Bombay High Court

Reshma Rejendra Desai And Rajendra ... vs L And T Finance Limited on 21 February, 2018

Author:
R.D. Dhanuka

Bench:
R.D. Dhanuka

carbp434-17

vai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL JURISDICTION

COMMERCIAL ARBITRATION PETITION NO.434 OF 2017

WITH
NOTICE OF MOTION NO.488 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.434 OF 2017

Global Aviation Services Private Limited, )
A Company incorporated under the )

Companies Act, 1956
having its registered )
Office at NKM International House, 6th )
Floor, B.M. Chinai Marg, 178, Backbay )
Reclamation, Mumbai - 400 020. )
)
Presently at G-A, Ground Floor, Pil Court, )
Sherbanoo Co-Operative Housing )
Society Limited, 111, Maharshi Karve )
Road, Marine Lines, Mumbai - 400 020. ) ...Petitioner
) ...Ori.Claimant

....Versus....

Airport Authority of India )
A Body Corporate constituted by Central )
Government under Airport Authority Act, )
(55 of 1994), having its office at )
Safdarjung Airport, New Delhi - 110 003 ; )
)
And having its Regional Office at the )
Regional Executive Director, Western )
Region, Airports Authority of India, )
Mumbai, C.S.I. Airport, Mumbai - 400 099. ) ...Respondent

WITH
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017
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WITH
NOTICE OF MOTION NO.690 OF 2017
WITH
NOTICE OF MOTIONNO.165 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017

Ganesh Benzoplast Limited )
A Public Limited Company incorporated )
under the
Companies Act, 1956
and )
having its registered Office at 1st Floor, )
Dina Building, 53, Maharshi Karve Road, )
Marine Lines, Mumbai - 400 020. ) ...Petitioner

....Versus....

Bharat Petroleum Corporation Limited )
A Public Limited Company incorporated )
under the
Companies Act, 1956
and )
having its registered Office at 4 & 6, )
Currimbhoy Road, Ballard Estate, )
Mumbai - 400 001. ) ...Respondent

WITH
ARBITRATION PETITION NO.159 OF 2017

B. M. Chapalkar & Sons ...Petitioner
V/s.
Union Of India ...Respondent

WITH
COMMERCIAL ARBITRATION PETITION NO.173 OF 2017

Mumbai Metropolitan Region Development Authority ...Petitioner
V/s.
M/s Patel Engineering Ltd. ...Respondent

WITH
ARBITRATION PETITION NO.230 OF 2017
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Vijay Shree Pal Sharma ...Petitioner
V/s.
M/s. L & T Finance Ltd. ...Respondent

WITH
ARBITRATION PETITION NO.232 OF 2017

Vijay Shree Pal Sharma ...Petitioner
V/s.
M/s. L &T Finance Ltd. ...Respondent

WITH
ARBITRATION PETITION NO. 413 OF 2017

Union Of India Through Controller Of Stores ...Petitioner
V/s.
Union Roadways Corporation ...Respondent

WITH
ARBITRATION PETITION NO.448 OF 2017

SMC Global Securities Ltd. ...Petitioner
V/s.
Iqbal Hussain Bhati ...Respondent

WITH
ARBITRATION PETITION NO.976 OF 2016

Haresh N. Awatramani & Anr. ...Petitioner
V/s.
The Saraswat Co-operative Bank Limited & Ors. ...Respondents

WITH
ARBITRATION PETITION NO.399 OF 2017

MIRC Electronic Limited ...Petitioner
V/s.
M/s.Power Plaza ...Respondent
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WITH
ARBITRATION PETITION NO.484 OF 2017

JM Financial Services Ltd. ...Petitioner
V/s.
Gouri Arvind Kapoor ...Respondent

WITH
ARBITRATION PETITION NO.614 OF 2017

Iqbal Hussain Bhati ...Petitioner
V/s.
SMC Global Securities Ltd. & Anr. ...Respondents

WITH
ARBITRATION PETITION NO.624 OF 2017

Bharat Sanchar Nigam Limited ...Petitioner
V/s.
Trimax IT Infrastructure & Services Limited ...Respondent

WITH
ARBITRATION PETITION NO.655 OF 2017

Reshma Rejendra Desai & Anr. ...Petitioners
V/s.
L And T Finance Limited ...Respondent

Mr.Shyam Mehta, Senior Counsel with Mr.Hitesh Mutha, Mr.Sumit
Raghani, Ms.Dimple Majithia, Ms.Dipika Bhateja i/b Agrud Partners
for the Petitioner in CARBP No.434 of 2017.

Mr.Sagar Kasar, with Mr.Amol Wagh and Ms.Sheha Sanap for the
Petitioner in ARBP No.159 of 2017.

Ms.Sapna Rachure i/b T.N. Tripathi & Co. for the Petitioner in ARBP
No.976 of 2016.
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Mr.A.S. Daver with Mr.Anuj Jaiswal, Mr.Nirav Shah, i/b Little & Co. for
the Petitioner in CARBP No.173 of 2017.
Mr.Pawan Pandey i/b Clayderman & Co. for the Petitioner in ARBP
Nos.230 of 2017 and 232 of 2017.

Mr.Sanjay Jain with Mr.Aniketh Nair and Ms.Apoorva Gupta i/b
Mr.Mustafa Motiwala for the Petitioner in CARBP No.236 of 2017.

Mr.C.N. Chavan for the Petitioner in ARBP No.399 of 2017.

Mr.Prakash Shah with Mr.Santosh Mungekar, Mr.Rohin Shah for the
Petitioner in ARBP No.448 of 2017 and the Respondent No.1 in
ARBP No.614 of 2017.

Mr.Simil Purohit i/b M/s Purohit & Co. for the Petitioner in ARBP
No.484 of 2017.
Mr.Iqbal Hussain Bhati - Petitioner Present in Person in ARBP
No.614 of 2017.
Mr.Shriram Kulkarni with Mr.Sachin Chavan, Ms.Megna Pujari and
Ms.Madhu Deshmukh for the Petitioner in ARBP No.624 of 2017.

Mr.Paras Vira i/b Mr.Anand Kate for the Petitioner in ARBP No. 655
of 2017.

Ms.Lopa Munim with Mr.Sanish Mathew i/b Rajesh Kothari & Co. for
the Respondent in CARBP No.434 of 2017.

Mr.T.J. Pandian for the Respondent in ARBP No.159 of 2017 and the
Petitioner in ARBP No.413 of 2017.

Mr.Bhupesh Samant for the Respondent No.1 in ARBP No.976 of
2016.

Ms.Sumi Soman i/b Mr.Priyanka Pawar for the Respondent in
CARBP No.173 of 2017.

Mr.Anand Poojary with Ms.S.I. Joshi and Ms.Nikita Pawar, Ms.Jalpa
i/b S.I. Joshi & Co. for the Respondent in ARBP Nos.230 of 2017, 232
of 2017 and 655 of 2017.

Mr.Girish Agarwal for the Respondent in ARBP No.413 of 2017.

Mr.Anil Balani for the Respondent in ARBP No.484 of 2017.
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Mr.Ashish Kamat with Mr.S. Banerjee i/b Mr.Rajesh Gaikwad for the
Respondent in ARBP No.624 of 2017.

Mr.Pankaj Savant, Senior Advocate, a/w. Mr.Sandeep Aole, Mr.Saket
More,Mr.Subit Chakrabarti, Mr.Vishesh Kalra, Ms.Neha Joshi,
i/b.Vidhi Partners for the Respondent in CARBP No.236 of 2017.

CORAM : R.D. DHANUKA, J.
RESERVED ON : 25TH JANUARY, 2018
PRONOUNCED ON : 21ST FEBRUARY, 2018

ORDER :
-

1. The respondents in all these petitions have raised a
preliminary issue of maintainability of these petitions on the ground
that no notice under
section 34 (5)
of the Arbitration & Conciliation
Act, 1996 has been issued by the petitioners to the respondents
before filing these arbitration petitions and thus the petitions are liable
to be dismissed on that ground itself. In view of this preliminary
objection raised by the respondents, learned counsel appearing for
the parties have addressed this Court on this issue at this stage at
great length, which is being considered by this Court by passing a
common order in the aforesaid matters.

2. The questions that arise for consideration of this Court
are :-

i). If the notice invoking arbitration agreement is issued
prior to 23rd October, 2015, whereas the impugned
award is rendered after 23rd October, 2015 and if the
arbitration agreement contemplate that the parties
would be governed not only by the provisions of the

Arbitration & Conciliation Act, 1996
, but also any
statutory modification thereof or repeal thereto, the
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provisions inserted by the
Arbitration & Conciliation
(Amendment) Act, 2015
would apply to such
proceedings filed after 23rd October, 2015 or not ?

ii). If there was no agreement between the parties that
that the parties would be governed by not only the
provisions of the
Arbitration & Conciliation Act, 1996

but also any statutory amendment thereto or repeal
thereto and the notice was issued prior to 23rd
October, 2015 but the arbitral award is rendered
after 23rd October, 2015, whether provisions of the

Arbitration & Conciliation (Amendment) Act, 2015

would apply to such arbitral proceedings
commenced prior to 23rd October, 2015 ?

iii). If the arbitral notice was issued prior to 23rd October,
2015 and the the arbital award was rendered prior to
23rd October, 2015 however the arbitration petition is
filed after 23rd October, 2015 whether the provisions
of the
Arbitration & Conciliation (Amendment) Act,
would apply to such pending petitions ?

iv) Even if the parties would be governed by the
provisions of the
Arbitration & Conciliation
(Amendment) Act, 2015
depending upon the facts

and circumstances of each case, whether issuance
of prior notice under
section 34(5)
by the petitioner
upon the respondent before filing the arbitration
petition under
section 34
is mandatory or directory
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and the consequence, if any, for non-compliance of
such prior notice ?

3. The petitioner in Commercial Arbitration Petition No.434 of
2017 began the arguments on these issue first and thus the facts in
the said arbitration petition which are relevant for the purpose of
deciding these preliminary issues raised by the respondents are
summarized in this order.

4. The respondents had invited the bids for setting up flying
schools at 11 airports all over India including two at Surat Airport. The
final bid of the petitioner was accepted by the respondents. The
petitioner accepted all the terms and conditions of the allotment letter
sent by the respondents. The respondents issued a modification by a
letter of allotment to the petitioner on 28 th March, 2008. The petitioner
accepted the terms and conditions of the letter of allotment as well as
modification thereto on 4th April, 2008. The dispute arose between the
parties.

5. On 28th February, 2011, the petitioner issued a notice
invoking arbitration agreement to the respondents to settle the claims
between the parties. The petitioner sent a reminder to the
respondents on 7th April, 2011 and once again called upon to appoint
a sole arbitrator. On 5th January, 2012, the respondents issued a
notice of termination of agreement. The petitioner filed an application
under
section 11
of the Arbitration & Conciliation Act, 1996 for
seeking an appointment of a sole arbitrator. On 4 th December, 2012,
the learned designate of the Hon'ble Chief Justice of this Court
disposed of the said Arbitration Application No.67 of 2012 and
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referred the disputes between the parties by appointing a sole
arbitrator. On 12th April, 2017, the learned arbitrator rendered an
award thereby rejecting the claims made by the petitioner and partly
allowing the counter claim made by the respondent. Being aggrieved
by the said award, the petitioner herein lodged this arbitration petition
under
section 34
of the Arbitration & Conciliation Act, 1996 on 11 th
July, 2017 which was taken on file on 21st August, 2017.

6.
Sections 34 (5)
and
34(6)
were inserted by the
Arbitration
& Conciliation (Amendment) Act, 2015
dated 31st December, 2015
with effect from 23rd October, 2015 (for short the said "Amendment
Act") which read thus :-

"(5) An application under this section shall be
filed by a party only after issuing a prior notice to the
other party and such application shall be
accompanied by an affidavit by the applicant
endorsing compliance with the said requirement.

(6) An application under this section shall be
disposed of expeditiously, and in any event, within a
period of one year from the date on which the notice
referred to in sub-section (5) is served upon the other
party."

7. Learned counsel for the respondents raised a preliminary
objection that since the petitioners had not issued prior notice to the
respondents of filing this application under
section 34
of the
Arbitration & Conciliation Act, 1996, this application could not have
been filed by the petitioner before issuance of such prior notice and
thus the arbitration petition under
section 34
is not maintainable and
deserves to be dismissed on that ground alone. It is also urged by the
respondents in their brief preliminary objection raised at the threshold
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that the said provision is mandatory and not directory. In view of this
preliminary objection raised by the respondents through their
respective counsel, I have heard the learned counsel for the parties
on these preliminary objections.

8. Mr.Mehta, learned senior counsel for the petitioner in
Commercial Arbitration Petition No.434 of 2017 submits that the
notice invoking arbitration agreement was admittedly issued by the
petitioner on 28th February, 2011, which was immediately received by
the respondent. The respondent did not agree to the appointment of
any arbitrator. The petitioner had thus filed an arbitration application
under
section 11(6)
of the Arbitration & Conciliation Act, 1996 before
this Court in the year 2012. He submits that the then designate of the
Hon'ble Chief Justice by an order dated 4 th December, 2012 had
appointed a former Judge of this Court as a sole arbitrator and
referred the disputes between the parties to the arbitration of the
learned arbitrator. He submits that in view of the petitioner invoking
arbitration agreement as far back as on 28 th February, 2011, the
arbitral proceedings had already commenced upon receipt of the said
notice invoking arbitration agreement by the respondent which was
much prior to insertion of
section 34(5)
of the Arbitration &
Conciliation Act, 1996 in
section 34
which was inserted with effect
from 23rd October, 2015.

