1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.4064 OF 2008
Mr Puneet Malhotra and Anr. ...Petitioners
v/s.
Mr.R.S.Gai,Sole Arbitrator & others ...Respondents
---
Mr S.S. Kanetkar for Petitioners.
Mr Vikas Shivarkar for Respondent Nos.3 and 4.
WITH
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.340 OF 2007
WITH
ARBITRATION PETITION NO.341 OF 2007
The Municipal Corporation of
Greater Mumbai. ...Petitioner
v/s.
M/s Joint Venture Angerlehner
Michell Bau GMBH ...Respondents
---
Mr R.D. Dhanuka with Mr R. Yadav, Mr R.Y. Shirsekar
and Mr H.C. Pimple for Petitioners.
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2
Mr Zal Andhyarujina with Mr Rajeev Talasikar and Ms.
Shivani i/b Mr Javed Gaya for Respondents.
WITH
ARBITRATION PETITION (L) NO.590 OF 2007
The Municipal Corporation of
Greater Mumbai. ...Petitioner
v/s
M/s Angerlehner Structural and
Civil Engineering Co. ...Respondents
ig ---
Mr R.D. Dhanuka with Mr R. Yadav, Mr R.Y. Shirsekar
and Mr H.C. Pimple for Petitioners.
Mr Zal Andhyarujina with Mr Rajeev Talasikar and Ms.
Shivani i/b Mr Javed Gaya for Respondents.
WITH
ARBITRATION PETITION (L) NO.591 OF 2007
WITH
ARBITRATION PETITION (L) NO.592 OF 2007
ARBITRATION PETITION (L) NO.593 OF 2007
M/s Angerlehner Structural and
Civil Engineering Co. ...Petitioners
v/s
The Municipal Corporation of
Greater Mumbai. ...Respondents
---
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3
Mr Zal Andhyarujina with Mr Rajeev Talasikar and Ms
Shivani i/b Mr Javed Gaya for Petitioners.
Mr R.D. Dhanuka with Mr R. Yadav, Mr R.Y. Shirsekar
and Mr H.C. Pimple for Respondents.
WITH
ARBITRATION PETITION NO.2 OF 2007
Mr Girish S. Khandagale ...Petitioner
v/s
Union of India, through Deputy
Chief Engineer, Central Railway
and anr. ...Respondents
---
Mr U.S. Samudrala for Petitioner.
Mr Suresh Kumar for Respondents.
WITH
ARBITRATION PETITION NO.310 OF 2007
Kotak Securities Ltd. ...Petitioners
v/s
Gaurav Goel and anr. ...Respondents
---
Mr Karan Bharihoke for Petitioners.
Mr Uday Warunjikar for Respondents.
---
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4
CORAM: D.K.DESHMUKH J,&
S.J.VAZIFDAR J. &
J.P.DEVADHAR,J.
DATED:23rd October, 2008.
JUDGMENT: (PER D.K.DESHMUKH, J.)
1. This bench has been constituted by the
Hon’ble The Chief Justice of the Bombay High Court
for answering the following question:-
“When a petition is filed challenging an
Award under section 34 of the Arbitration
and Conciliation Act,1996, under which
Article of the Bombay Court fees Act 1959,
the court fees would be payable ?”
2. The necessity of constituting a larger bench
for consideration of this question arose in the
following circumstances:-
When the Arbitration Act,1940 (hereinafter
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5referred to as “the 1940 Act”) was in force, a person
desiring to challenge an Award under 1940 Act had to
apply to the Court under Section 33 of that Act.
The term “Court” was defined by Section 2(c) of the
1940 Act, to mean a Civil Court having jurisdiction
to decide the questions forming the subject matter of
the reference if the same had been the subject
matter of a suit. Thus, in so far as the State of
Maharashtra is concerned, in the State of Maharashtra
excluding Bombay, an application under section 33 of
the 1940 Act was to be filed before the Civil Court
and so far as the Bombay is concerned, an application
to be filed either before this Court or the City
Civil Court depending on the amount involved in the
Award. When an application under Section 33 of the
1940 Act was filed in a Civil Court in the State of
Maharashtra excluding city of Bombay, court fee was
paid under Article 1(a) of the Second Schedule i.e.
Rs.5/- and when an application was made to the City
Civil Court in Bombay, the same court fee was to be
paid under the same Article. But when an application
was to be made under Section 33 before this Court,
court fee was to be paid under Article 1(f)(iii) of
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6the Second Schedule i.e. Rs.25/-. The court fee was
paid under the Second Schedule because of Article 3
found in the First Schedule of the Bombay Court fees
Act which provided that when an application to set
aside or modify an Award otherwise than an Award
under the 1940 Act, then court fee is payable on the
amount of value of the Award sought to be set aside
or modified, according to the scale prescribed under
Article 1.
Thus, because of Article 3 of Schedule I
of the Court fees Act, an application under Section
33 of the 1940 Act challenging an Award made by an
Arbitrator under the 1940 Act was excluded from
Article 3, and therefore, court fee on an application
filed under Section 33 of the 1940 Act was payable
under the Second Schedule. The 1940 Act was repealed
by the Arbitration and Conciliation Act 1996
(hereinafter referred to as “the 1996 Act”). Section
34 of the 1996 Act provides that an Award made under
that Act by an Arbitrator can be challenged by making
an application to the Court. The term “Court” is
defined by Section 2(e) of the 1996 Act, to mean the
principal Civil Court of original jurisdiction in a
district and includes the High Court in exercise of
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7its ordinary original civil jurisdiction having
jurisdiction to decide questions forming the subject
matter of the Arbitration if the same had been the
subject matter of a suit, but does not include any
civil court of a grade inferior to such principal
Civil court or any small causes Court. Thus, the
definition of the term “Court” found in the 1940 Act
and the 1996 Act is little different. Under the 1940
Act
an Award could be challenged before any Civil
Court but now it can be challenged only before the
principal Civil Court of original jurisdiction in a
district. Thus, now an Award made under the 1996 Act
can be challenged by making an application under
section 34 of that Act either in the district Court
or in this Court on its original side. A question,
therefore, arose as to which provision in the Bombay
Court fees Act would apply when an application under
section 34 of the 1996 Act is made. That question
arose when a Division Bench of this Court had before
it an appeal filed under Section 37 of the 1996 Act
challenging an order passed by a learned Single Judge
of this Court dismissing an application filed under
Section 34 of the 1996 Act. On that appeal, the
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8appellant had paid court fee according to Article 13
of Schedule II of the Bombay Court fees Act, which
provides that when a memorandum of appeal is filed,
challenging an order which is not a decree and which
does not have force of decree, in the High Court,
court fee payable would be Rs.25/-. The Division
Bench by its judgment in the case of “Maharashtra
Industries Development Corporation Vs. Govardhani
Constructions Company, 2007(2) Bombay Cases Reporter
835” decided on 7.3.2007 held that an appeal filed
against an order dismissing a petition filed under
section 34 of the 1996 Act will be governed by
Article 3 of Schedule I of the Bombay Court fees Act.
