HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 9 Case :- CIVIL REVISION No. - 383 of 1998 Revisionist :- Vohra Textile Mills Opposite Party :- Union Of India & Another Counsel for Revisionist :- S.K.Mehrotra,B.B.Jauhari Counsel for Opposite Party :- S.N. Srivastava,Krishna Agrawal,N.P.Shukla Hon'ble Anjani Kumar Mishra,J.
Heard counsel for the revisionist and Shri Krishna Agrawal for the contesting respondents 1 and 2.
The cause shown for non-appearance is found to be sufficient. The order dated 04.07.2014 is hereby recalled and the revision is restored to its original number and is being decided finally.
This revision is directed against the order dated 21.04.1998 passed in Execution Case No. 4 of 1998, where under an award dated 29.09.1997 was put to execution by means of an application under Section 36 of the Arbitration and Conciliation Act, 1996. The arbitration agreement itself between the parties is dated 04.07.1991.
The dispute that has been decided by the order impugned is as to whether the execution proceedings initiated in accordance with Section 36 of the Arbitration and Conciliation Act, 1996 (herein after referred to as the new Act) were maintainable or whether the arbitral award passed in the dispute between the parties was one under the old Act, 1940, in which case the award was necessarily required to be made Rule of the Court before it became enforceable.
It appears from a perusal of the award itself that an application for appointment of an arbitrator was made by the revisionist on 15.07.1995. Shri S.C. Gupta was appointed arbitrator on 06.02.1996. The new Act was enforced with effect from 25.01.1996. The arbitrator gave his award on 20.09.1997, which was put to execution under Section 36 of the new Act and it is in these proceedings that the objection was raised regarding non applicability of the new Act of 1996 and that the arbitration award was liable to be executed after it had been made Rule of the Court.
By the impugned order, the Court has held that the application under Section 36 of the new Act was maintainable because the arbitral proceedings commenced on 06.02.1996, on the date the arbitrator was appointed. Accordingly, the arbitral proceedings were held to be under the new Act of 1996.
The submission of counsel for the revisionist is that sub-section 2 of Section 85 of the Arbitration and Conciliation Act, 1996 which repeals the Act of 1940 is relevant for deciding the controversy in this revision. The said provision is extracted below:-
"(2) Notwithstanding such repeal,-
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;
(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act."
Relying upon the afore cited provision it is submitted that the arbitral proceedings have been held to commence on the date any of the parties applies for appointment of an arbitrator. This application was admittedly made on 15.05.1995. Therefore in view of Section 85 (2) (a) the proceedings would be governed by the old Act of 1940.
The contention of counsel for the opposite party relying upon the same sub-section 2-a of Section 85 is that the said provision consists of two parts. The first part provides that provisions of the repealed Act would apply to proceedings which commenced before enforcement of the new Act. However, the second part of this provision carves out an exception and provides that the parties can agree that the arbitral proceeding which commenced before enforcement of the new Act be proceeded with and be concluded in accordance with the new Act.
He has also placed reliance upon clause K of the arbitration agreement itself, copy whereof has been filed alongwith a supplementary affidavit on 28.04.2018. The relevant portion of the said clause K of the arbitration agreement, between the parties, is quoted herein below:-
"The arbitrator may, from time to time, with the consent of the parties enlarge the time for making and publishing the award. Save as aforesaid, the award of the arbitrator so appointed shall be final and binding on the parties here to the provision of the Indian Arbitration Act, 1945 or any statutory modification thereof for the time being in force shall apply."
Reliance has been placed on the words "any statutory modification thereof for the time being in force shall apply. " On its basis, it is contended that the parties had agreed to be governed by any modification made in the Arbitration Act, 1940 (wrongly mentioned as 1945 in the arbitration clause) which, in the facts and circumstances of this case is the new Act of 1996.
Since the parties had agreed to be governed by any statutory amendment/modification of the Arbitration Act, 1940, which could only mean the new Act, 1996, the application for enforcement of the award under Section 36 was rightly filed and the impugned order, under the circumstances, is fully justified and calls for no interference.
He has also placed reliance upon the decision in Thyssen Stahlunion Gmbh Vs. Steel Authority of India Ltd., AIR 1999 SC 3923, especially paragraphs 46 to 49 thereof and also on a decision of the Madras High Court in Kirloskar Computer Services Ltd. Vs. Lakshmi General Finance Ltd. and Anr., 2007 (1) ARBLR 156 (Madras), especially paragraphs 27 to 33 thereof.
The Madras High Court in Kirloskar Computer Services Ltd., while dealing with a clause similar to the arbitration clause in the case at hand has held as follows:-
"So, it is very clear that the parties intended to settle the dispute, difference and claim in accordance with the provisions of the old Act of 1940 or any statutory amendments thereof. The word amendments has broader meaning and it includes repealment also. When the old Act has been repealed and the new Act came into existence, the intention of the parties is that the repealed Act would not apply and only the new Act would apply."
In rejoinder, the contention of counsel for the revisionist is that in view of the first part of sub-section 2a of Section 85 and since the arbitral proceedings had already commenced prior to the enforcement of the 1996 Act, the proceedings were necessarily required to be governed by Act of 1940 and, therefore, the order impugned cannot be sustained.
Considered the submissions made by counsel for the parties and perused the record as also the case law cited.
There exists no dispute as regards the dates mentioned in the earlier part of this order.
Therefore, in view of the settled legal position that arbitral proceedings commence on the date a party applies for appointment of an arbitrator, which in the instant case is 15.07.1995 and is a date prior to the enforcement of the new Act of 1996. However, I agree with the contention of counsel for the opposite party that the parties can always agree to be governed by a subsequent or modified legislation.
In the case at hand, the arbitration clause is quite categorical. The parties had agreed to be governed by any modification that may be made in the Arbitration Act of 1940. The words 'statutory modification' occurring in the arbitration agreement, between the parties have been interpreted by the Madras High Court in the judgment relied upon by counsel for the revisionist to mean that the parties had agreed to be governed by new Act and not by the repealed Act of 1940. I do not see any ground to differ with the view taken by the Madras High Court. This agreement between the parties, which will necessarily govern the question of jurisdiction in the case at hand.
Under the circumstances, although the aforementioned reasons are not part of the impugned order, yet, in the facts and circumstances, this Court does not find any good ground to interfere therein. The impugned order, therefore, is found to be perfectly justified and does substantial justice between the parties.
Accordingly, the revision fails and is dismissed.
Order Date :- 1.5.2018 Mayank