# BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI CRICKET PVT. LTD. AND ETC

- **Citation:** [2018] 2 S.C.R. 829
- **Court:** Supreme Court of India
- **Decided:** 2018-03-15
- **Case number:** Civil Appeal Nos.2879-2880 of 2018
- **Bench:** R. F. Nariman, Navin Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/board-of-control-for-cricket-in-india-v-kochi-cricket-pvt-ltd-and-etc-32732
- **Pages:** 63

## Headnote

Arbitration and Conciliation (Amendment) Act, 2015: s. 26 -
Construction of - Application of s. 36 (substituted by the Amendment
Act), in its amended form or its original form to s.34 applications
for setting aside the arbitral award, filed prior to commencement of
the Amendment Act - On facts, passing of arbitral award -
Application u/s.34 challenging the arbitral award, filed prior to
coming into force of the Amendment Act and few after the Amendment
Act came into force - Execution applications by the award creditor
- Dismissal of execution applications sought by award debtor stating
that old s.36 would be applicable, thus, there would be automatic
stay to the execution of the awards until s.34 proceedings had been
decided - However, the Single Judge of the High Court held that
the amended s.36 would be applicable and execution of an award
would be as if it were a decree, there would be no automatic stay
and ordered execution - On appeal, held: Scheme of s.26 is clear
that the Amendment Act is to be applied only prospectively with
effect from the date of its commencement, and only to arbitral
proceedings and to court proceedings in relation thereto, which
have commenced on or after the commencement of the Amendment
Act - Further, s. 36 being a procedural provision, the context of the
Section is that the expression "has been" would refer to s.34 petitions
filed before the commencement of the Amendment Act and indicates
that the said Section would apply, in its substituted form, even to
such petitions - Thus, s.36 as amended should apply to s.34
applications filed before the commencement of the Amendment Act
- Arbitration and Conciliation Act, 1996 - ss. 36 and 34.
Dismissing the appeals, the Court
HELD: 1.1 The scheme of Section 26 of the Arbitration
and Conciliation (Amendment) Act, 2015 is clear: that the
Amendment Act is prospective in nature, and will apply to those
arbitral proceedings that are commenced, as understood by
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Section 21 of the principal Act, on or after the Amendment Act,
and to Court proceedings which have commenced on or after the
Amendment Act came into force. [Para 25] [859-C-D]
1.2 On a reading of Section 26, it is found that the provision
is in two parts. The first part refers to the Amendment Act not
applying to certain proceedings, whereas the second part
affirmatively applies the Amendment Act to certain proceedings.
The two parts are separated by the word 'but', which also shows
that the two parts are separate and distinct. It cannot be said that
the expression "but" means only that there is an emphatic
repetition of the first part of Section 26 in the second part of the
said Section. The context of the word "but" in Section 26 cannot
bear the aforesaid meaning, but serves only to separate the two
distinct parts of Section 26. What will be noticed from the first
part, which states, "Nothing contained in this Act shall apply to
the arbitral proceedings commenced, in accordance with the
provisions of section 21 of the principal Act, before the
commencement of this Act unless the parties otherwise agree..."
is that: (1) "the arbitral proceedings" and their commencement
is mentioned in the context of Section 21 of the principal Act; (2)
the expression used is "to" and not "in relation to"; and (3) parties
may otherwise agree. So far as the second part of Section 26 is
concerned, namely, the part which reads, "...but this Act shall
apply in relation to arbitral proceedings commenced on or after
the date of commencement of this Act" makes it clear that the
expression "in relation to" is used; and the expression "the"
arbitral proceedings and "in accordance with the provisions of
Section 21 of the principal Act" is conspicuous by its absence.
The expression "the arbitral proceedings" refers to proceedings
before an arbitral tribunal. These proceedings alone are referred
to, the expression "to" as contrasted with the expression "in
relation to"

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[2018] 2 S.C.R. 829
829
BOARD OF CONTROL FOR CRICKET IN INDIA
v.
KOCHI CRICKET PVT. LTD. AND ETC.
(Civil Appeal Nos.2879-2880 of 2018)
MARCH 15, 2018
[R. F. NARIMAN AND NAVIN SINHA, JJ.]
Arbitration and Conciliation (Amendment) Act, 2015: s. 26 -
Construction of - Application of s. 36 (substituted by the Amendment
Act), in its amended form or its original form to s.34 applications
for setting aside the arbitral award, filed prior to commencement of
the Amendment Act - On facts, passing of arbitral award -
Application u/s.34 challenging the arbitral award, filed prior to
coming into force of the Amendment Act and few after the Amendment
Act came into force - Execution applications by the award creditor
- Dismissal of execution applications sought by award debtor stating
that old s.36 would be applicable, thus, there would be automatic
stay to the execution of the awards until s.34 proceedings had been
decided - However, the Single Judge of the High Court held that
the amended s.36 would be applicable and execution of an award
would be as if it were a decree, there would be no automatic stay
and ordered execution - On appeal, held: Scheme of s.26 is clear
that the Amendment Act is to be applied only prospectively with
effect from the date of its commencement, and only to arbitral
proceedings and to court proceedings in relation thereto, which
have commenced on or after the commencement of the Amendment
Act - Further, s. 36 being a procedural provision, the context of the
Section is that the expression "has been" would refer to s.34 petitions
filed before the commencement of the Amendment Act and indicates
that the said Section would apply, in its substituted form, even to
such petitions - Thus, s.36 as amended should apply to s.34
applications filed before the commencement of the Amendment Act
- Arbitration and Conciliation Act, 1996 - ss. 36 and 34.
