Bombay High Court Judgement Reg section 34 (5) of the Arbitration & Conciliation Act, 1996
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO.434 OF 2017
WITH
NOTICE OF MOTION NO.488 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.434 OF 2017
Global Aviation Services Private Limited, )
A Company incorporated under the )
Companies Act, 1956 having its registered )
Office at NKM International House, 6th )
Floor, B.M. Chinai Marg, 178, Backbay )
Reclamation, Mumbai – 400 020. )
)
Presently at G-A, Ground Floor, Pil Court, )
Sherbanoo Co-Operative Housing )
Society Limited, 111, Maharshi Karve )
Road, Marine Lines, Mumbai – 400 020. ) …Petitioner
) …Ori.Claimant
….Versus….
Airport Authority of India )
A Body Corporate constituted by Central )
Government under Airport Authority Act, )
(55 of 1994), having its office at )
Safdarjung Airport, New Delhi – 110 003 ; )
)
And having its Regional Office at the )
Regional Executive Director, Western )
Region, Airports Authority of India, )
Mumbai, C.S.I. Airport, Mumbai – 400 099. ) …Respondent
WITH
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017
WITH
NOTICE OF MOTION NO.690 OF 2017
WITH
NOTICE OF MOTIONNO.165 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.236 OF 2017
Ganesh Benzoplast Limited )
A Public Limited Company incorporated )
under the Companies Act, 1956 and )
having its registered Office at 1st Floor, )
Dina Building, 53, Maharshi Karve Road, )
Marine Lines, Mumbai – 400 020. ) …Petitioner
….Versus….
Bharat Petroleum Corporation Limited )
A Public Limited Company incorporated )
under the Companies Act, 1956 and )
having its registered Office at 4 & 6, )
Currimbhoy Road, Ballard Estate, )
Mumbai – 400 001. ) …Respondent
WITH
ARBITRATION PETITION NO.159 OF 2017
B. M. Chapalkar & Sons …Petitioner
V/s.
Union Of India …Respondent
WITH
COMMERCIAL ARBITRATION PETITION NO.173 OF 2017
Mumbai Metropolitan Region Development Authority …Petitioner
V/s.
M/s Patel Engineering Ltd. …Respondent
WITH
ARBITRATION PETITION NO.230 OF 2017
Vijay Shree Pal Sharma …Petitioner
V/s.
M/s. L & T Finance Ltd. …Respondent
WITH
ARBITRATION PETITION NO.232 OF 2017
Vijay Shree Pal Sharma …Petitioner
V/s.
M/s. L &T Finance Ltd. …Respondent
WITH
ARBITRATION PETITION NO. 413 OF 2017
Union Of India Through Controller Of Stores …Petitioner
V/s.
Union Roadways Corporation …Respondent
WITH
ARBITRATION PETITION NO.448 OF 2017
SMC Global Securities Ltd. …Petitioner
V/s.
Iqbal Hussain Bhati …Respondent
WITH
ARBITRATION PETITION NO.976 OF 2016
Haresh N. Awatramani & Anr. …Petitioner
V/s.
The Saraswat Co-operative Bank Limited & Ors. …Respondents
WITH
ARBITRATION PETITION NO.399 OF 2017
MIRC Electronic Limited …Petitioner
V/s.
M/s.Power Plaza …Respondent
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WITH
ARBITRATION PETITION NO.484 OF 2017
JM Financial Services Ltd. …Petitioner
V/s.
Gouri Arvind Kapoor …Respondent
WITH
ARBITRATION PETITION NO.614 OF 2017
Iqbal Hussain Bhati …Petitioner
V/s.
SMC Global Securities Ltd. & Anr. …Respondents
WITH
ARBITRATION PETITION NO.624 OF 2017
Bharat Sanchar Nigam Limited …Petitioner
V/s.
Trimax IT Infrastructure & Services Limited …Respondent
WITH
ARBITRATION PETITION NO.655 OF 2017
Reshma Rejendra Desai & Anr. …Petitioners
V/s.
L And T Finance Limited …Respondent
Mr.Shyam Mehta, Senior Counsel with Mr.Hitesh Mutha, Mr.Sumit
Raghani, Ms.Dimple Majithia, Ms.Dipika Bhateja i/b Agrud Partners
for the Petitioner in CARBP No.434 of 2017.
Mr.Sagar Kasar, with Mr.Amol Wagh and Ms.Sheha Sanap for the
Petitioner in ARBP No.159 of 2017.
Ms.Sapna Rachure i/b T.N. Tripathi & Co. for the Petitioner in ARBP
No.976 of 2016.
Mr.A.S. Daver with Mr.Anuj Jaiswal, Mr.Nirav Shah, i/b Little & Co. for
the Petitioner in CARBP No.173 of 2017.
Mr.Pawan Pandey i/b Clayderman & Co. for the Petitioner in ARBP
Nos.230 of 2017 and 232 of 2017.
Mr.Sanjay Jain with Mr.Aniketh Nair and Ms.Apoorva Gupta i/b
Mr.Mustafa Motiwala for the Petitioner in CARBP No.236 of 2017.
Mr.C.N. Chavan for the Petitioner in ARBP No.399 of 2017.
Mr.Prakash Shah with Mr.Santosh Mungekar, Mr.Rohin Shah for the
Petitioner in ARBP No.448 of 2017 and the Respondent No.1 in
ARBP No.614 of 2017.
Mr.Simil Purohit i/b M/s Purohit & Co. for the Petitioner in ARBP
No.484 of 2017.
Mr.Iqbal Hussain Bhati – Petitioner Present in Person in ARBP
No.614 of 2017.
Mr.Shriram Kulkarni with Mr.Sachin Chavan, Ms.Megna Pujari and
Ms.Madhu Deshmukh for the Petitioner in ARBP No.624 of 2017.
Mr.Paras Vira i/b Mr.Anand Kate for the Petitioner in ARBP No. 655
of 2017.
Ms.Lopa Munim with Mr.Sanish Mathew i/b Rajesh Kothari & Co. for
the Respondent in CARBP No.434 of 2017.
Mr.T.J. Pandian for the Respondent in ARBP No.159 of 2017 and the
Petitioner in ARBP No.413 of 2017.
Mr.Bhupesh Samant for the Respondent No.1 in ARBP No.976 of
2016.
Ms.Sumi Soman i/b Mr.Priyanka Pawar for the Respondent in
CARBP No.173 of 2017.
Mr.Anand Poojary with Ms.S.I. Joshi and Ms.Nikita Pawar, Ms.Jalpa
i/b S.I. Joshi & Co. for the Respondent in ARBP Nos.230 of 2017, 232
of 2017 and 655 of 2017.
Mr.Girish Agarwal for the Respondent in ARBP No.413 of 2017.
Mr.Anil Balani for the Respondent in ARBP No.484 of 2017.
Mr.Ashish Kamat with Mr.S. Banerjee i/b Mr.Rajesh Gaikwad for the
Respondent in ARBP No.624 of 2017.
Mr.Pankaj Savant, Senior Advocate, a/w. Mr.Sandeep Aole, Mr.Saket
More,Mr.Subit Chakrabarti, Mr.Vishesh Kalra, Ms.Neha Joshi,
i/b.Vidhi Partners for the Respondent in CARBP No.236 of 2017.
CORAM : R.D. DHANUKA, J.
RESERVED ON : 25TH JANUARY, 2018 PRONOUNCED ON : 21ST FEBRUARY, 2018 ORDER :-
1. The respondents in all these petitions have raised a preliminary issue of maintainability of these petitions on the ground that no notice under section 34 (5) of the Arbitration & Conciliation Act, 1996 has been issued by the petitioners to the respondents before filing these arbitration petitions and thus the petitions are liable to be dismissed on that ground itself. In view of this preliminary objection raised by the respondents, learned counsel appearing for the parties have addressed this Court on this issue at this stage at great length, which is being considered by this Court by passing a common order in the aforesaid matters.
2. The questions that arise for consideration of this Court are :-
i). If the notice invoking arbitration agreement is issued prior to 23rd October, 2015, whereas the impugned award is rendered after 23rd October, 2015 and if the arbitration agreement contemplate that the parties would be governed not only by the provisions of the Arbitration & Conciliation Act, 1996, but also any statutory modification thereof or repeal thereto, the carbp434-17 provisions inserted by the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such proceedings filed after 23rd October, 2015 or not ?
ii). If there was no agreement between the parties that that the parties would be governed by not only the provisions of the Arbitration & Conciliation Act, 1996 but also any statutory amendment thereto or repeal thereto and the notice was issued prior to 23rd October, 2015 but the arbitral award is rendered after 23rd October, 2015, whether provisions of the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such arbitral proceedings commenced prior to 23rd October, 2015 ?
iii). If the arbitral notice was issued prior to 23rd October, 2015 and the the arbital award was rendered prior to 23rd October, 2015 however the arbitration petition is filed after 23rd October, 2015 whether the provisions of the Arbitration & Conciliation (Amendment) Act, 2015 would apply to such pending petitions ?
iv) Even if the parties would be governed by the
provisions of the Arbitration & Conciliation (Amendment) Act, 2015 depending upon the facts and circumstances of each case, whether issuance of prior notice under section 34(5) by the petitioner upon the respondent before filing the arbitration petition under section 34 is mandatory or directory carbp434-17 and the consequence, if any, for non-compliance of such prior notice ?
3. The petitioner in Commercial Arbitration Petition No.434 of 2017 began the arguments on these issue first and thus the facts in the said arbitration petition which are relevant for the purpose of deciding these preliminary issues raised by the respondents are summarized in this order.
4. The respondents had invited the bids for setting up flying schools at 11 airports all over India including two at Surat Airport. The final bid of the petitioner was accepted by the respondents. The petitioner accepted all the terms and conditions of the allotment letter sent by the respondents. The respondents issued a modification by a letter of allotment to the petitioner on 28 th March, 2008. The petitioner accepted the terms and conditions of the letter of allotment as well as modification thereto on 4th April, 2008. The dispute arose between the parties.
5. On 28th February, 2011, the petitioner issued a notice invoking arbitration agreement to the respondents to settle the claims between the parties. The petitioner sent a reminder to the respondents on 7th April, 2011 and once again called upon to appoint a sole arbitrator. On 5th January, 2012, the respondents issued a notice of termination of agreement. The petitioner filed an application under section 11 of the Arbitration & Conciliation Act, 1996 for seeking an appointment of a sole arbitrator. On 4 th December, 2012, the learned designate of the Hon’ble Chief Justice of this Court disposed of the said Arbitration Application No.67 of 2012 and carbp434-17 referred the disputes between the parties by appointing a sole arbitrator. On 12th April, 2017, the learned arbitrator rendered an award thereby rejecting the claims made by the petitioner and partly allowing the counter claim made by the respondent. Being aggrieved by the said award, the petitioner herein lodged this arbitration petition under section 34 of the Arbitration & Conciliation Act, 1996 on 11 th July, 2017 which was taken on file on 21st August, 2017.
6. Sections 34 (5) and 34(6) were inserted by the Arbitration & Conciliation (Amendment) Act, 2015 dated 31st December, 2015 with effect from 23rd October, 2015 (for short the said “Amendment Act”) which read thus :-
“(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.”
7. Learned counsel for the respondents raised a preliminary objection that since the petitioners had not issued prior notice to the respondents of filing this application under section 34 of the Arbitration & Conciliation Act, 1996, this application could not have been filed by the petitioner before issuance of such prior notice and thus the arbitration petition under section 34 is not maintainable and deserves to be dismissed on that ground alone. It is also urged by the respondents in their brief preliminary objection raised at the threshold carbp434-17 that the said provision is mandatory and not directory. In view of this preliminary objection raised by the respondents through their respective counsel, I have heard the learned counsel for the parties on these preliminary objections.
8. Mr.Mehta, learned senior counsel for the petitioner in Commercial Arbitration Petition No.434 of 2017 submits that the notice invoking arbitration agreement was admittedly issued by the petitioner on 28th February, 2011, which was immediately received by the respondent. The respondent did not agree to the appointment of any arbitrator. The petitioner had thus filed an arbitration application under section 11(6) of the Arbitration & Conciliation Act, 1996 before this Court in the year 2012. He submits that the then designate of the Hon’ble Chief Justice by an order dated 4 th December, 2012 had appointed a former Judge of this Court as a sole arbitrator and referred the disputes between the parties to the arbitration of the learned arbitrator. He submits that in view of the petitioner invoking arbitration agreement as far back as on 28 th February, 2011, the arbitral proceedings had already commenced upon receipt of the said notice invoking arbitration agreement by the respondent which was much prior to insertion of section 34(5) of the Arbitration & Conciliation Act, 1996 in section 34 which was inserted with effect from 23rd October, 2015.
