R S JIWANI Vs. IRCON INTERNATIONAL LTD

JUDGEMENT

(1.) The Law of Arbitration was earlier governed by Indian Arbitration Act, 1899. The Code of Civil Procedure, 1908 also provided for arbitration as Special Proceedings in the following terms: "89. Arbitration.

(2.) Principal of mutability is equally applicable to the Legislation as well. The Legislature is always expected to examine the needs of the society and amend, modify and enact laws accordingly. Looking into the legislative history, the Law of Arbitration in India was unsatisfactory and, in fact, quite nonexistent which persuaded the Legislature to enact the Arbitration Act, 1899 which was quite similar to the English Arbitration Act, 1899. This probably was the beginning of enforcement of Law of Arbitration in India but at that time, the reference to arbitration was primarily permissible with intervention of the court. The 1899 Act was applicable to presidency towns and its scope was confined to, "arbitration by agreement" without intervention of the court where it was so made applicable by the Provincial Government. Later Law of Arbitration gained momentum in India and need for its application in commercial as well as noncommercial disputes was felt at different quarters. The Act of 1940 was not able to attain effective results and thinkers in the field of arbitration felt that the 1940 Act suffered from number of inadequacies in law as well as in practice. Not only this, the Supreme Court in the case of Guru Nanak Foundations v. Rattan Singh,1981 AIR(SC) 2057 while referring to the Act of 1940 observed, "the way in which the proceedings under the Act are conducted and without an exception challenged in courts, has made lawyers laugh and legal philosophers weep" in view of "unending prolixity, at every stage providing a legal trap to the unwary." Still in another case in Food Corporation of India v. Joginderpal, 1981 AIR(SC) 2075, the Supreme Court observed that, "law of arbitration must be 'simple, less technical and more responsible to the actual reality of the situations', 'responsive to the canons of justice and fair play'. That being the dictum of law pronounced by the highest court of the land it made the Law Commission as well as Legislature and thinkers ponder over the issues rather seriously to consider amending the law. A proposal was mooted on 27th July, 1977 by Secretary, Department of Legal Affairs stating that as Public Accounts Committee had commented adversely on working of the Arbitration Act due to its delay, enormous expenses and long time spent, Government was desirous to have a second look to the provision of Arbitration Act, 1940 with a view to see whether the enormous delay occurring in arbitration proceedings and disproportionate costs incurred therein could be avoided. This resulted into 76th Report by the Law Commission of India, November, 1978. 76th Report of the Law Commission of India, the above referred observations of Supreme Court and Model UNCITRAL Law were primarily responsible factors leading to enactment of Arbitration and Conciliation Act, 1996. It will be useful for the court to examine the objects and reasons of the Arbitration and Conciliation Act, 1996 which have been stated as under:

(3.) Though the said UNCITRAL Model Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and to define the law relating to conciliation, taking into account the said UNCITRAL Model Law and Rules.