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TMI Blog2004 (4) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... ts factory a wide range of ice cream for and on behalf of the appellant. The said agreement was to remain valid for a period of five years. Admittedly, the said contract contained an arbitration agreement being Clause 20 thereof which is as under: "In case of any dispute or any difference arising at any time between the Company and the Manufacturer as to the construction, meaning or effect of this Agreement or any clause of thing contained therein or the rights and liabilities of the Company or the Manufacturer hereunder in relation to the premises, shall be referred to a single arbitrator, in case the parties can agree upon one, and failing such Agreement, to two arbitrators one to be appointed by either party and in case of disagreement between the two arbitrators aforesaid and in so far as and to the extent that they disagree to, an umpire to be appointed by the said two arbitrators before they enter upon the reference. All such arbitration proceedings shall be in accordance with and subject to the provisions of the Arbitrator Act, 1940, or any statutory modification or reenactment." 3. The contention of the appellant was that the first respondent herein did not fulfill its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the narration of facts, we may notice that the said order dated 3.8.1995 was appealed against by the first respondent before the 2ndAdditional District Judge, Gaya and by an order dated 13.3.1996, the 2ndAdditional District Judge, Gaya in Misc. Appeal No. 7 of 1995 (30/95) dismissed the same. Aggrieved by and dissatisfied with the said judgment and order the first respondent herein filed a revision application before the Patna High Court which was marked as C.R. No. 1020 of 1996. The said civil revision application was disposed of by an order dated 6.5.1997 in the following terms: "Before this court parties have agreed that the dispute between them may be referred, as per the agreement to arbitrators chosen by the parties. The plaintiff had chosen Shri Uday Sinha, a retired judge of this court and Senior Advocate of the Supreme Court, while the defendants have chosen Shri Hari Lal Agrawal, Senior Advocate of the Supreme Court, a former judge of this Court and Chief Justice of Orissa High Court as Arbitrators. The dispute between the parties is referred to arbitrator. I hope that the learned Arbitrators will dispose of the arbitration proceeding within three months of the enteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was marked as O.M.P. No. 94 of 1998. A learned Single Judge of the High Court held: "a) According to Section 21 of the Arbitration and Conciliation Act, 1996, unless otherwise agreed by the parties, the arbitral proceedings commences on the date of which a request for that dispute is referred to arbitration. The Act postulates a notice by a claimant to the respondent calling upon him to appoint an arbitrator for the settlement and it cannot be the other way round. No respondent would ask for the appointment of an arbitrator when he has no dispute to refer (unless the respondent would be a counter claimant). In case he has disputes to refer, then the respondent would become the claimant. The majority order correctly held that no defendant will save limitation for the claimant or the plaintiff. In view of this finding, the notice dated 14.9.1995 cannot be construed as a notice calling upon to initiate the arbitration proceedings. b) The agreement dated 7thApril, 1992 contemplates that such arbitration proceedings shall be in accordance with and subject to the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment. In 1992, when the agreement was en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1996 Act having chosen to use the expression 'initiation of the proceedings', the meaning thereof as is understood in common parlance should be applied. Strong reliance in this connection has been placed on a decision of the Queen's Bench Division Bench in Charles M. Willie & Co. (Shipping) Ltd. v. Ocean Laser Shipping Ltd. (1999) 1 LR 225. 15. Mr. Salve would submit that there appears to be some conflict in the decision of the two-Judge Benches of this Court as regard construction of the arbitration agreement, as contained in Clause 20 thereof, referred to hereinbefore vis-a-vis the applicability of the 1996 Act. In this connection, our attention has been drawn to a decision of this Court in N.S. Nayak & Sons etc. v.State of Goa etc. (2003)6SCC56 wherein allegedly a different note has been struck from an earlier view expressed in Delhi Transport Corporation Ltd. v. Rose Advertising [2003]3SCR678 . 16. Mr. R.K. Jain, learned senior counsel appearing on behalf of the respondent, on the other hand, would urge that having regard to the purport and object of the 1996 Act, as also in view of the fact that the arbitrators had already entered into the reference, this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation, the same will have no application whatsoever for the purpose of determining the question as to whether the 1940 Act will apply or the 1996 Act. Analysis of the relevant statutory provisions: 22. Section 37(3) of the 1940 Act provides that the arbitration proceeding commences when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator. 23. Section 21 of the 1996 Act is as under: "21. Commencement of arbitral proceedings.-Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." 24. We may notice that Section 14 of the English Arbitration Act 1996 deals with commencement of arbitral proceedings. Sub-section (1) of Section 14 provides that the parties are free to agree when arbitral proceedings are to be regarded as commenced for the purpose of this Part and for the purposes of the Limitation Act. Section 14(3) provides that in the absence of such agreement, the provisions contained in Sub-sections (3) to (5) shall apply. Both the 1940 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated. 25. Section 37(3) of the Arbitration Act, 1940 is not exhaustive. The expression "shall be deemed to be commenced" indicates that the Sub-section (3) deals with two modes of notional or fictional commencement as distinguished from factual commencement. It is, thus, possible to conceive cases where an arbitration can be said to have commenced under circumstances not contemplated by the Sub-section. Too much stress also cannot be laid on Rule 3 of the First Schedule of the 1940 Act in interpreting Sub-section (3) of Section 37 of the Act. (See Motilal Chamaria v. Lal Chand Dugar, AIR1960Cal6 ). 26. The commencement of an arbitration proceeding for the purpose of applicability of the provisions of the Indian Limitation Act is of great significance. Even Section 43(1) of the 1996 Act provides that the Limitation Act, 1963 shall apply to the arbitration as it applies to proceedings in court. Sub-section (2) thereof provides that for the purpose of the said section and the Limitation Act, 1963, an arbitration shall be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law of the arbitral procedure is another, for then, up to the date of commencement of the arbitration proceeding, the law of the contract must govern, and the law of the procedure will only govern thereafter. (See International Tank and Pipe S.A.K. v. Kuwait Aviation Fuelling Co. K.S.C. 1975 LR 8 32. Section 14(3) & (5) of the English Arbitration Act, 1996 would also show that commencement of arbitral proceeding is not only for the purpose of limitation but also for the purpose of considering a case when the parties by their contract agree that the arbitration must be commenced within a specified time, falling which the right to arbitration, or indeed the claim itself, is apt to be barred. Determination of time elements in an arbitration is provided for in Section 21 of the 1996 Act clearly indicating as to when such arbitration has officially begun. Charles M. Willie & Co. (supra): 33. On November 21, 1990 Willie received a letter from Holman Fenwick & Willan ("HFW") solicitors to Roussos enquiring about an engine stoppage in January, 1988. Correspondence developed in which Roussos alleged that Willie had been in breach of the MOC because at the time of delivery the vessel was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rix following the decision in Nea Agrex S.A. v. Baltic Shipping Co. Ltd. [(1976) 2 Lloyd's Re. 47] and while pointing out the difference between Section 27(3) of the 1939 Act and Section 34(3) of the 1980 Act on the one hand and the UNCITRAL Model Law and the English Law, on the other as regard difference in approach between them insofar as in terms of the English law something more must be done than to request that the matter be referred to arbitration, held: "I shall consider the facts relevant to that submission below. For the moment, I express the view that even a direct an application of the 1980 Act, and a fortiori an application by way of analogy, does not exclude the possibility of showing that arbitration has been commenced by means other than a notice requiring appointment or agreement of an arbitrator. I asked Mr. Nolan when an arbitration which no one would dispute was under way had been commenced in the absence of such a notice. His answer was to say that arbitration had commenced at latest when the respondent appointed or agreed in the appointment of an arbitrator; but no because of the Limitation Act, but because the respondent was then estopped from denying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n implied request: a rule for the commencement of arbitration which could not encompass the notification to a respondent that a claimant had appointed his own arbitrator would seem to me to be lacking in realism." Requirement of the law: 43. Issuance of notice is required to be interpreted broadly not only for the purpose of limitation but also for other purposes [See Allianz Versicherungs AG v. Fortuna Co. Inc. - (1999) 2 All ER 625 and Vosnoc Ltd. v. Transglobal Projects Ltd. 1998 1 WLR 101. 44. In Bernstein's Handbook of Arbitration and Dispute Resolution Practice, Fourth Edition under the heading 'When are arbitral proceedings commenced?' at page 80, it is stated: "2-196 Party autonomy and the default provisions: In accordance with the principle of party autonomy, the parties are free to agree on what is to be regarded as commencing arbitral proceedings. If there is no such agreement, then there are specific requirements in the Act. A little more is needed than simply for the claimant to serve a request for arbitration on the respondent. The relevant section of the Act is Section 14. Its effect is as follows: (a) Where the tribunal is named or designated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set out in the subsections. The requirements of Section 14 will be interpreted broadly and flexibly. Prior to the Arbitration Act 1996 there were a number of cases which addressed the form of notice to be given in order to commence arbitration for the purposes of Section 34(3) of the Limitation Act. This line of authority has been superseded by Section 14." 