9. It is submitted by the learned senior counsel that merely because the arbitral award came to be rendered on 12th April, 2017 i.e. after the said provision of section 34(5) was inserted in section 34, the said provision under section 34(5) cannot be made applicable to the arbitral proceedings which had commenced prior to 23 rd carbp434-17 October, 2015. He submits that merely because this arbitration petition was filed after the said provision of section 34(5) was inserted, the said provision cannot be made applicable to the arbitration application filed under section 34 of the Arbitration & Conciliation Act, 1996. The Court has to consider whether the arbitral proceedings had already commenced prior to 23rd October, 2015 or not and not as to when the arbitration petition under section 34 was filed by the petitioner challenging an award arising out of such arbitral proceedings which had commenced prior to 23rd October, 2015.
10. Learned senior counsel placed reliance on section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 which reads thus :-
“26. Act not to apply to pending arbitral proceedings. – Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”
Section 85 of the Arbitration and Conciliation Act, 1996 reads thus :-
“85. Repeal and saving :-
(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.
(2) Notwithstanding such repeal, –
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(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 notifications 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.”
11. Learned senior counsel placed reliance on clause 20 of the agreement entered into between the parties which recorded the arbitration agreement, which is extracted as under :-
“20. All disputes and differences arising out of or in any way touching or concerning this Agreement (except those the decision whereof is otherwise herein before expressly provided for or to which the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 and the rules framed thereunder which are now in force or which may hereafter come into forces are applicable shall be referred to the sole arbitration of a person to be appointed by the chairman of the Authority on in case the designation of Chairman is changed or his office is abolished by the person for the time being entrusted, whether or not in addition to other functions with the functions of the Chairman. Airports Authority of India, by whatever designation such person may be called and if the arbitrator so appointed and willing to act, to sole arbitration of some other person to be similarly appointed and willing to carbp434-17 act as such arbitrator. It will be no objection to any such appointment that the arbitrator so appointed is a servant of the Authority and that he had to deal with the matters to which this Agreement relates and that in the course of his duties as such servant of Authority he had expressed views on all or any of the matters in dispute or difference. The award of the arbitrator so appointed shall be final and binding on the parties. The Arbitrator may with the consent of the parties extend from time to time then time for making the publishing the award.”
12. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH vs. Steel Authority of India Limited, (1999) 9 SCC 334 and in particular paragraphs 2, 4, 5, 7, 12, 13, 22, 23, 25, 27, 28, 30, 32 and 33. He also placed reliance on the judgment of this Court in case of The Board of Trustees of the Port of Mumbai vs. M/s.Afcons Infrastructure Limited, (2016) SCC OnLine Bom. 10037 and in particular paragraph 289. He submits that since in the arbitration agreement recorded in clause 20 of the License Agreement dated 6th June, 2008, the parties had not agreed that the parties will be also bound by the provisions of any statutory amendment to the Arbitration & Conciliation Act, 1996 or any repeal thereto section 34(5) of the Amendment Act, which is brought into effect with effect from 23 rd October, 2015 cannot apply to the arbitral proceedings commenced prior to 23rd October, 2015.
13. Learned senior counsel for the petitioner also placed reliance on the judgment of the Supreme Court in case of Milkfood Limited vs. GMC Ice Cream (P) Limited, (2004) 7 SCC 288 and in particular paragraphs, 2, 8, 9, 10, 22, 47, 50, 51, 54, 57 and 90 to buttress his argument that the arbitral proceedings had commenced carbp434-17 in view of the notice issued under section 21 of the Arbitration & Conciliation Act, 1996. He submits that in the said judgment, the Supreme Court had considered the issue as to whether the provisions of the Arbitration Act, 1940 shall apply or the provisions of the Arbitration & Conciliation Act, 1996 would apply to the pending arbitral proceedings.
14. Mr.Mehta, also invited my attention to the judgment delivered by a learned single Judge of this Court in case of M/s.Rendezvous Sports World vs. The Board of Control for Cricket in India, (2016) SCC OnLine 6064 and in particular paragraphs 10, 11, 12, 17 and 20 to 23. He submits that the second part of section 26 of the Amendment Act does not provide that it would apply to the arbitral proceedings commenced earlier and prior to the amendment having brought into force. He submits that since the rights had been accrued in favour of the petitioner under the unamended provisions of the Arbitration & Conciliation Act, 1996, the same cannot be taken away impliedly or explicitly by virtue of insertion of section 34(5) by the Amendment Act with effect from 23rd October, 2015. He submits that the arbitration proceedings in Court cannot be considered as continuation of the arbitral proceedings before the learned arbitrator.
15. It is submitted that in the judgment of this Court in case of M/s.Rendezvous Sports World (supra), learned single Judge has interpreted section 36 of the Amendment Act and not the rights of the parties under sections 34 and 37 of the Act. He submits that in any event the said judgment was not dealing with section 34 of the Arbitration & Conciliation Act, 1996 which section is invoked by the carbp434-17 petitioner for challenging the impugned award. In support of this submission, learned senior counsel invited my attention to paragraphs 46, 49, 52, 53, 56 to 58, 62, 65, 66, 67 and 78 of the said judgment in case of M/s.Rendezvous Sports World (supra) and would submit that paragraphs 22(5) and 32 of the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) have not been considered by the learned single Judge of this Court in the said judgment of M/s.Rendezvous Sports World (supra).
16. Mr.Mehta, learned senior counsel also invited my attention to the judgment delivered by the learned single Judge of this Court in case of Enercon GmbH vs. Yogesh Mehra & Ors., 2017 SCC OnLine Bom. 1744 and in particular paragraphs 29, 36 and 45. He submits that in that case the arbitration petition was filed admittedly under section 34 after 23rd October, 2015 and thus that judgment would not assist the case of the respondent and is clearly distinguishable in the facts of this case.
17. Learned senior counsel placed reliance on the judgment delivered by the Delhi High Court in case of Ardee Infrastructure Private Limited vs. Ms.Anuradha Bhatia, (2017), SCC OnLine Del.6402 and in particular paragraphs 24 to 33 and would submit that the Delhi High Court had taken a different view than the view taken by the Calcutta High Court. Learned single Judge of this Court in case of Enercon GmbH vs. Yogesh Mehra & Ors. (supra) did not agree with the views expressed by the Delhi High Court in the said judgment in case of Ardee Infrastructure Private Limited (supra). Learned senior counsel placed reliance on the judgment of the Delhi High Curt in case of Ministry of Defence, Government of India. vs. carbp434-17 Cenrex Sp.Z.O.O. & Ors., (2015) SCC OnLine Del. 13944 and would submit that in the said matter, the arbitration petition was already filed before 23rd October, 2015. Reliance was placed on paragraph 25 of the said judgment. Learned senior counsel distinguished the judgment in case of Duro Felguera, S.A. vs. Gangavaram Port Ltd., (2017) 9 SCC 729 on the ground that in that matter the proceedings had commenced after 23rd October, 2015.
18. In his alternate submission, it is submitted by the learned senior counsel that section 34(5) and 34(6) have to be read together. He submits that the purpose and intent of the legislation in inserting section 34(5) and (6) in section 34 by virtue of the provisions of the Amendment Act was that the proceedings filed under section 34 shall be heard expeditiously. He submits that the period of one year is contemplated for the disposal of the application under section 34 from the date of service of notice under the provisions of section 34(5). He submits that section 34(5) refers to issuance of notice and does not provide the mode and manner of service of notice. Whether a copy of the arbitration petition is also required to be served upon the respondent or not is also not provided in the said provision. He submits that the said provisions also do not provide for any consequences in case of any default for not issuing the notice under section 34(5) before filing of the arbitration petition or if the arbitration petition is not disposed of within one year from the date of service of the notice under section 34(5).
19. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Vidyawati Gupta & Ors. vs. Bhakti Hari Nayak & Ors., (2006) 2 SCC 777 and in particular paragraphs carbp434-17 16, 22, 49, 51 and 52. He also placed reliance on the Bombay High Court (Original Side) Rules and more particularly Rule 803-B and would submit that the said provision also provides for issuance of a notice to the respondent before admitting the petition to obviate the delay on account of the Court notice.
20. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480 and in particular paragraphs 41 and 42. He also placed reliance on the judgment of the Supreme Court in case of Topline Shoes Limited vs. Corporation Bank, (2002) 6 SCC 33 and in particular paragraphs 5, 8 and 11 in support of his submission that the provisions under section 34(5) cannot be construed as mandatory but has to be considered as directory. He submits that no specific right is created in favour of the respondent even if no prior notice before filing of the arbitration petition under section 34 is issued to the respondent. The said provision is not a penal provision. It is submitted that the rules framed by this Court and more particularly Rule 803-B substantially protects the interest of the respondent.
21. Learned senior counsel placed reliance on the judgment of the Madras High Court in case of M/s.Jumbo Bags Limited vs. The New India Assurance Co. Ltd., (2016) 2 LW 769 and in particular paragraph 20. He submits that in the said judgment, the Madras High Court has considered the amended section 11(6-A) of the Amendment Act and had held that section 26 makes it quite clear that unless the parties agree, the provisions of the principal Act would continue to apply and those provisions would be applicable only to carbp434-17 the arbitral proceedings commenced on or after 23rd October, 2015.
22. Learned senior counsel placed reliance on the judgment of the Kerala High Court in case of Shamsudeen vs. Shreeram Transport Finance Co. Ltd. & Ors., 2017 (2) KLJ 24 and in particular paragraph 8 in which it has been held that if the parties do not agree otherwise, if the arbitration proceedings had already commenced before 23rd October, 2015, section 34(5) of the Amendment Act has no application to such a situation and thus such requirement prescribed under section 34(5) would not be complied with by the petitioner.
23. Mr.Shyam Mehta, learned senior counsel for the petitioner in Arbitration Petition No.434 of 2017 distinguished the judgment of Patna High Court in case of Bihar Rajya Bhumi Vikas Bank Samiti Bihar vs. State of Bihar & Others, delivered on 28th October, 2016 in Letters Patent Appeal NO.1841 of 2016 on the ground that the Patna High Court has not considered that no consequences/effect of non-compliance of the procedure prescribed under section 34(5) is considered by the Patna High Court in the said judgment. He also invited my attention to paragraphs 57, 59, 78 and 82 of the said judgment.
24. Mr.Sanjay Jain, learned counsel appearing in the Commercial Arbitration Petition No.236 of 2017 adopts the submissions of Mr.Mehta in Commercial Arbitration Petition No.434 of 2017 and made various additional submissions on the preliminary issues.
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25. Learned counsel invited my attention to the report of the Law Commission of India dated 5th August, 2014 suggesting various amendments to the Arbitration and Conciliation Act, 1996 and more particularly the Note in respect of section 34(5) which provides that the said provision has been included to streamline the process and to cut-short the long delays which accrued due to issue of Court notice. He submits that the interpretation of a provision has to be done to achieve the object of the enactment i.e. to avoid delays involved in the service of notice by the Court. The object is not to prevent the petition being filed. The interpretation has to be textual as well as contextual i.e. purposive interpretation.
26. Section 34(5) does not prescribe the nature of the notice or the contents of the notice and the said provision is vague. He also placed reliance on section 34(6) which was also inserted by the said Amendment Act and would submit that if the provision of section 34(5) is read with section 34(6), a party could issue and serve a notice on the 1st day of service of the award and file a petition under section 34 on the 120th day. In such a situation, the period available to the Court to dispose of the section 34 petition would be only 8 months which could not have been an intention of the legislature.
27. It is submitted by the learned counsel that section 34(5) of the Act does not provide for any consequences of non compliance and leaves the consequences of non compliance to the discretion of the Court. He submits that the Arbitration and Conciliation At, 1996 contains several provisions which provides consequences of non compliance thereof. There are several other provisions where no consequences are provided for non compliance thereof. He submits carbp434-17 that the legislature thus where it wanted certain consequences to follow has prescribed such consequences in case of non compliance of such provisions. The intention of the legislature in not providing for any consequences is deliberate such that the equity jurisdiction of the Court or the discretion of the Court is not affected or curtailed in any manner. This omission to provide consequences has also to be seen in the light of the object to be achieved which is to ensure that the respondent immediately gets notice of filing of the petition or the intended filing of the petition and save him from expenses of prosecuting remedies as if a challenge under section 34 has not been laid.
