S R ENGINEERING CONSTRUCTION Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner approached this Court through CR No.3921 of 2010 against the execution proceedings initiated by the Union of India in the Military Engineer Service in satisfaction of an arbitration award passed against the petitioner under the provisions of the Arbitration & Conciliation Act, 1996. In execution proceedings, the petitioner filed objections questioning the applicability of the new Act contending that the provisions of the Arbitration Act, 1940 could only be applied in terms of the arbitration clause. When the matter came up before this Court on September 13, 2010 the learned counsel for the petitioner drew the attention of the Court that the execution application had been withdrawn by the Union of India hence the revision petition had been rendered infructuous. An anxiety was expressed before the Court that the Union of India could well move a fresh execution application since the limitation prescribed for executing the decree remained. The Court took note of this fact and dismissed the petition as infructuous but not without clarifying that if a fresh execution application is moved then the petitioner shall be at liberty to challenge the applicability of the Arbitration & Conciliation Act, 1996 before the Executing Court and in case this were to happen the same shall be decided on its own merit without being prejudiced by the order of the High Court.

(2.) The respondent-Union of India did file a fresh Execution Application. Thereon, the petitioner filed fresh objections raising the issue of maintainability of the proceedings under the 1996 Act contending that the provisions of the 1940 Act alone applied to the dispute arising from the works contract entered into between the parties in 1991. The learned Additional District Judge, Chandigarh by the order dated May 04, 2013 without any reference to the order passed by this Courthas dismissed the objections for the reason that the objections raised earlier had been dismissed by the then learned Additional District Judge, Chandigarh by order dated March 20, 2009 which were the objections called in question in the aforesaid revision petition but the challenge thereto was blunted with the Union of India withdrawing the Execution Application. The learned Additional District Judge, Chandigarh has further reasoned that there was nothing on record to show that the matter is covered under the old Act and has held that the only remedy available to the petitioner was to file objections under Section 34 of the Arbitration & Conciliation Act, 1996 and, therefore, the present objections preferred under Section 47 of the CPC are not maintainable. Section 36 of the new Act is a deeming provision which provides for the enforcement of the award as if it is a decree of a civil court under the Civil Procedure Code. The learned Additional District Judge, Chandigarh has held the award executable exclusively by Section 36 of the Act. Section 47 of the Code of Civil Procedure deals with questions to be determined by the Court executing decree. When the issue raised is whether the 1940 Act applies or the 1996 Act applies is albeit a matter depending on a decision of a mixed question of law and fact. The relevant facts to be looked into are steps taken by the parties prior to the Ordinance issued in 1995 which was converted into the Act of 1996. As to how the change-over takes place from the old to the new law and of rights vested and accrued notwithstanding repeal is as adumberated by the Supreme Court in Thyssen Stahlunion GMBH v. Steel Authority of India, 1999 Supp3 SCR 461which succintly explains the law on the subject for Courts to follow and apply. In Thyssen the Court answered three different questions relating to the construction and interpretation of Section 85 of the Arbitration and Conciliation Act, 1996 which contains repeal and saving provision of the three Acts, namely, the Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The Reference by the Delhi High Court to a larger bench of the High Court was reframed by the Supreme Court to read: "What it means is that when clause (a) of Section 85(2) of the new Act uses the expression "unless otherwise agreed by the parties" can the parties agree for the applicability of the new Act before the new Act comes into force or they have necessarily to agree only after the new Act comes into force". The Supreme Court held on points 1, 4 to 6 of the summing up in Thyssen as follows:-

(3.) To answer the question then arising in the present case the Court below would necessarily have also to look at the wording of the arbitration clause and whether it contains such words as the arbitration proceedings would be conducted as per the existing law or their statutory amendments and enactments to see which of the two Acts applies in the context of Section 85 of the new arbitration Act. In MES contracts, there are no such recitals and, therefore, Mr. Sehgal contends that the impugned order dated May 4, 2013 is incorrect in its reasoning or the lack of it. It is a matter of some surprise that the learned Additional District Judge, Chandigarh has proceeded to decide the matter by wishing away the order passed by this Court on September 13, 2010 as if it did not exist. The learned Additional District Judge, Chandigarh was bound to decide the issues raised in the objections de novo and on their merits and reference to the earlier order dated March 20, 2009 had paled into the background. Had the Union of India not withdrawn the execution application the petition filed by the petitioner would not have been rendered infructuous. The challenge to the maintainibility of the proceedings under the new Act would have been examined by this Court. The petitioner was deprived of such an opportunity.