TaxTMI 
TaxTMI 
2004 (4) TMI 628
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....pondent herein was to manufacture and pack in its 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 app....
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....ent has been raised which would be dealt with a little later. 8. To complete 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 le....
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.... an application was filed by the appellant herein purported to be under Section 33 of the 1940 Act in the High Court of Delhi which 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 ....
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....tration proceeding", "continuance of arbitration proceedings", "entering into reference" which in different context would carry different meanings. The Parliament, however, in the 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 ot....
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....annot be said to have struck a different note from its earlier decision. Section 37 of the 1940 Act, the learned counsel would contend, being for the purpose of commencement of the period of limitation, 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 pu....
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...., an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator or where the agreement provides 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 Ac....
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.... example, the rules of the International Chambers of Commerce. 31. The date of commencement of an arbitration also affects the position under the conflict of laws when the proper law of the contract is one law and the 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 & Wi....
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....s SA and on behalf of Ocean Laser Shipping Limited. The points of Claim further provide that the first claimant i.e. G Roussos Sons SA on its own behalf and/or on behalf of Ocean Laser Shipping Limited as Buyer agreed to purchase the vessel... 42. Justice 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 th....
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....en it is, in my judgment, simply that. It seems to me, however, that I do not have to decide the point. But if the view I have just expressed is wrong, then it would to my mind amply demonstrate why it is necessary to permit what Lord Denning and Lord Justice Goff called an 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 agreem....
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....47. In Russell on Arbitration, 22nd edition, page 166, the law is stated in the following terms: "5-027: Notice of arbitration pursuant to Section 14. The "notice" referred to in Section 14(3) to (5) of the Arbitration Act 1996 must be in writing and its contents must comply with the requirements for commencing arbitration 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....
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....rce. 51. Section 21 of the 1996 Act, as noticed hereinbefore, provides as to when the arbitral proceedings would be deemed to have commenced. Section 21 although may be construed to be laying down a provision for the purpose of the said Act but the same must be given its full effect having regard to the fact that the repeal and saving clause is also contained therein. 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 theref....
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....t time could have thought that Section 30 of the old Act could be substituted by Section 34 of the new Act..." 54. Having said so, this Court in relation to a foreign award made in terms of the Foreign Awards Act and the Arbitration (Protocol and Convention) Act struck a different note, stating: "...When the Foreign Awards Act does not contain any provision for arbitral proceedings it is 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....
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....eated as "date of commencement" in those foreign proceedings. We would therefore, hold that on proper construction of Section 85(2)(a) the provision of this sub-section must be confined to the old Act only. Once having held so it could be said that Section 6 of the General Clauses Act would come into play and the foreign award would be enforced under the Foreign Awards Act. But then it is quite apparent that 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 Arb....
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....elation to a domestic arbitration proceedings, commencement thereof shall coincide with service of request/notice. 58. It may be true that in Thyssen (supra), this Court held that the parties may consent to the procedure laid down under the 1996 Act even before the same came into force but we intend to deal with this aspect of the matter separately. 59. The question was clearly answered by a Bench of this Court in which 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 ....
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....o the provisions contained in Chapter II thereof. Furthermore, Section 85(2)(a) of the new Act may have to be construed keeping in view the provisions contained in Section 21 of the new Act." 62. Keeping in mind the aforementioned principle, we may notice the other decisions of this Court cited at the Bar. 63. In Fertilizer Corporation of India Limited v. Domestic Engineering Installation AIR1970All31 , the Allahabad High Court was concerned with three different courses open 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 ....
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....heme of the concerned legislations for the purpose of finding out the purport of the expression - 'commencement of arbitration proceeding'. In terms of Section 37 of the 1940 Act, law of limitation will be applicable to arbitrators as it applies to proceedings in court. For the purpose of invoking the doctrine of lis pendens, Section 14 of the Limitation Act, 1963 and for other purposes presentation of plant would be the date when a legal proceeding starts. So far as the Arbitral Proceeding 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 l....