28. It is submitted by the learned counsel that the right to challenge an award is a vested right. It vests on the date of commencement of arbitral proceedings in accordance with section 21 of the Act. He invited my attention to the judgment of this Court in case of M/s.Rendezvous Sports World vs. Board of Control for Cricket in India dated 8th August, 2016 in Chamber Summons No.1530 of 2015 and more particularly paragraphs 50 and 53. He submits that the rights of the petitioner as prevailing on the date of commencement of arbitral proceedings in the present case was prior to 23rd October,2015. Such right did not have any such pre- conditions. An impediment now created by section 34(5) cannot affect the vested right. Though processual in nature, an impediment which affects a vested right, has to be treated as prospective and cannot be given a retrospective effect. He placed reliance on section 6 of the General Clauses Act and would submit that the said provision clearly protects rights already vested and accrued in favour of any party which cannot be taken away by any amendment or a repeal carbp434-17 unless it is so provided in such amendment.
29. It is submitted by the learned counsel that the Arbitration and Conciliation Act, 1996 is a completed code qua arbitral proceedings. The Act clarifies that the arbitral tribunal shall not be bound by the provisions of the Civil Procedure Code, 1908 or the Evidence Act, 1872. The Code of Civil Procedure, 1908 is however applicable to the proceedings under the Arbitration and Conciliation Act, 1996 in Court. The Code of Civil Procedure, 1908 gives ample powers to the Court to dispense with the requirement of notice or to waive the same in appropriate matters under section 151 or to extend the time to issue the notice under section 148. The Arbitration Act recognizes party autonomy.
30. It is submitted by the learned counsel that section 26 of the Amendment Act permits parties to agree “otherwise”. The respondent by not objecting and by not issuing a notice under section 34(5) has agreed otherwise. The petitioner has served the notice along with copy of the arbitration petition upon the respondent on 18th April, 2017 and has complied with or in any event substantially complied with the requirement under section 34(5) of the Arbitration Act. It is submitted by the learned counsel that the respondent can also waive a notice as required under section 34(5). Section 4 of the Arbitration and Conciliation Act, which provides for a waiver are applicable to the facts of this case. He submits that the respondent did not object to the filing of the petition for want of prior notice under section 34(5) when the petitioner had applied for condonation of delay by filing a notice of motion and when the same was argued by the petitioner.
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31. It is submitted that the petitioner in this case has also filed a notice of motion inter-alia praying for a declaration that the petitioner has complied with section 34(5) of the Arbitration Act. No affidavit in reply is filed by the respondent to the said notice of motion till date. He submits that the respondent has also filed an arbitration petition without issuing any notice under section 34(5) of the Arbitration Act to the petitioner.
32. Learned counsel for the petitioner invited my attention to section 34(6) of the Arbitration and Conciliation Act, 1996 and would submit that there is no consequence provided in the said provision also, if the application challenging an impugned award under section 34 is not disposed of within a period of one year from the date of effecting service of the notice referred in section 34(5). He also placed reliance on section 11(13) of the Arbitration and Conciliation Act, 1996 and would submit that even the said provision contemplates disposal of proceedings under section 11(6) of the Arbitration and Conciliation Act, 1996 within 60 days from the date of service of notice on the opposite party. He submits that the said provision also does not provide for any consequence if the said application is not disposed of within 60 days from the date of service of the notice on the other side.
33. Learned counsel for the petitioner also placed reliance on sections 8(1), 16(2), 25(a) and 34(3) and would submit that those provisions clearly provides for consequences of not complying with those provisions which consequences are absent in section 34(5) and 34(6) in those newly added provisions. Learned counsel appearing for the petitioner placed reliance on following judgments :-
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a). Judgment of this Court in case of Ashraf Ahmed vs. The Municipal Corporation of Greater Bombay in First Appeal No.292 of 1999,
b). Judgment of this Court in case of Macquire Bank Ltd. vs. Shilpi Cable Technologies Ltd. In Civil Appeal No.15135 of 2017,
c). Judgment of Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480,
d). Central Bank of India vs. Femme Pharma Ltd. & Ors., AIR 1982 Bom. 67,
e). Thirumalai Chemicals Ltd. vs. Union of India & Ors., 2011 6 SCC 739,
f). M/s.Babbar Sewing Machine Company vs. Trilok Nath Mahajan (1978) 4 SCC 188,
g). State of Goa vs. Western Builders, (2006) 6 SCC 239,
h). Raptakos Brett And Co. Ltd. vs. Ganesh Property, AIR 1998 SC 3085, and
i). Rohanlal Kuthalia & Ors. vs. R.B.Mohan Singh Oberoi, (1975) 4 SCC 628.
34. Learned counsel submits that if the consequence is not carbp434-17 provided for compliance of any particular provision, such provision has to be construed as directory and not mandatory. Such provision can be also waived. He also placed reliance on the Bombay High Court (Original Side) Rules and more particularly Rule 227 providing for six months time for issuance of notice by the Court in arbitration matters. He also placed reliance on section 80 of the Code of Civil Procedure, 1908 and section 527 of the Mumbai Municipal Corporation Act, 1882.
35. It is submitted by the learned counsel that section 34(5) only refers to issuance of prior notice and does not contemplate filing of the arbitration application impugning an arbitral award after service of the notice to the other party whereas section 34(6) contemplates period of disposal of arbitration application within one year from the date of service of notice upon other party. He submits that in view of such conflicting provision, the Court can compute disposal of the arbitration application from the date of filing petition or from the date of issuance of the Court notice. He submits that thus the notice contemplated under section 34(5) has to be considered as directory and cannot be considered as mandatory.
36. Mr.Jain, learned counsel for the petitioner submits that section 26 of the Amendment Act does not apply to the pending arbitral proceedings as on 23rd October, 2015. He led emphasis on the words “nothing contained in this Act shall apply to the arbitral proceedings commenced in accordance with the provisions of section 21 of the Principal Act before commencement of this Act”. He submits that the phrases ” commenced” and “arbitral proceedings” used in the said section 26 are only to identify the beginning point of the carbp434-17 proceedings to which the amendment will not apply. The commencement of proceedings is identified as it is well settled principle of law that when the proceedings are to be governed and decided in accordance with law prevalent on the date of institution of the proceedings. He submits that the beginning point “commencement of the arbitral proceedings” is equated to the institution of the proceedings in Court.
37. It is submitted that the phrase “date of commencement of the arbitral proceedings” is a legal fiction and on the date of commencement there are in fact no arbitral proceedings instituted. A request for reference of disputes to arbitration is the date of commencement of the arbitral proceedings. It is submitted that the phrase “arbitral proceedings” is not a stand alone phrase but it is in conjunction with the words “commenced in accordance with section 21”. Arbitral proceedings commences on such notice, irrespective of whether the reference is ultimately made to the arbitral tribunal or not. It only seeks to identify the date of commencement and not the nature of the proceedings to which it applies. It sets a time line i.e. starting line. He submitted that the amended provisions inserted by the said Amendment Act thus would apply to those arbitral proceedings where a notice under section 21 is issued after 23 rd October, 2015.
38. Learned counsel refers to the phrase “arbitral proceedings” in various provisions of the Arbitration & Conciliation Act, 1996 and more particularly in sections 9, 13, 16, 17, 21, 22, 27, 29, 29-A, 30, 31, 31-A, 32, 34, 38 and 77. He submits that the intention of the legislature is thus clear that if the notice invoking arbitration carbp434-17 agreement is issued prior to 23rd October, 2015, then all such matters would be governed by the provisions under the Arbitration & Conciliation Act, 1996 and not by the provisions of the Amendment Act.
39. It is submitted that even in those cases where the notice invoking the arbitration agreement is issued after 23 rd October, 2015 and the arbitral proceedings have commenced after that date, insofar as the provisions under section 34(5) and 34(6) of the Arbitration & Conciliation Act, 1996 inserted by the Amendment Act is concerned, the same being directory and not mandatory, all such arbitration petitions filed without issuing such notice prior to the date of filing of the arbitration petition cannot be dismissed on that ground. It is submitted that section 26 of the Amendment Act does not refer to two different sets of the arbitral proceedings i.e. (i) before the arbitral tribunal and another before the Court.
40. Mr.S.S. Kulkarni, learned counsel appearing for the petitioner in Arbitration Petition No.624 of 2017 placed reliance on the Law Commission Report and would submit that the said report also does not state whether the provisions of section 34(5) and 34(6) are mandatory or directory though has described some of the other provisions as mandatory. He placed reliance on section 34(2) of the Arbitration & Conciliation Act, 1996 and would submit that the powers of the Court under such provision is not circumscribed by the provision under section 34(5) and are not subject to such provisions. Section 34(5) cannot be read in isolation but has to be read in that context. Section 34(1) confers substantive right on a party to challenge an arbitral award. Section 34(5) provides merely for a carbp434-17 notice which is by way of an intimation. No format of any such notice is contemplated under the said provision. Even if an oral intimation is issued to the other side, that may be sufficient. He submits that section 34(5) is procedural in nature and thus the petitioner can always amend the grounds before the petition is filed. The petitioner is not required to serve any proceedings along with notice. Section 34(5) is totally silent about the mode and manner of effecting the service of notice.
41. Learned counsel then placed reliance on section 34 (6) and would submit that even if an arbitration petition filed under section 34 is not decided within one year from the date of service of notice under section 34(5) of the Act, the Court does not cease to loose powers to decide such petitions and does not become functus officio. The Court has to make an endeavor to decide such arbitration petition within one year from the date of service of notice under section 34(5) and thus such provisions have to be construed as directory and not mandatory. Learned counsel placed reliance on the dictionary meaning of the term “notice prescribed in Law of Lexicon. He also placed reliance on section 12(2) of the Bombay Rent Control Act, 1947 and submits that the Courts have construed the said provision as mandatory after considering the wordings and the legislative intent for providing such provision. He submits that section 34(5) cannot be compared with section 12(2) of the Rent Act. The said powers under section 34(5) does not fatter upon the powers under sections 34(1) and 34(2) of the Act. Learned counsel cited the judgment of the Supreme Court in case of Kailash vs. Nanhku & Ors. (2005) 4 SCC 480 and in particular paragraphs 23 to 28. It is submitted that even if a notice under section 34(5) is not issued prior carbp434-17 to the date of filing of the arbitration petition, substantive remedy of the aggrieved party cannot be taken away under section 34(1).
42. Learned counsel for the petitioner placed reliance on the judgment of the Supreme Court in case Parasramka Commercial Company vs. Union of India, 1969 (2) SCC 694 and in particular paragraph 5 in support of his submissions that even if a notice is issued by the petitioner to the respondent post filing of the petition, it would amount to substantial compliance of provisions of section 34(5) and the purpose of such notice would be served.
43. Mr.Pujari, learned counsel appearing for the respondent in Arbitration Petition No.238 of 2017 placed reliance on the unreported judgment delivered on 25th October,2013 in First Appeal No.302 of 2013 in which this Court had considered section 164 of the Maharashtra Co-operative Societies Act in support of the submission that since prior notice before filing arbitration petition was not issued by the petitioner in the said Arbitration Petition No.238 of 2017, the petition is not maintainable and deserves to be dismissed on that ground alone. He submits that the said provision under section 34(5) is mandatory and not directory. He also placed reliance on the judgment of this Court reported in 76 Company Cases 244 (Bom.) in support of this submission.
44. Ms.Munim, learned counsel appearing for the respondent in Commercial Arbitration Petition No.434 of 2017 on the other hand submits that by virtue of insertion of section 34(5) and 34(6) of the Amendment Act, the Arbitration & Conciliation Act, 1996 is not repealed. The Ordinance did not contain any saving provision. The carbp434-17 arbitration ordinance was converted into the Amendment Act with insertion of section 26 as a saving section.
45. It is submitted that there is no period prescribed under section 34(5) for issuance of prior notice before filing an arbitration petition challenging the award. The legislative intent of issuance of such prior notice is for expeditious disposal of the arbitration proceedings. She submits that if section 34(5) and 34(6) are construed by this Court as directory and not mandatory, the whole purpose and legislative intent of expeditious disposal of the arbitration proceedings would be frustruted. It is submitted that the provisions of section 3(5) and 34(6) cannot be read in isolation but have to be read with section 34(1) and section 34 (2). Section 34(5) cannot be made otiose by declaring it as directory. The notice period is not required to be excluded by computing the period of limitation under section 34(3).