Dismissing the appeals, the Court
HELD: 1.1 The scheme of Section 26 of the Arbitration
and Conciliation (Amendment) Act, 2015 is clear: that the
Amendment Act is prospective in nature, and will apply to those
arbitral proceedings that are commenced, as understood by
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Section 21 of the principal Act, on or after the Amendment Act,
and to Court proceedings which have commenced on or after the
Amendment Act came into force. [Para 25] [859-C-D]
1.2 On a reading of Section 26, it is found that the provision
is in two parts. The first part refers to the Amendment Act not
applying to certain proceedings, whereas the second part
affirmatively applies the Amendment Act to certain proceedings.
The two parts are separated by the word 'but', which also shows
that the two parts are separate and distinct. It cannot be said that
the expression "but" means only that there is an emphatic
repetition of the first part of Section 26 in the second part of the
said Section. The context of the word "but" in Section 26 cannot
bear the aforesaid meaning, but serves only to separate the two
distinct parts of Section 26. What will be noticed from the first
part, which states, "Nothing contained in this Act shall apply to
the arbitral proceedings commenced, in accordance with the
provisions of section 21 of the principal Act, before the
commencement of this Act unless the parties otherwise agree..."
is that: (1) "the arbitral proceedings" and their commencement
is mentioned in the context of Section 21 of the principal Act; (2)
the expression used is "to" and not "in relation to"; and (3) parties
may otherwise agree. So far as the second part of Section 26 is
concerned, namely, the part which reads, "...but this Act shall
apply in relation to arbitral proceedings commenced on or after
the date of commencement of this Act" makes it clear that the
expression "in relation to" is used; and the expression "the"
arbitral proceedings and "in accordance with the provisions of
Section 21 of the principal Act" is conspicuous by its absence.
The expression "the arbitral proceedings" refers to proceedings
before an arbitral tribunal. These proceedings alone are referred
to, the expression "to" as contrasted with the expression "in
relation to" making this clear. Also, the reference to Section 21
of the 1996 Act, which appears in Chapter V, and which speaks of
the arbitral proceedings commencing on the date on which a
request for a dispute to be referred to arbitration is received by
the respondent, would also make it clear that it is these
proceedings, and no others, that form the subject matter of the
first part of Section 26. Also, since the conduct of arbitral
proceedings is largely procedural in nature, parties may
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"otherwise agree" and apply the Amendment Act to arbitral
proceedings that have commenced before the Amendment Act
came into force. In stark contrast to the first part of Section 26 is
the second part, where the Amendment Act is made applicable
"in relation to" arbitral proceedings which commenced on or after
the date of commencement of the Amendment Act. What is
conspicuous by its absence in the second part is any reference to
Section 21 of the 1996 Act. Whereas the first part refers only to
arbitral proceedings before an arbitral tribunal, the second part
refers to Court proceedings "in relation to" arbitral proceedings,
and it is the commencement of these Court proceedings that is
referred to in the second part of Section 26, as the words "in
relation to the arbitral proceedings" in the second part are not
controlled by the application of Section 21 of the 1996 Act. Section
26, therefore, bifurcates proceedings, with a great degree of clarity,
into two sets of proceedings - arbitral proceedings themselves,
and Court proceedings in relation thereto. The reason why the
first part of Section 26 is couched in negative form is only to
state that the Amendment Act will apply even to arbitral
proceedings commenced before the amendment if parties
otherwise agree. If the first part of Section 26 were couched in
positive language (like the second part), it would have been
necessary to add a proviso stating that the Amendment Act would
apply even to arbitral proceedings commenced before the
amendment if the parties agree. In either case, the intention of
the legislature remains the same, the negative form conveying
exactly what could have been stated positively, with the necessary
proviso. Obviously, "arbitral proceedings" having been subsumed
in the first part cannot re-appear in the second part, and the
expression "in relation to arbitral proceedings" would, therefore,
apply only to Court proceedings which relate to the arbitral
proceedings.[Paras 23-25][856-H; 857-A-H; 858-A-E; 589-A-C]
1.3 When the first part of Section 26 makes it clear that
arbitral proceedings commenced before the Amendment Act
would not be governed by the Amendment Act, it is clear that
arbitral proceedings that have commenced after the Amendment
Act comes into force would be so governed by it. The negative
form of the language of the first part only becomes necessary to
indicate that parties may otherwise agree to apply the Amendment
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
CRICKET PVT. LTD. AND ETC.