9. It is submitted by the learned senior counsel that merely
because the arbitral award came to be rendered on 12th April, 2017
i.e. after the said provision of
section 34(5)
was inserted in
section
, the said provision under
section 34(5)
cannot be made applicable
to the arbitral proceedings which had commenced prior to 23 rd
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October, 2015. He submits that merely because this arbitration
petition was filed after the said provision of
section 34(5)
was
inserted, the said provision cannot be made applicable to the
arbitration application filed under
section 34
of the Arbitration &
Conciliation Act, 1996. The Court has to consider whether the arbitral
proceedings had already commenced prior to 23rd October, 2015 or
not and not as to when the arbitration petition under
section 34
was
filed by the petitioner challenging an award arising out of such arbitral
proceedings which had commenced prior to 23rd October, 2015.

10. Learned senior counsel placed reliance on
section 26
of
the Arbitration & Conciliation (Amendment) Act, 2015 which reads
thus :-

"26. Act not to apply to pending arbitral
proceedings. - Nothing contained in this Act shall
apply to the arbitral proceedings commenced, in
accordance with the provisions of
section 21
of the
principal Act, before the commencement of this Act
unless the parties otherwise agree but this Act shall
apply in relation to arbitral proceedings commenced
on or after the date of commencement of this Act."

Section 85
of the Arbitration and Conciliation Act, 1996
reads thus :-

"85. Repeal and saving :-

(1)
The Arbitration (Protocol and Convention)
Act, 1937
(6 of 1937), the
Arbitration Act, 1940
(10 of
1940) and the
Foreign Awards (Recognition and
Enforcement) Act, 1961
(45 of 1961) are hereby
repealed.

(2) Notwithstanding such repeal, -
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(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."

11. Learned senior counsel placed reliance on clause 20 of
the agreement entered into between the parties which recorded the
arbitration agreement, which is extracted as under :-

"20. All disputes and differences arising out of
or in any way touching or concerning this Agreement
(except those the decision whereof is otherwise herein
before expressly provided for or to which the
Public
Premises (Eviction of Unauthorized Occupants) Act,
and the rules framed thereunder which are now
in force or which may hereafter come into forces are
applicable shall be referred to the sole arbitration of a
person to be appointed by the chairman of the
Authority on in case the designation of Chairman is
changed or his office is abolished by the person for
the time being entrusted, whether or not in addition to
other functions with the functions of the Chairman.
Airports Authority of India, by whatever designation
such person may be called and if the arbitrator so
appointed and willing to act, to sole arbitration of some
other person to be similarly appointed and willing to
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act as such arbitrator. It will be no objection to any
such appointment that the arbitrator so appointed is a
servant of the Authority and that he had to deal with
the matters to which this Agreement relates and that in
the course of his duties as such servant of Authority
he had expressed views on all or any of the matters in
dispute or difference. The award of the arbitrator so
appointed shall be final and binding on the parties.
The Arbitrator may with the consent of the parties
extend from time to time then time for making the
publishing the award."

12. Learned senior counsel placed reliance on the judgment of
the Supreme Court in case of
Thyssen Stahlunion GMBH vs. Steel
Authority of India Limited
, (1999) 9 SCC 334 and in particular
paragraphs 2, 4, 5, 7, 12, 13, 22, 23, 25, 27, 28, 30, 32 and 33. He
also placed reliance on the judgment of this Court in case of The
Board of Trustees of the Port of Mumbai vs. M/s.Afcons
Infrastructure Limited, (2016) SCC OnLine Bom. 10037 and in
particular paragraph 289. He submits that since in the arbitration
agreement recorded in clause 20 of the License Agreement dated 6th
June, 2008, the parties had not agreed that the parties will be also
bound by the provisions of any statutory amendment to the
Arbitration
& Conciliation Act, 1996
or any repeal thereto section 34(5) of the
Amendment Act, which is brought into effect with effect from 23 rd
October, 2015 cannot apply to the arbitral proceedings commenced
prior to 23rd October, 2015.

13. Learned senior counsel for the petitioner also placed
reliance on the judgment of the Supreme Court in case of
Milkfood
Limited vs. GMC Ice Cream (P) Limited
, (2004) 7 SCC 288 and in
particular paragraphs, 2, 8, 9, 10, 22, 47, 50, 51, 54, 57 and 90 to
buttress his argument that the arbitral proceedings had commenced
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in view of the notice issued under
section 21
of the Arbitration &
Conciliation Act, 1996. He submits that in
the said judgment
, the
Supreme Court had considered the issue as to whether the
provisions of the
Arbitration Act, 1940
shall apply or the provisions of
the
Arbitration & Conciliation Act, 1996
would apply to the pending
arbitral proceedings.

14. Mr.Mehta, also invited my attention to the judgment
delivered by a learned single Judge of this Court in case of
M/s.Rendezvous
Sports World vs. The Board of Control
for
Cricket in India, (2016) SCC OnLine 6064 and in particular
paragraphs 10, 11, 12, 17 and 20 to 23. He submits that the second
part of section 26 of the Amendment Act does not provide that it
would apply to the arbitral proceedings commenced earlier and prior
to the amendment having brought into force. He submits that since
the rights had been accrued in favour of the petitioner under the
unamended provisions of the
Arbitration & Conciliation Act, 1996
, the
same cannot be taken away impliedly or explicitly by virtue of
insertion of
section 34(5)
by the Amendment Act with effect from 23rd
October, 2015. He submits that the arbitration proceedings in Court
cannot be considered as continuation of the arbitral proceedings
before the learned arbitrator.

15. It is submitted that in the judgment of this Court in case of
M/s.Rendezvous
Sports World
(supra), learned single Judge has
interpreted section 36 of the Amendment Act and not the rights of the
parties under
sections 34
and
of the Act. He submits that in any
event
the said judgment
was not dealing with
section 34
of the
Arbitration & Conciliation Act, 1996 which section is invoked by the
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petitioner for challenging the impugned award.

In support of this
submission, learned senior counsel invited my attention to
paragraphs 46, 49, 52, 53, 56 to 58, 62, 65, 66, 67 and 78 of
the said
judgment
in case of M/s.Rendezvous
Sports World
(supra) and
would submit that paragraphs 22(5) and 32 of the judgment of the
Supreme Court in case of
Thyssen Stahlunion GMBH
(supra) have
not been considered by the learned single Judge of this Court in
the
said judgment
of M/s.Rendezvous
Sports World
(supra).

16. Mr.Mehta, learned senior counsel also invited my attention
to the judgment delivered by the learned single Judge of this Court in
case of
Enercon GmbH vs. Yogesh Mehra & Ors.
, 2017 SCC
OnLine Bom. 1744 and in particular paragraphs 29, 36 and 45. He
submits that
in that case
the arbitration petition was filed admittedly
under
section 34
after 23rd October, 2015 and thus that judgment
would not assist the case of the respondent and is clearly
distinguishable in the facts of this case.

17. Learned senior counsel placed reliance on the judgment
delivered by the Delhi High Court in case of
Ardee Infrastructure
Private Limited vs. Ms.Anuradha Bhatia
, (2017), SCC OnLine
Del.6402 and in particular paragraphs 24 to 33 and would submit that
the Delhi High Court had taken a different view than the view taken
by the Calcutta High Court.

Learned single Judge of this Court in
case of
Enercon GmbH vs. Yogesh Mehra & Ors.
(supra) did not
agree with the views expressed by the Delhi High Court in
the said
judgment
in case of
Ardee Infrastructure Private Limited
(supra).
Learned senior counsel placed reliance on the judgment of the Delhi
High Curt in case of Ministry of Defence, Government of India. vs.
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Cenrex Sp.Z.O.O. & Ors., (2015) SCC OnLine Del. 13944 and
would submit that in the said matter, the arbitration petition was
already filed before 23rd October, 2015. Reliance was placed on
paragraph 25 of
the said judgment
.

Learned senior counsel
distinguished the judgment in case of
Duro Felguera, S.A. vs.
Gangavaram Port Ltd.
, (2017) 9 SCC 729 on the ground that in that
matter the proceedings had commenced after 23rd October, 2015.

18. In his alternate submission, it is submitted by the learned
senior counsel that
section 34(5)
and
34(6)
have to be read together.
He submits that the purpose and intent of the legislation in inserting

section 34(5)
and (6) in
section 34
by virtue of the provisions of the
Amendment Act was that the proceedings filed under
section 34
shall
be heard expeditiously. He submits that the period of one year is
contemplated for the disposal of the application under
section 34
from
the date of service of notice under the provisions of
section 34(5)
. He
submits that
section 34(5)
refers to issuance of notice and does not
provide the mode and manner of service of notice. Whether a copy of
the arbitration petition is also required to be served upon the
respondent or not is also not provided in the said provision. He
submits that the said provisions also do not provide for any
consequences in case of any default for not issuing the notice under

section 34(5)
before filing of the arbitration petition or if the arbitration
petition is not disposed of within one year from the date of service of
the notice under
section 34(5)
.

19. Learned senior counsel placed reliance on the judgment of
the Supreme Court in case of
Vidyawati Gupta & Ors. vs. Bhakti
Hari Nayak & Ors.
, (2006) 2 SCC 777 and in particular paragraphs
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16, 22, 49, 51 and 52. He also placed reliance on the Bombay High
Court (Original Side) Rules and more particularly Rule 803-B and
would submit that the said provision also provides for issuance of a
notice to the respondent before admitting the petition to obviate the
delay on account of the Court notice.

20. Learned senior counsel placed reliance on the judgment of
the Supreme Court in case of
Kailash vs. Nanhku & Ors.
(2005) 4
SCC 480 and in particular paragraphs 41 and 42.

He also placed
reliance on the judgment of the Supreme Court in case of
Topline
Shoes Limited vs. Corporation Bank
, (2002) 6 SCC 33 and in
particular paragraphs 5, 8 and 11 in support of his submission that
the provisions under
section 34(5)
cannot be construed as
mandatory but has to be considered as directory. He submits that no
specific right is created in favour of the respondent even if no prior
notice before filing of the arbitration petition under
section 34
is
issued to the respondent. The said provision is not a penal provision.
It is submitted that the rules framed by this Court and more
particularly Rule 803-B substantially protects the interest of the
respondent.

21. Learned senior counsel placed reliance on the judgment of
the Madras High Court in case of M/s.Jumbo
Bags Limited vs. The
New India Assurance Co. Ltd.
, (2016) 2 LW 769 and in particular
paragraph 20. He submits that in
the said judgment
, the Madras High
Court has considered the amended
section 11
(6-
A) of the
Amendment Act
and had held that
section 26
makes it quite clear that
unless the parties agree, the provisions of the principal Act would
continue to apply and those provisions would be applicable only to
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the arbitral proceedings commenced on or after 23rd October, 2015.

22. Learned senior counsel placed reliance on the judgment of
the Kerala High Court in case of
Shamsudeen vs. Shreeram
Transport Finance Co. Ltd. & Ors.
, 2017 (2) KLJ 24 and in
particular paragraph 8 in which it has been held that if the parties do
not agree otherwise, if the arbitration proceedings had already
commenced before 23rd October, 2015, section 34(5) of the
Amendment Act has no application to such a situation and thus such
requirement prescribed under
section 34(5)
would not be complied
with by the petitioner.

23. Mr.Shyam Mehta, learned senior counsel for the petitioner
in Arbitration Petition No.434 of 2017 distinguished the judgment of
Patna High Court in case of
Bihar Rajya Bhumi Vikas Bank Samiti
Bihar vs. State of Bihar & Others
, delivered on 28th October, 2016
in Letters Patent Appeal NO.1841 of 2016 on the ground that the
Patna High Court has not considered that no consequences/effect of
non-compliance of the procedure prescribed under
section 34(5)
is
considered by the Patna High Court in
the said judgment
. He also
invited my attention to paragraphs 57, 59, 78 and 82 of
the said
judgment
.

24. Mr.Sanjay Jain, learned counsel appearing in the
Commercial Arbitration Petition No.236 of 2017 adopts the
submissions of Mr.Mehta in Commercial Arbitration Petition No.434 of
2017 and made various additional submissions on the preliminary
issues.
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25. Learned counsel invited my attention to the report of the
Law Commission of India dated 5th August, 2014 suggesting various
amendments to the
Arbitration and Conciliation Act, 1996
and more
particularly the Note in respect of
section 34(5)
which provides that
the said provision has been included to streamline the process and to
cut-short the long delays which accrued due to issue of Court notice.
He submits that the interpretation of a provision has to be done to
achieve the object of the enactment i.e. to avoid delays involved in
the service of notice by the Court. The object is not to prevent the
petition being filed. The interpretation has to be textual as well as
contextual i.e. purposive interpretation.

26.
Section 34(5)
does not prescribe the nature of the notice or
the contents of the notice and the said provision is vague. He also
placed reliance on
section 34(6)
which was also inserted by the said
Amendment Act and would submit that if the provision of
section
34(5)
is read with
section 34(6)
, a party could issue and serve a
notice on the 1st day of service of the award and file a petition under

section 34
on the 120th day. In such a situation, the period available
to the Court to dispose of the
section 34
petition would be only 8
months which could not have been an intention of the legislature.