46. Learned counsel invited my attention to the averments in the Commercial Arbitration Petition No.434 of 2017 and would submit that the notice invoking arbitration agreement was issued by the other party on 20th February, 2011. The award was rendered by the learned arbitrator on 12th April, 2017. On 5th June, 2017, the learned arbitrator passed an order under section 33 of the Arbitration & Conciliation Act, 1996. The arbitration petition was filed on 11 th July, 2017. She submits that admittedly the arbitral award is rendered after 23 rd October, 2015 and the arbitration petition also came to be filed after 23rd October, 2015. She strongly placed reliance on the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and in particular paragraphs 10, 11, 21, 25 to 28, 33, 34, 52, 53, 57, 58 and 78 and also in case of Enercon GmbH (supra) and in particular carbp434-17 paragraphs 24, 28, 32, 38, 40 and 44 in support of her submission that though the notice invoking arbitration agreement was given prior to 23rd October, 2015 and the award was rendered after that date, all the arbitration petitions challenging such award would be governed by section 34(5) and 34(6) to be read with section 34(1) and those provisions thus will have to be complied with. She submits that there are two sets of arbitral proceedings contemplated under section 26 of the Arbitration & Conciliation Act, 1996 i.e. one before the arbitral tribunal and another in Court post award.
47. Learned counsel placed reliance on the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) and submits that the phrase “in relation to the arbitral proceedings” cannot be given a narrow meaning to mean only the pendency of the arbitration proceedings before the learned arbitrator but would also cover the proceedings before the Court. She submits that saving section thus becomes exhaustive and takes within fold two different types of proceedings arising out of the Arbitration & Conciliation Act, 1996. Section 6 of the General Clauses Act becomes applicable. She submits that by all necessary implication, the amendments introduced by the Amendment Act will apply to the proceedings other than the arbitral proceedings even though the said proceedings may have commenced prior to 23rd October, 2015. She submits that this Court has already held in the said judgment in M/s.Rendezvous Sports World (supra) that the object of the amendment to section 26 can be fulfilled only by holding the saving section 26 exhaustive. It is submitted by the learned counsel that this Court in case of Enercon GmbH (supra) has also dealt with the effect of section 26 of the Amendment Act.
carbp434-17
48. It is submitted that in view of the fact that the arbitration petition has been filed after Amendment Act came into force and in view of the fact that the saving clause 26 does not save post arbitral proceedings under section 34 from the application of the Amendment Act, the mandatory provisions of section 34(5) will be applicable to this matter and the petitioner not having complied with this mandatory requirement, the arbitration petition deserves to be dismissed, as not maintainable. She submits that issuance of a notice is a sine qua non before filing of a challenge petition. It is submitted that section 34(1) clearly provides that a recourse to Court against an arbitral award may be made only by an application for setting aside such an award in accordance with sub-sections 2, 3 and 5. A petition which is not in compliance of the requirement of section 34 is not valid and is not maintainable. She led emphasis on the word “shall” used in section 34(5) and would submit that the said word would clearly indicate that the petition itself could be filed only after compliance of the mandatory notice and not otherwise.
49. Learned counsel placed reliance on the judgment of the Supreme Court in case of Union of India & Ors. vs. A.K. Pandey holding that it is the duty of the Courts of justice to try to get the real intention of the legislature by considering the whole scope of the statutes. She placed reliance on the words “an application under section 34(1) shall be disposed in any event within a period of one year from the date of such notice referred to in sub-section 5 is served”. She submits that the word “only” is an exclusive word and indicates the legislative intent that the section is mandatory. She placed reliance on section 25 of the Law Commission Report in carbp434-17 support of this submission.
50. Learned counsel placed reliance on section 11(13) of the Arbitration & Conciliation Act, 1996 and would submit that in the said provision, a mandate is provided that the High Court or the Supreme Court as the case may be shall decide an application as expeditiously as possible and an endeavor shall be made to dispose of the matter within a period of 60 days from the date of service of the notice on the opposite parties. The words “in any event” are not used in the said provision, whereas such words are used in section 34(6) of the Amendment Act. She submits that the effect of section 34(5) is clearly to impose a bar against the institution of the application under section 34(1) and the same is the only legislative purpose and intent to dispose of the challenge applications within a period of one year from issuance of the notice impugning an award.
51. Learned counsel for the respondent placed reliance on the judgment of the Supreme Court in case of Sharif-ud-Din vs. Abdul Gani Lone, AIR 1980 SC 303 and would submit that in the said judgment, it is held by the Supreme Court that whenever a statute prescribes that a particular act is to be done in a particular manner and also lays does failure to comply with the said requirement, leads to specific consequence and it would be difficult to hold that the requirement is not mandatory. She also placed reliance on the judgment of the Supreme Court in case of Union of India vs. Popular Construction Company, (2001) 8 SCC 470 and in particular paragraph 12. She also placed reliance on the judgment of the Supreme Court in case of Bihari Chowdhary & Anr. vs. State of Bihar & Ors., (1984) 2 SCC 627 and would submit that since the carbp434-17 language used in section 34(5) is clear and unambiguous, it is the duty of the Court to give effect to such legislative intent and has to construe such provisions strictly.
52. Learned counsel also placed reliance on the following judgments :-
i). The judgment delivered by the National Company Law Appellate Tribunal, New Delhi in case of Seema Gupta vs. Supreme Infrastructure India Ltd. & Ors. in Company Appeals (AT) (Insolvency) No.53 of 2017,
ii). The judgment delivered by the National Company Law Appellate Tribunal in case of Era Infra Engineering Limited vs. Prideco Commercial Projects Pvt. Ltd. in Company Appeals (AT) (Insolvency) No.31 of 2017,
iii). The judgment of the Supreme Court in case of State of Kerala vs. M.S. Mani & Ors. in Contempt Petition (Civil) No.280 of 1999,
iv). The judgment of the Supreme Court in case of Yogendra Pratap Singh vs. Savitri Pandey & Anr. in Criminal Appeal No.605 of 2012 and another connected matters,
v). The judgment of the Supreme Court in case of M/s.Shreeram Finance Corporation vs. Yasin Khan & Ors., AIR 1989 SC 1769, carbp434-17
vi). The judgment of the Supreme Court in case of Sharif-ud- Din vs. Abdul Gani Lone, AIR 1980 SC 303,
vii). The judgment of the Supreme Court in case of M/s. Raptakos Brett & Co. Ltd. vs. Ganesh Property, AIR 1998 SC 3085,
viii). The judgment delivered by the Division Bench of the Patna High Court delivered on 28th October, 2016 in Letters Patent Appeal No.1841 of 2016 in case of Bihar Rajya Bhumi Vikas Bank Samiti, Bihar – Jharkhand vs. The State of Bihar & Ors.
53. Learned counsel for the respondent makes an attempt to distinguish the judgment of this Court in case of The Board of Trustees of the Port of Mumbai (supra) on the ground that the said judgment is in conflict with the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra). Learned counsel distinguished the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra) on the ground that the question for consideration of the Supreme Court in the said judgment was of the construction of section 85(2)(a) of the Arbitration & Conciliation Act, 1996. Learned counsel for the respondent also makes an attempt to distinguish the judgment of the Supreme Court in case of Milkfood Limited (supra) on similar ground.
54. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Vidyawati Gupta & Ors. (supra) and would submit that section 34(5) in this case being mandatory, non-compliance of such mandatory provision would carbp434-17 render the proceedings non-est in the eyes of law. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Kailas vs. Nanhku & Ors. (supra) on the ground that prior notice contemplated under section 34(5) is an integral part of the application under section 34 touching to the maintainability of the application itself and not a procedure in the facts before the Supreme Court in the said judgment while considering the provisions of Order VIII Rule 1 of the Code of Civil Procedure.
55. Learned counsel for the respondent distinguished the judgment of the Supreme Court in case of Topline Shoes Limited (supra) on the ground that the object of the amendment to the Principal Act, 1996 was by virtue of the amendments to section 34(5) read with section 34(6) so as to fix the time frame for disposal of the challenge petitions filed under section 34 so that the award creditor will not be deprived of the fruits of the award. Learned counsel for the respondent distinguished the judgment of the Madras High Court in case of M/s.Jumbo Bags Limited (supra) on the ground that the said judgment is contrary to the judgments of this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra)
56. Learned counsel for the respondent distinguished the judgment of the Kerala High Court in case of Shamsudeen vs. Shreeram Transport Finance Co. Ltd. & Ors., (supra) on the ground that the said judgment is contrary to the principles laid down by this Court in case of M/s.Rendezvous Sports World (supra) and Enercon GmbH (supra).
57. Insofar as the judgment delivered by a single Judge of the carbp434-17 Patna High Court in case of Bihar Rajya Bhumi Vikas Bank Samiti (supra) is concerned, it is submitted by the learned counsel for the respondent that the said judgment is overruled by the Division Bench of the Patna High Court. Insofar as the judgment of the Himachal Pradesh High Court dated 24th August, 2016 in case of M/s.Madhava Hytech Engineers Pvt. Ltd. vs. The Executive Engineers and Anr. In OMP (M) No.48 of 2016, delivered on 24th August, 2017 is concerned, learned counsel for the respondent distinguished the said judgment on the ground that the said judgment has dealt with an application under section 14 of the Limitation Act and the facts before the Himachal Pradesh High Court in the said judgment were totally different and are distinguishable in the facts of this case.
58. Mr.Ashish Kamat, learned counsel appearing for the respondent in Arbitration Petition No.624 of 2017 adopted the submissions made by Ms.Munim, learned counsel for the respondent in Commercial Arbitration Petition No.434 of 2017 and would submit that the object and purpose of introducing the section 34(5) and 34(6) is expeditious disposal of the arbitration petitions challenging an arbitral award. Such provisions are mandatory in its nature. The arbitration petition challenging the arbitral award can be filed only post issuance of such mandatory notice. The obligation to issue such notice is on the party who seeks to challenge an arbitral award. The duty is cast on the office of the Court to ensure that due compliance of such mandatory notice is made by the petitioner before filing of the arbitration petition under section 34.
59. It is submitted by the learned counsel that section 34(5) provides for an implied consequence of non-compliance of issuance carbp434-17 of the mandatory notice. Though there is no specific consequence provided in section 34(6), if such arbitration application is not disposed of within one year from the date of service of the notice under section 34(5) upon the respondent, the period of one year may be curtailed and such arbitration petition has to be disposed of by the Court within the balance period left after service of such notice upon the respondent. He submits that a party who deliberately delays filing of the petition cannot be benefited. Even if the provisions of section 34(6) is not mandatory, the provisions of section 34(5) is mandatory.
60. Mr.Jain, learned counsel for the petitioner in Commercial Arbitration Petition No.236 of 2017 in rejoinder placed reliance on paragraph 289 of the judgment of this Court in case of The Board of Trustees of the Port of Mumbai (supra) and distinguished the judgment of this Court in case of M/s.Rendezvous Sports World (supra) by placing reliance on paragraphs 45, 62, 65, 66 and 78 and would submit that in the said judgment, learned single Judge of this Court has only decided the said matter based on the applicability of section 36 of the Arbitration & Conciliation Act, 1996. In support of this submission, he invited my attention to the paragraphs 10 to 12, 26, 27, 46, 52, 58 and 59 of the said judgment. He submits that in the said judgment, the learned single Judge has not based her decision on construing section 26 of the Amendment Act but the entire judgment is based on the issue involved in the said judgment about the applicability of section 36 in the pending arbitration petitions prior to 23rd October, 2015. He once again led emphasis on paragraph 22(5) of the judgment of the Supreme Court in case of Thyssen Stahlunion GMBH (supra). He submits that the right to file an application under section 34 of the Arbitration & Conciliation Act, carbp434-17 1996 had accrued in favour of the petitioner when the petitioner had invoked the arbitration agreement by issuing a notice and when the same was received by the other side in view of section 21 of the Arbitration & Conciliation Act, 1996. He submits that at the most, the Court can construe that the requirement of notice under section 34(5) introduced by the Amendment Act would provide an additional condition and not mandatory condition.
REASONS AND CONCLUSIONS :
61. Since the main arguments are advanced by the learned counsel for the parties in Commercial Arbitration Petition No.434 of 2017 and Commercial Arbitration Petition No.236 of 2017, I shall briefly indicate the admitted facts which are relevant for the purpose of deciding the legal issues raised by the respondent in these batch of petitions.
62. Insofar as Commercial Arbitration Petition No.434 of 2017 is concerned, the petitioner had issued a notice invoking arbitration clause on 28th February, 2011. On 4th December, 2012, the learned designate of the Chief Justice appointed the sole arbitrator in an application filed by the petitioner under section 11(6) of the Arbitration & Conciliation Act, 1996. On 23 rd October, 2015, the Amendment Act came into effect. On 12th April, 2017, learned arbitrator made an award i.e. after the Amendment Act came into force. On 21 st August, 2017, the petitioner filed this arbitration petition. The respondent has raised a plea in the affidavit in reply dated 5th October, 2017 about the maintainability of this petition in view of non-issuance of prior notice by the petitioner under section 34(5) of the Amendment Act.
