LAW FOR ALL : whether an “award” delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre [“SIAC Rules”] can be said to be an order under Section 17(1) of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”]; and second, as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of 1 the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable.= The second question posed is thus answered declaring that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator’s order made under Section 17(2) of the Act.

Saturday, August 7, 2021

whether an “award” delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre [“SIAC Rules”] can be said to be an order under Section 17(1) of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”]; and second, as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of 1 the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable.= The second question posed is thus answered declaring that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator’s order made under Section 17(2) of the Act.

whether an “award” delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre [“SIAC Rules”] can be said to be an order under Section 17(1) of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”]; and

second, as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of 1 the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 4492-4493 OF 2021

AMAZON.COM NV INVESTMENT

HOLDINGS LLC … APPELLANT

VERSUS

FUTURE RETAIL LIMITED & ORS. … RESPONDENTS

WITH

CIVIL APPEAL NOs. 4494-4495 OF 2021

CIVIL APPEAL NOs. 4496-4497 OF 2021

JUDGMENT

R.F. NARIMAN, J.

1. Two important questions arise in these appeals – first, as to whether

an “award” delivered by an Emergency Arbitrator under the Arbitration

Rules of the Singapore International Arbitration Centre [“SIAC Rules”] can

be said to be an order under Section 17(1) of the Arbitration and

Conciliation Act, 1996 [“Arbitration Act”]; and second, as to whether an

order passed under Section 17(2) of the Arbitration Act in enforcement of

the award of an Emergency Arbitrator by a learned Single Judge of the

High Court is appealable.

2. The brief facts necessary to appreciate the context in which these two

questions arise are as follows:

2.1. Proceedings were initiated by the Appellant, Amazon.com NV

Investment Holdings LLC [“Amazon”] before the High Court of Delhi under

Section 17(2) of the Arbitration Act to enforce the award/order dated 25th

October, 2020 of an Emergency Arbitrator, Mr. V.K. Rajah, SC. This order

was passed in arbitration proceedings being SIAC Arbitration No. 960 of

2020 commenced by Amazon against Respondents No. 1 to 13, who are

described as under:

(i) Respondent No.1 – Future Retail Limited, India’s second-largest

offline retailer [“FRL”]

(ii) Respondent No.2 – Future Coupons Pvt. Ltd., a company that holds

9.82% shareholding in FRL and is controlled and majority-owned by

Respondents No. 3 to 11 [“FCPL”]

(iii) Respondent No.3 – Mr. Kishore Biyani, Executive Chairman and

Group CEO of FRL

(iv) Respondent No.8 – Mr. Rakesh Biyani, Managing Director of FRL

(v) Respondents No. 4 to 7 and 9 to 11 – other members of the Biyani

family, namely, Ms. Ashni Kishore Biyani, Mr. Anil Biyani, Mr.

Gopikishan Biyani, Mr. Laxminarayan Biyani, Mr. Sunil Biyani, Mr.

Vijay Biyani, and Mr. Vivek Biyani, who are promoters and

shareholders of FRL

(vi) Respondents No. 12 and 13 – Future Corporate Resources Pvt. Ltd.

and Akar Estate and Finance Pvt. Ltd., group companies of FRL

Respondents No. 1 to 13 are hereinafter collectively referred to as the

“Biyani Group”.

2.2. The seat of the arbitral proceedings is New Delhi, and as per the

arbitration clause agreed upon by the parties, SIAC Rules apply.

2.3. Three agreements were entered into between the parties. A

Shareholders’ Agreement dated 12th August, 2019, was entered into

amongst the Biyani Group, i.e., Respondents No. 1 to 13 [“FRL

Shareholders’ Agreement”]. Under this Shareholders’ Agreement, FCPL

was accorded negative, protective, special, and material rights with regard

to FRL including, in particular, FRL’s retail stores [“retail assets”]. The

rights granted to FCPL under this Shareholders’ Agreement were to be

exercised for Amazon’s benefit and thus were mirrored in a Shareholders’

Agreement dated 22nd August, 2019 entered into between Amazon, FCPL,

and Respondents No. 3 to 13 [“FCPL Shareholders’ Agreement”].

Amazon agreed to invest a sum of Rs.1431 crore in FCPL based on the

rights granted to FCPL under the FRL Shareholders’ Agreement and the

FCPL Shareholders’ Agreement. This investment was recorded in the

Share Subscription Agreement dated 22nd August, 2019 entered into

between Amazon, FCPL, and Respondents No. 3 to 13 [“Share

Subscription Agreement”]. It was expressly stipulated that this investment

in FCPL would “flow down” to FRL. It appears that the basic understanding

between the parties was that Amazon’s investment in the retail assets of

FRL would continue to vest in FRL, as a result of which FRL could not

transfer its retail assets without FCPL’s consent which, in turn, could not be

granted unless Amazon had provided its consent. Also, FRL was prohibited

from encumbering/transferring/selling/divesting/disposing of its retail assets

to “restricted persons”, being prohibited entities, with whom FRL, FCPL,

and the Biyanis could not deal. A list of such restricted persons was then

set out in Schedule III of the FCPL Shareholders’ Agreement and also

under the FRL Shareholders’ Agreement vide letter dated 19th December,

2019. There is no doubt that the Mukesh Dhirubhai Ambani group

(Reliance Industries group) is a “restricted person” under both these

Shareholders’ Agreements.

2.4. On 26th December, 2019, Amazon invested the aforesaid sum of

Rs.1431 crore in FCPL which “flowed down” to FRL on the very same day.

The bone of contention between the parties is that within a few months

from the date of this investment, i.e., on 29th August, 2020, Respondents

No. 1 to 13 entered into a transaction with the Mukesh Dhirubhai Ambani

group which envisages the amalgamation of FRL with the Mukesh

Dhirubhai Ambani group, the consequential cessation of FRL as an entity,

and the complete disposal of its retail assets in favour of the said group.

2.5. Amazon initiated arbitration proceedings and filed an application on

th October, 2020 seeking emergency interim relief under the SIAC Rules,

asking for injunctions against the aforesaid transaction. Mr. V.K. Rajah, SC

was appointed as the Emergency Arbitrator and heard detailed oral

submissions from all parties and then passed an “interim award” dated 25th

October, 2020, in which the learned Arbitrator issued the following

injunctions/directions:

“B. Dispositive Orders/Directions

285. In the result, I award, direct, and order as follows:

(a) the Respondents are injuncted from taking any steps in

furtherance or in aid of the Board Resolution made by the

Board of Directors of FRL on 29 August 2020 in relation to the

Disputed Transaction, including but not limited to filing or

pursuing any application before any person, including

regulatory bodies or agencies in India, or requesting for

approval at any company meeting;

(b) the Respondents are injuncted from taking any steps to

complete the Disputed Transaction with entities that are part of

the MDA Group;

Lenders, the Respondents are injuncted from directly or

indirectly taking any steps to transfer/ dispose/ alienate/

encumber FRL’s Retail Assets or the shares held in FRL by the

Promoters in any manner without the prior written consent of

the Claimant;

(d) the Respondents are injuncted from issuing securities of

FRL or obtaining/securing any financing, directly or indirectly,

from any Restricted Person that will be in any manner contrary

to Section 13.3.1 of the FCPL SHA;

(e) the orders in (a) to (d) above are to take effect immediately

and will remain in place until further order from the Tribunal,

when constituted; and

(f) the Claimant is to provide within 7 days from the date hereof

a cross-undertaking in damages to the Respondents. If the

Parties are unable to agree on its terms, they are to refer their

differences to me qua EA for resolution; and

(g) the costs of this Application be part of the costs of this

Arbitration.”

2.6. The Biyani Group thereafter went ahead with the impugned

transaction, describing the award as a nullity and the Emergency Arbitrator

as coram non judice in order to press forward for permissions before

statutory authorities/regulatory bodies. FRL, consistent with this stand, did

not challenge the Emergency Arbitrator’s award under Section 37 of the

Arbitration Act, but instead chose to file a civil suit before the Delhi High

Court being C.S. No. 493 of 2020, in which it sought to interdict the

arbitration proceedings and asked for interim relief to restrain Amazon from

writing to statutory authorities by relying on the Emergency Arbitrator’s

order, calling it a “tortious interference” with its civil rights. A learned Single

Judge of the Delhi High Court, after finding a prima facie case of tortious

interference, then refused to grant any interim injunction as follows:

“12.3 Thus the trinity of the principles for grant of interim

injunction i.e., prima facie case, irreparable loss and balance of

convenience are required to be tested in terms of principles as

noted above. Since this Court has held that prima facie the

representation of Amazon based on the plea that the resolution

dated 29th August, 2020 of FRL is void and that on conflation of

the FCPL SHA and FRL SHA, the ‘control’ that is sought to be

asserted by Amazon on FRL is not permitted under the FEMA

FDI Rules, without the governmental approvals, this Court finds

that FRL has made out a prima facie case in its favour for grant

of interim injunction. However, the main tests in the present

case are in respect of “balance of convenience” and

“irreparable loss”. Even if a prima facie case is made out by

FRL, the balance of convenience lies both in favour of FRL and

Amazon. If the case of FRL is that the representation by

Amazon to the statutory authorities /regulators is based on

illegal premise, Amazon has also based its representation on

the alleged breach of FCPL SHA and FRL SHA, as also the

directions in the EA order. Hence it cannot be said that the

balance of convenience lies in favour of FRL and not in favour

of Amazon. It would be a matter of trial after parties have led

their evidence or if decided by any other competent forum to

determine whether the representation of Amazon that the

transaction between FRL and Reliance being in breach of the

FCPL SHA and FRL SHA would outweigh the plea of FRL in the

present suit. Further in case Amazon is not permitted to

represent its case before the statutory authorities/Regulators, it

will suffer an irreparable loss as Amazon also claims to have

created pre-emptive rights in its favour in case the Indian law

permitted in future. Further there may not be irreparable loss to

FRL for the reason even if Amazon makes a representation

based on incorrect facts thereby using unlawful means, it will be

for the statutory authorities/Regulators to apply their mind to the

facts and legal issues therein and come to the right conclusion.

There is yet another aspect as to why no interim injunction can

be granted in the present application for the reason both FRL

and Amazon have already made their representations and

counter representations to the statutory authorities/regulators

and now it is for the Statutory Authorities/Regulators to take a

decision thereon.

Therefore, this Court finds that no case for grant of interim

injunction is made out in favour of the FRL and against

Amazon.

Conclusion

13. Consequently, the present application is disposed of,

declining the grant of interim injunction as prayed for by FRL,

however, the Statutory Authorities/Regulators are directed to

take the decision on the applications/objections in accordance

with the law.”

No appeal against this order has been filed by the Biyani Group. On the

other hand, Amazon has filed an appeal against certain observations made

in the order. This appeal is pending.

2.7. Meanwhile, Amazon went ahead with an application filed under

Section 17(2) of the Arbitration Act which was heard and disposed of by a

learned Single Judge of the Delhi High Court. On 2nd February, 2021, the

learned Single Judge passed a status-quo order in which he restrained the

Biyani Group from going ahead with the impugned transaction, stating that

reasons and a detailed order will follow. An appeal against this was filed by

FRL, in which a Division Bench, vide order dated 8th February, 2021, after

setting out the facts of this case and after reaching certain prima facie

findings, stayed the operation, implementation, and execution of the Single

Judge order dated 2nd February, 2021 till the next date of hearing, and listed

the appeal for further hearing on 26th February, 2021. Meanwhile, on 22nd

February, 2021, the Supreme Court allowed the amalgamation proceedings

pending before the National Company Law Tribunal to continue, but not to

culminate in any final order of sanction of scheme of amalgamation.

2.8. On 18th March, 2020, the learned Single Judge passed a detailed

judgment giving reasons for an order made under Section 17(2) read with

Order XXXIX, Rule 2-A of the Code of Civil Procedure, 1908 [“Code of

Civil Procedure”] in which it was held that an Emergency Arbitrator’s

award is an order under Section 17(1) of the Arbitration Act. Since

breaches of the Agreements aforementioned were admitted, the only plea

being raised being that the Emergency Arbitrator’s award was a nullity, the

learned Single Judge held that such award was enforceable as an order

under the Arbitration Act, and further held that the injunctions/directions

granted by the said award were deliberately flouted by the Biyani Group.

He also found that any so-called violations of Foreign Exchange

Management Act, 1999 [“FEMA”] did not render the Emergency Arbitrator’s

award a nullity, and therefore, issued a show-cause notice under Order

XXXIX, Rule 2-A of the Code of Civil Procedure, after imposing Rs.20 lakh

as costs to be deposited with the Prime Minister Relief Fund for being used

for providing COVID vaccinations to the Below Poverty Line category of

senior citizens of Delhi. The learned Single Judge then directed as follows:

“Conclusion

188. The Emergency Arbitrator is an Arbitrator for all intents and

purposes; order of the Emergency Arbitrator is an order under

Section 17(1) and enforceable as an order of this Court under

Section 17(2) of the Arbitration and Conciliation Act.

189. Respondent No.2 is a proper party to the arbitration

proceedings and the Emergency Arbitrator has rightly invoked

the Group of Companies doctrine by applying the well settled

principles laid down by the Supreme Court in Chloro Controls

(supra), Cheran Properties (supra) and MTNL (supra). The

respondents have raised a plea contrary to the well settled law

relating to Group of Companies doctrine laid down by the

Supreme Court.

190. The respondents have raised a vague plea of Nullity

without substantiating the same. The interim order of the

Emergency Arbitrator is not a Nullity as alleged by respondent

No.2.

191. Combining/treating all the agreements as a single

integrated transaction does not amount to control of the

petitioner over FRL and therefore, the petitioner’s investment

does not violate any law.

192. All the objections raised by the respondents are hereby

rejected with cost of Rs.20,00,000/- to be deposited by the

respondents with the Prime Minister Relief Fund for being used

for providing COVID vaccination to the Below Poverty Line

(BPL) category - senior citizens of Delhi. The cost be deposited

within a period of two weeks and the receipt be placed on

record within one week of the deposit.

193. The respondents have deliberately and wilfully violated the

interim order dated 25th October, 2020 and are liable for the

consequences enumerated in Order XXXIX Rule 2-A of the

Code of Civil Procedure.

194. In exercise of power under Order XXXIX Rule 2-A(1) of the

Code of Civil Procedure, the assets of respondents No.1 to 13

are hereby attached. Respondents No.1 to 13 are directed to

file an affidavit of their assets as on today in Form 16A,

Appendix E under Order XXI Rule 41(2) of the Code of Civil

Procedure within 30 days. Respondent No.1, 2, 12 and 13 are

directed to file an additional affidavit in the format of Annexure

B-1 and respondents No.3 to 11 are directed to file an

additional affidavit in the format of Annexure A-1 to the

judgment of M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s

Maharia Raj Joint Venture, (supra) along with the documents

mentioned therein within 30 days.

195. Show cause notice is hereby issued to respondents No.3

to 13 to show cause why they be not detained in civil prison for

a term not exceeding three months under Order XXXIX Rule 2-

A(1) of the Code of Civil Procedure for violation of the order

dated 25th October, 2020. Reply to the show cause notice be

filed within two weeks. Rejoinder within two weeks thereafter.

196. The respondents are directed not to take any further action

in violation of the interim order dated 25th October, 2020. The

respondents are further directed to approach all the competent

authorities for recall of the orders passed on their applications

in violation of the interim order dated 25th October, 2020 within

two weeks. The respondents are directed to file an affidavit to

place on record the actions taken by them after 25th October,

2020 and the present status of all those actions at least three

days before the next date of hearing.

197. Respondents No.3 to 11 shall remain present before this

Court on the next date of hearing.”

He listed the matter for further directions on 28th April, 2021.

2.9. Against this detailed judgment, FAO No. 51 of 2021 was filed by FRL.

By the second impugned judgment in this case dated 22nd March, 2021, a

Division Bench of the Delhi High Court referred to its earlier order dated 8th

February, 2021 and stayed the learned Single Judge’s detailed judgment

and order for the same reasons given by the earlier order till the next date

of hearing, which was 30th April, 2021. Against the said order, Special

Leave Petitions were filed before this Court, and this Court by its order

dated 19th April, 2021 stayed further proceedings before the learned Single

Judge as well as the Division Bench of the Delhi High Court, and set the

matter down for final disposal before this Court.

3. Mr. Gopal Subramanium, learned Senior Advocate appearing on

behalf of Amazon, took us through the record with painstaking detail. He

castigated the impugned orders of the Division Bench as suffering from a

complete non-application of mind in that the order dated 8th February, 2021

referred to three agreements, the third being between FRL and Reliance

Retail Ltd., which is an error apparent on the face of the record. Secondly, it

went on to observe that in the aforesaid agreement, Amazon is not a party.

It then went on to hold that an appeal against an order under Section 17(2)

of the Arbitration Act would be maintainable under the provisions of the

Code of Civil Procedure on the basis of the reasoning contained in a Delhi

High Court judgment in South Delhi Municipal Corporation v. Tech

Mahindra, (2019) SCC Online Delhi 11863, relying upon paragraphs 8 to

11 thereof. Mr. Subramanium argued that had the learned Division Bench

bothered to refer to paragraphs 12 and 13 of the aforesaid judgment, it

would be clear that this authority would be an authority for exactly the

opposite proposition, thereby rendering an appeal under Order XLIII, Rule

1(r) of the Code of Civil Procedure non-maintainable when it is read with

Section 37 of the Arbitration Act. Further observations that prima facie, the

agreements are between different parties, and therefore, the group-ofcompanies doctrine cannot be invoked, without any reasoning, again

betrays a complete non-application of mind. Since the second impugned

order of the Division Bench relies upon this very order to stay even the

detailed judgment of the Single Judge, the learned senior counsel argued

that the second order, being a reiteration of the first, suffers from the same

malady.

3.1. Mr. Subramanium then referred us to Sections 2(1)(a), 2(1)(c), 2(1)

(d), 2(6), 2(8) and 19(2) to argue that the Arbitration Act reflects the

grundnorm of arbitration as being party autonomy, which is respected by

these provisions and delineated in several judgments of this Court. He then

referred to Section 37, pointing out that an appeal under Section 37(2)(b) is

restricted to granting or refusing to grant an interim measure under Section

17, which would refer to Section 17(1) and not Section 17(2). He went on to

argue that the Arbitration Act is a complete code in itself and if an appeal

does not fall within the four corners of Section 37, then it is incompetent, as

has been held by several judgments of this Court.

