Section 36 Of Arbitration Act As Amended Applies To Pre-Amendment S.34 Applications: Allahabad High Court Reiterates

Brief Facts

The respondent was awarded a contract, which could not be completed within the stipulated period. As such, a dispute arose between the parties. The matter was referred to the Arbitrator. On 03.03.2010, an award was passed against the petitioners awarding Rs. 92 lakh with 8% interest. Against the award dated 03.03.2010, the petitioners filed an application under section 34 of the Arbitration Act, which was rejected vide order dated 03.02.2021 by the Commercial Court, Jhansi on the ground that the court had no jurisdiction to interfere with the award. Against the award dated 03.03.2010 and order dated 03.02.2021, the petitioners preferred First Appeal From Order, which is pending before the Court.

An Execution Case was filed by the Respondent–Decree Holder before the Commercial Court under section 36 of the Act, which was dismissed vide order dated 02.01.2023. A second execution case under section 36 was filed by the respondent before the Commercial Court in which the petitioners filed preliminary objection stating that the execution case was time-barred. By the impugned order dated 21.09.2024, the preliminary objection filed by the petitioners was rejected. The Petitioner filed the petition against the impugned order dated 21.09.2024.

Submissions

Counsel for the Petitioners submitted that the award was passed on 03.03.2010; whereas, the execution case was filed on 17.05.2024 after a lapse of more than 12 years, which is not permissible under the Act.

Per contra, counsel for the Respondent submitted that the application was filed within time as prescribed under the Act. He placed reliance on the judgement in Board of Control for Cricket in India (BCCI) to contend that the second execution case was within limitation.

Observations

The court relied on the judgment in BCCI, where the Supreme Court, with regard to the applicability of section 36 of the Act after amendment, held as under:

“The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced …on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.

..Section 36, prior to the Amendment Act, is only a clog on the right of the decree holder, who cannot execute the award in his favour, unless the conditions of this section are met. This does not mean that there is a corresponding right in the judgment debtor to stay the execution of such an award... the vested right of appeal can be taken away only by a subsequent enactment, if it so provides specifically or by necessary intendment and not otherwise..."

In BCCI, it was held that “Section 36 as amended should apply to Section 34 applications filed before the commencement of the Amendment Act”.

The court refused to interfere with the impugned order. It accordingly dismissed the petition.

Case Title: U.P. Jal Nigam (Urban) And Another vs. Spml Infra Ltd.

Neutral Citation No.: 2025:AHC:20224

Date of Order: 13.02.2025

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