63. Insofar as Commercial Arbitration Petition No.236 of 2017 carbp434-17 is concerned, the petitioner had issued a notice invoking arbitration agreement on 14th June, 2014. Learned arbitrator accepted his nomination and entered upon the reference on 7 th August, 2014. Learned arbitrator made an award on 25 th November, 2016. The petitioner filed this arbitration petition on 12 th April, 2017. The respondent has raised an objection about the maintainability of this petition on the ground that the notice under section 34(5) of the Amendment Act has not been served upon the respondent before filing this petition across the bar.
64. On perusal of the aforesaid admitted facts, it is clear that in both these matters the arbitration agreements were invoked much prior to 23rd October, 2015. The arbitral awards are delivered by the Arbitral Tribunal after 23rd October, 2015. Both the Arbitration Petitions have been filed under section 34 of the Arbitration & Conciliation Act, 1996 after 23rd October, 2015.
65. Insofar as Commercial Arbitration Petition No.434 of 2017 is concerned, the arbitration agreement is recorded in clause 20 of the agreement dated 6th June, 2008 between the parties to this petition. The arbitration agreement does not provide that in case of any dispute arising between the parties in future under the said arbitration agreement, the parties will be governed not only by the provisions of the Arbitration & Conciliation Act, 1996 but also by any statutory repeal thereto or any amendment thereto.
66. Insofar as Commercial Arbitration Petition No.236 of 2017 is concerned, the arbitration agreement is recorded in clause 25 of the Terminalling / Handling Services Agreement dated 5 th August, carbp434-17 2011. The arbitration agreement provides that the provision of the Arbitration & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under the said provision.
67. By section 27 of the Amendment Act, the Arbitration and Conciliation (Amendment) Act, 2015 is repealed. Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Section 43 of the Arbitration and Conciliation Act, 1996 provides that for the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section
21.
68. The Supreme Court in case of Thyssen Stahlunion GMBH (supra) has construed section 85(1)(a) of the Arbitration and Conciliation Act and has held that the provisions of Arbitration Act, 1940 shall apply in relation to the arbitral proceedings which are commenced before coming into force of the Arbitration and Conciliation Act, 1996. Supreme Court has held that in the cases where arbitral proceedings have commenced before coming into force of the New Act (1996 Act) and are pending before the Arbitrator, it is open to the parties to agree that new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act carbp434-17 comes into force.
69. It is held that once the arbitral proceedings have commenced, it cannot be stated that right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act that some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force. If narrow meaning of the phrase “in relation to arbitral proceedings” is to be accepted, it is likely to create great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the New Act. An interpretation which leads to unjust and inconvenient results cannot be accepted. A foreign award given after the commencement of the new Act can be enforced only under the new Act.
70. The Supreme Court held that the provisions of the old Act shall apply in relation to the arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties and (2) new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The old Act will apply to whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word “to” could have sufficed and when the legislature has used the expression “in relation to”, a proper meaning has to be given. It is held that the first limb of section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the carbp434-17 award under that Act. Multiple and complex problems would arise if the award given under the old Act is said to be enforced under the new Act. Both the Acts are vastly different to each other. It is held that when arbitration proceedings are held under the old Act, the parties and the arbitrator keep in view the provisions of that Act for the enforcement of the award. In paragraph (32) of the said judgment, it is held that it is not necessary that for the right to accrue that legal proceedings must be pending when the new Act comes into force. To have the award enforced when arbitral proceedings commenced under the old Act under that very Act is certainly an accrued right.
71. This Court in case of The Board of Trustees of the Port of Mumbai vs. Afcons Infrastructure Limited (supra) has considered a situation where notice invoking arbitration agreement was issued much prior to 23rd October, 2015. The arbitral award was rendered prior to 23rd October, 2015. The arbitration petition was filed in the year 2012 and was pending till 23 rd December, 2016. There was no provision in the arbitration agreement that the parties would be governed by not only the provisions of the Arbitration and Conciliation Act, 1996 but also by the statutory amendment or repealed thereto. This Court accordingly held that since the notice invoking arbitration agreement was issued prior to 23rd October, 2015, the provisions of amended section 34 brought into effect on 23rd October, 2015 would not be applicable to the facts of this case.
72. In case of Padmini C. Menon vs. Vijay C. Menon & Ors. in Arbitration Petition No.9 of 2015 in its judgment delivered on 10th January,2018, this Court held that in view of there being an agreement between the parties that the parties would be governed carbp434-17 not only by the Arbitration and Conciliation Act, 1996 but also statutory amendment or repeal thereto, though the arbitration proceedings had commenced prior to 23rd October, 2015, the amendment inserted in section 11 as section 11(6-A) would be applicable to the parties though the arbitration application filed by the applicant in the year 2015 was pending in this Court on 23 rd October, 2015 and thereafter this Court after adverting to section 85(2)(a) and section 26 of the Amendment Act has held that section 26 of the Amendment Act is an non-obstante provision. If the parties agree that the provisions contained in the said Amendment Act shall also apply to the arbitral proceedings commenced in accordance with the provisions of section 21 of the Arbitration & Conciliation Act, 1996, the said amended provision would apply to such proceedings commenced earlier, otherwise the Amendment Act shall apply in relation to the arbitral proceedings on or after the date of commencement of the Amendment Act.
73. This Court held that in view of section 26 of the Amendment Act and in view of the specific agreement between the parties that the disputes will be settled not only in accordance with the provisions of the Arbitration & Conciliation, Act, 1996 prevailing on the date of the execution of the said agreement but also any statutory modifications thereof, Amendment Act would apply even if arbitral proceedings had commenced prior to 23rd October, 2015. It is held that section 11(6-A) of the Amendment Act thus would apply to the parties. This Court also followed the earlier two judgments of this Court in case of M/s.Amisha Buildcon Pvt. Ltd. vs. Jidnyasa Co- op. Housing Society Ltd., 2016 SCC OnLine Bom. 5234 and in case of Vipin Bhimlal Shah vs. Slum Rehabilitation Authority in carbp434-17 Arbitration Application No.251 of 2015 delivered on 12 th October, 2017 holding that the provisions of Amendment Act would apply in view of such agreement between parties. This Court also adverted to the judgment of Supreme Court in case of Duro Felguera vs. Gangavaram Port Ltd., (2017) 9 SCC 729 in which the Supreme Court had held that the parties would be governed by the amended provisions under section 11(6-A) of the Amendment Act and also to the several judgments of various High Courts taking a similar view. In my view, the principles laid down by the Supreme Court in the said judgment would apply to the facts of this case. I am respectively bound by the said judgment.
74. In my view, the principles laid down by the Supreme Court in case of Thyssen Stahlunion GMBH (supra) and judgments of this Court in case of The Board of Trustees of the Port of Mumbai vs. Afcons Infrastructure Limited (supra) and Padmini C. Menon vs. Vijay C. Menon & Ors. (supra) would apply to the facts of this case. I am respectively bound by those judgments.
75. A perusal of section 26 of the Amendment Act of 2015 clearly indicates that unless the parties otherwise agree, no provisions of the Amendment Act would apply to arbitral proceedings commenced in accordance with the provisions of section 21 of the Arbitration and Conciliation Act, 1996 prior to 23rd October, 2015. It also makes it clear that the provisions of Amendment Act shall apply in relation to the arbitral proceedings commenced on or after the date of commencement of the Amendment Act. It is thus clear that if in an arbitration agreement is entered into prior to 23rd October, 2015, and the parties had agreed that the parties would be governed not only by carbp434-17 the provisions of the Arbitration and Conciliation Act, 1996 but also by statutory amendment thereto or repeal thereto and if the notice invoking arbitration agreement under section 21 is received by the other party prior to 23rd October, 2015 when the arbitral proceedings contemplated under section 21 is commenced, the party will be governed by not only the provisions of Arbitration and Conciliation Act, 1996 but also by the statutory amendments thereto or repeal thereto and not otherwise.
76. If however there was no such agreement between the parties to apply the provisions of statutory amendments or repeal to the Arbitration and Conciliation Act, 1996 and the arbitral proceedings have commenced prior thereto 23rd October, 2015 by virtue of section 21 of the Arbitration Act, such arbitral proceedings will be governed by the provisions of the Arbitration and Conciliation Act, 1996 before its amendment brought into effect by Amendment Act w.e.f. 23rd October, 2015 irrespective of the fact that the award is rendered after 23rd October, 2015 or that the arbitration petition challenging an award is pending as on 23rd October, 2015 or filed thereafter.
77. In my view, since the arbitral proceedings commences on receipt of the notice invoking arbitration agreement by the other party as contemplated under section 21 read with section 43 of the Arbitration and Conciliation Act, 1996, if such notice is received by the other side after 23rd October, 2015, the provisions of the Amendment Act would apply to such matters. The parties cannot agree that they will not be bound by the provisions of the Amendment Act.
78. The respondent has strongly placed reliance on the carbp434-17 judgment delivered by a learned Single Judge of this Court in case of M/s.Rendezvous Sports World (supra) and also on the judgment delivered by another learned Single Judge of this Court in case of Enercon GmBH (supra). Learned counsel appearing for the parties have dealt with both these judgments threadbare for consideration of this Court in support of their rival submissions.
79. Insofar as the judgment M/s.Rendezvous Sports World (supra) is concerned, chamber summons was filed by the original petitioner who had filed application under section 34 of the Arbitration Act inter-alia praying for dismissal of the application for execution of the arbitral award filed by the judgment debtor. The arbitral awards in that matter were made on 22nd June, 2015, 22nd June, 2015 and 28th January, 2015 respectively. Arbitration petitions were filed on 16th September, 2015 challenging the arbitral awards. One of the arbitration petition was admitted on 19th October, 2015. The question that arose before this Court in the said matter was whether in respect of those awards which were delivered prior to 23rd October, 2015 and the arbitration petitions also having been filed prior to 23rd October, 2015, those awards would become enforceable only if and when those petitions under section 34 were refused and not otherwise. A question was also before this Court that if Amendment Act is held applicable, whether after expiry of three months of the arbitral award, it becomes enforceable in accordance with the provisions of Code of Civil Procedure, irrespective of fact whether challenge has been filed under section 34 of the Act or not.
80. This Court recorded that there was no dispute between the parties as regards the specific meaning of the term arbitral carbp434-17 proceedings under the Arbitration Act. This Court also recorded that there was no dispute between the parties that the first part of section 26 carries restrictive meaning that the proceedings before the arbitral tribunal which proceedings get terminated on passing of the final award. It is held that by necessary implication, the saving section becomes exhaustive i.e. it takes within it’s fold all different types of proceedings arising out of the Arbitration Act. It is thus clear that in that judgment, there was no contest between the parties that the first part of saving section 26 carries restrictive meaning that the proceedings before the arbitral tribunal which proceedings get terminated with passing of the final award. The parties in that proceedings also did not dispute that the section 26 was consisting of two parts i.e. the arbitral proceedings before arbitral tribunal which are terminated by virtue of an order under section 32(1) and another arbitral proceedings before Court of law.
81. This Court held that if use of the verb “has been” is held to be in “present perfect tense”, section 36 of the Arbitration Act will be applicable not only to cases where a petition under section 34 of the Arbitration Act is filed after 23rd October, 2015 but also to cases where a petition has been filed before 23rd October, 2015. It is held that all the applications under section 34 pending in the Court for consideration will attract section 36(2) of the Amended Act. It is held that the vested right of the award-debtor under section 34 of the Arbitration Act is unaffected by the amendment to section 36 of the Arbitration Act. It is held that by the amended section 34 of the Arbitration Act, the shadow or impediment on the enforceability of the arbitral award has been removed to enable a successful claimant to enforce the arbitral award, unless the award-debtor obtains an order carbp434-17 of interim stay from the Court under section 36(3) of the Arbitration Act. The lifting of this shadow or impediment, on the enforceability of the arbitral award operates only in future i.e. after 23rd October, 2015 on the basis of an existing state of affairs, even if the award was passed or the petition under section 34 of the Arbitration Act was filed before 23rd October, 2015. The Amended section 36 of the Arbitration Act cannot be said to operate retrospectively, its operation is prospective in nature. This Court accordingly dismissed the chamber summons inter-alia praying for dismissing of the execution application.
