Supreme Court of India: Whether a non-maintainable appeal, under Indian Arbitration Act, is nonetheless maintainable under the general law (Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015) of India

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The Supreme Court of India (the Court), in Kandla Export Corporation & Anr. v M/S. OCI Corporation & Anr. (Civil Appeal no. 1661-1663 OF 2018 @ SLP(CIVIL) no. 28582-28584 of 2017 decided on February 7, 2018) addressed the issue of whether an appeal, not maintainable under Section 50 of the Arbitration and Conciliation Act, 1996 (the Act), is nonetheless maintainable under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (the Commercial Courts Act). The Court held that appeals that are mentioned in Section 37 of the Act alone are appeals that can be made to the Commercial Appellate Division of a High Court. The Court further held that Section 13(1) of the Commercial Courts Act, being a general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes, would not apply to cases covered by Section 50 of the Act.

Factual Matrix

A dispute arose between the Sellers (Appellants) and the buyers (Respondents) and as result an Award (the Award) passed under Rule No.125 of the Grain and Feed Trade Association (GAFTA). The appeal of the Appellants filed before the Queen’s Bench Division, Commercial Court was got and the Appellants filed yet another appeal before the Court of Appeal, Civil Division, in U.K. which was also rejected.

Meanwhile the Respondents filed the execution of the Award in India which was objected by the Appellants. The Respondents preferred an application before the High Court, under Section 15(5) of the Commercial Courts Act, for an appropriate order to transfer the execution petition to the High Court which was granted.

The High Court dismissed the objections that were filed by the Appellants and allowed the execution petition filed by the Respondents. Being aggrieved by this judgment, the Appellants filed an appeal under the Commercial Courts Act, which was dismissed stating that the Commercial Courts Act did not provide any additional right of appeal which is not otherwise available to the Appellants under the provisions of the Arbitration Act. The Appellants then went to the Supreme Court impugning this decision of the High Court.

Relevant Legal Principles

Section 50 of the Act

50. Appealable orders.— (1) An appeal shall lie from the order refusing to–

(a) refer the parties to arbitration under section 45;

(b) enforce a foreign award under section 48, to the Court authorised by law to hear appeals from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

Section 13 of the Commercial Courts Act

13. Appeals from decrees of Commercial Courts and Commercial Divisions.—

(1) Any person aggrieved by the decision of the Commercial Court or Commercial Division of a High Court may appeal to the  Commercial Appellate Division of that High Court within a period of sixty days from the date of  judgment or order, as the case may be:

Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil  Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation  Act, 1996 (26 of 1996).

(2) Notwithstanding anything contained in any other law for the time being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.

Section 21 of the Commercial Courts Act

21. Act to have overriding effect.—

Save as otherwise provided, the provisions of this Act shall have effect, notwithstanding  anything  inconsistent  therewith  contained  in any  other  law  for  the  time  being  in  force  or in any  instrument having  effect  by  virtue  of any  law for  the  time  being  in  force  other  than  this Act.

Section 10 & 11 of the Commercial Courts Act

10. Jurisdiction in respect of arbitration matters.—

Where the subject-matter of an arbitration is a commercial dispute of a Specified Value and––

(1)   If   such   arbitration   is   an   international   commercial   arbitration,   all   applications   or appeals  arising  out  of  such  arbitration  under  the  provisions  of  the  Arbitration  and  Conciliation Act,  1996 (26  of  1996) that  have  been  filed  in a  High  Court,  shall  be  heard and  disposed  of  by  the Commercial Division where such Commercial Division has been constituted in such High Court.

(2)  If  such  arbitration  is  other  than  an  international  commercial  arbitration,  all  applications  or appeals  arising  out  of  such  arbitration  under  the  provisions  of  the  Arbitration  and  Conciliation Act, 1996 (26 of 1996) that have been filed on the original side of the High Court, shall be heard and disposed  of  by  the  Commercial  Division  where  such  Commercial  Division  has  been constituted  in such High Court.

(3)  If  such  arbitration  is  other  than  an  international  commercial  arbitration,  all  applications  or appeals  arising  out  of  such  arbitration  under  the  provisions  of  the  Arbitration  and  Conciliation Act,  1996 (26  of  1996) that  would  ordinarily  lie  before  any  principal  civil  court  of  original jurisdiction in a district (not being  a High Court) shall be filed in, and heard and disposed of by the  Commercial  Court  exercising  territorial  jurisdiction  over  such  arbitration  where  such  Commercial Court has been constituted.

11. Bar of jurisdiction of Commercial Courts and Commercial Divisions.—

Notwithstanding anything  contained  in  this  Act,  a  Commercial  Court  or  a  Commercial  Division  shall  not  entertain or decide  any  suit,  application  or  proceedings  relating  to  any  commercial  dispute  in  respect  of  which  the jurisdiction of the civil court is either expressly or impliedly barred under any other law for the time being in force.

