Amendment of Section 25, THE ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2015

13. In section 25 of the principal Act, in clause (b), at the end, atter the words “allegations by the claimant”, the words “and shall have the discretion to treat the right of the

respondent to file such statement of defence as having been forfeited” shall be inserted.

THE ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2015

THE ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2015

No.9 or 2015

Promulgated by the President in the Sixty-sixth Year of the Republic of India.

An Ordinance to amend the Arbitration and Conciliation Act, 1996.

WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action;

Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:—-—

1. (I) This Ordinance may be called the Arbitration and Conciliation (Amendment) Ordinance, 2015.

(2) It shall come into force at once.

2.  In the Arbitration and Conciliation Act, 1996 hereinafter referred to as the principal Act), in section 2,——

(I) in subsection (1)—

(A) for clause (e), the following clause shall be substituted, namely:~—

‘(e) “Court” means——

(i) in the case of an arbitration other than ~ international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original - civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes; '

(ii) in‘the case of international commercial . arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject~matter of the arbitration if the same had been the subject—matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;’;

(B) in clause (t), in sub-clause (iii), the words

“a company or” shall be omitted;

(II) in sub—section (2), the following proviso shall be inserted, namely:—

“Provided that subject to an agreement to the contrary, the provisions of sections 9, 27, and clause (a) of sub-section (1) and sub-section (3) of section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable

and recognised under the provisions of Part II of this Ordinance”.

3. In section 7 of the principal Act, in sub-section (4), in clause (b), after the words “or other means of

telecommunication”, the words “including communication through electronic means" shall be inserted.
4. In section 8 of the principal Act;—

(i) for sub-section (1), the following sub-section shall be substituted, namely:—-—

“(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 primafacie no valid arbitration agreement exists”;

.(ii) in sub-section (2), the following proviso shall be inserted, namely:—

“Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub—section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying

the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy

before that Court”.

5. Section 9 of the principal Act shall be re—numbered as sub-section (1) thereof, and after sub-section (1) as so re- numbered, the following sub-sections shall be inserted,

namely:—

“(2) Where, before the commencement of the arbitral proceedings, a "Court passes an order for any interim measure of protection under sub-section (1), the'arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.

(3) 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“.

6. In section ll of the principal Act,—

(1') in sub-sections (4), (5) and (6), for the words “the Chief Justice or any person or institution designated by him” wherever they occur, the words “the Supreme Court or, as

the case may be, the High Court or any person or institution designated by such Court” shall be substituted;

(ii) after sub-section (6), the following sub-sections shall be inserted, namely:—~

“(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 sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement.

(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court”;

(iii) in sub-section (7), for the words “the Chief Justice or the person or institution designated by him is fin ”, the words “the Supreme Court or, as the cam 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” shall be substituted;

(iv) for sub-section (8), the following sub-section shall be substituted, namely:——

“(8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub- section (1) of section 12, and have due regard to—

(a) any qualifications required for the arbitrator by the agreement of the parties; and

(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.”;

(v) in sub—section (9), for the words “the Chief Justice of India or the person or institution designated by him", the words “the Supreme Court or the person or institution designated by that Court” shall be substituted;

(vi) for sub-section (10), the following sub—section shall be substituted, namely:——-

“(10) The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub section (4) or sub-section (5) or sub-section (6), to it.”;

(vii) in sub-section (11), for the words “the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made”, the words “different High Courts or their designates, the High Court or its designate to whom the request has been first made” shall be substituted;

(viii) for sub-section (12), the following sub-Section shall be substituted, namely:—

‘(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the “Supreme Court or, as the case may be, the High Court” in those sub-sections shall be construed as a reference to the “Supreme Court”; and

(b) where the matters referred to in sub—sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to “the Supreme Court or, as the case may be, the High Court” in those sub-sections shall be construed as a reference to the “High Court” within whose local limits the principal Civil Court referred to in clause (e) of sub—section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court.’; -

(ix) after sub-section (12), the following sub-sections shall be inserted, namely:—

“(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavor shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.

(14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.

Explanation. -For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution”.

7. After section 11 of the principal Act, the following new section shall be inserted, namely :—

“l lA.(l) If the Central Government is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, amend the Fourth Schedule and thereupon the Fourth Schedule shall be deemed to have been amended accordingly.

(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in drafi before each House of Parliament, while it is‘in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification, the notification shall not be issued or as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses of Parliament.”.

8. In section 12 of the principal Act,—

(i) for sub-section (1), the following sub-section shall be substituted, namely:~

“(1). When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in - writing any circumstances,—

(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and

(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of

twelve months.

Explanation l.~« The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.

Explanation 2.»— The disclosure shall be made by such person in the form specified in the Sixth Schedule”;

(ii) after sub—section (4), the following sub-section shall be inserted, namely:—

“(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:

Provided that parties may, subsequent to disputes _ having arisen between them, waive the applicability of this sub-section by an express agreement in writing:

Provided further that this sub-section shall not apply to cases where an arbitrator has already been appointed on or before the commencement of the Arbitration and

Conciliation (Amendment) Ordinance, 2015.”.

