient for the purpose of obtaining
full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the Court to be just and convenient,
829
and the Court shall have the same power for making orders as it
has for the purpose of, and in relation to, any proceedings before
it.”
After the 2015 Amendment Act, Section 17(1), which, as has
been stated hereinabove, is now a mirror image of Section 9(1), reads as
follows:
“17. Interim measures ordered by arbitral tribunal .—(1) A
party may, during the arbitral proceedings, apply to the arbi tral
tribunal—
(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
may arise therein and authorising for any of the
aforesaid purposes any person to enter upon any land
or building in the possession of any party, or
authorising any samples to be taken, or any
observation to be made, or experiment to be tried,
which may be necessary or expedient for the purpose
of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the arbitral tribunal to be just and
convenient,
and the arbitral tribunal shall have the same power for m aking
orders, as the court has for the purpose of, and in relation to, any
proceedings before it.”
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
Section 17(2), which was also introduced by the same Amendment
Act, reads:
“17. Interim measures ordered by arbitral tribunal .—
* * *
(2) Subject to any orders passed in an appeal under sectio n 37,
any order issued by the arbitral tribunal under this section shall be
deemed to be an order of the court for all purposes and shall be
enforceable under the Code of Civil Procedure, 1908 (5 of 1908),
in the same manner as if it were an order of the court.”
Section 37, within the four corners of which appeals against orders
are to be made under the Arbitration Act, reads as follows:
“37. Appealable orders .—(1) Notwithstanding anything
contained in any other law for the time being in force, an appeal
shall lie from the following orders (and from no others) to the
court authorised by law to hear appeals from original decrees of
the Court passing the order, namely:—
(a) refusing to refer the parties to arbitrationunder Sec tion
8;
(b) granting or refusing to grant any measure under Section
9;
(c) setting aside or refusing to set aside an arbitral a ward
under Section 34.
(2) An appeal shall also lie to a court from an order of the arbitral
tribunal—
(a) accepting the plea referred to in sub-section (2) or sub -
section (3) of Section 16; or
(b) granting or refusing to grant an interim measure under
Section 17.
(3) No second appeal shall lie from an order passed in ap peal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court.”
44. As has been pointed out hereinabove, the Law Commission
recommended an amendment to Section 17 to provide the arbitral tribunal
the same powers as a court would have under Section 9.
831
45. Section 9(1), after setting out in clauses (i) and (ii) what interim
measures or protection could be granted, then goes on to add, “and the
court shall have the same power for making orders as it has for the
purpose of, and in relation to , any proceedings before it ”.
46. The italicised words arose for interpretation in Adhunik Steels
Ltd. v. Orissa Manganese and Minerals (P) Ltd. , (2007) 7 SCC
125. In paragraph 11 of the judgment, this Court held:
“11. It is true that Section 9 of the Act speaks of the court by way
of an interim measure passing an order for protection, for the
preservation, interim custody or sale of any goods, which are the
subject-matter of the arbitration agreement and such i nterim
measure of protection as may appear to the court to be just and
convenient. The grant of an interim prohibitory injunction or an
interim mandatory injunction are governed by well-known rules
and it is difficult to imagine that the legislature while enacting
Section 9 of the Act intended to make a provision which was
dehors the accepted principles that governed the grant of an interim
injunction. Same is the position regarding the appointment of a
receiver since the section itself brings in the concept of “just and
convenient” while speaking of passing any interim measur e of
protection. The concluding words of the section, “and the court
shall have the same power for making orders as it has f or the
purpose and in relation to any proceedings before it” also suggest
that the normal rules that govern the court in the grant of interim
orders is not sought to be jettisoned by the provision. Moreover,
when a party is given a right to approach an ordinary court of the
country without providing a special procedure or a special set of
rules in that behalf, the ordinary rules followed by that court would
govern the exercise of power conferred by the Act. On that basis
also, it is not possible to keep out the concept of bala nce of
convenience, prima facie case, irreparable injury and the concept
of just and convenient while passing interim measures unde r
Section 9 of the Act.”
47. Quite apart from the above, the language of the last pa rt of
Section 9(1) clearly refers to Section 94 of the Code of Civil Procedure
read with Order XXXIX thereof. Section 94 of the Co de of Civil
Procedure reads as follows:
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
“94. Supplemental proceedings.—In order to prevent the ends
of justice from being defeated the Court may, if it is so
prescribed,—
(a) issue a warrant to arrest the defendant and bring him bef ore
the Court to show cause why he should not give security
for his appearance, and if he fails to comply with any order
for security commit him to the civil prison;
(b) direct the defendant to furnish security to produce any
property belonging to him and to place the same at the
disposal of the Court or order the attachment of an y
property;
(c) grant a temporary injunction and in case of disobedience
commit the person guilty thereof to the civil prison and order
that his property be attached and sold;
(d) appoint a receiver of any property and enforce t he
performance of his duties by attaching and selling his
property;
(e) make such other interlocutory orders as may appear to the
Court to be just and convenient.”
Order XXXIX, Rules 1, 2, and 2-A read as follows:
“ORDER XXXIX
Temporary injunctions
1. Cases in which temporary injunction may be granted .—
Where in any suit it is proved by affidavit or otherwise—
(a) that any property in dispute in a suit is in danger of being
wasted, damaged or alienated by any party to the suit, or
wrongfully sold in execution of a decree, or
(b) that the defendant threatens, or intends, to remove or dispose
of his property with a view to defrauding his creditors,
(c) that the defendant threatens to dispossess the plaintiff or
otherwise cause injury to the plaintiff in relation to any
property in dispute in the suit,
the Court may by order grant a temporary injunction to res train
such act, or make such other order for the purpose of staying and
833
preventing the wasting, damaging, alienation, sale, removal or
disposition of the property or dispossession of the plaintiff , or
otherwise causing injury to the plaintiff in relation to any property
in dispute in the suit] as the Court thinks fit, until the disposal of
the suit or until further orders.
2. Injunction to restrain repetition or continuance of
breach.—(1) In any suit for restraining the defendant from
committing a breach of contract or other injury of an y kind,
whether compensation is claimed in the suit or not, the plainti ff
may, at any time after the commencement of the suit, and either
before or after judgment, apply to the Court for a tem porary
injunction to restrain the defendant from committing the breach
of contract or injury complained of, or any breach of contract or
injury of a like kind arising out of the same contract or relating to
the same property or right.
(2) The Court may by order grant such injunction, on such terms
as to the duration of the injunction, keeping an account, giving
security, or otherwise, as the Court thinks fit.
2-A. Consequence of disobedience or breach of injunctio n.
—(1) In the case of disobedience of any injunction granted or
other order made under Rule 1 or Rule 2 or breach of any of the
terms on which the injunction was granted or the order made, of
the Court granting the injunction or making the order, or any Court
to which the suit or proceeding is transferred, may order the
property of the person guilty of such disobedience or breach to be
attached, and may also order such person to be detained in the
civil prison for a term not exceeding three months, unless in the
meantime the Court directs his release.
(2) No attachment made under this rule shall remain in force for
more than one year, at the end of which time, if the disobedience
or breach continues, the property attached may be sold and out of
the proceeds, the Court may award such compensation as it thinks
fit to the injured party and shall pay the balance, if any, to the
party entitled thereto.”
Prior to the Code of Civil Procedure (Amendment) Act, 1976
[“1976 Amendment Act”], disobedience of an injunction or breach of
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
any of its terms was enforced under sub-rules (3) and (4) of Order
XXXIX, Rule 2 as follows:
“2. Injunction to restrain repetition or continuance of
breach.—
* * *
(3) In case of disobedience, or of breach of any such ter ms, the
Court granting an injunction may order the property of the person
guilty of such disobedience or breach to be attached, and may
also order such person to be detained in the civil prison for a term
not exceeding six months, unless in the meantime the Court directs
his release.”