3.2. He also referred to various judgments of this Court, arguing that an

Emergency Arbitrator’s award can never be characterised as a nullity and

ignored, and cited a number of judgments to show that until the said award

is set aside, it must be obeyed. He also referred to the important fact that

the award must be taken as it stands as no appeal was made therefrom by

the Biyani Group and that, therefore, it was not permissible to go behind

the award.

3.3. He also cited judgments to show that non-signatories to arbitration

agreements would nevertheless be bound thereby and on facts, it was

admitted that the “Ultimate Controlling Person” behind the entire

transaction was Mr. Kishore Biyani, who was defined as such under the

three Agreements.

3.4. He also argued that, as has been held in the judgments of this Court,

the FEMA is wholly unlike the Foreign Exchange Regulation Act, 1973

[“FERA”] and does not contain any provision nullifying an agreement, even

assuming that there was a breach thereof.

4. Mr. Aspi Chinoy, learned Senior Advocate also appearing on behalf of

Amazon, took us through various parts of the Emergency Arbitrator’s award

and argued that no equity can possibly be found in favour of the Biyani

Group as the breach of the Emergency Arbitrator’s award had been

admitted by them. Thus, they have come to the Court with a dishonest and

immoral case and if this is appreciated, it will be clear that on facts, after

openly flouting the Emergency Arbitrator’s award, they would have no case

on merits to resist the directions issued by the learned Single Judge under

Section 17(2) of the Arbitration Act. Even otherwise, he referred to Section

17(2) and argued that enforcement orders were made under the Arbitration

Act and not under the Code of Civil Procedure, as a result of which the

appeal filed under Order XLIII, Rule 1(r) would not be maintainable. Mr.

Chinoy also referred to a Division Bench judgment of the Bombay High

Court in Kakade Construction Co. Ltd. v. Vistra ITCL, 2019 SCC OnLine

Bom 1521 : (2019) 6 Bom CR 805 [“Kakade Construction”] to buttress his

submission.

5. Mr. Ranjit Kumar, learned Senior Advocate appearing on behalf of

Amazon, referred to Sections 9 and 17 of the Arbitration Act and the

Arbitration and Conciliation (Amendment) Act, 2015 [“2015 Amendment

Act”] which brought Section 17 into line with Section 9. He then referred to

Section 9(3) to argue that the legislative intent is to obtain interim orders

from an arbitral tribunal then constituted so as to decongest courts and free

them from the burdens of Section 9 petitions being filed before them. If this

is appreciated, then it would be clear that an Emergency Arbitrator’s award

would be a step in the right direction under institutional rules, furthering this

very objective. He also pointed out that by the very same amendment, a

non-obstante clause was added to Section 37(1), thereby making it

abundantly clear that unless an appeal falls within the four corners of

Section 37, the moment an order is passed under the Arbitration Act, no

other appeal could possibly be filed if it was outside the four corners of

Section 37.

6. Mr. Harish Salve, learned Senior Advocate appearing on behalf of

FRL, stated that he would not go to the extent of arguing that an

Emergency Arbitrator’s award would be outside the ken of the Arbitration

Act, but that it was sufficient for his purpose to argue that an Emergency

Arbitrator’s award cannot be said to fall under Section 17(1) of the Act. He

placed before us an extract of the 246th Law Commission Report, in which

the Law Commission advocated the amendment of Section 2 of the

Arbitration Act, to include within sub-section (1)(d) a provision for the

appointment of an Emergency Arbitrator. He said that despite this

suggestion being made, Parliament did not adopt the same when it

amended the Arbitration Act by the 2015 Amendment Act, thereby

indicating that such orders would not fall within Section 17(1) of the

Arbitration Act. He then took us through the definition sections in the

Arbitration Act and read out Sections 10 to 13, 16, 17, 21, 23, 27, 29A, and

30, in particular, to argue that an arbitral tribunal as defined by Section 2(1)

(d) of the Act can only mean a tribunal that is constituted between the

parties, which then decides the disputes between the parties finally and

cannot, given the scheme of the Act, include an Emergency Arbitrator who

is not an “arbitral tribunal” but a person who only decides, at best, an

interim dispute between the parties which never culminates in a final

award. He argued that Mr. Subramanium was trying to fit a square peg in a

round hole as the Arbitration Act only speaks of arbitral tribunals that are

constituted between the parties and that can finally decide the disputes

between the parties. As an example, if the tribunal rules on its own

jurisdiction and rejects a plea stating it has no jurisdiction, it must only

continue with the arbitral proceedings and make a final arbitral award,

which can never be done by an Emergency Arbitrator. The scheme,

therefore, of the entirety of Part I of the Act, would show that an Emergency

Arbitrator is a foreigner to the Indian Arbitration Act and cannot fit within its

scheme unless an amendment is made by Parliament.

6.1. He further argued, pointing to section 25.2 of the arbitral agreement

contained in the FCPL Shareholders’ Agreement (which is mirrored in the

FRL Shareholders’ Agreement as section 15.2), that in any case, the

provisions of the SIAC Rules relating to an Emergency Arbitrator’s award,

which were agreed to between the parties, were subject to the provisions of

the Arbitration Act; and since the Arbitration Act did not provide for

Emergency Arbitrators, this part of the SIAC Rules would not apply, making

it clear that an Emergency Arbitrator’s award cannot fall within Section

17(1) of the Act. He also argued that the scheme of Section 17(1) made it

clear that a party may, during arbitral proceedings, apply to the arbitral

tribunal. Even under the SIAC Rules, an Emergency Arbitrator is appointed

before the arbitral tribunal is constituted, as is clear from Rule 30 read with

Schedule 1. This being the case, an Emergency Arbitrator, not being

appointed during arbitral proceedings, falls outside Section 17(1).

6.2. He also contrasted the Arbitration Act with provisions contained in the

Singapore, New Zealand, Hong Kong, and English statutes which made it

clear that under those statutes, an Emergency Arbitrator’s awards were

expressly included and could thus be enforced under their provisions.

6.3. Mr. Salve made it clear that the appeal that was filed in the present

case was not under Section 37 of the Arbitration Act but was under Order

XLIII, Rule 1(r) of the Code of Civil Procedure. He then read Section 9

together with Section 37 of the Arbitration Act to stress that orders may be

made under Section 9 until enforcement of an award in accordance with

Section 36, and then read Section 36 to make it clear that the contours of

Section 37 did not go beyond orders and awards made under the

Arbitration Act. Since orders made in enforcement proceedings are not

under the Arbitration Act but only under the Code of Civil Procedure,

therefore, in enforcement proceedings – both under Section 17(2) and

under Section 36(1) – appeals can be filed from such orders under the

Code of Civil Procedure. He stressed upon the language of Section 36(1),

which made it clear that when a final award is made, it shall be enforced in

accordance with the provisions of the Code of Civil Procedure in the same

manner as if it were a decree of the court, thereby arguing that by a legal

fiction, an award is deemed to be a decree for the purposes of

enforcement, which would include all purposes, including appeals from

orders passed in enforcement proceedings. He also stressed upon the

language of Section 17(2) to indicate that an order passed under Section

17(1) is deemed to be an order of the court for all purposes and shall be

enforceable under the Code of Civil Procedure in the same manner as if it

were an order of the court, making it clear that enforcement is not under the

Arbitration Act but only under the Code of Civil Procedure. He stressed the

fact that the order of the learned Single Judge also made it abundantly

clear that he was exercising powers only under Order XXXIX, Rule 2-A of

the Code of Civil Procedure and not under the Arbitration Act. He then

pointed out that there would be various anomalies which cannot be

addressed if we were to accept the construction suggested by Mr.

Subramanium. As is well known, third-party objectors may object to an

order under Section 17(2) or an award. If their rights are affected, it cannot

be that they would have no right of appeal, as a perverse order against

their interests would certainly be appealable. He also pointed out that, as of

today, the application for modification/setting aside of the Emergency

Arbitrator’s award had been argued before a regularly constituted arbitral

tribunal, which would issue its order either agreeing with or rejecting the

Emergency Arbitrator’s award, from which either his clients or Mr.

Subramanium’s clients would file appeals, depending upon the orders so

passed. He referred to a number of judgments to buttress his submissions.

7. Mr. K.V. Viswanathan, learned Senior Advocate also appearing on

behalf of FRL, argued that four rules of interpretation of statutes in this

case would necessarily require us to allow these appeals in favour of the

Respondents. First, he argued that the words “as if” contained in Section

17(2) of the Act contain a legal fiction which, when taken to its logical

conclusion, would necessarily mean that enforcement proceedings would

be outside the pale of the Arbitration Act and within the confines of the

Code of Civil Procedure. Further, he argued that the use of the expression

“under the Code of Civil Procedure” in Section 17(2) is legislation by

reference and not by incorporation, leading to the conclusion that it is the

Code of Civil Procedure alone under which enforcement takes place. He

then reiterated that the expression “due regard” contained in Section 36(3)

is fundamentally different from the expression “under the Code of Civil

Procedure”, and that Section 36(1) and Section 17(2) are pari materia

provisions, distinct from Section 36(3), under which a stay of an award may

be granted under the Arbitration Act with “due regard to the Code of Civil

Procedure”. He then added that when different words are used in different

provisions, they are meant to be differentiated. He also cited judgments to

buttress each one of these submissions. He then went on to discuss

various High Court judgments which show that, in practice, appeals that are

filed against orders and awards sought to be enforced are filed under the

Code of Civil Procedure and not under the Arbitration Act.

7.1. He then referred to Section 17(1) and, in particular, to the expression

“and the arbitral tribunal shall have the same power for making orders, as

the court has for the purpose of, and in relation to, any proceedings before

it” and argued that the expression “in relation to” refers only to incidental

powers given to the tribunal and not to powers of enforcement. He also

argued that the expression “arbitral tribunal” in Section 17(1) is to be read

as defined by Section 2(1)(d), there being nothing in the context of Section

17(1) to the contrary which would obviate the application of Section 2(1)(d)

in the context of Section 17(1). He then referred to the arbitration clause

between the parties to argue that the parties contemplated, by virtue of

section 25.2 of the FCPL Shareholders’ Agreement, that only civil courts

could pass interim orders until the arbitral tribunal is properly constituted by

the parties. He then referred to a recent judgment of this Court, namely

National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine

SC 473 [“NHAI”], arguing that Section 17 was like Section 34(1) of the

Arbitration Act in that nothing could be read into Section 17 so as to

incorporate awards made by an Emergency Arbitrator.

7.2. He then argued that on a reading of Schedule 1 of the SIAC Rules,

an Emergency Arbitrator cannot be said to be like an arbitral tribunal in that,

under Rule 3, the President of the SIAC must first accept as to whether or

not an Emergency Arbitrator be appointed at all. Also, under Rule 9, an

administrative authority alone is given the power to extend time in the

circumstances mentioned in the Rule, and under Rule 10, an Emergency

Arbitrator has no power to act after the arbitral tribunal is constituted, the

tribunal not being bound by any reasons given by the Emergency Arbitrator.

From this, he argued that an Emergency Arbitrator does not fit within the

Arbitration Act as such arbitrator is not an independent quasi-judicial body

under the Rules.

7.3. He then referred to certain judgments and authorities for the

proposition that a proper reading of Exception 1 to Section 28 of the Indian

Contract Act, 1872 would show that the civil court’s jurisdiction is ousted

and that only what is expressly provided for by the ouster provisions can be

given effect to as nothing can be implied therein. He then argued that the

learned Single Judge was in a great hurry to decide the case and did not

even give sufficient time to the Respondents to file objections to the

enforcement application, though he did concede that notes of written

arguments, including the objection as to an award by an Emergency

Arbitrator being a nullity, were raised before the learned Single Judge. He

also cited various judgments to show that this was a case in which the

Emergency Arbitrator lacked inherent jurisdiction, as a result of which his

clients were justified in ignoring the award passed by the Emergency

Arbitrator.

8. Mr. Vikram Nankani, learned Senior Advocate appearing on behalf of

Respondents No. 1 to 12 in Civil Appeal Nos. 4496-4497 of 2021 and

Respondents No. 2 to 13 in Civil Appeal Nos. 4494-4495 of 2021, was at

pains to point out that in the enforcement application, on the facts of this

case, it was specifically pleaded that the High Court was being approached

as a civil court, and that the application was filed only under Order XXXIX,

Rule 2-A. He also cited judgments to show that the provisions of Order

XXXIX, Rule 2-A, being punitive in nature and requiring a heightened

standard of wilful disobedience to be applied cannot be applied routinely or

in the cavalier manner in which the learned Single Judge has applied the

said provision. He also referred to the fact that only the SIAC Rules

pertaining to “arbitration” stricto sensu were agreed to between the parties,

which would exclude rules relating to awards by an Emergency Arbitrator.

He then distinguished the judgment in Kakade Construction (supra) relied

upon by Mr. Chinoy and the judgment in Jet Airways (India) Ltd. v.

Subrata Roy Sahara, 2011 SCC OnLine Bom 1379 : 2012 (2) AIR Bom

855 [“Jet Airways”], stating that they applied only to Section 36 of the Act

and are not authorities qua Section 17, which is the subject matter of

argument in the facts of the present case.

9. Having heard learned counsel for the parties, the first question to be

determined by this Court is whether an Emergency Arbitrator’s award can

be said to be within the contemplation of the Arbitration Act, and whether it

can further be said to be an order under Section 17(1) of the Act.

10. The relevant provisions of the Arbitration Act, so far as this contention

is concerned, are as follows:

“2. Definitions.—(1) In this Part, unless the context otherwise

requires,—

(a) “arbitration” means any arbitration whether or not

administered by permanent arbitral institution;

* * *

(d) “arbitral tribunal” means a sole arbitrator or a

panel of arbitrators;”

* * *

(6) Construction of references.—Where this Part, except

Section 28, leaves the parties free to determine a certain issue,

that freedom shall include the right of the parties to authorise

any person including an institution, to determine that issue.”

* * *

(8) Where this Part—

(a) refers to the fact that the parties have agreed or

that they may agree, or

(b) in any other way refers to an agreement of the

parties, that agreement shall include any

arbitration rules referred to in that agreement.”

“19. Determination of rules of procedure.—

* * *

(2) Subject to this Part, the parties are free to agree on the

procedure to be followed by the arbitral tribunal in conducting

its proceedings.”

“21. Commencement of arbitral proceedings.—Unless

otherwise agreed by the parties, the arbitral proceedings in

respect of a particular dispute commence on the date on which

a request for that dispute to be referred to arbitration is received

by the respondent.”

11. A reading of these provisions would show that an arbitration

proceeding can be administered by a permanent arbitral institution.

Importantly, Section 2(6) makes it clear that parties are free to authorise

any person including an institution to determine issues that arise between

the parties. Also, under Section 2(8), party autonomy goes to the extent of

an agreement which includes being governed by arbitration rules referred

to in the aforesaid agreements. Likewise, under Section 19(2), parties are

free to agree on the procedure to be followed by an arbitral tribunal in

conducting its proceedings.

12. Section 21 provides that arbitral proceedings in respect of a particular

dispute commence on the date on which a request for that dispute to be

referred to arbitration is received by the respondent. This Section is

expressly subject to agreement by the parties. Rule 3.3 of the SIAC Rules

reads as follows:

“Rule 3: Notice of Arbitration

* * *

3.3 The date of receipt of the complete Notice of Arbitration

by the Registrar shall be deemed to be the date of

commencement of the arbitration. For the avoidance of doubt,

the Notice of Arbitration is deemed to be complete when all the

requirements of Rule 3.1 and Rule 6.1(b) (if applicable) are

fulfilled or when the Registrar determines that there has been

substantial compliance with such requirements. SIAC shall

notify the parties of the commencement of the arbitration.”

By agreeing to the application of the SIAC Rules, the arbitral proceedings

in the present case can be said to have commenced from the date of

receipt of a complete notice of arbitration by the Registrar of the SIAC,

which would indicate that arbitral proceedings under the SIAC Rules

commence much before the constitution of an arbitral tribunal under the

said Rules. This being the case, when Section 17(1) uses the expression

“during the arbitral proceedings”, the said expression would be elastic

enough, when read with the provisions of Section 21 of the Act, to include

emergency arbitration proceedings, which only commence after receipt of

notice of arbitration by the Registrar under Rule 3.3 of the SIAC Rules as

aforesaid.

13. A conjoint reading of these provisions coupled with there being no

interdict, either express or by necessary implication, against an Emergency

Arbitrator would show that an Emergency Arbitrator’s orders, if provided for

under institutional rules, would be covered by the Arbitration Act.

14. As a matter of fact, a number of judgments of this Court have referred

to the importance of party autonomy as being one of the pillars of

arbitration in the Arbitration Act. Thus, in Antrix Corporation Ltd. v. Devas

Multimedia Pvt. Ltd., (2014) 11 SCC 560, this Court held as follows:

“35. In view of the language of Article 20 of the arbitration

agreement which provided that the arbitration proceedings

would be held in accordance with the rules and procedures of

the International Chamber of Commerce or UNCITRAL, Devas

was entitled to invoke the Rules of Arbitration of ICC for the

conduct of the arbitration proceedings. Article 19 of the

agreement provided that the rights and responsibilities of the

parties thereunder would be subject to and construed in

accordance with the laws of India. There is, therefore, a clear

distinction between the law which was to operate as the

governing law of the agreement and the law which was to

govern the arbitration proceedings. Once the provisions of the

ICC Rules of Arbitration had been invoked by Devas, the

proceedings initiated thereunder could not be interfered with in

a proceeding under Section 11 of the 1996 Act. The invocation

of the ICC Rules would, of course, be subject to challenge in

appropriate proceedings but not by way of an application under

Section 11(6) of the 1996 Act. Where the parties had agreed

that the procedure for the arbitration would be governed by the

ICC Rules, the same would necessarily include the

appointment of an Arbitral Tribunal in terms of the arbitration

agreement and the said Rules. Arbitration Petition No. 20 of

2011 under Section 11(6) of the 1996 Act for the appointment of

an arbitrator must, therefore, fail and is rejected, but this will not

prevent the petitioner from taking recourse to other provisions

of the aforesaid Act for appropriate relief.”