The Court held that by Article 3 of Schedule I only
an application or memorandum of appeal challenging an
award made under the Arbitration Act 1940 is
excluded. In effect, the Division Bench held that
when an application under Section 34 of the 1996 Act
against the Award is made or an appeal is filed under
Section 37 of the 1996 Act challenging the order made
under Section 34 of the 1996 Act, payment of court
fee will be governed by Article 3 Schedule I of the
Bombay Court fees Act. The Division Bench held so
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9because, according to the Division Bench, only an
application or appeal challenging the Award made
under the 1940 Act has been excluded from Article 3
of Schedule I of the Bombay Court Fees Act, and
therefore, an application under Section 34 of the
1996 Act or an appeal under Section 37 of the 1996
Act would not be excluded from Article 3 of Schedule
I of the Bombay Court fees Act, and therefore, Court
fee will be
payable according to Article 3 of
Schedule I of the Bombay Court Fees Act. It appears
that when a learned Single Judge of this Court had
before him petition filed under Section 34 of the
1996 Act where Court fee in accordance with Article 3
of Schedule I of the Bombay Court fees Act was not
paid, an objection was raised relying on the judgment
of the Division Bench in the case of “Govardhani
Construction Company” referred to above. The learned
Single Judge found that he cannot agree with the view
taken by the Division Bench in the judgment in the
case of “Govradhani Construction Company”, because
according to him, while deciding the question, the
Division bench in that case did not consider the
provisions of Section 8 of the General Clauses Act
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10and as the Division Bench did not consider the
provisions of Section 8 of the General Clauses Act,
the view taken by the Division Bench in the case of
“Govardhani Construction Company” was not proper, and
therefore, the learned Single Judge made an order
dated 19.6.2008 directing the office to place papers
before the Hon’ble the Chief Justice for placing the
matter before a larger bench. The Hon’ble the Chief
Justice pursuant to the order made by the learned
Single Judge made an order on 1.8.2008 constituting
this bench for considering the question referred to
above. It appears that another Division bench of
this Court in appeal no.77 of 2007 and appeal no.78
of 2007 in the case “Oil & Natural Gas Corporation
Ltd. Vs. Jindal Drilling & Industries Ltd.” has
considered the question “whether to an application
filed under Section 34 of the 1996 Act and to an
appeal filed under Section 37 of the 1996 Act, the
provisions of Article 3 of Schedule I would be
applicable”. The Division Bench has considered the
question with reference to the provisions of Section
8 of the General Clauses Act and has come to the
conclusion that because the scheme of 1996 Act is
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11totally different from the 1940 Act, the 1996 act
cannot be said to be re-enactment of the 1940 Act and
therefore, even considering the provisions of Section
8 of the General Clauses Act, it cannot be said that
Article 3 of Schedule I of the Bombay Court fees Act
is applicable to an application made under Section 34
and an appeal filed under section 37 of the 1996 Act.
3. Thus, it is clear from what has beenobserved above that for answering the question framed
above, first we have to consider whether Article 3 of
Schedule I of the Bombay Court fees Act applies to an
application filed under Section 34 and an appeal
filed under Section 37 of the 1996 Act, and if we
find that Article 3 of Schedule I of the Bombay Court
fees Act does not apply then we will have to make an
enquiry to find out which is the provisions which
will be applicable ?
4. In so far as the writ petition no.4064 of
2008 which also has been placed before us is
concerned, it appears that a petition under Section
34 of the 1996 Act challenging an Award was filed
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12before the District Judge, Pune. Before the learned
District Judge, an application was made by the
respondent for direction to applicant to pay court
fee in accordance with Article 3 of Schedule I of the
Bombay Court Fees Act. That application has been
decided by the learned District Judge by order dated
20.2.2008. The learned District Judge held that court
fee is payable according to the provisions of Article
3 of Schedule I of the Bombay Court fees Act. That
order was challenged in writ petition no.4064 of
2008. When that writ petition came up before the
learned Single Judge of this Court, it was contended
before the learned Single Judge that the judgment of
the Division Bench in “Govardhani Constructions
Company” case needs reconsideration. The learned
Single Judge on finding that the question of
correctness or otherwise of the judgment of the
Division Bench in the case of “Govardhani
Constructions Company” has been referred to a larger
bench, has directed the office to place the paper to
the Hon’ble the Chief Justice, and accordingly, that
petition has also been placed before us. The
question to be considered in that petition is also
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13the same as in the other petitions that are listed
before us. As the question before us relates to
payment of Court fees, we issued notice to the State
of Maharashtra. In response to the notice, the
learned Advocate General appeared before us, we heard
him.
