JUDGMENT (Per D.S.A. Varma, J.) Heard the learned counsel appearing for the appellants as well as Sri P.S. Narasimha, the learned Senior Counsel, representing the learned counsel appearing for the respondents. 2. This Civil Miscellaneous Appeal is directed against the order and decree, 11-10-2004, passed by the Senior Civil Judge, Gudivada, dismissing the petition O.P.No.65 of 2000, filed under Section 30 of the Arbitration Act (Act 10 of 1940) (for brevity "the 1940 Act") read with Section 34 of the Arbitration and Conciliation Act (Act 26 of 1996) (for brevity "the 1996 Act"), seeking to set aside the award, dated 06-09-1999, passed by the learned Arbitrator, Justice K. Punnaiah. 3. Appellants are the Deputy Manager and the Managing Director of Food Corporation of India, respectively, and the respondents are the claimants. 4. The facts, in brief, are that there was an agreement entered into between the parties in connection with certain works; that the original agreement was entered into on 24-04-1983; that due to various reasons certain disputes have arisen, as a result of which the contractor/claimant abandoned the work and sought for reference to an arbitrator by invoking arbitration clause, provided under the agreement; that eventually the appellant rescinded the contract of the claimant on the ground that he failed to complete the work and the aggrieved party approached the civil Court; that the Hon'ble Sri Justice M.Krishnarao was appointed as sole arbitrator; that challenging the appointment of the arbitrator, the appellant has preferred an appeal C.MANo. 425 of 1990 and during the pendency of the said appeal, the said learned arbitrator Hon'ble Sri Justice M. Krishnarao died; that subsequently the said appeal C.M.A.No.425 of 1996 was dismissed on 29-11-1996 with a direction to appoint a new arbitrator in the place of deceased arbitrator. 5. 5. Consequently, the claimant filed an application I.A.No. 1438 of 1997 in a.S.No.20 of 1986 and eventually the Hon'ble Sri Justice K. Punnaiah was appointed as sole arbitrator; that during the pendency of the arbitral proceedings, the claimant has filed the claim statement and the appellant also filed counter to the same; that, on 14-08-1999, the appellant has filed a memo stating that the learned arbitrator has failed to complete the arbitral proceedings within the statutory period of four months time and hence it was not willing for extension of time for arbitral proceedings; that, notwithstanding the said memo, the appellant was set ex parte by the learned arbitrator, the proceedings were conducted and eventually an award was passed on 06-09-1999; that challenging the said award, the appellant has filed the present petition a.p.No.65 of 2000, which was dismissed, by the Court below, through the impugned order. Hence, the present Civil Miscellaneous Appeal. 6. The learned counsel appearing for the appellant would contend that the dispute had arisen prior to the 1996 Act and that since all the proceedings were initiated prior to the commencement of the 1996 Act, they have to be conducted only under the provisions of the 1940 Act. 7. A perusal of the impugned order would only show that both the parties agreed not to contest the matter on merits, except on one and only question of law - as to whether while passing the award the procedure under the 1940 Act ought to be followed or under the 1996 Act? 8. In this connection, the learned counsel appearing for the appellant places reliance on Section 21 read with Section 85 of the 1996 Act. 9. For the sake of convenience and ready reference, Section 21 of the 1996 Act, which deals with commencement of arbitral proceedings, is extracted hereunder, which is thus: "Section 21: Commencement of arbitral proceedings:- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." 10. For the sake of convenience and ready reference, Section 85 of the 1996 Act, which contains the repeal and saving clause, is extracted hereunder, which is thus: "Section 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,- (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." (emphasis supplied by us) 11. From a reading of Section 21, it is obvious that the arbitral proceedings would commence on the date on which the request of the dispute to be referred to arbitration is received by the respondent and obviously the ingredients of Section 21 are in existence in the present case. Therefore, it is to be understood that the arbitral proceedings had commenced somewhere in the month of April, 1985, much before the introduction of the 1996 Act. 12. Coming to clause (a) of subsection (2) of Section 85, which makes it clear that the 1940 Act had been repealed and such a repeal is subject to two contingencies, which are incorporated in clause (a) of sub-section (2) of Section 85; they are, firstly, the provisions of the 1940 Act shall apply to those proceedings, which commence before the new Act came into force; secondly, notwithstanding the same, if the parties agree, the new Act alone shall be made applicable. 