Bombay High Court
Gautam Hari Singhania vs Hari Shankar Singhania And 20 Ors on 29 March, 2017
Bench: V.M. Kanade
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BDPPS
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL APPELLATE DIVISION
COMMERCIAL APPEAL NO.4 OF 2016
IN
NOTICE NO.1786 OF 2015
IN
EXECUTION APPLICATION NO.2006 OF 2015
IN
ARBITRATION AWARD dated 4th August, 2008
Smt. Sushila Singhania & Ors. .....Appellants.
V/s
Bharat Hari Singhania & Ors .....Respondents
And
Vijaypat Singhania & Ors. .....Respondents.
WITH
COMMERCIAL APPEAL (L) NO. 5 OF 2016
IN
NOTICE NO.1786 OF 2015
IN
EXECUTION APPLICATION NO.2006 OF 2015
IN
ARBITRATION AWARD DATED 4TH AUGUST, 2008
Dr. Vijaypat Singhania & Anr. ..... Appellants.
V/s
Hari Shankar Singhania & Ors. ..... Respondents.
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WITH
COMMERCIAL APPEAL (L) NO.6 OF 2016
FROM
NOTICE NO.1786 OF 2015
IN
EXECUTION APPLICATION NO.2006 OF 2015
IN
ARBITRATION AWARD DATED 4TH AUGUST, 2008
Gautam Singhania .....Appellant.
V/s
Hari Shankar Singhania & Ors. ..... Respondents
----
Mr. Virag Tulzapurkar, Senior Counsel a/w Soumya Srikrishna, Mr.
Suraj Juneja, Ms. Shachi Udeshi i/b Wadia Ghandy & Co. for the
Appellant in COMAPL/5/2016.
Mr. Milind Sathe, Senior Counsel a/w Mr. Nikhil Sakhardande, Mr.
Suraj Juneja, Ms. Shachi Udeshi i/b Wadia Ghandy & Co. for the
Appellant in COMAPL/6/2016.
Mr. Zal Andhyarujina a/w Mr. Naseem Patrawala, Ms. Akanksha
Agarwal a/w Ms. Pranjali Mehendale i/b Malvi Ranchoddas & Co. for
the Appellant in COMAP/4/2016.
Mr. D.D. Madon, Senior Counsel a/w Mr. Mikhail Behl, Mr.
Chakrapani Misra, Ms. Nandini Khaitan, Mr. Sairam Subramanian, Mr.
Pulkitesh Dutt, Ms. Manasi Gandhi i/b Khaitan & Co. for Respondent
Nos. 1 to 5 in COMAP/4/2016 and for Respondent Nos. 1 to 6 in
COMAPL/5/2016 and COMAPL/6/2016.
Mr. Sanjay Sinha for Respondent Nos. 18 to 20 in COMAPL/5/2016
and for Respondent Nos. 19 to 21 in COMAPL/6/2016.
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CORAM: V. M. KANADE &
MRS. SWAPNA S. JOSHI, JJ.
Reserved on 24th October, 2016
Listed for directions on 3rd March, 2017
Pronounced on 29th March, 2017
ORAL ORDER: (Per V.M. Kanade, J.)
1] All these appeals can be disposed of by a common order since
they are arising out of the common judgment delivered by the learned
Single Judge.
Preliminary Objection:
2] Mr. Madon, the learned Senior Counsel appearing on behalf of
Respondents in all these appeals has raised a preliminary objection
regarding maintainability of these appeals. He submitted that in view
of language used in Section 13 of the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Act, 2015
(hereafter referred to as "Commercial Courts Act"), appeal against the
impugned judgment and order will not be maintainable.
3] Before considering the rival contentions, it will be necessary to
briefly state the relevant facts for the purpose of deciding this
preliminary objection.
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FACTS:
4] Prior to 1987, a partnership firm was carrying on business in
the name and style of Juggilal Kamlapat Bankers which was
reconstituted from time to time and it was finally reconstituted on
21/02/1980.
5] Sometime in the year 1987, differences arose between the
partners of the firm and on 26/03/1987, a deed of dissolution of
partnership was executed between the partners and the firm was
dissolved with effect from 19/03/1987. A supplemental agreement
was also executed on 28/03/1987. Partners agreed to partition and
distribute the immovable properties of the said firm amongst the
partners.
6] Since there was some dispute regarding distribution, the
Arbitration Suit No.1904 of 1992 was filed by Respondent Nos. 1 to 6
for appointment of an Arbitrator under Section 20 of the Arbitration
Act, 1940. The suit was initially dismissed on the ground of limitation.
The matter travelled upto the Supreme Court and the Apex Court held
that the suit was within time and the disputes between the parties
were referred to the arbitration of the sole arbitrator Mr. Justice S.N.
Variava (Retd.).
7] The learned Arbitrator passed an Award on 04/08/2008 and in
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the said Award he was pleased to order and direct partition and
distribution of various immovable properties of the firm amongst the
partners. For the purpose of deciding the preliminary objection of
maintainability of these appeals, it is not necessary to go into details of
the manner of distribution of properties.
8] The Award was challenged under Section 34 of the Arbitration
and Conciliation Act, 1996 and the Petition challenging the said award
was dismissed by this Court on 01/10/2009. Being aggrieved by the
said Order, an appeal was preferred under Section 37 of the said Act,
1996 by the Bombay Group and Kanpur Group which was also
disposed of on 08/03/2013 and therefore the said Award became
executable as a decree.
9] Since the distribution did not take place and the Award was not
complied with, an Execution Application No.2006 of 2015 under
Order XXI of CPC was filed in this Court and the relief was claimed for
possession of the Bombay property. Respondent No.16 also filed
Execution Application No.1913 of 2015. Thereafter, Notice No.1786
of 2015 was issued under Order XXI Rule 22 of the CPC to all the
parties in the Execution Application to show cause why the said Award
was not executable and why warrant of possession should not be
issued. All the parties filed detailed reply to the said notice.
Appellants herein opposed and resisted the execution of the Award on
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the ground that the obligations of the groups in the Award were joint,
interlinked and interconnected and to be executed and complied with
simultaneously.
10] Mr. Madon, the learned Senior Counsel appearing on behalf of
Respondents, has raised a preliminary objection regarding
maintainability of these appeals and his contention is that these orders
which are passed in execution proceedings are not decrees of
Commercial Courts and Commercial Division nor are orders which are
specifically enumerated in sub-section (1) of Section 13. He therefore
inter alia submitted that these appeals are not maintainable.
11] On the other hand, Mr. Virag Tulzapurkar, the learned Senior
Counsel appearing on behalf of the Appellants has submitted that
these appeals are not restricted either to decrees or orders which are
specifically enumerated in the proviso but also would lie against
decision of the Commercial Courts or Commercial Division which has
the effect of attaining finality and even against such a decision,
appeal would be maintainable. It is his contention that the order
passed in execution proceedings is in the nature of final order
affecting substantive rights of the appellants and, therefore, these
appeals are maintainable.
12] We have heard all the parties at length and they have filed their
Written Submissions.
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Submissions of the learned Senior Counsel Mr. D. D. Madon for
Respondent Nos. 1 to 5 in COMAP/4/2016 and for Respondent
Nos. 1 to 6 in COMAPL/5/2016 and COMAPL/6/2016.
13] Mr. Madon, the learned Senior Counsel appearing on behalf of
Respondents Nos. 1 to 5 - Kolkata Group made the following
submissions:-
(I) Firstly, he submitted that the objections taken by
the Appellants in the execution proceedings fall within the
ambit of Section 47 Explanation II (b) of the Civil
Procedure Code ("CPC"), which deals with all questions
relating to the delivery of property in execution. He
submitted that the principal objection of the Appellants is
that the Respondents are seeking to execute only a part of
the Award and, therefore, their contention is that the
obligations of all parties to the Award should be
performed simultaneously and that the Award should not
be executed in parts since the same is fashioned as an
indivisible whole. He submitted that as per the
Amendment Act 104 of 1976, determination of any
questions within "Section 47" of the CPC were omitted
from the definition of the word "decree" and therefore no
appeal under Section 96 of the CPC would lie against the
orders passed in execution proceedings under Section 47
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read with Order XXI Rule 22.
(II) Secondly, he submitted that the provisions of
Letters Patent of the Hon'ble Bombay High Court will have
no applicability and the provisions of the Commercial
Courts Act would prevail over the Letters Patent in its
applicability to commercial disputes. He therefore
submitted that no appeal could lie under Clause 15 of the
Letters Patent. He contended that execution proceedings
under Section 36 of the Arbitration and Conciliation Act,
1996 (For short "Arbitration Act") are not proceedings
under the CPC but under the Arbitration Act which is an
exhaustive Code by itself and which does not provide for
any such appeal and therefore applicability of Clause 15 of
the Letters Patent has been impliedly excluded by Section
37 of the Arbitration Act. He relied on the judgment of
Jet Airways (India) Limited vs. Subrata Roy Sahara 1 (paras
1, 9, 15-30 & 34) in which it was held that LPA does not
lie since the execution was under Section 36 of the
Arbitration Act and not under the provisions of the CPC.
He further submitted that since no appeal had been
provided under Section 37 of the Arbitration Act, an
appeal would not be maintainable. He submitted that
Division Bench in the case of Jet Airways (India) Ltd.
1 2011 SCC OnLine Bom 1379
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(supra) followed the judgment of the Hon'ble Supreme
Court in Furest Day Lawson vs. Jindal Exports Limited 1
(paras 89-91). He then submitted that in Paramjeet Singh
Patheja vs. ICDS Ltd2, the Supreme Court held that the
arbitral award cannot be considered to be a decree for any
purpose for any Central or State Act.
(III) Thirdly, he submitted that Section 13(2) of the
Commercial Courts Act specifically excludes LPA and
therefore in view of binding precedent, the present
execution proceedings were not the proceedings under
the CPC but the proceedings under Section 36 of the
Arbitration Act. He submitted that Section 37 of the
Arbitration Act does not provide for an appeal from
execution proceedings. He submitted that Clause 15 of
the Letters Patent is impliedly excluded by the
Arbitration Act and no appeal could lie from the order in
execution proceedings of an award.
(IV) Fourthly, he submitted that the term
"judgment" in Section 13(1) of the Commercial Courts
Act must be given the same meaning and definition as
in Section 2(9) of the CPC and not the expanded
1 (2011) 8 SCC 333
2 (2006) 13 SCC 322
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meaning as under the Letters Patent.
(V) Fifthly, he submitted that the word "decision" in
Section 13(1) of the Commercial Courts Act must be
read to mean "decree".
(VI) Sixthly, he submitted that assuming the word
"decision" includes judgment and order even then an
appeal would not be maintainable under the
Commercial Courts Act. He submitted that the proviso
contained in Section 13(1) provides for appeals only
from certain Orders under Order XLIII of the CPC and
Section 37 of the Arbitration Act and since the
impugned Order is not a decree, no appeal would lie in
view of proviso to Section 13(1).
(VII) Seventhly, he submitted that the Appellants are
not obstructionists. He submitted that the present
Application was tried and determined under Section 47
and not under Rules 58, 98 or 103 of Order XXI of the
CPC.
(VIII) Eighthly, he submitted that the Appellants
never had vested right of appeal prior to enactment of
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the Commercial Courts Act in view of the legal
position settled in Jet Airways (India) Ltd. (supra). He
submitted that the right of appeal had been expressly
taken away by virtue of the provisions of Section
13(2) of the Commercial Courts Act. He submitted
that Hon'ble Division Bench of this Court vide its
Judgment dated 24/10/2015 in Hubtown Limited vs.
IDBI Trusteeship Service Ltd delivered in Commercial
Appeal No.7 of 2016 had held that appeal would lie
from Order granting conditional leave inter alia on the
ground that since the suit was filed prior to the coming
into force of the Commercial Courts Act, the Appellants
had vested right of appeal. He submitted that, in the
present case, there was no right of appeal available to
the Appellants prior to coming into force of the
Commercial Courts Act.
Submissions of the learned Senior Counsel Mr. Virag Tulzapurkar,
for the Appellant in COMAPL/5/2016.
