ORDER
R.L. Khurana, J.
1. This order will dispose of the objections preferred by the petitioner, H.P. State Council for Child Welfare, under Section 34 of the Arbitration and Conciliation Act, 1996 (for short : the Act) against the award dated 7-4-1998 of the learned Arbitrator.
2. Briefly stated, the facts of the case leading to the present objection petition are these. The petitioner in the year 1982 decided to set up a 'Panjiri' plant, that is, Food Processing Unit, for children at Parwanoo. However, lateron it was decided to set up such plant at Hira Nagar, near Shimla. For the purpose of setting up such a plant the petitioner entered into an agreement with the respondent for the supply of necessary machinery. A sum of Rs. 6,00,000/- as advance was paid to the respondent in two instalments on 27-8-1988 and 7-3-1989. A dispute, however, arose between the parties in respect of the land which was selected as site for the installation of the plant. Consequent upon such dispute, the petitioner in its general body meeting held on 9-8-1991 decided not to set up the 'Panjiri' plant at all since the proposal was found to be uneconomical. In the said meeting it was also decided to retrieve the money paid to the respondent by way of advance. For this purpose a committee of two members consisting of Shri H. P. Singh, the then Joint Director. Welfare, and Shri R. L. Mohil, the then Administrator of the petitioner-Council was deputed to negotiate with the respondent. The committee had a meeting with the representatives of the respondent at Thane on the 16th and 17th of September, 1992. The respondent failed to settle the matter in spite of the assurances held out in such meeting. As a result, the petitioner invoked Clause 17 of the agreement and referred the
matter to the Arbitrator on 31-8-1995. Subsequently, the petitioner felt that reference to Arbitrator was not properly made. Therefore, after obtaining legal advice, a notice was sent to the respondent on 23-7-1997 calling upon the respondent to settle the dispute. No response to such notice was received from the respondent. Accordingly on 27-11-1997, the matter was again referred to the Arbitrator, along with the statement of claims. The petitioner raised a claim of Rs. 18,44,000/-, that is, refund of principal amount of Rs. 6,00,000/- and interest of Rs. 12,44,000/- on such principal amount, calculated at the rate of 24% per annum.
3. The respondent, while resisting the claim of the petitioner raised a counterclaim of Rs. 8,42,000/- before the learned Arbitrator, as under :--
(a) Cost of Machinery Rs. 6,70,000/-
(b) Payments made to Rs. 15,000/-
Civil Contractor for
installation & setting up
of the plant.
(c) Costs of visits to the Rs. 45,000/-
spot.
(d) Storage charges up Rs. 72,000/-
to December, 1991
(e) Cost of dismantling Rs. 20,000/-
of the machinery.
(f) Storage charges up Rs. 20,000/-
to August 1992.
______________________________
Total : Rs. 8,42,000/-
______________________________
The learned Arbitrator vide his award dated 7-4-1998 rejected the counter-claim of the respondent in toto. The claim of the petitioner was partly allowed to the extent of Rs. 1,01,000/-. It was directed that the respondent shall pay the said amount to the petitioner within four months from the date of making the award falling which the petitioner would be entitled to interest on such amount at the rate of 18% per annum. The award of the amount of Rs. 1,01,000/- was made subject to the condition that the plant machinery which is in the nature of almost scrap would belong to the respondent, who shall be entitled to use the same and dispose of the same at its discretion.
4. Feeling aggrieved by and being dissatisfied with the award, the petitioner has approached this Court by way of the presentobjection petition under Section 34 of the Act, assailing the award inter alia on the following grounds :--
(a) The arbitrator has neither followed the procedure for conducting the proceedings nor evolved his own procedure to conduct the same. So much so that even the principles of natural Justice has been ignored;
(b) No decision was taken by the arbitrator as to whether he would hold oral hearings for recording of evidence and arguments or whether the proceedings would be conducted on the basis of documents etc.;
(c) The award is in violation of the mandate contained in Section 81 of the Act;
(d) Neither issues were framed nor any opportunity was given to the parties to adduce evidence;
(e) No reasons have been recorded by the arbitrator in support of his findings.
