Gujarat High Court
M. B. Patel And Co vs Oil And Natural Gas Corporation Limited ... on 12 August, 2025
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/SCA/10536/2025 ORDER DATED: 12/08/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10536 of 2025
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M. B. PATEL AND CO
Versus
OIL AND NATURAL GAS CORPORATION LIMITED (ONGC)
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Appearance:
MR SHEGUN B CHOKSHI(12790) for the Petitioner(s) No. 1
MR SP MAJMUDAR(3456) for the Petitioner(s) No. 1
MR AKSHAT KHARE with MS RR GAUTAM for the Respondent(s)
No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 12/08/2025
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
1. Heard Mr. S.P. Majmudar, learned advocate for the petitioner and Mr. Akshat Khare with Ms. RR Gautam, learned advocates for the respondent and perused the record.
2. The challenge in the present petition invoking the extraordinary supervisory jurisdiction of this Court under Article 227 of the Constitution of India is to the order dated 24.02.2025 passed by the Commercial Court/4th Additional District Judge, Vadodara in Commercial Misc. Application No. 29 of 2021. The further prayer made in the present petition is to issue a direction to the Commercial Court while setting aside the order dated 24.05.2025, to make the award dated 21.02.2011 passed by the learned Umpire, a Rule of the Court Page 1 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined within the meaning of the Arbitration Act, 1940 (in short as the "Act' 1940").
3. The relevant facts to decide the controversy at hands are that the Commercial Misc. Application No. 29 of 2021 was filed under Section 14(2) of the Act' 1940 before the Commercial Court at Vadodara, with a prayer for making of the award dated 21.02.2011 passed by the learned Umpire, the Rule of Court. It is noted by the Commercial Court that the dispute between the parties was jointly referred to the learned Umpire on 16.03.1985. The first round of the arbitration proceedings culminated into passing of an award dated 03.05.1985 which was made Rule of the Court by passing a decree dated 04.10.1985 by the learned Civil Court (Senior Division), Vadodara.
4. A First Appeal No. 418 of 1986 challenging the award and decree dated 04.10.1985 was filed before this Court, which, in turn, was allowed vide judgment and order dated 11.07.2000. A perusal of the judgment and order dated 11.07.2000 passed by this Court indicates that it was recorded that the learned Umpire had misconducted with the proceedings and further that there was an error apparent on the face of the record, inasmuch as, the learned Umpire had overlooked clauses 14 and 18 of the Arbitration agreement. While allowing the appeal, it was also held by this Court that the learned Umpire had travelled beyond the scope of the contract between the parties by including certain items and claims which were not agreed between them. The award dated 03.05.1985 was, thus, set aside under Section 30(a) of Page 2 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined the Act' 1940.
5. The matter further travelled to the Apex Court and the decision of appeal in the judgment and order dated 11.07.2000 has been affirmed with the dismissal of the Civil Appeal No. 7340 of 2002, in the following manner :-
"In view of the aforesaid premises, the Arbitrator has not at all considered clause 14 of the Arbitration Agreement. The interest has been awarded in violation of clause 14 of the Agreement. Apart from others these two legal aspects have not been considered by the Arbitrator. We are, therefore, in full agreement with the reasoning given by the High Court. The Arbitrator may now proceed with the arbitration but in the light of the judgment of the High Court. We direct the Arbitrator to consider the matter afresh in the light of the reasoning of the High Court."
6. It seems that after the award dated 03.05.1985 passed by the learned Umpire was set aside, in view of the directions contained in the judgement and order dated 08.05.2008 passed by the Apex Court in dismissing the Civil Appeal, the learned arbitrator/Umpire considered the matter afresh and an award dated 21.02.2011 was prepared and signed by the learned arbitrator/Umpire.