14] Mr. Virag Tulzapurkar the learned Senior Counsel appearing on
behalf of the Appellants made the following submissions:-
(A) Firstly, he submitted that Section 13 of the
Commercial Courts Act is a sole provision providing
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for governing the appeals under the Commercial
Courts Act. He submitted that the said Section
including its heading, uses the expression "decision",
"decree" or a "judgment" or an "order". He contended
that the expression "decision" in Section 13(1) of the
said Act refers to a decision which has the
characteristic and quality of finality i.e. one which
conclusively determines the rights of the parties to the
proceeding. He submitted that in view of Section
13(1), against such a decision, appeal is maintainable
and, therefore, it is not necessary to refer to the
proviso of Section 13(1).
(B) Secondly, he submitted that proviso to Section
13(1) gives an additional right of appeal against such
orders as are specifically enumerated (i) under Order
XLIII of the CPC and (ii) under Section 37 of the
Arbitration Act and merely because "orders" or
"decisions" which have attained finality as provided
under Section 13(1) are not mentioned in the proviso,
appeal against such orders would not be excluded
under Section 13 of the Commercial Courts Act. He,
therefore, submitted that the proviso to Section 13(1)
has to be read as an independent statutory enactment
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which gives an additional right of appeal under the
Commercial Courts Act. In support of the said
submissions, he relied on the following Judgments of
the Apex Court:-
[1] The State of Orissa vs. Debaki Debi and
Ors1
[2] Commissioner of Stamp Duties vs. Alan
Cavave Atwill and Ors.2 (Pages 330, 331
and 332)
[3] Madhu Gopal vs. VI Additional District
Judge and Ors3 (Para 7)
[4] Swedish Match AB and Anr. vs.
Securities and Exchange Board of India &
Anr.4 (Paras 65 & 66)
He submitted that under the Commercial Courts
Act, whether an appeal from a particular
"decision" lies or not is to be decided on the basis
of the nature of the decision itself and its intrinsic
character. He submitted that if the decision
conclusively or finally adjudicates upon and
1 1964 SC 1413
2 1973 (2) WLR 327
3 AIR 1989 SCC 155
4 (2004) 11 SCC 641
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determines the rights of parties then an appeal
will lie under Section 13(1).
(C) Thirdly, he submitted that heading of the
Section can be used in aid of construing or
interpreting a Section. In support of the said
submission, he relied upon the following
judgments:-
[1] Oulater Hall & Co. Ltd vs. Board
of Trade1 (Pages 832 to 833)
[2] Inglis vs. Robertson and Baxter2
( Page 630)
[3] Bhinka and Ors vs. Charan
Singh3 (Page 966, para 15)
[3] Raichurmatham Prabhakar and
Anr. vs. Rawatmal Dugar4 (Page 775,
para 14)
He submitted that, therefore, a "decree" is
appealable under Section 13(1) itself, even if it
does not find place in and is not referred to in the
1 (1961) 3 W.L.R. 825
2 1898 AC 616
3 AIR 1959 SC 960
4 2004(4) SCC 766
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proviso.
(D) Fourthly, he submitted that definition of the
word "decree" in CPC is incorporated in the
Commercial Courts Act. He submitted that
Section 2(2) of the Commercial Courts Act states
that the words and expressions used and not
defined under the Commercial Courts Act, but
defined under the Code of Civil Procedure, 1908,
and the Evidence Act, 1872, should be given the
same meaning as assigned to them in the Code
and the Act. He submitted that definitions of
"decree", "order" and "judgment" as referred to in
the CPC, apply to the Commercial Courts Act as
they are not separately defined in the Commercial
Courts Act. He submitted that though the words
"section 47" were omitted by the 1976
amendment from the definition of the word
"decree", alternative provisions were made by
amendments incorporated in the CPC at about the
same time in several provisions of the CPC such
as Order 21 Rules 58(4), Rule 98(2) - Bombay
Amendment and Order 21 Rule 103 of the CPC
(read with Order 21 Rules 97, 98, 99, 101
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therein). He submitted that any order passed
adjudicating any application therein has the force
of a decree for the purpose of appeal. He relied
on Order XXI Rule 103. He submitted that the
Respondents' contention that under Order XXI
Rules 97 to 103 only a third party, and not the
judgment debtor, could raise objection /
obstruction, is not correct. In support of the said
contention, he relied upon the following
judgments:-
[1] Nooruddin vs. Dr. K.L. Anand 1
(Para 8)
[2] Shreenath and another vs.
Rajesh and others2 (Para 10)
[3] Brahmdeo Chaudhary vs.
Rishikesh Prasad Jaiswal and
another3 (Para 6)
He submitted that provisions of the CPC
themselves viz. Order 21 Rule 98(2) contemplate
obstruction by a judgment debtor himself. He
submitted that the impugned order in this matter
1 (1995) 1 SCC 242
2 4 SCC 543
3 (1997) 3 SCC 694
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is an order having the same characteristics and
passed under the said provisions viz Order 21
Rule 103 read with Order 21 Rules 97, 98, 99
and 101. He submitted that the impugned order
is a decision having the force of a decree and is
appealable under Section 13(1) of the
Commercial Courts Act. In support of the said
submission, he gave certain illustrations and
thereafter relied on the judgment of the Apex
Court in Transmission Corporation of A.P. vs. CH.
Prabhakar and others1 (Para 18)
(E) Fifthly, he submitted that Section 13(1)
also refers to "judgment" and an appeal from
"judgment". He submitted that if the impugned
order affects the vital and valuable rights of the
Appellants, it has to be treated as a judgment
under Section 13 of the Commercial Courts Act
and it has a force of final judgment. In support of
the said submissions, he relied on the following
judgments:-
[1] Radhy Shyam vs. Shyam Behari
1 (2004) 5 SCC 551
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Singh1 (Para 7)
[2] Shah Babulal Khimji vs. Jayaben
D. Kania and Anr.2 (Paras 112 and
113)
(F) Sixthly, he submitted that for the purposes
of execution of a decision, decree, order or
judgment passed under the provisions of the
Commercial Courts Act, the provisions of the CPC
as regards the execution are applicable. He
submitted that the Commercial Courts Act does
not contain any provisions for execution and only
the CPC provisions for execution are applicable.
He relied on Section 16 of the Commercial
Courts Act. He submitted that Section 16 of the
Commercial Courts Act amends certain
provisions of the CPC in their application to
proceedings in the Commercial Courts Act and
the Commercial Court / Commercial Division has
to follow these provisions of the CPC amended by
the Commercial Courts Act. He submitted that
amendments to the CPC are found in Schedule to
the Commercial Courts Act. He submitted that,
1 AIR 1971 SC 2337
2 AIR 1981 SC 1786
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however, there is no amendment in respect of
Order XXI of the CPC. He submitted that all the
amendments relate to proceedings upto the stage
of judgment and not thereafter. He submitted
that had the Parliament desired to amend Order
XXI Rule 103 to exclude from the expression
"decree", the order passed under Rule 103, it
would have done so. He therefore submitted that
for the purposes of the Commercial Courts Act
any order passed under Order XXI Rule 103
continues to be a decree for the purpose of an
appeal therefrom.
(G) Seventhly, on the point of legal fiction, he
submitted that where the statutory fiction is to be
resorted to, full effect must be given to the
statutory fiction and it should be carried to its
logical conclusion. In support of the said
submission, he relied upon the following
judgments:-
[1] State of Bombay vs. Pandurang
Vinayak and others1 (Para 5)
[2] American Home Products
1 AIR 1953 SC 244
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Corporation vs. Mac Laboratories Ltd
and Anr.1 (Paras 56, 57 and 66)
APPELLANTS' RESPONSE TO THE RESPONDENT
NOS. 1 TO 6'S CONTENTIONS:
In reply to the contention of the Respondents
that in view of the judgment of this Court in Jet
Airways (India) Ltd. vs. Subrata Roy Sahara and
others2 the learned Senior Counsel appearing on
behalf of the Appellants has made the following
submissions:-
(a) Firstly, he submitted that the judgment in Jet
Airways (India) Ltd. (supra) was passed when the
Commercial Courts Act had not been enacted and
had not come into orce.
(b) Secondly, he submitted that the statutory
provisions considered in the said judgment were
totally different.
(c) Thirdly, he submitted that Section 13 of the
1 AIR 1986 SC 137
2 2011 SCC OnLine Bom 1379
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Commercial Courts Act alone governs the right of
appeal to the express exclusion of the CPC, Letters
Patent and the Arbitration Act.
Alternatively, he submitted that decision in
Jet Airways (India) Ltd. (supra) is not good law
since it does not take into consideration judgments
of the Apex Court in State of Bombay vs.
Pandurang1 (Para 5), American Home Products
Corporation vs. Mac Laboratories Ltd and Anr2
(Paras 56, 57, 66) and in East End Dwelling vs.
Finsbury3 (Pages 132, 133). He submitted that
since these judgments have not been considered,
the judgment in Jet Airways (India) Ltd. (supra) is
not good law and should be ignored.
(d) Fourthly, he submitted that the judgment
in Jet Airways (India) Ltd. (supra) requires
reconsideration since it has overlooked the settled
legal position that the statutory fiction contained in
Section 36 of the Arbitration Act must be given full
effect. It is contended that the judgment in Jet
Airways (India) Ltd (supra) holding that execution
1 AIR 1953 SC 244
2 AIR 1986 SC 137
3 1952 A.C. 109
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applications in respect of an Award are
applications under the Arbitration Act and not
under the CPC, is erroneous. He submitted that
once an Award is passed, thereafter execution
proceedings are under the CPC alone and not
under the Arbitration Act.
(e) Lastly, he submitted that the judgment in Jet
Airways (India) Ltd. (supra) was based upon the
decision of the Supreme Court in Paramjeet Singh
Patheja vs. ICDS Ltd.1. He submitted that the said
judgment of the Apex Court in Patheja (supra) is
misconstrued and misapplied in the the judgment
of Jet Airways (India) Ltd. (supra). It is submitted
that ratio in the judgment of Patheja (supra) was
with reference to notice under Section 9(2) of the
Presidency Towns Insolvency Act, 1909 (For short
"Insolvency Act") and it was observed that on the
basis of an Award, notice under Section 9(2) of the
Insolvency Act could not be issued since it was not
a decree. It is submitted that in paras 42 and 43 of
the judgment in Patheja (supra), the Supreme
Court has expressly observed that an Award is a
"decree" for execution purposes. It is therefore
1 (2006) 13 SCC 322
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submitted that the conclusion arrived at in the case
of Jet Airways (India) Ltd. (supra) is contrary to
the decision in Patheja (supra)
Submissions of the learned Senior Counsel Mr. Milind Sathe for
the Appellant in COMAPL/6/2016
15] Mr Milind Sathe, the learned Senior Counsel appearing on behalf
of the Appellant firstly submitted that the notice was taken out under
the provisions of Order XXI Rule 22 of the CPC and this was resisted
by the Appellant herein by raising objections which are in the nature
of objections under Order XXI Rule 97 of the CPC. He submitted that
the order impugned in the appeal is passed on an application which is
in the nature of the order contemplated under Rule 101 of Order XXI.
He therefore submitted that the order is to be treated as decree under
Rule 103 of Order XXI. He submitted that the order impugned in
appeal therefore qualifies as "decree" under section 13 of the
Commercial Courts Act. He then invited our attention to Section 13 of
the said Act. While interpreting Section 13, he submitted that the
Section could not be read to mean that only judgment or order is
appealable. He submitted that such an interpretation would lead to a
result that, then decree is not provided as being appealable in Section
13 of the Commercial Courts Act, which would give rise to a situation
that an interlocutory order is appealable but an order which is in the
form of a decree is not appealable. He submitted that the
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interpretation of Section 13 and the legislative intent to provide appeal
against any "decision" of Commercial Division can also be gathered
from the draft of "Commercial Court Bill" introduced in Parliament.
He submitted that the Bill had used the words "only against" and
"against no other orders" and these words are not incorporated in
Section 13 of the Act. He therefore submitted that the legislative
intent was to provide appeal against all decisions. He submitted that
so far as proceedings under Section 36 of the Arbitration Act are
concerned, they must be treated as proceedings under Section 47 and
Order XXI of the CPC. In support of the said submission, he pointed
out firstly that Section 36 expressly provides that the "Award" shall be
executable "as if it were a decree" under the provision of the CPC.