'Commencement of an arbitration proceeding' and 'commencement of a proceeding before an arbitrator' are two different expressions and carry different meanings. 48. A notice of arbitration or the commencement of an arbitration may not bear the same meaning, as different dates may be specified for commencement of arbitration for different purpose. What matters is the context in which the expressions are used. A notice of arbitration is the first essential step towards the making of a default appointment in terms of Chapter II of the Arbitration Act, 1940. Although at that point of time, no person or group of persons charged with any authority to determine the matters in dispute, it may not be necessary for us to consider the practical sense of the term as the said expression has been used for a certain purpose in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 21 of the Act must, therefore, be construed having regard to Section 85(2)(a) of the 1996 Act. Once it is so construed, indisputably the service of notice and/or issuance of request for appointment of an arbitrator in terms of the arbitration agreement must be held to be determinative of the commencement of the arbitral proceeding. Case laws on the point 52. In Shetty's Construction Co. Pvt. Ltd. v. Konkan Railway Construction and Anr. AIR1999SC1535 , it was held: "A mere look at Sub-section (2)(a) of Section 85 shows that despite the repeal of Arbitration Act, 1940, the provisions of the said enactment shall be applicable in relation to arbitration proceedings which have commenced prior to the coming into force of the new Act. The new Act came into force on 26-1-1996. The question therefore, arises whether on that date the arbitration proceedings in the present four suits had commenced or not. For resolving this controversy we may turn to Section 21 of the new Act which lays down that unless otherwise agreed to between the parties, the arbitration suit in respect of arbitration dispute commenced on the date on which the request for referring the dispute for arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to agree to the argument that in spite of that the applicability of the Foreign Awards Act is saved by virtue of Section 85(2)(a). As a matter of fact if we examine the provisions of the Foreign Awards Act and the new Act there is not much difference for the enforcement of the foreign award. Under the Foreign Awards Act when the court is satisfied that the foreign award is enforceable under that Act the court shall order the award to be filed and shall proceed to pronounce judgment accordingly and upon the judgment so pronounced a decree shall follow. Sections 7 and 8 of the Foreign Awards Act respectively prescribe the conditions for enforcement of a foreign award and the evidence to be produced by the party applying for its enforcement. The definition of foreign award is the same in both the enactments. Sections 48 and 47 of the new Act correspond to Sections 7 and 8 respectively of the Foreign Awards Act. While Section 49 of the new Act states that where the court is satisfied that the foreign award is enforceable under this Chapter (Chapter I, Part II, relating to New York Convention Awards) the award is deemed to be a decree of that court. The only difference, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a different intention does appear that there is no right that could be said to have been acquired by a party when arbitral proceedings are held in a place resulting in a foreign award to have that award enforced under the Foreign Awards Act." 55. In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. [2001]3SCR479 , a distinction was again made between enforceability of a foreign award and a domestic arbitration stating Section 85(2)(a) provides for a dividing line dependent on 'commencement of arbitral proceedings' which expression would necessarily refer to Section 21 of the new Act. This Court noticed the decision in Rani Constructions (P) Ltd. v. H.P. SEB, C.A. No. 61 of 1999, wherein it was held: "41. Again a bare reading of the Foreign Awards Act and the Arbitration (Protocol and Convention) Act, 1937 would show that these two enactments are concerned only with recognition and enforcement of the foreign awards and do not contain provisions for the conduct of arbitral proceedings which would, of necessity, have taken place in a foreign country. The provisions of Section 85(2)(a) insofar these apply to the Foreign Awards Act and the 1937 Act, would appear to be quite sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch two of us were parties in State of West Bengal v. Amritlal Chatterjee AIR2003SC4564 . This Court followed Shetty Construction and held that Thyssen (supra) has no application stating : "Thyssen Stahlunion GMBH v. Steel Authority of India Ltd. AIR1999SC3923 which was passionately relied upon by the learned Senior