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Act to arbitral proceedings commenced even before the
Amendment Act comes into force. The absence of any reference
to Section 21 of the 1996 Act in the second part of Section 26 of
the Amendment Act is also a good reason as to why arbitral
proceedings before an arbitral tribunal are not contemplated in
the second part. It cannot be said that Section 26 manifests a
clear intention to destroy all rights, vested or otherwise, which
have accrued under the unamended 1996 Act. It is clear that the
intendment of Section 26 is to apply the Amendment Act
prospectively, with effect from the date of its commencement, to
arbitral proceedings and to court proceedings in relation thereto.
[Paras 32-34] [866-C-D, E-F, H]
1.4 From a reading of Section 26 as interpreted, it becomes
clear that in all cases where the Section 34 petition is filed after
the commencement of the Amendment Act, and an application
for stay having been made under Section 36 therein, will be
governed by Section 34 as amended and Section 36 as substituted.
But, what is to happen to Section 34 petitions that have been
filed before the commencement of the Amendment Act, which
were governed by Section 36 of the old Act? Would Section 36,
as substituted, apply to such petitions? To answer this question,
it is to be decided on what is meant by "enforcement" in Section
36. On the one hand, it has been argued that "enforcement" is
nothing but "execution", and on the other hand, it has been
argued that "enforcement" and "execution" are different
concepts, "enforcement" being substantive and "execution"
being procedural in nature. [Para 39] [871-A-C]
1.5 An arbitral proceeding commences under Section 21,
unless otherwise agreed by parties, when a dispute arises
between the parties for which a request for the dispute to be
referred to arbitration is received by the respondent. The arbitral
proceedings terminate under Section 32(1) by the delivery of a
final arbitral award or by the circumstances mentioned in Section
32(2). The mandate of the arbitral tribunal terminates with the
termination of arbitral proceedings, save and except for correction
and interpretation of the award within the bounds of Section 33,
or the making of an additional arbitral award as to claims presented
in the proceedings, but omitted from the award. Once this is over,
in cases where an arbitral award is delivered, such award shall be
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final and binding on the parties and persons claiming under them,
under Section 35 of the 1996 Act. Under Section 36, both pre and
post amendment, such award shall be "enforced" in accordance
with the provisions of the Code of Civil Procedure, 1908, in the
same manner as if it were a decree of the Court. It is clear that
the scheme of the 1996 Act is materially different from the scheme
of the 1940 Act. Under Section 17 of the 1940 Act, once an award
was delivered, the Court had to pronounce judgment in accordance
with the award, following which a decree would be drawn up, which
would then be executable under the Code of Civil Procedure.
Under Section 36 of the 1996 Act, the Court does not have to
deliver judgment in terms of the award, which is then followed by
a decree, which is the formal expression of the adjudication
between the parties. Under Section 36 of the 1996 Act, the award
is deemed to be a decree and shall be enforced under the CPC
as such. Further, it is clear that Section 36 refers to the execution
of an award as if it were a decree, attracting the provisions of
Order XXI and Order LXI, Rule 5 CPC and would, therefore, be
a provision dealing with the execution of arbitral awards. Since it
is clear that execution of a decree pertains to the realm of
procedure, and that there is no substantive vested right in a
judgment debtor to resist execution, Section 36, as substituted,
would apply even to pending Section 34 applications on the date
of commencement of the Amendment Act. [Para 40-42] [871-DH; 872-A-C; 874-F-G]
1.6 Section 36, prior to the Amendment Act, is only a clog
on the right of the decree holder, who cannot execute the award
in his favour, unless the conditions of this section are met. This
does not mean that there is a corresponding right in the judgment
debtor to stay the execution of such an award. It has been held
that Section 26 does specifically provide that the court
proceedings in relation to arbitral proceedings, being independent
from arbitral proceedings would not be viewed as a continuation
of arbitral proceedings but would be viewed separately. [Para 43]
[874-H; 875-A, D]
1.7 Being a procedural provision, it is obvious that the
context of Section 36 is that the expression "has been" would
refer to Section 34 petitions filed before the commencement of
the Amendment Act and would be one pointer to the fact that the
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
CRICKET PVT. LTD. AND ETC.
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said section would indeed apply, in its substituted form, even to
such petitions. The unamended Section 36 granted an automatic
stay (which could last for a number of years) on execution of an
award before the enforcement process of Section 34 was over
without having to look at the facts of each case. Due to the sheer
unfairness of this, Section 36 as amended should apply to
Section 34 applications filed before the commencement of the
amendment Act. [Paras 45-46] [877-E-F; 879-E]
1.8 In the instant case, it is clear that "enforcement" in
Section 36 is to treat the award as if it were a decree and enforce
it as such under the Code of Civil Procedure, which would only
mean that such decree has to be executed in the manner indicated.
Also, a stray sentence in a judgment in a particular context cannot be
torn out of such context and applied in a situation where it has been
argued that enforcement and execution are one and the same, at
least for the purpose of the 1996 Act. [Para 48] [880-B-C]
1.9 Since the Amendment Act is only prospective in
application, no anomalies can possibly arise. The choosing of
Section 21 as being the date on which the Amendment Act would
apply to arbitral proceedings that have been commenced could
equally be stated to give rise to various anomalies. One such
anomaly could be that the arbitration agreement itself may have
been entered into years earlier, and disputes between the parties
could have arisen many years after the said arbitration agreement.
