IMPORTANT POINT
A foreign award given after the commencement of Arbitration and Conciliation Act, 1996, though arbitration proceedings might have commenced before its commencement, can be enforced only under Arbitration and Conciliation Act.

Headnote:(i) Arbitration and Conciliation Act, 1996-What is the date of the commencement of this Act? On 22.8.1996 and is deemed to have been effective from 25.1.1996.
       Held : From the plain and literal reading of the said provision and the Gazette Notification, it is clear that the Act came into force on 22.8.1996. But the purposive reading would show that the Act came into force in continuation of the first Ordinance which was brought into force on 25.1.1996. This makes the position clear that although the Act came into force on 22.8.1996, for all practical and legal purposes it shall be deemed to have been effective from 25.1.1996 particularly when the provisions of the Ordinance and the Act are similar and there is nothing in the Act to the contrary so as to make the Ordinance ineffective as to either its coming into force on 25.1.1996 or its continuation upto 22.8.1996. Thus we conclude that the Act was brought into force with effect from 22.8.1996 vide Notification No. G.S.R. 375 (E) dated 22-8-1996 published in the Gazette of India and that the Act being a continuation of the Ordinance is deemed to have been effective from 25.1.1996 when the first Ordinance came into force. (Para 29)
       (ii) Arbitration and Conciliation Act, 1996-Sections 47, 48 and 49-Foreign award-Foreign award given after commencement of 1996 Act, although arbitration proceedings had commenced prior to enforcement of 1996 Act-Whether 1996 Act would apply? (Yes)-High Court holding to the contrary-Whether correct? (No)-Effect-Appeal allowed, case remanded to High Court for enforcement of foreign award-Case law discussed.
       Held : Prior to the enforcement of the Act, the Law of Arbitration in this country was substantially contained in three enactments namely (1) The Arbitration Act, 1940, (2) The Arbitration (Protocol and Convention) Act, 1937 and (3) The Foreign Awards (Recognition and Enforcement) Act, 1961. A party holding a foreign award was required to take recourse to these enactments. Preamble of the Act makes it abundantly clear that it aims at to consolidate and amend Indian laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act is to minimize supervisory role of court and to give speedy justice. In this view, the stage of approaching court for making award a rule of court as required in Arbitration Act, 1940 is dispensed with in the present Act. If the argument of the respondent is accepted, one of the objects of the Act will be frustrated and defeated. Under the old Act, after making award and prior to execution, there was a procedure for filing and making an award a rule of court i.e. a decree. Since the object of the act is to provide speedy and alternative solution of the dispute, the same procedure cannot be insisted under the new Act when it is advisedly eliminated. If separate proceedings are to be taken, one for deciding the enforceability of a foreign award and the other thereafter for execution, it would only contribute to protracting the litigation and adding to the sufferings of a litigant in terms of money, time and energy. Avoiding such difficulties is one of the objects of the Act as can be gathered from the scheme of the Act and particularly looking to the provisions contained in Sections 46 to 49 in relation to enforcement of foreign award. In para 40 of the Thyssen judgment already extracted above, it is stated that as a matter of fact, there is not much difference between the provisions of the 1961 Act and the Act in the matter of enforcement of foreign award. The only difference as found is that while under the Foreign Award Act a decree follows, under the new Act the foreign award is already stamped as the decree. Thus, in our view, a party holding foreign award can apply for enforcement of it but the court before taking further effective steps for the execution of the award has to proceed in accordance with Sections 47 to 49. In one proceeding there may be different stages. In the first stage the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions. Once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of court/decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and Scheme of the Act that every final arbitral award is to be enforced as if it were a decree of the court. The submission that the execution petition could not be permitted to convert as an application under Section 47 is technical and is of no consequence in the view we have taken. In our opinion, for enforcement of foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make rule of the court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the court enforcing a foreign award can deal with the entire matter. Even otherwise, this procedure does not prejudice a party in the light of what is stated in para 40 of the Thyssen judgment. Part II of the Act relates to enforcement of certain foreign awards. Chapter 1 of this Part deals with New York Convention Awards. Section 46 of the Act speaks as to when a foreign award is binding. Section 47 states as to what evidence the party applying for the enforcement of a foreign award should produce before the court. Section 48 states as to the conditions for enforcement of foreign awards. As per Section 49 if the Court is satisfied that a foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that court and that court has to proceed further to execute the foreign award as a decree of that court. If the argument advanced on behalf of the respondent is accepted, the very purpose of the Act in regard to speedy and effective execution of foreign award will be defeated. Thus none of the contentions urged on behalf of the respondent merit acceptance so as to uphold the impugned judgment and order. We have no hesitation or impediment in concluding that the impugned judgment and order cannot be sustained. In the light of the discussion made and the reasons stated hereinabove, the impugned judgment and order are set aside. The case is remitted to a learned Single Judge of the High Court for proceeding with enforcement of the award in the light of the observations made above. The appeal is allowed in terms indicated above. No costs. (Paras 31, 32 and 33)

JUDGMENT

Shivaraj V. Patil, J.-Leave granted.