7. It seems that the award dated 21.02.2011 was never referred to the Court by the learned Umpire under Section 14 of the Act' 1940 for making it Rule of the Court. However, the petitioner herein had filed an application in the Civil Court for execution of the award on 01.10.2015 treating it as an award passed under the new Act, viz. the Arbitration and Conciliation Act, 1996 (in short as the "Act' 1996", which Page 3 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined came into force on 25.01.1996. The Commercial Execution Petition No. 1 of 2017 was registered and placed before the Commercial Court at Vadodara. However, the petitioner withdrew the Execution petition on 05.07.2018. After withdrawal, the application dated 13.12.2021 was filed under Section 14(2) of the Act' 1940 before the Commercial Court at Vadodara, with the prayer to make the award dated 21.02.2011, Rule of the Court.
8. The Commercial Court has rejected the said application by recording that it was beyond the period of 90 days, i.e. the statutory limitation for presenting an application under Section 14(2) of the Act' 1940. However, even after observing that the application itself fails on the ground of limitation and is liable to be dismissed being barred by limitation, the learned Commercial Court has also entered into the merits of the award and recorded various findings to finally conclude that the award dated 21.02.2011 cannot be made the Rule of the Court.
9. We may note, at the outset, that in the present petition, the only challenge is about the rejection of the application under Section 14 of the Act' 1940 on the ground of limitation. The only submission made by Mr. S.P. Majmudar, learned advocate appearing for the petitioner is that once the Commercial Court had reached at the conclusion that the application itself is barred by limitation, there was no reason for the Court to enter into the merits of the award and record any adverse findings against the petitioner herein. In any case, the award had not been challenged by the respondent, Page 4 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined by filing any application before the Commercial Court, to set aside the same on any grounds available in Section 30 of the Act' 1940.
10. Taking note of the above, we may proceed to record the submissions made by the learned counsel for the petitioner on the order of the Commercial Court in rejection of the application under Section 14(2) on the ground of limitation.
11. At this stage, we may set out the provisions of Sections 14, 15, 16, 17 and 30 of the Arbitration Act' 1940 :-
"14. Award to be signed and filed .-(1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.
(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been, taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.
(3) Where the arbitrators or umpire state a special case under clause (b) of section 13, the Court, after giving notice to the parties and hearing them, shall pronounce its opinion thereon and such opinion shall be added to, and shall form part of, the award.
15. Power of Court to modify award .-The Court may by order modify or correct an award-Page 5 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025
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(a) where it appears that a part of, the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or
(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or
(c) where the award contains a clerical mistake or an error arising from an accidental slip or omission.
16. Power to remit award .-(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit-
(a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the face of it.
(2) Where an award is remitted under sub-section (1), the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court:
Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.Page 6 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025
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17. Judgment in terms of award .-Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."
"30. Grounds for setting aside award .-An award shall not be set aside except on one or more of the following grounds, namely:-
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is otherwise invalid."
12. A perusal of Section 14 of the Act' 1940 indicates that on making of an award by the arbitrator or Umpire, they were required to sign it and give notice in writing to the parties of the making and signing of the award, and also intimating the amount of fee and charges payable in respect of the arbitration and the award. A further reading of sub-section (2) of Section 14 of the Act' 1940 makes it clear that at the request of any party to the arbitration agreement or any person claiming under such party or if there is a direction of the court, upon payment of fee and charges due in respect of the arbitration and award, as also of the costs and charges of Page 7 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined filing the award, the award or a signed copy of it together with any depositions and documents which may have been taken and proved before the arbitrator, were to be filed in the Court. The Court shall thereupon give notice to the parties of filing of the award.
13. Section 15 of the Act' 1940 empowered the Court to modify the award. Section 16, however, conferred power to remit the award. Section 17 provided that if the Court does not find any reason to remit the award on any of the matters referred to arbitration for consideration, or to set aside the award, after the time period for making of an application to set aside the award has expired or after rejection of application to set aside the award, shall proceed to pronounce judgement according to the award. On such judgment being pronounced by the Court, a decree shall follow and no appeal shall lie from such decree, except on the ground that it is in excess of or not otherwise in accordance with the award.