The argument on behalf of the appellants is that parties are entitled
to proceed on the basis of the law as it exists on the date on
which they entered into an agreement to refer disputes to
arbitration. If this were to be the case, the starting point of the
application of the Amendment Act being only when a notice to
arbitrate has been received by the respondent, which could be
many years after the arbitration agreement has been entered into,
would itself give rise to the anomaly that the amended law would
apply even to arbitration proceedings years afterwards as and
when a dispute arises and a notice to arbitrate has been issued
under Section 21. In such a case, the parties, having entered into
an arbitration agreement years earlier, could well turn around
and say that they never bargained for the change in law that has
taken place many years after, and which change would apply to
them, since the notice, referred to in Section 21, has been issued
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after the Amendment Act has come into force. Cut off dates, by
their very nature, are bound to lead to certain anomalies, but
that does not mean that the process of interpretation must be so
twisted as to negate both the plain language as well as the object
of the amending statute. On this ground also, it cannot be seen
how an emotive argument could be converted into a legal one, so
as to interpret Section 26 in a manner that would be contrary to
both its plain language and object. [Para 55] [885-C-H; 886-A]
1.10 The Government will be well-advised in keeping the
Statement of Objects and Reasons in the forefront, if it proposes
to enact Section 87 on the lines indicated in the Government's
press release dated 7th March, 2018. The immediate effect of the
proposed Section 87 would be to put all the important amendments
made by the Amendment Act on a back-burner, such as the
important amendments made to Sections 28 and 34 in particular,
which, as has been stated by the Statement of Objects and
Reasons, "...have resulted in delay of disposal of arbitration
proceedings and increase in interference of courts in arbitration
matters, which tend to defeat the object of the Act", and will now
not be applicable to Section 34 petitions filed after 23rd October,
2015, but will be applicable to Section 34 petitions filed in cases
where arbitration proceedings have themselves commenced only
after 23rd October, 2015. This would mean that in all matters which
are in the pipeline, despite the fact that Section 34 proceedings
have been initiated only after 23rd October, 2015, yet, the old law
would continue to apply resulting in delay of disposal of arbitration
proceedings by increased interference of courts, which ultimately
defeats the object of the 1996 Act. The 246th Law Commission
Report has itself bifurcated proceedings into two parts, so that
the Amendment Act can apply to Court proceedings commenced
on or after 23rd October, 2015. It is this basic scheme which is
adhered to by Section 26 of the Amendment Act, which ought not
to be displaced as the very object of the enactment of the
Amendment Act would otherwise be defeated.[Para 57] [888-DG; 889-A]
1.11 The Counsel for BCCI in SLP(C) No. 8374-75 of 2017
and 8376-78 of 2017 submitted that the impugned judgment, when
it dealt with the majority award in favour of respondent went
behind the award in ordering execution of a portion of the award
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
CRICKET PVT. LTD. AND ETC.
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in favour of respondent, when the majority award specifically
ordered the 2nd and 3rd defendants to pay to the joint venture
company, a sum of Rs.6,77,24,56,570/-. It is only thereafter that
the tribunal awarded the said amount. It is thus the submission
that it is the decree holder alone who can execute such decree in
its favour, and that in the instant case it is WWIL who is the
decree holder and that, therefore, respondent's Chamber
Summons, to execute this portion of the award, is contrary to the
CPC as well as a number of judgments construing the Code. On
the other hand, the submission of the other side is that the 2nd
and 3rd defendants in the arbitration proceedings, are in control
and management of WWIL, and have wrongfully excluded
respondent from such control and management. WWIL, therefore,
will never put this decree into execution. This being so, the
interest of justice requires that the High Court judgment should
not be interfered as there is no person that would be in a position
to enforce the award apart from the respondent. [Paras 58-60]
889-B-C; 890-C, E-G]
1.12 Even though the High Court may not be strictly correct
in its appreciation of the law, yet it has attempted to do justice on
the facts of the case. It is not appropriate, in the interest of justice,
to interfere with the impugned judgment on this count. [Para 61]
[890-H; 891-D]
Milkfood Ltd. v. GMC Ice Cream Pvt. Ltd. (2004) 7 SCC
288 : [2004] 3 SCR 854; Thyssen Stahlunion v. Steel
Authority of India (1999) 9 SCC 334 : [1999] 3 Suppl.
 SCR 461; N.S. Nayak & Sons v. State of Goa (2003) 6
SCC 56 : [2003] 1 Suppl. SCR 69 - distinguished.
Garikapati Veeraya v. N. Subbiah Choudhry [1957] SCR
488; National Aluminium Co. Ltd. v. Pressteel &
Fabrications (P) Ltd. (2004) 1 SCC 540; ONGC v. Saw
Pipes Ltd (2003) 5 SCC 705 : [2003] 3 SCR 691; ONGC
Ltd. v. Western Geco International Ltd. (2014) 9 SCC
263 : [2014] 12 SCR 1; Satish Kumar v. Surinder Kumar
[1969] 2 SCR 244; Bhagat Ram Sharma v. Union of
India (1988) (Supp) SCC 30 : [1988] SCR 1034;
Hitendra Vishnu Thakur v. State of Maharashtra (1994)
4 SCC 602 : [1994] 1 Suppl. SCR 360; Transport and
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Dock Workers' Union & others v. New Dholera Steamship
Ltd., Bombay and others, (1967) 1 LLJ 434; Kalawati
Devi Harlalka v. CIT (1967) 3 SCR 833; State of Punjab
v. Mohar Singh, [1955] 1 SCR 893; T.S. Baliah v. T.S.