(4) No attachment under this rule shall remain in force for more
than one year, at the end of which time, if the disobedience or
breach continues, the property attached may be sold, and out of
the proceeds the Court may award such compensation as it thinks
fit, and shall pay the balance, if any, to the party entitled thereto.”
A controversy arose as to whether sub-rules (3) and (4) to Rule 2
applied to breach of injunctions that were granted under Rule 1 of Order
XXXIX. This controversy was set at rest by omitting sub-rules (3) and
(4) from Order XXXIX, Rule 2 and introducing a new Rule 2-A to Order
XXXIX. The Statement of Objects and Reasons for this provision read
as follows:
“Clause 89 – Sub-rule (iii) – New Rule 2-A is being inserted to
provide for the consequences of a breach of an injunction issued
under Rule 1 which is, at present, not covered. The amendment is
intended to seek the application of the provisions for breach, which
are, at present, available under an injunction granted under Rule
2, to the said class of cases as well. There is a controversy a s to
whether under the existing provision, a court to which a suit is
transferred can punish disobedience of an injunction issued by the
predecessor court. New Rule 2-A provides that the transferee
court can also exercise that power.” ( See Gazette of Ind., 8 th
April 1974, Pt. II, S. 2. Ext. p. 335)
48. A reading of Order XXXIX, Rule 2(3) and 2(4) as it originally
stood, and Order XXXIX, Rule 2-A as it stands after the 1976 Amendment
Act is to “prescribe” under Section 94 of the Code of Civil Procedure as
835
to what is the consequence when a temporary injunction order and/or an
order appointing a receiver of property is flouted. The consequences
are mentioned in Sections 94(c) and (d) itself and fleshed out by Order
XXXIX as aforesaid.
49. Mr. Nankani cited the judgment of Food Corporation of
India v. Sukh Deo Prasad, (2009) 5 SCC 665, in which he relied upon
the following observations of this Court:
“38. The power exercised by a court under Order 39 Rule 2-A of
the Code is punitive in nature, akin to the power to punish for civil
contempt under the Contempt of Courts Act, 1971. The person
who complains of disobedience or breach has to clearly make out
beyond any doubt that there was an injunction or order directing
the person against whom the application is made, to do or desist
from doing some specific thing or act and that ther e was
disobedience or breach of such order. While considerin g an
application under Order 39 Rule 2-A, the court cannot construe
the order in regard to which disobedience/breach is alleged, as
creating an obligation to do something which is not mentioned in
the “order”, on surmises, suspicions and inferences. The power
under Rule 2-A should be exercised with great cautio n and
responsibility.”
He also relied upon the judgment of U.C. Surendranath v.
Mambally’s Bakery, (2019) 20 SCC 666, and paragraph 7 in particular,
which states:
“7. For finding a person guilty of wilful disobedience of the order
under Order 39 Rule 2-A CPC there has to be not mer e
“disobedience” but it should be a “wilful disobedience”. The
allegation of wilful disobedience being in the nature of criminal
liability, the same has to be proved to the satisfaction of the court
that the disobedience was not mere “disobedience” but a “wilful
disobedience”. As pointed out earlier, during the second visit of
the Commissioner to the appellant’s shop, tea cakes and masala
cakes were being sold without any wrappers/labels. The only thing
which the Commissioner has noted is that “non- removal of the
hoarding” displayed in front of the appellant’s shop for which the
appellant has offered an explanation which, in our considered view,
is acceptable one.”
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
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50. It is one thing to say that the power exercised by a cou rt
under Order XXXIX, Rule 2-A is punitive in nature and akin to the power
to punish for civil contempt under the Contempt of Courts Act, 1971. It
is quite another thing to say that Order XXXIX, Rule 2-A requires not
“mere disobedience” but “wilful disobedience”. We are prima facie of
the view that the latter judgment in adding the word “wilful” into Order
XXXIX, Rule 2-A is not quite correct and may require to be reviewed
by a larger Bench. Suffice it to say that there is a vast difference between
enforcement of orders passed under Order XXXIX, Rules 1 and 2 and
orders made in contempt of court. Orders which are in contemp t of
court are made primarily to punish the offender by imposing a fine or a
jail sentence or both. On the other hand, Order XXXIX, Rule 2-A is
primarily intended to enforce orders passed under Order XXXIX, Rules
1 and 2, and for that purpose, civil courts are given vast powers which
include the power to attach property, apart from pass ing orders of
imprisonment, which are punitive in nature.1 Orders passed under Section
17(2) of the Arbitration Act, using the power contained in Order XXXIX,
Rule 2-A are, therefore, properly referable only to the Arbitration Act.
Neither of the aforesaid judgments are an authority for any proposition
of law to the contrary.
51. It is well settled that the expression “in relation to”, which
occurs in both Section 9(1) and Section 17(1), is an expression which is
comprehensive in nature, having both a direct as well as an ind irect
significance. Thus, in Bandekar Brothers Pvt. Ltd. v. Prasad
Vassudev Keni, 2020 SCC OnLine SC 707 this Court held:
“20. The words “in relation to” have been the subject matter of
judicial discussion in many judgments. Suffice it to say that for the
present, two such judgments need to be noticed. In State Wakf
Board, Madras v. Abdul Azeez Sahib , AIR 1968 Mad. 79, the
expression “relating to” contained in Section 57(1) of the Wa kf
Act, 1954 fell for consideration before the Madras High Court.
The High Court held:
“8. We have no doubt whatever that the learned Judge,
(Kailasam, J.), was correct in his view that even the second
1 When an order for permanent injunction is to be en forced, Order XXI, Rule 32
provides for attachment and/or detention in a civil prison. Orders that are passed under
Order XXI, Rule 32 are primarily intended to enforc e injunction decrees by methods
similar to those contained in Order XXXIX, Rule 2-A . This also shows the object of
Order XXXIX, Rule 2-A is primarily to enforce order s of interim injunction.
837
suit has to be interpreted as within the scope of the w ords
employed in S. 57(1) namely, “In every suit or proceeding
relating to title to Wakf property”. There is ample judici al
authority for the view that such words as “relating to” or “in
relation to” are words of comprehensiveness which might both
have a direct significance as well as an indirect significance,
depending on the context. They are not words of restrictive
content and ought not to be so construed. The matter has come
up for judicial determination in more than one instance. The
case in Compagnie Financiec Dae Pacifique v. Peruvian
Guano Co, is of great interest, on this particular aspect and
the judgment of Brett, L.J., expounds the interpretation of O.
31, R. 12 of the Rules of the Supreme Court, 1875, in the
context of the phrase “material to any matter in question in the
action”. Brett, L.J., observed that this could both be direct as
well as indirect in consequences and according to the learned
Judge the test was this (at page 63):
“…a document can properly be said to contain information
which may enable the party requiring the affidavit either to
advance his own case or to damage the case of his
adversary if it is a document which may fairly lead him to a
train of inquiry, which may have either of these
consequences.”
21. Likewise, in Mansukhlal Dhanraj Jain v. Eknath Vithal
Ogale, (1995) 2 SCC 665, the expression “Suits and proceedings
between a licensor and licensee…relating to the recover y of
possession” under Section 41(1) of the Presidency Small Cause
Courts Act, 1882 came up for consideration before this Cour t.
The Court held:
“14. …The words ‘relating to’ are of wide import and
can take in their sweep any suit in which the grievance is made
that the defendant is threatening to illegally recover possession
from the plaintiff-licensee. Suits for protecting such possession
of immovable property against the alleged illegal attempts on
the part of the defendant to forcibly recover such possession
from the plaintiff, can clearly get covered by the wide sweep
of the words “relating to recovery of possession” as employed
by Section 41(1).”
