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Madhya Pradesh High Court · body

2010 DIGILAW 624 (MP)

Mohanlal v. Choudhary Builders Pvt. Ltd. Indore

2010-06-28

PRAKASH SHRIVASTAVA

body2010
ORDER 1. This revision petition under section 115 of the Civil Procedure Code has been filed challenging the order dated 19.2.2010 passed by the Court of XV Additional District Judge (Fast Track), Indore in Civil Execution Case No. 12-A/1996/2005 rejecting the petitioners' application under section 151 of the Civil Procedure Code. 2. The brief facts are that an agreement of sale was executed by the petitioners in favour of the respondent No. 1 for sale of the suit property. The agreement contained the Arbitration Clause that in case of dispute between the parties with the consent of both the parties Gulabchandra will be appointed as Arbitrator and his decision will be acceptable to both the parties. 3. The respondent No.1 on 25.2.1994 filed application under section 20 of the Arbitration Act, 1940 (for short "Act of 1940") in the Court of District Judge, Indore for filing for agreement in the Court and referring the dispute to the Arbitrator. On 27 .11.1998 the dispute was referred to the sole Arbitrator Shri Gulabchand Agrawal by the Court. The Arbitrator passed the award on 24.9.2004 and on the same day the award was submitted by the Arbitrator before the trial Court. Before the trial Court no objection was raised. The trial Court on 19.10.2004 held that under the Arbitration and Conciliation Act, 1996 (for short "Act of 1996") it is not necessary to make the award rule of the Court and the award can be executed directly. The respondent No.1 on 24.12.2005 filed the execution application before the Court below which was registered as Execution Case No. 12-A/ 1996/2005. During the pendency of the execution proceedings the petitioners filed application under section 151 of Civil Procedure Code dated 17.2.2010 raising an objection that in terms of section 17 of the Act of 1940 the award is required to be made rule of the Court and without it the award cannot be executed. They raised the plea that the provisions of the old Act of 1940 will apply. 4. The application was opposed by the respondent No. 1 and the Executing Court vide order dated 19.2.2010 rejected the application stating that the provision relied upon by the petitioners is not attracted in the matter. 5. They raised the plea that the provisions of the old Act of 1940 will apply. 4. The application was opposed by the respondent No. 1 and the Executing Court vide order dated 19.2.2010 rejected the application stating that the provision relied upon by the petitioners is not attracted in the matter. 5. Learned counsel appearing for the respondents, submitted that in view of the saving clause in the Act of 1996 the provisions of the Act of 1940 will be applicable and since the request for arbitration was made on 25.2.1994 before coming into force Act of 1996, therefore, it is necessary to make the award rule of the Court without which the award cannot be executed. 6. Learned counsel appearing for the respondents submitted that it was agreed by the parties before the Arbitrator that the proceedings will be governed by the Act of 1996, therefore, in terms of the saving clause of the Act of 1996 the provisions of the Act of 1940 will not apply. He further submitted that this issue was closed by the order of the trial Court dated 19.10.2004, therefore, the same issue cannot be raised again by the petitioners. He contended that the petitioners had filed the present application before the Executing Court with the sale intention to delay the proceedings. 7. I have heard the learned counsel for the parties and perused the record. 8. In the present matter it is undisputed that the application under section 20 of the Act of 1940 was made on 25.2.1994. The Arbitrator was appointed vide order dated 27.11.1998. The Act of 1996 has come into force on 22.8.1996. Undisputedly the arbitration proceedings had commenced under the Act of 1940 and during the pendency of the arbitration proceedings the Act of 1996 had come into force. 9. Section 85 of the Act of 1996 deals with repeal and saving and provides as under: "85. Repeal and savings:- (1) The Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed. 9. Section 85 of the Act of 1996 deals with repeal and saving and provides as under: "85. Repeal and savings:- (1) The Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed. (2) Notwithstanding such repeal,(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; (b) all rules made and notification 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." 10. From bare reading of section 85 (2) (a) the following position emerges: (i) The provisions of Arbitration Act, 1940 and Act of 1937 and 1961 mentioned under section 85 (1) will apply to the arbitral proceedings commenced before coming into force of Act of 1996. , (ii) In relation of the arbitral proceeding commenced before coming into force of Act, 1966, the provision of Act of 1996 will apply if the parties so agree. (iii) The Act of 1996 will apply to the arbitral proceedings commenced on or after coming into force of Act, 1996. 11. Learned counsel for the petitioners referring to the judgment of the Supreme Court in the matter of M/s. Shetty's Constructions Co. Pvt. Ltd. v. Ms. Konkan Railway Construction and another, reported in AIR 1999 SC 1535 , in the matter of Thyseen Stahlunion GMBH v. Steel Authority of India Ltd., reported in AIR 1999 SC 3923 ; and in the matter of Ba1mukund Pandey v. K. Singh, reported in 2010 (1) MPLJ 372 submitted that since in the present case the demand for referring dispute was made prior to coming into force of the Act of 1996, therefore, the arbitration proceedings had commenced under the Act of 1940. 