82. A perusal of the judgment rendered by this Court in case of M/s.Rendezvous Sports World (supra) indicates that this Court has held in the said judgment that right vested in the party under section 34 of the Arbitration and Conciliation Act is unaffected and not taken away by the amendment to section 36 of the Arbitration Act. A vested right available to the award-debtor would be only in the matter of challenge to the arbitral award which had remained intact. It is held that section 36 of the Arbitration Act pertains only to the enforcement of an award and its executability. The original section 34, imposed a disability on the award-holder in executing the award during pendency of the challenge to the award. It is held that the right to interim relief cannot be a vested or accrued substantive right. The disability imposed on the award-holder under original section 36 was absolute. It is thus clear that even in the said judgment, it is held by this Court that insofar as right of an aggrieved party to challenge an arbitral award is concerned, the said right is a vested right accrued to him which is not affected by section 36 by virtue of insertion of such amendment by the Amendment Act.
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83. This Court in the said judgment in case of
M/s.Rendezvous Sports World (supra) held that the parties in that case were ad-idem and both the parties had agreed that the term ‘arbitral proceedings’ referred in section 26 of the Amendment Act refers to two separate arbitral proceedings i.e. one before the arbitral tribunal before rendering of an award and another before this Court of law after rendering of an award. In these proceedings however Mr.Jain learned counsel for the petitioner had strenuously urged before this Court that the term ‘arbitral proceedings’ used in section 26 of the Amendment Act referred to only one arbitral proceedings which commences upon receipt of notice invoking arbitration agreement under section 21 of the Arbitration Act and not two separate stages of arbitration proceedings i.e. one before the arbitral tribunal and another before this Court. In my view, he rightly placed reliance by the term ‘arbitral proceedings’ referred by the legislature in various sections and more particularly sections 9, 13, 16, 17, 21, 22, 27, 29, 29A, 30, 31, 31A, 32, 34, 38 and 77. In section 31A(1)(IV) of the Arbitration Act, the Court as well as the arbitral tribunal are empowered to award cost based on the expenses incurred in connection with the arbitral and Court proceedings.
84. The aforesaid provisions would clearly indicate that the term ‘arbitral proceedings’ referred is only one arbitral proceedings which commences by virtue of the receipt of notice under section 21 of the Arbitration Act by the other party. The arbitral proceedings commences even before a statement of claim is filed or even before appointment of an arbitral tribunal. In my view, the arbitral proceedings referred in section 26 of the Amendment Act and under carbp434-17 various provisions of Arbitration Act referred to aforesaid cannot be construed as proceedings before Court or cannot be construed as two separate proceedings at two different stages i.e. one which commences on receipt of notice invoking arbitration agreement under section 21 and another before a Court i.e. at the stage of challenging an award or otherwise.
85. In my view, a plain and simple interpretation of section 26 of the Amendment Act on conjoint reading with other provisions of the Arbitration Act referred to aforesaid wherein the term ‘arbitral proceedings’ are referred would clearly indicate that the provisions in the Arbitration and Conciliation Act prior to the provisions of Amendment Act having been brought into effect would apply to all the arbitral proceedings wherein a notice invoking arbitration agreement under section 21 was received by the other party prior to 23 rd October, 2015 and the provisions of the Arbitration Act duly amended by the Amendment Act would apply to all the arbitral proceedings which have commenced after 23rd October, 2015 by virtue of a receipt of notice invoking arbitration agreement by other party in view of section 21 of the Arbitration and Conciliation Act, 1996. The phrase “the date of commencement of the arbitral proceedings” is a legal fiction and has to be read in conjunction with the words “commenced in accordance with section 21”.
86. The judgment of this Court in case of M/s.Rendezvous Sports World (supra) thus to this extent does not support the case of the respondent but supports the case of the petitioner that the right to challenge an arbitral award is vested in favour of the aggrieved party and cannot be taken away by virtue of an amendment.
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87. The Supreme Court in case of Aravali Power Company Pvt. Ltd. vs. M/s.Era Infra Engineering Ltd., 2017 SCC OnLine 1072 has considered the applicability of the Amendment Act in a matter where notice invoking arbitration agreement was issued prior to 23rd October, 2015. During the pendency of the arbitral proceedings, section 12 of the Arbitration and Conciliation Act, 1996 was amended by the same Amendment Act. The respondent before the Supreme Court had invoked the amended provisions during the pendency of the arbitration proceedings before the learned arbitrator and had raised objection that the learned arbitrator was disqualified being an employee in view of the amendment to section 12(1) read with 7th Schedule. The respondent had also filed an application under section 14 seeking termination of the mandate of the learned arbitrator. High Court had entertained such application filed by the respondent before the learned arbitrator and the petitioner before the High Court. Supreme Court has reversed the said view of the High Court and has categorically held that in pre-amendment cases, the law laid down in Northern Railway Administration’s case must be applied and not otherwise.
88. It is held by the Supreme Court in that case governed by 1996 Act after the Amendment Act has come into force that if the arbitration Clause finds foul with the amended provisions, the appointment of the Arbitrator even if apparently in conformity with the arbitration Clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible. The procedure as laid down in unamended section 12 mandated disclosure of circumstances likely to give rise to carbp434-17 justifiable doubts as to independence and impartiality of the Arbitrator. Supreme Court accordingly interfered with the order of the High Court exercising jurisdiction in that case and held that the High Court ought not to have interfered with the process and progress of the arbitration. The principles laid down by the Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra) squarely applies to the facts of this case. This judgment of the Supreme Court is delivered after the date of delivery of the judgment of this Court in case of M/s.Rendezvous Sports World (supra) and in case of Enercon GmBH (supra). This Court while delivering these judgments did not have benefit of the judgment of Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra).
89. In my view, the judgment of this Court in case of M/s.Rendezvous Sports World (supra) holding that there are two stages of arbitral proceedings referred in section 26 of the Amendment Act is based on the consensus of the parties and even otherwise contrary to the judgment of Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra). I am bound by the judgment of Supreme Court.
90. In case of Voestalpine Schienen GmbH vs. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665, the Supreme Court has considered a different situation where the notice invoking arbitration agreement was issued after 23rd October, 2015 and the arbitral proceedings had commenced after Amendment Act came into force. The appointment of the arbitrator was not in conformity with section 12(1) of the Amendment Act Supreme Court interfered with such appointment by applying the provisions of the Amendment Act, 2015. The Supreme Court distinguished the judgments delivered prior to the carbp434-17 said amendment to the facts of that case before the Supreme Court in view of the admitted fact that the notice invoking arbitration agreement was issued after 23rd October,2015.
91. This judgment of the Supreme Court is adverted to by the Supreme Court in case of Aravali Power Company Pvt. Ltd. (supra) and was distinguished on the ground that in that matter, the notice under section 21 of the Arbitration Act was issued prior to 23rd October,2015. In my view the principles of law laid down by the Supreme Court would apply to the facts of this case to a situation where the notice under section 21 is issued after 23 rd October, 2015 thereby arbitral proceedings having commenced after 23rd October,2015. It is thus clear beyond reasonable doubt that if the notice under section 21 to invoke arbitration agreement has been received prior to 23rd October, 2015, the arbitral proceedings had commenced prior to 23rd October, 2015 and thus the provisions of the unamended Arbitration and Conciliation Act, 1996 would continue to apply to such proceedings before the arbitral tribunal as well as before Court and not the provisions of the Amendment Act. This Court in case of M/s.Rendezvous Sports World (supra) and in case of Enercon GmBH (supra) did not have benefit of the judgment of Supreme Court in case of Voestalpine Schienen GmbH (supra).
92. This Court in case of Marwadi Shares & Finance Ltd. vs. Miral Kanaksinh Thakore & Anr. (2014) 1 Bom.C.R. 481 has considered the amendment in the bye-laws and the regulations of Bombay Stock Exchange Limited which were amended during the pendency of the arbitral proceedings before the arbitral tribunal and by virtue of such amendment, the power to condone the delay in filing carbp434-17 the arbitration petition before the appellate bench was taken away. This Court after adverting to various judgments of the Supreme Court, including the judgment in case of Garikapati Veeraya vs. N. Subiah Choudhry, AIR 1957 SC 540 held that the rights and remedies accrued to the petitioner and subsequent rights and/or remedy in filing the proceedings before the superior Court or the appellate forum would continue and cannot be divested by the amendment unless it is shown clearly intended by the amendment to make it applicable with retrospective effect. It is held that the petitioner in that matter had filed the proceedings before the learned arbitrator. The right of filing an appeal against the impugned award, if any, and a right to file an application for condonation of delay on showing sufficient cause on the date of filing of the original proceedings would be continued.
93. It is held that the petitioner had vested right to impugn the arbitral award rendered by the sole arbitrator along with an application for condonation of delay in the event of delay by showing sufficient cause. The day on which the impugned award was rendered by the learned sole arbitrator, there was no amendment to bye-law 2 and the regulations of the Bombay Stock Exchange thereby taking away the powers of the appellate bench to condone the delay. This Court held that in such a situation section 6(e) of the General Clauses Act, 1897 would be attracted. This Court accordingly has set aside the order passed by the appellate bench of the Bombay Stock Exchange and directed that the appellate bench to hear the application for condonation of delay.
94. In this case also, it is not the case of any of the parties that section 34(5) an 34(6) inserted by the Amendment Act would be carbp434-17 applicable with retrospective effect. Even otherwise the intent of the legislation while inserting these two provisions does not indicate that the said provisions are brought into effect with retrospective effect. In my view, when the arbitration proceedings commenced in view of the notice issued by the petitioner under section 21 much prior to 23rd October, 2015 and since at that point of time, the petitioner was not required to issue any prior notice to the respondent before filing of the arbitration petition under section 34, merely because the award is rendered after 23rd October, 2015 and the petition is filed after the said amendment, the conditions imposed in section 34(5) and 34(6) cannot be made applicable to such matters where the arbitral proceedings had commenced much prior to the date of the amendment.
95. In my view, the parties would be governed by the right and remedy available to the parties existing on the date of invoking the arbitration agreement and not on the date of the award or on the date of filing of the arbitration petition unless the legislature so specifically provided for a different remedy or the conditions introduced by invoking such remedy in law with retrospective effect. In my view, section 34(5) and 34(6) thus cannot be pressed in the service by the respondent to deprive the petitioner of filing a petition challenging an award in such matters without issuing any prior notice to the respondent. In my view, the right of challenging the award under section 34 is a vested right to impugn the arbitral award which cannot be taken away by such amendment under section 34(5). The principles laid down by this Court in case of Marwadi Shares & Finance Limited (supra) applies to the facts of this case. In view of section 6(e) of the General Clauses Act, 1897, the parties who had carbp434-17 invoked the arbitration agreement prior to 23rd October, 2015, would be continued to be governed by the provisions applicable on the date of invocation of such arbitration agreement and not on the date when the arbitral award is rendered or when the arbitration petition challenging an arbiral award is filed.
96. The Supreme Court in case of Milkfood Limited (supra) has construed section 21 as well as section 85(2)(a) of the Arbitration & Conciliation Act, 1996 and also the provisions of section 37(3) of the Arbitration Act, 1940. It is held by the Supreme Court that the service of notice and/or issuance of request for appointment of an arbitrator in terms of the arbitration agreement must be held to be determinative of commencement of the arbitral proceedings. The Supreme Court adverted to the judgment in case of Thyssen Stahlunion GMBH (supra) and has held that the judgment in that case itself is an authority for proposition that in relation to the domestic arbitration proceedings, commencement thereof shall co- incide with the service of request / notice.
97. It is held by the Supreme Court that the commencement of the arbitration proceedings for the purpose of limitation or otherwise is of the Court’s conscience. If a proceeding commences, the same becomes relevant for many purposes including that of limitation. In paragraph 70 of the said judgment, it is held that those arbitral proceedings which were commenced before coming into force of the 1996 Act are saved and the provisions of the 1996 Act would apply in relation to the arbitral proceedings which commenced on or after the said Act came into force. Even for the said limited purpose, it is necessary to find out as to what is meant by commencement of carbp434-17 arbital proceedings for the purpose of the 1996 Act wherefor also necessity of reference to section 21 would arise. In my view, the principles laid down by the Supreme Court in case of Milkfood Limited (supra) would squarely apply to the facts of this case.
98. The reference to “arbitral proceedings” in section 26 of the Amendment Act refers to such proceedings at two different stages i.e. one before the Amendment Act came into effect and another after such amendment came into force i.e. after 23rd October, 2015. It is thus clear beyond reasonable doubt that the term “arbitral proceedings” referred in section 26 is one and the same proceedings which commences upon receipt of notice under section 21 by the other party and does not refer to two separate arbitral proceedings i.e. one before the arbitral tribunal and another before the Court of law. Section 21 of the Arbitration & Conciliation Act, 1996 does not apply to proceedings in Court. Arbitration proceedings in Court does not commence upon receipt of notice under section 21 of the Arbitration & Conciliation Act, 1996 by the other party. In my view, the intention of the legislature is very clear in this respect.