5. On behalf of the petitioners, it was
submitted that
Article 1(f)(iii) of Schedule II of
the Bombay Court Fees Act is applicable to the
petitions filed under Section 34 of the 1996 Act and
not Article 3 of Schedule I of the Bombay Court Fees
Act. It was submitted that the Arbitration Act,1940
has been repealed and re-enacted by the Arbitration &
Conciliation Act,1996. It was submitted that remedy
to challenge an award was by way of an arbitration
petition under Section 33 of the 1940 Act, and since
the Court is considering the issue as to which
article of Bombay Court Fees Act is attracted to a
petition challenging an Award under Section 34 of the
1996 Act, the Court would have to examine whether
there is any repeal and re-enactment of the provision
relating to challenge of an award under the
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14Arbitration Act,1940 by another provision under the
1996 Act. It was further submitted that remedy of
challenging an Award which was available under the
provisions of the 1940 Act is now available under
section 34 of the 1996 Act. It was submitted that
Article 18(a) of Schedule II provided for payment of
fixed court fees on an application under Section 20
of the 1940 Act. It was submitted that though the
1940 Act has been repealed and re-enacted by the 1996
Act, subject legislated upon i.e. arbitration has
remained the same. It was submitted that remedy of
challenging an award available under section 33 of
the 1940 Act is continued under section 34 of the
1996 Act. It was submitted that since the Court is
considering the applicability of the relevant article
of Bombay Court fees Act, the Court has to see
whether the relevant article applicable to the
petition challenging an award under the provisions of
the 1940 Act has been repealed and re-enacted by
another provisions under the 1996 Act or not. It was
submitted that since section 33 of the 1940 Act is
repealed and re-enacted by the 1996 Act, in view of
the provisions of Section 8 of the General Clauses
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15Act, the provisions applicable to challenge an Award
is Section 34 of the 1996 Act on which court fees is
to be paid, therefore, reference in Article 3 of the
Bombay Court Fees Act to 1940 Act has to be read as
reference to 1996 Act. The learned Counsel relied on
the judgment of the Supreme Court in the case “State
Vs. A.Parthiban, (2006)11 Supreme Court Cases 473 ,
as also the judgment of the Supreme Court in the case
“New Central Jute
Mills Co.Ltd. Vs. The Asstt.
Collector of Central Excise, Allahabad and other,
1970(2) Supreme Court Cases 820″.
6. He further submitted that section 8 of the
General Clauses Act does not require that latter Act
repealing and re-enacting an earlier Act should be a
repealing and amendment Act but only requires that a
Central Act should repeal and re-enact a former
enactment either with modification or without
modification. He submitted that where a provision of
an Act omitted by an Act and the said Act is
simultaneously re-enacts a new provision which
specially covers the filed occupied by the repealed
provision with certain modification, in that event
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16such re-enactment is regarded as having force
continuously and the modification or changes are
considered as amendment coming into force with effect
from the date of enforcement of re-enacted provision.
He relied on the judgment of the Supreme Court in the
Case “Commissioner of Income Tax, Bangalore Vs.
Venkateshwara Hatcheries (P) Ltd, AIR 1999 Supreme
Court 1225”. He further submitted that even the
statement
of objects and reasons of the 1996 Act
makes it clear that the bill sought to consolidate
and amend the law relating to domestic arbitration,
international and commercial arbitration, enforcement
of foreign arbitral award and to define the law
relating to conciliation taking into account the
Uncitral modern law and rules. He further submitted
that most of the provisions of the 1940 Act are also
incorporated in the 1996 Act with or without
modification. It was submitted that some of the
provisions of 1940 Act are deleted in 1996 Act and
certain new provisions are introduced in the 1996
Act. It was submitted that chapter regarding
Conciliation proceedings has been introduced in the
1996 Act. It was submitted that section 8 of General
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17Clauses Act applies even when any provision of a
former enactment is repealed and re-enacted with or
without modification. The learned Counsel then took
us through the definition of term “modification”
given in “Law Lexicon”. Then the learned Counsel took
us through the provisions of Section 85 of the 1996
Act to show that the 1940 Act has specifically been
repealed by Section 85 of the 1996 Act. The learned
Counsel then relied on the judgment of the Supreme
Court in the case “Thyssen Stahlunion Gmbh vs. Steel
Authority of India Ltd., (1999)9 Supreme Court Cases
334″ and submitted that the Supreme court in that
judgment has held that when an arbitration clause
entered into before 1996, the 1940 Act is referred
to, to the arbitration proceedings initiated after
the commencement of 1996 Act in relation to such an
arbitration clause, the provisions of the 1996 Act
apply. The learned Counsel submits that the Division
Bench in its judgment in the case “Jindal Drilling &
Industries Ltd.” could not have considered all the
provisions of the 1996 Act and the 1940 Act because
only the relevant provisions were to be considered in
view of Section 8 of the General Clauses Act. The
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18learned Counsel, thus, submitted that in view of the
provisions of Section 8 of the General Clauses Act it
has to be held that reference to the provisions of
1940 Act in Article 3 of Schedule I of the Bombay
court fees Act has to be read to the relevant
provisions of the 1996 Act.
7. On the other hand, the learned Advocate
General submitted that Article 3 of Schedule I of the
Bombay Court fees Act carves out an exemption from
payment of ad-valorem court fee in case of any
application, petition, including memorandum of appeal
for setting aside or modifying any award under the
1940 Act. It was submitted that the said provision
specifically referred to the 1940 Act and the
exemption conferred thereunder is restricted to an
award made under the 1940 Act and the said exemption
cannot be extended to the arbitration petition
challenging the award made under the 1996 Act. It
was submitted that in order to claim benefit under
section 8(1) of the General Clauses Act, the
following elements are required:-
(i) Repeal and re-enactment of any
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19provision.
(ii) With or without modification.
(iii) Reference to the said provision in any
other enactment.
(iv) Unless contrary intention appears, to
be construed as reference to the re-enacted
provision.