13. 13. In other words, though the dispute had arisen prior to the year 1996 and the arbitral proceedings have to be initiated and proceeded under the old law, it is not essential that the provisions of the new Act have got to be eliminated for all purposes and much depends upon the agreement between the parties, and if both the parties agree therein that even during the pendency of the arbitral proceedings, under the old law, the provisions of the new Act, can always be made applicable. Parties to the agreement rather have the option of being governed by either the old Act or the new Act. 14. Relying on the language employed in the above provision, the learned counsel appearing for the appellant would contend that when once the dispute has arisen before the 1996 Act and further since there was no express consensus between the parties, as regards the application of new law, the law under the 1940 Act alone has to be made applicable and as a consequence thereof, the learned arbitrator since could not complete the arbitral proceedings within the prescribed period of four months time, from the date of its commencement, no further proceedings could be taken up by the learned arbitrator and the award passed by him has to be treated as vitiated. 15. On the other hand, Sri P.S.Narasimha, the learned Senior Counsel appearing for the respondent, would repel the contention by drawing our attention to a specific clause of terms and conditions that when there is a specific agreement between the parties in the original contract itself, agreeing for the application of new law i.e., the 1996 Act, the present contention of the appellant cannot be sustained. 16. The learned Senior Counsel relies on Clause-25 of the Contract, and, for the purpose of convenience and ready reference, it is apt to extract the same, which is thus: "Clause-25: Subject as aforesaid, the provisions of the Arbitration Act, 1940, or any statutory modification or reenactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceedings under this clause. The arbitrator(s) may from time to time with the consent of the parties enlarge the time for making and publishing the award." (emphasis supplied by us) 17. The arbitrator(s) may from time to time with the consent of the parties enlarge the time for making and publishing the award." (emphasis supplied by us) 17. In view of the said clause, the learned Senior Counsel appearing for the respondent contends that way back on 24-04-1983 itself in the original agreement both the parties to the contract agreed to be bound either by the provisions of the 1940 Act or any modified law and for the time being in force shall apply to the proceedings, even though the arbitral proceedings were initiated prior to the 1996 Act came into force. 18. In other words, even though the parties were governed by the law under the 1940 Act as on the date of dispute, still the parties have an option to ignore the application of the 1940 Act and be governed by any modified Act or Rules in future and such option was exercised explicitly by the parties to the agreement by incorporating the above clause. 19. It is clear that both the parties agreed in the year 1983 itself, even much prior to the introduction of the 1996 Act, to the adoption of any modified law that may come into force from time to time in future, subsequent to the date of agreement. 20. Therefore, any disagreement by either of the party does not, in normal course, arise at this point of time. 21. Clause 25 of the agreement squarely falls within the ambit of the expression "unless otherwise agreed by the parties" mentioned in clause (b) (sic. (a)) of subsection (2) of Section 85 of the 1996 Act. 22. In order to substantiate this contention, the learned Senior counsel appearing for the respondent has relied on the judgments of the apex Court in Thyssen Stahlunion GMBH v. Steel Authority of India (1999) 9 SCC 334 , DTC Ltd., v. Rose Advertising (2003) 6 SCC 36 (at paragraph No.4 at page No.39) and Milkfood Ltd. v. GMC Ice Cream (P) Ltd. (2004) 7 SCC 288 (at paragraph NO.83 at page No.319). 23. 23. In Thyssen's case (supra), the apex Court held that (a) provisions of the old Act (the 1940 Act) shall apply in relation to arbitral proceedings commenced before coming into force of the new Act (the 1996 Act), (b) in cases where the arbitral proceedings have commenced before coming into force of the 1996 Act and are pending before the Arbitrator, it is open to the parties to agree that the 1996 Act be applicable to such arbitral proceedings and they can so agree even before coming into force of the 1996 Act. 24. From the above, it is abundantly clear that the proceedings that have been initiated prior to the commencement of the 1996 Act, in normal course, shall be governed by the 1940 Act only. However, the exception to the above is that the parties to the proceedings are not precluded from yielding to any law that is in force and they can enter into an agreement to that effect even before the 1996 Act came into force. 