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
* * *
“16. It is, therefore, obvious that the phrase “relating to
recovery of possession” as found in Section 41(1) of the Small
Cause Courts Act is comprehensive in nature and takes in its
sweep all types of suits and proceedings which are concerned
with the recovery of possession of suit property from th e
licensee and, therefore, suits for permanent injunction restraining
the defendant from effecting forcible recovery of s uch
possession from the licensee-plaintiff would squarely be covered
by the wide sweep of the said phrase. Consequently, in the
light of the averments in the plaints under consideration and
the prayers sought for therein, on the clear language of Section
41(1), the conclusion is inevitable that these suits could lie within
the exclusive jurisdiction of Small Cause Court, Bombay and
the City Civil Court would have no jurisdiction to entertain such
suits.”
52. As a matter of fact, the judgment of this Court in Thyssen
Stahlunion Gmbh v. Steel Authority of India Ltd. , (1999) 9 SCC
334, set out Section 85 of the Arbitration Act in paragraph 2 as follows:
“2. This Section 85 of the new Act we reproduce at the outse t:
“85. Repeal and savings .—(1) The Arbitration (Protocol and
Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10
of 1940) and the Foreign Awards (Recognition and Enforcement)
Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal,—
(a) the provisions of the said enactments shall apply in relation
to arbitral proceedings which commenced before this Act
came into force unless otherwise agreed by the parties but
this Act shall apply in relation to arbitral proceedings which
commenced on or after this Act comes into force;
(b) all rules made and notifications published, under the said
enactments shall, to the extent to which they are n ot
repugnant to this Act, be deemed respectively to have been
made or issued under this Act.”
The expression “in relation to” appears in Section 85(2)(a). The
question which arose before the Court, and which was answered by the
839
Court, was whether enforcement proceedings would be included within
the ambit of Section 85(2)(a). Holding that they did, this Court opined:
“32. …… We are, therefore, of the opinion that it would be the
provisions of the old Act that would apply to the enforcement of
the award in the case of Civil Appeal No. 6036 of 1998. Any
other construction on Section 85(2)(a) would only lead to confusion
and hardship. This construction put by us is consistent with the
wording of Section 85(2)(a) using the terms “provision” and “in
relation to arbitral proceedings” which would mean that once the
arbitral proceedings commenced under the old Act it would be
the old Act which would apply for enforcing the award as well.”
This passage was referred to by this Court in BCCI v. Kochi
Cricket (P) Ltd., (2018) 6 SCC 287, in paragraph 69, as follows:
“69. However, Shri Viswanathan strongly relied upon the
observations made in para 32 in Thyssen [Thyssen Stahlunion
GmbH v. SAIL, (1999) 9 SCC 334] and the judgment in Hameed
Joharan v. Abdul Salam [Hameed Joharan v. Abdul Salam ,
(2001) 7 SCC 573]. It is no doubt true that para 32 in Thyssen
[Thyssen Stahlunion GmbH v. SAIL, (1999) 9 SCC 334] does, at
first blush, support Shri Viswanathan’s stand. However, this was
stated in the context of the machinery for enforcement under
Section 17 of the 1940 Act which, as we have seen, differs from
Section 36 of the 1996 Act, because of the expression “in relation
to arbitral proceedings”, which took in the entire gamut, starting
from the arbitral proceedings before the Arbitral Tribunal and
ending up with enforcement of the award. It was also in the context
of the structure of the 1940 Act being completely different from
the structure of the 1996 Act, which repealed the 1940 Act. ……”
Finally, however, this Court held that Section 36, as amended by
the 2015 Amendment Act, should apply to Section 34 applications filed
even before the commencement of the 2015 Amendment Act.
53. Coupled with this, the expression “any proceedings”, occurring
in Section 9(1) and Section 17(1), would also be an expression
comprehensive enough to take in enforcement proceed ings. The
expression “any” has been construed by some of the judgments of this
Court. Thus, in Shri Balaganesan Metals v. M.N. Shanmugham
Chetty, (1987) 2 SCC 707, in context of Section 10(3)(c) of the Tamil
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
Nadu Buildings (Lease and Rent Control) Act, 1960, this Court held as
follows:
“18. In construing Section 10(3)(c) it is pertinent to note that the
words used are “any tenant” and not “a tenant” who can be called
upon to vacate the portion in his occupation. The word “any” has
the following meaning:
“some; one of many; an indefinite number. One indiscriminately
or whatever kind or quantity.
Word ‘any’ has a diversity of meaning and may be employed
to indicate ‘all’ or ‘every’ as well as ‘some’ or ‘one’ and its
meaning in a given statute depends upon the context and the
subject-matter of the statute.
It is often synonymous with ‘either’, ‘every’ or ‘all ’. Its
generality may be restricted by the context;” ( Black’s Law
Dictionary, 5th Ed.)
19. Unless the legislature had intended that both classes of tenants
can be asked to vacate by the Rent Controller for providing the
landlord additional accommodation, be it for residential or non-
residential purposes, it would not have used the word “any” instead
of using the letter “a” to denote a tenant.”
Similarly, in Lucknow Development Authority v. M.K. Gupta,
(1994) 1 SCC 243, this Court, while construing the word “service” under
the Consumer Protection Act, 1986, held as follows:
“4. What is the meaning of the word ‘service’? Does it extend to
deficiency in the building of a house or flat? Can a complaint be
filed under the Act against the statutory authority or a builder or
contractor for any deficiency in respect of such prope rty. The
answer to all this shall depend on understanding of the word
‘service’. The term has variety of meanings. It may mea n any
benefit or any act resulting in promoting interest or happiness. It
may be contractual, professional, public, domestic, legal, statutory
etc. The concept of service thus is very wide. How it should be
understood and what it means depends on the context in which it
has been used in an enactment. Clause (o) of the definition section
defines it as under:
841
“‘service’ means service of any description which is
made available to potential users and includes the provision of
facilities in connection with banking, financing, insurance,
transport, processing, supply of electrical or other energy, board
or lodging or both, housing construction, entertain ment,
amusement or the purveying of news or other information, but
does not include the rendering of any service free of charge or
under a contract of personal service;”
It is in three parts. The main part is followed by inclusive clause
and ends by exclusionary clause. The main clause itself is ve ry
wide. It applies to any service made available to potential users.
The words ‘any’ and ‘potential’ are significant. Both are of wide
amplitude. The word ‘any’ dictionarily means ‘one or some or
all’. In Black’s Law Dictionary it is explained thus, “word ‘any’
has a diversity of meaning and may be employed to indicate ‘all’
or ‘every’ as well as ‘some’ or ‘one’ and its meaning in a gi ven
statute depends upon the context and the subject-matter of the
statute”. The use of the word ‘any’ in the context it has bee n
used in clause (o) indicates that it has been used in wider sense
extending from one to all. …”
In Union of India v. A.B. Shah, (1996) 8 SCC 540, this Court,
while examining the purport of the expression “at any time” contained in
one of the conditions set by the Director General of Coal Mines in exercise
of his powers under the Coal Mines Regulations, 1957 read with the
Mines Act, 1952, held as follows:
“12. If we look into Conditions 3 and 6 with the object and purpose
of the Act in mind, it has to be held that these conditions are not
only relatable to what was required at the commencement of
depillaring process, but the unstowing for the required length must
exist always. The expression “at any time” finding p lace in
Condition 6 has to mean, in the context in which it has been used,
“at any point of time”, the effect of which is that the re quired
length must be maintained all the time. The accomplishment of
object of the Act, one of which is safety in the mines, requir es
taking of such a view, especially in the backdrop of repeated mine
disasters which have been taking, off and on, heavy toll of lives of
the miners. It may be pointed out that the word ‘any’ has a diversity
of meaning and in Black’ s Law Dictionary it has been stated
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that this word may be employed to indicate ‘all’ or ‘every’, and its
meaning will depend “upon the context and subject-matter of the
statute”. A reference to what has been stated in Stroud’s Judicial
Dictionary Vol. I, is revealing inasmuch as the import of the word
‘any’ has been explained from pp. 145 to 153 of the 4th Edn., a
perusal of which shows it has different connotations depending
primarily on the subject-matter of the statute and the context of
its use. A Bench of this Court in Lucknow Development Authority
v. M.K. Gupta [(1994) 1 SCC 243], gave a very wide meaning to
this word finding place in Section 2(o) of the Consumer Protection
Act, 1986 defining ‘service’. (See para 4)”
54. Properly so read, the expressions “in relation to” an d “any
proceedings” would include the power to enforce orders that are made
under Section 9(1), and are not limited to incidental powers to m ake
interim orders, as was suggested by Mr. Viswanathan. Thus, if an order
under Section 9(1) is flouted by any party, proceedings for enforcement
of the same are available to the court making such orders under Section
9(1). These powers are, therefore, traceable directly to Section 9(1) of
the Act – which then takes us to the Code of Civil Procedure. Thus, 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 the
Arbitration Act.
