The Arbitration and Conciliation Act of 1996 is enacted by Parliament to fall in line with the “uncitral model law on international commercial arbitration”, adopted by the UN in 1985, which recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of law of arbitral procedure and the specific needs of international commercial arbitration law of practice. The said Act deals with domestic arbitration, enforcement of certain foreign awards, conciliation etc., and Section 82 of the Act confers power on the High Courts to make rules consistent with the Act as to all proceedings before the Court, under the Act. Similarly, under Section 84 of the Act, the Central Government by notification in the Official Gazette, made rules for carrying out the provisions of the Act. Various High Courts and the Supreme Court of India have framed rules to be followed by the courts for the proceedings before the courts under the Act. The Arbitration and Conciliation Act of 1996, as already stated, is intended to consolidate and amend the law relating to arbitration, as is evident from the preamble of the Act itself. The Statement of Objects and Reasons given in the Arbitration and Conciliation Bill, 1995, are as follows: “(i) to comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation; (ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration; (iii) to provide that the Arbitral Tribunal gives reasons for its arbitral award; (iv) to ensure that the Arbitral Tribunal remains within the limits of its jurisdiction; (v) to minimise the supervisory role of courts in the arbitral process; (vi) to permit an Arbitral Tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes; (vii) to provide that every final arbitral award is enforced in the same manner as if it were a decree of the court; (viii) to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an Arbitral Tribunal; and (ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award.” Out of the above objectives the one at Serial No. (v) is being opposed as it restricts the role of the courts. The words “arbitral process” cannot be given a limited meaning to mean proceedings before the arbitrators only. It extends to the proceedings arising out of an arbitral award, in any civil court, under the various provisions of the Act of 1996 also. If this interpretation is accepted, then the role of the civil courts while dealing with any matter, arising out of the Act of 1996, shall be guided and controlled by the Arbitration and Conciliation Act of 1996 itself, as the Arbitration Act is a self-contained code in itself and one need not go beyond the Act for any procedural aspects to be followed in any civil courts. The argument that the Arbitration Act of 1996 is a self-contained code in itself and Parliament has kept in view the basic requirements and the rights of the parties adumbrated in the Civil Procedure Code gets support from Section 9 of the Act, which has taken care to incorporate several basic provisions of the Code of Civil Procedure of 1908, in the following manner: “(i) for the appointment of a guardian for a minor or a 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 a 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.” The Act under Section 16 provides absolute power to the Arbitral Tribunal itself, to rule on its own jurisdiction, including ruling on any objections, with respect to the existence or validity of arbitration agreement. Under Section 17, the Arbitral Tribunal has been vested with powers to order a party to take any interim measure of protection on the subject-matter of dispute and it may also require a party to provide an appropriate security in connection with a measure ordered by it. The Act has also provided for appeal on limited question of fact and law on the decision of the arbitrators, under Section 34, read with Section 37. Section 16 and Section 34(2)(a)(ii) also reveal that the Act has also envisaged a revision of the decision and conduct of the Arbitral Tribunal by the civil courts. The Act has also incorporated in itself the provisions of Section 34 and Section 35 CPC, as an integral part of it, under Section 31, in respect of award of interest and cost by the Arbitral Tribunal. Section 27 authorises the arbitrator to seek assistance of the court for recording of evidence under certain circumstances. Similarly, provision is also made under Section 26 for the Arbitral Tribunal to appoint commissioners and experts, wherever required, for proper adjudication of disputes referred to it. Finally, Section 19 of the Act of 1996 declares that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure of 1908 or the Evidence Act of 1872. It is clear from the above provisions of the Act, that they encompass in themselves the wide spectrum of the Code of Civil Procedure of 1908, to make the Act a complete code in itself and therefore, Parliament has rightly incorporated Section 19, barring the application of the Code of Civil Procedure to the proceedings before the Arbitral Tribunal. In this connection it is worth mentioning that the Rule framed by the Hon’ble High Court of Karnataka, under clause 12 reads as follows: “12. The applicability of the Code of Civil Procedure, 1908.—Subject to what is provided for, in the Arbitration and Conciliation Act and these rules, the provisions of the Code of Civil Procedure and the Karnataka Civil Rules of Practice, may be applied to the proceedings under the Act to the extent considered necessary or appropriate by the Court, or judicial authority.” The above rule is being interpreted by some courts in the proceedings under Section 34 of the Act, that parties shall follow all the provisions of the Code of Civil Procedure, 1908 and the Civil Rules of Practice, while dealing with the objections filed against the award of the Arbitral Tribunal. In several cases, courts are also inclined to follow scrupulously, the provisions of CPC and the Civil Rules of Practice, for fear that its decisions may be challenged in the higher courts, for not complying with the provisions of CPC etc. This attitude of the parties and courts, it is felt, is contrary to the very object of the law of arbitration and inconsistent with the main objective, which is to minimise the supervisory role of court in the arbitral process. Judicial pronouncements are also equally confusing and conflicting on the above said question. The latest decision of the Hon’ble Supreme Court of India, in the case of ITI Ltd. v. Siemens Public Communications Network Ltd. while dealing with Section 5 and Section 36 of the Act and also Section 115 CPC, has laid down the law that the applicability of CPC having not been expressly prohibited in the Act, the High Court’s power under Section 115 CPC, against an order made by the civil court, in an appeal preferred under Section 37 of the Act, is not barred. While doing it is reiterated by the Supreme Court that in view of the fact that the Act of 1996 has not expressly barred the application of provisions of CPC, no inference can be drawn that CPC is not applicable to the proceedings arising out of the Act in the civil courts. In this context it is pertinent to extract Section 5 of the Act of 1996 which expressly states thus: “5. Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.” It is clear that Parliament did not wish that the civil courts should interfere in any of the matters governed by the Act of 1996, except to the extent provided under the Act itself. If this intention of Parliament is to be taken to the logical conclusion, no civil court, while dealing with any matter before it, should look beyond the provisions of the Act of 1996 itself, as the same is a self-contained code. If that be so, then the effect of Rule 12 framed by the High Court of Karnataka and the decision of the Hon’ble Supreme Court in ITI case1 calls for review. It may be mentioned that the rules framed by the High Court may not stand in the context of the Full Bench decision as in the case of Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd.2 While dealing with the rules framed by the Chief Justices of various High Courts and by the Chief Justice of India, under the Act, the Court stated as follows: (SCC pp. 405-06, para 22) “22. The schemes made by the Chief Justices under Section 11 cannot govern the interpretation of Section 11. If the schemes, as drawn, go beyond the terms of Section 11 they are bad and have to be amended. To the extent that the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996, goes beyond Section 11 by requiring, in clause 7, the service of a notice upon the other party to the arbitration agreement to show cause why the nomination of an arbitrator, as requested, should not be made, it is bad and must be amended. The other party needs to be given notice of the request only so that it may know of it and it may, if it so chooses, assist the Chief Justice or his designate in the nomination of an arbitrator.” It is thus clear that any rules framed by the Chief Justice, including the Chief Justice of India, under the Act, which are inconsistent with or beyond the terms of the statute, have been held to be bad and suggested to be amended.
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Tags :Civil Law