Secondly, he submitted that various provisions in Order XXI of CPC
contemplate adjudication of right, title and interest of various parties
such as in Order XXI Rule 58 and Order XXI Rules 97 to 103 of the
CPC. He submitted that these decisions are treated "as if it were a
decree of a Civil Court". He submitted that since the expression in
Section 36 of the Arbitration Act "as if it were a decree of a Civil
Court" is sought to be argued as not construing as a decree then the
provisions of Order XXI Rule 58 as well as Order XXI Rule 103 would
be rendered nugatory. He therefore submitted that proceedings under
Section 36 of the Arbitration Act must be construed as proceedings
under the CPC. He submitted that the Judgment in Jet Airways (India)
Limited (supra) has not taken into consideration these issues and
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therefore is required to be referred to the larger Bench for
reconsideration. Lastly, he submitted that the exclusion of applicability
of the provisions of the CPC under Section 19 of Arbitration Act is
limited to "arbitral proceeding" and not to execution of the Award.
Submissions of the learned Counsel Mr. Zal Andhyarujina for
the Appellant in COMAP/4/2016.
16] Mr Zal Andhyarujina, the learned Senior Counsel for the
Appellant submitted that the Commercial Courts Act is a specific Act
dealing with a specific types of disputes and the object of the Act was
to provide an independent mechanism for early resolution of the
disputes. He submitted that the plain language of Section 13(1)
indicates that "the decision" would include a "judgment and order".
He submitted that the plain language thus is plenary and wide in
nature. He submitted that the term "decision" has been judicially
interpreted. He relied on the judgment in Balanand & Anr. vs.
Devkinand & Ors.1(Paras 5 and 6) and also in Ratan & Co vs. Asst.
Registrar of Trademarks2 (Para 24). He submitted that the proviso to
Section 13(1) is an enabling statutory provision. He submitted that
this is also evident from the express exclusionary language of Section
13(2) which provides that "notwithstanding any other law in force",
no other appeals shall lie. He submitted that the contrast in the
language between the proviso to Section 13(1) and Section 13(2)
1 AIR 1963 HP 30
2 AIR 1977 Delhi 93
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makes it evident that the former is enabling and the latter is
disabling/exclusionary. He then submitted so far as the appeals under
Section 37(1) of the Arbitration Act are concerned, the Arbitration Act
provides that the appeal shall lie from such orders, to the Court
authorized by law to hear appeals from original decrees of the Court
passing the orders. He submitted that the effect of Section 13(1) of
the Commercial Courts Act on such orders is to make all appeals from
those orders to lie before the Commercial Appellate Division. He
submitted that under Section 37, appeals could be filed from orders of
the Court under Section 9 and 34 which was provided in Section 37(1)
and also orders of the Arbitral Tribunal under Section 16 and 17 as
specified under Section 37(2). He submitted that under the
Arbitration Act, appeals under Section 37(1) would go to Division
Bench/Appeal Court and the appeals under Section 37(2) would be
heard by the Single Judge. He submitted that however proviso to
Section 13 specifically enables an appeal to lie from orders passed by
the Commercial Division under Section 37 of the said Act to the
Commercial Appellate Division. He submitted that such an appeal is in
the nature of second appeal and provides for an appeal where no such
appeal previously existed. He submitted that the Commercial Courts
Act, being a more specific and later central statute, would override the
Arbitration Act which was an older and general statute to the extent of
inconsistency and repugnancy. He submitted that the present appeal
is maintainable under Section 13(1) of the said Act and the proviso
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has no application to the facts of the present case. Lastly, he
submitted that enforcement of an Award is done in the same manner
as if it is a decree of the Court and therefore all provisions applicable
to the enforcement under the CPC including appeals which are
otherwise available would be available to the parties. He relied on the
judgment in SBP & Co. vs. Patel Engineering Ltd.1 (Para 18) and also in
Shin-Etsu Chemical Co. Ltd. & Ors. vs. Vindhya Teleinks Ltd. & Ors 2. He
submitted that the judgment in Jet Airways (India) Limited (supra)
requires reconsideration.
REPLY OF MR MADON, THE LEARNED SENIOR COUNSEL FOR
RESPONDENTS TO THE SUBMISSIONS MADE BY THE LEARNED
SENIOR COUNSEL MR. SATHE & MR ZAL ANDHYARUJINA,
COUNSEL FOR THE APPELLANT.
17] Mr. Madon, the learned Senior Counsel appearing on behalf of
the Respondents has also given in detail his reply as to how the
arguments made by the Appellants' Counsel are not tenable. While
dealing with the submissions made by the learned Senior Counsel Mr.
Milind Sathe, he submitted that the judgment in Jet Airways (India)
Limited (supra) does not require any reconsideration. He submitted
that the legal fiction which is created in Section 36 is for limited
purpose and this fiction could not be expanded further. So far as the
submission that certain words such as "and from no other orders"
which were present in the Commercial Courts, Commercial Division
1 (2005) 8 SCC 618
2 AIR 2009 SCC 3284
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and Commercial Appellate Division of High Courts Bill, 2015 were
omitted from this Act, is concerned, he submitted that this submission
is incorrect since in the main Act, these words are incorporated which
read as follows:-
"....no appeal shall lie from any order or
decree..."
In reply to the submission of the learned Senior Counsel Mr. Sathe
that Section 37 of the Arbitration Act and Order XLIII of the CPC only
provide for appeals from orders that have not attained finality, he
submitted that Section 37(1)(c ) & Section 37(2)(a) of the Arbitration
Act provide for appeals from orders that finally dispose of arbitration
proceedings.
18] Referring to the submission of the learned Counsel Mr.
Andhyarujina, Mr. Madon, the learned Senior Counsel for the
Respondents submitted that such argument is fallacious and based on
misreading of the proviso to Section 13 of the Commercial Courts Act.
He submitted that Mr. Andhyarujina wanted to read the words into
proviso as if they they were "an appeal shall lie from all orders
covered under Section 37 of the Arbitration Act, 1996" when, in fact,
the proviso clearly mentions that appeal would lie from all such orders
that are specifically enumerated under Order XLIII of the CPC and
Section 37 of the Arbitration and Conciliation Act, 1996. He
submitted that if submission of Mr. Andhyarujina was to be accepted,
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provision of Section 37(3) of the Arbitration Act would be rendered
otiose. He submitted that the judgments on which reliance has been
placed by Counsel Mr. Andhyarujina have no application to the facts
of the present case.
FINDINGS:
19] After having heard all the Counsels appearing on behalf of
Appellants and Respondents and having examined their written
submissions, following questions in our view fall for consideration
before this Court:-
QUESTIONS
[1] Whether, in an application for
execution of an Award passed under the
Arbitration Act, 1996, an order passed by
the learned Single Judge is appealable
under Section 13(1) of the Commercial
Courts Act as if it is a decree?
[2] Whether the word "decision" means a
decree?
[3] Whether a decision in the form of an
order is appealable only under the conditions
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given in proviso to section 13(1) viz. that the
order/decision is appealable only on the
grounds mentioned in Section 37 or Section
104 or Order XLIII of the CPC
[4] Whether the word "decision" which is
found in Section 13(1) of the Commercial
Courts Act includes a "decree" or an "order"
which has the effect of having finality or final
adjudication of rights of parties?
[5] Whether, the heading to Section 13 of
the Commercial Courts Act governs Section
13(1) i.e. whether the word "decision" is to be
taken as a "decree" on account of the heading
of the Section?
[6] Whether ratio of the judgment in Jet
Airways (India) Ltd. (supra) is applicable to the
facts of the present case and is a binding
precedent with reference to the facts arising in
the present case?
[7] Whether ratio of the judgment in the
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case of Paramjeet Singh Patheja (supra) which
has been relied upon in the case of Jet Airways
(India) Ltd. (supra) is applicable to the facts of
the present case?
20] In order to appreciate the aforesaid questions which have been
raised in these appeals, it is necessary to briefly consider the purpose
for which this Act has been passed and also the Scheme of the Act.
21] The Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Act, 2015 was passed by the
Parliament on 31/12/2015 and it received the assent of the President
on 31/12/2015 and was published in the Gazette of Government of
India on 01/01/2016. The Preamble to the Act reads as under:-
"An Act to provide for the Constitution
of Commercial Courts, Commercial Division
and Commercial Appellate Division in the
High Courts for adjudicating commercial
disputes of specified value and for matters
connected therewith or incidental thereto."
The Statement of Objects and Reasons mentions that the Government
had proposed to provide for speedy disposal of high value commercial
disputes and therefore it wanted to constitute an independent
mechanism for their early resolution. Clause 6 of the said Statement
of Objects and Reasons reads as under:-
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"6. It is proposed to introduce the
Commercial Courts, Commercial Division
and Commercial Appellate Division of High
Courts Bill, 2015 to replace the
Commercial Courts, Commercial Division
and Commercial Appellate Division of High
Courts Ordinance, 2015 which inter alia,
provides for the following namely :-
(i) constitution of the Commercial
Courts at District level except for the
territory over which any High Court is
having ordinary original civil jurisdiction;
(ii) constitution of the Commercial
Divisions in those High Courts which are
already exercising ordinary civil
jurisdiction and they shall have territorial
jurisdiction over such areas on which it has
original jurisdiction;
(iii) constitution of the Commercial
Appellate Division in all the High Courts to
hear the appeals against the Orders of the
Commercial Courts and the Orders of the
Commercial Division of the High Court;
(iv) the minimum pecuniary jurisdiction
of such Commercial Courts and
Commercial Division is proposed as one
crore rupees; and
(v) to amend the Code of Civil
Procedure, 1908 as applicable to the
Commercial Courts and Commercial
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Divisions which shall prevail over the
existing High Courts Rules and other
provisions of the Code of Civil Procedure,
1908 so as to improve the efficiency and
reduce delays in disposal of commercial
cases."
The Preamble to the Act and the Objects and Reasons disclose the
intention of the Parliament that it wanted to provide a separate
mechanism for the purpose of speedy disposal of commercial
disputes.
22] "Commercial dispute" has been defined under section 2(c) of the
Commercial Courts Act. The definition reveals that all disputes which
are commercial in nature are included in the said definition.
Constitution of Commercial Courts is provided in Section 3 and it
envisages constitution of number of Commercial Courts at District
level and in the High Court which has ordinary original civil
jurisdiction. It provides for constitution of Commercial Division of the
High Court which is presided over by a Single Judge and constitution
of Commercial Appellate Division which is presided over by Division
Bench. So far as Bombay High Court is concerned, it has ordinary
original civil jurisdiction and, as such, the suits and proceedings of
commercial nature are to be first heard by the Single Judge and the
appeal is provided to the Division Bench under Section 3.
23] Section 7 of the Commercial Courts Act speaks about jurisdiction
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of Commercial Divisions of High Courts and mentions that all suits
and applications relating to commercial disputes would be heard and
decided by Commercial Division i.e. by a Single Judge of the High
Court. Section 10 of the Commercial Courts Act speaks about
jurisdiction in respect of arbitration matters. Clause (1) of Section 10
mentions the arbitration arising out of international commercial
arbitration and clause (2) speaks about arbitration other than
international commercial arbitration.
24] Section 13 of the Commercial Courts Act speaks about appeals
which arise out of the matters decided by the Commercial Division in
civil suits etc and also appeals out of arbitration proceedings presided
over by the Commercial Division i.e. Single Judge. It is evident
therefore that no separate provisions have been made for
differentiating between civil suits and arbitration proceedings. Section
13 combines appeals which are filed in suits and in arbitration
proceedings. Section 13 reads as under:-
"13. Appeals from decrees of Commercial
Courts and Commercial Divisions.- (1) Any
person aggrieved by the Decision of the
Commercial Court or Commercial Division of a
High Court may appeal to the Commercial
Appellate Division of that High Court within a
period of sixty days from the date of judgment
or order, as the case may be:
Provided that an appeal shall lie from
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such orders passed by a Commercial
Division or a Commercial Court that are
specifically enumerated under Order XLIII of
the Code of Civil Procedure, 1908 (5 of
1908) as amended by this Act and section
37 of the Arbitration and Conciliation Act,
1996 (26 of 1996).
(2) Notwithstanding anything contained
in any other law for the time being in force
or Letters Patent of a High Court, no appeal
shall lie from any order or decree of a
Commercial Division or Commercial Court
otherwise than in accordance with the
provisions of this Act."