Similarly, in Bharat Aluminium Co. v. Kaiser Aluminium Technical

Services Inc., (2016) 4 SCC 126 [“Balco”], this Court stated thus:

“5. Party autonomy being the brooding and guiding spirit in

arbitration, the parties are free to agree on application of three

different laws governing their entire contract — (1) proper law of

contract, (2) proper law of arbitration agreement, and (3) proper

law of the conduct of arbitration, which is popularly and in legal

parlance known as “curial law”. The interplay and application of

these different laws to an arbitration has been succinctly

explained by this Court in Sumitomo Heavy Industries Ltd. v.

ONGC Ltd. [Sumitomo Heavy Industries Ltd. v. ONGC Ltd.,

(1998) 1 SCC 305], which is one of the earliest decisions in that

direction and which has been consistently followed in all the

subsequent decisions including the recent Reliance Industries

Ltd. v. Union of India [Reliance Industries Ltd. v. Union of India,

(2014) 7 SCC 603 : (2014) 3 SCC (Civ) 737].”

* * *

“10. In the matter of interpretation, the court has to make

different approaches depending upon the instrument falling for

interpretation. Legislative drafting is made by experts and is

subjected to scrutiny at different stages before it takes final

shape of an Act, Rule or Regulation. There is another category

of drafting by lawmen or document writers who are

professionally qualified and experienced in the field like drafting

deeds, treaties, settlements in court, etc. And then there is the

third category of documents made by laymen who have no

knowledge of law or expertise in the field. The legal quality or

perfection of the document is comparatively low in the third

category, high in second and higher in first. No doubt, in the

process of interpretation in the first category, the courts do

make an attempt to gather the purpose of the legislation, its

context and text. In the second category also, the text as well

as the purpose is certainly important, and in the third category

of documents like wills, it is simply intention alone of the

executor that is relevant. In the case before us, being a contract

executed between the two parties, the court cannot adopt an

approach for interpreting a statute. The terms of the contract

will have to be understood in the way the parties wanted and

intended them to be. In that context, particularly in agreements

of arbitration, where party autonomy is the grund norm, how the

parties worked out the agreement, is one of the indicators to

decipher the intention, apart from the plain or grammatical

meaning of the expressions and the use of the expressions at

the proper places in the agreement.”

The importance of party autonomy in arbitration and commercial contracts

was further delineated in the judgment of Centrotrade Minerals & Metal

Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228 [“Centrotrade”] as

follows:

“38. Party autonomy is virtually the backbone of arbitrations.

This Court has expressed this view in quite a few decisions. In

two significant passages in Balco [Bharat Aluminium Co. v.

Kaiser Aluminium Technical Services Inc., (2016) 4 SCC 126]

this Court dealt with party autonomy from the point of view of

the contracting parties and its importance in commercial

contracts. In para 5 of the Report, it was observed: (SCC p.

130)

“5. Party autonomy being the brooding and guiding

spirit in arbitration, the parties are free to agree on

application of three different laws governing their entire

contract— (1) proper law of contract, (2) proper law of

arbitration agreement, and (3) proper law of the conduct

of arbitration, which is popularly and in legal parlance

known as “curial law”. The interplay and application of

these different laws to an arbitration has been succinctly

explained by this Court in Sumitomo [Sumitomo Heavy

Industries Ltd. v. ONGC Ltd., (1998) 1 SCC 305] which is

one of the earliest decisions in that direction and which

has been consistently followed in all the subsequent

decisions including the recent Reliance Industries Ltd. v.

Union of India [Reliance Industries Ltd. v. Union of India,

(2014) 7 SCC 603 : (2014) 3 SCC (Civ) 737].”

(emphasis in original)

Later in para 10 of the Report, it was held: (SCC pp. 131-32)

“10. In the matter of interpretation, the court has to

make different approaches depending upon the

instrument falling for interpretation. Legislative drafting is

made by experts and is subjected to scrutiny at different

stages before it takes final shape of an Act, Rule or

Regulation. There is another category of drafting by

lawmen or document writers who are professionally

qualified and experienced in the field like drafting deeds,

treaties, settlements in court, etc. And then there is the

third category of documents made by laymen who have

no knowledge of law or expertise in the field. The legal

quality or perfection of the document is comparatively low

in the third category, high in second and higher in first. No

doubt, in the process of interpretation in the first category,

the courts do make an attempt to gather the purpose of

the legislation, its context and text. In the second category

also, the text as well as the purpose is certainly important,

and in the third category of documents like wills, it is

simply intention alone of the executor that is relevant. In

the case before us, being a contract executed between

the two parties, the court cannot adopt an approach for

interpreting a statute. The terms of the contract will have

to be understood in the way the parties wanted and

intended them to be. In that context, particularly in

agreements of arbitration, where party autonomy is the

grund norm, how the parties worked out the agreement, is

one of the indicators to decipher the intention, apart from

the plain or grammatical meaning of the expressions and

the use of the expressions at the proper places in the

agreement.”

(emphasis in original)

* * *

“42. Be that as it may, the legal position as we understand it is

that the parties to an arbitration agreement have the autonomy

to decide not only on the procedural law to be followed but also

the substantive law. The choice of jurisdiction is left to the

contracting parties. In the present case, the parties have

agreed on a two-tier arbitration system through Clause 14 of

the agreement and Clause 16 of the agreement provides for the

construction of the contract as a contract made in accordance

with the laws of India. We see nothing wrong in either of the two

clauses mutually agreed upon by the parties.”

* * *

“46. For the present we are concerned only with the

fundamental or public policy of India. Even assuming the broad

delineation of the fundamental policy of India as stated in

Associate Builders [Associate Builders v. DDA, (2015) 3 SCC

49 : (2015) 2 SCC (Civ) 204] we do not find anything

fundamentally objectionable in the parties preferring and

accepting the two-tier arbitration system. The parties to the

contract have not by-passed any mandatory provision of the

A&C Act and were aware, or at least ought to have been aware

that they could have agreed upon the finality of an award given

by the arbitration panel of the Indian Council of Arbitration in

accordance with the Rules of Arbitration of the Indian Council of

Arbitration. Yet they voluntarily and deliberately chose to agree

upon a second or appellate arbitration in London, UK in

accordance with the Rules of Conciliation and Arbitration of the

International Chamber of Commerce. There is nothing in the

A&C Act that prohibits the contracting parties from agreeing

upon a second instance or appellate arbitration — either

explicitly or implicitly. No such prohibition or mandate can be

read into the A&C Act except by an unreasonable and awkward

misconstruction and by straining its language to a vanishing

point. We are not concerned with the reason why the parties

(including HCL) agreed to a second instance arbitration — the

fact is that they did and are bound by the agreement entered

into by them. HCL cannot wriggle out of a solemn commitment

made by it voluntarily, deliberately and with eyes wide open.”

(emphasis supplied)

The principle of party autonomy, as delineated in Balco (supra) and

Centrotrade (supra), has recently been quoted with approval by this Court

in PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt.

Ltd., 2021 SCC OnLine SC 331 (see paragraphs 101 and 102).

15. A recent judgment in NHAI v. M. Hakeem (supra) dealt with certain

provisions of the National Highways Act, 1956, which laid down a scheme

of acquisition different from that contained in the Land Acquisition Act,

1984. As part of the said scheme, arbitral awards passed under the

National Highways Act were challengeable only under Section 34 of the

Arbitration Act. The question squarely raised before this Court was as to

whether, when a court was empowered to “set aside” awards under Section

34 of the Act, would this power include the power to modify an award.

16. In answering this question, this Court referred to Article 34 of the

UNCITRAL Model Law on International Commercial Arbitration, 1985

[“Model Law”], and came to the conclusion that given the fact that Section

34 is a verbatim reproduction of Article 34 of the Model Law, it would not

contain any power to modify an arbitral award. In this case, since the

parliamentary intention was crystal clear, and there was no play in the joints

to apply purposive or creative interpretation, this Court came to the

conclusion that only an amendment of the Arbitration Act could set right the

position as otherwise, the Court would be guilty of altering the material of

which the Act was woven and not merely ironing out creases which were

found in the statute.

17. By way of contrast, the present is a case akin to Centrotrade (supra).

As has been pointed out in Centrotrade (supra), the parties to the contract,

in the present case, by agreeing to the SIAC Rules and the award of the

Emergency Arbitrator, have not bypassed any mandatory provision of the

Arbitration Act. There is nothing in the Arbitration Act that prohibits

contracting parties from agreeing to a provision providing for an award

being made by an Emergency Arbitrator. On the contrary, when properly

read, various Sections of the Act which speak of party autonomy in

choosing to be governed by institutional rules would make it clear that the

said rules would apply to govern the rights between the parties, a position

which, far from being prohibited by the Arbitration Act, is specifically

endorsed by it. This judgment is, therefore, entirely distinguishable from the

fact situation in the present case.

18. However, Mr. Salve argued, relying strongly upon the provisions of

Sections 10 to 13, 16, 17, 21, 23, 27, 29A, and 30 of the Arbitration Act, in

particular, that the “arbitral tribunal” spoken of in these provisions, and

referable to Section 2(1)(d) of the Act, is exhaustively defined, which means

a sole arbitrator or a panel of arbitrators, which, when read with these

provisions, would only include an arbitral tribunal which can not only pass

interim orders, but which is constituted between the parties so that interim

and/or final awards can be passed by this very tribunal. He also argued,

contrasting the language of Section 9(1) with the language of Section

17(1), that Section 17(1) would only apply where a party, during arbitral

proceedings, applies to an arbitral tribunal (as defined) for interim relief,

which cannot possibly apply to an Emergency Arbitrator who is admittedly

appointed only before an arbitral tribunal is properly constituted. By way of

contrast, he argued that under Section 9(1), an interim measure by the

courts may be availed by a party even before arbitral proceedings

commence, up to the stage of enforcement in accordance with Section 36.

19. There can be no doubt that the “arbitral tribunal” as defined in Section

2(1)(d) speaks only of an arbitral tribunal that is constituted between the

parties and which can give interim and final relief, “given the scheme of the

Act”, as Mr. Salve puts it, as contained in the aforementioned Sections.

However, like every other definition section, the definition contained in

Section 2(1)(d) only applies “unless the context otherwise requires”. Given

that the definition of “arbitration” in Section 2(1)(a) means any arbitration,

whether or not administered by a permanent arbitral institution, when read

with Sections 2(6) and 2(8), would make it clear that even interim orders

that are passed by Emergency Arbitrators under the rules of a permanent

arbitral institution would, on a proper reading of Section 17(1), be included

within its ambit. It is significant to note that the words “arbitral proceedings”

are not limited by any definition and thus encompass proceedings before

an Emergency Arbitrator, as has been held hereinabove with reference to

Section 21 of the Act read with the SIAC Rules. The short point is as to

whether the definition of “arbitral tribunal” contained in Section 2(1)(d)

should so constrict Section 17(1), making it apply only to an arbitral tribunal

that can give final reliefs by way of an interim or final award.

20. The heart of Section 17(1) is the application by a party for interim

reliefs. There is nothing in Section 17(1), when read with the other

provisions of the Act, to interdict the application of rules of arbitral

institutions that the parties may have agreed to. This being the position, at

least insofar as Section 17(1) is concerned, the “arbitral tribunal” would,

when institutional rules apply, include an Emergency Arbitrator, the context

of Section 17 “otherwise requiring” – the context being interim measures

that are ordered by arbitrators. The same object and context would apply

even to Section 9(3) which makes it clear that the court shall not entertain

an application for interim relief once an arbitral tribunal is constituted unless

the court finds that circumstances exist which may not render the remedy

provided under Section 17 efficacious. Since Section 9(3) and Section 17

form part of one scheme, it is clear that an “arbitral tribunal” as defined

under Section 2(1)(d) would not apply and the arbitral tribunal spoken of in

Section 9(3) would be like the “arbitral tribunal” spoken of in Section 17(1)

which, as has been held above, would include an Emergency Arbitrator

appointed under institutional rules.

21. However, Mr. Salve relied upon Firm Ashok Traders v. Gurumukh

Das Saluja, (2004) 3 SCC 155 and, in particular, the following passage:

“18. Under the A&C Act, 1996, unlike the predecessor Act of

1940, the Arbitral Tribunal is empowered by Section 17 of the

Act to make orders amounting to interim measures. The need

for Section 9, in spite of Section 17 having been enacted, is that

Section 17 would operate only during the existence of the

Arbitral Tribunal and its being functional. During that period, the

power conferred on the Arbitral Tribunal under Section 17 and

the power conferred on the court under Section 9 may overlap

to some extent but so far as the period pre- and post- the

arbitral proceedings is concerned, the party requiring an interim

measure of protection shall have to approach only the court. …”

This judgment also does not carry the Respondents’ case any further as

the question for decision in this case is whether the Emergency Arbitrator’s

award can be said to be by an “arbitral tribunal” as defined, and does not

have any reference to when a party may approach a court under Section 9.

22. Mr. Salve then argued that in any case, the arbitration agreement

between the parties, contained in section 25.2 of the FCPL Shareholders’

Agreement (pari materia with section 15.2 of the FRL Shareholders’

Agreement), makes it clear that the SIAC Rules would be subject to the

Indian Arbitration Act, and being so subject, the provisions governing an

award made by an Emergency Arbitrator under the SIAC Rules would not

be applicable between the parties. Sections 25.1 and 25.2 of the FCPL

Shareholders’ Agreement (pari materia with sections 15.1 and 15.2 of the

FRL Shareholders’ Agreement) read as follows:

“25.1. Governing Law

This Agreement shall be governed by and construed in

accordance with the Laws of India. Subject to the provisions of

Section 25.2 (Dispute Resolution), the courts at New Delhi,

India shall have exclusive jurisdiction over any matters or

Dispute (hereinafter defined) relating or arising out of this

Agreement.

“25.2. Dispute Resolution

25.2.1. Arbitration

Any dispute, controversy, claim or disagreement of any kind

whatsoever between or among the Parties in connection with or

arising out of this Agreement or the breach, termination or

invalidity thereof (hereinafter referred to as a “Dispute”), failing

amicable resolution through negotiations, shall be referred to

and finally resolved by arbitration irrespective of the amount in

Dispute or whether such Dispute would otherwise be

considered justifiable or ripe for resolution by any court. The

parties agree that they shall attempt to resolve through good

faith consultation, any such Dispute between any of the Parties

and such consultation shall begin promptly after a Party has

delivered to another Party a written request for such

consultation. In the event the Dispute is not resolved by means

of negotiation within a period of 30 (thirty) days or such different

period mutually agreed between the Parties, such Dispute shall

be referred to and finally resolved by Arbitration in accordance

with the arbitration rules of the Singapore International

Arbitration Centre (“SIAC”), and such rules (the “Rules”) as may

be modified by the provisions of this Section 25 (Governing Law

and Dispute Resolution). This Agreement and the rights and

obligations of the Parties shall remain in full force and effect

pending the award in such arbitration providing, which award, if

appropriate, shall determine whether and when any termination

shall become effective.”

As has been held by us above, it is wholly incorrect to say that Section

17(1) of the Act would exclude an Emergency Arbitrator’s orders. This

being the case, even if section 25.2 of the FCPL Shareholders’ Agreement

(pari materia with section 15.2 of the FRL Shareholders’ Agreement) makes

the SIAC Rules subject to the Arbitration Act, the said Act, properly

construed, would include an Emergency Arbitrator’s awards/orders, there

being nothing inconsistent in the SIAC Rules when read with the Act.

23. Also, Mr. Nankani’s argument that the arbitration agreement

contained in section 25.2 of the FCPL Shareholders’ Agreement referred to

hereinabove would indicate that the SIAC Rules were only agreed upon

insofar as arbitration alone is concerned is wholly incorrect. Rule 1.3 of the

SIAC Rules indicates that an award of an Emergency Arbitrator is included

within the ambit of these Rules, and that an Emergency Arbitrator, as

defined, means an arbitrator appointed in accordance with paragraph 3 of

Schedule 1. This makes it clear beyond doubt that “arbitration” mentioned

in section 25.2 of the FCPL Shareholders’ Agreement would include an

arbitrator appointed in accordance with the SIAC Rules which, in turn,

would include an Emergency Arbitrator.

24. The SIAC Rules, with which we are immediately concerned, deal with

the concept of an Emergency Arbitrator as follows:

“Rule 1: Scope of Application and Interpretation

* * *

1.3 In these Rules:

“Award” includes a partial, interim or final award and an award

of an Emergency Arbitrator;

* * *

“Emergency Arbitrator” means an arbitrator appointed in

accordance with paragraph 3 of Schedule 1;”

“Rule 30: Interim and Emergency Relief

30.1 The Tribunal may, at the request of a party, issue an order

or an Award granting an injunction or any other interim relief it

deems appropriate. The Tribunal may order the party

requesting interim relief to provide appropriate security in

connection with the relief sought.

30.2 A party that wishes to seek emergency interim relief prior

to the constitution of the Tribunal may apply for such relief

pursuant to the procedures set forth in Schedule 1.

30.3 A request for interim relief made by a party to a judicial

authority prior to the constitution of the Tribunal, or in

exceptional circumstances thereafter, is not incompatible with

these Rules.”

“SCHEDULE 1

EMERGENCY ARBITRATOR

1. A party that wishes to seek emergency interim relief may,

concurrent with or following the filing of a Notice of Arbitration

but prior to the constitution of the Tribunal, file an application for

emergency interim relief with the Registrar. The party shall, at

the same time as it files the application for emergency interim

relief, send a copy of the application to all other parties. The

application for emergency interim relief shall include:

a. the nature of the relief sought;

b. the reasons why the party is entitled to such relief; and

c. a statement certifying that all other parties have been

provided with a copy of the application or, if not, an

explanation of the steps taken in good faith to provide

a copy or notification to all other parties.

* * *

3. The President shall, if he determines that SIAC should

accept the application for emergency interim relief, seek to

appoint an Emergency Arbitrator within one day of receipt by

the Registrar of such application and payment of the

administration fee and deposits.

4. If the parties have agreed on the seat of the arbitration,

such seat shall be the seat of the proceedings for emergency

interim relief. Failing such an agreement, the seat of the

proceedings for emergency interim relief shall be Singapore,

without prejudice to the Tribunal’s determination of the seat of

the arbitration under Rule 21.1.

5. Prior to accepting appointment, a prospective Emergency

Arbitrator shall disclose to the Registrar any circumstances that

may give rise to justifiable doubts as to his impartiality or

independence. Any challenge to the appointment of the

Emergency Arbitrator must be made within two days of the

communication by the Registrar to the parties of the

appointment of the Emergency Arbitrator and the circumstances

disclosed.