55. Given the fact that the 2015 Amendment Act has provided in
Section 17(1) the same powers to an arbitral tribunal as a re given to a
court, it would be anomalous to hold that if an interim order was passed
by the tribunal and then enforced by the court with reference to Order
XXXIX Rule 2-A of the Code of Civil Procedure, such order would not
be referable to Section 17. Section 17(2) was necessitated because the
earlier law on enforcement of an arbitral tribunal’s interim orders was
found to be too cumbersome. Thus, in Alka Chandewar v. Shamshul
Ishrar Khan, (2017) 16 SCC 119, this Court referred to the earlier
position as follows:
“8. Coming to Shri Rana Mukherjee’s submission that sub- section
(2) of Section 17 introduced by the 2015 Amendment Act now
provides for the necessary remedy against infraction of i nterim
orders by the Tribunal, suffice it to state that the Law Commission
itself, in its 246th Report, found the need to go one step fur ther
than what was provided in Section 27(5) as construed by the Delhi
843
High Court [Sri Krishan v. Anand, 2009 SCC OnLine Del 2472
: (2009) 112 DRJ 657 : (2009) 3 Arb LR 447]. The Commission, in
its Report, had this to say:
“Powers of Tribunal to order interim measures
46. Under Section 17, the Arbitral Tribunal has the power
to order interim measures of protection, unless the parties ha ve
excluded such power by agreement. Section 17 is an impor tant
provision, which is crucial to the working of the arbitration system,
since it ensures that even for the purposes of interim measur es,
the parties can approach the Arbitral Tribunal rather tha n await
orders from a court. The efficacy of Section 17 is howeve r,
seriously compromised given the lack of any suitable statuto ry
mechanism for the enforcement of such interim orders of the
Arbitral Tribunal.
47. In Sundaram Finance Ltd. [Sundaram Finance Ltd.
v. NEPC India Ltd. , (1999) 2 SCC 479], the Supreme Court
observed that though Section 17 gives the Arbitral Tribunal the
power to pass orders, the same cannot be enforced as orders of a
court and it is for this reason only that Section 9 gives the court
power to pass interim orders during the arbitration proceedings.
Subsequently, in Army Welfare Housing Organisation v.
Sumangal Services (P) Ltd. , (2004) 9 SCC 619, the Court had
held that under Section 17 of the Act no power is conferred on
the Arbitral Tribunal to enforce its order nor does it provide f or
judicial enforcement thereof.
48. In the face of such categorical judicial opinion, the Delhi
High Court attempted to find a suitable legislative basis for
enforcing the orders of the Arbitral Tribunal under Section 17 in
Sri Krishan v. Anand, 2009 SCC OnLine Del 2472 : (2009) 112
DRJ 657 : (2009) 3 Arb LR 447 [followed in Indiabulls Financial
Services Ltd. v. Jubilee Plots & Housing (P) Ltd. , 2009 SCC
OnLine Del 2458]. The Delhi High Court held that any person
failing to comply with the order of the Arbitral Tribunal unde r
Section 17 would be deemed to be “making any other default” or
“guilty of any contempt to the Arbitral Tribunal during the conduct
of the proceedings” under Section 27(5) of Act. The remedy of
the aggrieved party would then be to apply to the Arbitral Tribunal
for making a representation to the court to mete out appropriate
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punishment. Once such a representation is received by the court
from the Arbitral Tribunal, the court would be competent to deal
with such party in default as if it is in contempt of an order of the
court i.e., either under the provisions of the Contempt of Courts
Act or under the provisions of Order 39 Rule 2-A of the Code of
Civil Procedure, 1908.
49. The Commission believes that while it is important to
provide teeth to the interim orders of the Arbitral Tribunal as well
as to provide for their enforcement, the judgment of the Delhi
High Court in Sri Krishan v. Anand, 2009 SCC OnLine Del
2472 : (2009) 112 DRJ 657 : (2009) 3 Arb LR 447 is not a complete
solution . The Commission has, therefore, recommended
amendments to Section 17 of the Act which would give teeth to
the orders of the Arbitral Tribunal and the same would be statutorily
enforceable in the same manner as the orders of a court. In this
respect, the views of the Commission are consistent with (though
do not go as far as) the 2006 amendments to Article 17 of the
UNCITRAL Model Law.”
(emphasis in original)
9. Pursuant to this 246 th Report, sub-section (2) to Section 17
was added by the 2015 Amendment Act, so that the cumbersome
procedure of an Arbitral Tribunal having to apply every time to
the High Court for contempt of its orders would no longer be
necessary. Such orders would now be deemed to be orders of the
court for all purposes and would be enforced under the Civil
Procedure Code, 1908 in the same manner as if they were orders
of the court. Thus, we do not find Shri Rana Mukher jee’s
submission to be of any substance in view of the fact that Section
17(2) was enacted for the purpose of providing a “complet e
solution” to the problem.”
56. It was to remedy this situation that Section 17(2) was introduced.
There is no doubt that the arbitral tribunal cannot itself enforce its orders,
which can only be done by a court with reference to the Code of Civil
Procedure. But the court, when it acts under Section 17(2), a cts in the
same manner as it acts to enforce a court order made under S ection
9(1). If this is so, then what is clear is that the arbitral tr ibunal’s order
gets enforced under Section 17(2) read with the Code of Civil Procedure.
845
57. There is no doubt that Section 17(2) creates a legal f iction.
This fiction is created only for the purpose of enforceability of interim
orders made by the arbitral tribunal. To extend it to appeals being filed
under the Code of Civil Procedure would be a big leap not envisaged by
the legislature at all in enacting the said fiction. As a matter of fact, this
Court, in Paramjeet Singh Patheja v. ICDS Ltd., (2006) 13 SCC 322,
dealt with Section 36 of the Arbitration Act as it stood immediately before
the 2015 Amendment Act (Section 36 as it then stood is the mirror image
of Section 36(1) post amendment). In answering the question rais ed
before it – as to whether an arbitration award can be said to be a decree
for the purpose of Section 9 of the Presidency Towns Inso lvency Act,
1909, this Court held:
“39. Section 15 of the Arbitration Act, 1899 provides fo r
“enforcing” the award as if it were a decree. Thus, a final award,
without actually being followed by a decree (as was later provided
by Section 17 of the Arbitration Act of 1940), could be enforced
i.e., executed in the same manner as a decree. For this limi ted
purpose of enforcement, the provisions of CPC were m ade
available for realising the money awarded. However, the award
remained an award and did not become a decree either as defined
in CPC and much less so far the purposes of an entirely different
statute such as the Insolvency Act are concerned.
40. Section 36 of the Arbitration and Conciliation Act of 1996
brings back the same situation as it existed from 1899 to 1940.
Only under the Arbitration Act, 1940, was the award required to
be made a rule of court i.e., required a judgment followed by a
decree of court.
41. Issuance of a notice under the Insolvency Act is fraught with
serious consequences: it is intended to bring about a drastic change
in the status of the person against whom a notice is issued viz. to
declare him an insolvent with all the attendant dis abilities.
