Arbitration vs. CPC

In the case of Arbitration, the provisions of CPC are to be followed as a guidance, whereas the provisions of the Arbitration Act are essentially to be first applied. Since, the Arbitration Act is a self-contained Act, the provisions of the CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act.

The Honourable Supreme Court in the matter of Pam Developments Pvt. Ltd. vs. State of West Bengal, Civil Appeal No. 5432 of 2019, considered the effect of Section 36 of the Arbitration Act, vis­a­vis the provisions of Order 19 XXVII Rule 8A of CPC. Sub­Section (3) of Section 36 of the Arbitration Act mandates that while considering an application for stay filed along with or after filing of objection under Section 34 of the Arbitration Act, if stay is to be granted then it shall be subject to such conditions as may be deemed fit. The said sub­section clearly mandates that the grant of stay of the operation of the award is to be for reasons to be recorded in writing “subject to such conditions as it may deem fit”. The proviso makes it clear that the Court has to “have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure”. The phrase “have   due regard   to” would only mean that the provisions of CPC are to be taken into consideration, and not that they are mandatory.  While considering the phrase “having regard to”, the Court in the case of Shri Sitaram Sugar Company Limited vs. Union of India (1990) 3 SCC 223 has held that “the words ‘having regard to’ in sub­section are the legislative instruction for the general guidance of the Government in determining the price of sugar. They are not strictly mandatory, but in essence directory.”

In view of the same, the phrase used is ‘having regard to’ the provisions of CPC and not” in accordance with” the provisions of CPC. In the latter case, it would have been mandatory, but in the form as mentioned in Rule 36(3) of the Arbitration Act, it would only be directory or as a guiding factor. Mere reference to CPC in the said Section 36 cannot be construed in such a manner that it takes away the power conferred in the main statute (i.e. Arbitration Act) itself. It is to be taken as a general guideline, which will not make the main provision of the Arbitration Act inapplicable.  The provisions of CPC are to be followed as a guidance,   whereas   the   provisions   of   the   Arbitration   Act   are essentially to be first applied.  Since, the Arbitration Act is a self contained Act, the provisions of the CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act.

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