{"id":245281,"date":"2021-03-10T08:17:27","date_gmt":"2021-03-10T02:47:27","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=245281"},"modified":"2021-03-12T10:41:53","modified_gmt":"2021-03-12T05:11:53","slug":"sc-calls-for-amendment-to-sections-117-37-of-the-arbitration-and-conciliation-act-1996-to-bring-sections-8-11-at-par-on-appealability-read-how-vidya-drolia-judgment-has-led-to-an-anomaly","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/03\/10\/sc-calls-for-amendment-to-sections-117-37-of-the-arbitration-and-conciliation-act-1996-to-bring-sections-8-11-at-par-on-appealability-read-how-vidya-drolia-judgment-has-led-to-an-anomaly\/","title":{"rendered":"SC calls for amendment to Sections 11(7) & 37 of the Arbitration and Conciliation Act, 1996 to bring Sections 8 & 11 at par on appealability. Read how Vidya Drolia judgment has led to an anomaly"},"content":{"rendered":"

Supreme Court:<\/strong> In the light of the \u201cprima facie\u201d test laid down last year in Vidya Drolia v. Durga Trading Corporation<\/strong><\/em>,\u00a0(2021) 2 SCC 1<\/a>, <\/strong>the 3-judge bench of RF Nariman*<\/strong>, BR Gavai and Hrishikesh Roy, JJ has held that the Parliament may need to have a re-look at Section 11(7) and Section 37 of the he Arbitration and Conciliation Act, 1996 so that orders made under Sections 8 and 11 are brought on par qua<\/em> appealability as well.<\/p>\n

What do the relevant provisions in question read? <\/strong><\/span><\/h3>\n
    \n
  1. Power to refer parties to arbitration where there is an arbitration agreement. \u2014 <\/strong><\/li>\n<\/ol>\n

    (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.<\/p>\n

    (\u2026)<\/p>\n

      \n
    1. Appointment of arbitrators. \u2014<\/strong><\/li>\n<\/ol>\n

      (\u2026)<\/p>\n

      (6) Where, under an appointment procedure agreed upon by the parties, \u2014 (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or subsection (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.<\/p>\n

      (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to 3 the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision.<\/p>\n

      Legislative History<\/strong><\/span><\/h3>\n

      Sections 8 and 11 were amended pursuant to a detailed Law Commission Report being the 246th Law Commission Report on Arbitration. Shedding light on the legislative history of the provisions in question, the Court said that\u00a0 when Parliament enacted the 2015 amendment pursuant to the Law Commission Report, it followed the Scheme of the Law Commission\u2019s Report qua Section 8 and Section 37 by enacting the words \u201c\u2026.. unless it finds that prima facie no valid arbitration agreement exists\u2026\u2026\u201d in Section 8(1) and the insertion of sub-clause (a) in Section 37(1) providing an appeal in an order made under Section 8, which refuses to refer 44 parties to arbitration. However, so far as Section 11(6) and Section 11(6A) are concerned, what was recommended by the Law Commission was not incorporated.<\/p>\n

      \n

      “Section 11(6A) merely confined examination of the Court to the existence of an arbitration agreement. Section 11(7) was retained, by which no appeal could be filed under an order made under Section 11(6) read with Section 11(6A), whether the Court\u2019s determination led to a finding that the arbitration agreement existed or did not exist on the facts of a given case. Concomitantly, no amendment was made to Section 37(1), as recommended by the Law Commission.”<\/span><\/p>\n<\/blockquote>\n

      What was held in Vidya Drolia<\/a><\/em> Judgment?<\/strong><\/span><\/h3>\n

      ‘Landlord-tenant disputes under Transfer of Property Act are arbitrable’. SC lays down test for determining non-arbitrability of disputes<\/a><\/p><\/blockquote>\n