Therefore, firstly, such a notice was intended to be issued onl y
after a regularly constituted court, a component of the judici al
organ established for the dispensation of justice, has passe d a
decree or order for the payment of money. Secondly, a notice
under the Insolvency Act is not a mode of enforcing a deb t;
enforcement is done by taking steps for execution available under
CPC for realising monies.
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42. The words “ as if” demonstrate that award and decree or
order are two different things. The legal fiction created is for the
limited purpose of enforcement as a decree. The fiction is not
intended to make it a decree for all purposes under all st atutes,
whether State or Central.”
(emphasis supplied)
58. Mr. Viswanathan cited the judgment Rajasthan State
Industrial Development & Investment Corporation v. Diamond
& Gem Development Corporation Ltd. , (2013) 5 SCC 470. Far
from supporting his contention that the legal fiction contained in Section
17(2) extends to the filing of an appeal under the Code of Civil Procedure
as enforcement proceedings are different from interim orders, paragraph
26 states as follows:
“VI. “As if”—Meaning of
26. The expression “as if” is used to make one applicable in respect
of the other. The words “as if” create a legal fiction. By it, when
a person is “deemed to be” something, the only meaning possible
is that, while in reality he is not that something, but for the purposes
of the Act of legislature he is required to be treated that something,
and not otherwise. It is a well-settled rule of interpretation that, in
construing the scope of a legal fiction, it would be proper and
even necessary to assume all those facts on the basis of which
alone such fiction can operate. The words “as if” in fact show the
distinction between two things and, such words must be used only
for a limited purpose. They further show that a legal fiction must
be limited to the purpose for which it was created. [Vide
Radhakissen Chamria v. Durga Prosad Chamria [(1939-40)
67 IA 360 : (1940) 52 LW 647 : AIR 1940 PC 167], CIT v. S. Teja
Singh [AIR 1959 SC 352], Ram Kishore Sen v. Union of India
[AIR 1966 SC 644], Sher Singh v. Union of India [(1984) 1
SCC 107 : AIR 1984 SC 200], State of Maharashtra v. Laljit
Rajshi Shah [(2000) 2 SCC 699 : 2000 SCC (Cri) 533 : AIR 2000
SC 937], Paramjeet Singh Patheja v. ICDS Ltd. [(2006) 13 SCC
322 at p. 341, para 28] and CIT v. Willamson Financial Services
[(2008) 2 SCC 202].]”
(emphasis supplied)
847
The celebrated judgment in East End Dwellings Co. Ltd. v.
Finsbury Borough Council, 1952 AC 109 : (1951) 2 All ER 587 (HL)
then follows in paragraph 27, followed by another judgment of this Court
in paragraph 28, as follows:
“27. In East End Dwellings Co. Ltd. v. Finsbury Borough
Council [1952 AC 109 : (1951) 2 All ER 587 (HL)] this Court
approved the approach which stood adopted and follo wed
persistently. It set out as under: (AC p. 133)
“… The statute says that you must imagine a certain
state of affairs; it does not say that having done so, you must
cause or permit your imagination to boggle when it comes to
the inevitable corollaries of that state of affairs.”
28. In Industrial Supplies (P) Ltd. v. Union of India [(1980) 4
SCC 341] this Court observed as follows: (SCC p.351, para 25)
“25. It is now axiomatic that when a legal fiction is
incorporated in a statute, the court has to ascertain for what
purpose the fiction is created. After ascertaining the purpose,
full effect must be given to the statutory fiction and it should
be carried to its logical conclusion. The court has to assume all
the facts and consequences which are incidental or inevitable
corollaries to giving effect to the fiction. The legal effec t of
the words ‘as if he were’ in the definition of ‘owner’ in Section
3(n) of the Nationalisation Act read with Section 2(1) of the
Mines Act is that although the petitioners were not the owners,
they being the contractors for the working of the mine i n
question, were to be treated as such though, in fact, they were
not so.”
(emphasis supplied)
59. There can be no doubt that the legal fiction created und er
Section 17(2) for enforcement of interim orders is created only for the
limited purpose of enforcement as a decree of the court. To extend this
fiction to encompass appeals from such orders is to go beyond the clear
intention of the legislature. Mr. Salve’s argument in stressing the words
“under the Code of Civil Procedure” in Section 17(2), thus holds no
water as a limited fiction for the purpose of enforcement can not be
elevated to the level of a genie which has been released from a statutory
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provision and which would encompass matters never in the contemplation
of the legislature.
60. In a recent judgment of this Court in Union of India v. Vedanta
Ltd., (2020) 10 SCC 1, this Court held that a petition to enforce a foreign
award, made under Section 49 of the Arbitration Act, is governed by
Article 137 of the Limitation Act, 1963 and not by Article 136 of the said
Act. This conclusion was arrived at as follows:
“69. Section 36 of the Arbitration Act, 1996 creates a statutory
fiction for the limited purpose of enforcement of a “domesti c
award” as a decree of the court, even though it is otherwise an
award in an arbitral proceeding [Umesh Goel v. H.P . Coop. Group
Housing Society Ltd., (2016) 11 SCC 313 : (2016) 3 SCC (Civ)
795]. By this deeming fiction, a domestic award is deemed to be
a decree of the court [ Sundaram Finance Ltd. v. Abdul Samad,
(2018) 3 SCC 622 : (2018) 2 SCC (Civ) 593], even though it is as
such not a decree passed by a civil court. The Arbitral Tr ibunal
cannot be considered to be a “court”, and the arbitral proceedings
are not civil proceedings. The deeming fiction is restricted to treat
the award as a decree of the court for the purposes of execution,
even though it is, as a matter of fact, only an award in an arbitral
proceeding. In Paramjeet Singh Patheja v. ICDS Ltd., (2006)
13 SCC 322, this Court in the context of a domestic award, held
that the fiction is not intended to make an award a decree for all
purposes, or under all statutes, whether State or Central. I t is a
legal fiction which must be limited to the purpose for which it was
created. Paras 39 and 42 of the judgment in Paramjeet Singh
Patheja v. ICDS Ltd., (2006) 13 SCC 322] read as: (SCC pp.
345-46)
“39. Section 15 of the Arbitration Act, 1899 provides
for “enforcing” the award as if it were a decree. Thus a final
award, without actually being followed by a decree (as
was later provided by Section 17 of the Arbitration Act of 1940),
could be enforced i.e. executed in the same manner as a
decree. For this limited purpose of enforcement, th e
provisions of CPC were made available for realising the
money awarded. However, the award remained an award
and did not become a decree either as defined in CPC and
849
much less so far the purposes of an entirely different st atute
such as the Insolvency Act are concerned .
* * *
42. The words “as if” demonstrate that award and
decree or order are two different things. The legal fiction
created is for the limited purpose of enforcement a s a
decree. The fiction is not intended to make it a decree for
all purposes under all statutes, whether State or Central .”
(emphasis in original)
* * *
“72. Foreign awards are not decrees of an Indian civil court. By
a legal fiction, Section 49 provides that a foreign award, after it is
granted recognition and enforcement under Section 48, would be
deemed to be a decree of “that court” for the limited purpose of
enforcement. The phrase “that court” refers to the court w hich
has adjudicated upon the petition filed under Sections 47 and 49
for enforcement of the foreign award. In our view, Article 136 of
the Limitation Act would not be applicable for the enforcement/
execution of a foreign award, since it is not a decree of a civil
court in India.
73. The enforcement of a foreign award as a deemed decree of
the High Court concerned [as per the amended Explanation to
Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the
High Court for execution of foreign awards] would be covered
by the residuary provision i.e. Article 137 of the Limitation Act. A
three-Judge Bench of this Court in Kerala SEB v. T.P.
Kunhaliumma [Kerala SEB v. T.P . Kunhaliumma, (1976) 4 SCC
634] held that the phrase “any other application” in A rticle 137
cannot be interpreted on the principle of ejusdem generis to be
applications under the Civil Procedure Code. The phrase “any
other application” used in Article 137 would include petitions within
the word “applications”, filed under any special enactment. This
would be evident from the definition of “application” under Section
2(b) of the Limitation Act, which includes a petition. Article 137
stands in isolation from all other Articles in Part I of the Third
Division of the Limitation Act, 1963.”