Rengachari [1969] 3 SCR 65; Lalji Raja and Sons v.
Hansraj Nathuram, (1971) 1 SCC 721 : [1971] 3 SCR
815; Narhari Shivram Shet Narvekar v. Pannalal
Umediram (1976) 3 SCC 203: [1976] 3 SCR 149; Union
of India v. A.L. Rallia Ram [1964] 3 SCR 164; NBCC
Ltd. v. J.G. Engineering (P) Ltd., (2010) 2 SCC 385 :
[2010] 1 SCR 109; Snehadeep Structures (P) Ltd. v.
Maharashtra Small-Scale Industries Development Corpn.
Ltd., (2010) 3 SCC 34 : [2010] 1 SCR 76; State of
Bombay v. Vishnu Ramchandra (1961) 2 SCR 26;
Workmen v. Firestone Tyre & Rubber Co. of India (P)
Ltd. (1973) 1 SCC 813 : [1973] 3 SCR 587; Hameed
Joharan v. Abdul Salam, (2001) 7 SCC 573: [2001] 1
Suppl. SCR 469; Regional Manager & Anr. v. Pawan
Kumar Dubey [1976] 3 SCR 540; Akkayanaicker v.
A.A.A. Kotchadainaidu and Anr. (2004) 12 SCC 469:
[2004] 4 Suppl. SCR 638; R. Rajagopal Reddy v. Padmini
Chandrasekharan (1995) 2 SCC 630 : [1995] 1 SCR
715; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.
(2001) 6 SCC 356 : [2001] 3 SCR 479; Sedco Forex
International Drill. Inc. v. CIT (2005) 12 SCC 717 :
[2005] 5 Suppl. SCR 302; Bank of Baroda v. Anita
Nandrajog (2009) 9 SCC 462; ONGC v. Western Geco
International Ltd. (2014) 9 SCC 263 : [2014] 12 SCR1;
HRD Corporation (Marcus Oil and Chemical Division)
v. Gail (India) Limited (Formerly Gas Authority of India
Ltd.) 2017 SCC Online 1024 - referred to.
Minister of Public Works of the Government of the State
of Kuwait v. Sir Frederick Snow and Partners (1984) 2
WLR 340; L'Office Cherifien Des Phosphates and
another v. Yamashita-Shinnihon Steamship Co. Ltd.
(1994) 1 AC 486 - referred to.
Case Law Reference
[1999] 3 Suppl. SCR 461
distinguished
Para 7
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CRICKET PVT. LTD. AND ETC.
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[2003] 1 Suppl. SCR 69
distinguished
Para 7
[2004] 3 SCR 854
distinguished
Para 7
[1957] SCR 488
referred to
Para 7
(2004) 1 SCC 540
referred to
Para 8
[2003] 3 SCR 691
referred to
Para 12
[2014] 12 SCR 1
referred to
Para 12
[1969] 2 SCR 244
referred to
Para 13
[1988] SCR 1034
referred to
Para 17
[1994] 1 Suppl. SCR 360
referred to
Para 25
(1967) 1 LLJ 434
referred to
Para 27
[1967] 3 SCR 833
referred to
Para 27
[1955] 1 SCR 893
referred to
Para 28
[1969] 3 SCR 65
referred to
Para 28
[1999] 3 Suppl. SCR 461
referred to.
Para 38
[2003] 1 Suppl. SCR 69
referred to
Para 38
[2004] 3 SCR 854
referred to
Para 38
[1971] 3 SCR 815
referred to
Para 42
[1976] 3 SCR 149
referred to
Para 42
[1964] 3 SCR 164
referred to
Para 43
[2010] 1 SCR 109
referred to
Para 43
[2010] 1 SCR 76
referred to
Para 43
[1961] 2 SCR 26
referred to
Para 44
[1973] 3 SCR 587
referred to
Para 44
[2001] 1 Suppl. SCR 469
referred to
Para 48
[1976] 3 SCR 540
referred to
Para 48
[2004] 4 Suppl. SCR 638
referred to
Para 51
[1995] 1 SCR 715
referred to
Para 54
[2001] 3 SCR 479
referred to
Para 54
[2005] 5 Suppl. SCR 302
referred to
Para 54
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(2009) 9 SCC 462
referred to
Para 54
[2014] 12 SCR 1
referred to
Para 54
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 28792880 of 2018
From the Judgment and Order dated 14.06.2016 in Chamber
Summons No. 1532 of 2015 in Execution Application (L) No. 2482 of
2015 in Arbitral Award dated 22.06.2015 and Chamber Summons No.