counsel for the appellant, has in our view, no application to the facts of the present case. The Bench concluded : "1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before the coming into force of the new Act (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 proceeding 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 the award becoming a decree under Section 17 thereof and also appeal arising thereunder." There cannot be any doubt that invoking the arbitration clause by a party and appointment of arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen to a court while passing an order under Section 20(4) of the 1940 Act. The question which precisely arose therein was as to whether the plaintiff could be permitted to contend that the arbitrator named in the agreement had since then incapacitated himself from acting as an arbitrator between the parties and that, therefore, the plaintiff had the right to urge that reference to not made to the arbitrator named in the agreement. 64. On the other hand, when a suit is stayed, the parties are required to refer their disputes in terms of Chapter II of the Act. The procedure, laid down in Chapter III has, thus, no application in such a case. 65. In Sarbeswar Rout (supra), this Court was concerned with award of interest pendente lite which was not permissible, though interest for the period prior to the commencement of arbitration proceeding was permissible where the Interest Act, 1978 applied. Drawing an analogy of commencement of legal provisions vis-a-vis applicability of the provisions of the Interest Act, this Court said for the said purpose filing of a plaint would be the date on which the suit would be instituted for the purpose of grant of interest. there is no reason as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, service of notice in term of Chapter II of the 1940 Act shall set the ball in motion whereafter only the arbitration proceeding commences. Such commencement of arbitration proceeding although in terms of Section 37 of the Act is for the purpose of limitation but it in effect and substance will also be the purpose for determining as to whether the 1940 Act or the 1996 Act would apply. It is relevant to note that it is not mandatory to approach the court for appointment of an arbitrator in terms of Sub-section (2) of Section 8 of the 1940 Act. If the other party thereto does not concur to the arbitrator already appointed or nominate his own arbitrator in a given case, it is legally permissible for the arbitrator so nominated by one party to proceed with the reference and make an award in accordance with law. However, in terms of Sub-section (2) of Section 8 only a legal fiction has been created in terms whereof an arbitrator appointed by the Court shall be deemed to have been nominated by both the parties to the arbitration proceedings. 69. Section 37 of the Arbitration Act, 1940 speaks of power to stay legal proceeding where there is an arbitration agreement. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For instance, in the case of arbitration administered by an arbitration institution, they may agree to abide by the arbitration rules of that institution for determining the point of time at which the arbitral proceedings can be said to have commenced. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Section 3 is relevant on the question as to when a request can be said to have been received by the respondent. The request made to the respondent should clearly indicate that the claimant seeks arbitration of the dispute. Section 21 is of direct relevance in connection with the running of periods of limitation under Section 43 and the savings provision in Section 85(2)(a)." 72. Section 85 of the 1996 Act repeals the 1940 Act. Sub-section (2) of Section 85 provides for a non-obstante clause. Clause (a) of the said sub-section provides for saving clause stating that the provisions of the said enactments shall be apply in relation to arbitral proceedings which commenced before the said Act came into force. Thus, those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Munsif by an order dated 7.8.1995 i.e. before the 1996 Act came into force not only stayed further proceedings of the suit but also directed that in the meanwhile the matter be referred to arbitration. The matter was referred to arbitration as soon as the notice dated 14.9.1995 was issued and served on the other side. 76. It may be true that before the High Court apart from Shri H.L. Agrawal, Shri Uday Sinha also came to be appointed; but the change in the constitution of the arbitral tribunal is irrelevant for the purpose of determining the question as to when the arbitration proceeding commenced within the meaning of Section 21 of the 1996 Act. The purported reference of the dispute to the arbitrator was merely a reference to new arbitral tribunal which concept is separate and distinct from that of commencement of arbitration proceeding. Was it necessary that the appellant must be the claimant : 77. The learned Single Judge of the High court has proceeded on the premise that the appellant was not a claimant. The parties were ad idem that there had been a dispute between them. Only as a result of the dispute and on an apprehension consequent thereupon the suit for inj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p for adjudication before Ld. Arbitrators. 