25. Further, in DTC Ltd's case (supra), the apex Court had pointed out that the case of Rani Constructions (P) Ltd. v. H.P.Seb (CANo.No.61 of 1999) decided in Thyssen's case (supra) was held to be still squarely covering the facts and circumstances of the case before it. It would be useful to note that in Rani Constructions (P) Ltd. v. H.P.Seb (C.A.No.61 of 1999) the apex Court had taken a special note of the arbitration agreement contained in clause (25) which is akin to clause (25) of the agreement in the case on hand, which reads as under: "Subject to the provisions of the contract to the contrary as aforesaid, the provisions of the Indian Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to all arbitration proceedings under this clause." 26. In view of the language employed in the said clause of the agreement between the parties in that case and read with Section 85 (2) of the 1996 Act which uses the expression "unless otherwise agreed by the parties' the parties can agree for the applicability of the 1996 Act even before the 1996 Act came into force. 27. In view of the language employed in the said clause of the agreement between the parties in that case and read with Section 85 (2) of the 1996 Act which uses the expression "unless otherwise agreed by the parties' the parties can agree for the applicability of the 1996 Act even before the 1996 Act came into force. 27. While holding as above, the apex Court had taken note of the facts in Rani Constructions (P) Ltd. v. H.P. Seb (CA No. 61 of 1999). In the said Case, clause (25) of the agreement, which is akin to clause (25) of the case on hand, was read in conjunction with Section 85(2) of the case on hand, was read in conjunction with Section 85 (2), which contains the language. 28. Nextly, in Milkfood's case (supra), at para-83, the apex Court had categorically pointed out that the proceedings that had arisen prior to the 1996 Act came into force shall be dealt with as per the 1940 Act only. However, Their Lordships had considered the decision rendered in Thyssen's case (supra), wherein, primarily, the question that had fallen for consideration was regarding the commencement of the proceedings. While dealing with the said aspect, the applicability of the 1940 Act or the 1996 Act was also considered. 29. In this case, the apex Court had expressed its view about the applicability of the 1940 Act or the 1996 Act. Therefore, at a glance, it appears as if there is a deviation from the earlier view in Thyssen's case (supra) and OTC Ltd's case (supra). But, a careful reading of the facts and circumstances of the discussion made in the said case, it appears that there is no deviation whatsoever from the principles laid down in the Thyssen's case (supra). 30. In Milkfood's case (supra), at para-84, the apex Court had also taken into account some other facts of OTC Ltd's case (supra)'wherein it was pointed out as under: "The conduct of the arbitration proceeding and the participation of the parties therein shows that the parties acted under the 1996 Act. Even the arbitrator proceeded on that understanding and gave his award in pursuance of the 1996 Act." 31. Even the arbitrator proceeded on that understanding and gave his award in pursuance of the 1996 Act." 31. It was further noticed that in OTC Ltd's case (supra), tile parties went for arbitration with a clear understanding and belief that the proceedings were being conducted under the 1996 Act only and that the appointment of Arbitrator was made under the new Act; the parties participated in the arbitration proceedings with the understanding and belief that the proceedings were governed by the 1996 Act and also taken note of the fact that in the award itself the learned Arbitrator recorded that "both parties submitted claims under the 1996 Act." 32. Further, in DTC Ltd's case (supra) also, sub-clause (d) of clause (25) of the agreement, which is again akin to clause (25) of the agreement in the present case, was available. In view of the said clause, the apex Court had noticed that the view taken in DTC Ltd's case (supra) was based on the above facts. 33. Noticing all the above distinguishable facts and circumstances in other cases, however, having regard to the facts and circumstances and the contentions raised in Milkfood's case (supra) it was held that the proceedings since were initiated prior to the 1940 Act, the proceedings had to be dealt with under the 1940 Act only and, therefore, we are of the view that the principles laid down by the apex Court in Thyssen's case (supra), DTC Ltd's case (supra) and Rani Constructions (P) Ltd. v. H.P. Seb (CA No. 61 of 1999) case and the facts therein are quite similar to the facts and circumstances of the present case. 34. 