2. An agreement was entered into between the appellant and the respondent on 1.8.1994 under which the respondent was to supply certain goods to the appellant during the period January, 1995 to June, 1996. Certain disputes cropped up in the course of the execution of the agreement. The agreement provided for arbitration. The appellant filed a claim petition before the International General Produce Association (IGPA) a body nominated by the appellant as the Arbitrators. The Arbitrators, after entering into reference, received evidence and thereafter passed an Award on 13.8.1996 allowing the claims of the appellant. The appeal filed by the respondent against the Award before the IGPA Appellate Board was dismissed on 14.11.1998. Further the appeal filed by the respondent before the Queen s Bench Division of the High Court of Justice at London was also dismissed on 29.1.1999. The appellant filed an execution application in August 1998 before the High Court of Delhi for enforcement of said foreign Award dated 13.8.1996. An order of attachment was issued by the High Court against the respondent. The respondent filed an application under Section 151 CPC (E.A. 347 of 1998) seeking dismissal of the execution petition. The respondent also filed O.M.P. No. 203 of 1998 under Section 48 of the Arbitration and Conciliation Act, 1996 (for short the Act ). The High Court varied its order of attachment and ordered the respondent to lodge security. A learned Single Judge of the High Court held that the execution application filed by the appellant for enforcement of foreign Award dated 13.8.1996 was not maintainable under the Act as the arbitration proceedings were commenced prior to the coming into force of the Act and dismissed the execution petition, consequently released the security of 1.74 crores furnished by the respondent. The appellant filed Special Leave Petition No. 7674 of 1999 before this Court challenging the order passed by the learned Single Judge. This Court disposed of the Special Leave Petition observing that the order of the learned Single Judge was appealable under Section 50(1)(b) of the Act. In this view, the appellant filed FAO (OS) No. 284 of 1999 before Division Bench of the High Court. The Division Bench of the High Court by the impugned judgment and order dismissed the appeal saying that there was no fallacy in the reasoning of the learned Single Judge. Under these circumstances, the appellant is before this Court in this appeal assailing the impugned judgment and order.

3. Mr. Ashwani Kumar, learned Senior Counsel appearing for the appellant, contended that the learned Single Judge as well as the Division Bench of the High Court manifestly erred in holding that since the arbitration proceedings were commenced prior to 25.1.1996, i.e., before the commencement of Act, the foreign Award dated 13.8.1996 could not be enforced under Act in terms of Section 85 read with Section 21 of the Act; this Court has ruled in Thyssen Stahlunion GMBH v. Steel Authority of India Ltd.1 that a foreign award passed after the commencement of Act is to be enforced/executed under the said Act alone being stamped as decree; in this ruling the reasoning and conclusions of Gujarat High Court in Western Ship Breaking Corporation v. Clarehaven Ltd U.K.2 were affirmed; at no stage before the High Court, either before the learned Single Judge or before the Division Bench, the respondent questioned the date of commencement of the Act on 25.1.1996; in fact the Division Bench proceeded on the admitted position that new Act commenced from 25.1.1996 and, therefore, it cannot be raised for the first time in these proceedings; even otherwise the question is no longer res integra having been conclusively decided by this Court in Shetty s Constructions Co. Pvt. Ltd. v. Konkan Railway Constructions & Another3. Thyssen Stahlenion GMBH v. Steel Authority of India Ltd. (supra) an

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2001 Supreme(SC) 869

IMPORTANT POINTA foreign award given after the commencement of Arbitration and Conciliation Act, 1996, though arbitration proceedings might have commenced before its commencement, can be enforced only under Arbitration and Conciliation Act.

Cases Referred (11)

IMPORTANT POINT
A foreign award given after the commencement of Arbitration and Conciliation Act, 1996, though arbitration proceedings might have commenced before its commencement, can be enforced only under Arbitration and Conciliation Act.