It was further submitted relying on the observations
of the Supreme Court in the case “Sundaram Finance
Ltd. Vs. NEPC India Ltd. (1999)2 SCC 477” that the
scheme of the 1996 Act and the 1940 Act is totally
different and the provisions of the 1940 Act cannot
be referred for interpreting the provisions of the
1996 Act. It was, therefore, submitted that the 1996
Act is not a re-enactment of the 1940 Act. It was
submitted that the 1996 Act is entirely a new
enactment. It was further submitted that section 34
of the 1996 Act cannot be said to be an enactment of
Section 30 or section 33 of the 1940 Act. The learned
Advocate General took us through the provisions of
Sections 30 and 33 of the 1940 Act and the provisions
of Section 34 of the Arbitration Act and submitted
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20that width and amplitude of challenge provided by two
provisions is totally different. It was submitted,
therefore, that section 34 of the 1996 Act cannot be
said to be a re-enactment with modification of
Sections 30 or 33 of the 1940 Act. The
learned Advocate general took us through some
decisions to show what, according to him, is the
meaning of term “modification”. It was submitted
that although heading of section 34 of the 1996 Act
is similar to that of Section 33 or Section 30 of the
1940 Act, the substance thereof is entirely new. It
was contended that the reliance placed by the
petitioners on the observations of the Supreme Court
in its judgment in the case “Thyssen Stahlunion Gmbh
vs. Steel Authority of India Ltd.” referred to above
is also not proper because the question that was
considered by the Supreme Court is totally different.
8. For the purpose of considering the first
question that is “whether the provisions of Article 3
of Schedule I of the Bombay Court Fees Act apply to a
petition filed under Section 34 of the 1996 Act or an
appeal filed under Section 37 of that Act”, we have
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21first to see Article 1 and Article 3 of Schedule I of
the Bombay Court fees Act. Perusal of Article 1 of
Schedule I shows that on a plaint or memorandum of
appeal presented to any civil or revenue Court, the
Court fee is liable to be paid according to the
subject matter involved in such a plaint or
memorandum of appeal. Thus, according to Article 1
court fee is payable on ad-valorem basis. Article 3
of Schedule I reads as under:-
3. Plaint, application or — A fee on the
petition (including amount or value of
memorandum of appeal), to the award soughtset aside or modify any to be set aside or
award otherwise than under modified,according
the Arbitration Act,1940. to the scale
prescribed underArticle 1.
According to Article III of Schedule I, on any
plaint, application or petition or memorandum of
appeal for setting aside or modifying an award, same
court fee is payable as is payable on a plaint or
memorandum of appeal under Article 1. Thus, when an
award is challenged by a plaint, application,
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22petition or memorandum of appeal, court fee is
payable on ad-valorem basis. But from this
requirement of payment of court fee on ad-valorem
basis, Article 3 excludes an application or petition
or memorandum of appeal filed in civil or revenue
Court challenging any award made under the
Arbitration Act,1940. Thus, the provisions of
Article III of Schedule I do not apply when an
application is filed or appeal is filed challenging
an award made under the Arbitration Act,1940. The
question, therefore, that arises for consideration is
“whether reference to the provisions of 1940 Act
found in Article III of Schedule I of the Bombay
Court fees Act can be said to include reference to
the 1996 Act.” The petitioners have relied on the
provisions of section 8 of the General Clauses Act to
contend that reference to the provisions of the 1940
Act in Article III of Schedule I has to be taken as
reference to the relevant provisions in the 1996 Act.
It is sub-section 1 of Section 8 of the General
Clauses Act which has been relied on. Sub-section
(1) of Section 8 of the General Clauses Act reads as
under:-
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23“8. Construction of references to repealed
enactments.- (1) Where this Act, or any[Central Act] or Regulation made after the
commencement of this Act, repeals and re-
enacts, with or without modification, anyprovision of a former enactment, then
references in any other enactment or in any
instrument to the provision so repealedshall, unless a different intention appears,
be construed as references to the provision
so re-enacted.”Perusal of the above provisions shows that where by a
central enactment any provision of a former enactment
is repealed and re-enacted with or without
modification then reference in any other enactment to
the provision so repealed shall, unless a different
intention appears, be construed as references to the
provisions so re-enacted. In the present case, it is
common ground that the former enactment is the 1940
Act, the new enactment is the 1996 Act and any other
enactment is the Bombay Court Fees Act.
9. Now first we have to see which is the
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24provision of 1940 Act (former enactment) which has
been referred to in the Bombay Court Fees Act (any
other enactment). Perusal of Article 3 of Schedule I
quoted above shows that the provision of 1940 Act
which relates to making of an application or petition
providing for setting aside or modifying an Award is
referred to. It may be pointed out here that for
considering the effect of Section 8 of the General
Clauses Act,
primarily it is not necessary to
consider the scheme of entire new enactment and the
former enactment, what is primarily to be considered
is the provisions of the former enactment which is
referred to in the other enactment. Therefore, in
this case, primarily, it is not necessary for us to
consider the entire scheme of the 1940 Act (former
enactment) and the 1996 Act (the new enactment).
What we have to, primarily, consider is the
provision relating to challenge to an Award contained
in the 1940 Act and the provisions contained in the
1996 Act relating to challenge to an Award made under
that Act, and to decide whether it can be said that
those provisions which were contained in the 1940 Act
have been repealed and re-enacted with or without
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25modification in the new Act.
10. It was not disputed before us that by
section 85 of the 1996 Act one of the enactments
which has been repealed is the 1940 Act, therefore,
there is no debate that all the provisions of the
1940 Act including the provisions which are referred
to in Article 3 of Schedule I of the Bombay Court
Fees Act have been
ig repealed by the new Act. Theentire debate before us was whether those provisions
have been re-enacted with or without modification in
the new enactment. For that purpose, first we have
to see which are the provisions contained in the 1940
Act relating to challenging an award made by
Arbitrator under the 1940 Act. The first provisions
which is relevant in that regard is Section 33 of the
1940 Act which reads as under:-
“33. Arbitration agreement or award to
be contested by application. – Any party to
an arbitration agreement or any person
claiming under him desiring to challenge the
existence or validity of an arbitration
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26agreement or an award or to have the effect
of either determined shall apply to the
Court and the Court shall decide the
question on affidavits:
PROVIDED THAT where the Court deems
it just and expedient, it may set down the
application for hearing on other evidence
also, and it may pass such orders for
discovery and particulars as it may do in a
suit.”
