Mistaken reference to the repealed arbitration law did not invalidate a clear agreement to arbitrate under the 1996 Act.

A post-1996 partnership clause referring to arbitration under the repealed 1940 Act remained a valid arbitration agreement because it satisfied Section 7 of the 1996 Act and clearly showed an intention to arbitrate. Section 85 displaced the 1940 Act for proceedings commenced under the 1996 regime, so an incorrect statutory reference did not defeat the clause. The proper approach was to read the agreement consistently with the 1996 Act rather than deny arbitration altogether. The dispute was therefore referable to arbitration under the 1996 Act, and the contrary view below was set aside.

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Issues: Whether a partnership clause executed after the Arbitration and Conciliation Act, 1996 came into force, but referring to arbitration under the Indian Arbitration Act, 1940, remained a valid arbitration agreement and could support reference of the dispute under Section 8 of the Arbitration and Conciliation Act, 1996.

Analysis: The basic requirements of an arbitration agreement under Section 7 were satisfied because the clause evidenced a written agreement to submit disputes to arbitration. Section 85 repealed the 1940 Act and made the 1996 Act applicable to arbitral proceedings commenced on or after its commencement. A mistaken reference to the 1940 Act in a post-1996 agreement did not negate the parties' clear intention to arbitrate. The earlier decisions relied upon below were distinguished, and the observations in Thyssen were held to be out of context when used to deny arbitration altogether. The correct approach was to give effect to the arbitration clause and read the incorrect reference consistently with the 1996 Act.

Conclusion: The arbitration clause was valid and enforceable, and the dispute was required to be referred to arbitration under the 1996 Act; the contrary view of the courts below was set aside.

Ratio Decidendi: An arbitration clause is not invalid merely because it mistakenly refers to the repealed 1940 Act, if the agreement otherwise satisfies Section 7 of the 1996 Act and unmistakably manifests an intention to arbitrate; in such a case, the dispute must be governed by the 1996 Act.

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