1998 Supreme(Bom) 162

IN THE HIGH COURT OF BOMBAY
(PANAJI BENCH)
R.M.S. Khandeparkar, J.
M/s. Reshma Constructions ..... Petitioner.
Versus
State of Goa .... Respondent.
Civil Rev. Application No. 165 of 1997, decided on 12-3-1998.
Advocates appeared :
S.G. Dessai, S.A. with R.B. de Sa, for the petitioner.
V.B. Nadkarni, A.G. with S. Vahidulla, Asst. Govt. Adv., for respondent.

Headnote:Sections 30 and 14-Arbitration and Conciliation Act (26 of 1996), Section 85(2)(a)-Expressions "unless otherwise agreed" in Section 85(2)(a) of the 1996 Act necessarily refers to the intention of the parties as regards the proceedings to be followed in the matter of arbitration proceedings and not to the time factor as regards execution of the agreement-Words "otherwise agreed by the parties" would include an agreement already entered into between parties even prior to enforcement of new Act as also the agreement entered into after enforcement of new Act.- The petitioner was awarded work of construction of Canal Head Regulator of Chapoli Minor Irrigation Tank at Canacona and the agreement between the parties in respect thereof provided that in case of dispute between the parties, the same to be settled by way of arbitration. On a dispute arising between the parties, the Court appointed an arbitrator to decide the dispute and the said arbitrator gave his award on 30.7.1996. Meanwhile, Arbitration and Conciliation Act, 1996 came into force on 25.1.1996. The arbitrator filed his award in the Court in terms of Section 14 of the old Act and the respondent State filed its objection to the said award. The Petitioner filed an application for dismissal of the entire proceedings before the trial Court on the ground that in view of Section 85 of the 1996 Act read with clause 25 of the said agreement between the parties, the provisions of the new Act were applicable and therefore, the award of the petitioner was itself enforceable as if it was a decree of the Civil Court. Clause 25 of the agreement recited "Subject as aforesaid, the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause." The trial Court dismissed the said application of the petitioner holding that Section 85 of the new Act provides that the proceedings commenced under the old Act before coming into force of the new Act would be governed by the old Act, unless the parties enter into an agreement to the contrary, after the new Act came into force. In revision application challenging the said order.

       Held, that the expression "otherwise agreed by the parties" in Section 85(2)(a) of the 1996 Act, would include an agreement already entered into between the parties even prior to enforcement of the new Act as also the agreement entered into after enforcement of the new Act. Such a conclusion is but natural since the expression "otherwise agreed" does not refer to the time factor but refers to the intention of the parties regarding applicability of the provisions of the new or old Act. The intention of the Legislature in this regard is evident from the later portion of the saving clause which provides that the new Act shall apply to the arbitral proceedings commenced after enforcement of the new Act, but in relation to the agreement which had already been entered into and which contains provision for reference of the matter to the arbitration. In other words, in relation to the matters wherein the arbitration proceedings would commence after enforcement of the new Act, but under the agreement already executed before coming into force of the new Act the provisions of the new Act would apply to such proceedings. In respect of such proceedings, it is not left to the will of the parties to adopt the procedure of their choice - old or new Act but such proceedings are necessarily to be governed by the provisions of the new Act. But one thing is clear from this provision that the provisions of the new Act are made applicable even to the proceedings which commence after coming into force of the new Act, but under the agreement executed before coming into force of the new Act. Bearing this in mind, it will be thus clear that the expression "otherwise agreed by the parties" necessarily refers to the intention of the parties regarding applicability of the provisions of the new or old Act and not to the time factor. In this view of the matter, the findings of the trial Court that the said agreement was required to be executed after enforcement of the new Act is not only erroneous and contrary to the scheme and spirit of the Act, but tends to defeat the very object and purpose sought to be attained by the new Act. In fact, the trial Court had rushed to the conclusion that such an agreement is necessarily to be executed after enforcement of the new Act without analyzing even the scope and meaning of the expression "otherwise agreed by the parties". On plain reading of above quoted sub-clause 25 of the agreement between the parties, it is clear that the parties have in no uncertain terms agreed that the arbitration proceedings between the parties would be governed by the provisions contained in the Arbitration Act, 1940 as well as in terms of any modification or re-enactment thereof. It was further agreed therein that the law time being in force shall apply to such proceedings. These terms in the agreement disclose, that the parties had unequivocally agreed to be governed, in the matter of procedure of the proceedings relating to the arbitration, by the law which was in force at the time of execution of the agreement as well as by any further statutory changes those may be brought about in such law. The agreement between the parties does not disclose any intention on the part of the parties to the agreement to provide for the procedure to be followed in the arbitration under the agreement, shall always be one that has been provided under the old Act. The intention appears to be to the contrary. In this view of the matter, the finding of the trial Court that because the parties to the agreement in the case in hand, had not entered into a new agreement, relating to the applicability of the new Act to the pending proceedings, after enforcement of the new Act, the provisions of the new Act are not applicable to the proceedings between the parties, cannot be sustained and is liable to be set aside.

       Sections 33 and 34, Arbitration Act (10 of 1940), Sections 14 and 30 and Limitation Act (36 of 1963), Section 14-Arbitration proceedings under 1940 Act-Award-Objections filed against award-Act of 1996 came into force in the meantime-Provisions of 1996 Act being applicable to proceedings in view of agreement between parties to that effect, it would be unjust to deny opportunity to the parties to take recourse under Section 33 and/or Section 34 of the 1996 Act Period spent by them under bona fide belief that proceedings were governed by 1940 Act would be excluded for the purpose of calculation of limitation period in terms of Section 14 of the Limitation Act.

       -It is well-established rule of interpretation of statute that while the words of an enactment are important, the context is no less import-The words, therefore, should be read in context and not in isolation.