Union Of India Thru' G.M., N.E. ... vs M/S Variety Industrial Works (P) ...
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HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved
 
Court No. - 9
 
Case :- CIVIL REVISION No. - 38 of 2012
 
Revisionist :- Union Of India Thru' G.M., N.E. Railway And
 
Another
 
Opposite Party :- M/S Variety Industrial Works (P) Ltd.
 
Counsel for Revisionist :- Anil Kumar,Govind Saran
 
Counsel for Opposite Party :- Rahul Sahai
 
Hon'ble Anjani Kumar Mishra,J.

Heard learned counsel for the parties.

This revision has been filed by the General Manager, North

Eastern Railway, Gorakhpur representing the Union of India

against the order dated 24.01.2011 passed in Execution Case

No.7 of 2001, M/s Variety Industrial Works (P) Ltd. Vs. Union

of India, whereby an application dated 04.07.2001 (Application

10-C) for quashing the execution proceedings, has been

rejected.

The facts of the case are that an execution application, 4-C, for

execution of an Arbitration award was filed.

An objection was filed by the revisionist that since the

arbitration proceedings had commenced in the year 1981, the

execution application under the provisions of the new Act was

not maintainable and was liable to be rejected.

It was pleaded that Case No.231 of 1981 was filed in the Court

of Civil Judge (Senior Division), Gorakhpur for appointment of

Arbitrator. Relying upon the judgment in the Apex Court, it has

been submitted that the arbitral proceedings are deemed to

commence when an application for referring the dispute to the

Arbitrator is made. This happened in 1981. The Arbitration

proceedings, were therefore, under the old Act. The award of

the Arbitrator, under the old Act ( Arbitration Act, 1940) is

required to be made Rule of the Court before it becames

executable.

Counsel for the revisionist has placed reliance upon the

decision in U.P. State Sugar Corporation Ltd. Vs. Jain

Construction Co. and another, 2004, 7SCC 332 and Milkfood

Ltd. Vs. GMC Ice Cream (P) Ltd. 2004, 7SCC 288 which holds

that unless otherwise agreed, arbitral proceedings commence on

the date a request is made that the dispute be referred for

Arbitration. Therefore, in view of Section 21 of the Act, the

arbitral proceedings commenced in year 1981, when the

proceedings for appointment of the Arbitrator were initiated by

the opposite party.

Rebuttal 14-C, was filed by the opposite party stating that the

General Manager N.E., Railways, was appointed sole

Arbitrator on 15.11.1999, after the enforcement of the new Act.

The Arbitrator also proceeded in accordance with Arbitration

and Conciliation Act, 1996 and therefore, there is no

requirement of the award being made Rule of the Court. The

execution application had therefore been filed as per Section 36

of the Act, 1996.

It was also pleaded that Case No.231 of 1981 was with regard

to appointment of Arbitrator, under section 20 of the old Act of

1940. The Arbitrator, appointed on 15.11.1999, has passed the

award on 23.01.2001.

It has also been submitted by the opposite party that the

Arbitrator wrote two letters dated 11.08.2000 and 11.9.2000 to

the revisionist, clearly stating his intention to proceed in

accordance with Act 1996 calling upon the revisionist to furnish

their documents and comments, failing which, action would be

taken in accordance with the provisions of Arbitration and

Conciliation Act, 1996.

It is, therefore, contended that the arbitrator proceeded under

the new Act and the revisionists, having participated in these

proceedings, without raising any objection, are precluded from

claiming to the contrary.

Reference has also been made to the Arbitration agreement

between the parties, which provides that the contract would be

governed by the law of India, for the time being in force. On the

date the Arbitrator commenced proceedings, the Arbitration Act

of 1940 stood repealed and therefore, the proceedings were

necessarily, under the Act of 1996.

Reference has also been made by both the Counsel to Section

85 (2-A) and Section 21 of the Arbitration and Conciliation Act

1996.

From the facts noticed above, it is clear that the only point

requiring consideration is whether the award which has been

put to execution in the execution case, would be deemed to be

one under the old Act or it is under the new Act, in which case,

the award would be executable without any requirement of its

being made Rule of the Court as was required under the Act of

1940.

It has been laid down by the Supreme Court that Arbitration

proceedings are deemed to have commenced on the date, a

party applies for referring a dispute to the Arbitrator. In the

case, at hand the proceedings for appointment of Arbitrator

were commenced in the year 1981 long before the Arbitration

and Conciliation Act, 1996 came to be enforced and therefore,

the Arbitration proceedings will be governed by the old Act of

1940.

Having said so, this Court finds that a difficulty arises on

account of Sections 21 and 85 of the Arbitration and

Conciliation Act 1996.

The words "unless, otherwise agreed by the parties" occurring

in Section 21 of the Arbitration and Conciliation Act, 1996 are

significant.

Reference is also required to Section 85 of the Arbitration and

Conciliation Act, 1940, which is quoted below -

" 85. Repeal and savings.

1. The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the

Arbitration Act, 1940 (10 of 1940). and the Foreign Awards (Recognition

and Enforcement) Act, 1961 (30 45 of 1961). are hereby repealed.

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."

The afore-noted provision contain the same words; "unless

otherwise agreed by the parties" which as noticed above, occur

also in Section 21 of the Arbitration and Conciliation Act, 1996.

Upon a conjoint reading of the aforesaid two provisions, it

necessarily follows that although arbitral proceedings are

deemed to commence on the date, a request is made for

referring the dispute for Arbitration and the proceedings would

be governed by the Arbitration Act 1940, but, in case, the

parties agree, the proceedings, despite the above legal position,

may be governed by the Act of 1996.

The controversy in the instant case, therefore, has to be resolved

upon a consideration whether the parties agreed to the

arbitration being conducted in accordance with the Arbitration

& Conciliation Act, 1996.

In this regard, the two letters issued by the sole Arbitrator to the

revisionist, referred to by counsel for the opposite party and

which are available on record in the judgement of this Court

passed in Civil Revision No.595 of 2001 on 25.05.2009, are

crucial.

It emerges that in both these letters, the sole Arbitrator has

clearly stated that action would be taken in accordance with the

provisions of the Arbitration and Conciliation Act 1996.

It is also not disputed that this observation was not objected to

by the revisionist. It is, therefore clear that the Arbitrator

proceeded under the Act of 1996 and the opposite party, has

also proceed to file the execution case relying upon the

provisions of the Act of 1996.

In my considered opinion, once the Arbitrator categorically

stated his intention to proceed under the Act of 1996 and no

objection thereto was raised by the revisionist, it must be

assumed that the revisionist agreed to the application of the

Arbitration and Conciliation Act 1996 in the Arbitration case.

Therefore, the plea, being raised by means of this revision, is hit

by the term," unless otherwise agreed by the parties" occurring

in Sections 21 and 85(2) a of Act, 1996.

Even if not, express, there was a tacit agreement that the arbitral

proceedings before the sole Arbitrator proceed in accordance

with the Arbitration and Conciliation Act 1996.

Therefore, the Court below has rightly held that the award of

the Arbitrator is not required to be made Rule of the court and

the application for quashing the execution case under Section

36, has been rightly rejected. For the same reason, this revision

is without merit.

The revision is accordingly, dismissed.

Order Date :- 24.11.2017

RKM