11. The Arbitration & Conciliation Act, 1996 came into being w.e.f. 25thJanuary 1996, by which date orders referring dispute between the parties already stood passed. 12. It is submitted that in view of the said facts and circumstances, it is the respectful submission of Second Party that while deciding the disputes, the provisions of Indian Arbitration Act, 1940 alone would be applicable and proceedings shall not be governed by the provisions of Indian Arbitration & Conciliation Act, 1996." 13. The present application has been made by the Second Party at the first available opportunity before even submitting reply to the copy of statement of claim, with a view that no prejudice should be caused to any party during the course of arbitration proceedings." 80. The statements made in paras 10 and 11 had been traversed by the respondent thus: "6. That the submissions made in para Nos. 10 and 11 of the petition under reply are not tenable and have been made to delay the proceedings. The new Act is applicable as the old one is repealed and only the arbitration proceedings, which commenced before the coming of the new Act was saved." 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l commence. In fact it does not appear that such a question was raised either before the arbitrators or before the High Court. The respondent, therefore, cannot be permitted to raise the same before us for the first time. Arbitration clause - effect of : 83. It inter alia reads : "...All such arbitration proceedings shall be in accordance with and subject to the provisions of the Arbitration Act, 1940, or any statutory modification or re-enactment." 84. In Thyssen (supra), the court held that the parties can agree to the applicability of the new Act even before the same came into force. Relevant findings of this Court are: "In the case of Thyssen Stahlunion GMBH (CA No. 6036 of 1998) the contract for sale and purchase of prime cold rolled mild steel sheets in coils contains arbitration agreement. Relevant Clauses are as under: "CLAUSE 12: LEGAL INTERPRETATION 12.1 This contract shall be governed and construed in accordance with the Laws of India for the time being in force. 12.2 To interpret all commercial terms and abbreviations used herein which have not been otherwise defined, the rules of "INCOTERMS 1990" shall be applied. CLAUSE 13: SETTLEMENT OF DISPUTES All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the 1940 Act in September 1995, the question of adopting a different procedure laid down under the 1996 Act would not arise. 89. It is not a case where like Delhi Transport Corporation (supra) limited, the parties went for arbitration with a clear understanding and belief that the proceedings were being conducted under the 1996 Act. Therein the appointment of arbitrator was made under the new Act; the parties participated in the arbitration proceeding with the understanding and belief that the proceedings are governed under the 1996 Act. In the award itself the arbitrator noted that "both parties submitted claims before me under the Arbitration and Conciliation Act, 1996" and he purported to have made its award in terms thereof. In that situation sub para 3 of para 22 of Thyssen (supra) was held to be applicable. Shah, J. who was a party in Thyssen (supra) as also Delhi Transport Corporation (supra) in N.S. Nayak (supra), however, noticed the distinctive features in Thyssen (supra) and while supplying the requisite emphasis thereon observed: "Further, the part of the arbitration clauses which is quoted above also provides that the provisions of the Arbitration Act, 1940 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect that to the arbitral proceedings, the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment thereof would be applicable, is not valid. The Court negatived the said contention by interpreting the expression "unless otherwise agreed". The Court held that such agreement could be entered into even before coming into force of the new Act. However, it nowhere lays down that in a pending arbitral proceeding, which was being conducted as per the procedure prescribed under the old Act, the parties have option of changing the procedure." (emphasis supplied) 92. In NS Nayak (supra) also having regard to the fact that the arbitrator was appointed prior to 21.8.1996, the old Act was held to be applicable. Conclusion: 93. For the reasons aforementioned, we are of the view that in this case, the 1940 Act shall apply and not the 1996 Act. However, it is accepted at the Bar that the learned arbitrators had already entered into the reference. The proceedings before the arbitrators were not stayed. Only making of the award was stayed. In that view of the matter, in the peculiar facts and circumstances of this case, we are of the opinion that although the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act, 1940, or any statutory modification or reenactment." 