Perusal of the above quoted provision shows that any
award made by Arbitrator under that Act can be
challenged by making an application to the Court. The
term “Court” is defined by Section 2(c) of the 1940
Act which reads as under:-
“2.(c) “Court” means a Civil Court having
jurisdiction to decide the questions forming
the subject-matter of the reference if the
same had been the subject-matter of a suit,
but does not except for the purpose of
arbitration proceedings under Section 21,
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27include a Small Cause Court;”
Thus, an award made under the 1940 Act can be
challenged by making an application under section 33
to a civil Court which would have jurisdiction had
the subject matter of the Award been the subject
matter of a suit. Section 30 of the 1940 Act lays
down as to on what ground an Award can be set aside
by the Court.
Section 30 reads as under:-
“30. Grounds for setting aside award.- An
award shall not be set aside except on one
or more of the following grounds, namely:
(a) that an arbitrator or umpire has
misconducted himself or the proceedings:
(b) that an award has been made after
the issue of an order by the Court
superseding the arbitration or after
arbitration proceedings have become invalid
under Sec.35:
(c) that an award has been improperly
procured or is otherwise invalid.”
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28Thus, an award made under the 1940 Act could be
challenged by making an application under section 33
to the Court and that Award could be set aside by the
Court on the grounds which are mentioned under
section 30.
11. So far as the 1996 Act is concerned, the
relevant provisions is Section 34. It is sub-section
(1) and (2) of Section 34 which are relevant for the
present purpose which reads as under:-
“34. Application for setting aside arbitral
award- (1) Recourse to a Court against an
arbitral award may be made only by an
application for setting aside such award in
accordance with sub-section (2) and sub-
section (3).
(2) An Arbitral award may be set aside
by the Court only if –
(a) the party making the application
furnishes proof that –
(i) a party was under some incapacity, or ::: Downloaded on - 09/06/2013 14:01:14 ::: 29 (ii) the arbitration agreement isnot valid under the law to which the parties
have subjected it or, failing any indication
thereon, under the law for the time being in
force; or
(iii) the party making the
application was not given proper notice of
the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable
to present his case; or
(iv) the arbitral award deals with
an dispute not contemplated by or not
falling within the terms of the submission
to arbitration, or it contains decisions on
matters beyond the scope of the submission
to arbitration;
(b) the Court finds that –
(i) the subject-matter of the
dispute is not capable of settlement by
arbitration under the law for the time being
in force, or
(ii) the arbitral award is in
conflict with the public policy of India.
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30
Explanation.- Without prejudice to the
generality of sub-clause (ii) it is hereby
declared, for the avoidance of any doubt,
that an award is in conflict with the public
policy of India if the making of the award
was induced or affected by fraud or
corruption or was in violation of section 75
or section 81.”
Perusal of sub-section (1) and (2) of Section 34
shows that Arbitral award can be challenged by making
an application before a Court. The term “Court” is
defined by Section 2(e) of the 1996 Act. It reads as
under:-
“2.(e) “Court” means the principal Civil
Court of original jurisdiction in a
district, and includes the High Court in
exercise of its ordinary original civiljurisdiction, having jurisdiction to decide
the questions forming the subject-matter of
the arbitration if the same had been the
subject matter of a suit but does not
include any civil court of a grade inferior
to such principal Civil Court, or any Court::: Downloaded on – 09/06/2013 14:01:14 :::
31of Small Causes;”
A comparison of definition of term “Court” in the
1940 Act and the 1996 Act which are both quoted above
shows that the definitions are substantially the same
except that in the 1940 Act an application could be
made to the Civil Court but now as per the 1996 Act
an application can be made only to the Principal
Civil Court of original jurisdiction in a district.
So far as this Court on original side is concerned,
there is no change made. Thus, a comparison of the
provisions of sub-section (1) of section 34 of the
1996 Act with the provisions of Section 33 of the
1940 Act shows that by virtue of the provisions of
Section 85 of the 1996 Act, section 33 of the 1940
Act has been repealed and has been re-enacted in the
form of sub-section (1) of section 34 of the 1996 Act
with a slight modification in the definition of the
term “Court”. As observed above, in so far as the
original jurisdiction of this Court is concerned,
even that difference does not exist. In other words,
in so far as the original jurisdiction of this Court
is concerned, in the matter of challenge made to an
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32
award made by Arbitrator, the provisions of section
33 of of the 1940 Act has been repealed and re-
enacted with hardly any modification. A comparison of
the provisions of sub-section (2) of section 34 of
the 1996 Act with the provisions of section 30 of
the 1940 Act shows that the grounds on which an award
could be set aside by the Court under the 1940 Act
are different than the ones on which an award can be
set aside under sub-section (2) of section 34 of the
1996 Act. But, in our opinion, so far as the
provisions of Article 3 of Schedule I of the Bombay
Court Fees Act is concerned, the grounds on which
the Court can set aside an Award is not relevant,
because the subject matter of the provisions of
Bombay Court Fees Act is payment of Court fees on
plaint, application, petition or memorandum of appeal
and not the grounds on which the Court can grant
reliefs to the applicant, plaintiff, petitioner or
appellant. In our opinion, therefore, the only
provision of the 1940 Act referred to in Article 3 of
Schedule I of the Bombay Court Fees Act is the
provisions of Section 33 of the 1940 Act and bare
comparison of that provision with the provisions of
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33
sub-section (1) of Section 34 of the 1996 Act shows
that the provision of section 33 of the 1940 Act is
repealed and re-enacted in sub-section (1) of Section
34 of the 1996 Act with slight modification.
