In an Arbitration appeal, the Division Bench of the Himachal Pradesh High Court noted that as per the scheme of Section 26 of the Arbitration and Conciliation Amendment Act, 2015, the amendments are prospective in nature and since the court proceedings started when the appeal was filed, they cannot apply on a case even when the amendment came into force during the proceedings.
Brief Facts:
The instant appeal challenged the order passed by the learned Single Judge, whereby the application of the appellant filed under section 8 of the Arbitration and Conciliation Act, 1996 has been rejected.
The respondents herein had filed a suit for recovery on account of damages against the appellant. The current appellant then filed an application under section 8 of the Arbitration Act seeking reference of the matter to arbitration on the basis of the arbitration clause that exists in an agreement between the parties. The single judge dismissed the application and held that the suit is maintainable.
Contentions of the Respondent:
The respondents in the current case and the plaintiffs of the suit for recovery have first pointed out that the order refusing to refer the parties to Arbitration under Section 8 of the Arbitration Act had been made appealable from 23.10.2015, whereas the application u/s 8 was filed by the appellant on 10.07.2015. Therefore, it was contended that the court proceedings out of which the instant appeal arose had commenced before the right of appeal was included and by virtue of Section 26, the amendments have been made applicable prospectively.
Contentions of the Appellant:
The Learned Counsel for the appellant in the current case and the defendant in the suit for recovery has responded to the opposite party by pointing out that the impugned order was passed on 18.04.2016, after the coming into force of the Amendment Act No. 3 of 2016, according to which the right to file an appeal had been accrued in favor of the appellant. And thus, the appellant has the right to maintain the instant appeal.
Observations of the Court:
The court first noted that the appellant had filed an application under section 8 of the Arbitration Act on 10.07.2015. And it was then noted that before 23.10.2015, there was no provision in the act under which an appeal could be filed against the order refusing reference of the matter to arbitration. After coming into force of the Arbitration and Conciliation Amendment Act 2015, an order refusing to refer the matter to Arbitration under Section 8 of the 1996 Act was made appealable under Section 37 (1)(a) of the Act.
The court then noted Section 26 of the Amendment Act of 3 of 2016 and observed that this section made the amendments incorporated in the principal act prospective in nature and accordingly it would apply to only those arbitration and court proceedings that commenced after coming into force of Act No. 3 of 2016 that is from 23.10.2015. then the court proceeded to refer to the Supreme Court’s case Board of Control for Cricket in India vs. Kochi Cricket Private Limited & Ors, where the construction of Section 26 of Act No. 3 of 2016 had been dealt with in detail. In this case, the court noted that it was specifically held that the amendment act is prospective in nature and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act and to court proceedings which have commenced on or after the Amendment Act came in force. Accordingly, it was concluded that the amendment to the principal act including the amendment in section 37 is of prospective nature and will apply to court proceedings that have commenced on or after the Amendment Act came into force.
Now coming to the facts of the current case the question was whether, for the purpose of the appeal, the court proceedings will be taken to have commenced on 10.07.2015 i.e., on the date of filing of the application under Section 8 of the 1996 Act or on the date when the impugned order was passed?
It was noted that the court proceedings started on 10.07.2015 when the application was filed. Then the Supreme Court’s judgment in Malluru Mallappa v. Kruvathappa and others was noted, and it was noted that the appellant had no right to file an appeal at the time of the commencement of the court proceedings.
The decision of the Court:
The appeal filed by the appellant was held to be not maintainable and was dismissed.
Case Title: Graviss Foods Private Limited v. M/s Ice Cream Garden & Anr.
Coram: Justice Sabina, Justice Satyen Vaidya
Case No.: Arbitration Appeal No. 10 of 2016
Advocate for the Appellants: Mr. K.D. Sood, Senior Advocate, with Mr. Rahul Gathania, Advocate.
Advocate for the Respondent: Mr. Mohit Thakur, Advocate.
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