97. On the strength of this agreement dated 7.4.1992, the respondent herein filed title suit No. 40 of 1995 on 20.5.1995 for an injunction restraining the appellant herein from disturbing manufacture and supply office cream. In the said suit, the appellant applied for stay of suit vide application dated 17.7.1995 under Section 34 of the 1940 Act. By order dated 3.8.1995, the trial Court stayed the suit. Being aggrieved, the respondent herein filed an application before Additional District Judge, Gaya, which was dismissed on 13.3.1996. Aggrieved, the respondent herein carried the matter in revision to the High Court which was disposed of on 6.5.1997 in terms of the following order:-- "Before this court parties have agreed that the dispute between them may be referred as per the agreement to arbitrators chosen by the parties. The plaintiff has chosen Shri Uday Sinha, a retired judge of this court and Senior Advocate of the Supreme Court, while the defence have chosen Shri Hari Lal Agarwal, Senior Advocate of the Supreme Court, a former judge of this court and Chief Justice of Orissa High Court as arbitrators. The dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996 Act as there was a clear and explicit agreement between the parties recorded in the consent order dated 6.5.1997. It was held that in relation to arbitration proceedings which commenced before the 1996 Act, parties were free to agree as to when arbitration proceedings are to be regarded as commenced for the purposes of Section 85(2)(a) of the 1996 Act and since there was such an agreement in the consent order dated 6.5.1997, the arbitration proceedings had commenced under the 1996 Act. It was further held that by order dated 6.5.1997 passed by the High Court, the arbitration was set in motion by the parties when they nominated their respective arbitrators and the Court ordered that the dispute between the parties be referred to the, arbitrators and that the arbitration proceedings be disposed of within three months of entering upon the reference. It was held that arbitration commenced when there was a completely constituted arbitration Tribunal to decide the dispute, which on facts took place only after the 1996 Act commenced. It was further held that the notice dated 14.9.1995 served by the appellant was a non-starter and that such a notice did not commence arbitral proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn to the decision of this Court in the case N.S. Nayak and Ors v. State of Goa (2003)6SCC56 , wherein allegedly a different note has been struck from an earlier decision of this Court in Delhi Transport Corporation Ltd. v. Rose Advertising [2003]3SCR678 . 102. Per contra, Mr. R.K. Jain, learned senior counsel appearing on behalf of the respondent urged that having regard to the object of 1996 Act, as also in view of the fact that the arbitrators had already entered into the reference pursuant to the consent order dated 6.5.1997, this Court may not interfere with the impugned judgment in exercise of jurisdiction under Article 136 of the Constitution. Strong reliance was placed on the judgment of this Court in the case Chandra Singh v. State of Rajasthan AIR2003SC2889 . 103. It was next contended that a proceeding commences in the Court of law when a plaint is filed and by analogy an arbitration proceeding must be held to be initiated when a claim petition is filed by the claimant before the arbitrator; that before a proceeding is said to be initiated before a Court or Tribunal, the existence of such Tribunal was a condition precedent for initiation of proceedings. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court to appoint arbitrator where the parties concurred in the appointment of an arbitrator. In such a case, after the Court appointed an arbitrator, it is the parties who referred the dispute to him. On the other hand, Section 20 enabled a party to apply for filing of the arbitration agreement in the Court and that section empowered the Court to make an order of reference to the arbitrator appointed by the parties and in the absence of such appointment, the Court was empowered to make an order of reference to the arbitrator appointed by it. In other words, under Section 20, unlike Section 8, it is the Court which referred the dispute. In the case of Fertilizer Corporation of India Limited v. Domestic Engineering Installation reported in AIR1970All31 , it has been held that under Section 20(4), three courses were open to the Court. After the arbitration agreement was ordered to be filed, the Court shall proceed to make reference, firstly to the arbitrator appointed by the parties in the agreement, secondly to the arbitrator not named in the agreement but with regard to whom the parties agreed otherwise, and thirdly when the parties did not agree upon an arbitrator, to an arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re free to agree when an arbitration is to be regarded as commencing both under the Arbitration Act 1996 and for limitation purposes. In the absence of agreement the provisions of Section 14 of the Arbitration Act 1996 apply. Under that section an arbitration is treated as being commenced when a notice in writing is served on the other party requiring him to agree to the appointment of an arbitrator or if the parties are each to make an appointment, requiring him to appoint an arbitrator. The party giving the notice does not have to have already appointed his own arbitrator. Where, however, the arbitration agreement specifies the person to be appointed as arbitrator, the arbitration is treated as being commenced when a notice in writing is served on the other party requiring him to submit the dispute to that person. Finally, if the arbitrator is to be appointed by