14. A reading of the provisions contained in Sections 14 to 17 of the Act' 1940 makes it clear that an award may be made the Rule of the Court after examining the contents of the award once it is filed in the Court by the arbitrator/Umpire at the instance of any party to the arbitration agreement on payment of cost and charges of filing the award.
15. We may further take note of the provisions of the Limitation Act, 1963. Article 119 as contained in the Schedule of the Limitation Act, 1963 provides the limitation for filing of an award in the Court, which is 30 days from the date of service of the notice of the making of the award.
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16. In the instant case, there is no dispute about the fact that the signed copy of the award was prepared by the learned arbitrator/Umpire and the notice in writing of making and signing thereof was given to the parties. It seems that upon receipt of the award, the petitioner initially filed an execution application under the Act' 1996, in the year 2015. There is no explanation for the period of four years taken by the petitioner in approaching the Commercial Court for execution of the award treating it as an award prepared under the Arbitration and Conciliation Act, 1996.
17. Be that as it may, the execution application itself was withdrawn by the petitioner herein by moving a withdrawal purshis on 05.07.2018. Even after withdrawal, with the understanding that the provisions of the Act' 1996 would not be applicable, the application for making the award as Rule of the Court by invoking Section 14(2) of the Arbitration Act, 1940, was filed after a period of 3 years and 5 months, for which, no explanation could be found by the Commercial Court. The Commercial Court, therefore, cannot be said to have committed any error of law in holding that the application under Section 14(2) of the Act' 1940 was beyond the limitation prescribed.
18. In order to assail the decision of the Commercial Court, it was sought to be argued by Mr. S.P. Majmudar, learned advocate for the petitioner that the lifecycle of the arbitral proceedings which were initiated with the making of the reference before the learned Umpire on 16.03.1985 in view of Section 4 of the Act' 1940, had come to an end with Page 9 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined the decision of the Apex Court in setting aside the award dated 03.05.1985 vide judgment and order dated 08.05.2008 and relegating the matter for fresh consideration in light of the reasoning of the High Court.
19. It is submitted that after remittal, the award made by the learned arbitrator/Umpire on 21.02.2011 has to be treated as an award made under the new Act, namely the Arbitration and Conciliation Act, 1996. The submission is that the petitioner under wrong legal advice withdrew the Execution Application No.1 of 2017 by submitting a withdrawal purshis on 05.07.2018. However, fresh execution application seeking for execution of the award dated 21.02.2011 treating it as an award made under the Act' 1996, may still be filed by the petitioner which may be directed to be entertained by the Commercial Court.
20. Testing this submission of the learned counsel for the petitioner, we may take note of the provisions of Section 85 (2)(a) of the Act' 1996, which reads as under :-
"85.Repeal and savings.--
(2) Notwithstanding such repeal,--
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force"
21. A reading of the said provision indicates that while there has been a repeal of the old Arbitration Act, 1940, but not only the arbitral proceedings, but all proceedings in relation Page 10 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined to the arbitral proceedings which commenced before the enforcement of the Act' 1996, were saved by the legislature. The language employed in clause (a) of sub-section (2) of Section 85 makes it clear that the provisions of the Arbitration Act, 1940 shall apply in relation to arbitral proceedings, in case such proceedings had commenced before the Act' 1996 came into force. The only exception to the said proposition is to the effect that if there is an agreement between the parties that the Act' 1996 shall apply in relation to arbitral proceedings, which may have commenced on or after the Act' 1996 came into force.
22. In the instant case, no such agreement arrived between the parties had been placed before us nor there is any averment in the petition or the application before the Commercial Court that after the remittal of the matter by the Apex Court with the observations in the judgment and order dated 08.05.2008, the parties have approached the learned arbitrator with the mutual understanding that the proceedings of the arbitration would be conducted in accordance with the provisions of the Act' 1996. Moreover, from the conduct of the petitioner in withdrawing the execution application by filing a withdrawal purshis on 05.07.2018 and also the manner in which the arbitration proceedings were conducted with the making of the award on 21.02.2011, it seems that there was a clear understanding between the parties as well as the learned arbitrator that the proceedings of arbitration which commenced with the reference made on 16.03.1985, would continue as per the old Arbitration Act' 1940.
