2003 (5) TMI 355 - HC - Companies Law

Summary

Issues Involved:
1. Applicability of the Arbitration Act, 1940 versus the Arbitration and Conciliation Act, 1996.
2. Validity and enforcement of the arbitration award dated 29-12-2000.
3. Legal principles of estoppel, waiver, and election in the context of arbitration proceedings.

Issue-wise Detailed Analysis:

1. Applicability of the Arbitration Act, 1940 versus the Arbitration and Conciliation Act, 1996:
The primary issue was whether the Arbitration Act, 1940 or the Arbitration and Conciliation Act, 1996 applied to the arbitration proceedings between the parties. The court noted that the original arbitration proceedings commenced in 1991 under the 1940 Act. However, the court emphasized that the 1996 Act would apply to all proceedings after its promulgation, especially given the arbitration clause in the contract, which stated that "the provisions 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." The court referenced the Supreme Court's decision in Thyssen Stahlunion GMbH v. Steel Authority of India Ltd., which clarified that the 1996 Act would apply to arbitral proceedings commenced after its enactment unless parties agreed otherwise. The court concluded that the 1996 Act governed the arbitration proceedings and the subsequent court actions.

2. Validity and Enforcement of the Arbitration Award dated 29-12-2000:
MTNL challenged the arbitration award dated 29-12-2000, which ordered it to pay Rs. 2,44,62,861.68 to Unibros. MTNL filed objections under sections 14 and 17 of the 1940 Act, arguing that the award should be set aside. The court noted that the objections were filed under the 1940 Act, but since the 1996 Act applied, the objections should be considered under section 34 of the 1996 Act. The court decided to treat the objections as having been moved under the 1996 Act to ensure substantial justice. The court directed the registry to place the application in the file of execution proceedings and consigned Suit No. 266A/2001 to the records.

3. Legal Principles of Estoppel, Waiver, and Election in the Context of Arbitration Proceedings:
MTNL argued that the parties had proceeded on the assumption that the 1940 Act applied and that Unibros could not now contend that the 1996 Act was applicable. The court referenced the principle that a party cannot approbate and reprobate, meaning they cannot accept and reject the same instrument. The court cited several cases, including Nagubai Ammal v. B. Shama Rao and Vikas Motors Ltd. v. Dr. P.K. Jain, to support this principle. However, the court concluded that the arbitration clause in the contract indicated that the 1996 Act would apply to future disputes. The court also noted that the order appointing the arbitrator had attained finality and could not be challenged. The court dismissed the arguments of estoppel, waiver, and election, emphasizing that the 1996 Act governed the arbitration proceedings.

Conclusion:
The court held that the Arbitration and Conciliation Act, 1996 applied to the arbitration proceedings and the subsequent court actions. The petition filed under sections 14 to 17 of the 1940 Act was dismissed as misconceived. The objections to the award were treated as having been moved under section 34 of the 1996 Act to ensure substantial justice. The court directed the registry to place the application in the file of execution proceedings and consigned Suit No. 266A/2001 to the records.