IMPORTANT POINT
Automatic suspension of execution of the arbitration award, the moment an application challenging the said award is filed under Section 34 of the Arbitration and Conciliation Act, 1996, leaving no discretion in the Court to put the parties on terms, defeats the very objective of the alternate dispute resolution system to which arbitration belongs, therefore, there is a recommendation made by the concerned Ministry to the Parliament to amend Section 34 with a proposal to empower the civil court to pass suitable interim orders in such cases.

JUDGMENT

Santosh Hegde, J.-The original appeal from which this application arises for our consideration namely, C.A. No. 2522/99 was preferred by the respondent herein questioning the unilateral appointment of an arbitrator made by the present applicant under the Arbitration Act, 1940. This Court in the said appeal after hearing the parties and with the agreement of the parties appointed Hon. Mr. Justice A.M. Ahmadi, former Chief Justice of India as the sole arbitrator. Before the said arbitrator both the parties by consent agreed that the proceedings should be governed by the provisions of the Arbitration & Conciliation Act, 1996. It is on that basis the learned arbitrator proceeded and gave a final award.

2. In this application, namely, I.A. No. 2 in C.A. No. 2522/99 made under sections 15, 17 and 29 of the Indian Arbitration Act, 1940 praying for modification of the said award made by the arbitrator, the applicant contends that since the dispute between the parties and the agreement of the parties to refer such dispute to an arbitrator was prior to the coming into force of the 1996 Act, all further proceedings subsequent to the award should be governed by the 1940 Act and under the said Act an aggrieved party which wants to seek modification has to move the court which appointed the arbitrator, hence, the applicant contends that this is the only Court before which such an application is maintainable.

3. It is to be noted at this stage that the respondent in this application was appellant in C.A. No. 2522/99. The said respondent being aggrieved by this award, itself has filed objections to the said award before the appropriate Civil Court under section 34 read with section 2(e) of the 1996 Act.

4. On the facts of this case, 2 primary questions arise for our consideration. They are :(i) whether the proceedings in which an impugned award has come to be made, are governed by the 1940 Act or the 1996 Act ? and (ii) whether the appropriate court for the purpose of challenging the said award or seeking modification of the said award is this Court, being the court which appointed the arbitrator or an appropriate court as contemplated under Section 34 of the 1996 Act read with section 2(e) of the said Act which contemplates said court to be the principal civil court of original jurisdiction ?

5. As stated above, the argument of learned counsel appearing for the applicant is that since this Court has appointed the sole arbitrator in the abovesaid civil appeal under the provisions of the 1940 Act, this Court alone has the jurisdiction to modify the impugned award. While the respondent in this application contends that the proceedings before the arbitrator admittedly having proceeded under the provisions of the 1996 Act by consent of parties, for the purpose of seeking modification of the award in such proceedings, it will only be a court contemplated under the 1996 Act.

6. It is an admitted fact that after the arbitrator was appointed by this Court, the parties by consent agreed before the arbitrator that the proceedings should go on under the provisions of the 1996 Act though the dispute arose prior to coming into force of this Act. Such a procedure is permissible under section 85(2)(a) of the 1996 Act. In the normal course having agreed to this procedure, the applicant should not be permitted to raise a plea at this stage that the provisions of the 1940 Act would apply for challenging or seeking modification of the award made under the 1996 Act. But the learned counsel placed reliance on two judgments of this Court in State of M.P. etc. v. M/s. Saith & Skeleton (P) Ltd. (1972 1 SCC 702) and M/s. Guru Nanak Foundation v. M/s. Rattan Singh and Sons (1981 4 SCC 634) wherein according to the applicant, this Court entertained an award for the purpose of making it a rule of the Court because it had appointed the arbitrator hence for the purpose of making an award a rule of the Court it can only be the court which appointed the arbitrato