99. The date of filing of the arbitration petition under section 34 of the Arbitration & Conciliation Act, 1996 before 23 rd October, 2015 or after such date is not relevant for the purpose of deciding whether the parties will be governed by the provisions of the Arbitration & Conciliation Act, 1996 before insertion of the amendments by the Amendment Act or not.
100. This Court even today deals with the matters under section 30 of the Arbitration Act, 1940 in respect of which notice for carbp434-17 appointment of an arbitrator under section 37(3) of the Arbitration Act, 1940 was issued prior to the provisions of the Arbitration & Conciliation Act, 1996 came into effect. All such matters where the arbitral proceedings commenced under the provisions of Arbitration Act, 1940 are continued to be governed by the provisions of the said Act though an arbitration petition challenging the award under section 30 of the Arbitration Act, 1940 is filed after the Arbitration & Conciliation Act, 1996 came into force.
101. The Supreme Court in case of Andhra Pradesh Power Coordination Committee & Ors. vs. Lanco Kondapalli Power Ltd. & Ors., (2016) 3 SCC 468 has held that the notice of arbitration amounting to initiation of the arbitral proceedings as contemplated under section 21 of the Arbitration & Conciliation Act, 1996.
102. This Court in case of Board of Trustees of Jawaharlal Nehru Port Trust vs. Three Circles Contractors, (2015) SCC OnLine Bom. 951 has held that as the arbitration proceedings commences in respect of the disputes which are referred in the notice invoking the arbitration agreement on the date on which such notice is received by the respondent, limitation in respect of such disputes stops.
103. Insofar as the submission of the learned counsel for the respondent that the judgment of this Court in case of M/s.Rendezvous Sports World (supra) applies to the facts of this case and is binding on this Court is concerned, even in the said judgment, this Court has held that the Amendment Act does not repeal section 34. This Court in the said judgment has categorically carbp434-17 held that the vested right available to the award debtor would be only in the matter of challenge to the arbitration award which has remained intact and such right is unaffected by the amendment to section 36 of the Arbitration & Conciliation Act, 1996. In my view, Mr.Jain, learned counsel for the petitioner is right in his submission that impediment created by section 34(5) i.e. for issuance of prior notice before filing of the arbitration application cannot affect the vested right prescribed under section 34(1) of the Arbitration & Conciliation Act, 1996.
104. In this case, the petitioner had already served a copy along with a copy of the arbitration petition upon the respondent on 18 th April, 2017 i.e. after filing of the arbitration petition. In my view, learned counsel is right in his submission that the principles under section 4 of the Arbitration & Conciliation Act, 1996 are applicable to the present situation and issuance of such notice can also be waived by the respondent under section 4 of the Arbitration & Conciliation Act, 1996. The respondent in that matter has also filed a arbitration petition without issuing the notice under section 34(5) to the petitioner.
105. I shall now deal with the second issue arising in these matters as to whether the compliance of the requirement of prior notice contemplated under section 34(5) before filing an arbitration application under section 34(1) is mandatory or directory.
106. The Law Commission of India in its report dated 5 th August, 2014 had suggested various amendments to the Arbitration & Conciliation Act, 1996. Insofar as Note on section 34(5) in the said report is concerned, it is mentioned that the said provision of section carbp434-17 34(5) has been included to streamline the process and to cut short the long delays which occurs due to issuance of the notice.
107. Chapter XLIII-A of the Bombay High Court (Original Side) Rules provides for the rules relating to the Arbitration & Conciliation Act, 1996. It provides for the mode of application, contents of the petition and also provides for notice of filing an application to the persons likely to be affected. Rule 803-E provides that upon any application under the Act, the Judge in Chambers shall, if he accepts the petition, direct notice thereof to be given to all persons mentioned in the petition and to such other persons as may seen to him to be likely to be affected by the proceedings, requiring all or any of such persons to show cause, within the time specified in the notice, why the relief sought in the petition should not be granted. The said rules framed by this Court are statutory rules.
108. Rule 803-B clearly provides that save as otherwise provided in the said rules, all applications under the Arbitration & Conciliation Act, 1996 shall be made by the petitioner and shall be placed on board for admission after prior notice to all parties concerned. The Judge, may consider the admission of the Petition in exercise of his discretion even though no such notice is served on the other side. The Judge may admit or reject the Petition or pass such other orders thereon as he may deem fit. It is thus clear that all the respondents are required to be served with a copy of notice before the arbitration petitions are heard for admission. The recommendation of the Law Commission of India, in the said report that the purpose of introducing section 34(5) is to streamline the process and to cut short the long delays which accrued due to issuance of Court notice is carbp434-17 taken care of.
109. It is the practice of this Court not to hear any arbitration petition unless a copy of notice and the papers and proceedings are first served upon the opponents. Section 34(5) does not contemplate that after the prior notice is served, the petitioner is not required to serve the notice along with papers and proceedings upon the other party before the matter is heard for admission.
110. This Court in case of Ashraf Ahmed vs. The Municipal Corporation of Greater Bombay in First Appeal No.292 of 1999 has construed the requirement of notice under section 527 of the Mumbai Municipal Corporation Act and the consequence of non-compliance thereof. It is held that all the object of the notice under section 527 of the said Act is to give sufficient time to the Bombay Municipal corporation and/or its authorities to consider the prayer for redressal of the plaintiff’s grievances without resorting to any litigation. It is always open to the Bombay Municipal Corporation and/or its concerned authorities to waive the notice under section 527 of the Act or they may be estopped by conduct from pleading the want of notice. It is held that where the Bombay Municipal Corporation fails to raise a specific plea for want of notice at the earliest, by its conduct it may be estopped from pleading the want of notice at a later stage.
111. The Supreme Court in case of Macquire Bank Limited vs. Shilpi Cable Technologies Limited in Civil Appeal No.15135 of 2017 after adverting to the earlier judgment in case of Surendra Trading Company vs. Juggilal Kamalapat Jute Mills Company Limited & Ors. in Civil Appeal No.8400 of 2017 held that the carbp434-17 procedural provision cannot be stretched and considered as mandatory, when it causes serious general inconvenience. The Supreme Court also adverted to the earlier judgment in case of Mahanath Ram Das vs. Ganga Das, (1961) SCR 763 and held that such procedural orders, though peremptory are in essence in terrorem, so that dilatory litigants might put themselves in order and avoid delay, they do not, however, completely estop a Court from taking note of events and circumstances which happen within the time fixed.
112. This Court in case of Central Bank of India vs. Femme Pharma Limited & Ors., AIR 1982 Bom. 67 has construed the powers of Court under Rule 227 of the High Court (Original Side) Rules, 1980 and Rule 220(4) of the High Court (Original Side) Rules, 1957 and has held that though the suit is placed on board for dismissal, under the old Rules of 1957, the discretion of the Court was limited to sufficient cause being shown and if sufficient cause is not shown, the suit has to be dismissed. However, under the Rules of 1980, it only provides for a suit to be placed on board for dismissal but is silent on what happens thereafter. The new Rules of 1980 provides a wider discretion than before and the Court is not bound to dismiss the suit.
113. A perusal of section 34(5) read with section 34(6) of the Amendment Act makes it clear that even if prior notice is not given to the other party by the petitioner of filing an application under section 34 challenging an award and even if such application filed under section 34 is not decided by the Court within one year from the date of service of the said notice under section 34(5), no consequence of carbp434-17 such default is provided therein. Section 34(5) also does not provide the mode and manner of such service. Whether a copy of the arbitration petition along with annexures proposed to be filed also is required to be served along with such notice or not is not contemplated in the said provision.
114. The said provision also is silent on the issue i.e. if there are office objections raised by the office of this Court and if the petitioner is required to make any changes in the petition in the format or in the contents of the petition for the purposes of removal of such objections raised by the office, whether the petitioner is required to issue a fresh notice along with the papers with the corrections in the petition or not. Section 34(6) provides that such petition has to be disposed of within one year from the date on which the notice referred to in sub section 5 of section 34 is served upon the other party. If after giving the notice on the first day itself upon the receipt of the signed copy of the award from the arbitral tribunal,if the petitioner issues such notice as referred to in sub section 5 of section 34 and does not file the petition for the next three months or even within 30 days after expiry of three months and if filed within the time prescribed under section 34(3), the petition remains in the office objections for another six months, an application filed under section 34(1) obviously cannot be disposed of within a period of one year from the date on which a notice referred to in sub section 5 of section 34 is served upon the other party.
115. No consequence is provided in section 34(6) also if the arbitration petition is not disposed of by the Court within one year from the date of service of notice under section 34(5) of the carbp434-17 Amendment Act. For this reason also, I am of the view that the provisions of section 34(5) and 34(6) cannot be construed as mandatory but has to be construed as directory. In my view, the requirement of the notice under section 34(5) of the Amendment Act is procedural in nature and not a substantive provision. The compliance of such procedural provision without providing any consequences in case of defiance thereof thus cannot be construed as mandatory and has to be construed as directory. Even if a notice is not given prior to the date of filing of the petition, the right of challenging an award vested in section 34 of the Arbitration & Conciliation Act, 1996 cannot be taken away.
116. No substantive right is created on the other party even if such prior notice is not issued by the petitioner of filing the arbitration petition as contemplated under section 34(5) of the Amendment Act. If the arguments of the respondent is accepted, the Court has to dismiss such arbitration petitions which are filed without issuing prior notice under section 34(5) of the Amendment Act. The consequence of the petitioner not issuing such prior notice before filing of the arbitration petition would be serious and would amount to taking away the vested and substantive right available to the petitioner to impugn the arbitral award within the time prescribed under the Act. The procedure prescribed under section 34(5), can in my view be complied with even after the arbitration petition is filed by the petitioner under the said provisions or in accordance with the provisions of the High Court (Original Side) Rules.
117. The Supreme Court in case of Thirumalai Chemicals Limited vs. Union of India & Ors. (2001) 6 SCC 739 has held that carbp434-17 the procedural law established a mechanism for determining those rights and liabilities and a machinery for enforcing them, the same cannot be called a substantive right and an aggrieved person cannot claim any vested right. It is held that unless the language used plainly manifests in express terms or by necessary implication a contrary intention, a statute divesting vested rights is to be construed as prospective. A statue merely procedural is to be construed as retrospective and a statue which while procedural in its character, affects vested rights adversely, is to be construed as prospective.
118. In my view, Mr.Mehta, learned senior counsel and Mr.Jain, learned counsel have rightly contended that issuance of such notice under section 34(5) is a requirement however, not mandatory. The discretionary power is given to the Courts to look into the facts in each case and decide if the same has to be made mandatory or not. If the provision of section 34(5) is construed as mandatory, it would take away the discretionary powers from the Court. Any strict interpretation of such procedural provision will cause inconvenience to the parties and would result in lengthening the procedure and defeating the entire purpose of the Act itself. High Court (Original Side) Rules already provides sufficient protection to the other party for issuance of a notice before the matter is heard by the Court with a view to obviate any delay in the matter.
119. The Supreme Court in case of M/s.Babbar Sewing Machine Company vs. Trilok Nath Mahajan, (1978) 4 SCC 188 has held that the order for dismissal ought not be made under Order XI Rule 21, unless the Court is satisfied that the plaintiff wilfully withheld information or documents and the defence be struck out in case of carbp434-17 the defendant and placed in the same position as if he had not defended the suit. It is held that under the said provision, it is only when the default is wilful and only as a last resort that the Court should dismiss the suit or strike out the defence by exercising such power.
120. The Supreme Court in case of State of Goa vs. Western Builders, (2006) 6 SCC 239 has held that by virtue of section 43 of the Arbitration & Conciliation Act, 1996, Limitation Act, 1963 applies to the proceedings under the Act of 1996 and the provisions of the Limitation Act can only stand excluded to the extent wherever different period has been prescribed under the Act of 1996. It is held that since there is no prohibition provided under section 34, there is no reason why section 14 of the Limitation Act should not be read in the Act of 1996, which will advance the cause of justice. It is held that if the statute is silent and there is no specific prohibition then the statue should be interpreted which advances the cause of justice.
121. In my view since there is no consequence provided in section 34(5) as well as section 34(6) for non-compliance of the requirement mentioned therein, the Court has to balance the situation and exercise its discretionary power to permit the petitioner to issue notice along with papers and proceedings upon the other party even after the petition is filed to avoid any delay in disposal of such application. In my view section 34(5) cannot be equated with section 80 of the Code of Civil Procedure, 1908. In view of the fact that now by virtue of the amendment to section 36, merely upon filing of the arbitration application for challenging an award under section 34, there is no automatic stay, the petitioner who challenges the arbitral carbp434-17 award by filing an application under section 34 would not wait and would not cause any delay by not issuing notice upon the other party to obviate any situation of execution of award under the provisions of the Code of Civil Procedure, 1908. For this reason also, I am of the view that the requirement under section 34(5) has to be construed as directory and nor mandatory.
