Arun Kumar, J. - (1.) The main question for consideration in the present appeal is as to whether Arbitration Act, 1940 (hereinafter referred to "the old Act") would apply in the facts and circumstances of the case or the case will have to be dealt with under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act").
(2.) Briefly the facts as gathered from the impugned judgment of the High Court are that the parties had entered into an agreement on 15-1-1993 regarding display of advertisements on the body of DTC buses. DTC is the Delhi Transport Corporation which runs the public road transport for commuters in the city and outskirts of Delhi. The agreement was for a period of 3 years commencing from 15-1-1993 up to 14-1-1996. The agreement contained an arbitration clause. Dispute and differences arose between the parties. A request was made by the contractor on 9-1-1995 for appointment of arbitrator to settle the disputes that had arisen between the parties. This was followed by another letter dated 26th November, 1995 containing similar request. On 16th January, 1996 the contractor filed in Court a petition under S. 20 of the old Arbitration Act. The notice of the petition was issued to the opposite party i.e. the appellant herein. The counsel appearing for the appellant made a statement in Court on 19th July, 1996 that an arbitrator had already been appointed on 4th July, 1996 as per the terms of the agreement. The petition thus became infructuous. The arbitrator conducted the arbitration proceedings and ultimately made an award on 6th October, 1998. To enforce the award the appellant filed an application under the 1996 Act which was registered as an Execution application. The appellant DTC contested the said application for grounds including maintainability of the execution petition. The question of maintainability was raised on the basis that the 1996 Act was not applicable to the proceedings and, therefore, execution application did not lie. The contention of the appellant before the High Court was that the proceedings had commenced under the old Act and the said Act would continue to govern the proceedings. The learned single Judge upheld the objection regarding maintain-ability of the application. It was held that the Arbitration Act, 1940 continued to apply. This was based on the view that the arbitration proceedings commenced on the date when request for appointment of arbitrator was made and that was prior to the coming into force of the 1996 Act. Once the arbitration proceedings commenced, Section 85 of the 1996 Act read with S. 21 would lead to the conclusion that the old Act would continue to apply. Reliance was placed on the judgment of this Court in Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd. (AIR 1999 SC 3923). The contractor went in appeal against the said order of the learned single Judge. The Division Bench noted in its judgment that the parties went for arbitration with clear understanding and belief that the proceedings were being conducted under the 1996 Act. It was noted that the appointment of arbitrator was made after the new Act had come into force and the parties participated in the arbitration proceeding with the understanding and belief that the proceedings are governed under the 1996 Act. In the award itself the arbitrator noted that both the parties submitted claims before me under the Arbitration and Conciliation Act, 1996." He concluded the award by observing "I further award that the advertiser shall also be entitled for future interest at the rate of 18% p.a. on all payments awarded in accordance with S. 31(7)(b) of the Arbitration and Conciliation Act, 1996 from the date of award till the date of payment."
(3.) While referring to the judgment in Thyssens case (supra) the Court noted that parties can always agree that provision of law prevailing at the relevant time would apply to arbitral proceedings. The case of Rani Construction Pvt. Ltd. decided in Thyssens case (supra) was held to squarely cover the present case. In view of the fact that the arbitrator was appointed after coming into force of the 1996 Act and the arbitration proceedings were conducted in pursuance of the provision of the said Act, it was held that the case would be governed by the 1996 Act. It also weighed with the High Court that the parties had expressed their intention in the arbitration proceedings to be governed by the 1996 Act. The Division Bench thus allowed the appeal and set aside the judgment of the single Bench.;