12. Learned counsel for the respondents has not disputed the fact that the arbitration proceedings had commenced under the Act of 1940 but he submitted that since during the course of the arbitration proceedings parties had agreed before the Arbitrator that the proceedings will be governed by the Act of 1996, therefore, the provisions of Act of 1940 will not be attracted. 13. 13. On the perusal ofParagraph-5 of the Award passed by the Arbitrator it is noticed that both the parties had given consent before the Arbitrator that the proceedings before the Arbitrator will be conducted under the Act of 1996 and they will have no objection in this regard. 14. In terms of section 82 (2) (a) of the Act of 1996 the provisions of Act of 1996 can be made applicable in the pending arbitral proceedings under the Act of 1940 if it is agreed by the parties. In the present matter the parties had agreed for conduct of the proceedings before the Arbitrator under the Act of 1996. 15. The Supreme Court has considered the similar fact situation in the matter of National Aluminium Company Limited v. Pressteel and Fabrications (P) Limited and another, reported in (2004) 1 SCC 540 where the application for appointment of the Arbitrator was made under the Arbitrator Act of 1940 but before the Arbitrator both the parties by consent had agreed that the proceedings will be governed by the provisions of the Act of 1996 and when the Arbitrator had passed the Award, an application was made under sections 15, 17 and 29 of the Act of 1940 for modification of the award, therefore, the Supreme Court considered the question of applicability of Act of 1940 and held that the provisions of Act of 1996 would apply by observing that: "6. It is an admitted fact that after the arbitrator was appointed by this Court, the parties by consent agreed before the arbitrator that the proceedings should go on under the provisions of the 1996 Act though the dispute arose prior to coming into force of this Act. Such a procedure is permissible under section 85 (2) (a) of the 1996 Act. In the normal course having agreed to this procedure, the applicant should not be permitted to raise a plea at this stage that the provisions of the 1940 Act would apply for challenging or seeking modification of the award made under the 1996 Act. 9. Such a procedure is permissible under section 85 (2) (a) of the 1996 Act. In the normal course having agreed to this procedure, the applicant should not be permitted to raise a plea at this stage that the provisions of the 1940 Act would apply for challenging or seeking modification of the award made under the 1996 Act. 9. The next question to be considered by us in this application is whether the dispute having arisen prior to the coming into force of the 1996 Act and the proceedings having continued under the provisions of the 1996 Act, would the provisions of the 1940 Act still be applicable for making an application for the modification of the award, and if so, before which Court, First part of this issue need not detain us because of the admitted fact that by consent of the parties provisions of the 1996 Act have been made applicable to the proceedings, which is in conformity with section 85 (2) (a) of 1996 Act, it is futile to contend that for the purpose of challenge to the award the 1940 Act will apply. Hence, we reject this contention." 16. Thus, in view of the aforesaid position in law once the parties had agreed before the Arbitrator for conducting the proceedings under Act of 1996 it was not open to the petitioners to raise objection that in terms of section 17 of the Act of 1940 the award was required to be made rule of the Court. 17. It is also worth noting that the Arbitrator after passing the award had submitted it before the trial Court. The order sheet of the trial Court dated 1.10.2004 indicate that before the trial Court no objection in respect of the award was raised by the petitioners. The trial Court by order dated 19.10.2004 had held that under the provisions of Arbitration and Conciliation Act, 1996 the award is not required to be made rule of the Court and it can be directly executed. The trial Court had, therefore, terminated the proceedings permitting the parties to take steps for execution of the award. The said order of the trial Court was not challenged by the petitioners and the same attend finality. The trial Court had, therefore, terminated the proceedings permitting the parties to take steps for execution of the award. The said order of the trial Court was not challenged by the petitioners and the same attend finality. The application for execution of the award was filed by the respondent No.1 on 4.10.2006 and the petitioners by filing one application or another kept the execution proceedings pending and after more than three years they have raised the present objection which shows that the objection was raised solely with the intention to delay the execution proceedings. 18. In the aforesaid circumstances the trial Court had not committed any error in rejecting the application under section 151 of Civil Procedure Code filed by the petitioner. The trial Court has neither committed any illegality in the exercise of its jurisdiction nor has committed any jurisdictional error, therefore, no interference is required in the present revision petition and the same is accordingly dismissed. 19. No costs.