27. It is submitted by the learned counsel that
section 34(5)
of
the Act does not provide for any consequences of non compliance
and leaves the consequences of non compliance to the discretion of
the Court. He submits that the Arbitration and Conciliation At, 1996
contains several provisions which provides consequences of non
compliance thereof. There are several other provisions where no
consequences are provided for non compliance thereof. He submits
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that the legislature thus where it wanted certain consequences to
follow has prescribed such consequences in case of non compliance
of such provisions. The intention of the legislature in not providing for
any consequences is deliberate such that the equity jurisdiction of the
Court or the discretion of the Court is not affected or curtailed in any
manner. This omission to provide consequences has also to be seen
in the light of the object to be achieved which is to ensure that the
respondent immediately gets notice of filing of the petition or the
intended filing of the petition and save him from expenses of
prosecuting remedies as if a challenge under
section 34
has not been
laid.

28. It is submitted by the learned counsel that the right to
challenge an award is a vested right. It vests on the date of
commencement of arbitral proceedings in accordance with
section 21

of the Act. He invited my attention to the judgment of this Court in
case of M/s.Rendezvous
Sports World vs. Board of Control
for
Cricket in India dated 8th August, 2016 in Chamber Summons
No.1530 of 2015 and more particularly paragraphs 50 and 53. He
submits that the rights of the petitioner as prevailing on the date of
commencement of arbitral proceedings in the present case was prior
to 23rd October,2015. Such right did not have any such pre-
conditions. An impediment now created by
section 34(5)
cannot
affect the vested right. Though processual in nature, an impediment
which affects a vested right, has to be treated as prospective and
cannot be given a retrospective effect. He placed reliance on
section
of the General Clauses Act and would submit that the said provision
clearly protects rights already vested and accrued in favour of any
party which cannot be taken away by any amendment or a repeal
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unless it is so provided in such amendment.

29. It is submitted by the learned counsel that the
Arbitration
and Conciliation Act, 1996
is a completed code qua arbitral
proceedings.
The Act
clarifies that the arbitral tribunal shall not be
bound by the provisions of the Civil Procedure Code, 1908 or the

Evidence Act, 1872
. The
Code of Civil Procedure
, 1908 is however
applicable to the proceedings under the
Arbitration and Conciliation
Act, 1996
in Court. The
Code of Civil Procedure
, 1908 gives ample
powers to the Court to dispense with the requirement of notice or to
waive the same in appropriate matters under section 151 or to extend
the time to issue the notice under section 148.
The Arbitration Act

recognizes party autonomy.

30. It is submitted by the learned counsel that section 26 of the
Amendment Act permits parties to agree "otherwise". The respondent
by not objecting and by not issuing a notice under
section 34(5)
has
agreed otherwise. The petitioner has served the notice along with
copy of the arbitration petition upon the respondent on 18th April, 2017
and has complied with or in any event substantially complied with the
requirement under
section 34(5)
of the Arbitration Act. It is submitted
by the learned counsel that the respondent can also waive a notice as
required under
section 34(5)
.
Section 4
of the Arbitration and
Conciliation Act, which provides for a waiver are applicable to the
facts of this case. He submits that the respondent did not object to
the filing of the petition for want of prior notice under
section 34(5)

when the petitioner had applied for condonation of delay by filing a
notice of motion and when the same was argued by the petitioner.
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31. It is submitted that the petitioner in this case has also filed
a notice of motion inter-alia praying for a declaration that the
petitioner has complied with
section 34(5)
of the Arbitration Act. No
affidavit in reply is filed by the respondent to the said notice of motion
till date. He submits that the respondent has also filed an arbitration
petition without issuing any notice under
section 34(5)
of the
Arbitration Act to the petitioner.

32. Learned counsel for the petitioner invited my attention to

section 34(6)
of the Arbitration and Conciliation Act, 1996 and would
submit that there is no consequence provided in the said provision
also, if the application challenging an impugned award under
section
is not disposed of within a period of one year from the date of
effecting service of the notice referred in
section 34(5)
. He also
placed reliance on
section 11(13)
of the Arbitration and Conciliation
Act, 1996 and would submit that even the said provision
contemplates disposal of proceedings under
section 11(6)
of the
Arbitration and Conciliation Act, 1996 within 60 days from the date of
service of notice on the opposite party. He submits that the said
provision also does not provide for any consequence if the said
application is not disposed of within 60 days from the date of service
of the notice on the other side.

33. Learned counsel for the petitioner also placed reliance on

sections 8(1)
,
16(2)
,
25(a)
and
34(3)
and would submit that those
provisions clearly provides for consequences of not complying with
those provisions which consequences are absent in
section 34(5)
and

34(6)
in those newly added provisions. Learned counsel appearing
for the petitioner placed reliance on following judgments :-
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a). Judgment of this Court in case of Ashraf Ahmed vs. The
Municipal Corporation of Greater Bombay in First Appeal No.292
of 1999,

b). Judgment of this Court in case of
Macquire Bank Ltd. vs.
Shilpi Cable Technologies Ltd. In Civil Appeal No.15135
of 2017,

c). Judgment of Supreme Court in case of
Kailash vs.
Nanhku & Ors.
(2005) 4 SCC 480,

d).
Central Bank of India vs. Femme Pharma Ltd. & Ors.
,
AIR 1982 Bom. 67,

e).
Thirumalai Chemicals Ltd. vs. Union of India & Ors.
,
2011 6 SCC 739,

f). M/s.Babbar
Sewing Machine Company vs. Trilok Nath
Mahajan
(1978) 4 SCC 188,

g).
State of Goa vs. Western Builders
, (2006) 6 SCC 239,

h). Raptakos Brett And Co. Ltd. vs. Ganesh Property, AIR
1998 SC 3085, and

i).
Rohanlal Kuthalia & Ors. vs. R.B.Mohan Singh Oberoi
,
(1975) 4 SCC 628.

34. Learned counsel submits that if the consequence is not
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provided for compliance of any particular provision, such provision
has to be construed as directory and not mandatory. Such provision
can be also waived. He also placed reliance on the Bombay High
Court (Original Side) Rules and more particularly Rule 227 providing
for six months time for issuance of notice by the Court in arbitration
matters. He also placed reliance on
section 80
of the Code of Civil
Procedure, 1908 and
section 527
of the Mumbai Municipal
Corporation Act, 1882.

35. It is submitted by the learned counsel that
section 34(5)

only refers to issuance of prior notice and does not contemplate filing
of the arbitration application impugning an arbitral award after service
of the notice to the other party whereas
section 34(6)
contemplates
period of disposal of arbitration application within one year from the
date of service of notice upon other party. He submits that in view of
such conflicting provision, the Court can compute disposal of the
arbitration application from the date of filing petition or from the date
of issuance of the Court notice. He submits that thus the notice
contemplated under
section 34(5)
has to be considered as directory
and cannot be considered as mandatory.

36. Mr.Jain, learned counsel for the petitioner submits that
section 26 of the Amendment Act does not apply to the pending
arbitral proceedings as on 23rd October, 2015. He led emphasis on
the words "nothing contained in this Act shall apply to the arbitral
proceedings commenced in accordance with the provisions of section
21 of the Principal Act before commencement of this Act". He submits
that the phrases " commenced" and "arbitral proceedings" used in the
said
section 26
are only to identify the beginning point of the
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proceedings to which the amendment will not apply. The
commencement of proceedings is identified as it is well settled
principle of law that when the proceedings are to be governed and
decided in accordance with law prevalent on the date of institution of
the proceedings. He submits that the beginning point
"commencement of the arbitral proceedings" is equated to the
institution of the proceedings in Court.

37. It is submitted that the phrase "date of commencement of
the arbitral proceedings" is a legal fiction and on the date of
commencement there are in fact no arbitral proceedings instituted. A
request for reference of disputes to arbitration is the date of
commencement of the arbitral proceedings. It is submitted that the
phrase "arbitral proceedings" is not a stand alone phrase but it is in
conjunction with the words "commenced in accordance with
section
". Arbitral proceedings commences on such notice, irrespective of
whether the reference is ultimately made to the arbitral tribunal or not.
It only seeks to identify the date of commencement and not the
nature of the proceedings to which it applies. It sets a time line i.e.
starting line. He submitted that the amended provisions inserted by
the said Amendment Act thus would apply to those arbitral
proceedings where a notice under
section 21
is issued after 23 rd
October, 2015.

38. Learned counsel refers to the phrase "arbitral proceedings"

in various provisions of the
Arbitration & Conciliation Act, 1996
and
more particularly in
sections 9
,
,
,
,
,
,
,
,
29-A
,
,
,
31-A
,
,
,
and
. He submits that the intention of the
legislature is thus clear that if the notice invoking arbitration
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agreement is issued prior to 23rd October, 2015, then all such matters
would be governed by the provisions under the
Arbitration &
Conciliation Act, 1996
and not by the provisions of the Amendment
Act.

39. It is submitted that even in those cases where the notice
invoking the arbitration agreement is issued after 23 rd October, 2015
and the arbitral proceedings have commenced after that date, insofar
as the provisions under
section 34(5)
and
34(6)
of the Arbitration &
Conciliation Act, 1996 inserted by the Amendment Act is concerned,
the same being directory and not mandatory, all such arbitration
petitions filed without issuing such notice prior to the date of filing of
the arbitration petition cannot be dismissed on that ground. It is
submitted that section 26 of the Amendment Act does not refer to two
different sets of the arbitral proceedings i.e. (i) before the arbitral
tribunal and another before the Court.

40. Mr.S.S. Kulkarni, learned counsel appearing for the
petitioner in Arbitration Petition No.624 of 2017 placed reliance on the
Law Commission Report and would submit that the said report also
does not state whether the provisions of
section 34(5)
and
34(6)
are
mandatory or directory though has described some of the other
provisions as mandatory. He placed reliance on
section 34(2)
of the
Arbitration & Conciliation Act, 1996 and would submit that the powers
of the Court under such provision is not circumscribed by the
provision under
section 34(5)
and are not subject to such provisions.

Section 34(5)
cannot be read in isolation but has to be read in that
context.
Section 34(1)
confers substantive right on a party to
challenge an arbitral award.
Section 34(5)
provides merely for a
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notice which is by way of an intimation. No format of any such notice
is contemplated under the said provision. Even if an oral intimation is
issued to the other side, that may be sufficient. He submits that

section 34(5)
is procedural in nature and thus the petitioner can
always amend the grounds before the petition is filed. The petitioner
is not required to serve any proceedings along with notice.
Section
34(5)
is totally silent about the mode and manner of effecting the
service of notice.

41. Learned counsel then placed reliance on
section 34 (6)

and would submit that even if an arbitration petition filed under

section 34
is not decided within one year from the date of service of
notice under
section 34(5)
of the Act, the Court does not cease to
loose powers to decide such petitions and does not become functus
officio. The Court has to make an endeavor to decide such arbitration
petition within one year from the date of service of notice under

section 34(5)
and thus such provisions have to be construed as
directory and not mandatory. Learned counsel placed reliance on the
dictionary meaning of the term "notice prescribed in Law of Lexicon.
He also placed reliance on section 12(2) of the Bombay Rent Control
Act, 1947 and submits that the Courts have construed the said
provision as mandatory after considering the wordings and the
legislative intent for providing such provision. He submits that
section
34(5)
cannot be compared with
section 12(2)
of the Rent Act. The
said powers under
section 34(5)
does not fatter upon the powers
under
sections 34(1)
and
34(2)
of the Act. Learned counsel cited the
judgment of the Supreme Court in case of
Kailash vs. Nanhku &
Ors.
(2005) 4 SCC 480 and in particular paragraphs 23 to 28. It is
submitted that even if a notice under
section 34(5)
is not issued prior
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to the date of filing of the arbitration petition, substantive remedy of
the aggrieved party cannot be taken away under
section 34(1)
.

42. Learned counsel for the petitioner placed reliance on the
judgment of the Supreme Court in case
Parasramka Commercial
Company vs. Union of India
, 1969 (2) SCC 694 and in particular
paragraph 5 in support of his submissions that even if a notice is
issued by the petitioner to the respondent post filing of the petition, it
would amount to substantial compliance of provisions of
section 34(5)

and the purpose of such notice would be served.

43. Mr.Pujari, learned counsel appearing for the respondent in
Arbitration Petition No.238 of 2017 placed reliance on the unreported
judgment delivered on 25th October,2013 in First Appeal No.302 of
2013 in which this Court had considered
section 164
of the
Maharashtra Co-operative Societies Act in support of the submission
that since prior notice before filing arbitration petition was not issued
by the petitioner in the said Arbitration Petition No.238 of 2017, the
petition is not maintainable and deserves to be dismissed on that
ground alone. He submits that the said provision under
section 34(5)

is mandatory and not directory. He also placed reliance on the
judgment of this Court reported in 76 Company Cases 244 (Bom.) in
support of this submission.

44. Ms.Munim, learned counsel appearing for the respondent
in Commercial Arbitration Petition No.434 of 2017 on the other hand
submits that by virtue of insertion of
section 34(5)
and
34(6)
of the
Amendment Act, the Arbitration & Conciliation Act, 1996 is not
repealed. The Ordinance did not contain any saving provision. The
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arbitration ordinance was converted into the Amendment Act with
insertion of
section 26
as a saving section.

45. It is submitted that there is no period prescribed under

section 34(5)
for issuance of prior notice before filing an arbitration
petition challenging the award. The legislative intent of issuance of
such prior notice is for expeditious disposal of the arbitration
proceedings. She submits that if
section 34(5)
and
34(6)
are
construed by this Court as directory and not mandatory, the whole
purpose and legislative intent of expeditious disposal of the arbitration
proceedings would be frustruted. It is submitted that the provisions of

section 3(5)
and
34(6)
cannot be read in isolation but have to be read
with
section 34(1)
and
section 34 (2)
.
Section 34(5)
cannot be made
otiose by declaring it as directory. The notice period is not required to
be excluded by computing the period of limitation under
section 34(3)
.

