[A&C Act] Parties Must ‘Agree’ To Invoke 2015 Amendment Act For Proceedings That Commenced Before Amendment Coming Into Force: Calcutta HC

While relying on the decision of S.P. Singla Constructions (P) Ltd. v. State of Himachal Pradesh [(2019) 2 SCC 488], the Calcutta High Court refused to accept the contention of the Respondent that arbitration agreement had the window of importing statutory modifications for Section 29A of the Arbitration and Conciliation Act, 1996 to be applicable.

Observing that unless the parties otherwise agree, the 1996 Act shall apply prospectively, the Single Judge Bench of Justice Shekhar B. Saraf clarified that “Section 29-A of the Amendment Act applies prospectively to arbitration proceedings commenced in accordance with Section 21 of the Act after the Amendment Act, unless the parties otherwise agreed”.

Advocate Jishnu Chowdhury appeared for the Petitioner, whereas Advocate Swarup Banerjee appeared for the Respondent.

Going by the background of the case, the Petitioner, a Joint-Venture Company entered into an agreement with the first Respondent (a company holding iron mines) under lease from the Government of Orissa for a period of 20 years for setting up crushing and processing plant and for sale of iron ore. When dispute arose, the Petitioner invoked the arbitration clause by letter in 2006 and arbitrators were nominated. Proceedings commenced but could not be completed due to death of one of the presiding arbitrators. Thereafter, the Petitioner applied for appointment of new arbitrator, however during pendency of the application, criminal proceedings were initiated against the petitioner which ended in 2021 and last arbitral proceedings took place in 2016. Later, after Petitioner’s director was exonerated in 2021, the Petitioner requested the two sitting arbitrators to appoint a third arbitrator. Not satisfied, present petition had been preferred seeking appointment of a third arbitrator.

The respondent has opposed the petition stating that arbitral proceedings cannot be revived as there were undue delays and several latches which has made the subject-matter of the dispute redundant. It is also contended that their agreement had a statutory modification clause according to which Section 29A applies and hence, arbitral award should have been made withing 12 months of completion of proceedings.

After considering the submission, the High Court referred to the decision in case of BCCI v. Kochi Cricket Pvt. Ltd. [(2018) 6 SCC 287] wherein it was held that “upon arbitral proceedings commencing before the 2015 Amendment Act came into force, parties must ‘otherwise agree ‘for applicability of provisions of 2015 Amendment Act”.

Observing in consonance with the decision of Subrata Mitra v. Shyamali Basu and Anr. (AP 67 of 2020), the High Court clarified that delay in resumption of arbitral proceedings would not wipe out the arbitral reference.

However, the Bench left it for the Arbitral Tribunal to decide whether delay in conducting arbitral proceedings is clear evidence for abandonment.

With respect to applicability of procedural law to be applied retrospectively or prospectively, the bench stated that purely procedural provisions are to be applicable retrospectively, but such applicability can be ousted if specified in any statute.

Accordingly, while terminating the mandate of the erstwhile Late Arbitrator Justice R.N. Ray, the Bench appointed Justice Asok Kumar Ganguly, Former Judge, Supreme Court of India, as the substitute/presiding arbitrator to resolve the dispute between the parties.

Cause Title: East Indian Minerals Limited v. The Orissa Minerals Development Company Limited and Anr.

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