Delhi High Court: Appeal Under Commercial Court Act Against An Interlocutory Order Of The Court Emanating From Proceedings For Enforcement Of A Domestic Award

Delhi-High-Court

The Arbitration & Conciliation Act, 1996 (‘Arbitration Act’) is an exhaustive self-contained code on matters pertaining to arbitration.[1] The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (‘Commercial Courts Act’) on the other hand is a general statute which also contains general provision vis-à-vis arbitration relating to appeals arising out of commercial disputes.[2] Section 13 of the Commercial Courts Act provides for an appeal from orders passed by a Commercial Division of a High Court to the Commercial Appellate Division of that High Court, which are enumerated under Order XLIII of the Code of Civil Procedure, 1908 (‘1908’), as amended by the Commercial Courts Act or from orders which are mentioned in Section 37 of the Arbitration Act. Section 37 of the Arbitration Act restricts the appeals to the following orders:

  • refusing to refer the parties to arbitration under Section 8;
  • granting or refusing to grant any measure under Section 9;
  • setting aside or refusing to set aside an arbitral award under Section 34.

Thus, it is noteworthy that orders that are not specifically enumerated under Order XLIII 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. [3]

The above position of law was reiterated in Prasar Bharati vs M/S Stracon India Limited & Anr. EFA(OS)(COMM) 4/202 by the Division Bench of the Delhi High Court wherein the issue before the Court was whether an interlocutory order of the Court passed in exercise of its powers under Section 36 of the Arbitration Act [Enforcement of a domestic award] directing the Registry to release a partial amount deposited as a security by the Award Debtor is appealable under Section 13 of the Commercial Courts Act. In this case, the Award Debtor appealed under Section 13 of the Commercial Court Act against an interlocutory order passed in proceedings under Section 36 of the Arbitration Act, whereby a part of the amount which had been deposited by the Award Debtor in the court, has been directed to be released in favour of the Award Holder.

While deciding the above issue, the Division Bench placed reliance on the dictum of the Supreme Court in Kandla Export Corporation & Anr. vs M/s OCI Corporation & Anr[4] as reiterated by the Division Bench of the Delhi High Court in South Delhi Municipal Corporation vs. M/s Tech Mahindra and held that an appeal is a creation of a statute and cannot be claimed as a matter of right. On the maintainability of an appeal against an order passed in exercise of powers under Section 36 of the Arbitration Act, the Division Bench of the Bombay High Court in Kakade Construction Company Ltd. vs. Vistra ITCL (India) Ltd.[5] observed that Section 37 of the Arbitration Act provides appeal only in limited cases. These are order: refusing to refer the parties to arbitration under Section 8; granting or refusing to grant any measure under Section 9; setting aside or refusing to set aside an arbitral award under Section 34. An appeal shall also lie to a Court from an order of the arbitral tribunal accepting the plea referred in sub-Section (2) or sub-Section (3) of Section 16; or granting or refusing to grant an interim measure under Section 17. These are the only orders that have been made appealable.

In the case at hand, the Division Bench of the Delhi High Court considered the above judicial precedents and inter alia held that Section 8 of the Commercial Courts Act itself places a bar on any petition against an interlocutory order of the Commercial Court. Further, it was emphasized that in this case, the appeal before the Court is directed against an interlocutory order passed in proceedings under Section 36 of the Arbitration Act, whereby a part of the amount which had been deposited by the Award Debtor in the court, has been directed to be released in favour of the Award Holder. Under Section 37 of the Arbitration Act, no appeal is maintainable from any order passed under Section 36 of the Arbitration Act. Further, Section 36 of the Arbitration Act does not attract the provisions of CPC. Since the statute does not provide for an appeal against and order passed under Section 36, the Court held that it is axiomatic that such appeal in the present case is also not maintainable. More so because the order impugned by the Award Debtor would neither fall under Order XLIII of the CPC, nor under Section 37 of the Arbitration Act. Therefore, the Court dismissed the appeal of the Award Debtor filed under Section 13 of the Commercial Courts Act.

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

[1] Kandla Export Corporation & Anr. vs M/s OCI Corporation & Anr. reported as 2018 14 SCC 715

[2] Ibid

[3] Ibid

[4] 2018 14 SCC 715

[5] 2019 SSC OnLine Bombay 1521

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