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....otice subject to any contract operating in the field. [See Paras 5-020, 5-027 and 5-028 of Russel on Arbitration, 22ndEdn.]. Section 21 of the 1996 Act must be construed accordingly. It defines the moment of the commencement of arbitral proceedings. In the Arbitration and Conciliation Act, 1996 by P. Chandrasekhara Rao, it is stated : "Section 21 defines the moment of the commencement of arbitral proceedings. It gives freedom to the parties to agree on the date of commencement of arbitral proceedings. 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....
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....w the fact that in all the decisions, referred to hereinbefore, this Court has applied the meaning given to the expression 'commencement of the arbitral proceeding' as contained in Section 21 of the 1996 Act for the purpose of applicability of the 1940 Act having regard to Section 85(2)(a) thereof, we have no hesitation in holding that in this case also, service of a notice for appointment of an arbitrator would be the relevant date for the purpose of commencement of the arbitration proceeding. 75. In this case, the 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. T....
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....n 'commencement of the arbitration proceeding' as contained in Section 21 must be interpreted in the same manner. Service of Notice: 79. Mr. Jain had raised a question that the notice dated 14.9.1995 had not been served before the arbitrators. The appellant in its application for direction/clarification before the arbitrators, inter alia, contended : "10. It is submitted that appointment of Ld. Arbitrators as such is in pursuance of said orders only and, therefore, the disputes referred in August, 1995 as such have come up 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 availabl....
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....ator unless the claimant calls upon him to do so. The date on which the request for the dispute to be referred to arbitration is received by the respondent from the claimant is the date on which arbitration commences in respect of that particular dispute for purposes of Section 37(3) (See Section 22 and Section 43(2) of the new Act)." 82. The arbitrators, therefore, have also not held that notice dated 14.9.1995 was not served upon the respondent but merely proceeded on the basis that the same would be relevant for the purpose of determining the question as to when the arbitral proceeding shall 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 th....
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....he provision of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause." 88. It is one thing to say that the parties agree to take recourse to the procedure of the 1996 Act relying on or on the basis of tenor of the agreement as regard applicability of the statutory modification or reenactment of the 1940 Act but it is another thing to say, as has been held by the High Court, that the same by itself is a pointer to the fact that the appellant had agreed thereto. If the arbitral proceedings commenced for the purpose of the applicability 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 pr....
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....fic provision to the contrary. There is no such provision in the new Act. In the present cases, the appeals were pending before the High Court under the provisions of the old Act and, therefore, appeals are required to be decided on the basis of the statutory provisions under the said Act. Hence, there is no substance in the submission made by the learned counsel for the appellant." 91. Referring to the relevant portion of the discussions in Thyssen (supra), the learned Judge held: "The aforesaid discussion only deals with the contention that parties could not have agreed to the application of the new Act till they had the knowledge about the provisions thereof and, therefore, the agreement to the 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 p....
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....e between the Company and the Manufacturer as to the construction, meaning or effect of this Agreement or any clause or 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 Arbitration 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 s....
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....the appellant herein filed an application before the arbitrators dated 7.3.1998 enclosing notice dated 14.9.1995 served by the appellant on the respondent herein whereby the appellant had appointed Mr. H.L. Aggarwal as their arbitrator and by which notice the respondent herein was called upon to appoint their own arbitrator in terms of Clause 20 quoted above. In the application dated 7.3.1998, the appellant submitted that in view of the above notice dated 14.9.1995, the arbitration proceedings had commenced under the 1940 Act. By majority decision, the arbitrators took the view that the said notice dated 14.9.1995 did not make any difference to the question of commencement of the arbitral proceedings in view of the provisions of Section 85(2)(a) of the 1996 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....
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....ich in different context could carry different meanings. The Parliament however in the 1996 Act has chosen to use the expression "commencement of arbitral proceedings", in Section 21 the meaning thereof as is understood in common parlance should be applied. Strong reliance in this connection was placed on the decision of Queen's Bench Division in Charles M. Willie & Co. (Shipping) Ltd. v. Ocean Laser Shipping Ltd. [(1999) 1 Lloyds Law Report 225]. 101. Learned counsel for the appellant further submitted that there was a conflict in the decision of the two-Judge Benches of this Court as regards the construction of the arbitration agreement as contained in Clause 20 thereof vis-a-vis the applicability of the 1996 Act. In this connection, my attention was 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....