Explanation to Section 47 of the Act

Explanation—In this section and in the sections following in this Chapter, “Court” means the High Court having original jurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court.”

Section 37 of the Act

37. Appealable orders.—

(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:–

(a)refusing to refer the parties to arbitration under section 8;

(b) granting or refusing to grant any measure under section 9;

(c) setting aside or refusing to set aside an arbitral award under section 34.]

(2) An appeal shall also lie to a Court from an order of the arbitral tribunal.–

(a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or

(b) granting or refusing to grant an interim measure under section 17.

(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

Parties’ Contentions

Appellants argued that Section 13 provided an appeal to any person aggrieved by the decision of a Commercial Division of a High Court, and as Section 50 of the Arbitration Act found no place in the proviso to Section 13(1) of the Commercial Courts Act, it is clear that the wide language of Section 13(1) would confer a right of appeal, notwithstanding anything contained in Section 50 of the Arbitration Act. This became even clearer when read with Section 21 of the Commercial Court Act, which provides that the provisions of the Commercial Courts Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

Appellants further argued that the language of Section 13(1) of the Commercial Courts Act is extremely wide – it embraces “decisions”, “judgments” and/or “orders” by the Commercial Division of a High Court, and that this being so, the impugned judgment, allowing the execution petition filed by the Respondents, would certainly be a “decision” and/or “judgment” which would expressly be covered by the wide terms contained in Section 13(1) of the Commercial Courts Act.

Per contra Respondents relied strongly upon Sections 10 and 11 of the Commercial Courts Act. Respondents argued that the Explanation to Section 47 of the Act, when read with Section 11 of the Commercial Courts Act, would make it clear that the non-obstante clause contained in Section 21 of the Commercial Courts Act has to give way to Section 11, and that since Section 50 of the Arbitration Act impliedly bars appeals against an application allowing execution of a foreign award, Section 13 would be out of harm’s way, insofar as his Respondents are concerned.

The Respondents further argued that the object of both the Acts is to speedily determine matters pertaining to arbitration and/or commercial disputes and, the providing of an extra appeal by the Commercial Courts Act, which is impliedly excluded by the Arbitration Act, would militate against the object of both Acts.

Analysis

After analyzing the history and object of both the Acts, the Court observed that Section 13(1) of the Commercial Courts Act is in two parts. The main provision is a provision which provides for appeals from judgments, orders and decrees of the Commercial Division of the High Court. To this main provision, an exception is carved out by the proviso. The proviso goes on to state that an appeal shall lie from such orders passed by the Commercial Division of the High Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure Code, 1908, and Section 37 of the Arbitration Act. It will at once be noticed that orders that are not specifically enumerated under Order XLIII of the CPC would, therefore, not be appealable, and appeals that are mentioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appellate Division of a High Court.

The Court applied the ratio decidendi of Fuerst Day Lawson Limited v. Jindal Exports Limited, (2011) 8 SCC 333, wherein the common question that arose for consideration in the batch of cases before the Court was whether an order, though not appealable under Section 50 of the Act would, nevertheless be subject to appeal under the Letters Patent of the High Court. The Court held that where the special Act sets out a self-contained code and in that event the applicability of the general law procedure would be impliedly excluded. The express provision need not refer to or use the words “letters patent” but if on a reading of the provision it is clear that all further appeals are barred then even a letters patent appeal would be barred.

Conclusions

The Court held as under:

  • Appeals that are mentioned in Section 37 of the Arbitration Act alone are appeals that can be made to the Commercial Appellate Division of a High Court.
  • An order which refers parties to arbitration under Section 8 of the Act, not being appealable under Section 37(1)(a), would not be appealable under Section 13(1) of the Commercial Courts Act.
  • Similarly, an appeal rejecting a plea referred to in sub-sections (2) and (3) of Section 16 of the Arbitration Act would equally not be appealable under Section 37(2)(a) and, therefore, under Section 13(1) of the Commercial Courts Act.
  • Section 50 of the Act is a provision contained in a self-contained code on matters pertaining to arbitration, and which is exhaustive in nature. It carries the negative import that appeals which are not mentioned therein, are not permissible. This being the case, it is clear that Section 13(1) of the Commercial Courts Act, being a general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes, would obviously not apply to cases covered by Section 50 of the Arbitration Act.
  • Appeals filed under Section 50 of the Act would have to follow the drill of Section 50 alone.
  • Section 21 of the Commercial Court Act would only apply if Section 13(1) were to apply in the first place, which, as has been found, cannot be held to apply for the reasons given hereinabove.
  • Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving effect to the special statute i.e. the Arbitration Act, vis-à-vis the more general statute, namely the Commercial Courts Act, being left to operate in spheres other than arbitration.

 

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