6. An Emergency Arbitrator may not act as an arbitrator in

any future arbitration relating to the dispute, unless otherwise

agreed by the parties.

* * *

8. The Emergency Arbitrator shall have the power to order

or award any interim relief that he deems necessary, including

preliminary orders that may be made pending any hearing,

telephone or video conference or written submissions by the

parties. The Emergency Arbitrator shall give summary reasons

for his decision in writing. The Emergency Arbitrator may modify

or vacate the preliminary order, the interim order or Award for

good cause.

9. The Emergency Arbitrator shall make his interim order or

Award within 14 days from the date of his appointment unless,

in exceptional circumstances, the Registrar extends the time.

No interim order or Award shall be made by the Emergency

Arbitrator until it has been approved by the Registrar as to its

form.

10. The Emergency Arbitrator shall have no power to act after

the Tribunal is constituted. The Tribunal may reconsider, modify

or vacate any interim order or Award issued by the Emergency

Arbitrator, including a ruling on his own jurisdiction. The Tribunal

is not bound by the reasons given by the Emergency Arbitrator.

Any interim order or Award issued by the Emergency Arbitrator

shall, in any event, cease to be binding if the Tribunal is not

constituted within 90 days of such order or Award or when the

Tribunal makes a final Award or if the claim is withdrawn.

* * *

12. The parties agree that an order or Award by an

Emergency Arbitrator pursuant to this Schedule 1 shall be

binding on the parties from the date it is made, and undertake

to carry out the interim order or Award immediately and without

delay. The parties also irrevocably waive their rights to any form

of appeal, review or recourse to any State court or other judicial

authority with respect to such Award insofar as such waiver

may be validly made.”

25. A reading of the aforesaid Rules indicates that even before an arbitral

Tribunal is constituted under the Rules, urgent interim reliefs can be

granted by what is termed as an “Emergency Arbitrator”. An “Emergency

Arbitrator” is defined by Rule 1.3 of these Rules as meaning an arbitrator

appointed in accordance with paragraph 3 of Schedule 1. Under paragraph

7 of Schedule 1, the Emergency Arbitrator has all the powers vested in the

arbitral tribunal pursuant to SIAC Rules, including the authority to rule on

his own jurisdiction. Importantly, under paragraph 8 of Schedule 1 to the

SIAC Rules, the Emergency Arbitrator shall have the power to order such

interim relief that he deems necessary, and is to give summary reasons for

his decision in writing. Under paragraph 9, the interim order is to be made

within 14 days of his appointment, unless time is extended. Importantly,

once the arbitral tribunal is constituted under paragraph 10, the tribunal

may reconsider, modify, or vacate any such interim order. Such interim

order or award issued by the Emergency Arbitrator will continue to bind the

parties unless it is modified or vacated by the arbitral tribunal, once it is

constituted, until the tribunal makes a final award or until the claim is

withdrawn. Paragraph 10 of Schedule 1 also provides that any interim order

or award made by the Emergency Arbitrator shall cease to be binding only

if the tribunal is not constituted within 90 days of such order or award.

Under paragraph 12, the parties agree that such orders shall be binding on

the parties from the date it is made and undertake to carry out the interim

order immediately and without delay.

26. No doubt, as has been submitted, the 246th Law Commission Report

did provide for the insertion of an Emergency Arbitrator’s orders into

Section 2(1)(d) of the Arbitration Act as follows:

“Amendment of Section 2

1. In section 2 of the Arbitration and Conciliation Act, 1996,–

(i) In sub-section (1), clause (d), after the words “…panel of

arbitrators” add “and, in the case of an arbitration conducted

under the rules of an institution providing for appointment of an

emergency arbitrator, includes such emergency arbitrator;”

[NOTE: This amendment is to ensure that institutional rules

such as the SIAC Arbitration Rules which provide for an

emergency arbitrator are given statutory recognition in India.]”

27. As has been held in Avitel Post Studioz Ltd. & Ors. v. HSBC PI

Holdings (Mauritius) Ltd., (2021) 4 SCC 713, the mere fact that a

recommendation of a Law Commission Report is not followed by

Parliament, would not necessarily lead to the conclusion that what has

been suggested by the Law Commission cannot form part of the statute as

properly interpreted. This Court held:

“27. Mr Saurabh Kirpal took exception to Sikri, J.'s judgment in

that Sikri, J. did not refer to Para 52 of the 246th Law

Commission Report and its aftermath. Para 52 of the 246th Law

Commission Report reads as follows:

“52. The Commission believes that it is important to set

this entire controversy to a rest and make issues of fraud

expressly arbitrable and to this end has proposed

amendments to Section 16.”

The Law Commission then added, by way of amendment, a

proposed Section 16(7) as follows:

“Amendment of Section 16

10. In Section 16,

After sub-section (6), insert sub-section “(7) The Arbitral

Tribunal shall have the power to make an award or give a

ruling notwithstanding that the dispute before it involves a

serious question of law, complicated questions of fact or

allegations of fraud, corruption, etc.”

[Note: This amendment is proposed in the light of the

Supreme Court decisions (e.g. N. Radhakrishnan v.

Maestro Engineers [N. Radhakrishnan v. Maestro

Engineers, (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12])

which appear to denude an Arbitral Tribunal of the power

to decide on issues of fraud, etc.]”

28. Mr Saurabh Kirpal then referred to the fact that the

aforesaid sub-section was not inserted by Parliament by the

2015 Amendment Act, which largely incorporated other

amendments proposed by the Law Commission. His argument

therefore was that N. Radhakrishnan [N. Radhakrishnan v.

Maestro Engineers, (2010) 1 SCC 72] not having been

legislatively overruled, cannot now be said to be in any way

deprived of its precedential value, as Parliament has taken note

of the proposed Section 16(7) in the 246th Law Commission

Report, and has expressly chosen not to enact it. For this

proposition, he referred to La Pintada [President of India v. La

Pintada Compania Navigacion SA, 1985 AC 104 : (1984) 3

WLR 10 (HL)]. This judgment related to a challenge to an award

granting compound interest, inter alia, in a case where a debt is

paid late, but before any proceedings for its recovery had

begun.

28. He then referred to the fact that the aforesaid sub-section

was not inserted by Parliament by the 2015 Amendment Act,

which largely incorporated other amendments proposed by the

Law Commission. His argument therefore was that N.

Radhakrishnan [N. Radhakrishnan v. Maestro Engineers,

(2010) 1 SCC 72] not having been legislatively overruled,

cannot now be said to be in any way deprived of its

precedential value, as Parliament has taken note of the

proposed section 16(7) in the 246th Law Commission Report,

and has expressly chosen not to enact it. For this proposition,

he referred to La Pintada (supra). This judgment related to a

challenge to an award granting compound interest, inter alia, in

a case where a debt is paid late, but before any proceedings for

its recovery had begun.

29. Lord Brandon of Oakbrook, who wrote the main judgment in

this case, stated: (La Pintada case [President of India v. La

Pintada Compania Navigacion SA, 1985 AC 104 : (1984) 3

WLR 10 (HL)] , AC p. 122)

“There are three cases in which the absence of any

common law remedy for damage or loss caused by the

late payment of a debt may arise, cases which I shall in

what follows describe for convenience as Case 1, Case 2

and Case 3. Case 1 is where a debt is paid late, before

any proceedings for its recovery have been begun. Case

2 is where a debt is paid late, after proceedings for its

recovery have been begun, but before they have been

concluded. Case 3 is where a debt remains unpaid until

as a result of proceedings for its recovery being brought

and prosecuted to a conclusion, a money judgment is

given in which the original debt becomes merged.”

* * *

“32. It is a little difficult to apply this case to resurrect the ratio

of N. Radhakrishnan [N. Radhakrishnan v. Maestro Engineers,

(2010) 1 SCC 72] as a binding precedent given the advance

made in the law by this Court since N. Radhakrishnan was

decided. Quite apart from what has been stated by us in paras

17 to 21 above, as to how N. Radhakrishnan cannot be

considered to be a binding precedent for the reasons given in

the said paragraph, we are of the view that the development of

the law by this Court cannot be thwarted merely because a

certain provision recommended in a Law Commission Report is

not enacted by Parliament. Parliament may have felt, as was

mentioned by Lord Reid in British Railways Board v.

Herrington [British Railways Board v. Herrington, 1972 AC 877 :

1972 2 WLR 537 (HL)] , that it was unable to make up its mind

and instead, leave it to the courts to continue, case by case,

deciding upon what should constitute the fraud exception. [This

case is referred to in Lord Brandon’s judgment in La Pintada,

1985 AC 104 : (1984) 3 WLR 10 (HL) and distinguished at AC

p. 130 of his judgment.] Parliament may also have thought that

Section 16(7), proposed by the Law Commission, is clumsily

worded as it speaks of “a serious question of law, complicated

questions of fact, or allegations of fraud, corruption, etc.” N.

Radhakrishnan did not lay down that serious questions of law

or complicated questions of fact are non-arbitrable. Further,

“allegations of fraud, corruption, etc.” is vague. For this reason

also, Parliament may have left it to the courts to work out the

fraud exception. In any case, we have pointed out that dehors

any such provision, the ratio in N. Radhakrishnan, being based

upon a judgment under the 1940 Act, and without considering

Sections 5, 8 and 16 of the 1996 Act in their proper perspective,

would all show that the law laid down in this case cannot now

be applied as a precedent for application of the fraud mantra to

negate arbitral proceedings. For the reasons given in this

judgment, the House of Lords’ decision would have no

application inasmuch as N. Radhakrishnan has been tackled on

the judicial side and has been found to be wanting.”

28. It is pertinent to note that the High-Level Committee constituted by

the Government of India under the chairmanship of Justice B.N. Srikrishna

(Retd.) to review the institutionalisation of arbitration mechanism in India

and look into the provisions of the Arbitration Act after the 2015 Amendment

Act, submitted a report on 30th July, 2017 [“Srikrishna Committee

Report”], in which it is stated as follows:

“16. Enforcement of emergency awards

There is significant uncertainty in the law regarding the

enforceability of emergency awards in arbitrations seated in

India. The LCI in its 246th Report had recommended

recognising the concept of emergency arbitrator by widening

the definition of arbitral tribunal under section 2(d) of the ACA to

include emergency arbitrator. However, this recommendation

was not incorporated in the 2015 Amendment Act.

While one could possibly rely on section 17(2) of the ACA to

enforce emergency awards for arbitrations seated in India, the

Delhi High Court decision in Raffles Design International India

Pvt. Ltd.& Anr. v. Educomp Professional Education Ltd. & Ors.,

(2016) 234 DLT 349 held that an emergency award in an

arbitration seated outside India is not enforceable in India.

India’s approach differs from that of developed arbitration

jurisdictions such as Singapore and Hong Kong which have

recognised the enforceability of orders given by an emergency

arbitrator. Singapore amended the IAA in 2012 to broaden the

definition of ‘arbitral tribunal’ in section 2(1) to include

emergency arbitrator(s). Hong Kong amended the AO in 2013

to include Part 3A which deals with the enforcement of

emergency relief. Section 22B provides that emergency relief

granted by an emergency arbitrator shall with the leave of the

Court of First Instance of the High Court be enforceable in the

same manner as an order or direction of the Court.

Given that international practice is in favour of enforcing

emergency awards (Singapore, Hong Kong and the United

Kingdom all permit enforcement of emergency awards), it is

time that India permitted the enforcement of emergency awards

in all arbitral proceedings. This would also provide legislative

support to rules of arbitral institutions that presently provide for

emergency arbitrators (See Dennis Nolan and Roger Abrams,

‘Arbitral Immunity’, Berkeley Journal of Employment and Labour

Law, Vol. 11 Issue 2 (1989), pp.228–266). For this purpose, the

recommendation made by the LCI in its 246th Report may be

adopted.”

29. The Delhi High Court judgment in Raffles Design International

India Pvt. Ltd. v. Educomp Professional Education Ltd., 2016 SCC

OnLine Del 5521 : (2016) 234 DLT 349 dealt with an award by an

Emergency Arbitrator in an arbitration seated outside India (as was

mentioned in Srikrishna Committee Report). What is of significance is that

the said Report laid down that it is possible to interpret Section 17(2) of the

Act to enforce emergency awards for arbitrations seated in India, and

recommended that the Act be amended only so that it comes in line with

international practice in favour of recognising and enforcing an emergency

award.

30. It is relevant to note that the 246th Law Commission Report also

recommended the insertion of Section 9(2) and 9(3) as follows:

“Amendment of Section 9

6. In section 9,

(i) before the words “A party may, before” add sub-section “(1)”

(ii) after the words “any proceedings before it” add sub-section

“(2) Where, before the arbitral proceedings, a Court grants any

interim measure of protection under sub-section (1), the arbitral

proceedings shall be commenced within 60 days from the date

of such grant or within such shorter or further time as indicated

by the Court, failing which the interim measure of protection

shall cease to operate.

[NOTE: This amendment is to ensure the timely initiation of

arbitration proceedings by a party who is granted an interim

measure of protection.]

(iii) Add sub-section “(3) Once the Arbitral Tribunal has been

constituted, the Court shall, ordinarily, not entertain an

Application under this provision unless circumstances exist

owing to which the remedy under section 17 is not efficacious.”

[NOTE: This amendment seeks to reduce the role of the Court

in relation to grant of interim measures once the Arbitral

Tribunal has been constituted. After all, once the Tribunal is

seized of the matter it is most appropriate for the Tribunal to

hear all interim applications. This also appears to be the spirit of

the UNCITRAL Model Law as amended in 2006.

Accordingly, section 17 has been amended to provide the

Arbitral Tribunal the same powers as a Court would have under

section 9]”

31. The 2015 Amendment Act, therefore, introduced sub-sections (2) and

(3) to Section 9, which read as follows:

“9. Interim measures, etc. by Court.—

* * *

(2) Where, before the commencement of the arbitral

proceedings, a court passes an order for any interim measure

of protection under sub-section (1), the arbitral proceedings

shall be commenced within a period of ninety days from the

date of such order or within such further time as the court may

determine.

(3) Once the arbitral tribunal has been constituted, the court

shall not entertain an application under sub-section (1), unless

the court finds that circumstances exist which may not render

the remedy provided under Section 17 efficacious.”

32. In essence, what is provided by the SIAC Rules and the other

institutional rules, is reflected in Sections 9(2) and 9(3) so far as interim

orders passed by courts are concerned. The introduction of Sections 9(2)

and 9(3) would show that the objective was to avoid courts being flooded

with Section 9 petitions when an arbitral tribunal is constituted for two good

reasons – (i) that the clogged court system ought to be decongested, and

(ii) that an arbitral tribunal, once constituted, would be able to grant interim

relief in a timely and efficacious manner.

33. Similarly, the 246th Law Commission Report recommended the

amendment of Section 17 as follows:

“Amendment of Section 17

11. In section 17

* * *

(vi) In sub-section (1), after sub-clause “(d)”, insert sub-clause

“(e) such other interim measure of protection as may appear to

the Arbitral Tribunal to be just and convenient, and the arbitral

tribunal shall have the same power for making orders as the

Court has for the purpose of, and in relation to, any

proceedings before it.”

[NOTE: This is to provide the arbitral tribunal the same powers

as a civil court in relation to grant of interim measures. When

this provision is read in conjunction with section 9(2), parties will

by default be forced to approach the Arbitral Tribunal for interim

relief once the Tribunal has been constituted. The Arbitral

Tribunal would continue to have powers to grant interim relief

post-award. This regime would decrease the burden on Courts.

Further, this would also be in tune with the spirit of the

UNCITRAL Model Law as amended in 2006.]

(vii) delete words in sub-section (2) and add the words “(2)

Subject to any orders passed in appeal under section 37, any

order issued by the arbitral tribunal under this section shall be

deemed to be an Order of the Court for all purposes and shall

be enforceable under the Code of Civil Procedure, 1908 in the

same manner as if it were an Order of the Court.”

[NOTE: This is to ensure the effective enforcement of interim

measures that may be ordered by an arbitral tribunal.]”

34. Section 17 was then amended by the very same 2015 Amendment

Act (which brought in sub-sections (2) and (3) to Section 9) to substitute

Section 17 so that Section 17(1) would be a mirror image of Section 9(1),

making it clear that an arbitral tribunal is fully clothed with the same power

as a court to provide for interim relief. Also, Section 17(2) was added so as

to provide for enforceability of such orders, again, as if they were orders

passed by a court, thereby bringing Section 17 on par with Section 9.

35. An Emergency Arbitrator’s “award”, i.e., order, would undoubtedly be

an order which furthers these very objectives, i.e., to decongest the court

system and to give the parties urgent interim relief in cases which deserve

such relief. Given the fact that party autonomy is respected by the Act and

that there is otherwise no interdict against an Emergency Arbitrator being

appointed, as has been held by us hereinabove, it is clear that an

Emergency Arbitrator’s order, which is exactly like an order of an arbitral

tribunal once properly constituted, in that parties have to be heard and

reasons are to be given, would fall within the institutional rules to which the

parties have agreed, and would consequently be covered by Section 17(1),

when read with the other provisions of the Act, as delineated above.

36. A party cannot be heard to say, after it participates in an Emergency

Award proceeding, having agreed to institutional rules made in that regard,

that thereafter it will not be bound by an Emergency Arbitrator’s ruling. As

we have seen hereinabove, having agreed to paragraph 12 of Schedule 1

to the SIAC Rules, it cannot lie in the mouth of a party to ignore an

Emergency Arbitrator’s award by stating that it is a nullity when such party

expressly agrees to the binding nature of such award from the date it is

made and further undertakes to carry out the said interim order immediately

and without delay.

37. However, Mr. Viswanathan argued that an Emergency Arbitrator

under the SIAC Rules is not an independent judicial body like an arbitral

tribunal constituted under the very Rules, and referred to and relied upon

Rules 3, 9, and 10 to buttress this proposition. Rule 3 merely states that the

President may appoint an Emergency Arbitrator if he determines that the

SIAC should accept the application for emergency interim relief. Once the

Emergency Arbitrator enters upon the reference, he is given all the powers

of an arbitral tribunal under Rule 7 and is to decide completely

independently of any other administrative authority under the SIAC Rules.