Format of an Affidavit for illiterate Applicants

SPECIMEN AFFIDAVIT TO BE SUBMITTED BY ILLITERATE APPLICANTS AS PROOF OF DATE OF BIRTH IN CASE NO OTHER DOCUMENT MENTIONED IN DOCUMENT NUMBER 2 OF TABLE 3 IN SECTION D IS AVAILABLE

(To be executed on non-judicial stamp paper of minimum value)

I …………………S/o W/o D/o ……………….. presently residing at ………………… hereby state the following:

I was born on ………………. at ……………… situated in the district ………….. in the State of ……….. I have no documentary proof in support of my place and date of birth.

I do not possess any educational qualification and I am an illiterate person.

I take oath and solemnly declare/affirm that the particulars furnished by me above are correct and that I have not concealed or misrepresented any facts.

Place …………

Date …………..

Verified on this …………………… day of …………….. of the year …………….. that the contents of my above affidavit are true and correct to the best of my knowledge and belief, and nothing in material has been concealed there from.

The contents of the affidavit have been read out to me.

                                                                                                                                                Deponent

Attested Signature and official seal of attesting authority

 Note: Affidavit to be attested by the Judicial Magistrate or Executive Magistrate/Notary Public (In case of notary, notarial stamp would be required)

Chapter 5, The commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance,2015

CHAPTER V TRANSFER OF PENDING SUITS

15. (1) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996, relating to a  commercial dispute of Speciiied Value pending in a High Court where a Commercial Division has been constituted, shall be transferred to the Commercial Division.
(2) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996, relating to a commercial dispute of Specified Value pending in any civil court in any district or area in any of which a Commercial Court has been constituted, shall be transferred to such Commercial Court:

Provided that no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court shall be transferred either under sub-section (1) or sub-section (2).

(3) Where any suit or application, including an application under the Arbitration and Conciliation Act, 1996, relating to a commercial disPute of Specified Value shall stand transferred to the Commercial Division or Commercial Court under sub-section (1) or sub-section (2), the provisions of this Ordinance shall apply to those procedures that were not complete at the time of transfer.

4) The Commercial Division or Commercial Court, as the case may be, may hold case management hearings in respect of such transferred suit or application in order to prescribe new timelines or issue such further directions as may be necessary for a speedy and etiicacious disposal of such suit or application in  accordance with Order XIV-A of the Code of Civil Procedure, 1908: '

Provided that the proviso to sub-rule (1) of Rule 1 of Order V of the Code of Civil Procedure, 1908 shall not apply to such transferred suit or application and the court may, in its discretion, prescribe a new time period within which the written statement must be filed.

(5) In the event that such suit or application is not transferred in the manner Speciiied in sub-section (1), sub-section (2) or sub- section (3), the Commmial Appellate Division of the High Court may, on the application of any of the parties to the suit, withdraw such suit 0r application from the court before which it is pending and transfer the same for trial or disposal to the Commercial Division or Commercial Court, as the case may be, having territorial jurisdiction over such suit, and such order of transfer shall be final and binding. .

Schedule, The commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Ordinance,2015

SCHEDULE (See section17)

1. In section 26 of the Code of Civil Procedure, 1908 (hereafter referred to as the Code), in sub-section (2), the following proviso shall be inserted, namely:—

“Provided that such an affidavit shall be in the form and manner as prescribed under Order VI Rule 15A"

2. For section 35 of the Code, the following section shall be substituted, namely:—

“35.(l) In relation to any commercial dispute, the Court,

notwithstanding anything contained in any other law for the time being in force or Rule, has the discretion to determine:

(a) whether costs are payable by one party to another;

(b) the quantum of those costs; and (e) when they are to be paid.

Explanation.—— For die purpose of clause (a), the expression “costs” shall mean reasonable costs relating to—

(i) the fees and expenses of the witnesses incurred; (ii) legal and expenses incurred;

(iii) any other expenses incurred iri connection with the proceedings.

(2) If the Court decides to make an order for payment of costs, the general rule is that the unsuccessful party will .be ordered to pay the costs of the successful party:

Provided that the Court may make an order deviating from the general rule for reasons to be recorded in writing.

Illustration: The Plaintiff, in his suit, seeks a money decree for breach of contract, and damages. The Court holds that the Plaintiff is entitled to the money decree. However, it returns a finding that the claim for damages is frivolous and vexatious.

In such circumstances the Court may impose costs on the Plaintiff,

despite the Plaintiff being the successful party, for having raised frivolous claims for damages.
3 In making an order. for the payment of costs the court shall have regard to the following circumstances, including .—

(a) the conduct of the parties;

(b) whether a, party has succeeded on part of its case, even if that party has not been wholly successful;

- (e) whether the party had made a frivolous counter-claim leading to delay in the disposal of the case;

(d) whether any reasonable offer to settle is made by a party and unreasonably refused by the other party; and

(e) whether the party had made a frivolous claim and instituted a vexatious proceeding wasting the time of the Court.