46. Learned counsel invited my attention to the averments in
the Commercial Arbitration Petition No.434 of 2017 and would submit
that the notice invoking arbitration agreement was issued by the other
party on 20th February, 2011. The award was rendered by the learned
arbitrator on 12th April, 2017. On 5th June, 2017, the learned arbitrator
passed an order under
section 33
of the Arbitration & Conciliation
Act, 1996. The arbitration petition was filed on 11 th July, 2017. She
submits that admittedly the arbitral award is rendered after 23 rd
October, 2015 and the arbitration petition also came to be filed after
23rd October, 2015. She strongly placed reliance on the judgment of
this Court in case of M/s.Rendezvous
Sports World
(supra) and in
particular paragraphs 10, 11, 21, 25 to 28, 33, 34, 52, 53, 57, 58 and
78 and also in case of
Enercon GmbH
(supra) and in particular
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paragraphs 24, 28, 32, 38, 40 and 44 in support of her submission
that though the notice invoking arbitration agreement was given prior
to 23rd October, 2015 and the award was rendered after that date, all
the arbitration petitions challenging such award would be governed
by
section 34(5)
and
34(6)
to be read with
section 34(1)
and those
provisions thus will have to be complied with. She submits that there
are two sets of arbitral proceedings contemplated under
section 26
of
the Arbitration & Conciliation Act, 1996 i.e. one before the arbitral
tribunal and another in Court post award.

47. Learned counsel placed reliance on the judgment of the
Supreme Court in case of
Thyssen Stahlunion GMBH
(supra) and
submits that the phrase "in relation to the arbitral proceedings" cannot
be given a narrow meaning to mean only the pendency of the
arbitration proceedings before the learned arbitrator but would also
cover the proceedings before the Court. She submits that saving
section thus becomes exhaustive and takes within fold two different
types of proceedings arising out of the
Arbitration & Conciliation Act,
.
Section 6
of the General Clauses Act becomes applicable. She
submits that by all necessary implication, the amendments introduced
by the Amendment Act will apply to the proceedings other than the
arbitral proceedings even though the said proceedings may have
commenced prior to 23rd October, 2015.

She submits that this Court
has already held in
the said judgment
in M/s.Rendezvous
Sports
World
(supra) that the object of the amendment to
section 26
can be
fulfilled only by holding the saving
section 26
exhaustive.

It is
submitted by the learned counsel that this Court in case of
Enercon
GmbH
(supra) has also dealt with the effect of section 26 of the
Amendment Act.
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48. It is submitted that in view of the fact that the arbitration
petition has been filed after Amendment Act came into force and in
view of the fact that the saving clause 26 does not save post arbitral
proceedings under
section 34
from the application of the Amendment
Act, the mandatory provisions of
section 34(5)
will be applicable to
this matter and the petitioner not having complied with this mandatory
requirement, the arbitration petition deserves to be dismissed, as not
maintainable. She submits that issuance of a notice is a sine qua non
before filing of a challenge petition. It is submitted that
section 34(1)

clearly provides that a recourse to Court against an arbitral award
may be made only by an application for setting aside such an award
in accordance with sub-
sections 2
,
and
. A petition which is not in
compliance of the requirement of
section 34
is not valid and is not
maintainable. She led emphasis on the word "shall" used in
section
34(5)
and would submit that the said word would clearly indicate that
the petition itself could be filed only after compliance of the
mandatory notice and not otherwise.

49. Learned counsel placed reliance on the judgment of the
Supreme Court in case of
Union of India & Ors. vs. A.K. Pandey

holding that it is the duty of the Courts of justice to try to get the real
intention of the legislature by considering the whole scope of the
statutes. She placed reliance on the words "an application under

section 34(1)
shall be disposed in any event within a period of one
year from the date of such notice referred to in sub-
section 5
is
served". She submits that the word "only" is an exclusive word and
indicates the legislative intent that the section is mandatory. She
placed reliance on
section 25
of the Law Commission Report in
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support of this submission.

50. Learned counsel placed reliance on
section 11(13)
of the
Arbitration & Conciliation Act, 1996 and would submit that in the said
provision, a mandate is provided that the High Court or the Supreme
Court as the case may be shall decide an application as expeditiously
as possible and an endeavor shall be made to dispose of the matter
within a period of 60 days from the date of service of the notice on the
opposite parties. The words "in any event" are not used in the said
provision, whereas such words are used in section 34(6) of the
Amendment Act. She submits that the effect of
section 34(5)
is clearly
to impose a bar against the institution of the application under
section
34(1)
and the same is the only legislative purpose and intent to
dispose of the challenge applications within a period of one year from
issuance of the notice impugning an award.

51. Learned counsel for the respondent placed reliance on the
judgment of the Supreme Court in case of
Sharif-ud-Din vs. Abdul
Gani Lone
, AIR 1980 SC 303 and would submit that in
the said
judgment
, it is held by the Supreme Court that whenever a statute
prescribes that a particular act is to be done in a particular manner
and also lays does failure to comply with the said requirement, leads
to specific consequence and it would be difficult to hold that the
requirement is not mandatory.

She also placed reliance on the
judgment of the Supreme Court in case of
Union of India vs.
Popular Construction Company
, (2001) 8 SCC 470 and in
particular paragraph 12.

She also placed reliance on the judgment of
the Supreme Court in case of
Bihari Chowdhary & Anr. vs. State of
Bihar & Ors.
, (1984) 2 SCC 627 and would submit that since the
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language used in
section 34(5)
is clear and unambiguous, it is the
duty of the Court to give effect to such legislative intent and has to
construe such provisions strictly.

52. Learned counsel also placed reliance on the following
judgments :-

i). The judgment delivered by the National Company Law
Appellate Tribunal, New Delhi in case of Seema Gupta vs. Supreme
Infrastructure India Ltd. & Ors. in Company Appeals (AT)
(Insolvency) No.53 of 2017,

ii). The judgment delivered by the National Company Law
Appellate Tribunal in case of
Era Infra Engineering Limited vs.
Prideco Commercial Projects Pvt. Ltd.
in Company Appeals (AT)
(Insolvency) No.31 of 2017,

iii). The judgment of the Supreme Court in case of
State of
Kerala vs. M.S. Mani & Ors.
in Contempt Petition (Civil) No.280 of
1999,

iv). The judgment of the Supreme Court in case of
Yogendra
Pratap Singh vs. Savitri Pandey & Anr.
in Criminal Appeal No.605
of 2012 and another connected matters,

v). The judgment of the Supreme Court in case of
M/s.Shreeram
Finance Corporation vs. Yasin Khan & Ors.
, AIR
1989 SC 1769,
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vi). The judgment of the Supreme Court in case of Sharif-ud-

Din vs. Abdul Gani Lone
, AIR 1980 SC 303,

vii). The judgment of the Supreme Court in case of M/s.

Raptakos Brett & Co. Ltd. vs. Ganesh Property
, AIR 1998 SC
3085,

viii). The judgment delivered by the Division Bench of the Patna
High Court delivered on 28th October, 2016 in Letters Patent Appeal
No.1841 of 2016 in case of
Bihar Rajya Bhumi Vikas Bank Samiti,
Bihar - Jharkhand vs. The State of Bihar & Ors
.

53. Learned counsel for the respondent makes an attempt to
distinguish the judgment of this Court in case of
The Board of
Trustees of the Port of Mumbai
(supra) on the ground that
the said
judgment
is in conflict with the judgment of this Court in case of
M/s.Rendezvous
Sports World
(supra) and
Enercon GmbH

(supra).

Learned counsel distinguished the judgment of the Supreme
Court in case of
Thyssen Stahlunion GMBH
(supra) on the ground
that the question for consideration of the Supreme Court in
the said
judgment
was of the construction of
section 85(2)(a)
of the Arbitration
& Conciliation Act, 1996.

Learned counsel for the respondent also
makes an attempt to distinguish the judgment of the Supreme Court
in case of
Milkfood Limited
(supra) on similar ground.

54. Learned counsel for the respondent distinguished the
judgment of the Supreme Court in case of
Vidyawati Gupta & Ors.

(supra) and would submit that
section 34(5)
in this case being
mandatory, non-compliance of such mandatory provision would
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render the proceedings non-est in the eyes of law.
Learned counsel
for the respondent distinguished the judgment of the Supreme Court
in case of Kailas vs. Nanhku & Ors. (supra) on the ground that prior
notice contemplated under
section 34(5)
is an integral part of the
application under
section 34
touching to the maintainability of the
application itself and not a procedure in the facts before the Supreme
Court in the said judgment while considering the provisions of
Order
VIII Rule 1 of the Code of Civil Procedure
.

55. Learned counsel for the respondent distinguished the
judgment of the Supreme Court in case of
Topline Shoes Limited

(supra) on the ground that the object of the amendment to the
Principal Act, 1996 was by virtue of the amendments to
section 34(5)

read with
section 34(6)
so as to fix the time frame for disposal of the
challenge petitions filed under
section 34
so that the award creditor
will not be deprived of the fruits of the award.

Learned counsel for the
respondent distinguished the judgment of the Madras High Court in
case of M/s.Jumbo
Bags Limited
(supra) on the ground that
the
said judgment
is contrary to the judgments of this Court in case of
M/s.Rendezvous
Sports World
(supra) and
Enercon GmbH
(supra)

56. Learned counsel for the respondent distinguished the
judgment of the Kerala High Court in case of
Shamsudeen vs.
Shreeram Transport Finance Co. Ltd. & Ors.
, (supra) on the
ground that
the said judgment
is contrary to the principles
laid down
by
this Court in case of M/s.Rendezvous
Sports World
(supra) and

Enercon GmbH
(supra).

57.
Insofar as the judgment delivered by a single Judge of the
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Patna High Court in case of
Bihar Rajya Bhumi Vikas Bank Samiti

(supra) is concerned, it is submitted by the learned counsel for the
respondent that
the said judgment
is overruled by the Division Bench
of the Patna High Court.
Insofar as the judgment of the Himachal
Pradesh High Court dated 24th August, 2016 in case of M/s.Madhava
Hytech Engineers Pvt. Ltd. vs. The Executive Engineers and Anr.
In OMP (M) No.48 of 2016, delivered on 24th August, 2017 is
concerned, learned counsel for the respondent distinguished the said
judgment on the ground that the said judgment has dealt with an
application under
section 14
of the Limitation Act and the facts before
the Himachal Pradesh High Court in the said judgment were totally
different and are distinguishable in the facts of this case.

58. Mr.Ashish Kamat, learned counsel appearing for the
respondent in Arbitration Petition No.624 of 2017 adopted the
submissions made by Ms.Munim, learned counsel for the respondent
in Commercial Arbitration Petition No.434 of 2017 and would submit
that the object and purpose of introducing the
section 34(5)
and
34(6)

is expeditious disposal of the arbitration petitions challenging an
arbitral award. Such provisions are mandatory in its nature. The
arbitration petition challenging the arbitral award can be filed only
post issuance of such mandatory notice. The obligation to issue such
notice is on the party who seeks to challenge an arbitral award. The
duty is cast on the office of the Court to ensure that due compliance
of such mandatory notice is made by the petitioner before filing of the
arbitration petition under
section 34
.

59. It is submitted by the learned counsel that
section 34(5)

provides for an implied consequence of non-compliance of issuance
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of the mandatory notice. Though there is no specific consequence
provided in
section 34(6)
, if such arbitration application is not
disposed of within one year from the date of service of the notice
under
section 34(5)
upon the respondent, the period of one year may
be curtailed and such arbitration petition has to be disposed of by the
Court within the balance period left after service of such notice upon
the respondent. He submits that a party who deliberately delays filing
of the petition cannot be benefited. Even if the provisions of
section
34(6)
is not mandatory, the provisions of
section 34(5)
is mandatory.

60. Mr.Jain, learned counsel for the petitioner in Commercial
Arbitration Petition No.236 of 2017 in rejoinder placed reliance on
paragraph 289 of the judgment of this Court in case of
The Board of
Trustees of the Port of Mumbai
(supra) and distinguished the
judgment of this Court in case of M/s.Rendezvous
Sports World

(supra) by placing reliance on paragraphs 45, 62, 65, 66 and 78 and
would submit that in
the said judgment
, learned single Judge of this
Court has only decided the said matter based on the applicability of

section 36
of the Arbitration & Conciliation Act, 1996. In support of
this submission, he invited my attention to the paragraphs 10 to 12,
26, 27, 46, 52, 58 and 59 of
the said judgment
. He submits that in
the
said judgment
, the learned single Judge has not based her decision
on construing section 26 of the Amendment Act but
the entire
judgment
is based on the issue involved in
the said judgment
about
the applicability of
section 36
in the pending arbitration petitions prior
to 23rd October, 2015.

He once again led emphasis on paragraph
22(5) of the judgment of the Supreme Court in case of
Thyssen
Stahlunion GMBH
(supra). He submits that the right to file an
application under section 34 of the Arbitration & Conciliation Act,
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1996 had accrued in favour of the petitioner when the petitioner had
invoked the arbitration agreement by issuing a notice and when the
same was received by the other side in view of
section 21
of the
Arbitration & Conciliation Act, 1996. He submits that at the most, the
Court can construe that the requirement of notice under
section 34(5)

introduced by the Amendment Act would provide an additional
condition and not mandatory condition.

REASONS AND CONCLUSIONS :

61. Since the main arguments are advanced by the learned
counsel for the parties in Commercial Arbitration Petition No.434 of
2017 and Commercial Arbitration Petition No.236 of 2017, I shall
briefly indicate the admitted facts which are relevant for the purpose
of deciding the legal issues raised by the respondent in these batch
of petitions.