Equally, Rule 9 does not, in any manner, impinge upon the independence

of the Emergency Arbitrator as it only lays down the timeframe within which

an interim order or award is to be made, which time is extendable by the

Registrar. The interim order or award that is finally made by the Emergency

Arbitrator has only to be approved by the Registrar as to its “form” and not

on merits. Further, Rule 10 also does not, in any manner, interfere with the

independence of the decision of the Emergency Arbitrator. This argument

is, therefore, rejected.

38. Mr. Viswanathan also went on to argue, relying upon Section 28 of

the Contract Act, Justice R.S. Bachawat’s Law of Arbitration and

Conciliation (Sixth Ed., LexisNexis), and the Chancery Division judgment of

In Re Franklin and Swathling’s Arbitration, [1929] 1 Ch. 238, for the

proposition that arbitration, conceptually, is an ouster of the civil court’s

jurisdiction and that, therefore, only what is expressly provided in the ouster

provisions can be followed – there is no room for any implication here. This

argument may have found favour with a court if it were dealing with

Arbitration Act, 1940. As has been held in several decisions of this Court,

the Arbitration and Conciliation Act, 1996 is a complete break with the past

and is no longer to be viewed as an ouster statute but as a statute which

favours the remedy of arbitration so as to de-clog civil courts which are, in

today’s milieu, extremely burdened. As a matter of fact, Section 5 of the

Arbitration Act puts paid to the submission when it overrides all other laws

for the time being in force and goes on to state that in matters governed by

Part I of the Act, no judicial authority shall intervene except where so

provided in that Part. The Arbitration Act, therefore, turns the principle of

ouster on its head when it comes to arbitration as a favoured means of

resolving civil disputes. This argument also, therefore, stands rejected.

39. Even otherwise, as has been correctly pointed out by Mr.

Subramanium, no order bears the stamp of invalidity on its forehead and

has to be set aside in regular court proceedings as being illegal. This is

felicitously stated in several judgments – See Krishnadevi Malchand

Kamathia v. Bombay Environmental Action Group, (2011) 3 SCC 363

(at paragraphs 16 to 19), and Anita International v. Tungabadra Sugar

Works Mazdoor Sangh, (2016) 9 SCC 44 (at paragraphs 54 and 55). As a

matter of fact, in Tayabbhai M. Bagasarwalla v. Hind Rubber Industries

(P) Ltd., (1997) 3 SCC 443, this Court has unequivocally held that even if

an order is later set aside as having been passed without jurisdiction, for

the period of its subsistence, it is an order that must be obeyed. This Court

held:

“15. The next thing to be noticed is that certain interim orders

were asked for and were granted by the Civil Court during this

period. Would it be right to say that violation of and

disobedience to the said orders of injunction is not punishable

because it has been found later that the Civil Court had no

jurisdiction to entertain the suit. Mr Sorabjee suggests that

saying so would be subversive of the Rule of Law and would

seriously erode the majesty and dignity of the courts. It would

mean, suggests the learned counsel, that it would be open to

the defendants-respondents to decide for themselves whether

the order was with or without jurisdiction and act upon that

belief. This can never be, says the learned counsel. He further

suggests that if any party thinks that an order made by the Civil

Court is without jurisdiction or is contrary to law, the appropriate

course open to him is to approach that court with that plea and

ask for vacating the order. But it is not open to him to flout the

said order assuming that the order is without jurisdiction. It is

this principle which has been recognised and incorporated in

Section 9-A of Civil Procedure Code (inserted by Maharashtra

Amendment Act No. 65 of 1977), says Mr Sorabjee. Section 9-A

reads as follows:

“9-A. Where at the hearing of an application relating to

interim relief in suit, objection to jurisdiction is taken, such

issue to be decided by the Court as a preliminary issue.—

(1) Notwithstanding anything contained in this Code or

any other law for the time being in force, if, at the hearing

of any application for granting or setting aside an order

granting any interim relief, whether by way of stay

injunction, appointment of a receiver or otherwise, made

in any suit, an objection to the jurisdiction of the Court to

entertain such suit is taken by any of the parties to the

suit, the Court shall proceed to determine at the hearing

of such application the issue as to the jurisdiction as a

preliminary issue before granting or setting aside the

order granting the interim relief. Any such application shall

be heard and disposed of by the Court as expeditiously

as possible and shall not in any case be adjourned to the

hearing of suit.

(2) Notwithstanding anything contained in sub-section

(1), at the hearing of any such application, the Court may

grant such interim relief as it may consider necessary,

pending determination by it of the preliminary issue as to

the jurisdiction.”

16. According to this section, if an objection is raised to the

jurisdiction of the court at the hearing of an application for grant

of, or for vacating, interim relief, the court should determine that

issue in the first instance as a preliminary issue before granting

or setting aside the relief already granted. An application raising

objection to the jurisdiction to the court is directed to be heard

with all expedition. Sub-rule (2), however, says that the

command in sub-rule (1) does not preclude the court from

granting such interim relief as it may consider necessary

pending the decision on the question of jurisdiction. In our

opinion, the provision merely states the obvious. It makes

explicit what is implicit in law. Just because an objection to the

jurisdiction is raised, the court does not become helpless

forthwith — nor does it become incompetent to grant the interim

relief. It can. At the same time, it should also decide the

objection to jurisdiction at the earliest possible moment. This is

the general principle and this is what Section 9-A reiterates.

Take this very case. The plaintiff asked for temporary injunction.

An ad interim injunction was granted. Then the defendants

came forward objecting to the grant of injunction and also

raising an objection to the jurisdiction of the court. The court

overruled the objection as to jurisdiction and made the interim

injunction absolute. The defendants filed an appeal against the

decision on the question of jurisdiction. While that appeal was

pending, several other interim orders were passed both by the

Civil Court as well as by the High Court. Ultimately, no doubt,

the High Court has found that the Civil Court had no jurisdiction

to entertain the suit but all this took about six years. Can it be

said that orders passed by the Civil Court and the High Court

during this period of six years were all non est and that it is

open to the defendants to flout them merrily, without fear of any

consequence. Admittedly, this could not be done until the High

Court's decision on the question of jurisdiction. The question is

whether the said decision of the High Court means that no

person can be punished for flouting or disobeying the

interim/interlocutory orders while they were in force, i.e., for

violations and disobedience committed prior to the decision of

the High Court on the question of jurisdiction. Holding that by

virtue of the said decision of the High Court (on the question of

jurisdiction), no one can be punished thereafter for

disobedience or violation of the interim orders committed prior

to the said decision of the High Court, would indeed be

subversive of the Rule of Law and would seriously erode the

dignity and the authority of the courts. We must repeat that this

is not even a case where a suit was filed in the wrong court

knowingly or only with a view to snatch an interim order. As

pointed out hereinabove, the suit was filed in the Civil Court

bona fide. We are of the opinion that in such a case the

defendants cannot escape the consequences of their

disobedience and violation of the interim injunction committed

by them prior to the High Court's decision on the question of

jurisdiction.

* * *

“27. The learned counsel for Defendants 1 and 2 submitted that

this is not a proceeding for contempt but a proceeding under

Rule 2-A of Order 39 of the Civil Procedure Code. The learned

counsel submitted that proceedings under Order 39 Rule 2-A

are a part of the coercive process to secure obedience to its

injunction and that once it is found that the Court has no

jurisdiction, question of securing obedience to its orders any

further does not arise. The learned counsel also submitted that

enforcing the interim order after it is found that the Court had no

jurisdiction to try the said suit would not only be unjust and

illegal but would also reflect adversely upon the dignity and

authority of the Court. It is also suggested that the plaintiff had

instituted the present suit in the Civil Court knowing fully well

that it had no jurisdiction to try it. It is not possible to agree with

any of these submissions not only on principle but also in the

light of the specific provision contained in Section 9-A of the

Code of Civil Procedure (Maharashtra Amendment). In the light

of the said provision, it would not be right to say that the Civil

Court had no jurisdiction to pass interim orders or interim

injunction, as the case may be, pending decision on the

question of jurisdiction. The orders made were within the

jurisdiction of the Court and once this is so, they have to be

obeyed and implemented. It is not as if the defendants are

being sought to be punished for violations committed after the

decision of the High Court on the question of jurisdiction of the

Civil Court. Here the defendants are sought to be punished for

the disobedience and violation of the order of injunction

committed before the decision of the High Court in Vishanji Virji

Mepani [AIR 1996 Bom 366]. According to Section 9-A, the Civil

Court and the High Court did have the power to pass interim

orders until that decision. If they had that power, they must also

have the power to enforce them. In the light of the said

provision, it cannot also be held that those orders could be

enforced only till the said decision but not thereafter. The said

decision does not render them (the interim orders passed

meanwhile) either non est or without jurisdiction. Punishing the

defendants for violation of the said orders committed before the

said decision (Vishanji Virji Mepani [AIR 1996 Bom 366]) does

not amount, in any event, to enforcing them after the said

decision. Only the orders are being passed now. The violations

are those committed before the said decision.”

40. However, learned counsel for the Respondents referred to and relied

upon the classic passage in Kiran Singh v. Chaman Paswan, (1955) 1

SCR 117 (at page 122) and various other judgments following it to contend

that in cases of inherent lack of jurisdiction, it would be open to a party to

ignore an award by an Emergency Arbitrator. They also referred to the

judgment in CIT v. Pearl Mechanical Engineering & Foundry Works (P)

Ltd., (2004) 4 SCC 597, where this Court spoke of the jurisdiction of a

court or tribunal by stating that such jurisdiction only subsists when a court

or tribunal exercises such jurisdiction from the law. It is a power which

nobody on whom the law is not conferred can exercise. None of these

judgments are applicable in the fact situation of the present case. On the

contrary, we have pointed out that no party, after agreeing to be governed

by institutional rules, can participate in a proceeding before an Emergency

Arbitrator and, after losing, turn around and say that the award is a nullity or

coram non judice when there is nothing in the Arbitration Act which

interdicts an Emergency Arbitrator’s order from being made. As has been

pointed out, Section 17, as construed in the light of the other provisions of

the Act, clearly leads to the position that such emergency award is made

under the provisions of Section 17(1) and can be enforced under the

provisions of Section 17(2).

41. We, therefore, answer the first question by declaring that full party

autonomy is given by the Arbitration Act to have a dispute decided in

accordance with institutional rules which can include Emergency Arbitrators

delivering interim orders, described as “awards”. Such orders are an

important step in aid of decongesting the civil courts and affording

expeditious interim relief to the parties. Such orders are referable to and

are made under Section 17(1) of the Arbitration Act.

42. We now come to the question as to the maintainability of the appeal

that has been filed under Order XLIII, Rule 1(r). Order XLIII, Rule 1(r) reads

as under:

“ORDER XLIII – Appeals from Orders

1. Appeals from orders.—An appeal shall lie from the

following orders under the provisions of Section 104, namely:—

* * *

(r) an order under Rule 1, Rule 2, Rule 2-A, Rule 4 or Rule 10

of Order XXXIX;”

43. In order to answer this question, it is important to advert to Sections

9, 17, and 37 of the Arbitration Act. Section 9(1) reads as follows:

“9. Interim measures, etc. by Court.—(1) A party may, before

or during arbitral proceedings or at any time after the making of

the arbitral award but before it is enforced in accordance with

Section 36, apply to a Court:—

(i) for the appointment of a guardian for a minor or a person of

unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the

following matters, namely:—

(a) the preservation, interim custody or sale of any

goods which are the subject-matter of the arbitration

agreement;

(b) securing the amount in dispute in the arbitration;

property or thing which is the subject-matter of the

dispute in arbitration, or as to which any question

may arise therein and authorising for any of the

aforesaid purposes any person to enter upon any

land or building in the possession of any party, or

authorising any samples to be taken or any

observation to be made, or experiment to be tried,

which may be necessary or expedient for the

purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may

appear to the Court to be just and convenient,

and the Court shall have the same power for making orders as

it has for the purpose of, and in relation to, any proceedings

before it.”

After the 2015 Amendment Act, Section 17(1), which, as has been stated

hereinabove, is now a mirror image of Section 9(1), reads as follows:

“17. Interim measures ordered by arbitral tribunal.—(1) A

party may, during the arbitral proceedings, apply to the arbitral

tribunal—

(i) for the appointment of a guardian for a minor or person of

unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the

following matters, namely—

(a) the preservation, interim custody or sale of any goods

which are the subject matter of the arbitration

agreement;

(b) securing the amount in dispute in the arbitration;

property or thing which is the subject matter of the

dispute in arbitration, or as to which any question may

arise therein and authorising for any of the aforesaid

purposes any person to enter upon any land or

building in the possession of any party, or authorising

any samples to be taken, or any observation to be

made, or experiment to be tried, which may be

necessary or expedient for the purpose of obtaining full

information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may

appear to the arbitral tribunal to be just and

convenient,

and the arbitral tribunal shall have the same power for making

orders, as the court has for the purpose of, and in relation to,

any proceedings before it.”

Section 17(2), which was also introduced by the same Amendment Act,

reads:

“17. Interim measures ordered by arbitral tribunal.—

* * *

(2) Subject to any orders passed in an appeal under section 37,

any order issued by the arbitral tribunal under this section shall

be deemed to be an order of the court for all purposes and shall

be enforceable under the Code of Civil Procedure, 1908 (5 of

1908), in the same manner as if it were an order of the court.”

Section 37, within the four corners of which appeals against orders are to

be made under the Arbitration Act, reads as follows:

“37. Appealable orders.—(1) Notwithstanding anything

contained in any other law for the time being in force, an appeal

shall lie from the following orders (and from no others) to the

court authorised by law to hear appeals from original decrees of

the Court passing the order, namely:—

(a) refusing to refer the parties to arbitration under

Section 8;

(b) granting or refusing to grant any measure under

Section 9;

under Section 34.

(2) An appeal shall also lie to a court from an order of the

arbitral tribunal—

(a) accepting the plea referred to in sub-section (2) or

sub-section (3) of Section 16; or

(b) granting or refusing to grant an interim measure

under Section 17.

(3) No second appeal shall lie from an order passed in appeal

under this section, but nothing in this section shall affect or take

away any right to appeal to the Supreme Court.”

44. As has been pointed out hereinabove, the Law Commission

recommended an amendment to Section 17 to provide the arbitral tribunal

the same powers as a court would have under Section 9.

45. Section 9(1), after setting out in clauses (i) and (ii) what interim

measures or protection could be granted, then goes on to add, “and the

court shall have the same power for making orders as it has for the

purpose of, and in relation to, any proceedings before it”.

46. The italicised words arose for interpretation in Adhunik Steels Ltd. v.

Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125. In

paragraph 11 of the judgment, this Court held:

“11. It is true that Section 9 of the Act speaks of the court by

way of an interim measure passing an order for protection, for

the preservation, interim custody or sale of any goods, which

are the subject-matter of the arbitration agreement and such

interim measure of protection as may appear to the court to be

just and convenient. The grant of an interim prohibitory

injunction or an interim mandatory injunction are governed by

well-known rules and it is difficult to imagine that the legislature

while enacting Section 9 of the Act intended to make a

provision which was dehors the accepted principles that

governed the grant of an interim injunction. Same is the position

regarding the appointment of a receiver since the section itself

brings in the concept of “just and convenient” while speaking of

passing any interim measure of protection. The concluding

words of the section, “and the court shall have the same power

for making orders as it has for the purpose and in relation to

any proceedings before it” also suggest that the normal rules

that govern the court in the grant of interim orders is not sought

to be jettisoned by the provision. Moreover, when a party is

given a right to approach an ordinary court of the country

without providing a special procedure or a special set of rules in

that behalf, the ordinary rules followed by that court would

govern the exercise of power conferred by the Act. On that

basis also, it is not possible to keep out the concept of balance

of convenience, prima facie case, irreparable injury and the

concept of just and convenient while passing interim measures

under Section 9 of the Act.”

47. Quite apart from the above, the language of the last part of Section

9(1) clearly refers to Section 94 of the Code of Civil Procedure read with

Order XXXIX thereof. Section 94 of the Code of Civil Procedure reads as

follows:

“94. Supplemental proceedings.—In order to prevent the

ends of justice from being defeated the Court may, if it is so

prescribed,—

(a) issue a warrant to arrest the defendant and bring him

before the Court to show cause why he should not give

security for his appearance, and if he fails to comply with

any order for security commit him to the civil prison;

(b) direct the defendant to furnish security to produce any

property belonging to him and to place the same at the

disposal of the Court or order the attachment of any

property;

commit the person guilty thereof to the civil prison and

order that his property be attached and sold;

(d) appoint a receiver of any property and enforce the

performance of his duties by attaching and selling his

property;

(e) make such other interlocutory orders as may appear to the

Court to be just and convenient.”

Order XXXIX, Rules 1, 2, and 2-A read as follows:

“ORDER XXXIX

Temporary injunctions

1. Cases in which temporary injunction may be granted.—

Where in any suit it is proved by affidavit or otherwise—

(a) that any property in dispute in a suit is in danger of being

wasted, damaged or alienated by any party to the suit, or

wrongfully sold in execution of a decree, or

(b) that the defendant threatens, or intends, to remove or

dispose of his property with a view to defrauding his

creditors,

otherwise cause injury to the plaintiff in relation to any

property in dispute in the suit,

the Court may by order grant a temporary injunction to restrain

such act, or make such other order for the purpose of staying

and preventing the wasting, damaging, alienation, sale, removal

or disposition of the property or dispossession of the plaintiff, or

otherwise causing injury to the plaintiff in relation to any

property in dispute in the suit] as the Court thinks fit, until the

disposal of the suit or until further orders.

2. Injunction to restrain repetition or continuance of

breach.—(1) In any suit for restraining the defendant from

committing a breach of contract or other injury of any kind,

whether compensation is claimed in the suit or not, the plaintiff

may, at any time after the commencement of the suit, and either

before or after judgment, apply to the Court for a temporary

injunction to restrain the defendant from committing the breach

of contract or injury complained of, or any breach of contract or

injury of a like kind arising out of the same contract or relating

to the same property or right.

(2) The Court may by order grant such injunction, on such

terms as to the duration of the injunction, keeping an account,

giving security, or otherwise, as the Court thinks fit.

2-A. Consequence of disobedience or breach of injunction.