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....ent of the period of limitation, had no application whatsoever for the purposes of determining the question as to whether the 1940 Act will apply or the 1996 Act will apply. 105. I may now notice the provisions of the 1940 Act. Section 2 defines arbitration agreement to mean a written agreement to submit present or future dispute to the arbitration, whether an arbitrator is named therein or not. Section 2(e) defines "reference" to mean reference to arbitration. Therefore, the term "arbitration agreement" is different from the term "reference". "An agreement to refer" and "a reference" are two separate transactions while an arbitration agreement is only a contract to refer, reference is delegation of authority to a named arbitrator. Section 8 confers power upon the 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....
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.... shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act" 107. A bare reading of Section 21 of the 1996 Act indicates that arbitral proceedings in respect of a dispute commences on the date on which request to refer such dispute to arbitration is received by the respondent, unless otherwise agreed by the parties. Section 21 is similar to Section 14 of the English Arbitration Act 1996 which provides that parties are free to agree as to when an arbitration is to be regarded as commencing both under the Arbitration Act 1996 and for limitation purposes. In the absence of such agreement, Section 14 of that Act applies. Russell on Arbitration, [XXII Ed. Page 165] says as follows:- "Commencement for limitation purposes. The parties are 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 ap....
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....eads as under:-- "It is common to use expressions such as 'a notice of arbitration' or 'the commencement of an arbitration' as if they had the same meaning for all purposes, in the context of all the various possible types of agreement to arbitrate. This is misleading, for when enquiring whether sufficient steps have been taken to set an arbitration in train, the answer may depend on the reason why the question is being asked. There are several different reasons why it may matter when the arbitration has begun. Of these, the following are probably the most important. First, the question may be whether, at a given moment, there is any person or group of persons with jurisdiction to make an award, and power to give directions and make rulings in the course of the reference. For this purpose, what 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 arbitr....
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....ncement will take place from the date when notice to concur is served. This view is supported by the judgment of the division bench of this Court in Delhi Transport Corporation Ltd. (supra), in which a similar question was raised. In that matter, the parties had entered into an agreement on 15.1.1993 for display of advertisement on DTC buses in Delhi. The agreement was for a period of three years commencing from 15.1.1993. The agreement contained an arbitration clause. Disputes arose between the parties. A request was made by the contractor on 9.1.1995 for appointment of arbitrator to settle the disputes. This was followed by another letter dated 26.11.1995 containing a similar request. On 16.1.1996, he filed a petition under Section 20 of the 1940 Act. The counsel appearing for DTC made a statement in the court on 19.7.1996 that an arbitrator had been appointed 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....
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....se of Charles M. Willie & Co. (Shipping) Ltd. (supra), the facts were as follows. By a memorandum of agreement dated April 1, 1990, Charles M. Willie & Co. (Shipping) Ltd. sold their vessel to Ocean Laser Shipping Ltd. The MOA provided for an arbitration clause, which inter aliastated that if any dispute arises in connection with the contract, the same shall be decided by a single arbitrator and if the parties did not agree on the appointment of a single arbitrator, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third to be appointed by London Maritime Arbitrators Association. On 21.11.1990, Willie received a letter from solicitor of Ocean Laser Shipping Ltd. enquiring about an engine stoppage in January, 1988. Consequently, the dispute started. On 12.3.1992, Ocean Laser Shipping Ltd. through their solicitor invited 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....
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....two arbitrators. Before entering upon the reference under Clause 20 quoted above, all such arbitration proceedings were to be governed by the provisions of the Arbitration Act, 1940 or under any statutory re-enactment This clause is similar to the one considered by this Court in the case of Delhi Transport Corporation Ltd. (supra). On the strength of the agreement dated 7.4.1992, the respondent herein filed title suit No. 40 of 1995 for injunction and in the said suit, the appellant herein applied for stay under Section 34 of the 1940 Act. Suffice it to state that on 6.5.1997, when the matter came up before the High Court, the parties agreed that all disputes between them may be referred to arbitrators chosen by the parties as per the agreement. A consent order was accordingly passed on that day by the High Court referring the dispute to the arbitrators. Therefore, 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, ....