Therefore, reference to the provisions of section 33
of the 1940 Act in Article 3 of Schedule-I of the
Bombay Court fees Act has to be construed, in view of
the provisions of Section 8 of the General Clauses
Act, as reference to the provisions of Section 34 of
the 1996 Act. So far as an appeal filed under
Section 37 of the 1996 Act is concerned, perusal of
section 37 shows that an appeal is provided to the
appellate Court against an order setting aside the
arbitral award or refusing to set aside an arbitral
award under Section 34. Thus, as we have found that
the provisions of “Article 3 of Schedule-I” do not
apply to an application or petition filed under
section 34 of the 1996 Act, they will also not apply
to the memorandum of appeal filed to set aside or
modify an award made by the Arbitrator under the 1996
Act. In other words nothing contained in Article 3
of Schedule-I of the Bombay Court fees Act applies to
an application, petition or memorandum of appeal to
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34
set aside or modify any Award made under the 1996 Act
as it does not apply to an application or petition or
memorandum of appeal to set aside or modify an Award
made under the Arbitration Act,1940. Perusal of the
provisions of Section 8 of the General Clauses Act
shows that “references in any other enactment to a
provision in a former enactment” is to be construed
as ‘reference to re-enacted provision in the new
enactment” unless a different intention appears. The
different intention may appear either in the new
enactment or in the other enactment. Nobody has
pointed out to us any provision either in the 1996
Act or in the Bombay Court fees Act which can be
construed as a different intention or which will show
that it was not the intention of the Maharashtra
legislature to exclude an application or petition or
memorandum of appeal filed in Court to set aside or
modify an award made under the 1996 Act, from the
provisions of “Article 3 of Schedule-I” of the Bombay
Court Fees Act. It appears that the intention behind
excluding an application made, challenging the Award
made under the 1940 Act, from requirement of payment
of ad-valorem court fee which is required to be paid
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35
if the same litigant files a suit on the same subject
matter, was to encourage a litigant to go for
arbitration instead of filing a suit. Nothing has
been pointed out to us that there is any change in
that legislative policy. On the contrary, from the
preamble of the 1996 Act it is clear that the policy
of the legislature is to encourage people to adopt
the mode of arbitration for resolving disputes.
12. So far as the judgment of the Division bench
in “Govardhani Construction Company” case is
concerned, it is obvious from the judgment that the
provisions of Section 8 of General Clauses Act were
not pointed out to the Court and the Court,
therefore, on reading the language of Article 3 of
Schedule I of the Bombay Court Fees Act held that in
that Article there is no reference to an Award made
under the 1996 Act. The relevant observations are to
be found in paragraph 10 of that judgment which read
as under:-
“10. It was also sought to be contended
that in the Article 3 of Schedule I of the
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36
said Act, the Legislature in its wisdom has
excluded the award passed under Arbitration
Act,1940 and the same principle should apply
in case of award passed under the
Arbitration and Conciliation Act,1996. We
are afraid, the contention cannot be
accepted for the simple reason that the
Arbitration and Conciliation Act came into
force in the year 1996,specifically w.e.f.
22nd August,1996. Prior to that, the
Arbitration and Conciliation Ordinance, 1996
was promulgated on 16th January,1996. The
Arbitration and Conciliation Act, 1996
replaced the said Ordinance and the
Arbitration Act,1940. Yet no amendment has
been made since 1996 till this date to
Article 3 of Schedule I of the said Act
which clearly restricts the exclusion from
its applicability the Award under the
Arbitration Act,1940. In other words, the
award passed under the Arbitration and
Conciliation Act,1996 is not excluded under
Article 3 of Schedule I and for the same
reason, the said Article which specifically
deals with the subject-matter of setting
aside or modifying any award either at the
original stage by filing an application or a
petition in that regard, and also at the
appellate stage by presenting memorandum of
appeal, would naturally be applicable to all
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37
such proceedings. Needless to say that the
appeal is a continuation of the proceedings
at the original stage. The provision under
Article 3 of Schedule I clearly speaks of
plaint, application or petition including
memorandum of appeal to set aside or modify
any award. A memorandum of appeal to set
aside or modify any award spoken of under
Article 3 of Schedule I is obviously in
relation to an order passed on an
application or a petition to set aside or
modify an award. The Arbitration and
Conciliation Act,1996 nowhere provides any
appeal against the award itself. On the
contrary, it specifically provides for a
petition under section 34 for setting aside
the arbitral award and section 37(1)(b)
entitles the aggrieved party to file an
appeal against the order passed under
section 34 either to set aside or to refuse
to set aside the arbitral award. Once it is
apparent that Article 3 of Schedule I
nowhere excludes from its applicability any
award passed under any other statutes
including the Arbitration and Conciliation
Act,1996 and further it relates to a
petition as well as an appeal to set aside
or modify “any award”, it would obviously
include an award passed under the
Arbitration and Conciliation Act,1996 or any
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38
order in relation thereto. In our
considered view, therefore, the appellant is
liable to pay Court fee on the appeal in
hand in terms of Article 3 of Schedule I of
the said Act.”
So far as the judgment of the Division Bench in the
case “Jindal Drilling & Industries Ltd.”, it is clear
that the provisions of section 8 of the General
Clauses Act were pointed out to the Court and they
have been considered by the Court. The Court has
indicated the question it was considering in
paragraph (9) of the judgment in the case “Jindal
Drilling & Industries Ltd.” as follows:-
“The question, however, which arises is
whether the New Act can be said to be a
statute of the nature of re-enactment on
repeal of the Old Act.”
The Division Bench, thereafter, referred to the
judgment of the Supreme Court in the case “Sundaram
Finance Ltd. Vs. NEPC India Ltd., (1999)2 Supreme
Court Cases 479”, then judgment in the case of
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39
“Konkan Railway Corpn. Ltd. and others. Vs. Mehul
Construction Co., (2000)7 Supreme Court Cases 201,
then judgment of the Supreme Court in the case “Union
of India Vs. Popular Construction Co., (2001)8
Supreme Court cases 470” and has, in paragraph (14)
and (15), held thus:-
“14. The Apex Court having already
considered and declared that the New
Act is different from the Old Act, the
contention that the New Act is a re-
enactment within the meaning of the
said expression under Section 8 of the
General Clauses Act, cannot beaccepted. The New Act has been enacted
not merely by way of an amendment to
the Old Act but the entire scheme of
the New Act has been totally differentand this has been elaborately discussed
and clearly held by the Apex Court in
the matters of Sundaram Finance, MehulConstruction as well as in Popular
Construction and Olympus
Superstructures (supra).