62. Insofar as Commercial Arbitration Petition No.434 of 2017
is concerned, the petitioner had issued a notice invoking arbitration
clause on 28th February, 2011. On 4th December, 2012, the learned
designate of the Chief Justice appointed the sole arbitrator in an
application filed by the petitioner under
section 11(6)
of the Arbitration
& Conciliation Act, 1996. On 23 rd October, 2015, the Amendment Act
came into effect. On 12th April, 2017, learned arbitrator made an
award i.e. after the Amendment Act came into force. On 21 st August,
2017, the petitioner filed this arbitration petition. The respondent has
raised a plea in the affidavit in reply dated 5th October, 2017 about the
maintainability of this petition in view of non-issuance of prior notice
by the petitioner under section 34(5) of the Amendment Act.

63. Insofar as Commercial Arbitration Petition No.236 of 2017
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is concerned, the petitioner had issued a notice invoking arbitration
agreement on 14th June, 2014. Learned arbitrator accepted his
nomination and entered upon the reference on 7 th August, 2014.
Learned arbitrator made an award on 25 th November, 2016. The
petitioner filed this arbitration petition on 12 th April, 2017. The
respondent has raised an objection about the maintainability of this
petition on the ground that the notice under section 34(5) of the
Amendment Act has not been served upon the respondent before
filing this petition across the bar.

64. On perusal of the aforesaid admitted facts, it is clear that in
both these matters the arbitration agreements were invoked much
prior to 23rd October, 2015. The arbitral awards are delivered by the
Arbitral Tribunal after 23rd October, 2015. Both the Arbitration
Petitions have been filed under
section 34
of the Arbitration &
Conciliation Act, 1996 after 23rd October, 2015.

65. Insofar as Commercial Arbitration Petition No.434 of 2017
is concerned, the arbitration agreement is recorded in clause 20 of
the agreement dated 6th June, 2008 between the parties to this
petition. The arbitration agreement does not provide that in case of
any dispute arising between the parties in future under the said
arbitration agreement, the parties will be governed not only by the
provisions of the
Arbitration & Conciliation Act, 1996
but also by any
statutory repeal thereto or any amendment thereto.

66. Insofar as Commercial Arbitration Petition No.236 of 2017
is concerned, the arbitration agreement is recorded in clause 25 of
the Terminalling / Handling Services Agreement dated 5 th August,
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2011. The arbitration agreement provides that the provision of the

Arbitration & Conciliation Act, 1996
or any statutory modification or
re-enactment thereof and the rules made thereunder for the time
being in force shall apply to the arbitration proceedings under the said
provision.

67. By section 27 of the Amendment Act, the Arbitration and
Conciliation (Amendment) Act, 2015 is repealed.
Section 21
of the
Arbitration and Conciliation Act, 1996 provides that unless 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 43
of the
Arbitration and Conciliation Act, 1996 provides that for the purposes
of this section and the
Limitation Act, 1963
(36 of 1963), an arbitration
shall be deemed to have commenced on the date referred in section

21.

68. The Supreme Court in case of
Thyssen Stahlunion
GMBH
(supra) has construed
section 85(1)(a)
of the Arbitration and
Conciliation Act and has held that the provisions of
Arbitration Act,
shall apply in relation to the arbitral proceedings which are
commenced before coming into force of the
Arbitration and
Conciliation Act, 1996
. Supreme Court has held that in the cases
where arbitral proceedings have commenced before coming into
force of the New Act (1996 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. The new Act would be applicable in relation
to arbitral proceedings which commenced on or after the new Act
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comes into force.

69. It is held that 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. 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. An
interpretation which leads to unjust and inconvenient results cannot
be accepted. A foreign award given after the commencement of the
new Act can be enforced only under the new Act.

70. The Supreme Court held that the provisions of the old Act
shall apply in relation to the 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. 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. It is held that 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
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award under that Act. Multiple and complex problems would arise if
the award given under the old Act is said to be enforced under the
new Act. Both the Acts are vastly different to each other. It is held that
when arbitration proceedings are held under the old Act, the parties
and the arbitrator keep in view the provisions of that Act for the
enforcement of the award. In paragraph (32) of
the said judgment
, it
is held that it is not necessary that for the right to accrue that legal
proceedings must be pending when the new Act comes into force. To
have the award enforced when arbitral proceedings commenced
under the old Act under that very Act is certainly an accrued right.

71. This Court in case of
The Board of Trustees of the Port
of Mumbai vs. Afcons Infrastructure Limited
(supra) has
considered a situation where notice invoking arbitration agreement
was issued much prior to 23rd October, 2015. The arbitral award was
rendered prior to 23rd October, 2015. The arbitration petition was filed
in the year 2012 and was pending till 23 rd December, 2016. There
was no provision in the arbitration agreement that the parties would
be governed by not only the provisions of the
Arbitration and
Conciliation Act, 1996
but also by the statutory amendment or
repealed thereto. This Court accordingly held that since the notice
invoking arbitration agreement was issued prior to 23rd October, 2015,
the provisions of amended
section 34
brought into effect on 23rd
October, 2015 would not be applicable to the facts of this case.

72.
In case of
Padmini C. Menon vs. Vijay C. Menon & Ors.

in Arbitration Petition No.9 of 2015 in its judgment delivered on 10th
January,2018, this Court held that in view of there being an
agreement between the parties that the parties would be governed
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not only by the
Arbitration and Conciliation Act, 1996
but also
statutory amendment or repeal thereto, though the arbitration
proceedings had commenced prior to 23rd October, 2015, the
amendment inserted in
section 11
as
section 11
(6-A) would be
applicable to the parties though the arbitration application filed by the
applicant in the year 2015 was pending in this Court on 23 rd October,
2015 and thereafter this Court after adverting to
section 85(2)(a)
and
section 26 of the Amendment Act has held that section 26 of the
Amendment Act is an non-obstante provision. If the parties agree that
the provisions contained in the said Amendment Act shall also apply
to the arbitral proceedings commenced in accordance with the
provisions of
section 21
of the Arbitration & Conciliation Act, 1996,
the said amended provision would apply to such proceedings
commenced earlier, otherwise the Amendment Act shall apply in
relation to the arbitral proceedings on or after the date of
commencement of the Amendment Act.

73. This Court held that in view of section 26 of the
Amendment Act and in view of the specific agreement between the
parties that the disputes will be settled not only in accordance with the
provisions of the
Arbitration & Conciliation, Act, 1996
prevailing on the
date of the execution of the said agreement but also any statutory
modifications thereof, Amendment Act would apply even if arbitral
proceedings had commenced prior to 23rd October, 2015. It is held
that
section 11
(6-
A) of the Amendment Act
thus would apply to the
parties. This Court also followed the earlier two judgments of this
Court in case of M/s.Amisha
Buildcon Pvt. Ltd. vs. Jidnyasa Co-

op. Housing Society Ltd., 2016 SCC OnLine Bom.

5234 and in
case of
Vipin Bhimlal Shah vs. Slum Rehabilitation Authority
in
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Arbitration Application No.251 of 2015 delivered on 12 th October,
2017 holding that the provisions of Amendment Act would apply in
view of such agreement between parties.

This Court also adverted to
the judgment of Supreme Court in case of
Duro Felguera vs.
Gangavaram Port Ltd.
, (2017) 9 SCC 729 in which the Supreme
Court had held that the parties would be governed by the amended
provisions under
section 11
(6-
A) of the Amendment Act
and also to
the several judgments of various High Courts taking a similar view. In
my view, the principles
laid down by
the Supreme Court in
the said
judgment
would apply to the facts of this case. I am respectively
bound by
the said judgment
.

74.
In my view, the principles
laid down by
the Supreme Court
in case of
Thyssen Stahlunion GMBH
(supra) and judgments of this
Court in case of
The Board of Trustees of the Port of Mumbai vs.
Afcons Infrastructure Limited
(supra) and Padmini C. Menon vs.
Vijay C. Menon & Ors. (supra) would apply to the facts of this case.
I am respectively bound by those judgments.

75. A perusal of section 26 of the Amendment Act of 2015
clearly indicates that unless the parties otherwise agree, no
provisions of the Amendment Act would apply to arbitral proceedings
commenced in accordance with the provisions of
section 21
of the
Arbitration and Conciliation Act, 1996 prior to 23rd October, 2015. It
also makes it clear that the provisions of Amendment Act shall apply
in relation to the arbitral proceedings commenced on or after the date
of commencement of the Amendment Act. It is thus clear that if in an
arbitration agreement is entered into prior to 23rd October, 2015, and
the parties had agreed that the parties would be governed not only by
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the provisions of the
Arbitration and Conciliation Act, 1996
but also by
statutory amendment thereto or repeal thereto and if the notice
invoking arbitration agreement under
section 21
is received by the
other party prior to 23rd October, 2015 when the arbitral proceedings
contemplated under
section 21
is commenced, the party will be
governed by not only the provisions of
Arbitration and Conciliation
Act, 1996
but also by the statutory amendments thereto or repeal
thereto and not otherwise.

76. If however there was no such agreement between the
parties to apply the provisions of statutory amendments or repeal to
the
Arbitration and Conciliation Act, 1996
and the arbitral proceedings
have commenced prior thereto 23rd October, 2015 by virtue of
section
of the Arbitration Act, such arbitral proceedings will be governed
by the provisions of the
Arbitration and Conciliation Act, 1996
before
its amendment brought into effect by Amendment Act w.e.f. 23rd
October, 2015 irrespective of the fact that the award is rendered after
23rd October, 2015 or that the arbitration petition challenging an
award is pending as on 23rd October, 2015 or filed thereafter.

77. In my view, since the arbitral proceedings commences on
receipt of the notice invoking arbitration agreement by the other party
as contemplated under
section 21
read with
section 43
of the
Arbitration and Conciliation Act, 1996, if such notice is received by the
other side after 23rd October, 2015, the provisions of the Amendment
Act would apply to such matters. The parties cannot agree that they
will not be bound by the provisions of the Amendment Act.

78. The respondent has strongly placed reliance on the
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judgment delivered by a learned Single Judge of this Court in case of
M/s.Rendezvous
Sports World
(supra) and also on the judgment
delivered by another learned Single Judge of this Court in case of

Enercon GmBH
(supra). Learned counsel appearing for the parties
have dealt with both these judgments threadbare for consideration of
this Court in support of their rival submissions.

79.
Insofar as the judgment M/s.Rendezvous
Sports World

(supra) is concerned, chamber summons was filed by the original
petitioner who had filed application under
section 34
of the Arbitration
Act inter-alia praying for dismissal of the application for execution of
the arbitral award filed by the judgment debtor. The arbitral awards in
that matter were made on 22nd June, 2015, 22nd June, 2015 and 28th
January, 2015 respectively. Arbitration petitions were filed on 16th
September, 2015 challenging the arbitral awards. One of the
arbitration petition was admitted on 19th October, 2015. The question
that arose before this Court in the said matter was whether in respect
of those awards which were delivered prior to 23rd October, 2015 and
the arbitration petitions also having been filed prior to 23rd October,
2015, those awards would become enforceable only if and when
those petitions under
section 34
were refused and not otherwise. A
question was also before this Court that if Amendment Act is held
applicable, whether after expiry of three months of the arbitral award,
it becomes enforceable in accordance with the provisions
of Code of
Civil Procedure
, irrespective of fact whether challenge has been filed
under
section 34
of the Act or not.

80. This Court recorded that there was no dispute between the
parties as regards the specific meaning of the term arbitral
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proceedings under the
Arbitration Act
. This Court also recorded that
there was no dispute between the parties that the first part of
section
carries restrictive meaning that the proceedings before the arbitral
tribunal which proceedings get terminated on passing of the final
award. It is held that by necessary implication, the saving section
becomes exhaustive i.e. it takes within it's fold all different types of
proceedings arising out of the
Arbitration Act
. It is thus clear that in
that judgment, there was no contest between the parties that the first
part of saving
section 26
carries restrictive meaning that the
proceedings before the arbitral tribunal which proceedings get
terminated with passing of the final award. The parties in that
proceedings also did not dispute that the
section 26
was consisting of
two parts i.e. the arbitral proceedings before arbitral tribunal which
are terminated by virtue of an order under
section 32(1)
and another
arbitral proceedings before Court of law.

81. This Court held that if use of the verb "has been" is held to
be in "present perfect tense",
section 36
of the Arbitration Act will be
applicable not only to cases where a petition under
section 34
of the
Arbitration Act is filed after 23rd October, 2015 but also to cases
where a petition has been filed before 23rd October, 2015. It is held
that all the applications under
section 34
pending in the Court for
consideration will attract
section 36(2)
of the Amended Act. It is held
that the vested right of the award-debtor under
section 34
of the
Arbitration Act is unaffected by the amendment to
section 36
of the
Arbitration Act. It is held that by the amended
section 34
of the
Arbitration Act, the shadow or impediment on the enforceability of the
arbitral award has been removed to enable a successful claimant to
enforce the arbitral award, unless the award-debtor obtains an order
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of interim stay from the Court under
section 36(3)
of the Arbitration
Act. The lifting of this shadow or impediment, on the enforceability of
the arbitral award operates only in future i.e. after 23rd October, 2015
on the basis of an existing state of affairs, even if the award was
passed or the petition under
section 34
of the Arbitration Act was filed
before 23rd October, 2015. The Amended
section 36
of the Arbitration
Act cannot be said to operate retrospectively, its operation is
prospective in nature. This Court accordingly dismissed the chamber
summons inter-alia praying for dismissing of the execution
application.

