Pre 2015 Amendment Arbitration Act Will Apply If Notice Is Issued Prior To 2015 Even Though S.11 Application Is Filed Thereafter: SC

The two-judge Bench of Justice M.R Shah and Justice C.T Ravikumar observed that "in a case where the notice invoking arbitration is issued prior to the Amendment Act, 2015 and the application under Section 11 for appointment of an arbitrator is made post Amendment Act, 2015, the provisions of pre-Amendment Act, 2015 shall be applicable and not the Amendment Act, 2015".

Advocate K. Parameshwar appeared for the Appellant, while Advocate Padmesh Mishra appeared for the Respondent.

Going by the background of the case, the Appellant and the Respondents entered into an agreement for additions/alterations to Senior Non-Commissioned Officers mess and repairs/renewals to floors in tech area at Air Force Academy, Hyderabad. The Appellant raised a revised final bill for the said work and issued “no further claim” certificate upon receiving payment. However, later, the Appellant preferred an application under Section 11(6) of the Arbitration Act, 1996. The High Court after considering the submissions, dismissed the arbitration petition and refused to appoint the arbitrator / arbitral tribunal and held that there was a full and final settlement of the payment as per the final bill and even the Appellant issued the “no further claim” certificate and even the application under Section 11(6) of the Act, 1996 was filed after a period of approximately three years. Hence, the present appeal.

After considering the submissions, the Supreme Court noted that as per Section 21 of the principal Act, unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to the arbitration is received by the Respondent.

“At this stage, it is required to be noted that by Amendment Act, 2015, Sections 34 and 36 of the Arbitration Act also came to be amended and the interference of the Court in challenge to the award has been restricted and/or narrowed down”, added the Court.

The Bench took support from the decision in case of Parmar Constructions Company, wherein it was specifically observed that in a case where notice invoking arbitration is issued prior to Amendment Act, 2015 and the application under section 11(6) is filed post amendment, as per section 21 of the principal Act, the date of issuance of the notice invoking arbitration shall be considered as commencement of the arbitration proceedings and therefore as per section 26 of the Amendment Act, 2015, the Amended Act, 2015 shall not be applicable and the parties shall be governed by the pre-amendment Act, 2015.

“In the present case the notice invoking arbitration clause was issued on 26.12.2013, i.e., much prior to the Amendment Act, 2015 and the application under Section 11(6) of the Act has been preferred/filed on 27.04.2016, i.e., much after the amendment Act came into force, the law prevailing prior to the Amendment Act, 2015 shall be applicable”, highlighted the Bench.

Accordingly, the Apex Court dismissed the appeal while concurring with the High Court that has rightly entered into the question of accord and satisfaction and has rightly dismissed the application under section 11(6) of the Act applying the principal Act, namely, the Arbitration and Conciliation Act, 1996 (Principal Act), prevailing prior to the Amendment Act, 2015.

Cause Title: Shree Vishnu Constructions v. The Engineer in Chief, Military Engineering Service, and Ors.

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