—(1) In the case of disobedience of any injunction granted or

other order made under Rule 1 or Rule 2 or breach of any of

the terms on which the injunction was granted or the order

made, of the Court granting the injunction or making the order,

or any Court to which the suit or proceeding is transferred, may

order the property of the person guilty of such disobedience or

breach to be attached, and may also order such person to be

detained in the civil prison for a term not exceeding three

months, unless in the meantime the Court directs his release.

(2) No attachment made under this rule shall remain in force for

more than one year, at the end of which time, if the

disobedience or breach continues, the property attached may

be sold and out of the proceeds, the Court may award such

compensation as it thinks fit to the injured party and shall pay

the balance, if any, to the party entitled thereto.”

Prior to the Code of Civil Procedure (Amendment) Act, 1976 [“1976

Amendment Act”], disobedience of an injunction or breach of any of its

terms was enforced under sub-rules (3) and (4) of Order XXXIX, Rule 2 as

follows:

“2. Injunction to restrain repetition or continuance of

breach.—

* * *

(3) In case of disobedience, or of breach of any such terms, the

Court granting an injunction may order the property of the

person guilty of such disobedience or breach to be attached,

and may also order such person to be detained in the civil

prison for a term not exceeding six months, unless in the

meantime the Court directs his release.”

(4) No attachment under this rule shall remain in force for more

than one year, at the end of which time, if the disobedience or

breach continues, the property attached may be sold, and out

of the proceeds the Court may award such compensation as it

thinks fit, and shall pay the balance, if any, to the party entitled

thereto.”

A controversy arose as to whether sub-rules (3) and (4) to Rule 2 applied to

breach of injunctions that were granted under Rule 1 of Order XXXIX. This

controversy was set at rest by omitting sub-rules (3) and (4) from Order

XXXIX, Rule 2 and introducing a new Rule 2-A to Order XXXIX. The

Statement of Objects and Reasons for this provision read as follows:

“Clause 89 – Sub-rule (iii) – New Rule 2-A is being inserted to

provide for the consequences of a breach of an injunction

issued under Rule 1 which is, at present, not covered. The

amendment is intended to seek the application of the provisions

for breach, which are, at present, available under an injunction

granted under Rule 2, to the said class of cases as well. There

is a controversy as to whether under the existing provision, a

court to which a suit is transferred can punish disobedience of

an injunction issued by the predecessor court. New Rule 2-A

provides that the transferee court can also exercise that power.”

(See Gazette of Ind., 8th April 1974, Pt. II, S. 2. Ext. p. 335)

48. A reading of Order XXXIX, Rule 2(3) and 2(4) as it originally stood,

and Order XXXIX, Rule 2-A as it stands after the 1976 Amendment Act is to

“prescribe” under Section 94 of the Code of Civil Procedure as to what is

the consequence when a temporary injunction order and/or an order

appointing a receiver of property is flouted. The consequences are

mentioned in Sections 94(c) and (d) itself and fleshed out by Order XXXIX

as aforesaid.

49. Mr. Nankani cited the judgment of Food Corporation of India v.

Sukh Deo Prasad, (2009) 5 SCC 665, in which he relied upon the

following observations of this Court:

“38. The power exercised by a court under Order 39 Rule 2-A of

the Code is punitive in nature, akin to the power to punish for

civil contempt under the Contempt of Courts Act, 1971. The

person who complains of disobedience or breach has to clearly

make out beyond any doubt that there was an injunction or

order directing the person against whom the application is

made, to do or desist from doing some specific thing or act and

that there was disobedience or breach of such order. While

considering an application under Order 39 Rule 2-A, the court

cannot construe the order in regard to which

disobedience/breach is alleged, as creating an obligation to do

something which is not mentioned in the “order”, on surmises,

suspicions and inferences. The power under Rule 2-A should

be exercised with great caution and responsibility.”

He also relied upon the judgment of U.C. Surendranath v. Mambally’s

Bakery, (2019) 20 SCC 666, and paragraph 7 in particular, which states:

“7. For finding a person guilty of wilful disobedience of the order

under Order 39 Rule 2-A CPC there has to be not mere

“disobedience” but it should be a “wilful disobedience”. The

allegation of wilful disobedience being in the nature of criminal

liability, the same has to be proved to the satisfaction of the

court that the disobedience was not mere “disobedience” but a

“wilful disobedience”. As pointed out earlier, during the second

visit of the Commissioner to the appellant's shop, tea cakes and

masala cakes were being sold without any wrappers/labels. The

only thing which the Commissioner has noted is that “nonremoval of the hoarding” displayed in front of the appellant’s

shop for which the appellant has offered an explanation which,

in our considered view, is acceptable one.”

50. It is one thing to say that the power exercised by a court under Order

XXXIX, Rule 2-A is punitive in nature and akin to the power to punish for

civil contempt under the Contempt of Courts Act, 1971. It is quite another

thing to say that Order XXXIX, Rule 2-A requires not “mere disobedience”

but “wilful disobedience”. We are prima facie of the view that the latter

judgment in adding the word “wilful” into Order XXXIX, Rule 2-A is not quite

correct and may require to be reviewed by a larger Bench. Suffice it to say

that there is a vast difference between enforcement of orders passed under

Order XXXIX, Rules 1 and 2 and orders made in contempt of court. Orders

which are in contempt of court are made primarily to punish the offender by

imposing a fine or a jail sentence or both. On the other hand, Order XXXIX,

Rule 2-A is primarily intended to enforce orders passed under Order

XXXIX, Rules 1 and 2, and for that purpose, civil courts are given vast

powers which include the power to attach property, apart from passing

orders of imprisonment, which are punitive in nature.1

Orders passed under

Section 17(2) of the Arbitration Act, using the power contained in Order

XXXIX, Rule 2-A are, therefore, properly referable only to the Arbitration

1 When an order for permanent injunction is to be enforced, Order XXI, Rule 32

provides for attachment and/or detention in a civil prison. Orders that are passed under

Order XXI, Rule 32 are primarily intended to enforce injunction decrees by methods

similar to those contained in Order XXXIX, Rule 2-A. This also shows the object of

Order XXXIX, Rule 2-A is primarily to enforce orders of interim injunction.

Act. Neither of the aforesaid judgments are an authority for any proposition

of law to the contrary.

51. It is well settled that the expression “in relation to”, which occurs in

both Section 9(1) and Section 17(1), is an expression which is

comprehensive in nature, having both a direct as well as an indirect

significance. Thus, in Bandekar Brothers Pvt. Ltd. v. Prasad Vassudev

Keni, 2020 SCC OnLine SC 707 this Court held:

“20. The words “in relation to” have been the subject matter of

judicial discussion in many judgments. Suffice it to say that for

the present, two such judgments need to be noticed. In State

Wakf Board, Madras v. Abdul Azeez Sahib, AIR 1968 Mad. 79,

the expression “relating to” contained in Section 57(1) of the

Wakf Act, 1954 fell for consideration before the Madras High

Court. The High Court held:

“8. We have no doubt whatever that the learned Judge,

(Kailasam, J.), was correct in his view that even the second

suit has to be interpreted as within the scope of the words

employed in S. 57(1) namely, “In every suit or proceeding

relating to title to Wakf property”. There is ample judicial

authority for the view that such words as “relating to” or “in

relation to” are words of comprehensiveness which might

both have a direct significance as well as an indirect

significance, depending on the context. They are not words

of restrictive content and ought not to be so construed. The

matter has come up for judicial determination in more than

one instance. The case in Compagnie Financiec Dae

Pacifique v. Peruvian Guano Co, is of great interest, on this

particular aspect and the judgment of Brett, L.J., expounds

the interpretation of O. 31, R. 12 of the Rules of the

Supreme Court, 1875, in the context of the phrase “material

to any matter in question in the action”. Brett, L.J.,

observed that this could both be direct as well as indirect in

consequences and according to the learned Judge the test

was this (at page 63):

“…a document can properly be said to contain

information which may enable the party requiring

the affidavit either to advance his own case or to

damage the case of his adversary if it is a document

which may fairly lead him to a train of inquiry, which

may have either of these consequences.””

21. Likewise, in Mansukhlal Dhanraj Jain v. Eknath Vithal

Ogale, (1995) 2 SCC 665, the expression “Suits and

proceedings between a licensor and licensee…relating to the

recovery of possession” under Section 41(1) of the Presidency

Small Cause Courts Act, 1882 came up for consideration before

this Court. The Court held:

“14. …The words ‘relating to’ are of wide import and

can take in their sweep any suit in which the grievance is

made that the defendant is threatening to illegally recover

possession from the plaintiff-licensee. Suits for protecting

such possession of immovable property against the

alleged illegal attempts on the part of the defendant to

forcibly recover such possession from the plaintiff, can

clearly get covered by the wide sweep of the words

“relating to recovery of possession” as employed by

Section 41(1).”

* * *

“16. It is, therefore, obvious that the phrase “relating to

recovery of possession” as found in Section 41(1) of the

Small Cause Courts Act is comprehensive in nature and

takes in its sweep all types of suits and proceedings

which are concerned with the recovery of possession of

suit property from the licensee and, therefore, suits for

permanent injunction restraining the defendant from

effecting forcible recovery of such possession from the

licensee-plaintiff would squarely be covered by the wide

sweep of the said phrase. Consequently, in the light of the

averments in the plaints under consideration and the

prayers sought for therein, on the clear language of

Section 41(1), the conclusion is inevitable that these suits

could lie within the exclusive jurisdiction of Small Cause

Court, Bombay and the City Civil Court would have no

jurisdiction to entertain such suits.”

52. As a matter of fact, the judgment of this Court in Thyssen

Stahlunion Gmbh v. Steel Authority of India Ltd., (1999) 9 SCC 334, set

out Section 85 of the Arbitration Act in paragraph 2 as follows:

“2. This Section 85 of the new Act we reproduce at the outset:

“85. Repeal and savings.—(1) The Arbitration (Protocol

and Convention) Act, 1937 (6 of 1937), the Arbitration Act,

1940 (10 of 1940) and the Foreign Awards (Recognition

and Enforcement) Act, 1961 (45 of 1961) are hereby

repealed.

(2) Notwithstanding such repeal,—

(a) the provisions of the said enactments shall apply

in relation to arbitral proceedings which

commenced before this Act came into force unless

otherwise agreed by the parties but this Act shall

apply in relation to arbitral proceedings which

commenced on or after this Act comes into force;

(b) all rules made and notifications published, under

the said enactments shall, to the extent to which

they are not repugnant to this Act, be deemed

respectively to have been made or issued under

this Act.”

The expression “in relation to” appears in Section 85(2)(a). The question

which arose before the Court, and which was answered by the Court, was

whether enforcement proceedings would be included within the ambit of

Section 85(2)(a). Holding that they did, this Court opined:

“32. …… We are, therefore, of the opinion that it would be the

provisions of the old Act that would apply to the enforcement of

the award in the case of Civil Appeal No. 6036 of 1998. Any

other construction on Section 85(2)(a) would only lead to

confusion and hardship. This construction put by us is

consistent with the wording of Section 85(2)(a) using the terms

“provision” and “in relation to arbitral proceedings” which would

mean that once the arbitral proceedings commenced under the

old Act it would be the old Act which would apply for enforcing

the award as well.”

This passage was referred to by this Court in BCCI v. Kochi Cricket (P)

Ltd., (2018) 6 SCC 287, in paragraph 69, as follows:

“69. However, Shri Viswanathan strongly relied upon the

observations made in para 32 in Thyssen [Thyssen Stahlunion

GmbH v. SAIL, (1999) 9 SCC 334] and the judgment in

Hameed Joharan v. Abdul Salam [Hameed Joharan v. Abdul

Salam, (2001) 7 SCC 573]. It is no doubt true that para 32

in Thyssen [Thyssen Stahlunion GmbH v. SAIL, (1999) 9 SCC

334] does, at first blush, support Shri Viswanathan’s stand.

However, this was stated in the context of the machinery for

enforcement under Section 17 of the 1940 Act which, as we

have seen, differs from Section 36 of the 1996 Act, because of

the expression “in relation to arbitral proceedings”, which took in

the entire gamut, starting from the arbitral proceedings before

the Arbitral Tribunal and ending up with enforcement of the

award. It was also in the context of the structure of the 1940 Act

being completely different from the structure of the 1996 Act,

which repealed the 1940 Act. ……”

Finally, however, this Court held that Section 36, as amended by the 2015

Amendment Act, should apply to Section 34 applications filed even before

the commencement of the 2015 Amendment Act.

53. Coupled with this, the expression “any proceedings”, occurring in

Section 9(1) and Section 17(1), would also be an expression

comprehensive enough to take in enforcement proceedings. The

expression “any” has been construed by some of the judgments of this

Court. Thus, in Shri Balaganesan Metals v. M.N. Shanmugham Chetty,

(1987) 2 SCC 707, in context of Section 10(3)(c) of the Tamil Nadu

Buildings (Lease and Rent Control) Act, 1960, this Court held as follows:

“18. In construing Section 10(3)(c) it is pertinent to note that the

words used are “any tenant” and not “a tenant” who can be

called upon to vacate the portion in his occupation. The word

“any” has the following meaning:

“some; one of many; an indefinite number. One

indiscriminately or whatever kind or quantity.

Word ‘any’ has a diversity of meaning and may be

employed to indicate ‘all’ or ‘every’ as well as ‘some’ or

‘one’ and its meaning in a given statute depends upon the

context and the subject-matter of the statute.

It is often synonymous with ‘either’, ‘every’ or ‘all’. Its

generality may be restricted by the context;” (Black’s Law

Dictionary, 5th Ed.)

19. Unless the legislature had intended that both classes of

tenants can be asked to vacate by the Rent Controller for

providing the landlord additional accommodation, be it for

residential or non-residential purposes, it would not have used

the word “any” instead of using the letter “a” to denote a

tenant.”

Similarly, in Lucknow Development Authority v. M.K. Gupta, (1994) 1

SCC 243, this Court, while construing the word “service” under the

Consumer Protection Act, 1986, held as follows:

“4. What is the meaning of the word ‘service’? Does it extend to

deficiency in the building of a house or flat? Can a complaint be

filed under the Act against the statutory authority or a builder or

contractor for any deficiency in respect of such property. The

answer to all this shall depend on understanding of the word

‘service’. The term has variety of meanings. It may mean any

benefit or any act resulting in promoting interest or happiness. It

may be contractual, professional, public, domestic, legal,

statutory etc. The concept of service thus is very wide. How it

should be understood and what it means depends on the

context in which it has been used in an enactment. Clause (o)

of the definition section defines it as under:

“‘service’ means service of any description

which is made available to potential users and

includes the provision of facilities in connection with

banking, financing, insurance, transport, processing,

supply of electrical or other energy, board or lodging

or both, housing construction, entertainment,

amusement or the purveying of news or other

information, but does not include the rendering of

any service free of charge or under a contract of

personal service;”

It is in three parts. The main part is followed by inclusive clause

and ends by exclusionary clause. The main clause itself is very

wide. It applies to any service made available to potential users.

The words ‘any’ and ‘potential’ are significant. Both are of wide

amplitude. The word ‘any’ dictionarily means ‘one or some or

all’. In Black's Law Dictionary it is explained thus, “word ‘any’

has a diversity of meaning and may be employed to indicate ‘all’

or ‘every’ as well as ‘some’ or ‘one’ and its meaning in a given

statute depends upon the context and the subject-matter of the

statute”. The use of the word ‘any’ in the context it has been

used in clause (o) indicates that it has been used in wider

sense extending from one to all. …”

In Union of India v. A.B. Shah, (1996) 8 SCC 540, this Court, while

examining the purport of the expression “at any time” contained in one of

the conditions set by the Director General of Coal Mines in exercise of his

powers under the Coal Mines Regulations, 1957 read with the Mines Act,

1952, held as follows:

“12. If we look into Conditions 3 and 6 with the object and

purpose of the Act in mind, it has to be held that these

conditions are not only relatable to what was required at the

commencement of depillaring process, but the unstowing for

the required length must exist always. The expression “at any

time” finding place in Condition 6 has to mean, in the context in

which it has been used, “at any point of time”, the effect of

which is that the required length must be maintained all the

time. The accomplishment of object of the Act, one of which is

safety in the mines, requires taking of such a view, especially in

the backdrop of repeated mine disasters which have been

taking, off and on, heavy toll of lives of the miners. It may be

pointed out that the word ‘any’ has a diversity of meaning and

in Black's Law Dictionary it has been stated that this word may

be employed to indicate ‘all’ or ‘every’, and its meaning will

depend “upon the context and subject-matter of the statute”. A

reference to what has been stated in Stroud's Judicial

Dictionary Vol. I, is revealing inasmuch as the import of the

word ‘any’ has been explained from pp. 145 to 153 of the 4th

Edn., a perusal of which shows it has different connotations

depending primarily on the subject-matter of the statute and the

context of its use. A Bench of this Court in Lucknow

Development Authority v. M.K. Gupta [(1994) 1 SCC 243], gave

a very wide meaning to this word finding place in Section 2(o)

of the Consumer Protection Act, 1986 defining ‘service’.

(See para 4)”

54. Properly so read, the expressions “in relation to” and “any

proceedings” would include the power to enforce orders that are made

under Section 9(1), and are not limited to incidental powers to make interim

orders, as was suggested by Mr. Viswanathan. Thus, if an order under

Section 9(1) is flouted by any party, proceedings for enforcement of the

same are available to the court making such orders under Section 9(1).

These powers are, therefore, traceable directly to Section 9(1) of the Act –

which then takes us to the Code of Civil Procedure. Thus, an order made

under Order XXXIX Rule 2-A, in enforcement of an order made under

Section 9, would also be referable to Section 9(1) of the Arbitration Act.

55. Given the fact that the 2015 Amendment Act has provided in Section

17(1) the same powers to an arbitral tribunal as are given to a court, it

would be anomalous to hold that if an interim order was passed by the

tribunal and then enforced by the court with reference to Order XXXIX Rule

2-A of the Code of Civil Procedure, such order would not be referable to

Section 17. Section 17(2) was necessitated because the earlier law on

enforcement of an arbitral tribunal’s interim orders was found to be too

cumbersome. Thus, in Alka Chandewar v. Shamshul Ishrar Khan, (2017)

16 SCC 119, this Court referred to the earlier position as follows:

“8. Coming to Shri Rana Mukherjee’s submission that subsection (2) of Section 17 introduced by the 2015 Amendment

Act now provides for the necessary remedy against infraction of

interim orders by the Tribunal, suffice it to state that the Law

Commission itself, in its 246th Report, found the need to go one

step further than what was provided in Section 27(5) as

construed by the Delhi High Court [Sri Krishan v. Anand, 2009

SCC OnLine Del 2472 : (2009) 112 DRJ 657 : (2009) 3 Arb LR

447]. The Commission, in its Report, had this to say:

“Powers of Tribunal to order interim measures

46. Under Section 17, the Arbitral Tribunal has the

power to order interim measures of protection, unless the

parties have excluded such power by agreement. Section

17 is an important provision, which is crucial to the

working of the arbitration system, since it ensures that

even for the purposes of interim measures, the parties

can approach the Arbitral Tribunal rather than await

orders from a court. The efficacy of Section 17 is

however, seriously compromised given the lack of any

suitable statutory mechanism for the enforcement of such

interim orders of the Arbitral Tribunal.