82. A perusal of the judgment rendered by this Court in case of
M/s.Rendezvous
Sports World
(supra) indicates that this Court has
held in
the said judgment
that right vested in the party under
section
of the Arbitration and Conciliation Act is unaffected and not taken
away by the amendment to
section 36
of the Arbitration Act. A vested
right available to the award-debtor would be only in the matter of
challenge to the arbitral award which had remained intact. It is held
that
section 36
of the Arbitration Act pertains only to the enforcement
of an award and its executability. The original
section 34
, imposed a
disability on the award-holder in executing the award during
pendency of the challenge to the award. It is held that the right to
interim relief cannot be a vested or accrued substantive right. The
disability imposed on the award-holder under original
section 36
was
absolute. It is thus clear that even in
the said judgment
, it is held by
this Court that insofar as right of an aggrieved party to challenge an
arbitral award is concerned, the said right is a vested right accrued to
him which is not affected by
section 36
by virtue of insertion of such
amendment by the Amendment Act.
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83. This Court in
the said judgment
in case of
M/s.Rendezvous
Sports World
(supra) held that the parties
in that
case
were ad-idem and both the parties had agreed that the term
'arbitral proceedings' referred in section 26 of the Amendment Act
refers to two separate arbitral proceedings i.e. one before the arbitral
tribunal before rendering of an award and another before this Court of
law after rendering of an award. In these proceedings however
Mr.Jain learned counsel for the petitioner had strenuously urged
before this Court that the term 'arbitral proceedings' used in section
26 of the Amendment Act referred to only one arbitral proceedings
which commences upon receipt of notice invoking arbitration
agreement under
section 21
of the Arbitration Act and not two
separate stages of arbitration proceedings i.e. one before the arbitral
tribunal and another before this Court. In my view, he rightly placed
reliance by the term 'arbitral proceedings' referred by the legislature in
various sections and more particularly
sections 9
,
,
,
,
,
,
,
,
29A
,
,
,
31A
,
,
,
and
. In
section 31A(1)(IV)
of
the Arbitration Act, the Court as well as the arbitral tribunal are
empowered to award cost based on the expenses incurred in
connection with the arbitral and Court proceedings.

84. The aforesaid provisions would clearly indicate that the
term 'arbitral proceedings' referred is only one arbitral proceedings
which commences by virtue of the receipt of notice under
section 21

of the Arbitration Act by the other party. The arbitral proceedings
commences even before a statement of claim is filed or even before
appointment of an arbitral tribunal. In my view, the arbitral
proceedings referred in section 26 of the Amendment Act and under
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various provisions of
Arbitration Act
referred to aforesaid cannot be
construed as proceedings before Court or cannot be construed as
two separate proceedings at two different stages i.e. one which
commences on receipt of notice invoking arbitration agreement under

section 21
and another before a Court i.e. at the stage of challenging
an award or otherwise.

85. In my view, a plain and simple interpretation of section 26
of the Amendment Act on conjoint reading with other provisions of the

Arbitration Act
referred to aforesaid wherein the term 'arbitral
proceedings' are referred would clearly indicate that the provisions in
the
Arbitration and Conciliation Act
prior to the provisions of
Amendment Act having been brought into effect would apply to all the
arbitral proceedings wherein a notice invoking arbitration agreement
under
section 21
was received by the other party prior to 23 rd
October, 2015 and the provisions of the
Arbitration Act
duly amended
by the Amendment Act would apply to all the arbitral proceedings
which have commenced after 23rd October, 2015 by virtue of a receipt
of notice invoking arbitration agreement by other party in view of

section 21
of the Arbitration and Conciliation Act, 1996. The phrase
"the date of commencement of the arbitral proceedings" is a legal
fiction and has to be read in conjunction with the words "commenced
in accordance with
section 21
".

86. The judgment of this Court in case of M/s.Rendezvous

Sports World
(supra) thus to this extent does not support the case of
the respondent but supports the case of the petitioner that the right to
challenge an arbitral award is vested in favour of the aggrieved party
and cannot be taken away by virtue of an amendment.
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87. The Supreme Court in case of Aravali Power Company
Pvt. Ltd. vs. M/s.Era Infra Engineering Ltd., 2017 SCC OnLine
1072 has considered the applicability of the Amendment Act in a
matter where notice invoking arbitration agreement was issued prior
to 23rd October, 2015. During the pendency of the arbitral
proceedings,
section 12
of the Arbitration and Conciliation Act, 1996
was amended by the same Amendment Act. The respondent before
the Supreme Court had invoked the amended provisions during the
pendency of the arbitration proceedings before the learned arbitrator
and had raised objection that the learned arbitrator was disqualified
being an employee in view of the amendment to
section 12(1)
read
with 7th Schedule. The respondent had also filed an application under

section 14
seeking termination of the mandate of the learned
arbitrator. High Court had entertained such application filed by the
respondent before the learned arbitrator and the petitioner before the
High Court. Supreme Court has reversed the said view of the High
Court and has categorically held that in pre-amendment cases, the
law
laid down in
Northern Railway Administration's case must be
applied and not otherwise.

88. It is held by the Supreme Court in that case governed by
1996 Act after the Amendment Act has come into force that if the
arbitration Clause finds foul with the amended provisions, the
appointment of the Arbitrator even if apparently in conformity with the
arbitration Clause in the agreement, would be illegal and thus the
Court would be within its powers to appoint such arbitrator(s) as may
be permissible. The procedure as laid down in unamended
section
mandated disclosure of circumstances likely to give rise to
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justifiable doubts as to independence and impartiality of the Arbitrator.
Supreme Court accordingly interfered with the order of the High Court
exercising jurisdiction in that case and held that the High Court ought
not to have interfered with the process and progress of the arbitration.

The principles laid down by the Supreme Court in case of
Aravali
Power Company Pvt. Ltd.
(supra) squarely applies to the facts of
this case.

This judgment of the Supreme Court is delivered after the
date of delivery of the judgment of this Court in case of
M/s.Rendezvous
Sports World
(supra) and in case of
Enercon
GmBH
(supra).

This Court while delivering these judgments did not
have benefit of the judgment of Supreme Court in case of
Aravali
Power Company Pvt. Ltd.
(supra).

89.
In my view, the judgment of this Court in case of
M/s.Rendezvous
Sports World
(supra) holding that there are two
stages of arbitral proceedings referred in section 26 of the
Amendment Act is based on the consensus of the parties and even
otherwise contrary to the judgment of Supreme Court in case of

Aravali Power Company Pvt. Ltd.
(supra). I am bound by the
judgment of Supreme Court.

90.
In case of
Voestalpine Schienen GmbH vs. Delhi Metro
Rail Corporation Ltd.
, (2017) 4 SCC 665, the Supreme Court has
considered a different situation where the notice invoking arbitration
agreement was issued after 23rd October, 2015 and the arbitral
proceedings had commenced after Amendment Act came into force.
The appointment of the arbitrator was not in conformity with section
12(1) of the Amendment Act Supreme Court interfered with such
appointment by applying the provisions of the Amendment Act, 2015.
The Supreme Court distinguished the judgments delivered prior to the
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said amendment to the facts of that case before the Supreme Court in
view of the admitted fact that the notice invoking arbitration
agreement was issued after 23rd October,2015.

91. This judgment of the Supreme Court is adverted to by the
Supreme Court in case of
Aravali Power Company Pvt. Ltd.
(supra)
and was distinguished on the ground that in that matter, the notice
under
section 21
of the Arbitration Act was issued prior to 23rd
October,2015. In my view the principles of law
laid down by
the
Supreme Court would apply to the facts of this case to a situation
where the notice under
section 21
is issued after 23 rd October, 2015
thereby arbitral proceedings having commenced after 23rd
October,2015. It is thus clear beyond reasonable doubt that if the
notice under
section 21
to invoke arbitration agreement has been
received prior to 23rd October, 2015, the arbitral proceedings had
commenced prior to 23rd October, 2015 and thus the provisions of the
unamended
Arbitration and Conciliation Act, 1996
would continue to
apply to such proceedings before the arbitral tribunal as well as
before Court and not the provisions of the Amendment Act.

This
Court in case of M/s.Rendezvous
Sports World
(supra) and in case
of
Enercon GmBH
(supra) did not have benefit of the judgment of
Supreme Court in case of
Voestalpine Schienen GmbH
(supra).

92. This Court in case of
Marwadi Shares & Finance Ltd. vs.
Miral Kanaksinh Thakore & Anr.
(2014) 1 Bom.C.R. 481 has
considered the amendment in the bye-laws and the regulations of
Bombay Stock Exchange Limited which were amended during the
pendency of the arbitral proceedings before the arbitral tribunal and
by virtue of such amendment, the power to condone the delay in filing
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the arbitration petition before the appellate bench was taken away.

This Court after adverting to various judgments of the Supreme Court,
including the judgment in case of
Garikapati Veeraya vs. N. Subiah
Choudhry
, AIR 1957 SC 540 held that the rights and remedies
accrued to the petitioner and subsequent rights and/or remedy in
filing the proceedings before the superior Court or the appellate forum
would continue and cannot be divested by the amendment unless it is
shown clearly intended by the amendment to make it applicable with
retrospective effect. It is held that the petitioner in that matter had
filed the proceedings before the learned arbitrator. The right of filing
an appeal against the impugned award, if any, and a right to file an
application for condonation of delay on showing sufficient cause on
the date of filing of the original proceedings would be continued.

93. It is held that the petitioner had vested right to impugn the
arbitral award rendered by the sole arbitrator along with an
application for condonation of delay in the event of delay by showing
sufficient cause. The day on which the impugned award was
rendered by the learned sole arbitrator, there was no amendment to
bye-law 2 and the regulations of the Bombay Stock Exchange thereby
taking away the powers of the appellate bench to condone the delay.
This Court held that in such a situation
section 6(e)
of the General
Clauses Act, 1897 would be attracted. This Court accordingly has set
aside the order passed by the appellate bench of the Bombay Stock
Exchange and directed that the appellate bench to hear the
application for condonation of delay.

94. In this case also, it is not the case of any of the parties that

section 34(5)
an 34(6) inserted by the Amendment Act would be
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applicable with retrospective effect. Even otherwise the intent of the
legislation while inserting these two provisions does not indicate that
the said provisions are brought into effect with retrospective effect. In
my view, when the arbitration proceedings commenced in view of the
notice issued by the petitioner under
section 21
much prior to 23rd
October, 2015 and since at that point of time, the petitioner was not
required to issue any prior notice to the respondent before filing of the
arbitration petition under
section 34
, merely because the award is
rendered after 23rd October, 2015 and the petition is filed after the
said amendment, the conditions imposed in
section 34(5)
and
34(6)

cannot be made applicable to such matters where the arbitral
proceedings had commenced much prior to the date of the
amendment.

95. In my view, the parties would be governed by the right and
remedy available to the parties existing on the date of invoking the
arbitration agreement and not on the date of the award or on the date
of filing of the arbitration petition unless the legislature so specifically
provided for a different remedy or the conditions introduced by
invoking such remedy in law with retrospective effect. In my view,

section 34(5)
and
34(6)
thus cannot be pressed in the service by the
respondent to deprive the petitioner of filing a petition challenging an
award in such matters without issuing any prior notice to the
respondent. In my view, the right of challenging the award under

section 34
is a vested right to impugn the arbitral award which cannot
be taken away by such amendment under
section 34(5)
. The
principles
laid down by
this Court in case of
Marwadi Shares &
Finance Limited
(supra) applies to the facts of this case. In view of

section 6(e)
of the General Clauses Act, 1897, the parties who had
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invoked the arbitration agreement prior to 23rd October, 2015, would
be continued to be governed by the provisions applicable on the date
of invocation of such arbitration agreement and not on the date when
the arbitral award is rendered or when the arbitration petition
challenging an arbiral award is filed.

96. The Supreme Court in case of
Milkfood Limited
(supra)
has construed
section 21
as well as
section 85(2)(a)
of the Arbitration
& Conciliation Act, 1996 and also the provisions of
section 37(3)
of
the Arbitration Act, 1940. It is held by the Supreme Court that 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 commencement of the arbitral proceedings.

The
Supreme Court adverted to the judgment in case of
Thyssen
Stahlunion GMBH
(supra) and has held that the judgment
in that
case
itself is an authority for proposition that in relation to the
domestic arbitration proceedings, commencement thereof shall co-
incide with the service of request / notice.

97. It is held by the Supreme Court that the commencement of
the arbitration proceedings for the purpose of limitation or otherwise
is of the Court's conscience. If a proceeding commences, the same
becomes relevant for many purposes including that of limitation.
In
paragraph 70 of
the said judgment
, it is held that 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 the 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
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arbital proceedings for the purpose of the 1996 Act wherefor also
necessity of reference to
section 21
would arise.

In my view, the
principles
laid down by
the Supreme Court in case of
Milkfood
Limited
(supra) would squarely apply to the facts of this case.

98. The reference to "arbitral proceedings" in section 26 of the
Amendment Act refers to such proceedings at two different stages i.e.
one before the Amendment Act came into effect and another after
such amendment came into force i.e. after 23rd October, 2015. It is
thus clear beyond reasonable doubt that the term "arbitral
proceedings" referred in
section 26
is one and the same proceedings
which commences upon receipt of notice under
section 21
by the
other party and does not refer to two separate arbitral proceedings
i.e. one before the arbitral tribunal and another before the Court of
law.
Section 21
of the Arbitration & Conciliation Act, 1996 does not
apply to proceedings in Court. Arbitration proceedings in Court does
not commence upon receipt of notice under
section 21
of the
Arbitration & Conciliation Act, 1996 by the other party. In my view, the
intention of the legislature is very clear in this respect.

