Retrospective impact of 2015 amendment to Section 11(6) of Arbitration Act, Supreme Court to examine conflicting decisions

Supreme Court in case M/s Shree Vishnu Construction v. The Engineer in Chief Military Engineering Service and Or’s. SLP (C) No. 5306 of 2022 has decided to examine weather Section 11(6) as amended by the Arbitration & Conciliation Amendment Act, 2015 would be applicable to arbitral proceedings commenced before the court prior to the 2015 amendment came into force on 23.10.2015, or the cases where the issue was issued prior to 23.10.2015 or cases where notice invoking where arbitration was issued prior to amendments.

The Bench noticed that the decision of BCCI (Supra) was neither noticed by the court nor brought by the notice by the parties in Parmar Construction Company (Supra) and in Pradeep Vinod Construction Company (Supra), the court followed the ration in Parmar’s case (Supra) and did not notice the contrary decision of BCCI(Supra).

Considering the contrary decision of the Apex Court, the Bench thought it fit to issue notice.

The Court noted that though Pradeep Vinod (supra) was decided by a three judge Bench, reliance was placed on the Division Bench judgment in Parmar (supra), The Counsel appearing for the petitioner submitted that the cases subsequent to BCCI which had taken a contrary view can be said to be per incuriam.

In Board of Control for Cricket in India v. Kochi Cricket Private Limited and Or’s. (2018) 6 SCC 287, a Division Bench comprising Justices M. Shah and B.V. Nagarathna noted the divergent view on this issue, the division Bench of the Apex Court had held that the 2015 Amendment Act would apply to court proceedings filed after it came into effect on 23.10.2015, irrespective of when the arbitration had commenced. It would also apply to the proceedings filed prior to the 2015 Amendment Act, but pending when it came into force. However, in Union of India v. Parmar Construction Company (2019) 15 SCC 682, a Division Bench of the Apex Court had noted that the 2015 Amendment Act would not apply to arbitral proceedings which had commended before 23.10.2015, unless the parties had agreed.

It will defeat the object and purpose of Arbitration Act, If the application under Section 11 (6) of the Arbitration Act, 1986 are kept pending before the court for a long time and even the appointment of Arbitrators is not made at the earliest. The 2019 amendment proposed even as per, of course, it has not come into force. All endeavors should be made by the courts to decide and dispose of the applications for appointment of arbitrators within a period of six month.

Under the Commercial Courts Act, the commercial disputes are required to be disposed of within the period of one year even under the Arbitration Act (Amendment 2015), the arbitrator is required to dispose off the arbitral proceedings within a period of one year.

If the application under Section 11 (6) are not decided at the earliest and within the reasonable time, most probably within one year from the date of filling, the object and the purpose of Arbitration Act shall be frustrated. Such situations might have been in other High Court also before any directions is issued by this courts to the High Courts, we direct the registry to call the particulars with respect to the pending applications under section 11 (6) of Arbitration Act.

In Union of India v. Pradeep Vinod Construction Company (2020) 2 SCC 464, the decision of prospective application was followed.

An application filed under Section 11(6) of the Arbitration Act for appointment of Arbitrator was dismissed by the Bench hearing a plea assailing the order dated 30.06.20202 passed by the Telangana High Court.

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