25] It will also be relevant to look at some of the other provisions
viz. Sections 8, 16 and 21 of the Commercial Courts Act. Section 8 of
the Commercial Courts Act reads as under:-
"8. Bar against revision application or petition
against an interlocutory order.- Notwithstanding
anything contained in any other law for the time
being in force, no civil revision application or
petition shall be entertained against any
interlocutory order of a Commercial Court,
including an order on the issue of jurisdiction, and
any such challenge, subject to the provisions of
section 13, shall be raised only in an appeal
against the decree of the Commercial Court.
Perusal of the said sections indicate that a bar has been imposed
against civil revision application or petition against interlocutory order
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and it specifies that no civil revision application or petition shall be
entertained against any interlocutory order of a Commercial Court,
including an order on the issue of jurisdiction, and any such challenge,
subject to section 13, shall be raised only in an appeal against the
decree of the Commercial Court.
Section 16 of the Commercial Courts Act reads as under:-
"16. Amendments to the Code of Civil
Procedure, 1908 in its application to
commercial disputes.- (1) The provisions of the
Code of Civil Procedure, 1908 (5 of 1908) shall, in
their application to any suit in respect of a
commercial dispute of a Specified Value, stand
amended in the manner as specified in the
Schedule.
(2) The Commercial Division and Commercial
Court shall follow the provisions of the Code of
Civil Procedure, 1908 (5 of 1908), as amended by
this Act, in the trial of a suit in respect of a
commercial dispute of Specified Value.
(3) Where any provision of any rule of the
jurisdictional High Court or any amendment to the
Code of Civil Procedure, 1908 (5 of 1908), by the
State Government is in conflict with the provisions
of the Code of Civil Procedure, 1908 (5 of 1908),
as amended by this Act, the provisions of the Code
of Civil Procedure as amended by this Act shall
prevail."
Perusal of the said Section indicates that the provisions of the
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Code of Civil Procedure will apply to the extent, as amended in the
Schedule. Perusal of the Schedule indicates that provisions of Order
XXI in so far as they relate to execution have not been amended. The
said provisions therefore will clearly apply in respect of execution
proceedings taken out in civil matters.
Section 21 of the Commercial Courts Act reads as under:-
"21. Act to have overriding effect.- Save as
otherwise provided, the provisions of this Act shall
have effect, notwithstanding anything inconsistent
therewith contained in any other law for the time
being in force or in any instrument having effect
by virtue of any law for the time being in force
other than this Act."
In Section 21, it is provided that the Act shall have effect over
any other laws which are for the time being in force other than this
Act.
26] So far as the enforcement of Awards is concerned, under the
Arbitration Act, Section 36 lays down the manner in which the Award
can be enforced. Section 36 of the Arbitration Act reads as under:-
"36. Enforcement.- (1) Where the time for
making an application to set aside the
arbitral award under section 34 has expired,
then, subject to the provisions of sub-
section (2), such award shall be enforced in
accordance with the provisions of the Code
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of Civil Procedure, 1908 (5 of 1908), in the
same manner as if it were a decree of the
Court.
(2) Where an application to set aside the
arbitral award has been filed in the Court
under section 34, the filing of such an
application shall not only by itself render
that award unenforceable, unless the Court
grants an order of stay of the operation of
the said arbitral award in accordance with
the provisions of sub-section (3), on a
separate application made for that purpose.
(3) Upon filing of an application under
sub-section (2) for stay of the operation of
the arbitral award, the Court may, subject
to such conditions as it may deem fit, grant
stay of the operation of such award for
reasons to be recorded in writing:
Provided that the Court shall, while
considering the application for grant of stay
in the case of an arbitral award for payment
of money, have due regard to the provisions
for grant of stay of a money decree under
the provisions of the Code of Civil
Procedure, 1908 (5 of 1908)." [Emphasis
supplied]
27] It is therefore apparent that for the purpose of enforcement, no
separate provisions are to be found in the Arbitration Act and for that
purpose, the provisions of Civil Procedure Code 1908 have to be
followed as if the Award was a decree of the Court.
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28] Upon conjoint reading of the Commercial Courts Act and the
Arbitration Act, it is apparent that provisions of the Civil Procedure
Code in so far as they are not amended by the Commercial Courts Act,
will apply and more particularly they would apply for the enforcement
of the Award as if it was a decree of the Court. Legal fiction therefore
is created by the Statute and the Award has to be enforced by
following the provisions of the CPC relating to execution of decrees.
29] The last Section under the Arbitration Act which is relevant is
Section 37. This Section speaks about appealable orders. It reads as
under:-
"37. Appealable orders.- (1) 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
arbitration under section 8;
(b) granting or refusing to grant any
measure under section 9;
(c ) setting aside or refusing to set aside
an arbitral award 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-
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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 appeal under this section, but
nothing in this section shall affect or take
away any right to appeal to the Supreme
Court."
Section 37, therefore, lays down the orders against which
appeals can be filed. It is relevant to notice here that no appeal has
been provided against an order passed in execution proceedings. This
will have to be kept in mind while interpreting the word "decision"
which is found in Section 13(1) of the Commercial Courts Act.
30] In our view, since there is no separate provision of appeal
against execution of an Award passed in arbitration proceedings, the
word "decision" will have to be interpreted accordingly.
31] Before we consider the rival contentions, it will be necessary to
briefly reiterate the law of precedent:
The Apex Court in Bank of India and Anr. v. K. Mohandas
(2009) 5 SCC 313 observed as follows: (SCC pp. 335-36 paras 54-59)
"54. A word about precedents, before we deal with the
aforesaid observations. The classic statement of Earl of
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Halsbury, L.C. in Quinn v. Leathem [1901 AC 495 (HL)], is
worth recapitulating first: (AC p. 506)
'...before discussing ... Allen v. Flood [1898 AC 1 :
(1895-99) ALL ER Rep 52 (HL)and what was
decided therein, there are two observations of a
general character which I wish to make, and one is
to repeat what I have very often said before, that
every judgment must be read as applicable to the
particular facts proved, or assumed to be proved,
since the generality of the expressions which may be
found there are not intended to be expositions of
the whole law, but are governed and qualified by the
particular facts of the case in which such expressions
are to be found. The other is that a case is only an
authority for what it actually decides. I entirely
deny that it can be quoted for a proposition that
may seem to follow logically from it. Such a mode
of reasoning assumes that the law is necessarily a
logical code, whereas every lawyer must
acknowledge that the law is not always logical at
all.'
This Court has in long line of cases followed the aforesaid
statement of law.
55. In State of Orissa v. Sudhansu Sekhar Misra [AIR 1968
SC 647] it was observed: (AIR p. 651, para 13)
"13. ...A decision is only an authority for what it
actually decides. What is of the essence in a decision
is its ratio and not every observation found therein
nor what logically follows from the various
observations made in it."
56. In the words of Lord Denning:
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"Each case depends on its own facts and a close
similarity between one case and another is not
enough because even a single significant detail may
alter the entire aspect. In deciding such cases, one
should avoid the temptation to decide cases (as said
by Cardozo) by matching the colour of one case
against the colour of another. To decide, therefore,
on which side of the line a case falls, the broad
resemblance to another case is not at all decisive."
57. It was highlighted by this Court in Ambica Quarry Works
v. State of Gujarat: [(1987) 1 SCC 213] (SCC p. 221, para
18)
"18. ...The ratio of any decision must be understood
in the background of the facts of that case. It has
been said long time ago that a case is only an
authority for what it actually decides, and not what
logically follows from it."
58. In Bhavnagar University v. Palitana Sugar Mill (P) Ltd.
[(2003) 2 SCC 111] this Court held that a little difference in
facts or additional facts may make a lot of difference in the
precedential value of a decision.
59. This Court in Bharat Petroleum Corporation Ltd. v. N.R.
Vairamani [(2004) 8 SCC 579] emphasised that the courts
should not place reliance on decisions without discussing as
to how the factual situation fits in with the fact situation of
the decision on which reliance is placed. It was further
observed that the judgments of courts are not to be construed
as statutes and the observations must be read in the context
in which they appear to have been stated. The Court went on
to say that circumstantial applicability, one additional or
different fact may make a world of difference between
conclusions in two cases." (emphasis in original)
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The Apex Court in Arasmeta Captive Power Company Pvt. Ltd. vs.
Lafarge India Pvt. Ltd and another1, has observed on the question of
law of precedent in paras 28, 31, 32, 33 35 and 36 as under:-
"28. At this juncture, we think it condign to refer
to certain authorities which lay down the
principle for understanding the ratio decidendi of
a judgment. Such a deliberation, we are disposed
to think, is necessary as we notice that
contentions are raised that certain observations in
some paragraphs in SPB & Company (supra) have
been relied upon to build the edifice that latter
judgments have not referred to them."
"31. In Krishena Kumar v. Union of India and
Ors. (1990) 4 SCC 207, the Constitution Bench,
while dealing with the concept of ratio decidendi,
has referred to Caledonian Railway Co. v.
Walker's Trustees [(1882) 7 App Cas 259: 46 LT
826 (HL)] and Quinn (supra) and the
observations made by Sir Frederick Pollock and
thereafter proceeded to state as follows:
"The ratio decidendi is the underlying
principle, namely, the general reasons or
the general grounds upon which the
decision is based on the test or abstract
from the specific peculiarities of the
particular case which gives rise to the
decision. The
ratio
decidendi has to be
ascertained by an analysis of the facts of the
case and the process of reasoning involving
1 AIR 2014 SC 525
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the major premise consisting of a pre-
existing rule of law, either statutory or
judge-made, and a minor premise consisting
of the material facts of the case under
immediate consideration. If it is not clear, it
is not the duty of the court to spell it out
with difficulty in order to be bound by it. In
the words of Halsbury (4th edn., Vol. 26,
para 573)"
"The concrete decision alone is binding
between the parties to it but it is the
abstract ratio decidendi, as ascertained
on a consideration of the judgment in
relation to the subject matter of the
decision, which alone has the force of
law and which when it is clear it is not
part of a tribunal's duty to spell out with
difficulty a ratio decidendi in order to
bound by it, and it is always dangerous
to take one or two observations out of a
long judgment and treat them as if they
gave the ratio decidendi
of the case. If
more reasons than one are given by a
tribunal for its judgment, all are taken
as forming the ratio decidendi. "
(Emphasis added)
"32. In State of Orissa v. Mohd. Illiyas (2006) 1
SCC 275, it has been stated thus:
"12...According to the well-settled theory of
precedents, every decision contains three
basic postulates: (i) findings of material
facts, direct and inferential. An inferential
finding of facts is the inference which the
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Judge draws from the direct, or perceptible
facts; (ii) statements of the principles of law
applicable to the legal problems disclosed by
the facts; and (iii) judgment based on the
combined effect of the above. A decision is
an authority for what it actually decides.
What is of the essence in a decision is its
ratio and not every observation found
therein nor what logically flows from the
various observations made in the judgment."
"33. In Islamic Academy of Education v.
State of Karnataka (2003) 6 SCC 697, the
Court has made the following observations:
"2... The ratio decidendi of a judgment
has to be found out only on reading the
entire judgment. In fact, the ratio of the
judgment is what is set out in the judgment
itself. The answer to the question would
necessarily have to be read in the context
of what is set out in the judgment and not
in isolation. In case of any doubt as regards
any observations, reasons and principles,
the other part of the judgment has to be
looked into. By reading a line here and
there from the judgment, one cannot find
out the entire ratio
decidendi of the
judgment."
(Underlining is by us)
"35. At this stage, we may also profitably refer
to another principle which is of assistance to
understand and appreciate the ratio decidendi of
a judgment. The judgments rendered by a court
are not to be read as statutes. In Union of India
v. Amrit Lal Manchanda and Anr. (2004) 3 SCC
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75, it has been stated that observations of courts
are neither to be read as Euclid's theorems nor
as provisions of the statute and that too taken
out of their context. The observations must be
red in the context in which they appear to have
been stated. To interpret words, phrases and
provisions of a statute, it may become necessary
for judges to embark into lengthy discussions
but the discussion is meant to explain and not to
define. Judges interpret statutes, they do not
interpret judgments. They interpret words of
statutes; their words are not to be interpreted as
statutes."