someone other than a party to the arbitration proceedings, such as an arbitral institution, the arbitration is treated as being commenced when notice in writing is given to that other person requesting him to make the appointment. It is prudent to send to the respondent a copy of the notice addressed to the person request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being considered is whether the arbitration has reached the stage where there is a completely constituted arbitral tribunal. Second, the problem may relate to the jurisdiction of the arbitrator. Thus if there is a general reference of disputes the scope of the reference will be determined by the state of the disputes at the moment when the arbitration was begun. Disputes arising thereafter must be the subject of a separate arbitration, unless brought within the existing reference by consent. Third, the purpose of the enquiry may be to ascertain whether the claimant has taken such steps as may be prescribed by statute or contract for the purpose of preventing his claim from being time barred. Finally, it may be necessary to consider whether one party has taken sufficient steps towards setting the arbitration in motion to give him certain procedural advantages in the appointment of the tribunal: either as a preliminary to appointing his own nominee as sole arbitrator, or at least by way of preventing the other party from exercising his statutory right to make, or procure, a nomination in default. It is plain that expressions such as 'the commencement of the arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted on 4.7.1996 as per the agreement. The petition became infructuous in view of that statement. The arbitrator conducted the proceedings and made an award on 6.10.1998. To enforce the award, the contractor filed an application under 1996 Act. The DTC contested that application on the ground that the 1996 Act was not applicable and, therefore, the execution petition was not maintainable. The contention of the DTC before the High Court was that the proceedings had commenced under the old Act. This objection was upheld by the learned single Judge based on the view that the arbitration proceedings had commenced on the date when request for appointment of arbitrator was made which was prior to 16.8.1996 when the new Act came into force. The contractor went in appeal. The division bench of the High Court found on facts that the parties went for arbitration with clear understanding that the proceedings would be conducted under the new Act, particularly when the appointment of arbitrator was made after the new Act had come into force and particularly when the parties had participated in the arbitration proceedings with the understanding that the proceedings would be governed by the new A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Willie & Co. to agree on the appointment of a single arbitrator and further stated that in the event of Willie & Co.'s failure to nominate its arbitrator by 3.4.1992, Ocean Laser Shipping Ltd. appointed one Mr. Kazantzis as an arbitrator. On 5.11.1993, Ocean Laser submitted their claim before the arbitrator. On 18.2.1994, points of defence were filed. One of the points which arose for determination was as to when the arbitration could be said to have commenced. Taking a clue from Section 34(3) of the Limitation Act, 1980 which provided that an arbitration should be treated as having been commenced when one party served on the other party a notice requiring him to agree to the appointment of an arbitrator, it was held by Queen's Bench that commencement took place from receipt of such notice. This judgment has no application to the facts of the present case. The present case involves interpretation of transitional provisions, which was not in issue in the said judgment. Further, the judgment of Queen's Bench was based on provisions of Limitation Act, by analogy. Further, the judgment of Queen's Bench was delivered under the Arbitration Act 1996 under which the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for all practical purposes, the arbitration commenced on 6.5.1997, by which time the 1996 Act had come into force. In the circumstances, I am in agreement with the majority decision of the arbitrators that the proceedings in the present case would be governed by the provisions of the 1996 Act. 114. For above reasons, I respectfully dissent from the opinion of Sinha, J. Consequently I am of the view that this Civil Appeal ought to fail and be dismissed with no order as to costs. CIVIL APPEAL Nos. 9673-9674 OF 2003 115. Now coming to the Civil Appeal Nos. 9673-9674 of 2003, the facts briefly are as follows. On 6.4.1998, the learned arbitrators by majority decision took the view that in the present case the arbitration proceedings had commenced on 6.5.1997 when a consent order was passed by the Patna High Court and, therefore, the proceedings were governed by the 1996 Act. Aggrieved, the appellant herein had moved the single Judge of Delhi High Court. By order dated 13.10.1998, the learned single Judge of the High Court was pleased to uphold the majority decision dated 6.4.1998. Being aggrieved, the appellant carried the matter in Letters Patent appeal which was dismissed as not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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