5. The respondent, while resisting the petition has averred that proper procedure was followed by the arbitrator. No objection whatsoever was raised by the parties to the procedure adopted by the arbitrator. The award is neither unreasoned nor a non-speaking one. Section 81 of the Act has no application to the present case.
6. On the pleadings of the parties, following issues were framed on 10-5-1999 :--
1. Whether the award is liable to be set aside on the grounds stated OPP.
2. Relief.
7. I have heard the learned counsel for the parties and have also gone through the record of the case. My findings on the above Issues are as under :--
Issue No. 1.
8. At the very outset, a preliminary objection was raised on behalf of the respondent as to the maintainability of the present objection petition under Section 34 of the Act, It was contended that the present case is governed by the provisions of Indian Arbitration Act, 1940 (for short : the old Act) and as such the present petition made under Section 34 of the Act is not maintainable.
9. The learned Assistant Advocate General, on the other hand, contended that since the award was made on 7-4-1998, by the arbitrator when the Act had already come into force, the present case would be governed by the Act and the present objection petition under Section 34 of the Act ismaintainable.
10. The Act came into force on and with effect from 25-1-1996 and the old Act stood repealed. Section 85 of the Act, which deals with 'Repeal and Savings', provides :--
'(1) The Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940, and the Foreign Awards (Recognition and Enforcement) Act, 1961 are hereby repealed.
(2) Notwithstanding such repeal--
(a) the provisions of the said enactments shall apply in relation to the arbitral proceedings which commenced before this Act came into force unless otherwise agreed to 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 notification 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. A bare reading of the provision contained in Clause (a) of Sub-section (2) of Section 85 of the Act, quoted above, shows that in spite of the repeal of the old Act, the provisions of the said Act would continue to apply to all arbitral proceedings which commenced before the coming into force of the Act unless the parties had agreed to the applicability of the Act to such arbitral proceedings.
12. At this stage, it would not be out of place to quote Clause 17 of the 'General Terms and Conditions' of the agreement admittedly arrived at between the parties. It reads :
'In case of any dispute or difference between the parties hereto, arising before or after the delivery of the said plant relating to any covenants, provisions and stipulations hereof and/or discharge or non-discharge thereof, the same shall be referred to arbitration by an Arbitrator, who will be Secretary, Social Welfare Department, Government of H.P. The provisions of the Indian Arbitration Act, 1940 shall be applicable to such reference and the award of the Arbitrator shall be binding upon and be acted upon by the parties hereto.'
13. The question which first arises for determination is whether arbitral proceedings had commenced before 25-1-1996 when the Act came into force.
14. Section 21 of the Act provides that unless otherwise 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.
15. Section 37(3) of the old Act, which makes a somewhat similar provision, reads :--
'For the purposes of this section and of the Indian Limitation Act, 1908, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreements provides that reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated.'
16. The petitioner in its petition, while setting out the brief facts of the case at page 2, has averred in the following terms :--
The representatives of the firm assured to supply the necessary documents to settle this case but unfortunately the firm did not send any documents to the Council despite several reminders. Thus the claimants invoked the Arbitration Clause-17 of the Agreement and referred the dispute to the Arbitrator, vide letter of even number dated 31-8-1995 for taking further action under the Arbitration proceedings........'
17. Thus, as per the petitioner's own showing the arbitral proceedings had commenced on 31-8-1995 much before the coming into force of the Act. Therefore, in view of the terms contained in Clause 17 of the agreement read with Section 85 of the Act, in the absence of anything on the record to show that the parties had agreed to the applicability of the provisions of the Act to the arbitral proceedings, the present case would be governed by the provisions of the old Act and as such the present petition made under Section 34 of the Act is not maintainable.
18. The award, therefore, is not liable to be set aside on the grounds stated since the petition itself is not maintainable. The issue is decided against the petitioner.
19. As a result of the findings recorded under issue No. 1, above, the present petition is dismissed. No orders as to costs.