* THE HON’BLE Ms. JUSTICE G. ROHINI + CIVIL REVISION PETITION No.1102 OF 2009 % 06/10/2009 # 1. The Managing Director, APSRTC, RTC X Roads, Musheerabad, Hyderabad and another. … Petitioners Vs. $ A. Annaiah , Contractor, Hindupur, Anantapur District. .. Respondent < Gist > Head Note: ! Counsel for the petitioners : Sri C. Prakash Reddy ^ Counsel for the respondent : Sri Akella Srinivasa Rao Cases referred : [1] AIR 1999 SC 3923 = 1999 (10) Supreme 378 2 AIR 2004 SC 4335 3 AIR 2000 CALCUTTA 148 4 AIR 1989 SC 2259 5 AIR 2003 SC 2523 = 2003 (3) Supreme 431 THE HON’BLE Ms. JUSTICE G. ROHINI CIVIL REVISION PETITION No.1102 OF 2009 ORDER: This Civil Revision Petition has been preferred by the A.P. State Road Transport Corporation (for short, ‘the Corporation’) being aggrieved by the order of attachment dated 12.2.2009 passed in E.P.No.11 of 2009 in O.S.No.194 of 1996 on the file of the Court of the Senior Civil Judge, Hindupur. The facts which are not in dispute are as under: The respondent herein filed O.S.No.9 of 1994 in the Court of the Additional District Judge, Hindupur, under Section 20 of the Arbitration Act, 1940 to direct the Corporation to file the agreement dated 31.8.1991 into Court and make an order of reference to the Arbitrator appointed by the Court for decision of his claim against the Corporation. The said suit which was renumbered as O.S.No.194 of 1996 on transfer to the Sub-Court, Hindupur, was decreed on 17.4.1997 appointing Sri M. Rama Narasimhulu, a retired District Judge as the sole arbitrator. However, as the arbitrator so appointed was not willing to act as an Arbitrator, the respondent herein filed I.A.No.212 of 2005 to appoint another Arbitrator and by order dated 10.11.2005 the said application was allowed appointing Sri R. Gopala Rao, Retired Senior Civil Judge, as Arbitrator. Accordingly, the decree in O.S.No.194 of 1996, dated 17.4.1997 was modified. Pursuant thereto, an arbitral award was passed on 8.12.2008 directing the Corporation to pay Rs.2,44,477/- to the respondent herein together with interest at 18% p.a. from 14.12.1992 till the date of payment. Basing on the said award, the respondent herein filed E.P.No.11 of 2009 in the Court of the Senior Civil Judge, Hindupur, seeking attachment of the amounts lying in the Current Account of the Corporation in the State Bank of India, Hindupur, under Order 21 Rule 46 of C.P.C. for realisation of the E.P. amount. Having entertained the said Execution Petition, the learned Senior Civil Judge, Hindupur, by order dated 12.2.2009 while directing notice to the Corporation returnable by 12.03.2009, ordered attachment of the amount lying in the account of the Corporation. Aggrieved by the same, the present Civil Revision Petition is filed under Article 227 of the Constitution of India. I have heard the learned counsel for both the parties and perused the material on record. The learned counsel for the petitioner / Corporation contended that as the award 8.12.2008 was passed under the Arbitration Act, 1940 unless the same is made a rule of the Court as provided under Section 17 of the Arbitration Act, 1940, no execution proceedings can be maintained. Thus, according to the learned counsel for the petitioner, the Court below committed a grave error in entertaining E.P.No.11 of 2009 and passing the impugned order of attachment dated 12.2.2009. On the other hand, the learned counsel for the respondent vehemently contended that since the arbitral proceedings had actually commenced on 1.8.2006 the provisions of the Arbitration and Conciliation Act, 1996, are applicable and as per Section 36 of the said Act the Award dated 8.12.2008 is enforceable in the same manner as if it were a decree of the Court. Prior to enactment of the Arbitration and Conciliation Act, 1996 (for short, ‘Act No.26 of 1996’) w.e.f. 25.1.1996, the Arbitration Act, 1940 (for short, ‘repealed Act No.10 of 1940’) was in force. As per Section 20 of repealed Act No.10 of 1940, an application has to be made to a Court having jurisdiction in the matter to which the agreement between the parties relates seeking reference of the disputes arising out of such agreement to an Arbitrator. Such application shall be numbered and registered as a suit and after notice, if no sufficient cause is shown by the other party, the Court shall make an order of reference to the Arbitrator. Thereafter, the arbitration shall proceed and the award passed shall be filed into the Court upon which a judgment has to be pronounced followed by a decree. The award of the Arbitrator is executable only after a decree is passed in terms of Section 17 of the repealed Act No.10 of 1940. In other words, the award is incapable of execution unless it is made a rule of the Court under Section 17 of the repealed Act No.10 of 1940. However, under the new Act No.26 of 1996 there is no provision which requires reference to arbitrator by intervention of the Court. That