"36. In Som Mittal v. Government of Karnataka
(2008) 3 SCC 574, it has been observed that
judgments are not to be construed as statutes.
Nor words or phrases in judgments to be
interpreted like provisions of a statute. Some
words used in a judgment should be read and
understood contextually and are not intended to
be taken literally. Many a time a judge uses a
phrase or expression with the intention of
emphasizing a point or accentuating a principle
or even by way of a flourish of writing style.
Ratio decidendi of a judgment is not to be
discerned from a stray word or phrase read in
isolation."
The Apex Court in Zee Telefilms Ltd. and another vs. Union of
India and others1 has observed in paras 254, 255 & 256 as under:-
1 (2005) 4 SCC 649
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"Precedent
254. Are we bound hands and feet by
Pradeep Kumar Biswas (2002) 5 SCC 111? The
answer to the question must be found in the
law of precedent. A decision, it is trite, should
not be read as a statute. A decision is an
authority for the questions of law determined
by it. Such a question is determined having
regard to the fact situation obtaining therein.
While applying the ratio, the court may not pick
out a word or a sentence from the judgment
divorced from the context in which the said
question arose for consideration. A judgment,
as is well known, must be read in its entirety
and the observations made therein should
receive consideration in the light of the
questions raised before it. (See Punjab National
Bank v. R.L. Vaid (2004) 7 SCC 698).
255. Although decisions are galore on this
point, we may refer to a recent one in State of
Gujarat v. Akhil Gujarat Pravasi V.S.
Mahamandal (2004) 5 SCC 155 wherein this
Court held : (SCC p. 172, para 19)
"It is trite that any observation made during
the course of reasoning in a judgment should
not be read divorced from the context in which
it was used."
256. It is further well settled that a decision
is not an authority for a proposition which did
not fall for its consideration. It is also a trite
law that a point not raised before a court would
not be an authority on the said question. In A-
One Granites v. State of U.P. (2001) 3 SCC 537
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it is stated as follows : (SCC p. 543, para 11)
"11. This question was considered by the
Court of Appeal in Lancaster Motor Co.
(London) Ltd. v. Bremith Ltd. (1941) 1 KB 675
and it was laid down that when non
consideration was given to the question, the
decision cannot be said to be binding and
precedents sub silentio and without arguments
are of no moment"
[See also State of U.P. v. Synthetics and
Chemicals Ltd. (1991) 4 SCC 139, Arnit Das v.
State of Bihar (2000) 5 SCC 488 (SCC para 20),
Bhavnagar University v. Palitana Sugar Mills (P)
Ltd. (2003) 2 SCC 111, Cement Corpn. of India
Ltd. v. Purya (2004) 8 SCC 270, Bharat Forge
Co. Ltd. v. Uttam Manohar Nakate (2005) 2 SCC
489 and Kalyan Chandra Sarkar v. Rajesh
Ranjan (2005) 2 SCC 42, See para 42.]"
The view of the Apex Court on the law of precedents has to be
kept in mind while dealing with the judgments relied upon by all the
parties.
32] We have now to consider the scope and ambit of an appeal
which can be filed under Section 13(1) out of the orders which are
passed in execution proceedings of an Award.
33] In this context, provisions of Section 13 of the Commercial
Courts Act will have to be interpreted. Perusal of the said Section
indicates that it can be divided in four parts viz heading, which speaks
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about decrees of Commercial Courts and Commercial Divisions. The
heading is followed by sub-section (1), which speaks about an appeal
from the date of judgment or order and it also lays down limitation viz
60 days from the date of the said judgment and order. The third part
is the proviso. The proviso provides for an appeal from orders passed
by a Commercial Division or a Commercial Court and the said appeal
is restricted to appeals which are enumerated under Order XLIII of the
Code of Civil Procedure, 1908 as amended by this Act and Section 37
of the Arbitration and Conciliation Act, 1996. The fourth part is sub-
section (2) which starts with non-obstante clause and clarifies that no
appeal shall lie from any order or decree of a Commercial Division or
Commercial Court otherwise than in accordance with the provisions of
this Act. If we dissect these four parts, it can be noticed that appeals
are provided under sub-section (1) against any decision. In our view,
since sub-section (1) has combined the right of appeal against decree
or order, the word "decision" has been used and the proviso provides
for orders which are appealable. The contention of Mr. Tulzapurkar,
the learned Senior Counsel for the Appellants, that the word
"decision" also includes such orders, which have attained finality
cannot be accepted. This can be gathered from the Scheme of the
Commercial Courts Act and the Objects and Reasons. The Act was
passed for the purpose of speedy disposal of commercial disputes and
to improve efficiency and reduce delays in disposal of commercial
cases.
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34] The proviso to sub-section (1) therefore cannot be said to be an
additional enactment provided for appeal against the orders but it
restricts the orders against which appeals can be filed. In the present
case, Section 37 of the Arbitration Act has restricted the orders against
which appeals can be filed. If interpretation which is sought to be
given by the learned Senior Counsel Mr. Tulzapurkar appearing for
the Appellants, is to be accepted then it would not only be contrary to
Section 37 but would also be contrary to the provisions of the
Commercial Courts Act. It is a well settled principle of interpretation
that while interpreting a particular provision, it is not open for the
Court to add or subtract anything from the said provision. It is
therefore not possible to read something more in the word "decision"
to mean that it also includes orders which are not otherwise
appealable. Sub-section (2) of section 2 of the Commercial Courts Act
enumerates that the words and expressions used and not defined in
this Act but defined in the Code of Civil Procedure, 1908 and the
Evidence Act 1872, shall have the same meaning assigned to them in
that Code and the Act. The word "judgment" is defined in Section
2(9) of the CPC. Therefore, the said restricted meaning has to be
assigned to the word "judgment" found in sub-section (1) of Section
13 of the Commercial Courts Act and it will not be possible to expand
the meaning of the word "judgment" as has been done in the Letters
Patent by virtue of the judgment of the Supreme Court in Shah
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Babulal Khimji1(supra) [paras 112, 1113]. The submission of Mr.
Tulzapurkar, the learned Senior Counsel appearing for the Appellants
that the expanded meaning has to be given to the word "judgment" or
"decision" therefore cannot be accepted.
35] In the context of the facts of the present case, it has to be noted
that the Award passed by the arbitral tribunal was confirmed right up
to the Supreme Court and the matter was at the stage of execution.
The orders which are passed in execution proceedings are appealable
to the extent provided under Section 37 of the Arbitration Act. An
order passed on application under Order XXI Rule 103 is not
appealable under the provisions of the Commercial Courts Act arising
out of execution of an award.
36] Mr. Tulzapurkar, the learned Senior Counsel for the Appellants
in COMAPL/5/2016, Mr. Milind Sathe, the learned Senior Counsel
for the Appellant in COMAPL/6/2016 and Mr. Zal Andhyarujina, the
learned Counsel appearing for the Appellants in COMAP/4/2016 also
laid emphasis on the words "as if it were a decree" which are found at
various places in the CPC and particularly in Order XXI. It has been
contended that the present application has been filed under Order XXI
Rules 98, 99, 100 and 101 and therefore as per the provisions of
Section 103, the order passed is appealable as a decree. Number of
judgments also have been cited by Mr. Tulzapurkar the learned Senior
1 1981 SC 1786
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Counsel appearing for the Appellants that where legal fiction is
created, it must be taken to its logical conclusion. He submitted that
since the provisions of Order XXI are applicable to Commercial Courts
Act wherever words "as if it were a decree" are used in the CPC, it
becomes an appealable decree. In our view, though the said argument
appears to be very attractive at the first blush, on closer scrutiny, it
reveals that the said submission is without any substance. For that
purpose, it will be necessary to see Section 21 of the Commercial
Courts Act which gives overriding effect to the provisions of the said
Act. Therefore as long as this Act does not provide for an appeal
against such orders, these orders are not appealable.
Secondly, it has to be seen that following reliefs were sought in
Notice No.1786 of 2015 taken out by the Appellant in Execution
Application No.2006 of 2015 in Arbitration Award dated 4/8/2008.
"The mode in which the assistance of the
Court required:
(1) By issuing Notice under Order XXI Rule
22 of CPC, 1908, against the Respondents to
show cause, why the award dated 4th August,
2008 should not be executed against them;
(2) After the said notice is made absolute by
this Hon'ble Court, this Hon'ble Court may be
pleased to issue a Warrant of Possession
under Order XXI, Rule 35, against the
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Respondent No.10 to 16 in the arbitral
proceedings in respect of the immovable
property i.e. Kamla Cottage, situated at Juhu
Tara Road, Juhu, Mumbai - 400049.
(3) After the said notice is made absolute by
this Hon'ble Court, this Hon'ble Court may be
pleased to issue a Warrant of Possession
under Order XXI, Rule 35, against the Kanpur
Group (Respondent Nos. 1 to 9) in the
arbitral proceedings) in respect of the
following immoveable properties:
(i) Property at 37, Kanpur known as Kamla
Retreat valued at Rs. 9.62 crores.
(ii) Property at 80/80 Kanpur known as Oil
Mills land valued at Rs 7.90 crores and
Rs 0.30 crores.
(iii) Property at 20/131, Patkapur, Kanpur
valued at Rs 0.33 crores.
(4) With regard to the properties / assets of
the Respondent Nos. 10 to 16 which are
within the jurisdiction of this Hon'ble Court,
this Hon'ble Court may be pleased to grant
liberty to the Petitioner to seek warrants of
attachment and sale, accordingly;
(5) In the alternative and/or in addition to
the aforesaid, this Hon'ble Court may be
pleased to issue a certificate of non-
satisfaction of the Award, and to transfer the
Award under Section 39 of the Code of Civil
Procedure read with rules 5 and 6 of Order
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21 CPC and also read with Section 151 of the
CPC for execution to the Court within whose
jurisdiction the Respondents' assets are
situated."
Appellants are admittedly parties to the Award which has
become final. It is not now open for the Appellants to raise their
obstruction and again challenge the execution of the Award.
37] The contention of Mr. Tulzapurkar, the learned Senior Counsel
for the Appellants, and others that provisions of Order XXI Rule 103
will apply is also without any merit. It is clarified however that, in the
present case, since execution proceedings are in the nature of
enforcement of an Award to which the appellants are parties, they
now cannot contend that wherever the words "as if it were a decree"
are used in Order XXI, the same is a decree and not an order. All the
judgments on which reliance has been placed by Mr. Tulzapurkar, the
learned Senior Counsel appearing on behalf of the Appellants and
others therefore will have no application to the facts of the present
case.
38] Mr. Madon, the learned Senior Counsel appearing on behalf of
the Respondents has in support of his submissions relied on the
Judgment of the Apex Court in Jet Airways (India) Limited.1 (supra).
Division Bench of this Court in para 15 of the said judgment
1 2011 SC OnLine Bom 1379
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formulated three issues. Para 15 of the said judgment reads as
under:-
"A. Whether the proceedings under
section 36 of the 1996 Act are
proceedings under the Code of Civil
Procedure, 1908?
B. Whether the provisions of clause
15 of the Letters Patent are applicable
to the impugned Judgment and Order
and whether applicability of clause 15
has been impliedly excluded by section
37 of the 1996 Act or by the
amendment of section 2(2), 47 by Act
104 of 1976 amending the Code?
C. Whether the Judgment of the
Supreme Court in the case of Fuerst
Day Lawson (supra) is an authority
which is applicable only in respect of a
foreign award covered by Part II of the
1996 Act or whether the ratio of the
said Judgment is a binding precedent
even in respect of proceedings under
part I of the 1996 Act or the same is
obiter dicta?"
Brief facts in the said case are that both the appeals were filed,
challenging the judgment and order dated 04/05/2011 passed by the
learned Single Judge in Execution Application No.161 of 2009 with
Chamber Summons Nos. 551/09, 729/09, 603/10 & 477/11 and
Notice No.734 of 2009 in Arbitration Award dated 12/04/2007. It is
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not necessary to further go into the facts of the said case. It is
sufficient to point out that the appeals were arising out of the order
passed in execution proceedings of Award dated 12/04/2007.
