In a judgment on 27 November Supreme Court struck down the insertion of section 87 in Arbitration and Conciliation Act 1996. It was inserted by an Amendment in 2019. The bench pronounced the amendment manifestly arbitrary. The said judgment was delivered in the case of Hindustan Construction Company ltd. V. Union of India, by the bench comprising Justice R F Nariman, Just. Surya Kant and Just. V Ramasubramania.
- Unless the parties otherwise agree, the amendments made to this Act by the Arbitration and Conciliation (Amendment) Act, 2015 shall—
(a) not apply to–– (i) arbitral proceedings commenced before the commencement of the Arbitration and Conciliation (Amendment) Act, 2015;
(ii) court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015;
(b) apply only to arbitral proceedings commenced on or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 and to court proceedings arising out of or in relation to such arbitral proceedings.”.
The provision sought to nullify the effect of previous 2018 judgment of Supreme Court in the case of BCCI v. Kochi Cricket Private Ltd. which decided the prospective application of automatic stay provision in the act. The court in the case of BCCI v. Kochi Cricket Private Ltd. Opined that, “ the immediate effect of the proposed Section 87 would be to put all the important amendments made by the amendment act on a back-burner, such as the important amendments made to Section 28 and 34 in particular, which, as has been stated by the Statements of Objects and Reasons, have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of Act”, and will now not be applicable to Section 34 petitions filed after 23rd October, 2015, but will be applicable to Section 34 petitions filed in case where arbitration proceedings have themselves commenced only after 23rd October, 2015.”
Further the court observed as an obiter, “it would be important to remember that 246th law commission report has itself bifurcated proceedings into two parts, so that the Amendment Act can apply to court proceedings commenced on or after by Section 26 of the amendment act, which ought not to be displaced as the very object of the enactment of the Amendment Act.”
The amendments made to section 36 of the act were retrospective and prospective. It clarified that mere filing of appeal would not amount to stay of enforcement proceedings, and further introduced a provision that stay will only be conditional on furnishing security if the award relates to payment of money. Before the amendment, one could get a stay of enforcement of award by mere filing of appeal even without any security.
The insertion of section 87 by 2019 amendment act, states that the 2015 Amendment will not apply to court proceedings arising out of or in relation to arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Arbitration and Conciliation Amendment Act 2015.
This proposition of section 87 was going against the Kochi Cricket Pvt Ltd judgment.
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