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2003 Supreme(Del) 72
High Court Of Delhi
VIJAY INDUSTRIES AND PROJECTS LIMITED - Appellant
Versus
NATIONAL THERMAL POWER CORPORATION LIMITED - Respondent
First Appeal (OS) 41 of 2003
Decided On : 01/28/2003
ASHVANI KUMAR, Parag Tripathi, Ruchi Narula, Sandip Sharma
The judgment established the principle that the application of a new arbitration act to arbitration proceedings commenced before its enforcement depends on the agreement of the parties and the specific terms of the arbitration clauses in the contract.
Headnote:
ARBITRATION - New Arbitration Act of 1996 - Section 85, 13, 16, 26 - The court discussed the application of the New Arbitration Act of 1996 in relation to the arbitration proceedings commenced before the Act came into force. It highlighted the interpretation of Section 85 (2) (a) and the terms of the Arbitration Clause, emphasizing the option for parties to agree to the application of the new Act before its enforcement. The court also examined the specific arbitration clauses in the contract and the distinction between the terms of the clauses in the present case and the precedent case, ultimately concluding that the New Act was not attracted in the matter.
Fact of the Case:
The appellant was awarded a contract by the respondent for providing fire protection system. Disputes arose, and the appellant invoked the arbitration clause. The respondent filed a petition under the old Arbitration Act of 1940 for supersession of arbitration agreement and removal of Arbitrators. The appellant filed an application seeking dismissal of respondent's application under Section 85 of the New Arbitration Act.
Finding of the Court:
The court overruled the appellant's plea, emphasizing that the right had accrued to the respondent to get the application decided under the provisions of the Old Act. The court also distinguished the observations of the Supreme Court in a precedent case and concluded that the New Act was not attracted in the matter.
Issues: The issues revolved around the application of the New Arbitration Act of 1996 to arbitration proceedings commenced before the Act came into force, the interpretation of specific arbitration clauses in the contract, and the distinction between the terms of the clauses in the present case and the precedent case.
Ratio Decidendi: The court emphasized the option for parties to agree to the application of the new Act before its enforcement and examined the specific arbitration clauses in the contract. It concluded that the New Act was not attracted in the matter.
Final Decision: The appeal was dismissed on preliminary hearing.
( 1 ) C. M. 101/2003 Allowed subject to just exceptions.
( 2 ) C. M. 100/2003 Application is allowed. Delay in filing this appeal is condoned.
( 3 ) FAO (OS) 41/2003 appellant s application under Section 85 of New Arbitration and Conciliation Act of 1996 seeking dismissal of respondent s application (Suit No. 2065-A/95) filed under Section 5,11 and 12 of the old Arbitration Act of 1940 has been dismised by impugned order dated 9. 11. 2001. Hence this Appeal.
( 4 ) APPELLANT was awarded a contract by the respondent for providing fire protection system at one of its plants way back on 18. 2. 1982. Later some disputes arose between parties, upon which Appellant invoked arbitration clause vide letter dated 9. 12. 1989 and again by letter dated 10. 5. 1994. Appellant then approached the Institute of Engineers for appointment of Arbitrators. Though two Arbitrators were appointed but respondent did not submit to the jurisdiction and on the contrary filed a petition under Section 5,11 and 12 of the old Arbitration Act of 1940 (Suit No. 2065-A/95) for supersession of arbitration agreement and removal of Arbitrators.
( 5 ) FACED with this appellants filed an application (IA No. 8470/2001) under Section 85 of the New Arbitrator Act seeking dismissal of respondent s application under the old Act on the plea that under Clause 26. 6. 2 of the general conditions of the contract it was agreed to conduct the arbitration under the provisions of the Old Arbitration Act or "any statutory modification thereof" which included in the new Arbitration Act of 1996 also and under Sections 13 and 16 of this. Respondent could challenge the constitution of Arbitral Tribunal before the Tribunal itself.
( 6 ) LD. Single Judge over-ruled this plea on two counts :-
(I) that a right had accrued to respondent to get his application decided under the provisions of the Old Act as he had filed it on 2. 9. 95 and before coming into force of New Act.
(II) that award letter dated 24th March, 1982 containing the main arbitration clause would overide clause 26 of the general conditions of contract which would be inapplicable in the matter.
( 7 ) LD. Judge also distinguished the observations of the Supreme Court in M/s Rani Construction Pvt. Ltd. Vs. Himachal Pradesh State Electricity Board (Civil Appeal No. 61 of 1999) on noticing that award in that case was made after coming into force of the New Act, when Respondent s application under Sections 5, 11 and 12 was made sometime in September, 1995.
( 8 ) LD. Counsel for Appellant Mr. Prag Tripathi placed hole-hog reliance on observations of the Supreme Court in M/s Rani Construction case to urge that the New Arbitration Act was applicable in the matter as parties had agreed for the conduct of arbitration under the Old Arbitration Act of 1940 or any statutory modification thereof under Clause 26. 6. 2 of GCC which included the new Act also and under which respondent could challenge the constitution of Arbitral Tribunal before the Tribunal itself under Sections 15 and 16 of this Act. He claimed that the Arbitration clause in Rani Construction Case was pari materia with that of of the present case and once Supreme Court had made the New Act applicable in the first case it was attracted to this case also.
( 9 ) THE submission appears to us farfetched if not fallacious and that is for the reasons to follow. In Rani Construction case, Supreme Court was seized of interpretation and import of Section 85 (2) (a) of the New Act alongwith terms of the Arbitration Clause. Section 85 (2) (a) provided:-
"repeal and saving - (2) Notwithstanding such repeal,-- (a) the provisions of the said enactments 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;the Arbitration Clause in M/s Rani Construction case read thus:-
"subject to the prov
