Hindustan Construction Company Ltd. v. Union of India
Section 87 of the Act, which revived the automatic-stay regime for pre-2015 matters and deleted Section 26 of the 2015 Amendment, is struck down as manifestly arbitrary and unconstitutional; the BCCI v. Kochi Cricket position continues.
Facts
By the 2019 Amendment, Parliament inserted Section 87 and omitted Section 26 of the 2015 Amendment Act, with the effect of making the 2015 amendments (including the cure of the automatic stay under Section 36) inapplicable to court proceedings arising out of arbitrations commenced before 23 October 2015. This effectively resurrected the pre-amendment automatic stay and reversed BCCI v. Kochi Cricket. Contractors and award holders, whose awards were again frozen by mere filing of Section 34 challenges, challenged the constitutional validity of Section 87.
Issues
- Whether the insertion of Section 87 and deletion of Section 26 of the 2015 Amendment Act, reviving the automatic stay on enforcement, is constitutionally valid.
- Whether Parliament could legislatively nullify the BCCI v. Kochi Cricket decision.
Arguments
The petitioners argued Section 87 was manifestly arbitrary, defeated the object of speedy enforcement, resurrected a mischief the 2015 Amendment had deliberately cured, and disregarded the Supreme Court's reasoning and the Srikrishna Committee's warning against it. The Union defended the provision as a permissible legislative policy choice clarifying the temporal application of the amendments.
Held
The Court struck down Section 87 (and the consequential deletion of Section 26) as manifestly arbitrary under Article 14. It held that the provision resurrected the very mischief the 2015 Amendment had removed, ignored the Supreme Court's analysis in BCCI v. Kochi Cricket and the Srikrishna Committee's express recommendation against such a provision, and produced the absurd and unfair result of indefinitely staying awards merely upon the filing of a challenge. As a result, the position declared in BCCI v. Kochi Cricket was reinstated: the amended Section 36 applies to all court proceedings initiated after 23 October 2015.
Ratio decidendi
A legislative provision that revives a discredited automatic-stay regime, defeating the object of speedy enforcement and disregarding a binding judgment and expert recommendation, is manifestly arbitrary and void; the amended Section 36 (no automatic stay) governs court proceedings commenced after 23 October 2015.
Significance
A leading constitutional decision on award enforcement: it entrenched the no-automatic-stay regime by invalidating Parliament's attempt to reverse it, and is a rare instance of an arbitration amendment being struck down for manifest arbitrariness. It secures the enforceability gains of the 2015 Amendment for award holders.
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