apart as per Section 36 of the Act No.26 of 1996 the arbitral award is enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court. In the instant case, the proceedings were initiated by the respondent herein in the year 1994 by filing O.S.No.9 of 1994 under Section 20 of the repealed Act No.10 of 1940. The said suit was decreed appointing an Arbitrator on 17.04.1997 by which date the new Act No.26 of 1996 has come into force. There is no dispute about the fact that the decree was subsequently modified on 1.11.2005 replacing the arbitrator initially appointed and ultimately an arbitral award could be passed only on 8.12.2008. Admittedly no further steps were taken under the repealed Act No.10 of 1940 for making the award dated 8.12.2008 a rule of the court, but the same has been straightaway sought to be enforced by filing E.P.No.11 of 2009. Having regard to the aforesaid undisputed facts, the only question that arises for consideration is whether the award dated 8.12.2008 can be enforced in the absence of a judgment and decree of the Court as provided under Section 17 of the repealed Act No.10 of 1940. To answer the above question, it is necessary to refer to Section 85 of the Act No.26 of 1996 which runs as under : 85. Repeal and savings (1) Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 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; and (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. It is clear from Section 85 (2) (a) of the Act No.26 of 1996 that notwithstanding the repeal of the old Act No.10 of 1940, the provisions of the said Act shall apply in relation to arbitral proceedings which commenced before the new Act No.26 of 1996 came into force unless otherwise agreed by the parties. Section 85 (2) (a) of the Act No.26 of 1996 further made it clear that Act No.26 of 1996 shall apply in relation to arbitral proceedings which commenced on or after the said Act has come into force. In THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA LTD.[1] having considered the scope of Section 85 (2) of the Act No.26 of 1996, the Supreme Court held as under : 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 into force unless otherwise agreed by the parties and (2) new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. First limb can further be bifurcated into two : (a) Provisions of old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force and (b) 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 widest import as held by various decisions of this court in M/s. Doypack Systems Pvt. Ltd. JT 1989 (2 SC 518; Mansukhial Dhanraj Jain and Ors. JT 1995 (8 SC 293 ; M/s. Dhanrajamal Gobindram [1961 3 SCR 1020]; and Naveen Chemicals Mfg. and Ors. JT 1995 (8 SC 293. This expression "in relation to" has to be given full effect to, particularly when read in conjunction with the word "the provisions" of the old Act. That would mean that the old Act will apply to 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. 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. In U.P. STATE SUGAR CORPN. LTD. v. JAIN CONSTRUCTION CO.[2] it was further held that the arbitral proceedings in respect of a particular dispute commences on a date on which the request for that dispute to be referred to arbitration was received. In the said case, the parties had entered into an agreement on or about 11.04.1988 as regards certain civil works. Disputes and differences having arisen between the parties, an application was made on 1.5.1991 under Section 20 of the repealed Act No.10 of 1940 in the Civil Court for appointment of an arbitrator. The said suit was dismissed on 1.5.1992 and aggrieved by the same an appeal was preferred before the High Court under Section 39 (iv) of the Arbitration Act, 1940. The said appeal was disposed of by the High Court relegating the party to the appropriate remedy available under Act No.26 of 1996 since the new Act has come into force as on that date. While setting aside the judgment of the High Court and allowing the Civil Appeal, the Supreme Court held that since the arbitral proceedings were set in motion before the enactment of the new Act No.26 of 1996 when the party invoked the arbitration agreement as contained in the contract, the provisions of the Act No.10 of 1940 shall apply. Accordingly, the matter was remitted to the High Court for consideration of the merits of the matter afresh. In the instant case, the respondent herein initiated proceedings under Section 20 of the Arbitration Act, 1940, on 11.2.1994 alleging that though he demanded reference of disputes to the Arbitrator, the Corporation refused to do so. In the circumstances and in the light of the ratio laid down in THYSSEN STAHLUNION GMBH’S case (1 supra) and U.P. STATE SUGAR CORPN. LTD. (2 supra), it can be safely concluded that the arbitral proceedings had commenced at least on 11.2.1994 on the date of the presentation of the application under Section 20 