Calcutta High Court (Appellete Side)Sri Tufan Chatterjee vs Sri Rangan Dhar on 2 March, 2016Author:Indira BanerjeeBench:Indira BanerjeeIN THE HIGH COURT AT CALCUTTA
                     CIVIL APPELLATE JURISDICTION
                            APPELLATE SIDE


                          FMAT No.47 of 2016
                                  +
                           CAN 308 of 2016


                          Sri Tufan Chatterjee
                                   Vs.
                            Sri Rangan Dhar


B E F O R E:

The Hon'ble Justice INDIRA BANERJEE
           And
The Hon'ble Justice SAHIDULLAH MUNSHI


For the appellant       : Mr. Jishnu Chowdhury,
                          Mr. Asif Ali


For the respondent      : Mr. Sabyasachi Bhattacharyya,Ms. Shohini Chakraborty.Judgment on             : 02.03.2016




      INDIRA BANERJEE, J.: This appeal is against an Order No. 9

dated 5th January, 2016 passed by the Court of the learned District

Judge, South 24 Parganas at Alipore, in an application of the

appellant for interim relief, underSection 9of the Arbitration and

Conciliation Act, 1996, hereinafter referred to as the 1996 Act.The appellant and the respondent carried on business in real

estate, as partners of the partnership firm 'Pyramid Construction and

Contractors.A Deed of Partnership dated 31 st November 1995 was executed

by and between the appellant and the respondent in terms whereof

the respondent contributed 100% to the capital of the firm. The

petitioner made no contribution.It was, however, agreed that the share of profits and loss of the

partnership firm, would be shared between the partners in the

proportion of 75 percent and 25 percent, the share of the respondent

being 75 percent, and the share of the appellant being 25 percent.

The said partnership firm contained a clause for settlement of

disputes by arbitration.The partnership firm undertook six construction projects,

particulars whereof have been given in the petition. However,

disputes and differences arose between the respondent and the

petitioner with regard to the partnership business and/or sharing of

profits thereof.After the disputes arose, the appellant filed an application in

the Court of the learned District Judge, Alipore, underSection 9of
 the 1996, Act praying for inter alia an order of injunction restraining

the respondent, his men, agent, representatives from transferring,

alienating or creating rights in favour of third parties in respect of

the assets and properties, including bank accounts, investment,

securities in the name of the partnership firm, jointly owned by the

petitioner and the respondent and other consequential reliefs,

including appointment of a receiver.On the said application being moved, the Court of the learned

District Judge passed an order restraining the respondent from

transferring, alienating, disposing of or parting with possession or

creating third party interest in respect of the assets and properties of

the partnership firm. After the aforesaid order was passed an Arbitral

Tribunal was constituted, and arbitration proceedings commenced.While the arbitration proceedings were pending, Parliament

enacted theArbitration and Conciliation (Amendment) Act, 2015,

hereinafter referred to as the Amendment Act of 2015, which came

into force with retrospective effect from 23rd October, 2013.After the Amendment Act of 2015 was enacted the respondent

filed an application seeking dismissal of the application of the

appellant underSection 9of the 1996, in view of the amendment ofSection 9of the 1996 Act by the Amendment Act of 2015, by
 incorporation ofSection 9(3), placing fetters on the power of the

Court to entertain an application underSection 9, after the Arbitral

Tribunal was constituted. The application of the respondent was

heard and disposed of along with the pending application of the

appellant underSection 9of the 1996 Act.By the impugned order dated 5 th January, 2016, the learned

Court dismissed the application of the appellant underSection 9of

the 1996 Act, inter alia observing that since the arbitral proceedings

had already been initiated, the Court was no longer authorized to

pass any order on an application underSection 9(1)of the 1996 Act.The learned Court, in effect held that, in view of the enactment

and enforcement of the Amendment Act of 2015, amendingSections

9and17of the 1996 Act with effect from 23 rd October, 2015, the

Court could not pass an order of interim relief underSection 9of the

1996 Act once the Arbitral Tribunal had been constituted.The short question in this appeal is, whether the Court has

been denuded of power to grant interim relief to the appellant underSection 9of the 1996 Act, from the date on which the Amendment