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* * *
“77. The application under Sections 47 and 49 for enforcement
of the foreign award, is a substantive petition filed under the
Arbitration Act, 1996. It is a well-settled position that the Arbitration
Act is a self-contained code. [ Fuerst Day Lawson Ltd. v. Jindal
Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178; Kandla
Export Corpn. v. OCI Corpn., (2018) 14 SCC 715 : (2018) 4
SCC (Civ) 664; Shivnath Rai Harnarain (India) Co. v. Glencore
Grain Rotterdam, 2009 SCC OnLine Del 3564 : (2009) 164 DLT
197; Usha Drager (P) Ltd. v. Dragerwerk AG, 2009 SCC OnLine
Del 2975 : (2010) 170 DLT 628; Sumitomo Corpn. v. CDC
Financial Services (Mauritius) Ltd. , (2008) 4 SCC 91; Conros
Steels (P) Ltd. v. Lu Qin (Hong Kong) Co. Ltd. , 2014 SCC
OnLine Bom 2305 : (2015) 1 Arb LR 463 : (2015) 2 Bom CR 1]
The application under Section 47 is not an application filed under
any of the provisions of Order 21 CPC, 1908. The application is
filed before the appropriate High Court for enforcement, whi ch
would take recourse to the provisions of Order 21 CPC only for
the purposes of execution of the foreign award as a de emed
decree. The bar contained in Section 5, which exclu des an
application filed under any of the provisions of Order 21 CPC,
would not be applicable to a substantive petition filed under the
Arbitration Act, 1996. Consequently, a party may file an application
under Section 5 for condonation of delay, if required in the facts
and circumstances of the case.”
This judgment is, therefore, authority for the proposition that the
fiction created by Section 49 of the Arbitration Ac t is limited to
enforcement of a foreign award, with the important corollary that an
application to enforce an award is an application under the Arbitration
Act and not an application under Order XXI of the Cod e of Civil
Procedure (in which case, such application would have been governed
by Article 136 of the Limitation Act as an execution application under
Order XXI, and not an application under the residuary Article 137 of the
Limitation Act). Mr. Salve’s attempt to distinguish this judgment on the
ground that Section 49 lays down an entirely different procedure from
the procedure to be followed for a domestic award qua enforc eability
does not, in any manner, distinguish the ratio of this judgment which is
that an application to enforce a foreign award is not under Order XXI of
851
the Code of Civil Procedure but under the Arbitration Act. Also, the
deeming provision in Section 49, having reference to a decree of “that
Court”, which refers to the court which is satisfied that the foreign award
is enforceable, again, makes no difference to the aforesaid ratio of the
judgment.
61. Mr. Salve then painted a lurid picture of third parties b eing
affected in enforcement proceedings. No such third party is bef ore us.
As to a third party, i.e., a party who is not a party to the arbitration
agreement and to the subject matter covered by the award and w ho is
affected by an order made in enforcement, we say nothing, leaving the
question open to be argued on the facts of a future case.
62. Mr. Salve then read the provisions of the New Zea land
Arbitration Act, 1996, the Hong Kong Arbitration Ordinance (Cap. 209),
the Singapore Arbitration Act, 2001 as well as the Singapore International
Arbitration Act, 1994, and the English Arbitration Act, 1996 to argue that
in all the aforesaid legislations, awards passed by an Emergency Arbitrator
were expressly included with varying provisions as to their enforcement.
A contrast of these legislations with the provisions of the Indian Arbitration
Act, again, does not take us very far, given the fact that w e have, on a
proper interpretation of the said Act, held that an award/or der by an
Emergency Arbitrator would be covered by Section 17 of the Arbitration
Act, when properly read with other provisions of the Act.
63. Mr. Salve and Mr. Viswanathan then argued that Section 36(1),
which is a pari materia provision with Section 17(2), must be contrasted
with the provisions of Section 36(3). They argued that there is a basic
difference between having “due regard to the provisions for grant of
stay of a money decree under the provisions of the Code o f Civil
Procedure” and enforcement of an award “in accordance with the
provisions of the Code of Civil Procedure”. According to them, it i s
clear that the court granting a stay under sub-sections (2) and (3) of
Section 36 does so under the Arbitration Act only having due regard to
the provisions regarding grant of stay of a money decree under the Code
of Civil Procedure. By way of contrast, an award is enforced in
accordance with the provisions of the Code of Civil Procedure and not
under the Arbitration Act. It was also argued that Section 17(2) and
Section 36(1) are instances of legislation by reference and not legislation
by incorporation.
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64. The interpretation of Section 36 is not before us – the
interpretation of Section 17 read with Section 9 is. As far as Section 17
is concerned, as has been pointed out by us hereinabove, the sc heme
qua interim orders passed by an arbitral tribunal mirrors the scheme qua
interim orders passed by civil courts under Section 9. This vital difference
between the provisions of Section 17 read with Section 9 and as contrasted
with Section 36 puts paid to this argument.
65. We will now deal with some of the judgments of this Court
cited by the learned counsel for the Respondents. They strongly relied
upon the judgment of the Delhi High Court in Daelim Industrial Co.
Ltd. v. Numaligarh Refinery Ltd., 2009 SCC OnLine Del 511 : (2009)
159 DLT 579 [“ Daelim Industrial Co. ”] for the proposition that
enforcement applications under Section 36 of the Arbitrati on Act are
independent of arbitral proceedings which culminate in an award. The
Delhi High Court held that since execution applications would be governed
by Sections 38 and 39 of the Code of Civil Procedure, Section 42 of the
Arbitration Act cannot be held to apply and as a resu lt, the courts
mentioned in Sections 38 and 39 of the Code of Civil Procedure would
have jurisdiction to execute arbitral awards.
66. In Sundaram Finance Ltd. v. Abdul Samad, (2018) 3 SCC
622, this Court, in paragraph 18, referred to Daelim Industrial Co.
(supra) with approval. The question which arose before this Court was
posed thus:
“The divergence of legal opinion of different High Courts on the
question as to whether an award under the Arbitrati on and
Conciliation Act, 1996 (hereinafter referred to as “the said Act”)
is required to be first filed in the court having jurisdiction over the
arbitration proceedings for execution and then to obtain transfer
of the decree or whether the award can be straightaway filed and
executed in the Court where the assets are located is required to
be settled in the present appeal.”
A Division Bench of this Court, after setting out the relevant
provisions of the Code of Civil Procedure and the Arbitration Act, then
held:
“14. …… The aforesaid provision would show that an award is
to be enforced in accordance with the provisions of the said Code
in the same manner as if it were a decree. It is, t hus, the
853
enforcement mechanism, which is akin to the enforcement of a
decree but the award itself is not a decree of the civil court as no
decree whatsoever is passed by the civil court. It is t he Arbitral
Tribunal, which renders an award and the tribunal does not have
the power of execution of a decree. For the purposes of execution
of a decree the award is to be enforced in the same manner as if
it was a decree under the said Code.”
The judgment ultimately turned on Section 32 of the Arbitration
Act, which made it clear that after arbitral procee dings had been
terminated, Section 42 of the Act would not apply. This being so, the
question posed before the Court was answered thus:
“20. We are, thus, unhesitatingly of the view that the enforcement
of an award through its execution can be filed anywhere in the
country where such decree can be executed and there is no
requirement for obtaining a transfer of the decree from the court,
which would have jurisdiction over the arbitral proceedings.”
This judgment does not, in any manner, take the matter any further
as it does not advert to Section 17 of the Act at all and is on a completely
different point as to whether execution of an award can only be i n the
first court which is approached under Section 42 of the Act or can be a
proceeding which can be filed and pursued in any court.
