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TMI Blog2003 (5) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... e annals of the litigation are not in dispute. MTNL had awarded a contract to Unibros Ltd. (Unibros for short) for the construction of a telephone exchange-cum-office building in the CGO Complex, Lodhi Road, New Delhi in 1990. On 11-9-1991 Unibros invoked the Arbitration Clause; in response MTNL terminated the contract invoking clause 25 of General Conditions of Contract (for short GCC). Thereafter Unibros had filed a suit before this Court in 1991 in which the first Arbitrator was appointed by Orders dated 5-12-1991. An interim Award was announced on 13-3-1992 but this Award was assailed before this Court and was set aside by Orders dated 24-5-1999 which read thus : "Suit No. 1124-A/1992 This petition has been preferred by the petitioner, M/s Unibros under sections 14 and 17 read with section 27 of Arbitration Act, 1940 against the Mahanagar Telephone Limited. This matter has been argued for some-time. Objections have been made against the award of Mr. N.N. Chakraborty. Counsel for the parties submit that the present case relates only to issue pertaining to rescission of the contract and encashment of bank guarantee along with interest and cost but the remaining claims and coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 151 of the CPC and section 41 of the Arbitration Act, 1940 for stay of the execution proceedings. It was ordered by the Court that the attached amount shall not be disbursed to the Decree Holder, and this Order continues to operate till date. Meanwhile Suit No. 266-A/2001 was listed before the Joint Registrar (A) on 8-8-2001 and it was noted that the Award and proceedings have been filed. Notice of the suit was issued to Unibros for 28-2-2002. On 5-9-2001 MTNL filed objections against the Award dated 29-12-2002 praying therein that the said impugned Award may be set aside/quashed on the grounds set forth in section 30(a) and (c) read with section 33 of the Arbitration Act (X of 1940). No reply to these objections had been filed by the Unibros. 4. It is in these circumstances that Mr. C.S. Vaidyanathan, learned Senior counsel appearing for the MTNL, has contended that Indian Arbitration Act, 1940 continues to hold sway over the disputes between the parties and has been correctly invoked by the MTNL. The argument is that the Order dated 24-5-1999 could not have been passed under the 1996 Act and, therefore, it was evident that all the parties proceeded on the assumption that 1940 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above observations that the maxim that a person cannot 'approbate and reprobate' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto. The law is thus stated in Halsbury's Laws of England, Volume XIII, p. 454, para 512 : "On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here. Thus a party cannot, after taking advantage under an order (e.g. payment of costs), be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it". 5. Reliance has also been placed on the observations of the Apex Court in Vikas Motors Ltd. v. Dr. P.K. Jain [1999] 6 SCC 548 and C. Beepathuma v. Velasari Shankaranarayana Kadambolithaya AIR 1965 SC 241 to emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before coming into force of the new Act (The Arbitration and Conciliation Act, 1996). 2. The phrase 'in relation to arbitral proceedings' cannot be given a narrow meaning to mean only pendency of the arbitration proceedings before the Arbitrator. It would cover not only proceedings pending before the Arbitrator but would also cover the proceedings before the Court and any proceedings which are required to be taken under the old Act for award becoming decree under section 17 thereof and also appeal arising thereunder. 3. In cases where arbitral proceedings have commenced before coming into force of the new Act and are pending before the Arbitrator, it is open to the parties to agree that new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act. 4. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act comes into force. 5. Once the arbitral proceedings have commenced, it cannot be stated that right to be governed by the old Act for enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties against whom award is given after arbitral proceedings have been held under the old Act though given after the coming into force of the new Act, would be quite grave if it is debarred from challenging the award under the provision of the old Act. Structure of both the Acts is different. When arbitral proceedings commenced under the old Act it would be in the mind of everybody, i.e., arbitrators and the parties that the award given should not fall foul of sections 30 and 32 of the old Act. Nobody at that time could have thought that section 30 of the old Act could be substituted by section 34 of the new Act. As a matter of fact appellant Thyssen in Civil Appeal No. 6036/98 itself understood that the old Act would apply when it approached the High Court under sections 14 and 17 of the old Act for making the award rule of the Court. It was only later on that it changed the stand and now took the position that new Act would apply and for that purpose filed an