Bhai Sardar Singh & Sons. vs Delhi Development Authority
2001 Latest Caselaw 1062 Del

ORDER

V.S. Aggarwal, J.

1. Shri R.J. Bakhru had been appointed as an arbitrator by the Engineer Member, Delhi Development Authority to make an award regarding the disputes falling within the purview of clause 25 of the arbitration agreement between the parties. In pursuance of the same, the arbitrator decided the claims and the counter claims and made an award against the Delhi Development Authority amounting to Rs.18,89,998/- with interest at the rate of 18% PA on Rs.14,04,386/- with effect from 13th March, 1986 till the payment is made. The award had been filed and on 26th November, 1998 the Joint Registrar (O) issued notice to the parties without process fees.

2. The Delhi Development Authority filed objections to the award referred to above. It has been stated that there is error apparent on the face of the record and the award of the arbitrator is liable to be set aside. It is contrary to the conditions of the contract and in terms of clause 25 of the agreement reasons have not been given. The Delhi Development Authority thereupon assailed the findings claimwise to be not correct. The same need not be reproduced which is not relevant for purposes of the present judgment.

3. In the reply filed to the objections it was alleged that award is not liable to be set aside because this court will not examine the correctness of the findings of the arbitrator. It will also not go into the reasonableness of the findings and there are no ground otherwise also for setting aside of the award. A plea has been offered that the respondent objector has not disclosed the provisions under which the objections have been filed. Reply even to the merits had been filed supporting the findings of the arbitrator.

4. During the course of arguments an objections was raised that the present pleas raised in the form of objections by the Delhi Development Authority cannot be gone into because according to the learned counsel for the applicant M/s. Bhai Sardar Singh & Sons it can only be considered in terms of Arbitration and Conciliation Act, 1996. Needless to state that on behalf of the objector it was contended that the objections necessarily must be gone into because the arbitrator was appointed under the Arbitration Act, 1940 and in any case according to the learned counsel for the Delhi Development Authority it is the court which had issued the notice and thereupon objections were filed. Furthermore, plea had been raised that under Section 21 of the Arbitration and Conciliation Act, 1996, (for short the Act) proceedings for arbitration commences when request is made for reference to arbitration and it is received by the other party. Consequently it must continue under the Arbitration Act, 1940.

5. It is a common case of the parties that the reference had ben made while the arbitration Act, 1940 was in force. It had been made on 10th February, 1992. By the time the award had been pronounced the said Act has been repealed and the Arbitration and Conciliation Act, 1996 had come into force. Section 85 of the Arbitration and Conciliation Act, 1996 provides the necessary guide-lines in this regard. It runs as under:-

Repeal and saving - (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 (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, t the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.

6. It is abundantly clear from what has been reproduced above that though the Arbitration Act, 1940 has been repealed still the provisions of the said enactment shall apply in relation to arbitral proceedings which commenced before this Act. Of course, if the parties agree otherwise the Arbitration and Conciliation Act subsequently also will not apply.

7. In the present case in hand attention of the court has not been drawn to any agreement between the parties to come to the conclusion that the proceedings after the award were also to continue under the Arbitration Act, 1940. If there is no such agreement in that event in Delhi Development Authority cannot take recourse to sub-section 2(a) of Section 85 of the Arbitration and Conciliation Act, 1996. It will have no application herein.

8. Similarly recourse to Section 21 of the Arbitration Act would also be of little avail and consequence for Delhi Development Authority. Section 21 of the said Act provides that unless agreed by the parties arbitral proceedings in respect of particular dispute commences on the date on which a recourse for that dispute to be referred to arbitration is received by the other side. Obviously, the provisions of Section 21 would be prospective in nature. It has not been given retrospective effect. The proceedings commenced before the Arbitration and Conciliation Act, 1996 or Arbitration and Conciliation (Third) Ordinance 1996 was made applicable. As a necessary consequence the proceedings had already commenced and provisions of Section 21 have no role to play in the facts of the present case.

9. As regards the question as to what would be the position when there is no agreement to the contrary it becomes unnecessary for this court to ponder further. The matter in question is concluded by the decision of the Supreme Court in the case of Thyssen Stahlunion GmBH Vs. Steel Authority of India Ltd. . A group of cases had come up for consideration before the Supreme Court. In the case of Rani Construction Pvt. Ltd. with which we are presently concerned a contract was for construction of certain works of Himachal Pradesh State Electricity Board. Disputes had arisen between the parties and referred to arbitrator on 4-10-1993. Arbitrator gave his award on 23.2.1996 after the Arbitration and Conciliation Act, 1996 had come into force. The short question is as to whether old or the new Act would apply. Agreement between the parties was that matter would be governed by any enactment or rules that may have been framed. The Supreme Court held that matter would be governed by the provisions of the Arbitration and Conciliation Act after the award was pronounced. The findings of the court are:

We also hold that clause 25 containing the arbitration agreement in the case of Rani Constructions (P) Ltd vs. H.P. SEB (Civil Appeal No. 61 of 1999) does admit of the interpretation that the case is governed by the provisions of the Arbitration and Conciliation Act, 1996.

10. Thus it is abundantly clear from aforesaid that the proceedings could not continue under the Arbitration Act, 1940.

11. As noted above confronted with that position the plea raised by the Delhi Development Authority has been in terms that in any case notice had been issued by the court and objections had been filed. Therefore, the DDA should not be made to suffer for the fault of the court.

12. Taking the argument of the learned counsel at its best, it must be stated that while no party is to suffer for the fault of the court indeed no party will take an undue advantage of the same. When such is the situation the law must take its own course. The arbitration and Conciliation Act, 1996 has been enacted to consolidate and amend the law relating to domestic arbitration and international and commercial arbitration besides with respect to foreign awards.n It provides for altogether different procedure from the one prescribed under the Arbitration Act, 1940. Chapter III deals with composition of arbitral tribunal and how they were to be appointed. Sections 16 and 17 which forms part of Chapter IV provides for jurisdiction of the arbitral tribunals while Chapter V pertains to conduct of the arbitral proceedings. The award is made in terms of Section 28 to 33 of the said Act. While Section 34 gives an independent recourse to the aggrieved persons against the arbitral award, the awards are executed in terms of Section 36 as if it was a decree of the court.

13. Once the award had been pronounced and as referred to above it has to be in terms of the Arbitration and Conciliation Act, 1996, the remedy of the Delhi Development Authority obviously would be to have a recourse under Section 34 of the Act. Even if incidentally by mistake the notice has been issued by the court still it will not permit this court to run contrary to the plain language of law. Any other interpretation even if equitable would mean doing injustice to the plain language of Section 34 and 36 of the Arbitration and Conciliation Act, 1996. If the law does not permit the court will not take recourse to the Arbitration Act, 1940 and consequently the contention raised by the learned counsel for Delhi Development Authority must fail. The objections in the present form therefore would not be maintainable and it must follow that notice given by the Joint Registrar (O) in pursuance of the filing of the award to the parties would also be null and void.

14. As a result of the aforesaid, objections must fail but no opinion is expressed on merits of the matter.