67. The learned counsel for the Respondents then relied upon the
Full Bench judgment of the Bombay High Court in Gemini Bay
Transcription Pvt. Ltd. v. Integrated Sales Service Ltd., 2018 SCC
OnLine Bom 216 : AIR 2018 Bom 89 (FB) [“ Gemini Bay”] which
dealt with the same question and decided that Section 42 of the Act
would not apply to enforcement applications under the Act, which have
to follow the drill of Sections 38 and 39 of the Code of Civil Procedure.
The learned counsel for Amazon, however, strongly relied upon judgments
of the Bombay High Court in Jet Airways (supra), Kakade
Construction (supra), and Global Asia Venture Co. v. Arup Parimal
Deb, 2018 SCC OnLine Bom 13061. Since these judgments deal with
enforcement proceedings filed under Section 36 of the Arbitration Act,
we do not express any opinion on their correctness.
68. Mr. Salve then relied upon Punjab State Civil Supplies
Corporation Ltd. v. Atwal Rice & General Mills , (2017) 8 SCC
116. This judgment dealt with objections to the enforcement of an arbitral
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award in execution. In the course of dealing with the aforesaid objections,
the Court observed:
“18. In other words, the arbitral award has been given the status
of a decree of the civil court and, therefore, it is enforced li ke a
decree of the civil court by applying the provisions of Order 21 of
the Code and all other provisions, which deal with the execution
of the decree of the civil court.”
This judgment again does not take the matter very much further.
It does not deal with Section 17 of the Act at all but deals with Section
36 which, as has been pointed out by us, contains a scheme di fferent
from that contained for enforcement of interim orders under Section 17.
69. We now come to the appeal provision in the Arbitration Act.
There can be no doubt that Section 37 is a complete code so f ar as
appeals from orders and awards made under the Arbitration Act are
concerned. This has further been strengthened by the additio n of the
non-obstante clause by the Arbitration and Conciliation (Amendment)
Act, 2019.
70. This Court, in Kandla Export Corporation v. OCI
Corporation, (2018) 14 SCC 715 [“Kandla Export”], held in the context
of a Section 50 appeal as follows:
“20. Given the judgment of this Court in Fuerst Day Lawson
[Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011) 8 SCC
333 : (2011) 4 SCC (Civ) 178] , which Parliament is presumed to
know when it enacted the Arbitration Amendment Act, 2015, and
given the fact that no change was made in Section 50 of the
Arbitration Act when the Commercial Courts Act was brought
into force, it is clear that Section 50 is a provision contained in a
self-contained code on matters pertaining to arbitration, and which
is exhaustive in nature. It carries the negative import mentioned
in para 89 of Fuerst Day Lawson [Fuerst Day Lawson Ltd. v.
Jindal Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178]
that appeals which are not mentioned therein, are not permissible.
This being the case, it is clear that Section 13(1) of the Commercial
Courts Act, being a general provision vis-à-vis arbitration relating
to appeals arising out of commercial disputes, would obvious ly
not apply to cases covered by Section 50 of the Arbitration Act.
855
21. However, the question still arises as to why Section 37 of the
Arbitration Act was expressly included in the proviso to Section
13(1) of the Commercial Courts Act, which is equally a spec ial
provision of appeal contained in a self-contained code, which in
any case would be outside Section 13(1) of the Commercial Courts
Act. One answer is that this was done exabundanti cautela .
Another answer may be that as Section 37 itself was amended by
the Arbitration Amendment Act, 2015, which came into force on
the same day as the Commercial Courts Act, Parliament thought,
in its wisdom, that it was necessary to emphasise that the amended
Section 37 would have precedence over the general provision
contained in Section 13(1) of the Commercial Courts Act.
Incidentally, the amendment of 2015 introduced one more category
into the category of appealable orders in the Arbitrati on Act,
namely, a category where an order is made under Secti on 8
refusing to refer parties to arbitration. Parliament may have found
it necessary to emphasise the fact that an order referring parties
to arbitration under Section 8 is not appealable under Secti on
37(1)(a) and would, therefore, not be appealable under Section
13(1) of the Commercial Courts Act. Whatever may be the ultimate
reason for including Section 37 of the Arbitration Act in the proviso
to Section 13(1), the ratio decidendi of the judgment in Fuerst
Day Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. ,
(2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178] would apply, and this
being so, appeals filed under Section 50 of the Arbitration Act
would have to follow the drill of Section 50 alone.
22. This, in fact, follows from the language of Section 50 itself. In
all arbitration cases of enforcement of foreign awards, it is Section
50 alone that provides an appeal. Having provided for an appeal,
the forum of appeal is left “to the Court authorised by law to hear
appeals from such orders”. Section 50 properly read would,
therefore, mean that if an appeal lies under the said provisio n,
then alone would Section 13(1) of the Commercial Courts Act be
attracted as laying down the forum which will hear and decide
such an appeal.
23. In fact, in Sumitomo Corpn. v. CDC Financial Services
(Mauritius) Ltd. [Sumitomo Corpn. v. CDC Financial Services
(Mauritius) Ltd., (2008) 4 SCC 91], this Court adverted to Section
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
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50 of the Arbitration Act and to Sections 10(1)(a) and 10-F of the
Companies Act, 1956, to hold that once an appeal is provided for
in Section 50, the Court authorised by law to hear such appeals
would then be found in Sections 10(1)( a) and 10- F of the
Companies Act. The present case is a parallel instance of Section
50 of the Arbitration Act providing for an appeal, and Se ction
13(1) of the Commercial Courts Act providing the forum for such
appeal. Only, in the present case, as no appeal lies under Section
50 of the Arbitration Act, no forum can be provided for.”
* * *
“25. What is important to note is that it is Section 50 that provides
for an appeal, and not the letters patent, given the subject-matter
of appeal. Also, the appeal has to be adjudicated within the
parameters of Section 50 alone. Concomitantly, where Section 50
excludes an appeal, no such appeal will lie.”
This judgment is, therefore, an authority for the proposition that
the Arbitration Act is a self-contained code on matters per taining to
arbitration, which is exhaustive in nature. The appeal provision in that
case (Section 50) was held to carry a negative import t hat only such
matters as are mentioned in the Section are permissible, and matters not
mentioned therein cannot be brought in. It was further held tha t what
follows from this is that the substantive provision of appeal is contained
in Section 50 of the Act, which alone must be read, Section 13(1) of the
Commercial Courts Act, 2015 being a general provision, whi ch must
give way to the specific provision contained in Section 50.
71. Likewise, in Deep Industries Ltd. v. ONGC , (2020) 15
SCC 706, this Court opined:
“15. Given the aforesaid statutory provision and given the fact
that the 1996 Act repealed three previous enactments in orde r
that there be speedy disposal of all matters covered by i t, it is
clear that the statutory policy of the Act is that not only are time-
limits set down for disposal of the arbitral proceedings themselves
but time-limits have also been set down for Section 34 references
to be decided. Equally, in Union of India v. Varindera
Constructions Ltd. (2020) 2 SCC 111 : (2020) 1 SCC (Civ) 277,
dated 17-9-2018, disposing of SLP (C) No. 23155 of 2013, this
857
Court has imposed the selfsame limitation on first appeals under
Section 37 so that there be a timely resolution of all matters which
are covered by arbitration awards.
16. Most significant of all is the non obstante clause contained in
Section 5 which states that notwithstanding anything contained in
any other law, in matters that arise under Part I of the Arbitration
Act, no judicial authority shall intervene except where so provided
in this Part. Section 37 grants a constricted right of fi rst appeal
against certain judgments and orders and no others. Further, the
statutory mandate also provides for one bite at the cherry , and
interdicts a second appeal being filed [ see Section 37(2) of the
Act].”