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23. On the asking of the Court, learned counsel for the petitioner would admit that there is no trigger such as no proceedings has been initiated or conducted by the parties under any of the provisions of the Act' 1996 such as Section 9, Section 17, Section 27 and Section 29A of the Act' 1996, in relation to the arbitral proceedings before the learned arbitrator/Umpire after remittal.
24. We may note the decision of the Apex Court in Thyssen Stahlunion Gmbh v. Steel Authority of India Ltd., [(1999) 9 SCC 334], wherein it is held as under :-
"22. For the reasons to follow, we hold:
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 (the 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 proceedings 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 ["17. Judgment in terms of award.-- Where the court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not Page 12 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined otherwise in accordance with the award."] thereof and also appeal arising thereunder.
3. In cases where arbitral proceedings have commenced before the coming into force of the new Act and are pending before the arbitrator, it is open to the parties to agree that the new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act.
4. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act comes into force.
5. Once the arbitral proceedings have commenced, it cannot be stated that the right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act some legal proceedings for its enforcement must be pending under that Act at the time the new Act came into force.
6. If a narrow meaning of the phrase "in relation to arbitral proceedings" is to be accepted, it is likely to create a great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the new Act. Challenge of award can be with reference to the conduct of arbitral proceedings. An interpretation which leads to unjust and inconvenient results cannot be accepted.
7. A foreign award given after the commencement of the new Act can be enforced only under the new Act. There is no vested right to have the foreign award enforced under the Foreign Awards Act [Foreign Awards (Recognition and Enforcement) Act, 1961].
23. Section 85(2)(a) of the new Act is in two limbs : (1) provisions of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came Page 13 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined into force unless otherwise agreed by the parties, and (2) the new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The first limb can further be bifurcated into two : (a) provisions of the old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force, and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression "in relation to" is of the widest import as held by various decisions of this Court in Doypack Systems (P) Ltd. [(1988) 2 SCC 299] , Mansukhlal Dhanraj Jain [(1995) 2 SCC 665] , Dhanrajamal Gobindram [AIR 1961 SC 1285 : (1961) 3 SCR 1020] and Navin Chemicals Mfg. [(1993) 4 SCC 320] This expression "in relation to" has to be given full effect to, particularly when read in conjunction with the words "the provisions" of the old Act. That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word "to" could have sufficed and when the legislature has used the expression "in relation to", a proper meaning has to be given. This expression does not admit of restrictive meaning. The first limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act.
24. The contention that if it is accepted that the expression "in relation to" arbitral proceedings would include proceedings for the enforcement of the award as well, the second limb of Section 85(2)(a) would become superfluous. We do not think that would be so. The second limb also takes into account the arbitration agreement entered into under the old Act when the arbitral proceedings commenced after the coming into force of the new Act......"
"28. Section 85(2)(a) is the saving clause. It exempts the old Act from complete obliteration so far as pending arbitration proceedings are concerned. That would Page 14 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined include saving of whole of the old Act up till the time of the enforcement of the award. This (sic Thus) Section 85(2)(a) prevents the accrued right under the old Act from being affected. Saving provision preserves the existing right accrued under the old Act. There is a presumption that the legislature does not intend to limit or take away vested rights unless the language clearly points to the contrary. It is correct that the new Act is a remedial statute and, therefore, Section 85(2)(a) calls for a strict construction, it being a repealing provision. But then as stated above where one interpretation would produce an unjust or an inconvenient result and another would not have those effects, there is then also a presumption in favour of the latter."
"35. Parties can agree to the applicability of the new Act even before the new Act comes into force and when the old Act is still holding the field. There is nothing in the language of Section 85(2)(a) which bars the parties from so agreeing. There is, however, a bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitral proceedings under the old Act have not commenced though the arbitral agreement was under the old Act......."
