Saving clause in arbitration law preserves the 1940 Act where proceedings began before the 1996 Act came into force.

Arbitral proceedings commenced before 26 January 1996 continued to be governed by the Arbitration Act, 1940 because section 85(2)(a) of the Arbitration and Conciliation Act, 1996 preserves the repealed law for such proceedings. Section 21 treats arbitration as commenced on receipt of the request for reference, unless otherwise agreed. As the requests for arbitration were made in 1995 and the connected suits were also filed before the 1996 Act came into force, the proceedings had already commenced under the earlier regime. The saving clause therefore applied, and the 1940 Act, not the 1996 Act, governed the matters.

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Issues: Whether the arbitration proceedings were governed by the Arbitration Act, 1940 or by the Arbitration and Conciliation Act, 1996.

Analysis: Section 85(2)(a) of the Arbitration and Conciliation Act, 1996 preserves the repealed law for arbitral proceedings commenced before the new Act came into force. Section 21 provides that, unless otherwise agreed, arbitral proceedings commence on the date the request for reference to arbitration is received. The requests for arbitration in all the matters had been made in 1995 and the connected suits had also been filed before 26 January 1996, when the new Act came into force. The proceedings therefore commenced before the new Act and fell within the saving clause.

Conclusion: The proceedings were governed by the Arbitration Act, 1940 and not by the Arbitration and Conciliation Act, 1996.

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