Act of 2015 came into force, since an Arbitral Tribunal has been

constituted, and arbitral proceedings have commenced.Sections 9and17of the 1996 Act as they stood before their

amendment by theArbitration and Conciliation Act, 2015are set out

hereinbelow:-"9.         Interim measures etc. by Court. - A party may,
    before, or during arbitral proceedings or at any time after
    the making of the arbitral award but before it is enforced in
    accordance withsection 36, apply to a court-i.       for the appointment of a guardian for a minor or
          person of unsound mind for the purposes of arbitral
          proceedings; or
          ii.       for an interim measure of protection in respect
          of any of the following matters, namely:-(a)   the preservation, interim custody or sale
                   of any goods which are the subject-matter of the
                   arbitration agreement;(b)   securing the amount in dispute in the
                   arbitration;(c)   the detention, preservation or inspection of
                   any property or thing which is the subject-matter of the dispute in arbitration, or as to
                   which any question may arise therein and
                   authorising for any of the aforesaid purposes
                   any person to enter upon any land or building
                   in the possession of any party or authorising
                   any samples to be taken or any observation to
                   be made, or experiment to be tried, which may
                   be necessary or expedient for the purpose of
                   obtaining full information or evidence;(d)   interim injunction or the appointment of a
                   receiver;(e)   such other interim measure of protection
                  as may appear to the Court to be just and
                  convenient,
    and the Court shall have the same power for making orders
    as it has for the purpose of, and in relation to, any
    proceedings before it.17.     Interim measures ordered by arbitral tribunal.-(1)    Unless otherwise agreed by the parties, the
    arbitral tribunal may, at the request of a party, order a
    party to take any interim measure of protection as the
    arbitral tribunal may consider necessary in respect of the
    subject matter of the dispute.(2)    The arbitral tribunal may require a party to
    provide appropriate security in connection with a measure
    ordered under sub-section (1).Some of the relevant provisions of the Amendment Act of 2015

are set out herein below for convenience:-"5.Section 9of the principal Act shall be renumbered as
    sub-section (1) thereof, and after sub-section (1) as so
    renumbered, the following sub-sections shall be inserted,
    namely:-"(2)    Where,    before   the   commencement   of   the
           arbitral proceedings, a Court passes an order for any
           interim measure of protection under sub-section (1),
           the arbitral proceedings shall be commenced within a
        period of ninety days from the date of such order or
       within such further time as the Court may determine.(3)       Once       the     arbitral   tribunal      has       been
       constituted,      the      Court   shall     not    entertain    anapplication under sub-section (1), unless the Court
       finds that circumstances exist which may not render
       the remedy provided undersection 17efficacious."10.    Forsection 17of the principal Act, the following
section shall be substituted, namely:-"17.(1)          A     party    may,     during     the     arbitral
       proceedings or at any time after the making of the
       arbitral award but before it is enforced in accordance
       withsection 36, apply to the arbitral tribunal -(i)        For the appointment of a guardian for a
             minor or person of unsound mind for the
             purpose of arbitral proceedings; or(ii)       For an interim measure of protection in
             respect of any of the following matters, namely:-(a)       The preservation, interim custody
                        or sale of any goods which are the
                        subject-matter         of    the      arbitration
                        agreement;(b)       Securing the amount in dispute in
                        the arbitration;(c)   the        detention,          preservation       or
             inspection of any property or thing which
             is the subject-matter of the dispute in
             arbitration, or as to which any question
             may arise therein and authorising for
             any   of    the     aforesaid          purposes        any
             person     to     enter    upon         any     land    or
             building in possession of any party, or
             authorising any samples to be taken, or
             any      observation           to     be    made,       or
             experiment to be tried, which may be
             necessary or expedient for the purpose
             of obtaining full information or evidence;(d)   interim           injunction             or      the
             appointment of a receiver;


             (e)   such       other    interim          measure      of
             protection as may appear to the arbitral
             tribunal to be just and convenient,and the arbitral tribunal shall have the same
      power for making orders, as the court has for
      the   purpose     of,    and     in        relation    to,    any
      proceedings before it.(2)    Subject to any orders passed in an appeal
undersection 37, any order issued by the arbitral
tribunal under this section shall be deemed to be an
order of the Court for all purposes and shall be
enforceable underthe Code of Civil Procedure, 1908,
           in the same manner as if it were an order of the
          Court."26.    Nothing contained in this Act shall apply to the
    arbitral proceedings commenced, in accordance with the
    provisions ofsection 21of the principal Act, before the
    commencement of this Act unless the parties otherwise
    agree but this Act shall apply in relation to arbitral
    proceedings     commenced    on   or   after   the   date   of
    commencement of this Act."Section 9(3)incorporated in the 1996 Act, by the Amendment