While considering the question-A viz. "Whether the proceedings
under section 36 of the 1996 Act are proceedings under the Code of
Civil Procedure, 1908?", after taking into consideration various
provisions of the Act and relying on the judgment of the Supreme
Court in Paramjeet Singh Patheja1 (supra), Division Bench of this Court
came to the conclusion that the proceedings initiated by the
Appellants and the Respondents before the learned Single Judge were
the proceedings under Section 36 of the 1996 Act and could not be
held to be the proceedings of execution under Section 47 or Order XXI
of the CPC. While coming to the said conclusion, the words used in
Section 36 of the said Act viz. "the award shall be enforced under the
Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it
were a Decree of a Court" were interpreted and reliance was placed on
the judgment of the Supreme Court in Paramjeet Singh Patheja2
(supra) and relying on the observations made in the said judgment
and upon independent consideration of provisions of 1940 Act and
1996 Act, Division Bench came to the conclusion that proceedings
under section 36 are not the proceedings under the Code of Civil
Procedure. It further observed that the Letters Patent Appeal would
1 (2006) 13 SCC 322
2 (2006) 13 SCC 322
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not be maintainable in respect of orders passed under Section 36 of
the Arbitration Act.
On the second issue regarding implied exclusion of applicability
of Letters Patent, Division Bench, after relying on judgment in
(a) Union of India vs. Mohindra Supply Company 1, (b) State of West
Bengal vs. Gauranglal Chatterjee2, (c) ITI Ltd. vs. Siemens Public
Communications Network Ltd.3 (d) Union of India vs. Popular
Construction Company4, (e) Union of India vs. Aradhana Trading Co. 5
(f) Municipal Corporation of Greater Bombay vs. Patel Engineering
Company Limited,6 had held that Clause 15 of the Letters Patent was
impliedly excluded by 1996 Act. While dealing with the issue of
implied exclusion by the Code of Civil Procedure, after taking into
consideration various judgments of the Apex Court and this Court,
Division Bench held that the proceedings under Section 36 of 1996
Act are not the proceedings under the Code and therefore the second
issue had become academic.
Lastly, the Division Bench considered the ratio of the Judgment
in Furest Day Lawson vs. Jindal Exports Limited 7. In the said case, the
question which fell for consideration before the Apex Court was
1 1961 SCR 497 = AIR 1962 SC 256
2 (1993) 3 SCC 1
3 (2002) 5 SCC 510
4 (2001) 8 SCC 470
5 (2002) 4 SCC 447
6 1994 (3) Bom. C.R. 139
7 (2011) 8 SCC 333
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regarding maintainability of the Letters Patent under Clause 15 of the
Calcutta High Court which is in pari materia with that of the Bombay
High Court. In the said case, question before the Supreme Court was,
whether an order, though not appealable under Section 50 of 1996
Act, would nevertheless be subject to appeal under the relevant
provisions of the Letters Patent of the High Court. Section 50 deals
with part II of the Arbitration Act viz execution and enforcement of
the international award. The Apex Court in the said case came to the
conclusion that there was an exclusion of Letters Patent Appeal.
Division Bench relied on the conclusion drawn by the Apex Court in
Furest Day Lawson1 (supra).
39] Mr. Madon, the learned Senior Counsel appearing on behalf of
the the Respondents further relied on the judgment of the Apex Court
in Paramjeet Singh Patheja2 (supra). In the said case, brief facts were
that the Appellant was a judgment-debtor and an award was passed
against him on 26/06/2000 by the Arbitrator. On 16/01/2002, an
insolvency notice was issued under Section 9(2) of the Presidency
Towns Insolvency Act, 1909 on the basis of the arbitration award.
Section 9(2) provides that a debtor commits an act of insolvency if a
creditor who has obtained a "decree or order" against him for the
payment of money issues him a notice in the prescribed form to pay
the amount and the debtor fails to do so within the time specified in
1 (2011) 8 SCC 333
2 (2006) 13 SCC 322
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the notice. The Appellant filed Notice of Motion in the High Court
challenging the said notice inter alia on the ground that the Award is
neither a decree nor an order for the purposes of provisions of the
Insolvency Act and that no notice could be issued under Section 9(2)
on the basis of the Award. Division Bench of the Bombay High Court
held that the Award is a decree for the purposes of Section 9 of the
Insolvency Act and that insolvency notice may therefore be issued on
the basis of the Award passed by the Arbitrator. Against the said
Order, appeal was filed in the Supreme Court. In this context the
Supreme Court framed the following questions of law in para 12 of its
judgment in Paramjeet Singh Patheja1 (supra), which reads as under:-
"12. The substantial questions of law of
paramount importance to be decided by
this Court are :
(i) Whether an arbitration award is a
"decree" for the purpose of Section 9 of
the Presidency Towns Insolvency Act,
1909?
(ii) Whether an insolvency notice
can be issued under Section 9(2) of the
Presidency Towns Insolvency Act, 1909 on
the basis of an arbitration award?"
The Apex Court, after examining the provisions of the Presidency
Towns Insolvency Act, 1909, Arbitration Act, 1899 and the Civil
Procedure Code, 1908 and various judgments firstly came to the
1 (2006) 13 SCC 322
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conclusion that the Award passed under the Arbitration Act was not a
decree and, secondly, it held that the insolvency notice could not be
issued under Section 9(2) of the Presidency Towns Insolvency Act,
1909 on the basis of arbitration award.
40] Mr. Madon, the learned Senior Counsel, relying on the aforesaid
judgment therefore submitted that it is a settled position in law that
proceedings under Section 36 of the Arbitration Act are not the
proceedings under the Civil Procedure Code, 1908 and, secondly, that
the provisions of Letters Patent are not applicable and, thirdly, that
Commercial Courts Act expressly excluded applicability of Letters
Patent Act under sub-section (2) of Section 13. This submission was
sought to be repelled by the learned Senior Counsel for the Appellants
with others on various grounds which are already reproduced
hereinabove. However, in brief, their objections were that (a) firstly,
the said judgment has been passed prior to coming into force of the
Commercial Courts Act, (b) secondly, the said judgment does not
consider whether for the purpose of execution of award provisions of
CPC are applicable, (c) thirdly, the words which are used in section 36
viz "as if it were a decree of the Court" created a legal fiction and it
has to be taken to its logical conclusion and (d) lastly, the judgment
relied in the case of Paramjeet Singh Patheja1 (supra), the Apex Court
has held that an award is not a decree in the context of issuance of
notice under Section 9(2) of the Presidency Towns Insolvency Act,
1 (2006) 13 SCC 322
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1909.
41] Division Bench of this Court in Jet Airways (India) Limited.1
(supra), after relying on the judgment of Paramjeet Singh Patheja2
(supra), in our view, correctly held that the provisions of Civil
Procedure Code, 1908 and the Letters Patent have been impliedly
excluded by virtue of Sections 36 and 37 of the Arbitration Act. While
doing so, it has examined the said issue from all angles. Though it is
true that one of the issues which fell for consideration before the Apex
Court in Patheja's case was, whether an award is a decree within the
meaning of Section 9(2) of the Presidency Towns Insolvency Act, 1909
and it held that the Award is not a decree. It also considered the
meaning which is to be attributed to the words "as if" and held that
the legal fiction must be limited for the purpose for which it is created
and therefore the observation made by the Apex Court in the said
judgment also will have to be taken into consideration and more
particularly, the observation made in paras 42 and 43 would be
relevant which read as under:-
"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
1 2011 SC OnLine Bom 1379
2 (2006) 13 SCC 322
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statutes, whether State or Central."
"43 For the foregoing discussion
we hold :
(i) ........
(ii).........
(iii)........
(iv).........
(v) A legal fiction ought not to
be extended beyond its legitimate
field. As such, an award rendered
under the provisions of the
Arbitration and Conciliation Act,
1996 cannot be construed to be a
"decree" for the purpose of Section
9(2) of the Insolvency Act.
(vi)
(vii) It is a well established rule
that a provision must be construed
in a manner which would give effect
to its purpose and to cure the
mischief in the light of which it was
enacted. The object of Section 22,
in protecting guarantors from legal
proceedings pending a reference to
BIFR of the principal debtor, is to
ensure that a scheme for
rehabilitation would not be defeated
by isolated proceedings adopted
against the guarantors of a sick
company. To achieve that purpose,
it is imperative that the expression
"suit" in Section 22 be given its plain
meaning, namely, any proceedings
adopted for realisation of a right
vested in a party by law. This would
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clearly include arbitration
proceedings."
42] We are therefore of the view that the words which are used in
Section 36 of the Act, particularly the words "as if it were a decree of
the Court" do not mean that wherever appeals are provided under
Order XXI against the orders passed in execution, those appeals would
also be maintainable under the Arbitration Act or under Section 13(1)
of the Commercial Courts Act. When 1996 Act was passed and
thereafter Commercial Courts Act was passed, law makers were
conscious of what "decree" or "order" and "award" are. They were
also aware of fundamental difference between the Courts and
Arbitrators as far back as in 1909 when the CPC was enacted. It will
therefore be not possible to interpret the word "decision" to mean a
decree and an order which has attained finality. If legislature
intended to make an order passed in execution which has attained
finality as appealable, it would have done so by providing a proviso
that against such an order passed in execution proceedings which
attained finality of rights between the parties, appeal would be
maintainable. This Court therefore cannot add or subtract something
which was not intended by the legislature. It is further well settled
that an appeal is a creation of Statute and if no appeal is provided,
party does not get a right to file an appeal and no vested right is
created in him to file an appeal. The legislature having expressly and
impliedly excluded that right, it will not be open for this Court to hold
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that the word "decision" includes not only a decree but also orders
which have attained finality. It has to be remembered that the
Commercial Courts Act was passed for the purpose of quick disposal of
commercial disputes. If the word "decision" therefore is interpreted to
mean that orders which have attained finality also are appealable, the
very purpose for which the Act was passed would be rendered
nugatory, otiose and ineffective.
43] At this stage, it will also be relevant to take into consideration
the Law Commission's Report. While dealing with the question of
"appeals", recommendations of the Law Commission were thus:-
"(iv) Appeals
3.23.1 The Bill presently provides for a
direct appeal to the Supreme Court. This is
proposed to be replaced with a provision,
which mandates that there will be no
appeals from orders of the Commercial
Division or the Commercial Court save
under Order XLIII of the CPC and from final
judgments of the Commercial Division or
Commercial Court. Such appeals will only
be to the jurisdictional Commercial
Appellate Division.
3.23.2 It is further recommended that
notwithstanding any other law, no civil
revision application or petition shall be
entertained against an interlocutory order of
the Commercial Court, including an order
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on a jurisdictional challenge. The purpose
here is to prevent the time frames stipulated
for case management hearing from
becoming redundant by the frequent filing
of civil revision applications and petitions
against every interlocutory order. By
removing a potential source of bottleneck of
cases, the Bill hopes to ensure the
expedited disposal of cases.
3.23.3 Moreover, no appeals will be
permitted from a finding of the Commercial
Court or Commercial Division that the
dispute in question is a commercial dispute
inasmuch as there is no real prejudice
caused to the parties when the Commercial
Court or Commercial Division finds that the
dispute is a commercial dispute.
(v) Additional Provisions
a. Arbitration
3.24.1 The Law Commission, in its 246th
Report on the "Amendments to the
Arbitration and Conciliation Act" has
recommended changes to the A & C Act to
inter alia, reduce the intervention of the
Court in arbitration proceedings.1
3.24.2 The 246th Report of the
Commission has recommended an
amendment to definition of "Court" in
Section 2(e) of the A&C Act, 1996 to mean
"High Court" in the context of all
1 Law Commission of India, Amendments to the Arbitration and Conciliation Act,
1996, Report No.246 (2014)
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international commercial arbitrations,
irrespective of value. Keeping the
suggestions and the amendments proposed
in that report, we make the following
suggestions with respect to arbitrations that
involve commercial disputes.
3.24.3 First, it is recommended that in
case of an international commercial
arbitration concerning a commercial dispute
of more than Rupees One Crore, any
application or appeal arising out of such
arbitration under the A&C Act, that has
been filed in a High Court will be heard by
the Commercial Division of the High Court,
where such Commercial Division has been
constituted in the High Court. In the
absence of the Commercial Division,
applications or appeals concerning such
international commercial arbitrations will
be heard by the regular Bench of the High
Court.