1530 of 2015 in Execution Application (L) No. 2481 of 2015 in Arbitral
Award dated 22.06.2015 of the High Court of Judicature at Bombay.
WITH
C.A. NOS. 2881, 2882, 2883-2884, 2885-2886, 2887-2889, 28902891 and 2892 of 2018.
Tushar Mehta, ASG, C.A. Sundaram, K.V. Viswanathan, P.
Chidambaram, Kapil Sibal, Dr. Abhishek Manu Singhvi, Arun Varma,
Ms. Vibha Dutta Makhija, Neeraj Kishan Kaul, Sajan Poovayya, Sr.
Advs., Ms. Gauri Rasgotra, Indranil Deshmukh, Aditya Mehta, George
Varghese, Vineet Unnikrishnan, Ms. Nikitha Shenoy, Arjun Sreenivas,
Ms. Purnima Krishna, Mrs. Bihu Sharma, Abhinav Mukerji, Siddhant
Buxy, Ms. Rohini Musa, Avhishek Gupta, Zafar Inayat, Apoorv Tripathi,
Kartik Yadav, Ms. Neha Sarna, Ms. Olga Lumepereira, Arjun Sreenivas,
Ms. Sumita Sharma, M/s. Cyril Amarchand Mangaldas, Ravi Prakash,
Ms. Bani Dikshit, Ms. Iti Agarwal (For M/s. D.S.K. Legal), Jehangir
Jejeebhoy, Vivek A. Vashi, Ms. Kanika Sharma Goenka, Hrushi
Narvekar, Shaheda Madraswala, Utkarsh Srivastava, Mohd. Nizam
Pasha, Ms. Aastha Dhawan, Ashish Joshi, Ali R. Osmani, Chirag M.
Shroff, Mahesh Agarwal, Vivek Jain, Rishabh Parikh, Ms. Sumita Sharma,
E. C. Agrawala, Bharat Sangal, Ms. Sanaya Dadacharji, Ms. Vidushi
Garg, Ms. Anindita Deka, Ms. Isha Gupta, Mitul Shelat, Mahesh Agarwal,
Ms. Aastha Mehta, Rajesh Kumar, Rohit Bhat, Rajat Nair, M. K. Maroria,
Nakul Dewan, Pradhuman Gohil, Mrs. Taruna Singh Gohil, Ashish Kabra,
Ms. Neelu Mohan, Himanshu Choubey, Zain Maqbool, Ms. Abhishikta
Mallick, Brijesh Kumar, Anirudh Krishnan, Balaji Srinivasan, Keerthikiran
Murali, Ms. Sella Visalakshi, Ms. Goda Raghavan, Ms. Vaishnavi
Subrahmanyam, Hitesh Singhvi, Ms. Srishti Govil, Mayank Kshirsagar,
Ms. Pratiksha Mishra, Abhishek Bharti, Sanjay Bansal, G. K. Bansal,
D.N. Ray, Lokesh K. Choudhary, Ms. Disha Ray, Dilip Kumar Nayak,
Mrs. Sumita Ray, Rajendra Barot, P. Rohan A. Rajadhyaksha, Ms. Tanvi
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
CRICKET PVT. LTD. AND ETC.
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Dattani, Samar Kachwaha, Deepak Joshi, Ms. Liz Mathew, Priyadarshi
Banerjee, Pratibhanu S. Kharola, Ranjeeta Rohtagi, Prateek Kumar,
Ms. Anushka Sharda, Suksham Chauhan, Sanjeev K. Kapoor (For M/s.
Khaitan & Co.), Braj Kishore Mishra, Mrs. Shally Bhasin, Ms. Neha
Sangwan, Advs. for the appearing parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Leave granted.
2. The present batch of appeals raises an important question as to
the construction of Section 26 of the Arbitration and Conciliation
(Amendment) Act, 2015 (hereinafter referred to as the "Amendment
Act"), which reads as follows:
"Section 26. Act not to apply to pending arbitral
proceedings.
Nothing contained in this Act shall apply to the arbitral
proceedings commenced, in accordance with the provisions of
section 21 of the principal Act, before the commencement of
this Act unless the parties otherwise agree but this Act shall
apply in relation to arbitral proceedings commenced on or after
the date of commencement of this Act."
3. The questions raised in these appeals require the mentioning of
only a few important dates. In four of these appeals, namely, Board of
Control for Cricket in India v. Kochi Cricket Pvt. Ltd. and Ors.
(SLP(C) No. 19545-19546 of 2016), Arup Deb & Ors. v. Global Asia
Venture Company (SLP(C) No. 20224 of 2016), M/s Maharashtra
Airports Development Company Ltd. v. M/s PBA Infrastructure
Ltd. (SLP(C) No.5021 of 2017) and UB Cotton Pvt. Ltd. v. Jayshri
Ginning and Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), Section
34 applications under the Arbitration and Conciliation Act, 1996
(hereinafter referred to as the "1996 Act") were all filed prior to the
coming into force of the Amendment Act w.e.f. 23rd October, 2015. In
the other four appeals, the Section 34 applications were filed after the
Amendment Act came into force. The question with which we are
confronted is as to whether Section 36, which was substituted by the
Amendment Act, would apply in its amended form or in its original form
to the appeals in question.
