Case Note & Summary
The case involves an appeal by the Municipal Corporation of the City of Pune against a judgment of the 3rd Extra Joint District Judge, Pune, in Misc. Application No.586 of 1998. The dispute arose from a contract between the Corporation and Bombay Cable Car Co. Pvt. Ltd., which contained an arbitration clause. On 1st October 1996, the respondent issued a notice under Section 9 of the Arbitration Act, 1940, invoking the arbitration clause and appointing Hon'ble Mr. Justice M.L. Pendse (retd.) as sole arbitrator, giving the appellant 15 days to appoint its own arbitrator, failing which the appointed arbitrator would act as sole arbitrator. Subsequently, on 8th November 1996, the respondent issued another notice stating that since the Arbitration and Conciliation Act, 1996 had come into force, the earlier notice should be treated as a notice under Section 10 of the new Act, and the appellant had 30 days to communicate the name of its arbitrator. The notice claimed that the 30-day period ended on 5th October 1996, and in the absence of communication, the respondent's arbitrator would act as sole arbitrator. The arbitrator proceeded with the matter and passed an award. The appellant challenged the award before the District Court, which dismissed the application. The High Court considered the applicability of the 1996 Act to the arbitration proceedings. The court noted that the 1996 Act came into force on 22nd August 1996, and the arbitration proceedings commenced after that date. The court held that the 1996 Act applies to arbitrations commenced after its enforcement, even if the agreement was entered into prior, as per Section 85(2)(a) of the 1996 Act, which saves only those proceedings that had already commenced under the 1940 Act. The court further held that the notice under Section 9 of the 1940 Act could be treated as a notice under Section 10 of the 1996 Act, as the respondent's subsequent notice clarified the change. The appellant's failure to appoint an arbitrator within 30 days from the notice resulted in the respondent's arbitrator becoming the sole arbitrator. The court dismissed the appeal, upholding the judgment of the District Court.
Headnote
A) Arbitration Law - Applicability of Arbitration Act, 1996 - Repeal and Savings - Section 85 of Arbitration and Conciliation Act, 1996 - The court considered whether the 1996 Act applies to arbitration proceedings where the agreement was entered into before the new Act but proceedings commenced after its enforcement. The court held that the 1996 Act applies to arbitrations commenced after its enforcement, even if the agreement was prior, as per Section 85(2)(a) which saves only those proceedings that had already commenced under the 1940 Act. (Paras 1-10) B) Arbitration Law - Appointment of Arbitrator - Notice under Section 9 of 1940 Act treated as notice under Section 10 of 1996 Act - The court examined the validity of treating a notice issued under Section 9 of the 1940 Act as a notice under Section 10 of the 1996 Act. The court held that such treatment is permissible as the 1996 Act had come into force before the expiry of the notice period, and the respondent's subsequent notice clarified the change. (Paras 2-5) C) Arbitration Law - Appointment of Arbitrator - Failure to Appoint - Default Appointment - The court considered whether the appellant's failure to appoint an arbitrator within the stipulated time under the 1996 Act entitled the respondent to have its appointed arbitrator act as sole arbitrator. The court held that the appellant's failure to communicate the name of its arbitrator within 30 days from the notice resulted in the respondent's arbitrator becoming the sole arbitrator. (Paras 3-6)
Issue of Consideration
Whether the Arbitration and Conciliation Act, 1996 applies to arbitration proceedings commenced after its enforcement, where the arbitration agreement was entered into prior to the new Act, and whether the notice under Section 9 of the 1940 Act can be treated as a notice under Section 10 of the 1996 Act.
Final Decision
The High Court dismissed the appeal, upholding the judgment of the 3rd Extra Joint District Judge, Pune, and confirming the validity of the arbitral award.
Law Points
- Arbitration Act
- 1940
- 1996
- Section 9
- Section 10
- Section 21
- Section 85
- Repeal and Savings
- Applicability of New Act
- Appointment of Arbitrator
- Notice under Section 9 of 1940 Act treated as notice under Section 10 of 1996 Act