34. In other words, the only distinguishable factors in Thyssen's case (supra), DTC Ltd's case (supra) and Rani Constructions (P) Ltd. v. H. P. Seb (CANo.61 of 1999) case on one hand, and the Milkfood's case (supra) on the other, is the prevalence of certain facts, like the existence of clause (25) in the original agreement with explicit understanding that they would be governed by any modified law or the law for the time being in force and the conduct of the parties, while participating in the arbitration proceedings, before the leaned Arbitrator with prior understanding that they were proceeding under the provisions of 1996 Act only and also that the learned Arbitrator passed the award having regard to the said conduct of the parties, specifically indicated that the award was being passed under the 1996 Act only. Therefore, in the absence of these facts, having regard to the peculiar facts and circumstances of the case, it was held in Milkfood's case (supra) that the proceedings that were initiated under the 1940 Act have to be continued and concluded only under the 1940 Act only. In fact, this proposition was already laid down in. Thyssen's case (supra). The other principles are based on other facts and circumstances and they are in the nature of exceptions to the general principle. 35. As already pointed out, clause (25) of the agreement specifically contemplates that the parties are agreeable to be governed by the Arbitration Act, 1940 or the statutory modification or the rules and for the time being in force. If this is read with Section 85(2) (a) of the 1996 Act, which contains the repeal and savings clause, parties are governed by the provisions of the 1940 Act, unless otherwise agreed by the parties and it is to be noted that the parties specifically agreed under clause (25) that they are willing to be governed by the 1940 Act or any modification of the Act or the Rules that are enforced for the time being in force. If put it in a different way, primacy has been attached to the terms and conditions of the agreement entered into between the parties. 36. That apart, it is borne out from the record that the proceedings have been initiated originally prior to commencement of the 1996 Act. If put it in a different way, primacy has been attached to the terms and conditions of the agreement entered into between the parties. 36. That apart, it is borne out from the record that the proceedings have been initiated originally prior to commencement of the 1996 Act. But, the learned Arbitrator, who was appointed under the 1940 Act, died during the pendency of the arbitral proceedings. Thereupon, the parties have approached the civil Court seeking appointment of the new Arbitrator on 19-01-1998. Therefore, though, initially, an Arbitrator was appointed prior to the commencement of the 1996 Act, owing to the death of the said Arbitrator, on an application, filed by the parties, new Arbitrator was appointed in the year 1998 i.e., after the 1996 Act came into force. 37. In addition to that, the claimants have tiled the claim statement only under the 1996 Act, as could be seen from the preamble of the said statement. Counter was filed by the employer only under the 1996 Act, as could be seen from the preamble of the counter. Therefore, the conduct of the parties would only show that though the proceedings have been initiated originally under the 1940 Act, they yielded to the jurisdiction of the Arbitrator only under the 1996 Act. Furthermore, the said conduct makes it abundantly clear that the parties are clear in their mind and were fully conscious of clause (25) of the agreement. 38. Therefore, the overall facts and circumstances that are on record point out that the same are similar to the facts and circumstances and the law laid down by the apex Court in the cases referred to supra. 39. Our view is fortified with the principles laid down by the apex Court in the said decisions (1 to 3 supra). Therefore, in our considered view, the award, passed by the learned arbitrator, as well as the impugned order and decree, 11-10-2004, passed by the Court below, dismissing the petition a.p.No.65 of 2000, passed by the Court below, dismissing the petition a.p.No.65 of 2000, hold good. 40. For the aforementioned reasons and the law laid down by the apex Court, as discussed above, and in view of the only point, the Civil Miscellaneous Appeal is liable to be dismissed. 41. In the result, the Civil Miscellaneous Appeal is dismissed. However, there shall be no order as to costs.