TMI Blog2019 (9) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... agnik Majumdar, Adv. For the Respondent : Mr. Shyam Divan, Sr. Adv, Ms. Sonia Dube, Adv.,Ms. Labanyasree Sinha, Adv., Mr. S. Chakraborty, Adv., Ms. Kanchan Yadav, Adv., Ms. Surbhi Anand, Adv., Mr. Bhav Ratan, Adv., For M/s. Victor Moses Associates, AOR ORDER R.F. Nariman, J. 1) Leave granted. 2) We have heard Mr. Mukul Rohatgi, learned Senior Advocate appearing for the appellant and Mr. Shyam Divan, learned Senior Advocate appearing for the respondent at considerable length. 3) On the facts of this case, we do not propose to interfere with the impugned decision of 12.03.2019 and, therefore, do not find it necessary to exercise our extraordinary jurisdiction under Article 136 of the Constitution of India. 4) Having said this, however, during the course of argument, a recent decision of this Court was pointed out, namely, United India Insurance Company Limited vs. Antique Art Exports Private Limited, (2019) 5 SCC 362. In this judgment, purportedly following Duro Felguera, S.A. vs. Gangavaram Port Limited, (2017) 9 SCC 729, this Court held: 20. The submission of the learned counsel for the respondent that after insertion of sub-section (6-A) to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. 6) Mr. Mukul Rohatgi, learned Senior Advocate, has pointed out that by an amendment Act of 2019, which has since been passed, this sub-section has now been omitted. Section 3 of the amendment Act of 2019 insofar as it pertains to this omission has not yet been brought into force. The omission is pursuant to a High Level Committee Review regarding institutionalization of arbitration in India, headed by Justice B. N. Srikrishna. The Report given by this Committee is dated 30th July, 2017. The omission of the sub-section is not so as to resuscitate the law that was prevailing prior to the amendment Act of 2015. The reason for omission of S. 11(6A) is given in the Report as follows: Thus, the 2015 amendments to section 11 are geared towards facilitating speedy disposal of section 11 applications by: (a) enabling the designation of any person or institution as an appointing authority for arbitrators in addition to the High Court or Supreme Court under section 11; (b) limiting challenges to the decision made by the appointing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt level, it may also give impetus to institutional arbitration. xxx xxx Recommendations 1. In order to ensure speedy appointment of arbitrators, section 11 may be amended to provide that the appointment of arbitrator(s) under the section shall only be done by arbitral institution(s) designated by the Supreme Court (in case of international commercial arbitrations) or the High Court (in case of all other arbitrations) for such purpose, without the Supreme Court or High Courts being required to determine the existence of an arbitration agreement. Thus, it can be seen that after the amendment Act of 2019, Section 11(6A) has been omitted because appointment of arbitrators is to be done institutionally, in which case the Supreme Court or the High Court under the old statutory regime are no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists. 7) Prior to Section 11(6A), this Court in several judgments beginning with SBP Co. vs. Patel Engineering Ltd. and Anr. (2005) 8 SCC 618 has held that at the stage of a Section 11(6) application being filed, the Court need not merely confine itself to the examination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Amendment Act, 2015, has had a chequered history. In Konkan Railway Corporation Ltd. v. Mehul Construction Co., (2000) 7 SCC 201 [ Konkan Railway I ], it was held that the powers of the Chief Justice under Section 11(6) of the 1996 Act are administrative in nature, and that the Chief Justice or his designate does not act as a judicial authority while appointing an arbitrator. The same view was reiterated in Konkan Railway Corporation Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388 [ Konkan Railway II ]. 15. However, in SBP Co. (supra), a seven-Judge Bench overruled this view and held that the power to appoint an arbitrator under Section is judicial and not administrative. The conclusions of the seven-Judge Bench were summarised in paragraph 47 of the aforesaid judgment. We are concerned directly with subparagraphs (i), (iv), and (xii), which read as follows: (i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power. xxx xxx xxx (iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mple, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration. 17. As a result of these judgments, the door was wide open for the Chief Justice or his designate to decide a large number of preliminary aspects which could otherwise have been left to be decided by the arbitrator under Section 16 of the 1996 Act. As a result, the Law Commission of India, by its Report No. 246 submitted in August 2014, suggested that various sweeping changes be made in the 1996 Act. Insofar as SBP Co. (supra) and Boghara Polyfab (supra) are concerned, the Law Commission examined the matter and recommended the addition of a new sub-section, namely, sub-section (6A) in Section 11. In so doing, the Law Commission recommendations which are relevant and which led to the introduction of Section 11(6A) are as follows: 28. The Act recognizes situations where the intervention of the Court is envisaged at the pre-arbitral stage, i.e. prior to the constitution of the arbitral tribunal, which includes sections 8, 9, 11 in the case of Part I arbitrations and section 45 in the case of Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, is a party to such an agreement? 2. The issues (second category) which the Chief Justice/his designate may choose to decide are: (a) Whether the claim is a dead (long barred) claim or a live claim? (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection? 3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal are: (a) Whether a claim falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration)? (b) Merits of any claim involved in the arbitration. 31. The Commission is of the view that, in this context, the same test regarding scope and nature of judicial intervention, as applicable in the context of section 11, should also apply to sections 8 and 45 of the Act since the scope and nature of judicial intervention should not change upon whether a party (intending to defeat the arbitration agreement) refuses to appoint an arbitrator in terms of the arbitration agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 read as follows: STATEMENT OF OBJECTS AND REASONS xxx xxx xxx 6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the Arbitration and Conciliation (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely:- (i) to amend the definition of Court to provide that in the case of international commercial arbitrations, the Court should be the High Court; (ii) to ensure that an Indian Court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India; (iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days; (iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues; (v) to provide that the arbitral tribunal shall make its award within a period of twelve months from the date it enters upon the referenc ..... 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