25. In Delhi Transport Corporation Ltd. vs. Rose Advertising [(2003) 6 SCC 36], the Apex Court relied on Thyssen Stahlunion Gmbh (supra) to record as under :-
"2. .......To enforce the award the respondent filed an application under the 1996 Act which was registered as an execution application. The appellant DTC contested the said application on grounds including maintainability of the execution petition. The question of maintainability was raised on the basis that the 1996 Act was not applicable to the proceedings and therefore execution application did not lie. The contention of the appellant before the High Court was that the proceedings had commenced under the old Act and the said Act would continue to govern the proceedings. The learned Single Judge upheld the objection regarding maintainability of Page 15 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined the application. It was held that the Arbitration Act, 1940 continued to apply. This was based on the view that the arbitration proceedings commenced on the date when request for appointment of arbitrator was made and that was prior to the coming into force of the 1996 Act. Once the arbitration proceedings commenced, Section 85 of the 1996 Act read with Section 21 would lead to the conclusion that the old Act would continue to apply. Reliance was placed on the judgment of this Court in Thyssen Stahlunion GmbH v. Steel Authority of India Ltd. [(1999) 9 SCC 334 : AIR 1999 SC 3923] The contractor went in appeal against the said order of the learned Single Judge. The Division Bench noted in its judgment that the parties went for arbitration with clear understanding and belief that the proceedings were being conducted under the 1996 Act. It was noted that the appointment of arbitrator was made after the new Act had come into force and 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 the parties submitted claims before me under the Arbitration and Conciliation Act, 1996". He concluded the award by observing, "I further award that the advertiser shall also be entitled to future interest at the rate of 18% p.a. on all payments awarded in accordance with Section 31(7)(b) of the Arbitration and Conciliation Act, 1996 from the date of award till the date of payment."
3. While referring to the judgment in Thyssen case [(1999) 9 SCC 334 : AIR 1999 SC 3923] the Court noted that parties can always agree that provision of law prevailing at the relevant time would apply to arbitral proceedings. The case of Rani Constructions (P) Ltd. [Rani Constructions (P) Ltd. v. H.P. SEB, CA No. 61 of 1999] decided in Thyssen case [(1999) 9 SCC 334 :
AIR 1999 SC 3923] was held to squarely cover the present case. In view of the fact that the arbitrator was appointed after coming into force of the 1996 Act and the arbitration proceedings were conducted in Page 16 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined pursuance of the provision of the said Act, it was held that the case would be governed by the 1996 Act. It also weighed with the High Court that the parties had expressed their intention in the arbitration proceedings to be governed by the 1996 Act. The Division Bench thus allowed the appeal and set aside the judgment of the Single Bench.
4. Delhi Transport Corporation has come up in appeal against the said judgment of the High Court. The learned Additional Solicitor-General who argued the matter on behalf of the appellant was unable to persuade us to hold that the impugned judgment of the High Court was liable to be set aside. As per the facts noted above and the judgment of this Court in Thyssen case [(1999) 9 SCC 334 : AIR 1999 SC 3923] we are unable to differ with the view taken by the High Court. By virtue of Section 85 of the 1996 Act, the Arbitration Act, 1940 stands repealed. However, as noted earlier it is always open to the parties to agree as to which law will continue to govern their relationship. In the present case, clause 25 of the agreement is the arbitration clause. Sub-clause (d) of clause 25 has a bearing on the controversy in hand and therefore same is reproduced as under:
"Subject to as aforesaid, the 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."
5. The above clause shows that the parties agreed to be governed by the law as in force at the relevant time. Section 85(2) of the 1996 Act recognizes such an agreement between the parties. The conduct of the arbitration proceedings and the participation of the parties therein shows that the parties acted under the 1996 Act. Even the arbitrator proceeded on that understanding and gave his award in pursuance of the 1996 Act. Therefore, the impugned judgment of the High Court appears to be totally unassailable. We are unable Page 17 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined to find any ground or reason to differ with the view taken by the High Court on the main issue."