Act of 2015 provides that once the Arbitral Tribunal has been

constituted, the Court shall not entertain an application underSection 9(1), unless the Court finds that circumstances exist, which

may not render the remedy provided underSection 17efficacious.Section 26 of the Amendment Act of 2015 provides that nothing

contained in the said amendment Act is to apply to arbitral

proceedings commenced in accordance with the provisions ofSection

21of the principal Act, before the commencement of the Amendment

Act of 2015, unless the parties otherwise agree, but the Amendment

Act would apply in relation to arbitral proceedings commenced on or

after the date of commencement of 2015 Act.Section 21of the 1996 Act provides as follows :"21.   Commencement    of   arbitral   proceedings.--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 arbitration
    is received by the respondent."In this case, the application for interim relief underSection 9was moved in the Court in August, 2015 before the Amendment Act

of 2015 came into force. While the application was pending, arbitral

proceedings commenced underSection 21of the 1996 Act and an

arbitral tribunal was constituted.Mr. Jishnu Chowdhury, appearing on behalf of the petitioner

drew the attention of this Court to Section 26 of the Amendment Act

of 2015 and argued that the Amendment Act of 2015 would not apply

to proceedings which had commenced before the said Act came into

force.Mr. Chowdhury argued that the proceedings underSection 9of

the 1996 Act, had been initiated by the appellant in the Court below,

long before the Amendment Act of 2015 came into force.Mr. Chowdhury also argued that the amendments toSection 17of the 1996 Act, by the Amendment Act of 2015, to confer on the
 learned Tribunal, the same power to grant interim relief, as the

Courts, would not apply to the arbitral proceedings in this case,

which had commenced long before the Amendment Act of 2015 came

into force. Moreover the appellant would not be able to enforce any

interim order passed by the Arbitral Tribunal, underthe Code of Civil

Procedure, 1908, in the manner as if it were an order of Court.Mr. Sabyasachi Bhattacharya appearing with Mrs. Sohini

Chakraborty, however, argued that Section 26 of the Amendment Act

of 2015 provides that, nothing contained in the said Amendment Act

would apply to arbitral proceedings, commenced in accordance with

the provisions ofSection 21of the principal Act, before the

commencement of the said Amendment Act, unless the parties agreed

otherwise. The provisions of the Amendment Act of 2015, would

apply to proceedings initiated in Court.As argued by Mr. Bhattacharya,Section 21of the principal Act,

that is, the 1996 Act provides that unless otherwise agreed by the

parties, the arbitral proceedings in respect of a particular dispute

commences on the date on which a request for the reference of

dispute to arbitration, is received by the respondent.Arbitral   proceedings   are   proceedings   before   an   Arbitral

Tribunal, and no proceedings    in Court under the provisions of the
 1996 Act.Section 21of the 1996 Act creates a legal fiction by which

the arbitral proceedings commence on the date of receipt, by the

respondent, of a request to refer the dispute to arbitration. Thus for

the purpose inter alia of limitation the Arbitration proceedings

commence on the date of receipt of a request by the respondent, to

refer the dispute to arbitration, so that a claim is not defeated merely

by delaying the reference.Section 32of the 1996 Act provides as follows:-"32. Termination of proceedings.--(1) The arbitral proceedings shall be terminated by the
    final arbitral award or by an order of the arbitral tribunal
    under sub-section (2).(2) The arbitral tribunal shall issue an order for the
    termination of the arbitral proceedings where--(a)   the claimant withdraws his claim, unless the
               respondent objects to the order and the arbitral
               tribunal recognises a legitimate interest on his
               part in    obtaining   a final   settlement of   the
               dispute,(b)   the parties agree on the termination of the
               proceedings, or(c)   the arbitral tribunal finds that the continuation of
               the proceedings has for any other reason become
               unnecessary or impossible.(3) Subject tosection 33and sub-section (4) ofsection 34,
    the mandate of the arbitral tribunal shall terminate with the
    termination of the arbitral proceedings."A careful reading of the provisions of the 1996 Act, and in