99. The date of filing of the arbitration petition under
section 34

of the Arbitration & Conciliation Act, 1996 before 23 rd October, 2015
or after such date is not relevant for the purpose of deciding whether
the parties will be governed by the provisions of the
Arbitration &
Conciliation Act, 1996
before insertion of the amendments by the
Amendment Act or not.

100. This Court even today deals with the matters under
section
of the Arbitration Act, 1940 in respect of which notice for
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appointment of an arbitrator under
section 37(3)
of the Arbitration Act,
1940 was issued prior to the provisions of the
Arbitration &
Conciliation Act, 1996
came into effect. All such matters where the
arbitral proceedings commenced under the provisions of
Arbitration
Act, 1940
are continued to be governed by the provisions of the said
Act though an arbitration petition challenging the award under
section
of the Arbitration Act, 1940 is filed after the
Arbitration &
Conciliation Act, 1996
came into force.

101. The Supreme Court in case of
Andhra Pradesh Power
Coordination Committee & Ors. vs. Lanco Kondapalli Power
Ltd. & Ors.
, (2016) 3 SCC 468 has held that the notice of arbitration
amounting to initiation of the arbitral proceedings as contemplated
under
section 21
of the Arbitration & Conciliation Act, 1996.

102. This Court in case of
Board of Trustees of Jawaharlal
Nehru Port Trust vs. Three Circles Contractors
, (2015) SCC
OnLine Bom. 951 has held that as the arbitration proceedings
commences in respect of the disputes which are referred in the notice
invoking the arbitration agreement on the date on which such notice
is received by the respondent, limitation in respect of such disputes
stops.

103.
Insofar as the submission of the learned counsel for the
respondent that the judgment of this Court in case of
M/s.Rendezvous
Sports World
(supra) applies to the facts of this
case and is binding on this Court is concerned, even in
the said
judgment
, this Court has held that the Amendment Act does not
repeal
section 34
. This Court in
the said judgment
has categorically
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held that the vested right available to the award debtor would be only
in the matter of challenge to the arbitration award which has remained
intact and such right is unaffected by the amendment to
section 36
of
the Arbitration & Conciliation Act, 1996. In my view, Mr.Jain, learned
counsel for the petitioner is right in his submission that impediment
created by
section 34(5)
i.e. for issuance of prior notice before filing of
the arbitration application cannot affect the vested right prescribed
under
section 34(1)
of the Arbitration & Conciliation Act, 1996.

104. In this case, the petitioner had already served a copy along
with a copy of the arbitration petition upon the respondent on 18 th
April, 2017 i.e. after filing of the arbitration petition. In my view,
learned counsel is right in his submission that the principles under

section 4
of the Arbitration & Conciliation Act, 1996 are applicable to
the present situation and issuance of such notice can also be waived
by the respondent under
section 4
of the Arbitration & Conciliation
Act, 1996. The respondent in that matter has also filed a arbitration
petition without issuing the notice under
section 34(5)
to the
petitioner.

105. I shall now deal with the second issue arising in these
matters as to whether the compliance of the requirement of prior
notice contemplated under
section 34(5)
before filing an arbitration
application under
section 34(1)
is mandatory or directory.

106. The Law Commission of India in its report dated 5 th
August, 2014 had suggested various amendments to the
Arbitration
& Conciliation Act, 1996
. Insofar as Note on
section 34(5)
in the said
report is concerned, it is mentioned that the said provision of
section
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34(5) has been included to streamline the process and to cut short
the long delays which occurs due to issuance of the notice.

107. Chapter XLIII-A of the Bombay High Court (Original Side)
Rules provides for the rules relating to the
Arbitration & Conciliation
Act, 1996
. It provides for the mode of application, contents of the
petition and also provides for notice of filing an application to the
persons likely to be affected. Rule 803-E provides that upon any
application under the Act, the Judge in Chambers shall, if he accepts
the petition, direct notice thereof to be given to all persons mentioned
in the petition and to such other persons as may seen to him to be
likely to be affected by the proceedings, requiring all or any of such
persons to show cause, within the time specified in the notice, why
the relief sought in the petition should not be granted. The said rules
framed by this Court are statutory rules.

108. Rule 803-B clearly provides that save as otherwise
provided in the said rules, all applications under the
Arbitration &
Conciliation Act, 1996
shall be made by the petitioner and shall be
placed on board for admission after prior notice to all parties
concerned. The Judge, may consider the admission of the Petition in
exercise of his discretion even though no such notice is served on the
other side. The Judge may admit or reject the Petition or pass such
other orders thereon as he may deem fit. It is thus clear that all the
respondents are required to be served with a copy of notice before
the arbitration petitions are heard for admission. The recommendation
of the Law Commission of India, in the said report that the purpose of
introducing section 34(5) is to streamline the process and to cut short
the long delays which accrued due to issuance of Court notice is
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taken care of.

109. It is the practice of this Court not to hear any arbitration
petition unless a copy of notice and the papers and proceedings are
first served upon the opponents.
Section 34(5)
does not contemplate
that after the prior notice is served, the petitioner is not required to
serve the notice along with papers and proceedings upon the other
party before the matter is heard for admission.

110. This Court in case of Ashraf Ahmed vs. The Municipal
Corporation of Greater Bombay in First Appeal No.292 of 1999 has
construed the requirement of notice under
section 527
of the Mumbai
Municipal Corporation Act and the consequence of non-compliance
thereof. It is held that all the object of the notice under section 527 of
the said Act is to give sufficient time to the Bombay Municipal
corporation and/or its authorities to consider the prayer for redressal
of the plaintiff's grievances without resorting to any litigation. It is
always open to the Bombay Municipal Corporation and/or its
concerned authorities to waive the notice under
section 527
of the Act
or they may be estopped by conduct from pleading the want of notice.
It is held that where the Bombay Municipal Corporation fails to raise
a specific plea for want of notice at the earliest, by its conduct it may
be estopped from pleading the want of notice at a later stage.

111. The Supreme Court in case of
Macquire Bank Limited
vs. Shilpi Cable Technologies Limited
in Civil Appeal No.15135 of
2017 after adverting to the earlier judgment in case of
Surendra
Trading Company vs. Juggilal Kamalapat Jute Mills Company
Limited & Ors.
in Civil Appeal No.8400 of 2017 held that the
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procedural provision cannot be stretched and considered as
mandatory, when it causes serious general inconvenience.

The
Supreme Court also adverted to the earlier judgment in case of

Mahanath Ram Das vs. Ganga Das
, (1961) SCR 763 and held that
such procedural orders, though peremptory are in essence in
terrorem, so that dilatory litigants might put themselves in order and
avoid delay, they do not, however, completely estop a Court from
taking note of events and circumstances which happen within the
time fixed.

112. This Court in case of
Central Bank of India vs. Femme
Pharma Limited & Ors.
, AIR 1982 Bom. 67 has construed the
powers of Court under Rule 227 of the High Court (Original Side)
Rules, 1980 and Rule 220(4) of the High Court (Original Side) Rules,
1957 and has held that though the suit is placed on board for
dismissal, under the old Rules of 1957, the discretion of the Court
was limited to sufficient cause being shown and if sufficient cause is
not shown, the suit has to be dismissed. However, under the Rules of
1980, it only provides for a suit to be placed on board for dismissal
but is silent on what happens thereafter. The new Rules of 1980
provides a wider discretion than before and the Court is not bound to
dismiss the suit.

113. A perusal of
section 34(5)
read with section 34(6) of the
Amendment Act makes it clear that even if prior notice is not given to
the other party by the petitioner of filing an application under
section
challenging an award and even if such application filed under

section 34
is not decided by the Court within one year from the date
of service of the said notice under
section 34(5)
, no consequence of
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such default is provided therein.
Section 34(5)
also does not provide
the mode and manner of such service. Whether a copy of the
arbitration petition along with annexures proposed to be filed also is
required to be served along with such notice or not is not
contemplated in the said provision.

114. The said provision also is silent on the issue i.e. if there
are office objections raised by the office of this Court and if the
petitioner is required to make any changes in the petition in the
format or in the contents of the petition for the purposes of removal of
such objections raised by the office, whether the petitioner is required
to issue a fresh notice along with the papers with the corrections in
the petition or not.
Section 34(6)
provides that such petition has to be
disposed of within one year from the date on which the notice
referred to in sub
section 5
of
section 34
is served upon the other
party. If after giving the notice on the first day itself upon the receipt of
the signed copy of the award from the arbitral tribunal,if the petitioner
issues such notice as referred to in sub
section 5
of
section 34
and
does not file the petition for the next three months or even within 30
days after expiry of three months and if filed within the time
prescribed under
section 34(3)
, the petition remains in the office
objections for another six months, an application filed under
section
34(1)
obviously cannot be disposed of within a period of one year
from the date on which a notice referred to in sub
section 5
of
section
is served upon the other party.

115. No consequence is provided in
section 34(6)
also if the
arbitration petition is not disposed of by the Court within one year
from the date of service of notice under
section 34(5)
of the
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Amendment Act. For this reason also, I am of the view that the
provisions of
section 34(5)
and
34(6)
cannot be construed as
mandatory but has to be construed as directory. In my view, the
requirement of the notice under section 34(5) of the Amendment
Act is procedural in nature and not a substantive provision. The
compliance of such procedural provision without providing any
consequences in case of defiance thereof thus cannot be construed
as mandatory and has to be construed as directory. Even if a notice
is not given prior to the date of filing of the petition, the right of
challenging an award vested in
section 34
of the Arbitration &
Conciliation Act, 1996 cannot be taken away.

116. No substantive right is created on the other party even if
such prior notice is not issued by the petitioner of filing the arbitration
petition as contemplated under section 34(5) of the Amendment Act.
If the arguments of the respondent is accepted, the Court has to
dismiss such arbitration petitions which are filed without issuing prior
notice under section 34(5) of the Amendment Act. The consequence
of the petitioner not issuing such prior notice before filing of the
arbitration petition would be serious and would amount to taking away
the vested and substantive right available to the petitioner to impugn
the arbitral award within the time prescribed under the Act. The
procedure prescribed under
section 34(5)
, can in my view be
complied with even after the arbitration petition is filed by the
petitioner under the said provisions or in accordance with the
provisions of the High Court (Original Side) Rules.

117. The Supreme Court in case of Thirumalai Chemicals
Limited vs. Union of India & Ors. (2001) 6 SCC 739 has held that
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the procedural law established a mechanism for determining those
rights and liabilities and a machinery for enforcing them, the same
cannot be called a substantive right and an aggrieved person cannot
claim any vested right. It is held that unless the language used plainly
manifests in express terms or by necessary implication a contrary
intention, a statute divesting vested rights is to be construed as
prospective. A statue merely procedural is to be construed as
retrospective and a statue which while procedural in its character,
affects vested rights adversely, is to be construed as prospective.

118. In my view, Mr.Mehta, learned senior counsel and Mr.Jain,
learned counsel have rightly contended that issuance of such notice
under
section 34(5)
is a requirement however, not mandatory. The
discretionary power is given to the Courts to look into the facts in
each case and decide if the same has to be made mandatory or not.
If the provision of
section 34(5)
is construed as mandatory, it would
take away the discretionary powers from the Court. Any strict
interpretation of such procedural provision will cause inconvenience
to the parties and would result in lengthening the procedure and
defeating the entire purpose of the Act itself. High Court (Original
Side) Rules already provides sufficient protection to the other party
for issuance of a notice before the matter is heard by the Court with a
view to obviate any delay in the matter.

119. The Supreme Court in case of M/s.Babbar
Sewing
Machine Company vs. Trilok Nath Mahajan
, (1978) 4 SCC 188 has
held that the order for dismissal ought not be made under Order XI
Rule 21, unless the Court is satisfied that the plaintiff wilfully withheld
information or documents and the defence be struck out in case of
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the defendant and placed in the same position as if he had not
defended the suit. It is held that under the said provision, it is only
when the default is wilful and only as a last resort that the Court
should dismiss the suit or strike out the defence by exercising such
power.

120. The Supreme Court in case of
State of Goa vs. Western
Builders
, (2006) 6 SCC 239 has held that by virtue of
section 43
of
the Arbitration & Conciliation Act, 1996,
Limitation Act, 1963
applies
to the proceedings under the Act of 1996 and the provisions of the

Limitation Act
can only stand excluded to the extent wherever
different period has been prescribed under the Act of 1996. It is held
that since there is no prohibition provided under
section 34
, there is
no reason why
section 14
of the Limitation Act should not be read in
the Act of 1996, which will advance the cause of justice. It is held that
if the statute is silent and there is no specific prohibition then the
statue should be interpreted which advances the cause of justice.

121. In my view since there is no consequence provided in

section 34(5)
as well as
section 34(6)
for non-compliance of the
requirement mentioned therein, the Court has to balance the situation
and exercise its discretionary power to permit the petitioner to issue
notice along with papers and proceedings upon the other party even
after the petition is filed to avoid any delay in disposal of such
application. In my view
section 34(5)
cannot be equated with
section
of the Code of Civil Procedure, 1908. In view of the fact that now
by virtue of the amendment to
section 36
, merely upon filing of the
arbitration application for challenging an award under
section 34
,
there is no automatic stay, the petitioner who challenges the arbitral
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award by filing an application under
section 34
would not wait and
would not cause any delay by not issuing notice upon the other party
to obviate any situation of execution of award under the provisions
of
the Code of Civil Procedure
, 1908. For this reason also, I am of the
view that the requirement under
section 34(5)
has to be construed as
directory and nor mandatory.