26. In Milkfood Ltd. v. GMC Ice Cream (P) Ltd. [(2004) 7 SCC 288], the question before the Apex Court was about the interpretation of certain provisions of the Arbitration Act' 1940 and Arbitration Act' 1996. In the facts of the said case, the dispute was about the "commencement or initiation of the arbitration proceedings" and "continuance of the arbitration proceedings" under the old Act' 1940 vis-a-vis the New Act' 1996. The issue was as to what would determine the "commencement of the arbitration proceedings", whether the notice issued on 14.09.1995 by a party for appointment of arbitrator or the order of the revisional Civil Court dated 06.05.1997 for appointment of arbitrator, while disposing of the revision filed against the order dated 03.08.1995 under Section 34 of the Act' 1940 for stay of the suit proceedings initiated by another party. To decide on the applicability of the old Act' 1940 vis-a-vis and the new Act' 1996 to the arbitral proceedings within the meaning of Section 85(2)(a) of the new Act' 1996, about the expression "commencement of the arbitration proceedings" as occurring in Section 21 vis-a- vis Section 85 (2) (a) of the Act' 1996, it was observed in paras '47' '48' and '49' as under :-
Section 21 vis-à-vis Section 85(2)(a) of the 1996 Act
47. The importance of the expression "commencement of the arbitration proceeding" arises having regard to Section 85 of the 1996 Act, which reads thus:
"85. Repeal and savings.--(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Page 18 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal,--
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;
(b) all rules made and notifications published, under the said enactments 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."
48. Sub-section (1) of Section 85 of the 1996 Act repealed the 1940 Act (10 of 1940). Sub-section (2), however, notwithstanding such repeal makes the 1940 Act applicable in relation to arbitral proceedings which commenced before the said Act came into force.
49. 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.
27. It was further observed and held by the Apex Court in Milkfood Ltd. (supra) in paras '66' to '74' of as under :-
Page 19 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined "Applicability of the 1940 Act or the 1996 Act
66. Commencement of arbitration proceeding for the purpose of limitation or otherwise is of great significance. If a proceeding commences, the same becomes relevant for many purposes including that of limitation. When Parliament enacted the 1940 Act, it was not in its contemplation that 46 years later it would re-
enact the same. The court, therefore, while taking recourse to the interpretative process must notice the scheme of the legislations concerned 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 plaint would be the date when a legal proceeding starts. So far as the arbitral proceeding is concerned, service of notice in terms 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 nominates 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.
67. Section 34 of the Arbitration Act, 1940 speaks of power to stay legal proceeding where there is an arbitration agreement. Before a suit is stayed in terms of Page 20 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined Section 34 of the Act the court must be satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do so for the proper conduct of the arbitration. The court, therefore, while passing an order in terms of Section 34 of the Act must satisfy that there exists a "dispute" between the parties within the meaning of the provisions of the arbitration agreement and such dispute should be referred to arbitration in accordance with the arbitration agreement. Although under Section 34 of the 1940 Act, the court itself does not make a reference to an arbitrator but the very purpose for which the suit is stayed is that the parties may take recourse to the provisions contained in the arbitration agreement. A reference is made to the arbitrator in terms of the arbitration agreement to make a reference. (See Bhailal Manilal v. Amratlal Lallubhai Shah [AIR 1963 Guj 141 :
(1963) 4 Guj LR 498] and Dinabandhu Jana v. Durga Prasad Jana [AIR 1919 Cal 479 : ILR 46 Cal 1041] .)