3.24.4 Second, in the case of domestic
arbitrations concerning a commercial
dispute of more than Rupees One Crore,
applications or appeals may lie either to the
High Court or a Civil Court (not being a
High Court) depending upon the pecuniary
jurisdiction. It is recommended that all
applications or appeals arising out of such
arbitrations under the A&C Act, that have
been filed on the original side of the High
Court shall be heard by the Commercial
Division of the High Court where such
Commercial Division is constituted in the
High Court. However, in the absence of a
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Commercial Division being constituted, the
regular Bench of the High Court will hear
such applications or appeals arising out of
domestic arbitration. If the application or
appeal in such domestic arbitration is not
within the jurisdiction of the High Court
and would ordinarily lie before a Civil Court
(not being a High Court) and there is a
Commercial Court exercising territorial
jurisdiction in respect of such arbitration,
then such application or appeal shall be
filed in and heard by such Commercial
Court.
3.24.5 Third, it is recommended that all
appeals under the A&C in relation to
arbitration cases concerning a commercial
dispute of more than Rupees One Crore
preferred against an order of the
Commercial Division or Commercial Court,
shall be heard and disposed of by the
Commercial Appellate Division, where a
Commercial Appellate Division has been
constituted in the jurisdictional High Court."
However, when the final Act was passed, it is apparent that the
exclusion of the provisions of the Letters Patent are to be found in sub-
section (2). The said sub-section (2) also starts with a non-obstante
clause - notwithstanding anything contained in any other law -
meaning thereby either CPC, Arbitration Act or the Letters Patent or
any other law, no appeal would lie from any order or decree of a
Commercial Division or a Commercial Court otherwise than in
accordance with the provisions of this Act.
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44] Apart from reasons which we have given hereinabove, and in
addition to that while deciding the question as to whether "decision"
includes "judgment" and "decree", it will have to be considered
whether the word "decision" has to be used in narrow sense or in a
broad sense i.e. whether the word "decision" will have to be read only
as a "decree" or wider meaning has to be given viz that of "decree",
"judgment" and "order" which conclusively decides rights of the
parties. Though the Letters Patent Act is not applicable as it has been
expressly excluded under sub-section (2), it will be necessary to briefly
see how the word "judgment" has been interpreted by the Apex Court.
The word "judgment" is narrowly treated under Section 2 of the CPC.
When the said question came up for consideration before the Supreme
Court in Shah Babulal Khimji (supra), the Supreme Court in paras 112
and 113 of its judgment gave a wider meaning and held that those
orders which conclusively decide right of parties could be held to be
appealable under the Letters Patent Appeal, though the word
"judgment" is narrowly construed in the CPC. The Apex Court in Shah
Babulal Khimji (supra) did not give narrow meaning to the said word
"judgment" and, therefore, held that the orders which conclusively
decide right of parties, even if they are not appealable under Section
104 or Order XLIII, an appeal would lie under the Letters Patent.
45] The vexed question is whether similar meaning should be given
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to the word 'decision' as is found in sub-section (1) of Section 13.
46] The question which fell for consideration before the Apex Court
in Tirumalachetti Rajaram vs. Tirumalachetti Radhakrishnayya Chetty
and Others1, was as under:-
"If the appellate decree passed by the High
Court makes a variation in the decision of the
trial court under appeal in favour of a party
who intends to prefer an appeal against the said
appellate decree, can the said decree be said to
affirm the decision of the trial court or not
under Article 133(1) of the Constitution?"
While deciding the said question, the Apex Court also considered
the question as to what is the denotation of the word "decision". In
para 7 of the said Judgment, the Apex Court has observed as under:-
"7. The next question to consider is : what is the
denotation of the word "decision" used in the said
clause. The argument for the respondent is that the
word "decision" does not mean the whole of the
decision but the decision on that part of the
controversy between the parties which is brought to
this Court in appeal. In support of the argument that
the decision does not mean the entire decision of the
trial court reliance is placed on the provisions of O. 20,
Rules 4 and 5. Rule 4 of O. 20 deals with the
judgments of Small Cause Courts and judgments of
other Courts, and it provides that the judgments falling
1 (1962) 2 SCR 452 : AIR 1961 SC 1795
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under the first clause need not contain more than the
points for determination and decision thereon, whereas
the judgments falling under the latter class should
contain a concise statement of the case, the points for
determination, the decision thereon and the reasons
for such decision. There is not doubt that the decision
in the context means the decision on the points for
determination. That of course is the meaning of the
word "decision", but whether or not the word
"decision" means the decision on one point or the
decision of whole suit comprising of all the points in
dispute between the parties must inevitably depend
upon the context, and the context is plainly
inconsistent with the argument that the decision
should mean the decision on a specific point. If the
word "decree" in the first part of the relevant clause
means not a part of the decree but the whole of the
decree then it would be reasonable to hold that the
word "decision" must likewise mean the entire decision
of the trial court and not a part of it."
Similarly in para 9 of the said judgment, the Apex Court has
observed as under:-
"9. The question as to the meaning of the word
"decision" in the corresponding provision of the Code
of 1882 (s. 596) was considered by the Privy Council in
Rajah Tasadduq Rasul Khan v. Manik Chand [(1902-
03) 30 IA 35]. The question which arose for the
decision of the Privy Council was whether the appellate
decree in that case was one of affirmance or not. The
appellate decree had confirmed the trial court's
decision though on different grounds, and so it was
urged that the appellate decree was not one of
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affirmance. In rejecting this argument the Privy Council
stated that "the natural, obvious and prima facie
meaning of the word "decision" is decision of the suit
by the Court, and that that meaning should be given to
it in the section" (s. 596). The Privy Council examined
the definition of the word "judgment" in the Code of
1882 and came to the conclusion that the word
"decision" meant the decision of the suit by the trial
court and not the grounds stated in support of the said
decision; in the result it was held that the appellate
decree which confirmed the decision of the trial court
though on different grounds was in law a decree of
affirmance. It would thus be seen that this decision
undoubtedly supports the conclusion that the word
"decision" in Art. 133(1) should mean not a part of the
decision or the grounds given for it but the decision of
the suit as a whole; and if that be so, the clause could
be harmoniously construed to mean that in
determining the character of the appellate decree we
have to look at the appellate decree as a whole,
compare it with the decision of the trial court as a
whole and decide whether the appellate decree is one
of affirmance or not. In this enquiry the nature of the
variation made whether it is in favour of the intending
appellant or otherwise would not be relevant."
From the aforesaid judgment it is apparent that the word
"decision" would mean the entire decision of the Trial Court and not
part of it.
Secondly, in Raja Tassaduq Rashul Khan and another vs. Manik
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Chand1, Privy Council, while considering the definition of the word
"decision" has observed as under:-
"Now there is no definition of the word
'decision' in the Civil Procedure Code, but
there is a definition of the word 'decree'. It
says 'decree' means the formal expression of
a adjudication upon any right claimed or
defence set up in a Civil Court when such
adjudication, so far as regards the Court
expressing it, decides th suit or appeal.
Then, "judgment" is defined as meaning
"the statement given by the Judge of the
grounds of a decree or order." Therefore
their Lordships have two things: they have a
decree which decides the suit, and they
have the word "judgment," meaning the
statement of the grounds upon which the
learned Judge or the Court proceeds to
make the decree.
Mr. DeGruther appears to wish to give
the word "decision" the same meaning as
the word "judgment" and he says that it is
necessary that the Appellate Court should
not only affirm the decree made by the
Court below but should also affirm the
grounds of fact upon which that judgment
was passed. Their Lordships cannot come to
that conclusion. They think that the
natural, obvious, and prima facie meaning
of the word "decision" is decision of the suit
by the Court, and that that meaning should
be given to it in the section."
1 Voll VII The Calcutta Weekly Notes 177
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Similarly, the Apex Court in Diamond Sugar Mills Ltd. & Anr. vs.
State of Uttar Pradesh and Anr.1, has considered the meaning of the
term "decision" and in para 28 it has observed as under:-
"28. It is true that when words and phrases
previously interpreted by the courts are used by
the Legislature in later enactment replacing the
previous statute, there is a presumption that the
Legislature intended to convey by their use the
same meaning which the courts had already
given to them. This presumption can however
only be used as an aid to the interpretation of the
later statute and should not be considered to be
conclusive. As Mr. Justice Frankfurter observed in
Federal Com. Commission v. Columbia B. System
[311 US p. 302] when considering this doctrine,
the persuasion that lies behind the doctrine is
merely one factor in the total effort to give fair
meaning to language. The presumption will be
strong where the words of the previous statute
have received a settled meaning by a series of
decisions in the different courts of the country;
and particularly strong when such interpretation
has been made or affirmed by the highest court in
the land. We think it reasonable to say however
that the presumption will naturally be much
weaker when the interpretation was given in one
solitary case and was not tested in appeal. After
giving careful consideration to the view taken by
the learned Judge of the Allahabad High Court in
Emperor v. Munnalal [ILR 1942 p. 302] about the
meaning of the words "local area" and proper
1 AIR 1961 SC 652 : (1961) 3 SCR 242
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weight to the rule of interpretation mentioned
above, we are of the opinion that the
Constitution-makers did not use the words "local
area" in the meaning which the learned Judge
attached to it. We are of opinion that the proper
meaning to be attached to the words "local area"
in Entry 52 of the Constitution, (when the area is
a part of the State imposing the law) is an area
administered by a local body like a municipality,
a district board, a local board, a union board, a
Panchayat or the like. The premises of a factory is
therefore not a "local area"."
47] From the above decisions it can be seen that the words and
phrases previously interpreted by the Courts have to be used in aid to
interpretation of later statute. The word "decision" therefore in this
context would mean a final decision in the entire suit and therefore a
decree.
48] Mr. Tulzapurkar, the learned Senior Counsel appearing on
behalf of the Appellants has relied upon the definition of the word
"decision" given in Black's Law Dictionary (9th Edition) and has
contended that "decision" would include an order which finally
determines rights of the parties.
It is well settled that definition given by a dictionary cannot
override the interpretation made by the Court in the context of its
meaning as used in the statute and therefore the said submission is
unacceptable. It is a settled position in law that dictionary is a
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secondary and external aid to interpretation of statute and cannot be
relied upon when a direct meaning/definition has been in use in law
and/or defined specifically in a statute. It has to be noted here that
the term "decision" was a part of the Code of Civil Procedure 1882
(Section 596) which was later incorporated in Section 110 of the CPC
which is now deleted and is also used in Article 133 of the
Constitution of India.
From the judgments referred to hereinabove, it is clear that it
has been consistently held that the term "decision" appearing in thee
provisions means decision of the suit. The definition of "decision" and
"judgment" in Black's Law Dictionary is therefore contrary to the
settled law in India.
49] Mr. Andhyarujina the learned Counsel for the Appellant
submitted that the term "decision" has to be given a wide import and
it includes "decree", "judgment or order". He relied upon the
judgment of the High Court of Himachal Pradesh in Balanand & Anr.
vs. Devkinand & Ors1 (paras 5 and 6) and the judgment of High Court
of Delhi in Ratan & Co. vs. Asst. Registrar of Trademarks2 (para 24).
The said submission cannot be accepted since in para 5 of the
said judgment in Balanand (supra) it has been held that the word
1 AIR 1963 HP 30
2 AIR 1977 Delhi 93
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"decision" would not by itself amount to a judgment or order and from
para 6 of the said judgment it can be seen that the High Court of
Himachal Pradesh was of the view that a "decision" was when the suit
was disposed of on merits. Secondly, the decsion in Ratan & Co.
(supra) does not take into consideration the provisions of Section 110
of the Code of Civil Procedure, 1908, the provisions of Article 133(1)
of the Constitution of India, the provisions of Section 596 of the Code
of Civil Procedure, 1882 and the judicial pronouncements of the Privy
Council and the Supreme Court.
Therefore the submissions made by the learned Senior Counsel
Mr. Tulzapurkar and Mr Milind Sathe and the leanred Counsel Mr.
Andhyarujina appearing on behalf of the Appellants are without any
substance and "decision" therefore being a final decision of the suit is
a decree and not an order passed in execution proceedings.
50] Mr. Tulzapurkar, the learned Senior Counsel for the Appellants
relied on various judgments of the Apex Court regarding the meaning
which was to be given to proviso to Section 13(1). He relied upon the
following judgments:-
[1] The State of Orissa vs. Debaki Debi and
Ors1
[2] Commissioner of Stamp Duties vs. Alan
1 1964 SC 1413
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Cavave Atwill and Ors.1 (Pages 330, 331
and 332)
[3] Madhu Gopal vs. VI Additional District
Judge and Ors2 (Para 7)
[4] Swedish Match AB and Anr. vs.
