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High Court Of Delhi
D.D.A. - Appellant
Versus
BHAI SARDAR SINGH AND SONS - Respondent
F.A.O.(O.S.) 93 of 2002
Decided On : 04/20/2004
Arbitration Act - Applicability of old and new Arbitration Acts - Section 20 of old Arbitration Act - Sections 30/33 of old Arbitration Act - Sections 85 and 21 of new Arbitration Act - Award filing and objections - Interpretation of arbitration clause - Application of old and new Acts - Court's decision on applicability of Acts
Fact of the Case:
Disputes arose during the execution of a construction contract, leading to arbitration proceedings. The question was whether the old Arbitration Act of 1940 or the new Arbitration Act of 1996 would apply to the matter.
Finding of the Court:
The court held that the old Act would apply to arbitration proceedings commenced before the new Act came into force, unless otherwise agreed by the parties. The court found that the arbitration clause did not mandate automatic application of the new Act to pending proceedings.
Issues: Applicability of old and new Arbitration Acts, interpretation of arbitration clause, agreement by the parties, and the date of commencement of arbitration proceedings.
Ratio Decidendi: The court interpreted the arbitration clause and the provisions of Sections 85 and 21 of the new Act to determine the applicability of the old and new Acts. It emphasized that the old Act would apply to proceedings commenced before the new Act, unless there was a specific agreement by the parties for the new Act to apply.
Final Decision: The court allowed the appeal, setting aside the rejection of appellant's objections under the old Act and directing the Ld. Single Judge to decide the objections afresh in accordance with the law.
( 1 ) THE short question that falls for determination is whether the old Arbitration act of 1940 or the new Arbitration Act of 1996 would apply in the matter.
( 2 ) THE facts are not in dispute. Respondent was awarded the contract for construction of 1068 houses at Motia Khan. During its execution, disputes arose between the parties and respondent invoked arbitration clause (clause 25) of the contract agreement which amongst other things provided:-
"subject as aforesaid, the provisions of the Arbitration Act 1940 or any statutory modification or any reenactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause"
( 3 ) RESPONDENT then filed petition under section 20 of the old Arbitration Act for appointment of an arbitrator way back in 1982 which was registered as Suit No. 994-A/ 1982. One Sh. Subramanyam, Superintending engineer of appellant/dda was appointed as the sole arbitrator in this. He, however, expired before pronouncing the award. He was substituted by one Sh. O. P. Mittal who entered the reference on 17. 1. 1985 and who also expired before rendering the award. Finally, one RJ. Bakhru was appointed as the sole arbitrator who finally published the award on 12. 8. 1998 after the new Arbitration Act of 1996 had come into force on 25. 1. 1996. The award was then filed in this court and. registered as Suit No. 2560/98. Notice of the award was issued to appellant/dda requiring it to file objections to the award within 30 days from the service of notice which was received by it on 22. 2. 1999.
( 4 ) APPELLANT filed objections to the award under Sections 30/33 of the old Arbitration act of 1940 within the prescribed statutory period of 30 days. Respondent also filed reply to these objections controverting the appellant s stand on merits but without raising any objection to the maintainability of these. These objections later came up for consideration on 2. 8. 2001 and it seems that while arguing, respondent s counsel raised an obligation against the maintainability of these objections claiming that the new Arbitration act of 1996 was applicable in the matter. The issue was debated with both sides invoking sections 85 and 21 of the new Act to support their respective positions. Ld. Single Judge but accepted the stand of respondent and rejected appellant s objections under Sections 30/33 of the old Act by impugned judgment dated 2. 8. 2001 holding thus:-
"in the present case in hand attention of the court has not been drawn to any agreement between the parties to come to a 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 the Delhi Development authority cannot take recourse to subsection 2 (a) of Section 85 of new arbitration Act 1996, it will have no application herein. Similarly, recourse to Section 21 of the arbitration Act would also be of little avail and consequence for Delhi development Authority as the provisions of this Section would be prospective in nature and as it has not been given any retrospective effect and as the proceedings had commenced before the commencement of the new arbitration Act of 1996. Once the award had been pronounced and as referred to above it has to be in terms of Arbitration and Conciliation Act 1996, the remedy of Delhi Development authority would be to have recourse under Section 34 of the Act. Even if incidentally by mistake the notice had been issued by the court, still it will not permit this court to run contrary to the plain language of the law. Any other interpretation, even if equitable, would mean doing injustice to the plan language of Sections 30 and 36 of the new Act of 1996. "
( 5 ) APPELLANT assails this on several grounds. Appellant s case is that once the entire arbitration proceedings were conducted under the old Act and the award was also filed under that Act and the notice for filing of object
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