47. In Sundaram Finance Ltd. [Sundaram Finance Ltd.

v. NEPC India Ltd., (1999) 2 SCC 479], the Supreme

Court observed that though Section 17 gives the Arbitral

Tribunal the power to pass orders, the same cannot be

enforced as orders of a court and it is for this reason only

that Section 9 gives the court power to pass interim

orders during the arbitration proceedings. Subsequently,

in Army Welfare Housing Organisation v. Sumangal

Services (P) Ltd., (2004) 9 SCC 619, the Court had held

that under Section 17 of the Act no power is conferred on

the Arbitral Tribunal to enforce its order nor does it

provide for judicial enforcement thereof.

48. In the face of such categorical judicial opinion, the

Delhi High Court attempted to find a suitable legislative

basis for enforcing the orders of the Arbitral Tribunal

under Section 17 in Sri Krishan v. Anand, 2009 SCC

OnLine Del 2472 : (2009) 112 DRJ 657 : (2009) 3 Arb LR

447 [followed in Indiabulls Financial Services Ltd. v.

Jubilee Plots & Housing (P) Ltd., 2009 SCC OnLine Del

2458]. The Delhi High Court held that any person failing to

comply with the order of the Arbitral Tribunal under

Section 17 would be deemed to be “making any other

default” or “guilty of any contempt to the Arbitral Tribunal

during the conduct of the proceedings” under Section

27(5) of Act. The remedy of the aggrieved party would

then be to apply to the Arbitral Tribunal for making a

representation to the court to mete out appropriate

punishment. Once such a representation is received by

the court from the Arbitral Tribunal, the court would be

competent to deal with such party in default as if it is in

contempt of an order of the court i.e., either under the

provisions of the Contempt of Courts Act or under the

provisions of Order 39 Rule 2-A of the Code of Civil

Procedure, 1908.

49. The Commission believes that while it is important

to provide teeth to the interim orders of the Arbitral

Tribunal as well as to provide for their enforcement, the

judgment of the Delhi High Court in Sri Krishan v. Anand,

2009 SCC OnLine Del 2472 : (2009) 112 DRJ 657 :

(2009) 3 Arb LR 447 is not a complete solution. The

Commission has, therefore, recommended amendments

to Section 17 of the Act which would give teeth to the

orders of the Arbitral Tribunal and the same would be

statutorily enforceable in the same manner as the orders

of a court. In this respect, the views of the Commission

are consistent with (though do not go as far as) the 2006

amendments to Article 17 of the UNCITRAL Model Law.”

(emphasis in original)

9. Pursuant to this 246th Report, sub-section (2) to Section 17

was added by the 2015 Amendment Act, so that the

cumbersome procedure of an Arbitral Tribunal having to apply

every time to the High Court for contempt of its orders would no

longer be necessary. Such orders would now be deemed to be

orders of the court for all purposes and would be enforced

under the Civil Procedure Code, 1908 in the same manner as if

they were orders of the court. Thus, we do not find Shri Rana

Mukherjee's submission to be of any substance in view of the

fact that Section 17(2) was enacted for the purpose of providing

a “complete solution” to the problem.”

56. It was to remedy this situation that Section 17(2) was introduced.

There is no doubt that the arbitral tribunal cannot itself enforce its orders,

which can only be done by a court with reference to the Code of Civil

Procedure. But the court, when it acts under Section 17(2), acts in the

same manner as it acts to enforce a court order made under Section 9(1). If

this is so, then what is clear is that the arbitral tribunal’s order gets enforced

under Section 17(2) read with the Code of Civil Procedure.

57. There is no doubt that Section 17(2) creates a legal fiction. This

fiction is created only for the purpose of enforceability of interim orders

made by the arbitral tribunal. To extend it to appeals being filed under the

Code of Civil Procedure would be a big leap not envisaged by the

legislature at all in enacting the said fiction. As a matter of fact, this Court,

in Paramjeet Singh Patheja v. ICDS Ltd., (2006) 13 SCC 322, dealt with

Section 36 of the Arbitration Act as it stood immediately before the 2015

Amendment Act (Section 36 as it then stood is the mirror image of Section

36(1) post amendment). In answering the question raised before it – as to

whether an arbitration award can be said to be a decree for the purpose of

Section 9 of the Presidency Towns Insolvency Act, 1909, this Court held:

“39. Section 15 of the Arbitration Act, 1899 provides for

“enforcing” the award as if it were a decree. Thus, a final award,

without actually being followed by a decree (as was later

provided by Section 17 of the Arbitration Act of 1940), could be

enforced i.e., executed in the same manner as a decree. For

this limited purpose of enforcement, the provisions of CPC were

made available for realising the money awarded. However, the

award remained an award and did not become a decree either

as defined in CPC and much less so far the purposes of an

entirely different statute such as the Insolvency Act are

concerned.

40. Section 36 of the Arbitration and Conciliation Act of 1996

brings back the same situation as it existed from 1899 to 1940.

Only under the Arbitration Act, 1940, was the award required to

be made a rule of court i.e., required a judgment followed by a

decree of court.

41. Issuance of a notice under the Insolvency Act is fraught with

serious consequences: it is intended to bring about a drastic

change in the status of the person against whom a notice is

issued viz. to declare him an insolvent with all the attendant

disabilities. Therefore, firstly, such a notice was intended to be

issued only after a regularly constituted court, a component of

the judicial organ established for the dispensation of justice,

has passed a decree or order for the payment of money.

Secondly, a notice under the Insolvency Act is not a mode of

enforcing a debt; enforcement is done by taking steps for

execution available under CPC for realising monies.

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 statutes,

whether State or Central.”

(emphasis supplied)

58. Mr. Viswanathan cited the judgment Rajasthan State Industrial

Development & Investment Corporation v. Diamond & Gem

Development Corporation Ltd., (2013) 5 SCC 470. Far from supporting

his contention that the legal fiction contained in Section 17(2) extends to

the filing of an appeal under the Code of Civil Procedure as enforcement

proceedings are different from interim orders, paragraph 26 states as

follows:

“VI. “As if”—Meaning of

26. The expression “as if” is used to make one applicable in

respect of the other. The words “as if” create a legal fiction. By

it, when a person is “deemed to be” something, the only

meaning possible is that, while in reality he is not that

something, but for the purposes of the Act of legislature he is

required to be treated that something, and not otherwise. It is a

well-settled rule of interpretation that, in construing the scope of

a legal fiction, it would be proper and even necessary to

assume all those facts on the basis of which alone such fiction

can operate. The words “as if” in fact show the distinction

between two things and, such words must be used only for

a limited purpose . They further show that a legal fiction must be

limited to the purpose for which it was created. [Vide

Radhakissen Chamria v. Durga Prosad Chamria [(1939-40) 67

IA 360 : (1940) 52 LW 647 : AIR 1940 PC 167], CIT v. S. Teja

Singh [AIR 1959 SC 352], Ram Kishore Sen v. Union of

India [AIR 1966 SC 644], Sher Singh v. Union of India [(1984) 1

SCC 107 : AIR 1984 SC 200], State of Maharashtra v. Laljit

Rajshi Shah [(2000) 2 SCC 699 : 2000 SCC (Cri) 533 : AIR

2000 SC 937], Paramjeet Singh Patheja v. ICDS Ltd. [(2006) 13

SCC 322 at p. 341, para 28] and CIT v. Willamson Financial

Services [(2008) 2 SCC 202].]”

(emphasis supplied)

The celebrated judgment in East End Dwellings Co. Ltd. v. Finsbury

Borough Council, 1952 AC 109 : (1951) 2 All ER 587 (HL) then follows in

paragraph 27, followed by another judgment of this Court in paragraph 28,

as follows:

“27. In East End Dwellings Co. Ltd. v. Finsbury Borough

Council [1952 AC 109 : (1951) 2 All ER 587 (HL)] this Court

approved the approach which stood adopted and followed

persistently. It set out as under: (AC p. 133)

“… The statute says that you must imagine a certain

state of affairs; it does not say that having done so, you

must cause or permit your imagination to boggle when it

comes to the inevitable corollaries of that state of affairs.”

28. In Industrial Supplies (P) Ltd. v. Union of India [(1980) 4

SCC 341] this Court observed as follows: (SCC p.351, para 25)

“25. It is now axiomatic that when a legal fiction is

incorporated in a statute, the court has to ascertain for

what purpose the fiction is created. After ascertaining the

purpose, full effect must be given to the statutory fiction

and it should be carried to its logical conclusion. The court

has to assume all the facts and consequences which are

incidental or inevitable corollaries to giving effect to the

fiction. The legal effect of the words ‘as if he were’ in the

definition of ‘owner’ in Section 3(n) of the Nationalisation

Act read with Section 2(1) of the Mines Act is that

although the petitioners were not the owners, they being

the contractors for the working of the mine in question,

were to be treated as such though, in fact, they were not

so.”

(emphasis supplied)

59. There can be no doubt that the legal fiction created under Section

17(2) for enforcement of interim orders is created only for the limited

purpose of enforcement as a decree of the court. To extend this fiction to

encompass appeals from such orders is to go beyond the clear intention of

the legislature. Mr. Salve’s argument in stressing the words “under the

Code of Civil Procedure” in Section 17(2), thus holds no water as a limited

fiction for the purpose of enforcement cannot be elevated to the level of a

genie which has been released from a statutory provision and which would

encompass matters never in the contemplation of the legislature.

60. In a recent judgment of this Court in Union of India v. Vedanta Ltd.,

(2020) 10 SCC 1, this Court held that a petition to enforce a foreign award,

made under Section 49 of the Arbitration Act, is governed by Article 137 of

the Limitation Act, 1963 and not by Article 136 of the said Act. This

conclusion was arrived at as follows:

“69. Section 36 of the Arbitration Act, 1996 creates a statutory

fiction for the limited purpose of enforcement of a “domestic

award” as a decree of the court, even though it is otherwise an

award in an arbitral proceeding [Umesh Goel v. H.P. Coop.

Group Housing Society Ltd., (2016) 11 SCC 313 : (2016) 3

SCC (Civ) 795]. By this deeming fiction, a domestic award is

deemed to be a decree of the court [Sundaram Finance

Ltd. v. Abdul Samad, (2018) 3 SCC 622 : (2018) 2 SCC (Civ)

593], even though it is as such not a decree passed by a civil

court. The Arbitral Tribunal cannot be considered to be a

“court”, and the arbitral proceedings are not civil proceedings.

The deeming fiction is restricted to treat the award as a decree

of the court for the purposes of execution, even though it is, as

a matter of fact, only an award in an arbitral proceeding. In

Paramjeet Singh Patheja v. ICDS Ltd., (2006) 13 SCC 322, this

Court in the context of a domestic award, held that the fiction is

not intended to make an award a decree for all purposes, or

under all statutes, whether State or Central. It is a legal fiction

which must be limited to the purpose for which it was created.

Paras 39 and 42 of the judgment in Paramjeet Singh Patheja v.

ICDS Ltd., (2006) 13 SCC 322] read as: (SCC pp. 345-46)

“39. Section 15 of the Arbitration Act, 1899 provides for

“enforcing” the award as if it were a decree. Thus a final

award, without actually being followed by a decree (as

was later provided by Section 17 of the Arbitration Act of

1940), could be enforced i.e. executed in the same

manner as a decree. For this limited purpose of

enforcement, the provisions of CPC were made available

for realising the money awarded. However, the award

remained an award and did not become a decree either

as defined in CPC and much less so far the purposes of

an entirely different statute such as the Insolvency Act are

concerned.

* * *

42. The words “as if” demonstrate that award and

decree or order are two different things. The legal fiction

created is for the limited purpose of enforcement as a

decree. The fiction is not intended to make it a decree for

all purposes under all statutes, whether State or Central.”

(emphasis in original)

* * *

“72. Foreign awards are not decrees of an Indian civil court. By

a legal fiction, Section 49 provides that a foreign award, after it

is granted recognition and enforcement under Section 48,

would be deemed to be a decree of “that court” for the limited

purpose of enforcement. The phrase “that court” refers to the

court which has adjudicated upon the petition filed under

Sections 47 and 49 for enforcement of the foreign award. In our

view, Article 136 of the Limitation Act would not be applicable

for the enforcement/execution of a foreign award, since it is not

a decree of a civil court in India.

73. The enforcement of a foreign award as a deemed decree of

the High Court concerned [as per the amended Explanation to

Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the

High Court for execution of foreign awards] would be covered

by the residuary provision i.e. Article 137 of the Limitation Act. A

three-Judge Bench of this Court in Kerala SEB v. T.P.

Kunhaliumma [Kerala SEB v. T.P. Kunhaliumma, (1976) 4 SCC

634] held that the phrase “any other application” in Article 137

cannot be interpreted on the principle of ejusdem generis to be

applications under the Civil Procedure Code. The phrase “any

other application” used in Article 137 would include petitions

within the word “applications”, filed under any special

enactment. This would be evident from the definition of

“application” under Section 2(b) of the Limitation Act, which

includes a petition. Article 137 stands in isolation from all other

Articles in Part I of the Third Division of the Limitation Act,

1963.”

* * *

“77. The application under Sections 47 and 49 for enforcement

of the foreign award, is a substantive petition filed under the

Arbitration Act, 1996. It is a well-settled position that the

Arbitration Act is a self-contained code. [Fuerst Day Lawson

Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC

(Civ) 178; Kandla Export Corpn. v. OCI Corpn., (2018) 14 SCC

715 : (2018) 4 SCC (Civ) 664; Shivnath Rai Harnarain (India)

Co. v. Glencore Grain Rotterdam, 2009 SCC OnLine Del 3564 :

(2009) 164 DLT 197; Usha Drager (P) Ltd. v. Dragerwerk AG,

2009 SCC OnLine Del 2975 : (2010) 170 DLT 628; Sumitomo

Corpn. v. CDC Financial Services (Mauritius) Ltd., (2008) 4

SCC 91; Conros Steels (P) Ltd. v. Lu Qin (Hong Kong) Co. Ltd.,

2014 SCC OnLine Bom 2305 : (2015) 1 Arb LR 463 : (2015) 2

Bom CR 1] The application under Section 47 is not an

application filed under any of the provisions of Order 21 CPC,

1908. The application is filed before the appropriate High Court

for enforcement, which would take recourse to the provisions of

Order 21 CPC only for the purposes of execution of the foreign

award as a deemed decree. The bar contained in Section 5,

which excludes an application filed under any of the provisions

of Order 21 CPC, would not be applicable to a substantive

petition filed under the Arbitration Act, 1996. Consequently, a

party may file an application under Section 5 for condonation of

delay, if required in the facts and circumstances of the case.”

This judgment is, therefore, authority for the proposition that the fiction

created by Section 49 of the Arbitration Act is limited to enforcement of a

foreign award, with the important corollary that an application to enforce an

award is an application under the Arbitration Act and not an application

under Order XXI of the Code of Civil Procedure (in which case, such

application would have been governed by Article 136 of the Limitation Act

as an execution application under Order XXI, and not an application under

the residuary Article 137 of the Limitation Act). Mr. Salve’s attempt to

distinguish this judgment on the ground that Section 49 lays down an

entirely different procedure from the procedure to be followed for a

domestic award qua enforceability does not, in any manner, distinguish the

ratio of this judgment which is that an application to enforce a foreign award

is not under Order XXI of the Code of Civil Procedure but under the

Arbitration Act. Also, the deeming provision in Section 49, having reference

to a decree of “that Court”, which refers to the court which is satisfied that

the foreign award is enforceable, again, makes no difference to the

aforesaid ratio of the judgment.

61. Mr. Salve then painted a lurid picture of third parties being affected in

enforcement proceedings. No such third party is before us. As to a third

party, i.e., a party who is not a party to the arbitration agreement and to the

subject matter covered by the award and who is affected by an order made

in enforcement, we say nothing, leaving the question open to be argued on

the facts of a future case.

62. Mr. Salve then read the provisions of the New Zealand Arbitration Act,

1996, the Hong Kong Arbitration Ordinance (Cap. 209), the Singapore

Arbitration Act, 2001 as well as the Singapore International Arbitration Act,

1994, and the English Arbitration Act, 1996 to argue that in all the aforesaid

legislations, awards passed by an Emergency Arbitrator were expressly

included with varying provisions as to their enforcement. A contrast of these

legislations with the provisions of the Indian Arbitration Act, again, does not

take us very far, given the fact that we have, on a proper interpretation of

the said Act, held that an award/order by an Emergency Arbitrator would be

covered by Section 17 of the Arbitration Act, when properly read with other

provisions of the Act.

63. Mr. Salve and Mr. Viswanathan then argued that Section 36(1), which

is a pari materia provision with Section 17(2), must be contrasted with the

provisions of Section 36(3). They argued that there is a basic difference

between having “due regard to the provisions for grant of stay of a money

decree under the provisions of the Code of Civil Procedure” and

enforcement of an award “in accordance with the provisions of the Code of

Civil Procedure”. According to them, it is clear that the court granting a stay

under sub-sections (2) and (3) of Section 36 does so under the Arbitration

Act only having due regard to the provisions regarding grant of stay of a

money decree under the Code of Civil Procedure. By way of contrast, an

award is enforced in accordance with the provisions of the Code of Civil

Procedure and not under the Arbitration Act. It was also argued that Section

17(2) and Section 36(1) are instances of legislation by reference and not

legislation by incorporation.

64. The interpretation of Section 36 is not before us – the interpretation

of Section 17 read with Section 9 is. As far as Section 17 is concerned, as

has been pointed out by us hereinabove, the scheme qua interim orders

passed by an arbitral tribunal mirrors the scheme qua interim orders

passed by civil courts under Section 9. This vital difference between the

provisions of Section 17 read with Section 9 and as contrasted with Section

36 puts paid to this argument.

