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Madhya Pradesh High Court · body

2001 DIGILAW 20 (MP)

Goyal Brothers v. Indore Vikas Pradhikaran

2001-01-03

S.B.SAKRIKAR

body2001
Short Note Applicant has directed this revision against the order dated 31.10.98 passed by Xth Civil Judge Class-I. Indore, in Civil Suit No. 26A/96 thereby deciding Issue No. 12 against the applicant holding that the petition filed on behalf of the applicant u/s 11 of Indian Arbitration Act 1940 (for short the Act of 1940) is not maintainable. Briefly stated, the facts of the case are that the applicant is a registered partnership firm taking contracts of construction of buildings and roads. It is stated that the applicant entered into a contract with the non-applicant Indore Development Authority for construction of the roads in Scheme No. 74 of Sector-A, Indore. In the terms of the contact, there is an arbitration clause under which any dispute arising between the parties with regard to the alleged contract shall be referred to non-applicant No. 2 and he shall resolve the said dispute acting as sole Arbitrator. It is also stated that some dispute with regard to the payment of Rs. 4,20,024/- by way of damages to the applicant arose between the parties and on 9.6.1990 the Executive Engineer of non-applicant No. 1 was orally and thereafter in writing requested to refer the dispute to the Arbitrator under the terms of the agreement. On 26.3.1991, the matter was referred to non-applicant No. 2 for passing an arbitration award with regard to the dispute raised by the applicant. After the reference to non-applicant No. 2, he did not take any steps till 1.12.1995 for resolving the dispute raised by the applicant and unnecessarily delayed the arbitration award. In the aforesaid circumstances, the applicant on 29.8.1996 filed an application before the trial Court u/s 11 of the Act of 1940 for removal of non-applicant No. 2 as Arbitrator and appointment of some competent Advocate as Arbitrator to resolve the dispute raised by the applicant. The said application was opposed on behalf of the non-applicant No. 1 on various grounds by tiling a written reply. The non-applicant raised the objection that as the Arbitration and Conciliation Act of 1996 has come into force, the application filed by the applicant u/s 11 of the repealed Act is not maintainable. The said application was opposed on behalf of the non-applicant No. 1 on various grounds by tiling a written reply. The non-applicant raised the objection that as the Arbitration and Conciliation Act of 1996 has come into force, the application filed by the applicant u/s 11 of the repealed Act is not maintainable. The trial Court alongwith the other issues also framed Issue No. 12 in connection with the maintainability of the application and on hearing the arguments of the parties decided the said Issue No. 12 against the applicant holding that the petition filed u/s 11 of the repealed Act is not maintainable. Aggrieved, the applicant has filed this revision. I have heard the learned counsel for parties and carefully perused the impugned order as also the record of the trial Court. It is not in dispute that the application u/s 11 of the Act of 1940 was filed before the trial Court on 29.8.1996 after the commencement of the Arbitration and Conciliation Act of 1996 after short the Act of 1996). U/s 85 of the Act of 1996, the Arbitration Act of 1940 was repealed but section 85(2) of the said Act states as under: "85(2). Notwithstanding such repeal - (a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force." In view of the aforesaid provisions contained in section 85(2) (a) of the Act of 1996 it is clear that the arbitral proceedings which have commenced before the new Act come into force have been saved and for such proceedings the provisions of the corresponding repealed enactments shall continue to apply. Section 21 of the Act of 1996 speaks about the commencement of the arbitral proceedings. Section 21 of the Act of 1996 speaks about the commencement of the arbitral proceedings. It states as under: "Section 21 - Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." In the present case, in view of the facts stated in the application filed by the applicant u/s 11 of the repealed Act, it emerged that on 9.6.1990, an oral request as well as a request in writing was made to the non-applicant for resolving the dispute raised by the applicant by referring the matter to the Arbitrator in terms of the agreement. On perusal, it also emerged that on 26.3.1991, the matter was referred to the non-applicant No. 2 (Arbitrator) for resolving the dispute raised by the applicant. It is stated in the application that after referring the matter to the non-applicant No. 2 on 26.3.1991 under the terms of the agreement, he did not take any steps for resolving the dispute till 1.12.1995. As such, the applicant filed the applicant u/s 11 of the Act of 1940 for removal of the non-applicant No. 2 as Arbitrator and appointment of some new Arbitrator in his place. From the aforesaid facts and in view of the provisions of section 21 of the Act of 1996 it can be safely concluded that prior to the commencement of the Act of 1996 the arbitral proceedings in respect of the dispute raised by the applicant was already referred to the Arbitrator and the proceedings have commenced. As such, the order of the trial Court on Issue No. 12 recording the finding against the applicant holding that the application filed by the applicant u/s 11 of the Act of 1940 is not maintainable on commencement of the Act of 1996 is illegal and deserves to be set aside. In view of the facts of the case on hand as also the law applicable, in my considered opinion, the trial Court has committed an error in holding that the application filed on behalf of the applicant u/s 11 of the Act of 1940 is not maintainable as a result of the commencement of Act of 1996. Consequently, this revision petition is allowed. Consequently, this revision petition is allowed. The order impugned of the trial Court is set aside and the findings recorded by the trial Court on Issue No. 12 are reversed and it is held that the application filed on behalf of the applicant u/s 11 of the Act of 1940 is maintainable in the facts and circumstances of the case. The trial Court is directed to decide the other issues framed in the case and dispose of the application filed by the applicant in accordance with law. No order as to cost. The parties through their counsel are directed to appear before the trial Court on 12.2.2001.