15. In the facts and circumstances
as stated above, therefore, it is
difficult to accept the contention on::: Downloaded on – 09/06/2013 14:01:14 :::
40behalf of the appellants that Article 3
in Schedule I of the BCF Act is
required to be read as referred to theNew Act in place of the Old Act
consequent to enforcement of the New
Act.”
It is, thus, clear that the Division Bench has held
that because the Supreme Court has observed in the
above referred three judgments that the Scheme of
1996 Act is totally different from the scheme of 1940
Act in many respect the 1996 Act cannot called a
re-enactment of the 1940 Act within the meaning of
the said expression found in Section 8 of the General
Clauses Act.
13. In our opinion, in order to find out whether
because of the provisions of Section 8 of the General
Clauses Act, the expression “Arbitration Act,1940”
found in Article 3 of Schedule I of the Bombay Court
Fees Act can be taken to mean Arbitration Act,1996,
it was not necessary for the Division bench to
consider the scheme of the entire 1996 Act. What
should have been seen was whether the provision in
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41
the 1940 Act relating to challenging an Award
is re-enacted with or without modification in the
new enactment. Because, it appears that when the
Division Bench delivered the judgment in the case of
“Jindal Drilling & Industries Ltd.”, the question
‘whether the 1996 Act is a re-enactment of 1940 Act
with modification was no more res integra because of
the judgment of the Supreme Court in the case “Steel
authority of India Ltd.” referred to above. In the
case of “Steel authority of India Ltd.”, the Supreme
Court was considering the provisions of Section 85 of
the 1996 Act which reads as under:-
"85. Repeal and savings.- (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,-
(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
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42
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.”
Perusal of the provisions of above quoted section 85
of the 1996 Act shows that by sub-section (1) among
other Acts, the Arbitration Act 1940 has been
repealed, and by virtue of clause (a) of sub-section
(2) the provisions of the 1940 Act continued to apply
to arbitral proceedings which commenced before the
commencement of 1996 and in so far as the arbitral
proceedings which commence on or after the
commencement of the Act, the provisions of the 1996
Act apply to such proceedings. The Supreme Court
has decided several cases by its judgment in the case
of “Steel Authority of India Ltd.” One of the cases
was that of “Rani Constructions (P) Ltd. The Supreme
Court in that case was considering the provisions of
Section 85(2)(a) of the 1996 Act with reference to
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43
the arbitration clause in the case “Rani
Constructions (P) Ltd.”. That arbitration clause has
been quoted by the Supreme Court in paragraph (9) of
that judgment, which reads as under:-
“Subject to the provisions of the
contract to the contrary as aforesaid,
the provisions of the Indian
Arbitration Act,1940 or any statutory
modification or re-enactment
and the rules made thereunder and for
thereof
the time being in force shall apply to
all arbitration proceedings under this
clause.”
The question in “Rani Constructions (P) Ltd.” which
the Supreme Court in the above quoted arbitration
clause was considering is “whether the 1996 Act can
be stated to be a statutory modification or re-
enactment of the 1940 Act.” Perusal of the judgment
of the Supreme Court in the case “Steel Authority of
India Ltd” shows that the Supreme Court has referred
to its judgment in the case “Sundaram Finance Ltd.”
and has held that the term “statutory modification
or re-enactment for the time being in force” used in
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44
the arbitration clause in the case of “Rani
Constructions (P) Ltd.” includes reference to the
1996 Act. The observations of the Supreme Court in
paragraphs (35), (36), (37) and (38) are relevant,
they read as under:-
“35. Parties can agree to the
applicability of the new Act even before the
new Act comes into force and when the old
Act is still holding the field. There is
nothing in the language of Section 85(2)(a)
which bars the parties from so agreeing.
There is, however, a bar that they cannot
agree to the applicability of the old Act
after the new Act has come into force when
arbitral proceedings under the old Act have
not commenced though the arbitral agreement
was under the old Act. Arbitration clause in
the contract in the case of Rani
Constructions (Civil Appeal No.61 of 1999)
uses the expression “for the time being in
force” meaning thereby that provision of
that Act would apply to the arbitration
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45
proceedings which will be in force at the
relevant time when arbitration proceedings
are held. We have been referred to two
decisions – one of the Bombay High Court and
the other of the Madhya Pradesh High Court
on the interpretation of the expression “for
the time being in force” and we agree with
them that the expression aforementioned not
only refers to the law in force at the time
the arbitration agreement was entered into
but also to any law that may be in force for
the conduct of arbitration proceedings,
which would also include the enforcement of
the award as well. The expression “unless
otherwise agreed” as appearing in Section 85
(2)(a) of the New Act would clearly apply in
the case of Rani Constructions in Civil
appeal no.61 of 1999. Parties were clear in
their minds that it would be the old Act or
any statutory modification or re-enactment
of that Act which would govern the
arbitration. We accept the submission of
the appellant Rani Constructions that
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46
parties could anticipate that the new
enactment may come into operation at the
time the disputes arise. We have seen
Section 28 of the Contract Act. It is
difficult for us to comprehend that
arbitration agreement could be said to be in
restraint of legal proceedings. There is no
substance in the submission of the
respondent
that parties could not have
agreed to the application of the new Act
till they knew the provisions thereof and
that would mean that any such agreement as
mentioned in the arbitration clause could be
entered into only after the new Act had come
into force. When the agreement uses the
expression “unless otherwise agreed” and
“law in force” it does give an option to the
parties to agree that the new Act would
apply to the pending arbitration
proceedings. That agreement can be entered
into even before the new Act comes into
force and it cannot be said that agreement
has to be entered into only after the coming
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47
into force of the new Act.