68. Once a suit is stayed by the court the other provisions of the Arbitration Act may be taken recourse to by the parties. (See State of W.B. v. A.K. Ghosh and Bros. [AIR 1975 Cal 227 : 79 CWN 349]
69. The UNCITRAL Model Rules of Arbitration vis-à-vis provision of Section 14 of the English Arbitration Act, 1996 must be construed having regard to the decisions of the English courts as also this Court which addressed the form of notice to be given in order to commence the arbitration for the purpose of Section 34(3) of the Limitation Act. By reason of Section 14, merely the form of notice and strict adherence thereto has become redundant, as now in terms of Section 14 of the Arbitration Act there is otherwise no specific requirement as to the form of notice subject to any contract operating in the field. (See paras 5-020, 5-027 and 5-028 of Russell on Arbitration, 22nd Edn.) Section 21 of the 1996 Act must be construed accordingly. It defines the moment of the commencement of arbitral Page 21 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined proceedings. In Rao, P. Chandrasekhara: The Arbitration and Conciliation Act, 1996, 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 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)."
70. 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 apply in relation to arbitral proceedings which commenced before the said Act came into force. Thus, those arbitral proceedings which were commenced before coming into force of the 1996 Act are saved and the provisions of the 1996 Act would apply in relation to arbitral proceedings which commenced on or after the said Act came into force. Even for the said limited purpose, it is necessary to find out as to what is meant by commencement of arbitral proceedings for the purpose of the 1996 Act wherefor also necessity of reference to Section 21 would arise. The court is to interpret the repeal and savings clauses in such a Page 22 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined manner so as to give a pragmatic and purposive meaning thereto. It is one thing to say that commencement of arbitration proceedings is dependent upon the facts of each case as that would be subject to the agreement between the parties. It is also another thing to say that the expression "commencement of arbitration proceedings" must be understood having regard to the context in which the same is used; but it would be a totally different thing to say that the arbitration proceedings commence only for the purpose of limitation upon issuance of a notice and for no other purpose. The statute does not say so. Even the case-laws do not suggest the same. On the contrary, the decisions of this Court operating in the field beginning from Shetty's Constructions [(1998) 5 SCC 599] are ad idem to the effect that Section 21 must be taken recourse to for the purpose of interpretation of Section 85(2)(a) of the Act. There is no reason, even if two views are possible, to make a departure from the decisions of this Court as referred to hereinbefore.
71. While interpreting a judgment this Court must pinpoint its attention to the ratio thereof. A court of law must not lose sight of the doctrine of "stare decisis". A view which has been holding the field for a long time should not be disturbed only because another view is possible.
72. Keeping in view 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.
73. In this case, the learned Munsif by an order dated 3- 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 Page 23 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined arbitration. The matter was referred to arbitration as soon as the notice dated 14-9-1995 was issued and served on the other side.
74. It may be true that before the High Court apart from Shri H.L. Agarwal, 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 a new Arbitral Tribunal which concept is separate and distinct from that of commencement of arbitration proceeding."
28. In view of the above discussion, we do not find any substance in the arguments of the learned counsel for the petitioner that the lifecycle of the arbitral proceedings which commenced with the reference jointly made by the parties under Section 4 of the 1940 Act on 16.03.1985, had come to an end with the judgement and order dated 08.05.2008 passed by the Apex Court. The submission of the learned advocate that the petitioner be permitted to file an execution application invoking the provisions of the Arbitration and Conciliation Act, 1996, cannot be accepted in view of the clear language employed in Section 85(2)(a) that the proceedings in relation to arbitral matter which commenced prior to the enforcement of the Arbitration Act' 1996, would be governed under the old Act' 1940.
29. Coming to the second submission made by the learned counsel for the petitioner that under Section 14 of the Act' 1940, it was the duty of the learned arbitrator/Umpire to submit the award to the Court for making it Rule of the Court Page 24 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined and since there was a failure on the part of the learned arbitrator/Umpire in discharging its statutory duty, the limitation never began to run. The result is that the time period lapsed in approaching the Commercial Court for making the award, Rule of the Court would begin from the date when the said application under Section 14(2) was filed by the petitioner before the Commercial Court on 13.12.2021. For any delay caused in making of the said application after withdrawal of the execution application on 05.07.2018, a liberal approach was required to be adopted by the Commercial Court for the reason that the dismissal of the application under Section 14(2) on limitation, is causing serious prejudice to the petitioner.