122. The Division Bench of this Court in case of Bankay Bihari G. Agrawal & Ors. vs. M/s.Bhagwanji Meghji & Ors., (2001) 1 Mh.L.J. 345 while construing the order 37 Rule 2 of the Code of Civil Procedure, 1908 has held that merely because the defendant fails to appear or file his Vakalatnama or fails to obtain leave to defend the suit, the suit cannot be decreed if the Judge is satisfied that there is no cause of action at all disclosed in the plaint. It is this wide discretion of the Court which has been expressly recognized in Rule
221. It it held that notwithstanding the somewhat peremptory phraseology used in Order 37, Rule 2(2), suggesting that no such discretion is vested in the Court, there is always vested in the Court the judicial discretion to permit a plaintiff to take advantage of the summary procedure or to relegate him to the normal remedy of a regular suit. It is held that mere failure of the plaintiff to take out a Summons for Judgment within six months after the filing of the plaint would not justify granting of unconditional leave to defend the suit.
123. The Supreme Court in case of Vidyawati Gupta & Ors. (supra) has construed the provisions of section 26(2) and Order 4 Rule 1, Order 6 Rule 15(4) and Order 7 Rule 1 to 8 as amended from 1st July, 2002 and has held that those provisions are procedural and directory and thus non-compliance thereof did not automatically carbp434-17 render the plaint non-est and was curable. The principles laid down by the Supreme Court in the said judgment would apply to the facts of this case.
124. The Supreme Court in case of Topline Shoes Limited (supra) construed the provisions of section 13(2)(a) of the Consumer Protection Act, 1986 by which time limit was prescribed for filing of version of the opposite party and has held that the said provision is directory and not mandatory. The Supreme Court in the said judgment held that the intention to provide a time frame to file reply, is really meant to expedite the hearing of such matters and to avoid unnecessary adjournments to linger on the proceedings on the pretext of filing reply. The provision, however, as framed, does not indicate that it is mandatory in nature. In case the extended time exceeds 15 days, no penal consequences are prescribed therefor. The period of extension of time “not exceeding 15 days”, does not prescribe any kind of period of limitation. The Supreme Court accordingly held that the provision appears to be directory in nature. It is held that the provision is more by way of procedure to achieve the object of speedy disposal of such disputes. But it falls short of creating any kind of substantive right in favour of the complainant by reason of which the respondent may be debarred from placing his version in defence in any circumstances whatsoever.
125. In section 34(5) also, no consequence is provided in the event of the petitioner not issuing any prior notice before filing of the arbitration petition under section 34 to the respondent. Similarly, there is also no consequence provided in section 34(6), if the Court is not able to dispose of the arbitration petition under section 34 within one carbp434-17 year from the date of service of notice contemplated under section 34(5) upon other party. The purpose and the legislative intent of inserting those provisions is the speeder disposal of the proceedings and not to penalise the petitioner for non-compliance of the procedure which is directory. Powers of the Court under section 34(5) are not circumscribed by powers under section 34(2).
126. The Madras High Court in case of M/s.Jumbo Bags Limited (supra) has construed the provisions of section 11(6-A) which is also inserted by the Amendment Act and after considering the fact that the notice invoking arbitration agreement was issued prior to 23rd October, 2015 and after adverting to the judgment of the Supreme in case of Milkfood Limited (supra) held that the amended provisions under section 11(6-A) would not come into play in that case. In my view, the principles laid down by the Madras High Court would clearly apply to the facts of this case. I am in complete agreement with the views expressed by the Madras High Court in the said judgment.
127. The Kerala High Court in case of Shamsudeen (supra) has considered the provisions of section 34(5) inserted by the Amendment Act and has considered the fact that the notice invoking arbitration agreement was issued much prior to 23rd October, 2015 and accordingly held that section 34(5) of the Amendment Act has no application to the facts of that case and thus the petitioner was not required to comply with the provisions of section 34(5). The facts before the Kerala High Court are identical to the facts of this case. The principles laid down by the Kerala High Court in the said judgment would squarely apply to the facts of this case. I am in carbp434-17 complete agreement with the views expressed by the Kerala High Court in the said judgment.
128. The judgments of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. vs. Ganesh Property (supra), in case of State of Maharashtra vs. Hindustan Construction Company (supra), in case of Roshanlal Kuthalia & Ors. vs. R.B. Mohan Singh Oberoi (supra) and in case of Snehadeep Structures Private Limited vs. Maharashtra Small – Scale Industries Development Corporation Limited (supra) also would assist the case of the petitioner.
129. The Supreme Court in case of Thirumalai Chemicals Limited (supra) has held that the right of appeal conferred under section 19(1) of the FEMA is a substantive right. Unless the language used plainly manifests in express terms or by necessary implication a contrary intention, a statute divesting vested rights is to be construed as prospective and a statue which is procedural in its character and affects vested rights adversely is to be construed as prospective. The principles of law laid down by the Supreme Court in the said judgment are applicable to the facts of this case.
130. Insofar as the judgment delivered by the Division Bench of the Patna High Court in case of The Bihar Rajya Bhumi Vikas Bank Samiti, Bihar – Jharkhand (supra) relied upon by the learned counsel for the respondent is concerned, a perusal of the said judgment clearly indicates that the Patna High Court in the said judgment has not dealt with the judgments of the Supreme Court holding that if the notice under section 21 is received by other party carbp434-17 prior to 23rd October, 2015, the provisions of the unamended Arbitration & Conciliation Act, 1996 would be applicable to the parties, whereas if such notice is received after 23rd October, 2015, the parties will be governed by the provisions of Amendment Act. The Patna High Court has also not considered the issue that there is no consequence provided in section 34(5) and 34(6) of the Amendment Act in the event of non-compliance of the said provisions. The Bombay High Court (Original Side) Rules specifically provides for issuance of notice by the petitioner upon the other party before the matter is heard by the Court. The judgment of the Patna High Court is thus clearly distinguishable and would not assist the case of the respondent.
131. The Supreme Court in case of Ananthesh Bhakta & Ors. vs. Nayana S. Bhakta, (2017) 5 SCC 185 has construed section 8(2) providing that the Judicial authorities shall not entertain the application or referring the disputes to arbitration unless the said application is accompanied by the original arbitration agreement or duly certified copy thereof and held that section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under section 8(1) unless it is accompanied by the original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the court is considering the application shall not entail rejection of the application under section 8(2). The Supreme Court refused to accept the contention that the said application filed under section 8(1) was not maintainable since the same was not accompanied by the original arbitration agreement or certified copy thereof.
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132. It is thus clear that though the words used in section 8(2) of the Arbitration & Conciliation Act, 1996 that the Judicial authorities shall not entertain the application which is without accompanying the requisite documents, the Supreme Court has not dismissed such application and has held that such documents can be filed and considered even at the stage of considering the application. In my view, this judgment would also support the case of the petitioner that sections 34(5) and 34(6) are directory and not mandatory. The principles laid down by the Supreme Court in the said judgment would apply to the facts of this case. I am respectfully bound by the said judgment.
133. Insofar as the submission of the learned counsel for the respondent that if section 34(5) is considered as directory, the entire purpose of the amendments would be rendered otiose is concerned, in my view, there is no merit in this submission made by the learned counsel for the respondent. Since there is no consequence provided in the said provision in case of non-compliance thereof, the said provision cannot be considered as mandatory. The purpose of avoiding any delay in proceeding with the matter expeditiously is already served by insertion of appropriate rule in Bombay High Court (Original Side) Rules. The Court can always direct the petitioner to issue notice along with papers and proceedings upon other party before the matter is heard by the Court for admission as well as for final hearing. The vested rights of a party to challenge an award under section 34 cannot be taken away for non-compliance of issuance of prior notice before filing of the arbitration petition.
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134. Insofar as the judgment of the Supreme Court in case of Union of India vs. Popular Construction Company Limited (supra) relied upon by the learned counsel for the respondent is concerned, the Supreme Court in the said judgment has construed sections 5 and 29(2) of the Limitation Ac, 1963, and also section 34 of the Arbitration & Conciliation Act, 1996. It is held by the Supreme Court that in view of section 29(2) of the Limitation Act, 1963, the period prescribed for limitation under section 34(3) of the Arbitration & Conciliation Act, 1996 would apply. The expression “but not thereafter” described in section 34(3) is interpreted by the Supreme Court and it is held that the Arbitration Act being a self-contained Code, the Court has no power to condone delay beyond the period of 30 days and that also provided sufficient cause is shown. The judgment of the Supreme Court in case of Union of India (supra) is clearly distinguishable and would not assist the the case of the respondent.
135. Insofar as the judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) is concerned, the Supreme Court in the said judgment has construed section 69(2) of the Partnership Act, 1932 and has held that the said provision with regard to an unregistered firm is a penal provision and has to be strictly construed. In my view since under section 34(5) of the Amendment Act, no consequence is provided, the said provision cannot be considered as a penal provision and cannot be construed strictly. Section 34(5) and the Arbitration & Conciliation Act, 1996 cannot be equated with section 69(2) of the Partnership Act. The judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) thus would not assist the case of the respondent. The judgment of carbp434-17 this Court in First Appeal No.302 of 2013 and reported in 76 Company Cases, 244 (Bom.) also would not assist the case of the respondent.
136. Insofar as the submission of the learned counsel for the respondent that the effect of section 34(5) is clearly to impose a bar against the institution of an application under section 34(1) and thus the same should be construed as mandatory and not directory is concerned, on plain reading of section 34(5), it is clear that there is no clear bar provided under the said provision for not accepting the arbitration petition filed under section 34 on record unless a notice to other party is issued by the petitioner before filing of such petition. I am not inclined to accept the submission of the learned counsel for the respondent that the judgment of the Supreme Court in case of M/s.Raptakos Brett & Co. Ltd. (supra) would assist the case of the respondent and not the case of the petitioner. If section 34(5) is considered as mandatory and if a petition filed before issuance of such notice is dismissed on the ground of non-compliance, whether period taken in pursuing such petition has to be excluded under section 14 of the Limitation Act, 1963 would also be a relevant factor.
137. Insofar as the other judgments referred to and relied upon by the learned counsel for the petitioner referred to aforesaid, which are sought to be distinguished by the learned counsel for the respondent is concerned, in my view, learned counsel for the respondent could not distinguish any of those judgments. This Court has already dealt with those judgments in great detail in the earlier paragraphs of this judgment and are found clearly applicable to the facts of this case and assist the case of the petitioner.
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138. The conclusion drawn by this Court in this judgment is summarized as under :-
a). If notice invoking arbitration agreement is received by other party prior to 23rd October, 2015, the arbitration proceedings would commence prior to 23rd October, 2015. The provisions of the Arbitration & Conciliation Act, 1996 in force prior to 23 rd October, 2015 would be applicable to such matters for all the purposes.
b). If notice invoking arbitration clause is received by other party after 23rd October, 2015,the parties will be governed by the provisions of the Arbitration & Conciliation (Amendment) Act, 2015 for all the purposes.
c). The date of filing of the arbitration petition under section 34(1) of the Arbitration & Conciliation Act, 1996 is not relevant for the purpose of deciding the applicability of the provisions of the Arbitration & Conciliation Act, 1996 i.e. pre-amendment or post amendment.
d). The expression “arbitral proceedings” described in section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 refers to two different periods i.e. (i) before 23rd October, 2015 and (ii) after 23rd October, 2015. The expression “in relation to the arbitral proceedings” provided in section 26 of the Arbitration & Conciliation (Amendment) Act, 2015 does not refer to the arbitral proceedings in Court. The expression “in relation to the arbitral proceedings” prescribed in section 26 has to be read with section 21 of the carbp434-17 Arbitration & Conciliation Act, 1996.
e). Even in those cases where the notice invoking arbitration agreement under section 21 is received by other party after 23rd October, 2015, the provisions under section 34(5) and 34(6) are directory and not mandatory. The Court has ample power to direct the petitioner to issue notice along with papers and proceedings upon the respondent after the petitioner files the arbitration application under section 34(1) and before such petition is heard by the Court at the stage of admission.
f). The questions framed in the earlier part of the judgment are answered accordingly. The office is directed to place all the arbitration petitions in which an issue as to whether the provisions of section 34(5) and 34(6) of the Arbitration & Conciliation (Amendment) Act, 2015 are mandatory or directory on board for admission on 28 th February, 2018.
(R.D. DHANUKA, J.)