Chitambaresh, J.

1. “For an arbitrator goes by equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity” said Aristotle the ancient Greek philosopher and scientist.

2. The parties are referred to as ‘the claimant’ and ‘the respondents’ as they figure in the proceedings before the Sole Arbitrator Justice K. John Mathew who has passed an award dated 1.7.2009 in the dispute. The arbitral proceedings commenced when the claimant issued a letter dated 20.12.1991 (marked Ext.P61 in the proceedings) requesting that the dispute be referred to arbitration. A doubt arose as to whether the Arbitration Act, 1940 (‘the old Act’ for short) or the Arbitration and Conciliation Act, 1996 (‘the new Act’ for short) would apply. The respondents accordingly filed O.P.(Arb) No.7/2008 on the file of the Court of the Subordinate Judge of Mavelikkara under Section 33 of the old Act. The respondents sought a declaration that the dispute needs to be resolved by recourse to the old Act and that the new Act cannot be called in aid by the claimant as is attempted to be done. The Court of the Subordinate Judge of Mavelikkara dismissed O.P.(Arb) No.7/2008 by order dated 21.8.2008 as not maintainable nevertheless observing that it is for the Arbitrator to decide.

3. The applicability of the old Act or the new Act was additional issue No.8 before the Arbitrator who answered the same along with other issues in the award that the new Act would apply to the proceedings. The respondents thereupon filed O.P.(Arb) No.43/2009 on the file of the Court of the Additional District Judge of Mavelikkara on 19.9.2009 under Section 34(2) of the new Act. The respondents sought to set aside the arbitral award contending that the same is in conflict with the public policy of India wherein the applicability of the old Act was not raised. The respondents thereafter filed I.A.No.409/2011 seeking to amend O.P.(Arb)No.43/2009 by incorporating an additional ground that the old Act is applicable to the dispute. I.A.No.409/2011 was dismissed on 23.12.2011 and O.P.(Arb) No.43/2009 was disposed of by order dated 24.6.2013 which is impugned in these appeals by the respondents and claimant.

4. We heard Mr. S. Vinod Bhat, Advocate on behalf of the respondents/appellants and Mr. K.L. Varghese, Senior Advocate on behalf of the claimant/appellant.

5. The Arbitrator was prompted to hold that the new Act is applicable to the proceedings in view of Clause 56 of the General Conditions of Contract for Civil Works and the relevant part of the same is extracted below:

“Subject as aforesaid the provision of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause”. (emphasis supplied)

But the Supreme Court despite the existence of a similar clause in the arbitration agreement held in Milkfood Ltd. v. GMC Ice Cream (P) Ltd. [AIR 2004 SC 3145] that commencement of arbitral proceedings alone matters. It was concluded as follows:

“73. Keeping in view the fact that in all the decisions, referred to hereinbefore, this Court has applied the meaning given to the expression ‘commencement of the arbitral proceeding’ as contained in Section 21 of the 1996 Act for the purpose of applicability of the 1940 Act having regard to Section 85(2)(a) thereof, we have no hesitation in holding that in this case also, service of a notice for appointment of an arbitrator would be the relevant date for the purpose of commencement of the arbitration proceeding.”

Thyssen Stahlunion’s case [AIR 1999 SC 3923] was adverted to in the above decision clarifying that the parties have the option of changing the procedure by agreement in an arbitral proceeding pending.

6. Milkfood Ltd.’s case (supra) was quoted with approval in Parwani Builders v. Western Coalfields Limited and others [(2010) 15 SCC 729] reiterating that the Ac