application for execution of the award. By that time limitation to set aside the award under the new Act has elapsed. Appellant itself led the respondent SAIL in believing that the old Act would apply. SAIL had filed objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well. Expression 'unless otherwise agreed' as appearing in section 85(2)(a) of the new Act would clearly apply in the case of Rani Construction in Civil Appeal No. 61 of 1999. Parties were clear in their minds that it would (be) the old Act or any statutory modification or re-enactment of that Act which would govern the arbitration. We accept the submission of the appellant Rani Construction that parties could anticipate that the new enactment may come into operation at the time the disputes arise. We have seen section 28 of the Contract Act. It is difficult for us to comprehend that arbitration agreement could be said to be in restraint of legal proceedings. There is no substance in the submission of respondent that parties could not have agreed to the application of the new Act till they knew the provisions thereof and that would mean that any such agreement was mentioned in the arbitration clause could be entered into only after the new Act had come into force. When the agreement used the expressions 'unless otherwise agreed' and 'law in force' it does give option to the parties to agree that new Act would apply to the pending arbitration proceedings. That agreement can be en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only the arbitral proceedings, but also the Court's verdict. The Thyssen Stahlunion GMbH's case (supra) inter alia enunciates the proposition that the 1st and 2nd conclusions would hold good in those instances where the arbitration clause was silent on the applicability of the future modifications and enactments to the arbitral proceedings. The conclusion is that in the context of the present dispute it is the 1996 Act which has to be applied. 9. I shall now proceed to consider the argument on behalf of MTNL that it is open to parties to waive their rights and elect to proceed under the 1940 Act. In view of the interpretation imparted by the Apex Court in Thyssen Stahlunion GMbH's case (supra) to the arbitration clause found in the contract of Rani Construction Co., which is in pari materia with that in the present case, it is possible only to hold that the parties had agreed between themselves that the 1996 Act would apply to their arbitral proceedings. It must be recalled that there was a fresh appointment of the Arbitrator by the Orders dated 24-5-1999, at a stage in the arbitral proceedings where only an interim award had been given, and which was under challenge. The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue is because under the 1940 Act the width amplitude of challenges to the Award is much wider than under the 1996 Act. 10. In the third appeal before the Apex Court, namely the Western Ship breaking Corporation dispute, the Hon'ble Supreme Court came to the conclusion that "if the provisions of the Foreign Awards Act and the new Act relating to enforcement of the foreign award are juxtaposed there would appear to be hardly any difference." As in Thyssen and in contradistinction to Rani Construction, the arbitration clause in Western Ship breaking does not contemplate the application of the modified or new enactment. The Apex Court therefore held that the Award which was made in London in February, 1996 would be governed by the 1996 Act. 11. This distinction between the two statutes may however be illusionary, in view of the judgment of the Hon'ble Supreme Court inter alia defining the term 'public policy' employed in section 34 of the 1966 Act. The regime established in respect of the 1940 Act appears to have been restored in large measure by the following pronouncements of the Apex Court in Oil & Natural Gas Corpn. Ltd. v. SAW Pipes Ltd. [Civil Appeal No. 7419 of 2001 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of parties, as argued by Mr. Vaidyanathan on the strength of Commissioner of Customs v. Virgo Steels [2002] 4 SCC 316. I am also of the opinion that it is not necessary to answer Mr. Bhatia's contention that any modification to a written term must itself be in writing, although the exception envisioned by the Apex Court in Bai Hira Devi v. Official Assignee of Bombay, 1958 SCR 1384 may indicate to the contrary. 13. Mr. Vaidyanathan had drawn attention to various provisions of the 1940 Act to emphasise is contention that the Orders dated 24-5-1999 could only have been passed on the invocation of the 1940 Act. He placed reliance on section 15 which empowered the Court to modify an award; section 16 to remit it; section 17 to decree it; and section 19 to supercede the arbitration. It has also been contended that parties can opt for the 1940 Act, but this is contrary to the Thyssen ratio. It has also been argued that a fresh Reference could not have been made by Dalveer Bhandari, J. under the 1996 Act. I do not propose to delve into these arguments for the simple reason that the Order dated 24-5-1999 has become final; in fact it has not even been assailed in the Objections. 14. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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