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Electrosteel Castings Limited v/s Reacon Engineers (India) Private Limited

    A.P. No. 1710 of 2015

    Decided On, 14 January 2016

    At, High Court of Judicature at Calcutta


    For the Petitioner: Swarnendu Ghosh, K.Chatterjee, M. Dewanjee, Advocates. For the Respondent: A. Ghosh, N. Mukherjee, S. Chatterjee, Advocates.

Judgment Text

I.P. Mukerji, J.

1. The Arbitration and Conciliation (Amendment) Ordinance 2015 was promulgated on 23rd October, 2015. This Ordinance was repealed by the Arbitration and Conciliation (Amendment) Act 2015, which received the assent of the President on 31st December, 2015 and was published in the Gazette of India on 1st January, 2016.

2. Under Section 36 of the Arbitration and Conciliation Act, 1996 before amendment, an award could not be enforced unless the time for making an application to set aside the award under Section 34 (maximum of 120 days from the date of receipt of the award) had expired without an application having been made or when such application was made and refused. Thus, during pendency of a setting aside application, the award could not be enforced.

3. Section 19(2) of the amendment Act made the award enforceable after filing of the setting aside application unless the Court granted stay of the award. This could only be obtained on application. Furthermore, such stay could only be granted on certain terms and conditions. The proviso to Section 19 provided that by considering the grant of stay the Court would have due regard to inter alia Order 41(1)(3) and 41(5)(3)(c) of the Code of Civil Procedure. In other words, stay could be obtained on securing the awarded amount. It was not automatic on 'making' of a setting aside application.

4. The subject award was made and published on 30th July, 2015. This application to set aside the award was filed on 26th November, 2015.

5. Mr. A. Ghosh, learned Advocate for the respondent, took an initial objection to admission of this application on the ground that the awarded sum had to be secured by the petitioner.

6. Mr. S. Ghosh, learned Advocate for the petitioner took an adjournment to consider the legal point involved. He has come up with the answer today.

7. He showed me the Repeal and Savings clause in the Arbitration and Conciliation (Amendment) Act, 2015. It is Section 26 and is in the following terms :-

"Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."

8. Mr. S. Ghosh submitted that admittedly the arbitral proceedings in the instant case commenced before it coming into force of the Amendment Act.

9. The Act before amendment applied. Section 36 of the 1996 Act did not contain any provision for furnishing of security by an applicant in an application to set aside the award. On the contrary once an application was filed within time, the execution proceedings could not be commenced or if commenced would remain suspended. Therefore, he argued that the petitioner could not be asked to furnish any security.

10. Mr. A. Ghosh submitted that even Section 36 of the 1996 Act before amendment provided for enforcement of the award as a decree of the Court under the Code of Civil Procedure. Therefore, the entire procedure enshrined in the Civil Procedure Code, which included taking of security in certain cases, would apply.

11. I am unable to agree with the submission of Mr. A. Ghosh. Section 36 of the 1996 Act only stipulated that the award would be enforced in accordance with the Code of Civil Procedure. This simply meant that the award would be executed in accordance with the provisions in that behalf in the said code. There is nothing in the Chapter relating to execution in the Civil Procedure Code which provides for taking security from a judgement debtor.

12. In my opinion the repeal and savings clause of the Amendment Act of 2015 did not make applicable the amendment Act in case of arbitration which commenced before its enactment. Since the subject arbitration commenced much prior to coming into force of the Amendment Act, nothing in it applies to the subject arbitration.

13. I emphasise that the law in force before 31st December, 2015 did not recognise taking of security from the award debtor for staying of operation of the award. The award was stayed automatically upon "making" of the application to set aside the award.

14. In this case, this application has been filed on expiry of

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three months but within thirty days thereafter. Sufficient cause has been shown. 15. I condone the delay and admit the application. 16. Affidavit in opposition is to be filed by 9th February, 2016. List this application on 23rd February, 2016. Affidavit in reply may be filed in the meantime. 17. Certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities. Application allowed.