Statutory modification clause extends arbitration to the new Act, and bona fide civil-court time can be excluded for limitation.

A pre-existing arbitration clause referring to statutory modification or re-enactment was read as embracing the Arbitration and Conciliation Act, 1996, so pending proceedings could be governed by the new Act under section 85 where that matched the parties' intention. The court rejected the view that a fresh post-commencement agreement was required. It also treated receipt of a signed copy of the award as the operative event for limitation under sections 31(5), 33 and 34, and allowed exclusion of time spent bona fide pursuing the matter in Civil Court. The respondent was therefore left free to pursue post-award remedies under the 1996 Act.

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Issues: (i) Whether arbitral proceedings commenced under the Arbitration Act, 1940 and pending when the Arbitration and Conciliation Act, 1996 came into force were governed by the old Act or the new Act where the arbitration clause referred to statutory modification or re-enactment; (ii) Whether, on the facts, the respondent could still take recourse under sections 33 and 34 of the Arbitration and Conciliation Act, 1996 and whether time spent in prosecuting the matter before the Civil Court was liable to be excluded.

Issue (i): Whether arbitral proceedings commenced under the Arbitration Act, 1940 and pending when the Arbitration and Conciliation Act, 1996 came into force were governed by the old Act or the new Act where the arbitration clause referred to statutory modification or re-enactment.

Analysis: Section 85 of the Arbitration and Conciliation Act, 1996 saves the applicability of the repealed enactment to pending arbitral proceedings, unless the parties otherwise agree. The expression "unless otherwise agreed by the parties" was construed as referring to the parties' intention on the procedural regime and not to the time when the agreement was made. A clause providing that the arbitration would be governed by the Arbitration Act, 1940 or any statutory modification or re-enactment thereof was held to cover the new Act as well, because the agreement contemplated the law for the time being in force and any statutory change affecting the arbitral procedure. The trial Court's view that a fresh post-commencement agreement was necessary was held to be incorrect.

Conclusion: The new Act applied to the pending arbitration proceedings, and the trial Court's contrary finding could not be sustained.

Issue (ii): Whether, on the facts, the respondent could still take recourse under sections 33 and 34 of the Arbitration and Conciliation Act, 1996 and whether time spent in prosecuting the matter before the Civil Court was liable to be excluded.

Analysis: The award had been received by the parties before the filing of objections in the Civil Court, and sections 31(5), 33 and 34 make the delivery and receipt of a signed copy of the award the operative event for limitation. Since the respondent had been prosecuting the matter bona fide in the Civil Court under the belief that the old Act applied, it was held appropriate to protect its remedy by excluding the intervening period while computing limitation. The decision preserved the respondent's statutory right to seek correction, interpretation or setting aside of the award under the new Act.

Conclusion: The respondent was left free to pursue remedies under sections 33 and 34, with exclusion of the relevant period for limitation purposes.

Final Conclusion: The revision succeeded, the impugned order was set aside, and the arbitration proceedings pending before the trial Court were brought to an end while preserving the parties' statutory remedies under the new Act.

Ratio Decidendi: Where a pre-existing arbitration agreement contemplates statutory modification or re-enactment, the saving clause in section 85 of the Arbitration and Conciliation Act, 1996 permits the new Act to govern pending proceedings if that reflects the parties' intention, and limitation for post-award remedies runs from receipt of the signed award copy.

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