of the repealed Act No.10 of 1940. Consequently, as per Section 85 (2) (a) of the Act No.26 of 1996 the provisions of the repealed Arbitration Act, 1940 alone shall apply. However, the learned counsel for the respondent while relying upon a decision of High Court of Calcutta in UNION OF INDIA v. MONORANJAN MONDAL[3] vehemently contended that the arbitral proceedings can be said to have been commenced only after the replacement of the sole Arbitrator by order dated 10.11.2005 in I.A.No.212 of 2005 and therefore the provisions of the repealed Act No.10 of 1940 have no application at all. In MONORANJAN MONDAL’S case (3 supra) the arbitrators appointed did not indicate their willingness to act as such nor entered upon any reference prior to coming into force of Act No.26 of 1996. The Division Bench of High Court of Calcutta while relying upon the decision in SECY. TO THE GOVT. OF ORISSA v. SARBESWAR ROUT[4] arising under the repealed Act No.10 of 1940 held that arbitral proceedings did not commence under the Arbitration Act, 1940. Thus it was concluded that the provisions of the Arbitration Act, 1940 were not attracted. The Division Bench also held that Section 21 of the Act No.26 of 1996 will have no application to decide and determine whether the arbitral proceedings had commenced before coming into force of the new Act No.26 of 1996 or not. The said decision of the Calcutta High Court in MONORANJAN MONDAL’S case (3 supra) which was rendered following a decision arising under the repealed Act No.10 of 1940 without noticing the law laid down by the Supreme Court in THYSSEN STAHLUNION GMBH’S case (1 supra) is not a good law. For ready reference, the conclusions arrived in THYSSEN STAHLUNION GMBH’S case (1 supra) with regard to applicability of the provisions of the new Act No.26 of 1996 in relation to arbitral proceedings commenced before coming into force of the said Act may be extracted hereunder : 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 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 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 award becoming decree under Section 17 thereof and also appeal arising thereunder. 3. In cases where arbitral proceedings have commenced before coming into force of the new Act and are pending before the Arbitrator. It is open to the parties to agree that 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 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 that some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force. 6. If narrow meaning of the phrase "in relation to arbitral proceedings" is to be accepted, it is likely to create 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. In the light of the law laid down in the above case, the contention of the learned counsel for the respondent that the arbitral proceedings had commenced only on 1.8.2006 when the new arbitrator appointed in I.A.No.212 of 2005 had entered upon the reference cannot be accepted. The further decision relied upon by the learned counsel for the respondent in DELHI TRANSPORT CORPORATION LTD. v. ROSE ADVERTISING[5] is also not relevant for the purpose of the present case. In the said case, there was a specific clause in the agreement between the parties under which it was agreed that the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof for the time being in force shall apply to the arbitration proceedings. Having regard to the said clause and particularly in view of the fact that the parties had participated in the proceedings before the arbitrator and even the arbitrator proceeded on that understanding and gave his award in pursuance of the new Act No.26 of 1996, the Supreme Court held that the matter was rightly dealt with under the new Act No.26 of 1996. The facts in the present case are entirely different and there is nothing on record to show that the Corporation has ever agreed to abide by the provisions of the new Act No.26 of 1996. It is also relevant to note that the Corporation did not appear before the arbitrator and did not file its statement of defence. Hence, merely because the award dated 8.12.2008 was passed purportedly under the provisions of the new Act No.26 of 1996, it cannot be inferred that the Corporation had agreed to be governed by the new Act No.26 of 1996. For the reasons stated above, I am of the opinion that the provisions of the repealed Arbitration Act, 1940 shall apply and consequently the Award dated 8.12.2008 cannot be enforced unless it is made a rule of the Court. Accordingly, the impugned order of attachment is hereby set aside and the Civil Revision Petition is allowed holding that the execution proceedings are not maintainable. No costs. ______________ G. ROHINI, J. Dt. 06.10.2009 gbs Note:- LR copy to be marked. (B/O) gbs [1] AIR 1999 SC 3923 = 1999 (10) Supreme 378 [2] AIR 2004 SC 4335 [3] AIR 2000 CALCUTTA 148 [4] AIR 1989 SC 2259 [5] AIR 2003 SC 2523 = 2003 (3) Supreme 431