2003 (4) TMI 437 - SC - Companies Law

Whether Arbitration Act 1940 would apply in the facts and circumstances of the case ? Held that - It is the Division Bench of the High Court which took the view that the 1996 Act applied in the facts of the case. Against the said view of the Division Bench of the High Court this Court entertained the present appeal. Therefore the matter having remained subjudice there was no occasion for the appellant to apply for setting aside the award. The question whether time for making an application for setting aside an award can be extended will have to be decided as and when an application for that purpose is made. Then alone the stage for a judicial decision on the point will arise. Therefore at this stage we need not go into this question the same is left open to be decided as and when occasion arises. This appeal is dismissed leaving the parties to bear their respective costs.

Summary

Issues:
1. Applicability of Arbitration Act, 1940 or Arbitration & Conciliation Act, 1996.
2. Interpretation of the arbitration clause in the agreement.
3. Validity of the award and enforcement under the 1996 Act.
4. Time limit for filing objections against the award under Section 34 of the 1996 Act.

Analysis:

Issue 1: The main issue in the appeal was whether the Arbitration Act, 1940, or the Arbitration & Conciliation Act, 1996, would apply to the case. The High Court initially held that the old Act applied as the arbitration proceedings had commenced before the 1996 Act came into force. However, the Division Bench overturned this decision, considering that the appointment of the arbitrator was made after the new Act was in force, and the parties conducted the proceedings under the 1996 Act. The Supreme Court agreed with the Division Bench, emphasizing that parties can agree on the law governing arbitral proceedings, as seen in the agreement's arbitration clause.

Issue 2: The arbitration clause in the agreement stated that the provisions of the Arbitration Act, 1940, or any statutory modification, would apply to the arbitration proceedings. However, sub-clause (d) of the clause indicated that the law in force at the relevant time would govern the proceedings. The Supreme Court highlighted that the conduct of the parties and the arbitrator, along with their participation under the 1996 Act, supported the application of the newer Act to the case.

Issue 3: The validity of the award and its enforcement under the 1996 Act was challenged by the appellant. The Court noted that the arbitrator explicitly referenced the 1996 Act in the award and awarded future interest in accordance with the provisions of the said Act. The Division Bench found that the parties conducted the arbitration proceedings under the 1996 Act, and thus, the award was valid and enforceable under the same Act.

Issue 4: The appellant sought time to file objections against the award, which was opposed by the respondent citing the time limit prescribed under Section 34 of the 1996 Act. The Court acknowledged the controversy regarding the application of the old Act versus the 1996 Act, which was the subject of the appeal. As the matter was subjudice, the Court dismissed the appeal, leaving the question of extending the time for filing objections open for future consideration when an application is made.

In conclusion, the Supreme Court upheld the Division Bench's decision, emphasizing the parties' conduct and the arbitrator's actions under the 1996 Act, leading to the application of the newer Act to the arbitration proceedings. The appeal was dismissed, and the parties were directed to bear their respective costs.