Amended Section 36 Of Arbitration Act Applies Prospectively To Arbitral & Court Proceedings Post-Enactment: Allahabad HC
The High Court dismissed the challenge to the execution case and upheld the decision of the Commercial Court.
The Allahabad High Court ruled that the amended Section 36 of the Arbitration and Conciliation Act, 1996 applies prospectively to court proceedings initiated on or after the date the Amendment Act came into effect.
A Bench of Justice Piyush Agrawal based its decision on the Supreme Court’s judgment in Board of Control for Cricket in India v. Kochi Cricket Private Limited & Others (2018), which clarified the prospective application of the Amendment.
The Court in the BCCI judgment had said, “The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.”
Advocate Vimlesh Kumar Rai appeared for the petitioner.
On 3rd March 2010, the arbitrator passed an award directing the petitioners to pay Rs. 92 lakh with 8% interest. The petitioners challenged this award under Section 34 of the Arbitration Act, but their application was dismissed by the Commercial Court of Jhansi on 3rd February 2021 on the grounds that the court lacked jurisdiction to interfere with the award. The petitioners then filed an appeal against the award and the order, which was still pending before the Court.
The respondent initiated an Execution Case before the Commercial Court under Section 36 of the Arbitration Act. However, this case was dismissed on 2nd January 2023. Subsequently, a second execution case was filed by the respondent. The petitioners raised a preliminary objection, arguing that the execution case was time-barred due to the significant delay. However, on 21st September 2024, the court rejected the petitioners' objection. The petitioners filed a petition against this order.
The Court referred to the BCCI judgment by the Supreme Court, which dealt with the applicability of the amended Section 36 of the Arbitration and Conciliation Act. The Supreme Court had clarified that the amendment to Section 36 is prospective in nature, meaning it applies to arbitral and court proceedings that commence on or after the enactment of the Amendment Act. The Supreme Court’s ruling emphasized that prior to the amendment, Section 36 imposed restrictions on a decree holder’s ability to execute an award unless certain conditions were met. However, this did not confer a corresponding right to the judgment debtor to stay the execution of the award. It was further observed that a vested right of appeal could only be removed through a specific subsequent enactment or by necessary implication.
In the BCCI case, the Court also concluded that the amended provisions of Section 36 should apply to Section 34 applications filed before the Amendment Act’s commencement, reflecting a clear intention that the amendment would not affect proceedings that were already in progress.
Based on these observations, the Allahabad High Court concluded that the amendment to Section 36, as outlined in the BCCI judgment, applied to the present case. Consequently, the petitioners’ challenge to the execution case was dismissed, and the court upheld the decision of the Commercial Court, rejecting the petitioners' preliminary objection.
The petition was, therefore, dismissed, and the execution case was allowed to proceed.
Cause Title: U.P. Jal Nigam (Urban) & Anr. v. Spml Infra Ltd., [2025:AHC:20224]
