The SC in Hindustan Construction Company Limited v. Union of India[1] struck down Section 87 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), which was recently introduced by the Arbitration and Conciliation (Amendment) Act, 2019 (‘2019 Amendment’), as being manifestly arbitrary and violative of Article 14 of the Constitution of India. Section 87 stated that the provisions of the Arbitration and Conciliation (Amendment) Act, 2015 (‘2015 Amendment’) would apply only to arbitral proceedings commenced on or after the commencement date of the 2015 Amendment, i.e. October 23, 2015, and to Court proceedings arising out of or in relation to such arbitral proceedings.

SC held that Section 87 was contrary to the earlier decision of the SC in BCCI v. Kochi Cricket Private Limited[2], resulting in the provision of automatic stay on the award not being applicable to arbitral awards challenged post October 23, 2015, and was therefore contrary to public interest, arbitrary and unconstitutional as it revives a regime that caused delay in the disposal of arbitral proceedings. The SC held that the ‘retrospective resurrection’ of an automatic stay not only turns the clock backwards but is contrary to the object of the Arbitration Act and the 2015 Amendment, and also results in payments already made under the amended Section 36 to award-holders in a situation of no-stay or conditional-stay now being reversed. Consequently, the SC’s ruling in BCCI v. Kochi Cricket Private Limited will continue to hold force including in so far as an arbitral award challenged under Section 34 of the Arbitration Act would not be subject to an automatic stay. A separate application for such a stay shall be required and the Court may grant a conditional stay.

Further, the SC rejected the challenge to the IBC and inter alia, held that the term ‘corporate person’ in Section 3(7) of the IBC cannot include a statutory body like National Highway Authority of India.

[1] 2019 SCC OnLine SC 1520 [2] (2018) 6 SCC 287