(4) The orders which the Court may make under this provision include an order that a party must pay——

(a) a proportion of another party’s costs;

(b) a stated amount in reSpect of another party’s costs;

(c) costs from or until a certain date ;

((1) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings;

(0 costs relating to a distinct part of the proceedings; and (g) interest on costs from or until a certain date.

3. in section 35A of the Code, sub-section (2) shall be omitted.

4. In the First Schedule to the Code,—

(A) in the Order V, in Rule 1, in sub-rule (1), for the second proviso, the following proviso shall be substituted, namely:-—— '

“Provided further that where the defendant fails to file the . written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be- specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons. On expiry of one hundred twenty days from the date of service of summons; the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record”;

(B) in Order VI,—- (i) after Rule 3, the following Rule shall be inserted, namely:—

“3A. Forms of pleading in Commercial Courts —‘ In a Commercial Dispute, where forms of pleadings - have been prescribed under the High Court Rules or Practice Directions made for the purposes of such commercial disputes, pleadings shall be in such forms”;

(ii) after Rule 15, the following Rule shall be inserted, namely:-

“15A. Verification of pleadings in a Commercial Dispute.-

(1) Notwithstanding anything contained in Rule 15, every pleading in a Commercial Dispute shall be verified by an affidavit in the manner and form prescribed in the Appendix to this Schedule. _ -

(2) An affidavit under sub-rule (1) above shall be signed by the . party or by one of the parties to the proceedings, or by any other person on behalf of such party or parties who is proved to the satisfaction of the Court to be acquainted with the facts of the case and who is duly authorised by such party or parties.

(3) \Vhere a pleading is amended, the amendments must be verified in the form and manner referred to in sub-rule (1) unless the Court orders otherwise.

(4) Where a pleading is not verified in the manner provided under sub-rule (1), the party shall not be permitted to rely on such pleading as evidence or any of the matters set out therein.

(5) The Court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to this Schedule”;

(C) in Order VII, after Rule 2, the following Rule shall be inserted, namely: -—

“2A. Where interest is sought in the suit.-

(1) Where the plaintiff seeks interest, the plaint shall contain a statement to that effect along with the details set out under sub-

rules (2) and (3).

(2) Where the plaintiffs seeks interest, the plaint shall state whether

the plaintiff is seeking interest in relation to a commercial

transaction within the meaning of section 34 of the Code of Civil

Procedure, 1908 and, furthermore, if the plaintiff is doing so under the terms of a contract or under an Act, in which case the Act is to be specified in the plaint; or on some other basis and shall state the basis of that.

(3) Pleadings shall also state-

(a) the rate at which interest is claimed; (b) the date from which it is claimed; (c) the date to which it is calculated;

(d) the total amount of interest. claimed to the date of calculation; and

(e) the daily rate at which interest accrues after that date”;

(D) in Order VIII,—.

(i) in Rule 1, for the proviso, the following proviso shall be substituted, namely:——~

“Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of . summons. On expiry of one hundred twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record)”;
(ii) after Rule 3, the following Rule shall be inserted, namely:—-—

“3A. Denial by the defendant in suits before the Commercial Division of the High Court or the Commercial Court.

(1) Denial shall be in the manner provided in sub-rules (2), (3), (4) and (5) of this Rule.

(2) The defendant in his written statement shall state which of the allegations in the particulars of plaint he denies, which allegations he is unable to admit or deny, but which he requires the plaintiff to prove, and which allegations he adrnits.

(.3) 'Where the defendant denies an allegation of fact in a plaint,_he must state his reasons for doing so and if he intends to put forward a different version of events from that given by the plaintiff, he must state his own version.

(4) if the defendant disputes the jurisdiction of the Court he must state the reasons for doing so, and if he is able, give his own statement as to which Court ought to have jurisdiction.

(5) If the defendant disputes the plaintiff’s valuation- of the suit, he must state his reasons for doing so,and if he is able, give his own statement of the value of the suit." ;

(iii) in Rule 5, in sub-rule (1), after the first proviso, the following proviso shall be inserted, namely: -—-

“Provided further, that every allegation of fact in the plaint, if not denied in the manner provided under Rule 3A of this Order, shall be taken to be admitted. except as against a person under disability.” ; '

(iv) in Rule 10, after the first proviso, the following proviso shall be inserted, namely: -—

“Provided further that no Court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written

statement”;

(B) for Order XI of the Code, the following Order shall be substituted, namely:—

. “ORDER XI DISCLOSURE, DISCOVERY AND INSPECTION OF DOCUMENTS IN SUITS BEFORE THE COMMERCIAL DIVISION OF A HIGH COURT OR

A COMMERCIAL COURT

1.(l) Plaintiff shall file a list of all docur‘nents and photocopies of all documents, in its power, possession, control or custody, pertaining to the suit, along with the plaint, including:

I (a) Documents referred to and relied on by the plaintiff in the

plaint;

(b) Documents relating to any matter in question in 'the proceedings, in the power, possession, control or custody of the plaintiff, as on the date of filing the plaint, irrespective of whether the same is in support of or adverse to the plaintiff‘s case;

(c) nothing in this Rule shall apply to documents produced by plaintiffs and relevant only——