72. In BGS SGS SOMA JV v. NHPC, (2020) 4 SCC 234, this
time, the Court dealt with the maintainability of an appeal under Section
37 of the Act in a case in which an application under Section 34 of the
Act was ordered to be transferred from a court which had no jurisdiction
to a court which had jurisdiction. In deciding this question, th is Court
referred copiously to Kandla Export (supra) in paragraph 12. It then
went on to decide:
“13. Given the fact that there is no independent right of appeal
under Section 13(1) of the Commercial Courts Act, 2015, which
merely provides the forum of filing appeals, it is the parameters of
Section 37 of the Arbitration Act, 1996 alone which have t o be
looked at in order to determine whether the present appeals were
maintainable. Section 37(1) makes it clear that appeals shall only
lie from the orders set out in sub-clauses ( a), (b) and (c) and
from no others . The pigeonhole that the High Court in the
impugned judgment [NHPC Ltd. v. Jaiparkash Associates Ltd.,
2018 SCC OnLine P&H 1304 : (2019) 193 AIC 839] has chosen
to say that the appeals in the present cases were maintainable is
sub-clause (c). According to the High Court, even where a Section
34 application is ordered to be returned to the appropriate court,
such order would amount to an order “refusing to set aside an
arbitral award under Section 34”.
14. Interestingly, under the proviso to Section 13(1-A) of the
Commercial Courts Act, 2015, Order 43 CPC is also mentioned.
Order 43 Rule 1(a) reads as follows:
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
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“1. Appeals from orders .— An appeal shall lie from
the following orders under the provisions of Section 104,
namely—
(a) an order under Rule 10 of Order 7 returning a plaint
to be presented to the proper court except where the procedure
specified in Rule 10-A of Order 7 has been followed;”
This provision is conspicuous by its absence in Section 37 of the
Arbitration Act, 1996, which alone can be looked at for the purpose
of filing appeals against orders setting aside, or refusing to set
aside awards under Section 34. Also, what is missed b y the
impugned judgment [NHPC Ltd. v. Jaiparkash Associates Ltd.,
2018 SCC OnLine P&H 1304 : (2019) 193 AIC 839] is the words
“under Section 34”. Thus, the refusal to set aside an arbitral award
must be under Section 34 i.e. after the grounds set out in Section
34 have been applied to the arbitral award in question, and after
the Court has turned down such grounds. Admittedly, on the facts
of these cases, there was no adjudication under Section 34 of the
Arbitration Act, 1996 — all that was done was that the Specia l
Commercial Court at Gurugram allowed an application filed under
Section 151 read with Order 7 Rule 10 CPC, determining that the
Special Commercial Court at Gurugram had no jurisdiction to
proceed further with the Section 34 application, and there fore,
such application would have to be returned to the competent court
situate at New Delhi.”
This judgment is determinative of the issue before u s as it
specifically ruled out appeals under Order XLIII Rule 1 of the Code of
Civil Procedure when it comes to orders being made under the Arbitration
Act.
73. At this juncture, it is important to notice that Section 37 did not
remain untouched by the 2015 Amendment Act. As a matter of fact, a
new category of appeals was infused into the said provision by adding a
new sub-section (1)(a), which reads as follows:
“37. Appealable orders .—(1) Notwithstanding anything
contained in any other law for the time being in force, an appeal
shall lie from the following orders (and from no others) to the
court authorised by law to hear appeals from original decrees of
the Court passing the order, namely:—
859
(a) refusing to refer the parties to arbitration under Section 8;”
* * *
74. Despite Section 17 being amended by the same Amendment
Act, by making Section 17(1) the 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. There can be no doubt that
granting or refusing to grant any interim measure under Section 17 would
only refer to the grant or non-grant of interim measures under Section
17(1)(i) and 17(1) (ii). In fact, the opening words of Section 17(2), namely,
“subject to any orders passed in appeal under Section 37… ” also
demonstrates the legislature’s understanding that orders that are passed
in an appeal under Section 37 are relatable only to Section 17( 1). For
example, an appeal against an order refusing an injunction may be allowed,
in which case sub- section (2) of Section 17 then kicks in to enforce the
order passed in appeal. Also, the legislature made no amendment to the
granting or refusing to grant any measure under Section 9 to bring it in
line with Order XLIII, Rule 1(r), under Section 37(1)(b). What is clear
from this is that enforcement proceedings are not covered by the appeal
provision.
75. However, learned counsel appearing on behalf of the
Respondents pressed into service a recent judgment of this C ourt in
Chintels (India) Ltd. v. Bhayana Builders (P) Ltd. , (2021) 4 SCC
602. The precise question that arose before this Court was as to when
an application seeking condonation of delay in filing an appeal is dismissed,
whether this would amount to “refusal to set aside an arbitr al award”
under Section 34 and thus be appealable under Section 37(1)(c) of the
Act. In answering this question, this Court referred to Section 37(1) of
the Act and stressed the fact that an application for sett ing aside an
award must be in accordance with sub-sections (2) and (3) o f Section
34 – See paragraph 9. The Court then set out Section 34(3) and opined:
11. A reading of Section 34(1) would make it clear that a n
application made to set aside an award has to be in accordan ce
with both sub-sections (2) and (3). This would mean that such
application would not only have to be within the limitation period
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prescribed by sub-section (3), but would then have to set out
grounds under sub-sections (2) and/or (2-A) for setting aside such
award. What follows from this is that the application itself must
be within time, and if not within a period of three months, must be
accompanied with an application for condonation of delay, provided
it is within a further period of 30 days, this Court having made it
clear that Section 5 of the Limitation Act, 1963 does not apply and
that any delay beyond 120 days cannot be condoned — see State
of H.P. v. Himachal Techno Engineers [State of H.P. v.
Himachal Techno Engineers, (2010) 12 SCC 210 : (2010) 4 SCC
(Civ) 605] at para 5.”
Coming to Section 37(1)(c), the Court then held:
“12. We now come to Section 37(1)( c). It is important to note
that the expression “setting aside or refusing to set aside an arbitral
award” does not stand by itself. The expression has to be rea d
with the expression that follows— “under Section 34”. Section
34 is not limited to grounds being made out under Section 34(2).
Obviously, therefore, a literal reading of the provision would show
that a refusal to set aside an arbitral award as delay has not been
condoned under sub-section (3) of Section 34 would certainly fall
within Section 37(1)(c). The aforesaid reasoning is strengthened
by the fact that under Section 37(2)( a), an appeal lies when a
plea referred to in sub- section (2) or (3) of Section 16 is accepted.
This would show that the legislature, when it wished to refer to
part of a section, as opposed to the entire section, did so. Contrasted
with the language of Section 37(1)(c), where the expression “under
Section 34” refers to the entire section and not to Section 34(2)
only, the fact that an arbitral award can be refused to be set aside
for refusal to condone delay under Section 34(3) gets further
strengthened.”
Unlike the language of Section 34, a literal reading of Section 17
would show that the grant or non-grant of interim measures under Section
37(2) (b) refers only to Section 17(1) of the Act. Also, in the context of
Section 37(2)(b), the entirety of Section 17 was referred to when Sections
17 and 37 were first enacted in 1996. It is only by the 2015 Amendment
Act that Section 17 was bifurcated into two sub-section s. What is
significant in this context is that no corresponding amendment was made
to Section 37(2)(b) to include within its scope the amended Section 17,
861
as has been pointed out hereinabove. This judgment is also distinguishable
and, therefore, does not carry the Respondents’ argument any further.
76. The second question posed is thus answered declaring that no
appeal lies under Section 37 of the Arbitration Act against an order of
enforcement of an Emergency Arbitrator’s order made under Section
17(2) of the Act. As a result, all interim orders of this Court stand vacated.
The impugned judgments of the Division Bench, dated 8th February, 2021
and 22 nd March, 2021, are set aside. The appeals are dispose d of
accordingly.
AMAZON.COM NV INVESTMENT HOLDINGS LLC v.
FUTURE RETAIL LIMITED [R. F. NARIMAN, J.]
Nidhi Jain Appeals disposed of.