Arbitral tribunal’s amended power to appoint a receiver

By Vivek Vashi and Aditi Bhansali, Bharucha & Partners
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Bombay High Court, in M/s Shakti International Private Limited v M/s Excel Metal Processors Private Limited, recently analysed the scope of the arbitral tribunal’s powers under section 17 of the Arbitration and Conciliation Act, 1996, as amended by the Arbitration and Conciliation (Amendment) Act, 2015, and distinguished between the court’s powers under the amended section 9 and powers of the tribunal under the amended section 17, clarifying that the appointment of the Bombay High Court Receiver was not within the jurisdiction of the arbitral tribunal.

Vivek Vashi Partner Bharucha & Partners
Vivek Vashi
Partner
Bharucha & Partners

The decision was based on the status of the High Court Receiver and the court’s interpretation of the amended section 17.

The court noted that under Chapter XXX of the Bombay High Court (Original Side) Rules, 1980, and order XL of the Code of Civil Procedure, 1908, the Office of the Court Receiver, High Court, Bombay, functions only under the court’s supervision and control and only the court has the power to give directions to the court receiver (based on ICICI Ltd v Patheja Brothers Forgings and Stampings Ltd & Ors, 2000).

The court observed that the services of the High Court Receiver have never been lent to any court or forum, such as the Debt Recovery Tribunal (ICICI case), or the City Civil Court or Court of Small Causes (Girish M Joshi v Jagat Manubhai Parikh & Ors, 2009).

The court relied on the case of Bank of Tokyo-Mitsubishi Ltd v M/s Chembra Estates and Ors (2001), in which it was held that “there is no provision of law under which any Court subordinate to this Court can appoint the Court Receiver, High Court, Bombay as a Receiver”.

It was argued before the court that section 17 as amended expressly granted the power of appointing a receiver to the tribunal, in contrast to the section prior to amendment. However, a close reading of the plain language of the 1996 act as amended revealed that:

(a) The definition of a “court” in section 2(1)(e) read with section 17(1), that “the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it”; and with section 17(2), that “any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908, in the same manner as if it were an order of the Court”, clearly shows that a court is not the same as a tribunal;

(b) Section 9(3), that “once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious” allows for an interpretation that the court may need to intervene in certain circumstances where the remedies that the tribunal may grant are not efficacious enough; and

(c) The similarity between the language adopted by sections 9 and 17, in that both the “court” and the “tribunal” have been expressly empowered to appoint a receiver, does not lend credence to the argument that the arbitral tribunal is empowered to appoint the Bombay High Court Receiver.

Aditi Bhansali Associate Bharucha & Partners
Aditi Bhansali
Associate
Bharucha & Partners

Thus, based on the clear distinction between an arbitral tribunal having the same powers as a court and an arbitral tribunal being a court itself, the court found that there was nothing in the language of section 17 as amended that entitled an arbitral tribunal to function as a High Court, Bombay. Further, since the arbitral tribunal was not a “court”, specifically Bombay High Court, it could not issue orders of appointment, supervision and control over the Court Receiver, High Court, Bombay (albeit it could appoint a private person to be a receiver).

Under the circumstances and in light of the above, the court drew a clear and categorical distinction between the powers of the court under section 9 as amended and the powers of the arbitral tribunal under section 17 as amended, despite the similarity in language, and stated that the appointment of the Bombay High Court Receiver was only within the purview of the high court.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Aditi Bhansali is an associate.

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