65. We will now deal with some of the judgments of this Court cited by

the learned counsel for the Respondents. They strongly relied upon the

judgment of the Delhi High Court in Daelim Industrial Co. Ltd. v.

Numaligarh Refinery Ltd., 2009 SCC OnLine Del 511 : (2009) 159 DLT

579 [“Daelim Industrial Co.”] for the proposition that enforcement

applications under Section 36 of the Arbitration Act are independent of

arbitral proceedings which culminate in an award. The Delhi High Court

held that since execution applications would be governed by Sections 38

and 39 of the Code of Civil Procedure, Section 42 of the Arbitration Act

cannot be held to apply and as a result, the courts mentioned in Sections

38 and 39 of the Code of Civil Procedure would have jurisdiction to execute

arbitral awards.

66. In Sundaram Finance Ltd. v. Abdul Samad, (2018) 3 SCC 622, this

Court, in paragraph 18, referred to Daelim Industrial Co. (supra) with

approval. The question which arose before this Court was posed thus:

“The divergence of legal opinion of different High Courts on the

question as to whether an award under the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as “the said Act”)

is required to be first filed in the court having jurisdiction over

the arbitration proceedings for execution and then to obtain

transfer of the decree or whether the award can be

straightaway filed and executed in the Court where the assets

are located is required to be settled in the present appeal.”

A Division Bench of this Court, after setting out the relevant provisions of

the Code of Civil Procedure and the Arbitration Act, then held:

“14. …… The aforesaid provision would show that an award is

to be enforced in accordance with the provisions of the said

Code in the same manner as if it were a decree. It is, thus, the

enforcement mechanism, which is akin to the enforcement of a

decree but the award itself is not a decree of the civil court as

no decree whatsoever is passed by the civil court. It is the

Arbitral Tribunal, which renders an award and the tribunal does

not have the power of execution of a decree. For the purposes

of execution of a decree the award is to be enforced in the

same manner as if it was a decree under the said Code.”

The judgment ultimately turned on Section 32 of the Arbitration Act, which

made it clear that after arbitral proceedings had been terminated, Section

42 of the Act would not apply. This being so, the question posed before the

Court was answered thus:

“20. We are, thus, unhesitatingly of the view that the

enforcement of an award through its execution can be filed

anywhere in the country where such decree can be executed

and there is no requirement for obtaining a transfer of the

decree from the court, which would have jurisdiction over the

arbitral proceedings.”

This judgment does not, in any manner, take the matter any further as it

does not advert to Section 17 of the Act at all and is on a completely

different point as to whether execution of an award can only be in the first

court which is approached under Section 42 of the Act or can be a

proceeding which can be filed and pursued in any court.

67. The learned counsel for the Respondents then relied upon the Full

Bench judgment of the Bombay High Court in Gemini Bay Transcription

Pvt. Ltd. v. Integrated Sales Service Ltd., 2018 SCC OnLine Bom 216 :

AIR 2018 Bom 89 (FB) [“Gemini Bay”] which dealt with the same question

and decided that Section 42 of the Act would not apply to enforcement

applications under the Act, which have to follow the drill of Sections 38 and

39 of the Code of Civil Procedure. The learned counsel for Amazon,

however, strongly relied upon judgments of the Bombay High Court in Jet

Airways (supra), Kakade Construction (supra), and Global Asia Venture

Co. v. Arup Parimal Deb, 2018 SCC OnLine Bom 13061. Since these

judgments deal with enforcement proceedings filed under Section 36 of the

Arbitration Act, we do not express any opinion on their correctness.

68. Mr. Salve then relied upon Punjab State Civil Supplies Corporation

Ltd. v. Atwal Rice & General Mills, (2017) 8 SCC 116. This judgment

dealt with objections to the enforcement of an arbitral award in execution.

In the course of dealing with the aforesaid objections, the Court observed:

“18. In other words, the arbitral award has been given the

status of a decree of the civil court and, therefore, it is enforced

like a decree of the civil court by applying the provisions of

Order 21 of the Code and all other provisions, which deal with

the execution of the decree of the civil court.”

This judgment again does not take the matter very much further. It does not

deal with Section 17 of the Act at all but deals with Section 36 which, as

has been pointed out by us, contains a scheme different from that

contained for enforcement of interim orders under Section 17.

69. We now come to the appeal provision in the Arbitration Act. There

can be no doubt that Section 37 is a complete code so far as appeals from

orders and awards made under the Arbitration Act are concerned. This has

further been strengthened by the addition of the non-obstante clause by the

Arbitration and Conciliation (Amendment) Act, 2019.

70. This Court, in Kandla Export Corporation v. OCI Corporation,

(2018) 14 SCC 715 [“Kandla Export”], held in the context of a Section 50

appeal as follows:

“20. Given the judgment of this Court in Fuerst Day

Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011)

8 SCC 333 : (2011) 4 SCC (Civ) 178] , which Parliament is

presumed to know when it enacted the Arbitration Amendment

Act, 2015, and given the fact that no change was made in

Section 50 of the Arbitration Act when the Commercial Courts

Act was brought into force, it is clear that Section 50 is a

provision contained in a self-contained code on matters

pertaining to arbitration, and which is exhaustive in nature. It

carries the negative import mentioned in para 89 of Fuerst Day

Lawson [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011)

8 SCC 333 : (2011) 4 SCC (Civ) 178] that appeals which are

not mentioned therein, are not permissible. This being the case,

it is clear that Section 13(1) of the Commercial Courts Act,

being a general provision vis-à-vis arbitration relating to appeals

arising out of commercial disputes, would obviously not apply to

cases covered by Section 50 of the Arbitration Act.

21. However, the question still arises as to why Section 37 of

the Arbitration Act was expressly included in the proviso to

Section 13(1) of the Commercial Courts Act, which is equally a

special provision of appeal contained in a self-contained code,

which in any case would be outside Section 13(1) of the

Commercial Courts Act. One answer is that this was done ex

abundanti cautela. Another answer may be that as Section 37

itself was amended by the Arbitration Amendment Act, 2015,

which came into force on the same day as the Commercial

Courts Act, Parliament thought, in its wisdom, that it was

necessary to emphasise that the amended Section 37 would

have precedence over the general provision contained in

Section 13(1) of the Commercial Courts Act. Incidentally, the

amendment of 2015 introduced one more category into the

category of appealable orders in the Arbitration Act, namely, a

category where an order is made under Section 8 refusing to

refer parties to arbitration. Parliament may have found it

necessary to emphasise the fact that an order referring parties

to arbitration under Section 8 is not appealable under Section

37(1)(a) and would, therefore, not be appealable under Section

13(1) of the Commercial Courts Act. Whatever may be the

ultimate reason for including Section 37 of the Arbitration Act in

the proviso to Section 13(1), the ratio decidendi of the judgment

in Fuerst Day Lawson [Fuerst Day Lawson Ltd. v. Jindal

Exports Ltd., (2011) 8 SCC 333 : (2011) 4 SCC (Civ) 178]

would apply, and this being so, appeals filed under Section 50

of the Arbitration Act would have to follow the drill of Section 50

alone.

22. This, in fact, follows from the language of Section 50 itself.

In all arbitration cases of enforcement of foreign awards, it is

Section 50 alone that provides an appeal. Having provided for

an appeal, the forum of appeal is left “to the Court authorised

by law to hear appeals from such orders”. Section 50 properly

read would, therefore, mean that if an appeal lies under the

said provision, then alone would Section 13(1) of the

Commercial Courts Act be attracted as laying down the forum

which will hear and decide such an appeal.

23. In fact, in Sumitomo Corpn. v. CDC Financial Services

(Mauritius) Ltd. [Sumitomo Corpn. v. CDC Financial Services

(Mauritius) Ltd., (2008) 4 SCC 91], this Court adverted to

Section 50 of the Arbitration Act and to Sections 10(1)(a) and

10-F of the Companies Act, 1956, to hold that once an appeal is

provided for in Section 50, the Court authorised by law to hear

such appeals would then be found in Sections 10(1)(a) and 10-

F of the Companies Act. The present case is a parallel instance

of Section 50 of the Arbitration Act providing for an appeal, and

Section 13(1) of the Commercial Courts Act providing the forum

for such appeal. Only, in the present case, as no appeal lies

under Section 50 of the Arbitration Act, no forum can be

provided for.”

* * *

“25. What is important to note is that it is Section 50 that

provides for an appeal, and not the letters patent, given the

subject-matter of appeal. Also, the appeal has to be adjudicated

within the parameters of Section 50 alone. Concomitantly,

where Section 50 excludes an appeal, no such appeal will lie.”

This judgment is, therefore, an authority for the proposition that the

Arbitration Act is a self-contained code on matters pertaining to arbitration,

which is exhaustive in nature. The appeal provision in that case (Section

50) was held to carry a negative import that only such matters as are

mentioned in the Section are permissible, and matters not mentioned

therein cannot be brought in. It was further held that what follows from this

is that the substantive provision of appeal is contained in Section 50 of the

Act, which alone must be read, Section 13(1) of the Commercial Courts

Act, 2015 being a general provision, which must give way to the specific

provision contained in Section 50.

71. Likewise, in Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706, this

Court opined:

“15. Given the aforesaid statutory provision and given the fact

that the 1996 Act repealed three previous enactments in order

that there be speedy disposal of all matters covered by it, it is

clear that the statutory policy of the Act is that not only are timelimits set down for disposal of the arbitral proceedings

themselves but time-limits have also been set down for Section

34 references to be decided. Equally, in Union of India v.

Varindera Constructions Ltd. (2020) 2 SCC 111 : (2020) 1 SCC

(Civ) 277, dated 17-9-2018, disposing of SLP (C) No. 23155 of

2013, this Court has imposed the selfsame limitation on first

appeals under Section 37 so that there be a timely resolution of

all matters which are covered by arbitration awards.

16. Most significant of all is the non obstante clause contained

in Section 5 which states that notwithstanding anything

contained in any other law, in matters that arise under Part I of

the Arbitration Act, no judicial authority shall intervene except

where so provided in this Part. Section 37 grants a constricted

right of first appeal against certain judgments and orders and

no others. Further, the statutory mandate also provides for one

bite at the cherry, and interdicts a second appeal being filed

[see Section 37(2) of the Act].”

72. In BGS SGS SOMA JV v. NHPC, (2020) 4 SCC 234, this time, the

Court dealt with the maintainability of an appeal under Section 37 of the Act

in a case in which an application under Section 34 of the Act was ordered

to be transferred from a court which had no jurisdiction to a court which had

jurisdiction. In deciding this question, this Court referred copiously to

Kandla Export (supra) in paragraph 12. It then went on to decide:

“13. Given the fact that there is no independent right of appeal

under Section 13(1) of the Commercial Courts Act, 2015, which

merely provides the forum of filing appeals, it is the parameters

of Section 37 of the Arbitration Act, 1996 alone which have to

be looked at in order to determine whether the present appeals

were maintainable. Section 37(1) makes it clear that appeals

shall only lie from the orders set out in sub-clauses (a), (b) and

the impugned judgment [NHPC Ltd. v. Jaiparkash Associates

Ltd., 2018 SCC OnLine P&H 1304 : (2019) 193 AIC 839] has

chosen to say that the appeals in the present cases were

maintainable is sub-clause (c). According to the High Court,

even where a Section 34 application is ordered to be returned

to the appropriate court, such order would amount to an order

“refusing to set aside an arbitral award under Section 34”.

14. Interestingly, under the proviso to Section 13(1-A) of the

Commercial Courts Act, 2015, Order 43 CPC is also mentioned.

Order 43 Rule 1(a) reads as follows:

“1. Appeals from orders.— An appeal shall lie from

the following orders under the provisions of Section 104,

namely—

(a) an order under Rule 10 of Order 7 returning a plaint

to be presented to the proper court except where the

procedure specified in Rule 10-A of Order 7 has been

followed;”

This provision is conspicuous by its absence in Section 37 of

the Arbitration Act, 1996, which alone can be looked at for the

purpose of filing appeals against orders setting aside, or

refusing to set aside awards under Section 34. Also, what is

missed by the impugned judgment [NHPC Ltd. v. Jaiparkash

Associates Ltd., 2018 SCC OnLine P&H 1304 : (2019) 193 AIC

839] is the words “under Section 34”. Thus, the refusal to set

aside an arbitral award must be under Section 34 i.e. after the

grounds set out in Section 34 have been applied to the arbitral

award in question, and after the Court has turned down such

grounds. Admittedly, on the facts of these cases, there was no

adjudication under Section 34 of the Arbitration Act, 1996 — all

that was done was that the Special Commercial Court at

Gurugram allowed an application filed under Section 151 read

with Order 7 Rule 10 CPC, determining that the Special

Commercial Court at Gurugram had no jurisdiction to proceed

further with the Section 34 application, and therefore, such

application would have to be returned to the competent court

situate at New Delhi.”

This judgment is determinative of the issue before us as it specifically ruled

out appeals under Order XLIII Rule 1 of the Code of Civil Procedure when it

comes to orders being made under the Arbitration Act.

73. At this juncture, it is important to notice that Section 37 did not remain

untouched by the 2015 Amendment Act. As a matter of fact, a new category

of appeals was infused into the said provision by adding a new sub-section

(1)(a), which reads as follows:

“37. Appealable orders.—(1) Notwithstanding anything

contained in any other law for the time being in force, an appeal

shall lie from the following orders (and from no others) to the

court authorised by law to hear appeals from original decrees of

the Court passing the order, namely:—

(a) refusing to refer the parties to arbitration under Section 8;”

* * *

74. Despite Section 17 being amended by the same Amendment Act, by

making Section 17(1) the mirror image of Section 9(1) as to the interim

measures that can be made, and by adding Section 17(2) as a

consequence thereof, significantly, no change was made in Section 37(2)

(b) to bring it in line with Order XLIII, Rule 1(r). The said Section continued

to provide appeals only from an order granting or refusing to grant any

interim measure under Section 17. There can be no doubt that granting or

refusing to grant any interim measure under Section 17 would only refer to

the grant or non-grant of interim measures under Section 17(1)(i) and 17(1)

(ii). In fact, the opening words of Section 17(2), namely, “subject to any

orders passed in appeal under Section 37…” also demonstrates the

legislature’s understanding that orders that are passed in an appeal under

Section 37 are relatable only to Section 17(1). For example, an appeal

against an order refusing an injunction may be allowed, in which case subsection (2) of Section 17 then kicks in to enforce the order passed in

appeal. Also, the legislature made no amendment to the granting or

refusing to grant any measure under Section 9 to bring it in line with Order

XLIII, Rule 1(r), under Section 37(1)(b). What is clear from this is that

enforcement proceedings are not covered by the appeal provision.

75. However, learned counsel appearing on behalf of the Respondents

pressed into service a recent judgment of this Court in Chintels (India)

Ltd. v. Bhayana Builders (P) Ltd., (2021) 4 SCC 602. The precise

question that arose before this Court was as to when an application

seeking condonation of delay in filing an appeal is dismissed, whether this

would amount to “refusal to set aside an arbitral award” under Section 34

and thus be appealable under Section 37(1)(c) of the Act. In answering this

question, this Court referred to Section 37(1) of the Act and stressed the

fact that an application for setting aside an award must be in accordance

100

with sub-sections (2) and (3) of Section 34 – See paragraph 9. The Court

then set out Section 34(3) and opined:

11. A reading of Section 34(1) would make it clear that an

application made to set aside an award has to be in accordance

with both sub-sections (2) and (3). This would mean that such

application would not only have to be within the limitation period

prescribed by sub-section (3), but would then have to set out

grounds under sub-sections (2) and/or (2-A) for setting aside

such award. What follows from this is that the application itself

must be within time, and if not within a period of three months,

must be accompanied with an application for condonation of

delay, provided it is within a further period of 30 days, this Court

having made it clear that Section 5 of the Limitation Act, 1963

does not apply and that any delay beyond 120 days cannot be

condoned — see State of H.P. v. Himachal Techno Engineers

[State of H.P. v. Himachal Techno Engineers, (2010) 12 SCC

210 : (2010) 4 SCC (Civ) 605] at para 5.”

Coming to Section 37(1)(c), the Court then held:

“12. We now come to Section 37(1)(c). It is important to note

that the expression “setting aside or refusing to set aside an

arbitral award” does not stand by itself. The expression has to

be read with the expression that follows— “under Section 34”.

Section 34 is not limited to grounds being made out under

Section 34(2). Obviously, therefore, a literal reading of the

provision would show that a refusal to set aside an arbitral

award as delay has not been condoned under sub-section (3)

of Section 34 would certainly fall within Section 37(1)(c). The

aforesaid reasoning is strengthened by the fact that under

Section 37(2)(a), an appeal lies when a plea referred to in subsection (2) or (3) of Section 16 is accepted. This would show

that the legislature, when it wished to refer to part of a section,

as opposed to the entire section, did so. Contrasted with the

101

language of Section 37(1)(c), where the expression “under

Section 34” refers to the entire section and not to Section 34(2)

only, the fact that an arbitral award can be refused to be set

aside for refusal to condone delay under Section 34(3) gets

further strengthened.”

Unlike the language of Section 34, a literal reading of Section 17 would

show that the grant or non-grant of interim measures under Section 37(2)

(b) refers only to Section 17(1) of the Act. Also, in the context of Section

37(2)(b), the entirety of Section 17 was referred to when Sections 17 and

37 were first enacted in 1996. It is only by the 2015 Amendment Act that

Section 17 was bifurcated into two sub-sections. What is significant in this

context is that no corresponding amendment was made to Section 37(2)(b)

to include within its scope the amended Section 17, as has been pointed

out hereinabove. This judgment is also distinguishable and, therefore, does

not carry the Respondents’ argument any further.

76. The second question posed is thus answered declaring that no

appeal lies under Section 37 of the Arbitration Act against an order of

enforcement of an Emergency Arbitrator’s order made under Section 17(2)

of the Act. As a result, all interim orders of this Court stand vacated. The

102

impugned judgments of the Division Bench, dated 8

th February, 2021 and

22nd March, 2021, are set aside. The appeals are disposed of accordingly.

………………………………..J.

(R.F. Nariman)

………………………………..J.

(B.R. Gavai)

New Delhi.

August 06, 2021

103

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