Sanyukt Nirmata vs Delhi Development Authority And ...
2002 Latest Caselaw 328 Del

JUDGMENT

J.D. Kapoor, J.

1. Through this application moved under Section 151 CPC, the petitioner-claimant has sought dismissal of the objections field by the respondent under Sections 30 & 33 of the Arbitration Act of 1940 solely on the ground that as per Clause 25 of the agreement parties had decided that in case there is any statutory modification or re-enactment of the Arbitration Act, 1940 or the rules made there under, the same shall apply to arbitration proceedings under this clause.

2. It is contended by Mr. Raman Kapoor, learned counsel for the petitioner that since new Act came into force on 25.1.1996, the objections filed by the respondents under Sections 30 & 33 of the old Act are not maintainable and at the most can be decided on the premises of Section 34 of the New Act which provides recourse to court for setting aside the arbitral award.

3. In order to appreciate the aforesaid contentions of the learned counsel in proper perspective, the relevant facts need to be put in brief :-

Disputes arising between the parties were referred to the sole arbitration of Mr. S.C. Kaushal on 30.6.1992. He had entered into appearance on 7.7.1992. The sole Arbitrator made and published the award on 6.5.1994. The petitioner moved an application under Section 14 of the Arbitration Act of 1940 on 20.5.1994 for filing the award and making it rule of the court. The award was filed in the court on 5.8.1994. On filing of the award, notice was served upon the respondent on 25.10.1994. The respondent filed instant objections under Sections 30 & 33 of the Arbitration Act of 1940 on 22.11.1994. The new Arbitration Act came into force on 25.1.1996.

4. There is no dispute with the proposition that the provisions of new Arbitration Act of 1996 would be applicable wherever agreement between the parties provides that subject of the provisions of Arbitration Act of 1940 or any statutory modification or enactment and the rules made there under and for the time being in force shall apply to the arbitration proceedings. However, by virtue of such a clause the provisions of New Act will apply if the award is made after the enforcement of the New Act of 1996 irrespective of the fact whether the proceedings were initiated and continued under the old Act of 1940.

5. This controversy has been settled by the Supreme Court in Thyseen Stahlunion GMBH v. Steel Authority of India Ltd. as there was variance of opinion as to the effect of the aforesaid clauses. Parties can agree to the applicability of the new Act even before the new Act comes into force and when the old Act is still holding field as there is nothing in the language of Section 85(2)(a) which bars the parties from so agreeing. There is, however, a bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitral proceedings under the old Act have not commenced though the arbitral agreement was under the old Act. It was in view of aforesaid holdings that the Supreme Court has agreed with its view in Rani Constructions case that where the arbitration clause in the contract reads that "Subject to the provisions of the contract to the contrary as aforesaid, the provisions of the Indian Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made there under and for the time being in force shall apply to all arbitration proceedings under this clause, the expression "for the time being in force" means thereby that the provisions of old Act would apply to the arbitration proceedings which will be in force at the relevant time when arbitration proceedings are held that clause containing the arbitration agreement in the said case does admit of interpretation that the case is governed by the provisions of the Arbitration Act of 1996.

6. Mr. Kapoor further contended that the Supreme Court in Thyseen case has taken the view that expression "for the time being in force" not only refers to the law in force at the time the arbitration agreement was entered into but also to any law that may be in force for the conduct of arbitration proceedings which would also include the enforcement of the award as well.

7. Mr. Kapoor has also relied upon a recent judgment of this court in Atree Associates v. DDA and Anr. where the question for determination was as to whether the provisions of Act of 1940 or Act of 1996 would be applicable in respect of the award dated 11.2.1998. While placing reliance upon judgment of the Supreme Court in Thyseen case, this court has held that there is has no option but to deal with the case where the award was made after new Act of 1996 came into force on the touch stone of legal provisions of new Act.

8. On the contrary, Mr. K.K. Buchar, learned counsel for the respondent contends that Clause 25 confines itself to the arbitration proceedings before the Arbitrator only and nothing beyond that and if the interpretation being sought to be made by the petitioner is accepted then the award passed in 1994 becomes decree in 1994 itself as per provisions of Section 34 of the new Act of 1996 it could have been objected within three months from 6.5.1994, the date of the award, failing which the petitioner was entitled to seek execution of the award as a decree. It is further contended that the aforesaid judgments relate to the awards which have been made after 25.1.1996 and in respect of the awards made prior to January 25, 1996, the old Act would apply inasmuch as the date of making award can never be treated as date of decree.

9. In Thyssen case(supra) as well as in all other cases where a view has been taken that the provisions of New Act of 1996 will be applicable even if arbitration proceedings had commenced under the old Act, the awards were made after the enforcement of new Act. Even in Atree Associates case (supra), the award was made after the new Act came into force i.e. 11.2.1998 though the proceedings were initiated under the old Act.

10. As regards the observations of the Supreme Court in Thyssen case (supra) that the expression "for the time being in force" not only refers to the law in force at the time the arbitration agreement was entered into but also to any law that may be in force for the conduct of arbitration proceedings which would also include the enforcement of the award as well, the enforcement of the award means that the execution of the award. The implementation thereof does not entail as to which enactment would be applicable. In other words if the award is made after the new Act even if the proceedings were initiated under the old Act, the enforcement of the award has to be under the new Act that is by way of deeming it a decree only and otherwise objections under Section 34 have been preferred and decided.

11. As is apparent from the catena of decision where the controversy arose as to which of the Act will apply in case parties agree to the applicability of the new Act even before coming into force of new Act, the award was made after the enforcement of the new Act though arbitral proceeding had commenced under the old Act.

12. It is difficult to accept that the award made prior to the enforcement of the New Act and the objections filed before the enforcement of the new Act should be treated as if the award was made under the New Act and so were the objections. The effect of Clause 25 is that if there is modification of the statute or repealment of the old Act during the pendency of the arbitration proceedings and before the award is made, the provisions of new Act would be applicable. By no stretch of imagination, the effect of such a clause can be held to be that even if the award is made prior to the enforcement of the new Act and even if the objections are filed prior to the enforcement of new Act, not only the award but the objections will have to be treated having been made and filed under the new Act. Had it been so, the petitioner would also have taken steps for execution of the award deeming it as a decree on the presumption that the objections made under Sections 30 & 33 were not maintainable.

13. The petitioner cannot be allowed to adopt double standards. On the one hand, he as sought enforcement of the award under the old Act while on the other hand, he wants the objections of the respondent to be dealt with under the new Act. The facts of the instant case are clearly distinguishable from other cases where view was taken that the provisions of new Act will be applicable even if proceedings were commenced under the old Act as in the instant case not only the award was made prior to the enforcement of the new Act but objections were also filed prior to the enforcement of new Act. Therefore question of enforcement of the award or for that purpose treating the objections filed under the provisions of new Act does not arise. The determining date is the date of the final award. If the final award was passed after the enforcement of new Act, it is the provisions of new Act alone which will be applicable and no other provisions but in case the award is made under the old Act and objections are filed before the enforcement of new Act those objections have to be treated under the old Act.

14. The ratio of Thyseen judgment can be extended further to the extent that even if the award is made under the old Act but the objections are filed after the enforcement of the new Act, those objections have to be filed under Section 34 as by the time the objections were filed, the new Act had already come into force as the parties had agreed to be governed by the New Act as and when it comes into force. The award under the old Act does not attain finality till it is made rule of the court.

15. In view of the foregoing reasons, I do not find any merit in the application and dismissed the same.

S. 1192/1994 & IA 10051/1994

16. Renotify on 12th July, 2002.