122. The Division Bench of this Court in case of Bankay Bihari
G. Agrawal & Ors. vs. M/s.Bhagwanji Meghji & Ors., (2001) 1
Mh.L.J. 345 while construing the order 37
Rule 2 of the Code of Civil
Procedure
, 1908 has held that merely because the defendant fails to
appear or file his Vakalatnama or fails to obtain leave to defend the
suit, the suit cannot be decreed if the Judge is satisfied that there is
no cause of action at all disclosed in the plaint. It is this wide
discretion of the Court which has been expressly recognized in Rule

221. It it held that notwithstanding the somewhat peremptory
phraseology used in Order 37, Rule 2(2), suggesting that no such
discretion is vested in the Court, there is always vested in the Court
the judicial discretion to permit a plaintiff to take advantage of the
summary procedure or to relegate him to the normal remedy of a
regular suit. It is held that mere failure of the plaintiff to take out a
Summons for Judgment within six months after the filing of the plaint
would not justify granting of unconditional leave to defend the suit.

123. The Supreme Court in case of
Vidyawati Gupta & Ors.

(supra) has construed the provisions of
section 26(2)
and Order 4
Rule 1, Order 6 Rule 15(4) and Order 7 Rule 1 to 8 as amended from
1st July, 2002 and has held that those provisions are procedural and
directory and thus non-compliance thereof did not automatically
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render the plaint non-est and was curable. The principles
laid down
by
the Supreme Court in
the said judgment
would apply to the facts of
this case.

124. The Supreme Court in case of
Topline Shoes Limited

(supra) construed the provisions of
section 13(2)(a)
of the Consumer
Protection Act, 1986 by which time limit was prescribed for filing of
version of the opposite party and has held that the said provision is
directory and not mandatory. The Supreme Court in
the said
judgment
held that the intention to provide a time frame to file reply, is
really meant to expedite the hearing of such matters and to avoid
unnecessary adjournments to linger on the proceedings on the
pretext of filing reply. The provision, however, as framed, does not
indicate that it is mandatory in nature. In case the extended time
exceeds 15 days, no penal consequences are prescribed therefor.
The period of extension of time "not exceeding 15 days", does not
prescribe any kind of period of limitation. The Supreme Court
accordingly held that the provision appears to be directory in nature.
It is held that the provision is more by way of procedure to achieve
the object of speedy disposal of such disputes. But it falls short of
creating any kind of substantive right in favour of the complainant by
reason of which the respondent may be debarred from placing his
version in defence in any circumstances whatsoever.

125. In
section 34(5)
also, no consequence is provided in the
event of the petitioner not issuing any prior notice before filing of the
arbitration petition under
section 34
to the respondent. Similarly, there
is also no consequence provided in
section 34(6)
, if the Court is not
able to dispose of the arbitration petition under
section 34
within one
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year from the date of service of notice contemplated under
section
34(5)
upon other party. The purpose and the legislative intent of
inserting those provisions is the speeder disposal of the proceedings
and not to penalise the petitioner for non-compliance of the procedure
which is directory. Powers of the Court under
section 34(5)
are not
circumscribed by powers under
section 34(2)
.

126. The Madras High Court in case of M/s.Jumbo
Bags
Limited
(supra) has construed the provisions of
section 11
(6-A)
which is also inserted by the Amendment Act and after considering
the fact that the notice invoking arbitration agreement was issued
prior to 23rd October, 2015 and after adverting to the judgment of the
Supreme in case of
Milkfood Limited
(supra) held that the amended
provisions under
section 11
(6-A) would not come into play
in that
case
. In my view, the principles
laid down by
the Madras High Court
would clearly apply to the facts of this case. I am in complete
agreement with the views expressed by the Madras High Court in
the
said judgment
.

127. The Kerala High Court in case of
Shamsudeen
(supra)
has considered the provisions of
section 34(5)
inserted by the
Amendment Act and has considered the fact that the notice invoking
arbitration agreement was issued much prior to 23rd October, 2015
and accordingly held that section 34(5) of the Amendment Act has no
application to the facts of that case and thus the petitioner was not
required to comply with the provisions of
section 34(5)
. The facts
before the Kerala High Court are identical to the facts of this case.
The principles
laid down by
the Kerala High Court in
the said
judgment
would squarely apply to the facts of this case. I am in
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complete agreement with the views expressed by the Kerala High
Court in
the said judgment
.

128. The judgments of the Supreme Court in case of
M/s.Raptakos
Brett & Co. Ltd. vs. Ganesh Property
(supra), in
case of
State of Maharashtra vs. Hindustan Construction
Company
(supra), in case of
Roshanlal Kuthalia & Ors. vs. R.B.
Mohan Singh Oberoi
(supra) and in case of
Snehadeep Structures
Private Limited vs. Maharashtra Small - Scale Industries
Development Corporation Limited
(supra) also would assist the
case of the petitioner.

129. The Supreme Court in case of
Thirumalai Chemicals
Limited
(supra) has held that the right of appeal conferred under

section 19(1)
of the FEMA is a substantive right. Unless the
language used plainly manifests in express terms or by necessary
implication a contrary intention, a statute divesting vested rights is to
be construed as prospective and a statue which is procedural in its
character and affects vested rights adversely is to be construed as
prospective. The principles of law
laid down by
the Supreme Court in

the said judgment
are applicable to the facts of this case.

130.
Insofar as the judgment delivered by the Division Bench of
the Patna High Court in case of
The Bihar Rajya Bhumi Vikas Bank
Samiti, Bihar - Jharkhand
(supra) relied upon by the learned
counsel for the respondent is concerned, a perusal of
the said
judgment
clearly indicates that the Patna High Court in
the said
judgment
has not dealt with the judgments of the Supreme Court
holding that if the notice under
section 21
is received by other party
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prior to 23rd October, 2015, the provisions of the unamended

Arbitration & Conciliation Act, 1996
would be applicable to the parties,
whereas if such notice is received after 23rd October, 2015, the
parties will be governed by the provisions of Amendment Act. The
Patna High Court has also not considered the issue that there is no
consequence provided in section 34(5) and 34(6) of the Amendment
Act in the event of non-compliance of the said provisions. The
Bombay High Court (Original Side) Rules specifically provides for
issuance of notice by the petitioner upon the other party before the
matter is heard by the Court. The judgment of the Patna High Court is
thus clearly distinguishable and would not assist the case of the
respondent.

131. The Supreme Court in case of
Ananthesh Bhakta & Ors.
vs. Nayana S. Bhakta
, (2017) 5 SCC 185 has construed
section 8(2)

providing that the Judicial authorities shall not entertain the
application or referring the disputes to arbitration unless the said
application is accompanied by the original arbitration agreement or
duly certified copy thereof and held that
section 8(2)
has to be
interpreted to mean that the court shall not consider any application
filed by the party under
section 8(1)
unless it is accompanied by the
original arbitration agreement or duly certified copy thereof. The filing
of the application without such original or certified copy, but bringing
original arbitration agreement on record at the time when the court is
considering the application shall not entail rejection of the application
under
section 8(2)
. The Supreme Court refused to accept the
contention that the said application filed under
section 8(1)
was not
maintainable since the same was not accompanied by the original
arbitration agreement or certified copy thereof.
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132. It is thus clear that though the words used in
section 8(2)

of the Arbitration & Conciliation Act, 1996 that the Judicial authorities
shall not entertain the application which is without accompanying the
requisite documents, the Supreme Court has not dismissed such
application and has held that such documents can be filed and
considered even at the stage of considering the application. In my
view, this judgment would also support the case of the petitioner that

sections 34(5)
and
34(6)
are directory and not mandatory. The
principles
laid down by
the Supreme Court in
the said judgment

would apply to the facts of this case. I am respectfully bound by
the
said judgment
.

133. Insofar as the submission of the learned counsel for the
respondent that if
section 34(5)
is considered as directory, the entire
purpose of the amendments would be rendered otiose is concerned,
in my view, there is no merit in this submission made by the learned
counsel for the respondent. Since there is no consequence provided
in the said provision in case of non-compliance thereof, the said
provision cannot be considered as mandatory. The purpose of
avoiding any delay in proceeding with the matter expeditiously is
already served by insertion of appropriate rule in Bombay High Court
(Original Side) Rules. The Court can always direct the petitioner to
issue notice along with papers and proceedings upon other party
before the matter is heard by the Court for admission as well as for
final hearing. The vested rights of a party to challenge an award
under
section 34
cannot be taken away for non-compliance of
issuance of prior notice before filing of the arbitration petition.
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134.
Insofar as the judgment of the Supreme Court in case of

Union of India vs. Popular Construction Company Limited

(supra) relied upon by the learned counsel for the respondent is
concerned, the Supreme Court in
the said judgment
has construed

sections 5
and
29(2)
of the Limitation Ac, 1963, and also
section 34

of the Arbitration & Conciliation Act, 1996. It is held by the Supreme
Court that in view of
section 29(2)
of the Limitation Act, 1963, the
period prescribed for limitation under
section 34(3)
of the Arbitration &
Conciliation Act, 1996 would apply. The expression "but not
thereafter" described in
section 34(3)
is interpreted by the Supreme
Court and it is held that the
Arbitration Act
being a self-contained
Code, the Court has no power to condone delay beyond the period of
30 days and that also provided sufficient cause is shown.

The
judgment of the Supreme Court in case of
Union of India
(supra) is
clearly distinguishable and would not assist the the case of the
respondent.

135.
Insofar as the judgment of the Supreme Court in case of
M/s.Raptakos
Brett & Co. Ltd.
(supra) is concerned, the Supreme
Court in
the said judgment
has construed
section 69(2)
of the
Partnership Act, 1932 and has held that the said provision with regard
to an unregistered firm is a penal provision and has to be strictly
construed. In my view since under section 34(5) of the Amendment
Act, no consequence is provided, the said provision cannot be
considered as a penal provision and cannot be construed strictly.

Section 34(5)
and the
Arbitration & Conciliation Act, 1996
cannot be
equated with
section 69(2)
of the Partnership Act.

The judgment of
the Supreme Court in case of M/s.Raptakos
Brett & Co. Ltd.
(supra)
thus would not assist the case of the respondent. The judgment of
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this Court in First Appeal No.302 of 2013 and reported in 76
Company Cases, 244 (Bom.) also would not assist the case of the
respondent.

136. Insofar as the submission of the learned counsel for the
respondent that the effect of
section 34(5)
is clearly to impose a bar
against the institution of an application under
section 34(1)
and thus
the same should be construed as mandatory and not directory is
concerned, on plain reading of
section 34(5)
, it is clear that there is
no clear bar provided under the said provision for not accepting the
arbitration petition filed under
section 34
on record unless a notice to
other party is issued by the petitioner before filing of such petition. I
am not inclined to accept the submission of the learned counsel for
the respondent that the judgment of the Supreme Court in case of
M/s.Raptakos
Brett & Co. Ltd.
(supra) would assist the case of the
respondent and not the case of the petitioner. If
section 34(5)
is
considered as mandatory and if a petition filed before issuance of
such notice is dismissed on the ground of non-compliance, whether
period taken in pursuing such petition has to be excluded under

section 14
of the Limitation Act, 1963 would also be a relevant factor.

137. Insofar as the other judgments referred to and relied upon
by the learned counsel for the petitioner referred to aforesaid, which
are sought to be distinguished by the learned counsel for the
respondent is concerned, in my view, learned counsel for the
respondent could not distinguish any of those judgments. This Court
has already dealt with those judgments in great detail in the earlier
paragraphs of this judgment and are found clearly applicable to the
facts of this case and assist the case of the petitioner.
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138. The conclusion drawn by this Court in this judgment is
summarized as under :-

a). If notice invoking arbitration agreement is received by
other party prior to 23rd October, 2015, the arbitration proceedings
would commence prior to 23rd October, 2015. The provisions of the

Arbitration & Conciliation Act, 1996
in force prior to 23 rd October,
2015 would be applicable to such matters for all the purposes.

b). If notice invoking arbitration clause is received by other
party after 23rd October, 2015,the parties will be governed by the
provisions of the
Arbitration & Conciliation (Amendment) Act, 2015
for
all the purposes.

c). The date of filing of the arbitration petition under
section
34(1)
of the Arbitration & Conciliation Act, 1996 is not relevant for the
purpose of deciding the applicability of the provisions of the

Arbitration & Conciliation Act, 1996
i.e. pre-amendment or post
amendment.

d). The expression "arbitral proceedings" described in
section
of the Arbitration & Conciliation (Amendment) Act, 2015 refers to
two different periods i.e. (i) before 23rd October, 2015 and (ii) after
23rd October, 2015. The expression "in relation to the arbitral
proceedings" provided in
section 26
of the Arbitration & Conciliation
(Amendment) Act, 2015 does not refer to the arbitral proceedings in
Court. The expression "in relation to the arbitral proceedings"

prescribed in
section 26
has to be read with
section 21
of the
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Arbitration & Conciliation Act, 1996
.

e). Even in those cases where the notice invoking arbitration
agreement under
section 21
is received by other party after 23rd
October, 2015, the provisions under
section 34(5)
and
34(6)
are
directory and not mandatory. The Court has ample power to direct the
petitioner to issue notice along with papers and proceedings upon the
respondent after the petitioner files the arbitration application under

section 34(1)
and before such petition is heard by the Court at the
stage of admission.

f). The questions framed in the earlier part of the judgment
are answered accordingly. The office is directed to place all the
arbitration petitions in which an issue as to whether the provisions of

section 34(5)
and
34(6)
of the Arbitration & Conciliation (Amendment)
Act, 2015 are mandatory or directory on board for admission on 28 th
February, 2018.

(R.D. DHANUKA, J.)
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