4. The relevant facts of the first appeal namely, Board of Control
for Cricket in India v. Kochi Cricket Pvt. Ltd. and Ors. (SLP(C)
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Nos. 19545-19546 of 2016), are as follows. A notice dated 18th January,
2012 was sent by Respondent No.1 invoking arbitration under a franchise
agreement dated 12th March, 2011. A Sole Arbitrator was appointed,
who delivered two arbitral awards dated 22nd June, 2015 against the
Appellant and in favour of the Respondents. On 16th September, 2015,
the Appellants filed an application under Section 34 of the 1996 Act in
the Bombay High Court challenging the aforesaid arbitral awards. On
26th November, 2015, the Respondents filed two execution applications
in the High Court for payment of the amounts awarded under the two
awards, pending enforcement of such awards. These were resisted by
two Chamber Summons filed by the Appellants dated 3rd December,
2015, praying for dismissal of the aforesaid execution applications stating
that the old Section 36 would be applicable, and that, therefore, there
would be an automatic stay of the awards until the Section 34 proceedings
had been decided. The Chamber Summons were argued before a
learned Single Judge, who, by the impugned judgment in Special Leave
Petition (Civil) No.19545-19546 of 2016, dismissed the aforesaid Chamber
Summons and found that the amended Section 36 would be applicable in
the facts of this case. This is how the appeal from the aforesaid judgment
has come before us.
5. As aforementioned, the skeletal dates necessary to decide
the present appeals in the other cases would only be that so far as two
of the other appeals are concerned, namely, Arup Deb & Ors. v. Global
Asia Venture Company (SLP(C) No.20224 of 2016) and M/s
Maharashtra Airports Development Company Ltd. v. M/s PBA
Infrastructure Ltd. (SLP(C) No.5021 of 2017), the Section 34
applications were filed on 27th April, 2015, and 25th May, 2015 respectively
and the stay petitions or execution applications in those cases filed under
Section 36 were dated 16th December, 2015 and 26th October, 2016
respectively. In U.B. Cotton Pvt. Ltd. v. Jayshri Ginning and
Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), the Section 34
application was filed on 22nd February, 2013 and the execution application
was filed in 2014, which was transferred, by an order dated 12th January,
2017, to the Commercial Court, Rajkot as Execution Petition No. 1 of
2017. In the other cases, namely, Wind World (India) Ltd. v. Enercon
GMBH through its Director (SLP(C) Nos.8372-8373 of 2017),
Yogesh Mehra v. Enercon GMBH through its Director (SLP(C)
Nos.8376-8378 of 2017), Ajay Mehra v. Enercon GMBH through
its Director (SLP(C) Nos.8374-8375 of 2017), and Anuradha Bhatia
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
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v. M/s Ardee Infrastructure Pvt. Ltd. (SLP(C) Nos.9599-9600 of
2017), the Section 34 applications were filed after 23rd October, 2015,
viz., on 7th December, 2016 in the first two appeals, on 6th December,
2016 in the third appeal and on 4th January, 2016 in the last appeal.
6. Section 36, which is the bone of contention in the present appeals,
is set out hereinbelow:
PRE-AMENDED PROVISION
"Section 36. Enforcement.
Where the time for making an application to set aside the arbitral
award under section 34 has expired, or such application having
been made, it has been refused, 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 the Court."
AMENDED PROVISION
"Section 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 of Civil Procedure,
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 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)."
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6. Wide ranging arguments have been made on behalf of the parties
before us. Shri C.A. Sundaram, learned Senior Advocate, leading the
charge on behalf of the Appellants, has argued that Section 26 of the
Amendment Act consists of two parts. According to him, the second
part, which makes the Amendment Act applicable in relation to arbitral
proceedings commenced on or after the date of commencement of this
Act, is the principal part, whereas the first part of Section 26 is in the
nature of a proviso or exception. It is his submission, therefore, that so
far as the first part is concerned, Section 6 of the General Clauses Act,
1897 would be attracted, in which event the vested right to challenge
arbitral awards would continue by virtue of the said Section under the
old Act, which would, therefore, apply to the facts of all these cases.
For this purpose, he relied upon certain passages in Thyssen
Stahlunion v. Steel Authority of India (1999) 9 SCC 334, N.S. Nayak
& Sons v. State of Goa (2003) 6 SCC 56, and Milkfood Ltd. v GMC
Ice Cream Pvt. Ltd. (2004) 7 SCC 288. Given the fact that the vested
right is preserved, the amendment is only prospective in nature, and for
this purpose, he has cited a large number of judgments, starting with the
celebrated judgment in Garikapati Veeraya v. N. Subbiah Choudhry
(1957) SCR 488. He then referred to a chart of the effect of the
amendments made in general by the Amendment Act, in which he divided
the amended sections into three parts, namely, those that are only
procedural, those that are only substantive and those that are procedural
as well as substantive. In his submission, Section 36 is substantive in
nature, in that, in place of an automatic stay of the award under the old
regime, Order LXI, Rule 5 of the CPC will now be applicable. As a
result of this, instead of an automatic stay, a deposit of the entire amount
or substantial amount of the award would now have to be made in the
interim period between the award and the decision in the Section 34
application. He referred to the 246th Law Commission Report as well as
the debates leading to the Amendment Act to buttress his submissions.
