Order Passed Under S. 36 Of Arbitration Act Not Appealable Under S. 13 Of Commercial Courts Act: Delhi High Court

The bench of Justices Vibhu Bakhru and Amit Mahajan observed that in view of the proviso to Section 13(1A), an appeal shall lie only from such orders that are specifically enumerated under Order XLIII of the CPC. The Court ruled that as per the law laid down by the Apex Court in Kandla Export Corporation & Ors. v. OCI Corporation & Ors. (2018), the scope of appeal under Section 13(1A) of the Commercial Courts Act is controlled by its proviso.

The appellant/ award holder, HP Cotton Textile Mills Ltd, filed a petition under Section 36 of the A&C Act before the Delhi High Court seeking enforcement of the Arbitral Award against the respondent/ award debtor, Oriental Insurance Company Ltd. The Single Judge dismissed the petition, against which the appellant filed an intra-court appeal before the Division Bench.

Raising a preliminary objection against the maintainability of the appeal, the respondent, Oriental Insurance, submitted before the High Court that the appeal was not maintainable under Section 13 of the Commercial Courts Act.

The High Court noted that in terms of Section 36 of the A&C Act, an arbitral award is required to be enforced in accordance with the provisions of CPC, in the same manner as if it were a decree of the Court.

The bench reckoned that in view of Section 13(1A) of the Commercial Courts Act, against a judgment or order of the Commercial Court or the Commercial Division of the High Court, an appeal would lie to the High Court’s Commercial Appellate Division. However, as per the proviso to Section 13(1A), an appeal shall lie only from such orders that are specifically enumerated under Order XLIII of the CPC, as amended by the Commercial Courts Act and Section 37 of the A&C Act.

Further, Section 13(2) of the Commercial Courts Act expressly proscribes an appeal against any order or decree of a Commercial Division or Commercial Court, other than in accordance with the provisions of the Commercial Courts Act, the Court observed.

“Undisputedly, the order passed by the learned Single Judge is not appealable under Section 37 of the A&C Act. It is also not one of the orders enumerated under Order XLIII of the CPC, from which an appeal lies. Thus, on plain reading of the proviso to Section 13(1A) of the Commercial Courts Act, the present appeal would not be maintainable,” the Court concluded.

The bench referred to Supreme Court’s decision in Kandla Export Corporation & Ors. v. OCI Corporation & Ors. (2018), where the Apex Court had held that the scope of appeal under Section 13(1A) of the Commercial Courts Act is controlled by the proviso to the said Sub-section.

In support of the appeal, and by placing reliance on the judgment of the Co-ordinate Bench of Delhi High Court in D&H India Ltd. v. Superon Schweisstechnik India Ltd (2020), the appellant, HP Cotton Textile Mills, contended that the proviso to Section 13(1A) of the Commercial Courts Act does not restrict the main provision, and that Section 13(1A) must be read in an expansive manner.

The Coordinate Bench in D&H India (2020) had ruled that orders passed by the Single Judge while exercising commercial jurisdiction, which were not passed under the provisions of the CPC, cannot be excluded from the expansive sweep of Section 13(1A) of the Commercial Courts Act. The Coordinate Bench had concluded that the proviso to Section 13(1A) cannot be read as limiting the right to appeal conferred by Section 13 (1A), and thus, the proviso cannot be read as meaning that no appeal would lie in any other case, especially where the order under appeal has not been passed under the CPC at all.

While holding that the Coordinate Bench’s decision is contrary to the Apex Court’s decision in Kandla Export Corporation (2018), the Court said, “The observations, to the effect that Section 13(1A) of the Commercial Courts Act has to be read in an expansive manner and the proviso to Section 13(1A) cannot be read as limiting the right to appeal conferred under Section 13(1A), are contrary to the decision of the Supreme Court in Kandla Export Corporation and Ors. v. OCI Corporation and Ors. (supra). It also apparent that the said decision of the Supreme Court was not brought to the notice of this Court in D&H India Ltd. v. Superon Schweisstechnik India Ltd. (supra).”

Ruling that the appeal was not maintainable, the Court rejected the same.

Case Title: HP Cotton Textile Mills Ltd versus Oriental Insurance Company Ltd

Citation: 2023 LiveLaw (Del) 123

Counsel for the Appellant: Ms Shantha Devi Raman, Mr Arihant Jain and Mr Rishabh Kapoor, Advocates

Counsel for the Respondent: Mr Udyan Srivastava, Advocate

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