30. The submission is that in view of the order of the Commercial Court of rejection of the application under Section 14(2) of the Act' 1940, the petitioner herein is deprived of all benefits conferred by the learned arbitrator/Umpire under the award dated 21.02.2011, which was never challenged by the respondent by moving any application to set aside the award on any of the grounds provided in Section 30 of the Act' 1940.
31. At the cost of repetition, it may be noted that there is absolutely no explanation on the part of the petitioner as to why he did not approach the Court for making the award, Rule of the Court by moving a proper application under Section 14(2) of the Act' 1940, when the notice of making of the signed copy of the award dated 21.02.2011 was received by him. As noted hereinabove, sub-section (2) of Section 14 Page 25 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined provides that the award was to be filed in the Court, at the request of any of the parties to the arbitration agreement or any person claiming under such party, that too upon such party making the deposit of the cost and charges of filing the award in the Court. A bare reading of sub-section (2) of Section 14, thus, indicates that for filing of the award in the Court, at the first instance, action was required to be taken by the party concerned by invoking the provisions of sub-section (2) of Section 14. There is nothing on record nor a whisper that the petitioner had ever approached the learned arbitrator/Umpire with the request to file the award in the Court on payment of cost and charges of filing the same. No fault, therefore, can be attached to the action of the arbitrator in not forwarding or filing the award in the Court by invoking sub-section (2) of Section 14 of the Act' 1940.
32. This is not a case of inaction on the part of the learned arbitrator/Umpire. Rather, the procedure prescribed under the old Act' 1940 for filing the award in the Court to make it Rule of the Court has not been followed by the petitioner. Moreover, there has been a substantial delay on the part of the petitioner in approaching the Court directly for making it the Rule of the Court. As noted hereinabove, the execution application invoking Section 36 of the Act' 1996 had been filed only on 01.10.2015. As submitted, the date 01.10.2015 when the execution application was filed by the petitioner herein, at least, can be said to be the date of knowledge of the award with the petitioner, though there is no averment in the present petition or the application before the Commercial Court that the petitioner did not have knowledge of the award Page 26 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined dated 21.02.2011 and the notice of the award was not served upon him in accordance with the provisions of sub-section (1) of Section 14 of the Act' 1940.
33. At the cost of repetition, it is reiterated that there is no explanation for the delay of approximately four years in invoking the provisions of the Arbitration Act' 1996, at the first instance by the petitioner. The withdrawal of the said application was made on 05.07.2018 and the further delay of approximately two years in approaching the Court invoking Section 14(2) of the Act' 1940, has further not been explained.
34. It is, thus, evident that the delay of approximately more than ten years in approaching the Court under Section 14(2) of the Act' 1940 with the prayer to make the award the Rule of the Court, could not be explained by the learned counsel for the petitioner.
35. For the aforesaid, we do not find any justification to accept the arguments made by the learned counsel for the petitioner to take a liberal view of the limitation in making the award the Rule of the Court as per Section 14(2) of the Act' 1940 read with Article 19 of the Limitation Act, 1963.
36. In view of the above discussion, no infirmity can be attached to the order of the Commercial Court simply for the fact that the Commercial Court has also entered into the merits of the award while not being satisfied on the question of limitation. No interference, as such, is called for within the scope of the extraordinary supervisory jurisdiction of this Court under Article 227 of the Constitution of India to attach Page 27 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025 NEUTRAL CITATION C/SCA/10536/2025 ORDER DATED: 12/08/2025 undefined any illegality to the decision of the Commercial Court. The present petition stands dismissed, accordingly. No order as to costs.
(SUNITA AGARWAL, CJ ) (D.N.RAY,J) BIJOY B. PILLAI Page 28 of 28 Uploaded by BIJOY B. PILLAI(HC00202) on Thu Aug 21 2025 Downloaded on : Fri Aug 22 23:22:44 IST 2025