particularSections 21and32thereof, makes it amply clear that the

expression 'arbitral proceedings' in Section 26 of the Amendment Act

of 2015 cannot be construed to include proceedings in a Court under

the provisions of the 1996 Act, and definitely not any proceedings

underSection 9of the 1996 Act, instituted in a Court before a

request for reference of disputes to arbitration is made.Arbitral proceedings can be said to commence, when a request

for reference to arbitration is received by the respondent and/or the

authority competent under the arbitration agreement, upon notice to

the respondent. The arbitral proceedings, which so commence,

terminate with a final award as provided inSection 32(1)of the 1996

Act or with an order underSection 32(2)of the 1996 Act Proceedings

in Court under the 1996 Act whether initiated before, during or

after the termination of the arbitral proceedings, would not attract

Section 26 of the Amendment Act of 2015.The amendment Act of 2015, which came into force with effect from

23rd    October,   2015,   would   apply   to   arbitral   proceedings   which

commenced after 23rd October, 2015 but not to arbitral proceedings

which commenced before 23rd October, 2015. The Amendment Act of

2015 would apply to all Court proceedings on and from 23rd October,

2015.The amendment Act of 2015 has retrospective operation from

23 rd October, 2015. After 23 rd October, 2015, the Court cannot

entertain an application for interim relief underSection 9(1)of the

1996 Act, once the arbitral tribunal has been constituted, unless the

Court is satisfied that circumstances exist, which may not render the

remedy provided underSection 17efficacious.Mr. Chowdhury citedThyssen Stahlunion Gmbh Etc vs. Steel

Authority Of India Ltd(supra) reported in (1999) 9 SCC 334 in support

of his argument that the Amendment Act of 2015 would have no

application   to   Court   proceedings   which   commenced   before   the

enforcement of the Amendment Act, 2015.InThyssen Stahlunion Gmbh Etc vs. Steel Authority Of India

Ltd(supra) the Supreme Court held that where arbitral proceedings had

commenced before the enforcement of the 1996 Act, the arbitral award

would have to be enforced in accordance withArbitration Act, 1940and

not in accordance withSection 36of the 1996 Act.The judgment inThyssen Stahlunion Gmbh Etc vs. Steel

Authority Of India Ltd(supra) was rendered in the context ofSection
 85(2)(a)of the 1996 Act, which is set out hereinbelow for convenience,

along withSection 85(1):85. Repeal and savings.--(1)The Arbitration (Protocol and
    Convention) Act, 1937(6 of 1937), theArbitration Act, 1940(10 of 1940) and theForeign Awards (Recognition and
    Enforcement) Act, 1961(45 of 1961) are hereby repealed.(2) Notwithstanding such repeal,--(a)   the provisions of the said enactments shall apply
               in   relation   to   arbitral   proceedings   which
               commenced before this Act came into force unless
               otherwise agreed by the parties but this Act shall
               apply in relation to arbitral proceedings which
               commenced on or after this Act comes into force;"There is a significant difference between the language ofSection

86(2)(a)of the 1996 Act and Section 26 of the Amendment Act of 2015. As

observed above,Section 85(2)(a)makes the provisions of the repealed

enactments applicable "in relation to" arbitral proceedings, whereas

Section 26 of the Amendment Act of 2015, which reads "nothing in this

Section shall apply to the arbitral proceedings ............", restricts the

applicability of the Amendment Act of 2015 to arbitral proceedings which

commenced before the commencement of the said Act. The crucial

difference is in the words 'in relation to inSection 85(2)(a)of the 1996

Act which are not there in Section 26 of the Amendment Act of 2015.Mr. Chowdhury argued that the bar ofSection 9(3)of the 1996 Act

read withSection 26of the said Act would not apply to the application of
 the appellant underSection 9of the 1996 Act, as the application had

been filed in the Court below, and interim orders had also been passed,

long before the Amendment Act of 2015 came into force.However, as rightly argued by Mr. Bhattacharya, there is difference

between the expressions 'institute' and the expression 'entertain'. The

expression 'institute' is not synonymous with the expression 'entertain'. In

Martin & Harris Ltd. Vs. 6th Additional District Judge and Ors.

reported in (1998) 1 SCC 732 cited by Mr. Bhattacharya, the Supreme

Court interpreted the expression 'entertain' in Clause 21(1)(a) of theU.P.

Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, to

mean entertaining the ground for consideration for the purpose of

adjudication on merits and not any stage prior thereto. Unlike the

Limitation Act, which bars the institution of a suit after expiry of the

period of limitation,Section 26prohibits the Court from entertaining an

application underSection 9, except in circumstances specified inSection

9(3), which necessarily means considering application on merits, even at

the final stage.After amendment by the Amendment Act of 2015, the scope ofSection 17has considerably been widened and the Arbitral Tribunal

has expressly been conferred the same power, as the Court underSection 9. An order of the Tribunal underSection 17is also
 enforceable in the same manner as an order of Court underSection

9, under the provisions of the Civil Procedure Code.Mr. Chowdhury questioned the power of the Arbitral Tribunal to

grant the interim reliefs contemplated inSection 17of the 1996 Act, as

amended by the Amendment Act of 2015, in case of arbitral proceedings

which had commenced before the Amendment Act of 2015 came into

force.Mr. Chowdhury submitted that, since the Amendment Act did not

apply to arbitral proceedings that had already commenced before the said

Act came into force the arbitral tribunal lacked power to grant those

reliefs. The only remedy available to the appellant was to approach Court

underSection 9of the 1996 Act.The power of the Arbitral Tribunal underSection 17of the 1996 Act

was always of the widest amplitude. From the inception, the Arbitral

Tribunal had power under the 1996 Act to order a party to take any

interim measure of protection, as the Arbitral Tribunal might consider

necessary, in respect of the subject matter of the disputes. The Arbitral

Tribunal, therefore, all along had all the powers of Court underSection 9of the 1996 Act. The Amendments toSection 17of the 1996 Act by the

Amendment Act of 2015 are only clarifactory. The amendments have

possibly been made only by way of abundant caution.It is a cardinal principle of construction that every statute is

prospective unless it is expressly or by necessary implication made to

have retrospective operation, but the rule in general is applicable

when the object of the statute is to affect vested rights or to impose

new burdens or to impair existing obligations. Unless there are words

in the statute sufficient to show the intention of the legislature to

affect existing rights, it is deemed to be prospective only.In contrast to statutes dealing with substantive rights, statutes

dealing with merely matters of procedure are presumed to be

retrospective, unless such a construction is textually inadmissible.

As held by the Supreme Court inAnant Gopal Sheorey Vs. State of

Bombayreported in AIR 1958 SC 915 no person has vested right in

any course of procedure. He has only the right of prosecution or

defence in the manner prescribed for the time being by law in the

Court in which the case is pending and if by an Act of Parliament the

mode of procedure is altered he has no other right than to proceed

according to the altered mode. Law relating to forum is procedural in

nature.If, therefore, during the pendency of proceedings in the Civil

Court, a new law is enacted, which is worded as to denude the Civil

Court of jurisdiction except in specified circumstances, the Civil

Court will be debarred from exercising jurisdiction unless the

conditions precedent for exercise of jurisdiction by the Civil Court
 exist. This proposition finds support from the judgment of the Supreme

Court inInacio Martines Vs. Narayan Hari Naikreported in AIR 1993

SC 1756.Reference may also be made toUnited Bank of India,

Calcutta Vs. Abhijit Tea Co. Pvt. Ltd.reported in AIR 2000 SC 2957.Even though an earlier application for interim relief may have

been filed in Court, once arbitral proceedings have commenced and

an arbitral tribunal has been appointed, interim relief would have to

be sought before the learned Arbitrator. The Court would be denuded

of its power to grant interim relief unless the Court is satisfied that

circumstances exist, which may not render the remedy provided

underSection 17efficacious.In this case there are no such circumstances. However,

considering   that   the   application   for   interim   relief   had   been

entertained long before the amendment and an interim order had

been in force, the Court might have passed limited interim relief and

remitted the parties to proceedings underSection 17before the

Arbitral Tribunal.We do not interfere with the order under appeal. We however

direct that status quo with regard to the properties and assets in

question shall be maintained for a period of six weeks from date or
 till the application, if any, underSection 17filed by the petitioner, is

taken up, whichever is earlier.The appeal and the application are disposed of accordingly.



      Urgent Photostat certified copy, if applied for, be delivered to

the learned counsel for the parties, upon compliance of all usual

formalities.( INDIRA BANERJEE, J. )


               I Agree


                                          ( SAHIDULLAH MUNSHI, J. )