He also referred to the report of a High Level Committee headed by
Justice B.N. Srikrishna, delivered on 30th July, 2017, in which, after
referring to the divergent views taken by the High Courts, the Committee
recommended that the Amendment Act will not apply to arbitral
proceedings as well as Court proceedings which arise out of such arbitral
proceedings, where the arbitral proceedings themselves have commenced
in accordance with Section 21 before the commencement of the
Amendment Act. Concomitantly, according to the High Level Committee,
BOARD OF CONTROL FOR CRICKET IN INDIA v. KOCHI
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the Amendment Act will only apply to arbitral proceedings commenced
on or after the commencement of the Amendment Act and to Court
proceedings that arise out of or in relation to such arbitral proceedings.
8. Shri K.V. Viswanathan, learned Senior Advocate appearing on
behalf of the BCCI in Civil Appeal arising out of SLP(C) No.19546 of
2016, has argued that the expression "arbitral proceedings" in both parts
of Section 26 refers only to proceedings before an arbitrator and is the
same in both parts. Consequently, it is clear that it is only arbitral
proceedings that have commenced after 23rd October, 2015 and Court
proceedings in relation thereto, that will be governed by the Amendment
Act. If the arbitral proceedings have commenced under the old Act,
then those proceedings as well as all Court proceedings in relation thereto,
would be governed only by the old Act. According to him, Section 6 of
the General Clauses Act would be attracted, insofar as Court proceedings
are concerned, when the first part of Section 26 is applied. According
to him, the second part would not become superfluous on his reading of
Section 26, as the option given to the parties would be given only on
application of the first part and not the second. According to the learned
senior counsel, the judgment in Thyssen (supra) is determinative of the
present case, inasmuch as an entirely new challenge procedure under
Section 34 is laid down by the amendments made in 2015, somewhat
like the challenge procedure laid down in the original Section 34 of the
1996 Act, when contrasted with Section 30 of the Arbitration Act, 1940.
According to the learned senior counsel, party autonomy must be
respected, and this being the position, parties who have entered into
agreements in the expectation that the old regime will apply cannot
suddenly be foisted with a completely different regime under the
Amendment Act. According to the learned senior counsel, Section 85
of the 1996 Act is similar to Section 26 of the Amendment Act and,
therefore, the judgment in Thyssen (supra) must apply on all fours.
The learned senior counsel also forcefully put to us a number of anomalies
that would arise if the amendment to Section 36 were to be given
retrospective operation. According to him, the right to be governed by
the broad appellate/supervisory procedure found in sections 34 and 37
of the 1996 Act would be a vested right, resulting in the Amendment Act
not being applicable. Insofar as Section 36 is concerned, the learned
senior counsel made elaborate submissions on the difference between
enforceability and execution, and stated that whereas the former dealt
with substantive rights, the latter dealt with procedural rights. Equally,
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the expression "has been" contained in the amended Section 36(2) is
purely contextual and equivalent to the expression "is". For this, he has
cited certain judgments which we will refer to in due course. According
to the learned senior counsel, the decision in National Aluminium Co.
Ltd. v. Pressteel & Fabrications (P) Ltd. (2004) 1 SCC 540, which
exhorted the legislature to amend Section 36, cannot take the matter any
further, in that the said decision cannot be read to say that Section 36
should be substituted with retrospective effect.
9. Shri Tushar Mehta, learned Additional Solicitor General
appearing in SLP (C) No.5021 of 2017, supported the arguments of his
predecessor and added that, given a retrospective operation of Section
36, various anomalies would arise, which would lead to hardship and
inconvenience and that, therefore, we should not impart retrospective
operation to the aforesaid provision.
10. Shri Arvind Datar, learned senior advocate appearing in SLP
(C) No.20224 of 2016, supported Shri Viswanathan in stating that the
amendments made by the Amendment Act were very far reaching and
changed the basis of challenge to arbitral awards. It would not be fair to
retrospectively change the rules of the game insofar as such awards are
concerned. According to the learned senior counsel, the expression "in
relation to" that was used in Section 85 of the 1996 Act, as expounded in
Thyssen (supra), was because Section 85 repealed three enactments
together, and not because it sought to refer to Court proceedings. He
reiterated that in the interest of clarity, the report of the High Level
Committee, headed by Justice B.N. Srikrishna referred to by Shri
Sundaram, was the correct position so that it clearly be delineated that
the moment arbitral proceedings commenced before the Amendment
Act, such "proceedings", which would include all Court proceedings in
relation thereto, would be governed by the old Act, and only arbitral
proceedings commenced after the Amendment Act came into force,
together with related Court proceedings, would all be governed by the
Amendment Act.
11. Shri Anirudh Krishnan, learned Advocate appearing for the
intervenor in SLP (C) No.20224 of 2016, referred to Section 85A contained
in the 246th Law Commission Report which, according to him, was given
a go-by and was not followed in Section 26.