Arbitration proceedings commenced before the Act 1996 came into force would continue under the Act 1940 unless otherwise agreed by the parties.

Dipak Misra, J. - In this appeal preferred under section 39 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'), the non-applicant has called in question order dated 30-4-1998 passed by the VIth Additional District Judge, Bhopal in Civil Suit No. 3/97 whereby he has come to hold that the provisions of the Act is not applicable but the provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act 1996') is attracted and hence, the question of making the award rule of the Court did not arise. It is to be noted here that though the Court observed as aforesaid proceeded to deal with the objections placed on the record.

2. The facts as have been unfolded are that the appellant had availed a loan from the M.P. Film Development Corporation. As disputes arose with regard to payment of loan, the respondent Corporation referred the disputes to the sole Arbitrator of their own choice, namely, the Managing Director. The sole Arbitrator by notice dated 18-1-1996 directed the parties to appear before him for further proceedings. The Arbitrator entered into reference and eventually passed an award on 5-2-1997. The sole Arbitrator directed the loanee-appellant to pay a sum of Rs. 14,50,197.16 with interest. There was also a direction that the aforesaid amount was to be realised by sale/auction of the mortgaged property, hypothecated goods and also by other means prescribed in law. The learned Arbitrator sent the award to the competent Court as required under Section 14(2) of the Act for making it a rule of Court. The claimant-appellant filed its preliminary objection contending, inter alia, that the award passed by the Arbitrator was null and void, as disputes, had really not arisen between the parties. It was also putforth that even if disputes had arisen, the Arbitrator had no jurisdiction to adjudicate the same. Apart from this various other objections were taken questioning the justifiability of the award. A further objection was filed under section 151 of the Code of Civil Procedure to set aside the award. It was also pointed out before the Court below that the Arbitrator had committed gross legal misconduct and was biased. It is worth noting here that to the objection filed by the present appellant the Corporation also filed its reply justifying that the Arbitrator was correct in his determination of the claim and the award did not suffer from any infirmity. The rule making Court framed as many as four issues and came to hold that the Arbitration and Conciliation Ordinance had already come into effect by the time the learned Arbitrator had entered into reference and, therefore, the provisions of the Act would not be applicable. The Court referred to Section 21 of the Act and opined that the commencement of arbitration proceeding would be deemed to have taken place the day the Arbitrator had entered into reference. Being of this view, he rejected all the objections raised by the appellant.

3. Assailing the aforesaid order Mr. Abhay Gohil, learned counsel for the appellant has contended that the Court below has fallen into error by coming to hold that the Act 1996 is applicable to the facts of the present case. His further submission is that the Court below while holding that the Act 1996 is applicable has proceeded to adjudicate whether the Arbitrator had legally misconducted himself or not. The learned counsel has criticised that the objections raised by the appellant have not been properly dealt with by the Court below for the simple reason the Court was of the view that the Act was not applicable.

Mrs. Shobha Menon, learned counsel for the respondent supported the order passed by the learned trial Judge.

4. To appreciate the rival submissions raised at the Bar, we have carefully perused the order passed by the Court below. On a scrutiny of the same, we find that the learned trial Judge has held that the Act 1996 came into force on 25-1-1996 and the Arbitrator had entered into re