2017 (2) TMI 1376 - HC - Indian Laws

Arbitration award - compliance with conditions of Section 34(1) of the Arbitration and Conciliation Act 1996 - Held that - The arbitration award was passed on 29.8.2011. That means the arbitration proceedings commenced long before 23.10.2015. This is thus a case where the arbitration proceedings commenced before 23.10.2015 and the parties did not agree otherwise. Therefore Section 34(5) of the Act has no application to the present case. The requirements therein need not to be complied with by the appellant to apply under Section 34(1) - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Compliance with Section 34(5) of the Arbitration and Conciliation Act, 1996.
2. Retrospective application of the amendments introduced by Act 3 of 2016.
3. Interpretation of Section 26 of Act 3 of 2016.
4. Introduction of Sub-section (2-A) of Section 34 of the Act.

Compliance with Section 34(5) of the Arbitration and Conciliation Act, 1996:
The appellant filed an application to set aside an arbitration award under Section 34(1) of the Act. The District Judge dismissed the application as not maintainable due to non-compliance with Section 34(5), which requires the issuance of a prior notice to the other party. The appellant did not issue any prior notice or file an affidavit endorsing compliance. The High Court concurred with the District Judge's decision, emphasizing the importance of complying with the statutory requirements.

Retrospective application of the amendments introduced by Act 3 of 2016:
Act 3 of 2016 introduced amendments to the Act with retrospective effect from 23.10.2015. The key provision inserted was Section 34(5), which necessitates compliance with prior notice requirements. The Court deliberated on whether these amendments applied to arbitration proceedings that commenced before 23.10.2015. Section 26 of Act 3 of 2016 clarified that the amendments would have prospective effect unless parties agreed otherwise. Since the arbitration proceedings in this case began before the specified date and the parties did not agree otherwise, the Court held that Section 34(5) did not apply.

Interpretation of Section 26 of Act 3 of 2016:
Section 26 explicitly stated that the amendments introduced by Act 3 of 2016 would apply prospectively unless parties agreed otherwise. As the parties in this case did not agree to the contrary, the amendments took effect from 23.10.2015. This provision ensured that the retrospective application of the amendments was subject to party agreement, with the default being prospective application.

Introduction of Sub-section (2-A) of Section 34 of the Act:
Act 3 of 2016 also introduced Sub-section (2-A) to Section 34, providing an additional ground to set aside arbitration awards based on patent illegality. The appellant argued that this new ground was substantive law and thus retrospective in operation. However, the Court did not delve into this question for the present appeal, leaving it to the District Judge to decide while disposing of the application. The Court allowed the appeal, set aside the impugned order, and directed the District Judge to reconsider the application, indicating that all other questions except those addressed in the judgment remained open for consideration.