Case Note & Summary
The Supreme Court of India heard an appeal by special leave against a High Court judgment that allowed an appeal against the Subordinate Judge, Bhubaneswar's order making an arbitration award dated 26 March 1983 the rule of court. The Subordinate Judge had directed payment of Rs.95,003 to the appellant by 24 June 1983, failing which interest at 12 per cent per annum from 27 March 1983 would apply. The High Court set aside that order on the ground that the arbitrator was incompetent to make the award in view of Section 41A(7) of the Arbitration (Orissa Amendment) Act, 1982 (Orissa Act 3 of 1983), which came into force on 26 March 1983. The sole question before the Supreme Court was the applicability of the amendment when the award date and the date of enforcement were the same. The Arbitration (Orissa Amendment) Act, 1982 amended the Indian Arbitration Act, 1940 in its application to Orissa. It inserted Section 41-A, which provided that all arbitration references involving the State Government, local or other authorities controlled by the State Government, statutory corporations, or Government companies were to be made to an Arbitration Tribunal. Sub-section (7) dealt with pending proceedings and stated that all arbitration proceedings of the nature specified in sub-section (1) pending before any arbitrator on the date of commencement of the amending Act and in which no award had been made by the said date stood transferred to the Arbitration Tribunal. The Act received presidential assent on 21 March 1983 and came into force on publication in the Orissa Gazette Extraordinary on 26 March 1983. The appellant contended that the arbitration proceeding was not pending before the arbitrator on 26 March 1983 because the award had been made on that day, and the expression 'by the said date' included the date of commencement. The respondent State argued that the Act came into force on 26 March 1983 and any award made on that day was without jurisdiction because the proceeding still stood transferred to the Tribunal by virtue of sub-section (7). The Supreme Court reasoned that under the General Clauses Act, 1897, unless a contrary intention appears, an Act comes into operation immediately on the expiration of the day preceding its commencement. Therefore, the amending Act came into force at midnight between 25 and 26 March 1983. The expression 'pending before any arbitrator on the date of commencement' unambiguously meant pending up to that midnight. The words 'in which no award has been made by the said date' were inserted ex abundante cautela to clarify that only proceedings in which an award had already been made before that moment were excluded. Harmonious construction required 'by the said date' to mean 'before' and not 'on' 26 March 1983. The court examined dictionary meanings of 'by' as either 'before' or 'on or before' and concluded that context determined the meaning. Prior case law allowing inclusion of the specified date was distinguished because the context there permitted such inclusion. The court held that an award made on 26 March 1983 could not be considered an award made before 26 March 1983; therefore, the proceeding remained pending and automatically stood transferred to the Arbitration Tribunal, divesting the arbitrator of jurisdiction. The appeal was dismissed and the High Court's conclusion upheld.
Headnote
A) Arbitration Law - Pending Arbitration Proceedings - Automatic Transfer to Arbitration Tribunal - Arbitration (Orissa Amendment) Act, 1982 (Orissa Act 3 of 1983), Section 41A(7) - The dispute concerned an arbitration award made on 26 March 1983, the date the amending Act came into force; the amendment inserted Section 41A providing for transfer of pending arbitration proceedings involving the State Government and its instrumentalities to the Arbitration Tribunal. The court held that an arbitration proceeding in which no award had been made before 26 March 1983 remained pending on the date of commencement and automatically stood transferred to the Tribunal, thereby divesting the arbitrator of jurisdiction to make an award on 26 March 1983. Consequently, the arbitrator's award was without jurisdiction and the High Court's decision setting aside the rule of court was upheld. Held that the arbitrator had no jurisdiction to make the award on 26.3.1983 because it was a pending arbitration proceeding which automatically stood transferred to the Arbitration Tribunal. (Paras Not mentioned) B) Statutory Interpretation - Commencement of Statute - Word 'By' in Temporal Provision - General Clauses Act, 1897; Arbitration (Orissa Amendment) Act, 1982, Section 41A(7) - The court construed the expression 'by the said date' in Section 41A(7) to mean 'before the said date' rather than 'on or before' in the context of automatic transfer; this harmonised with the first limb of the provision and promoted the object of the amendment. Applying the General Clauses Act, 1897, the amending Act came into force at midnight between 25 and 26 March 1983, and any award made after that moment, including on 26 March 1983, was made without jurisdiction. Held that the word 'by' is context-dependent and the context here required 'before'. (Paras Not mentioned) C) Statutory Interpretation - Dictionaries and Case Law - Meaning of Word 'By' - No specific act - The court referred to Black's Law Dictionary and The New Shorter Oxford English Dictionary to show that 'by' may mean 'before' or 'on or before'; prior case law such as P.C. Muthu Chettiar, Sheikh Nuroo, T.A. Janakuara Nainar, and Dharamraj Mahadeo considered 'by' as inclusive where context permits, but the court distinguished those as context-dependent. Held that the present context excluded inclusion of the date specified and warranted 'before', consistent with Eastaugh v. Macpherson. (Paras Not mentioned)
Issue of Consideration
Whether the arbitration proceeding was pending before the arbitrator on the date of commencement of the Arbitration (Orissa Amendment) Act, 1982 within the meaning of Section 41A(7), and whether the expression 'by the said date' includes the date of commencement or means 'before' that date, thereby determining the arbitrator's jurisdiction to make an award on 26.3.1983.
Final Decision
Appeal dismissed; Supreme Court upheld the High Court's conclusion that the arbitrator lacked jurisdiction to make the award on 26 March 1983 because the arbitration proceeding was pending and automatically transferred to the Arbitration Tribunal under Section 41A(7).
Law Points
- Automatic transfer of pending arbitration proceedings under Section 41A(7) of Arbitration (Orissa Amendment) Act
- 1982
- 'by the said date' means 'before the said date' in context
- Act comes into force at midnight preceding commencement under General Clauses Act
- arbitrator loses jurisdiction to make award after commencement
- pending proceeding includes one where no award made before commencement
- harmonious construction of statutory expressions
- word 'by' is context-dependent
