IMPORTANT POINT
Words "commencement of the arbitration proceedings" not defined in Act, 1940, have to be given their ordinary meaning having regard to provisions in Chapter II thereof.

ORDER

As a result of an agreement between the parties certain work orders were given to the respondent herein. It is alleged that the respondent completed the construction work on 3rd July, 1990. Subsequently, on 20th October, 1993, the respondent raised a demand on account of additional work that it carried out to the Executive Engineer. It appears that the demand was not accepted by the Executive Engineer and as a result thereof the respondent sought reference for adjudication of disputes by an arbitrator.

2. Consequently on 7th September, 1994, the Chief Engineer of Irrigation and Waterways Directorate appointed one Shri K.P. Choudhary, former Secretary of the said Directorate as an arbitrator and referred the disputes raised by the respondent to the arbitrator. Since for a considerable period of time the arbitrator did not enter upon the reference, the respondent filed an application under Sections 5, 11 and 12 of the Arbitration Act, 1940 for removal of the arbitrator and appointment of a new arbitrator in his place before a learned Single Judge exercising original jurisdiction before the Calcutta High Court. The learned Single Judge by an order dated 22nd August, 1996 allowed the said application and appointed Shri Sibaji Mitra, Bar.-at-Law as an arbitrator by replacing Shri K.P. Chaudhary. It is against the said order of the High Court, the appellant is in appeal before us.

3. Shri Tapas Ray, learned senior counsel appearing for the appellant urged that the order passed by the learned Single Judge of the High Court was illegal, inasmuch as it was without jurisdiction on account of the fact that the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the new Act") came into force on 25.1.1996. We do not find any merit in the contention.

4. It may be noticed that the earlier arbitrator was appointed by the Chief Engineer on 7th September, 1994 under the Arbitration Act, 1940. The new Act came into force with effect from 25.1.1996. Section 21 of the new Act provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Clause (a) of sub-section (2) of Section 85 of the new Act provides that notwithstanding repeal of the Arbitration Act, 1940, the provisions of the said enactment 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.

5. On the arguments of the learned senior counsel for the appellant, the question that arises is as to when the proceedings commence.

6. In Shetty s Construction Co. Pvt. Ltd. vs. Konkan Railway Construction & Another, 1998(5) SCC 599, it was held that the arbitration suit in respect of arbitration dispute shall be deemed to have commenced on the date on which the request for referring the dispute for arbitration is received by the respondent.

7. In Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd., 1999(9) SCC 334, which was passionately relied upon by the learned senior counsel for the appellant, has, in our view, no application to the facts of the present cases. The Bench concluded :

"1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before coming into force of the new Act (The Arbitration and Conciliation Act, 1996).

2. The phrase "in relation to arbitral proceedings" cannot be given a narrow meaning to mean only pendency of the arbitration proceedings before the Arbitrator. It would cover not only proceedings pending before the arbitrator but would also cover the proceedings before the court and any proceedings which are required to be taken under the old Act for the award becoming a decree under Section