Securities and Exchange Board of India &
Anr.3 (Paras 65 & 66)
There cannot be any dispute regarding the ratio of the
Judgments of the Privy Council and Supreme Court. The Apex Court
in Swedish Match AB (supra) has in para 43 held that the proviso may
serve four different purposes, namely :
(1) qualifying or excepting certain provisions
from the main enactment;
(2) it may entirely change the very concept of
the intendment of the enactment by insisting on
certain mandatory conditons to be fulfilled in
order to make the enactment workable;
(3) it may be so embedded in the Act itself as to
become an integral part of the enactment and
thus acquire the tenor and colour of the
substantive enactment itself; and
(4) it may be used merely to act as an optional
addenda to the enactment with the sole object of
1 1973 (2) WLR 327
2 AIR 1989 SCC 155
3 (2004) 11 SCC 641
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explaining the real intendment of the statutory
provisions.
51] In the present case, the said provision if read as a whole and a
plain and grammatical meaning of the said provision is taken into
consideration, it can be seen that the proviso has been used to carve
out an exception to the general rule that an appeal would lie against
the decree and only against those orders which are specifically
enumerated in the proviso.
52] Mr. Tulzapurkar, the learned Senior Counsel for the Appellants
then relied on the following judgments on how the heading of the
section can be used in aid of constructing or interpreting the section.
[1] Oulater Hall & Co. Ltd vs. Board
of Trade1 (Pages 832 to 833)
[2] Inglis vs. Robertson and Baxter2
( Page 630)
[3] Bhinka and Ors vs. Charan
Singh3 (Page 966, para 15)
[3] Raichurmatham Prabhakar and
Anr. vs. Rawatmal Dugar4 (Page 775,
para 14)
1 (1961) 3 W.L.R. 825
2 1898 AC 616
3 AIR 1959 SC 960
4 2004(4) SCC 766
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53] From the conspectus of the cases on which reliance has been
placed by the learned Senior Counsel for the Appellants, it can be seen
that the Courts have held that (i) heading to the section has to be read
in conjunction with the main provision and make the two consistent if
possible, (ii) headings are not mere marginal notes, but the sections in
the group to which they belong must be read in connection with the
headings and interpreted by the light of them, (iv) headings are in the
nature of preamble to the section, (v) the headings prefixed to sections
or sets of sections in some modern statutes are regarded as preambles
to those sections. They cannot control the plain words of the statute
but they may explain ambiguous words, (iv) if there is any doubt in
the interpretation of words in the section, heading certainly help us to
resolve the doubt, (v) headings of the title of the section plays a
limited role in the construction of statutes. They may be taken as very
broad and general indicators of the nature of the subject matter dealt
with thereunder.
54] From the ratio of the aforesaid judgments, in our view, it is
apparent that heading of the section 13 deals with appeals from
decrees and the proviso to Section 13 (1) carves out an exception in
respect of the orders which are specifically enumerated in Section 37
of the Arbitration Act, against which appeal can be filed. The word
"decision" therefore will have to be interpreted to mean a decree.
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55] The next question which has been argued by the learned
Counsels appearing for the Appellants is regarding definition of the
word "judgment". All the learned Counsels for the Appellants have
submitted that the word "judgment" has to be given a wider meaning
as laid down in Radhy Shyam vs. Shyam Behari Singh1 (Para 7) and in
Shah Babulal Khimji vs. Jayaben D. Kania and Anr. 2 (Paras 112 and
113). In our view, reference to these judgments is misconceived.
Firstly, the question which fell for consideration before the Supreme
Court in Radhy Shyam (supra) was : whether the order passed under
Order XXI Rule 90 is a "judgment" and in that context the Apex Court
held that Letters Patent Appeal lay against the order of the learned
Single Judge. Similar view was taken by the Apex Court in Shah
Babulal Khimji (supra) in which the Apex Court observed that the
word "judgment" in sub-section (9) of section 2 of the CPC, 1908 has
to be given a narrow meaning whereas the word "judgment" used in
Clause 15 of the Letters Patent has to be interpreted widely. In our
view, both these judgments will not be of any assistance to the
Appellants since in the said cases the word "judgment" was interpreted
in the context of the word "judgment" used in CPC and the word
"judgment" used in the Letters Patent. In the present case, in sub-
section (2) of Section 13 the words "Letters Patent Appeal" have been
expressly excluded and as such the word "judgment" which is
occurring in sub-section (1) of Section 13 cannot be given a wider
1 AIR 1971 SC 2337
2 AIR 1981 SC 1786
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meaning.
56] Mr. Tulzapurkar, the learned Senior Counsel for the Appellants
also submitted that it is a well-known principle of interpretation of
statute that the construction should not be put upon the statutory
provision which would lead to manifest absurdity or futility, palpable
injustice, or absurd inconvenience or anomaly. He submitted that
when a statute enacts that something shall be deemed to have been
done, which in fact and truth was not done, the Court is entitled and
bound to ascertain for what purpose and between what persons the
statutory fiction is to be resorted and full effect must be given to the
statutory fiction and it should be carried to its logical conclusion. He
relied on the following judgments:-
[1] State of Bombay vs. Pandurang
Vinayak and others1 (Para 5)
[2] American Home Products
Corporation vs. Mac Laboratories Ltd
and Anr.2 (Paras 56, 57 and 66)
In the light of the said judgments, he contended that since section 36
in terms state that an award has to be executed as if it is a decree and
wherever the words "as if it were a decree" are occurring in Order XXI,
1 AIR 1953 SC 244
2 AIR 1986 SC 137
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it has to be treated as a decree and therefore it would be appealable as
a decree under section 13(1). It was contended that the present order
is in the nature of Order under Order XXI Rule 103 which even
otherwise states that appeal is provided. In our view ratio of the
judgments on which reliance is placed are not applicable to the facts of
the present case. The Apex Court in Paramjeet Singh Patheja vs. ICDS
Ltd1, in paras 42 and 43 has clearly observed that Section 36 of the
Arbitration Act has created a very limited legal fiction for the purpose
of enforcement of the abritral awards under the CPC in the same
manner as if it was a decree of the Court. It is well settled that even if
there is a legal fiction, the same cannot be widened for any purpose
which is outside its avowed purpose. It cannot be widened to include
a right of appeal since no appeal is provided under Section 37 of the
Arbitration Act. It is also equally well settled that the fiction intended
by the legislature must be restricted to the plain term of the statute
and it cannot be used to travel beyond the term of the statute.
Reliance can be placed on the following decisions in State of
Travancore-Cochin & Ors. vs. Shanmughah Vilas Cashwnut Factory 2
(Paras 36, 37 and 40) and in Commissioner of Income Tax, Bombay vs.
Shakuntala (para 8).
57] So far as submissions of the learned Senior Counsel Mr. Milind
Sathe are concerned, he submitted that in the Bill, words "and from
1 (2006) 13 SCC 322
2 AIR 1953 SC 333
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no other orders" were present whereas they were omitted from the
text of Section 13 of the said Act. The said submission is without any
substance since perusal of the said section clearly discloses that the
said words have been incorporated in sub-section (2) of Section 13 of
the Commercial Courts Act which read as under:-
"13(2) ............ , no appeal shall lie from any
order or decree of a Commercial Division or
Commercial Court otherwise than in accordance
with the provisions of this Act."
He then, submitted that Section 37 of the Arbitration Act and Order
XLIII of the CPC only provided for appeals from orders that have not
attained finality. This submission is without any substance since
section 37(1)(c ) and Section 37(2)(a) provided for appeals from
orders that finally dispose of the arbitration proceedings.
58] So far as the submissions of the learned Counsel Mr.
Andhyarujina are concerned, he submitted that Section 13 of the
Commercial Courts Act created a new hierarchy of appeals. He
submitted that by virtue of the proviso, even appeals under Section
37(2) of the Arbitration Act would lie to the Commercial Appellate
Division. This submission is repelled by the learned Senior Counsel Mr.
Madon appearing on behalf of the Respondents. We agree with the
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submission made by the learned Senior Counsel Mr. Madon. The
proviso clearly states that "appeals shall lie from all such orders passed
by a Commercial Division or a Commercial Court that are specifically
enumerated under Order XLIII of the Code of Civil Procedure, 1908 as
amended by this Act and Sections 37 of the Arbitration and
Conciliation Act, 1996. The orders passed under Section 37(2) of the
Arbitration Act are not Orders passed by a Commercial Division or a
Commercial Court and therefore no appeal shall lie from them to the
Commercial Appellate Division under the proviso to Section 13. If the
said submission is accepted then provisions of section 37(3) would be
rendered otiose since it makes it clear that no second appeal shall lie
from the order passed in appeal under Section 37 of the Arbitration
Act. Moreover, there is no provision of appeal from order passed in
execution proceedings under Section 37 of the Arbitration Act.
59] Mr. Andhyarujina further submitted that section 37(3) of the
Arbitration Act has not been incorporated into the body of section 13
of the Commercial Courts Act. This submission is fallicious since
section 13 includes the entire section 37 in the proviso and not merely
any part thereof. So far as the judgment on which reliance is placed
by the learned Counsel Mr. Andhyarujina is concerned viz. Shin-Etsu
Chemical Company Limited vs. Vindhya Telelinks Limited 1, in our view,
it will not be applicable to the facts of the present case and therefore
cannot be of any assistance to the Appellants.
1 2009 SC 3284
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60] We do not wish to go into the question raised by both the
parties regarding nature of the order passed by the learned Single
Judge on the application under Order XXI Rule 22. According to the
learned Senior Counsel Mr. Madon for the Respondents the said order
is passed under section 47 which has been excluded from the
definition of "decree' in CPC and therefore is not appealable, whereas
according to the learned Senior Counsel Mr. Tulzapurkar and two
other Counsels the said Order has been passed not under Section 47
but under Order XXI Rules 97, 98, 99, 101 and 103 and therefore the
said order is appealable. Reliance has been placed by the learned
Senior Counsel for the Appelalnts on judgments in support of the said
submission. We, however, do not propose to go into the said question
for the reasons stated hereinabove and, secondly, because in our view
the orders passed in execution proceedings of award are not
appealable under Section 37 and therefore it is not necessary to go
into the said question.
61] It has to be noted that the question which falls for consideration
before this Court is :Whether, in an application for execution of an
Award passed under the Arbitration Act, 1996, an oder passed by the
learned Single Judge is appealable under Section 13(1) of the
Commercial Courts Act as if it is a decree? And we are called upon to
decide the said question only.
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62] We therefore answer the questions framed in para 19 above as
under:-
QUESTIONS ANSWERS
[1] Whether, in an application for execution of
an Award passed under the Arbitration Act,
No
1996, an order passed by the learned Single
Judge is appealable under Section 13(1) of the
Commercial Courts Act as if it is a decree?
[2] Whether the word "decision" means a
Yes
decree?
[3] Whether a decision in the form of an
order is appealable only under the conditions
Yes
given in proviso to section 13(1) viz. that the
order/decision is appealable only on the
grounds mentioned in Section 37 or Section
104 or Order XLIII of the CPC?
[4] Whether the word "decision" which is
found in Section 13(1) of the Commercial
No
Courts Act includes a "decree" or an "order"
which has the effect of having finality or final
adjudication of rights of parties?
[5] Whether, the heading to Section 13 of
the Commercial Courts Act governs Section Yes
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13(1) i.e. whether the word "decision" is to be
taken as a "decree" on account of the heading
of the Section?
[6] Whether ratio of the judgment in Jet
Airways (India) Ltd. (supra) is applicable to
Yes
the facts of the present case and is a binding
precedent with reference to the facts arising in
the present case?
[7] Whether ratio of the judgment in the
case of Paramjeet Singh Patheja (supra) which
Yes
has been relied upon in the case of Jet Airways
(India) Ltd. (supra) is applicable to the facts of
the present case?
CONCLUSION:
63] For the reasons stated above, all the appeals are dismissed as
they are not maintainable.
(MRS SWAPNA S. JOSHI, J.) (V.M. KANADE, J.)