36. Mr.Desai had referred to a decision
of the Bombay High Court (Goa Bench),
rendered by a Single Judge in Reshma
Constructions v. State of Goa. In that case
the arbitration clause in the contract
provided as under:-
”
Subject as aforesaid, the provisions of
the Arbitration Act,1940 or any statutory
modification or re-enactment thereof and the
rules made thereunder and for the time being
in force shall apply to the arbitration
proceeding under this clause.”
37. The Court held that these terms in
the clause disclosed that the parties had
agreed to be governed by the law which was
in force at the time of execution of the
arbitration agreement as well as by any
further statutory changes that may be
brought about in such law. This is how the
High Court considered the issue before it;
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48
“Considering the scheme of the Act,
harmonious reading of the said provision
contained in sub-section (2) of Section 85
thereof would disclose that the reference
‘otherwise agreed’ necessarily refers to the
intention of the parties as regards the
procedure to be followed in the matter of
arbitration proceedings and not to the time
factor as
ig regards execution of the
agreements. It provides that though the
law provides that the provisions of the old
Act would continue to apply to the pending
proceedings by virtue of the said saving
clause in Section 85, it simultaneously
provides that the parties can agree to the
contrary. Such a provision leaving it to
the discretion of the parties to the
proceedings to decide about the procedure to
be followed – other in terms of the new Act
or the old Act – is certainly in consonance
with the scheme of the Act, whereunder most
of the provisions of the new Act, the
procedure regarding various stages of the
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49
arbitration proceedings is made subject to
the agreement to the contrary between the
parties, thereby giving ample freedom to the
parties to decide about the procedure to be
followed in such proceedings; being so, it
is but natural that the legislature in its
wisdom has left it to the option of the
parties in the pending proceedings to choose
the procedure for such pending proceedings.
The reference ‘otherwise agreed by the
parties’ in Section 85(2)(c) of the new Act,
therefore, would include an agreement
already entered into between the parties
even prior to enforcement of the new Act as
also the agreement entered into after
enforcement of the new Act. Such a
conclusion is but natural since the
expression ‘otherwise agreed’ does not refer
to the time factor but refers to the
intention of the parties regarding
applicability of the provisions of the new
or old Act.”
We agree with the High Court on the
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50
interpretation put to the arbitration clause
in the contract.
38. Section 28 of the Contract Act
contains provision regarding agreements in
the restraint of legal proceedings.
Exception 1 to Section 28 of the Contract
Act does not render illegal a contract by
which the
ig parties agree that any future
dispute shall be referred to arbitration.
That being so parties can also agree that
the provisions of arbitration law existing
at that time would apply to the arbitral
proceedings. It is not necessary for the
parties to know what law will be in force at
the time of the conduct of arbitration
proceedings. They can always agree that
provisions that are in force at the relevant
time would apply. In this view of the
matter, if the parties have agreed that at
the relevant time provisions of law as
existing at that time would apply, there
cannot be any objection to that. Thus
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51
construing clause 25, in Rani Constructions
(CA No.61 of 1999) the new Act will apply.”
It is clear from the observations of the Supreme
Court quoted above that the 1940 Act and the 1996 Act
are legislation on the same subject and the 1996 Act
is a re-enactment of 1940 Act with modification. In
our opinion, therefore, the Division Bench in “Jindal
Drilling &
Industries Ltd.” was not justified in
holding that the 1996 Act cannot be termed as re-
enactment of the 1940 Act within the meaning of that
explanation under section 8 of the General Clauses
Act as observed above.
14. Now having found that Article 1 of Schedule
1 of the Bombay Court Fees Act does not apply to an
application or petition or memorandum of appeal filed
to challenge an Award made under the 1996 Act, the
question arises which would be the Article which
will govern payment of court fees on a petition filed
under Section 34 firstly before this Court
challenging the Award made under 1996 Act. Bare
perusal of the Bombay Court Fees Act and the
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52
Schedules of that Act shows that payment of court
fees on a petition filed on the original side of this
Court challenging an Award made under Section 34 of
the 1996 Act would be governed by Article 1(f)(iii)
of Schedule II of the Bombay Court Fees Act, which
reads as under:-
1.Application or (a)----
petition (f) when presented
ig to the High Court-
(i) ----
(ii) ----
(iii) in any other (Twenty
case not rupees)
otherwise
provided for
by this Act.
15. In so far as an appeal filed before this
Court under Section 37 of the Arbitration and
Conciliation Act,1996 against an order made in a
petition filed under Section 34 of the 1996 Act is
concerned, it will be governed by Article 13 of
Second Schedule which reads as under:-
—————————————————–
13.Memorandum of (a) ----- (Twenty Five
appeal when the (c) to the Rupees)
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53
appeal is not from High Court
a decree or an
order having the
force of a decree,
and is presented---
—————————————————–
When a petition under Section 34 is to be filed
before a Principal Civil Court of original
jurisdiction which is not a High Court, the question
arises which Article of either First Schedule or
Second Schedule would apply. In so far as the
challenge to an Award made under the 1940 Act is
concerned, an application under Section 33 of that
Act could be made to a Civil Court and therefore,
payment of court fee was governed by Article 1(a) of
Schedule II which reads as under:-
—————————————————–
1.Application or (a) ------ Five Rupees
petition or when presented
to any Civil Court
other than a
principal Civil
Court of original
jurisdiction;
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54
—————————————————–
This was so because the application was to be
presented to the Court of Civil Judge which was not a
principal Civil Court of original jurisdiction. But
now because of change of definition of term “Court”
in the 1996 Act, a petition has to be presented,
challenging an Award made under the 1996 Act in terms
of the provisions of Section 34 thereof, before the
Principal Civil Court of original jurisdiction. We
have not been pointed out any entry either in the
first Schedule or in the Second Schedule which
applies to an application or petition to be made
before the Principal Civil Court of original
jurisdiction, and therefore, when a litigant wants to
file petition before a Principal Civil Court having
original jurisdiction which is not High Court,
challenging an Award made under the 1996 Act, no
Court fee under Bombay Court Fees Act is payable
because of absence of a general or specific
provision. Whereas on an appeal filed under Section
37 of the 1996 Act against an order made in that
petition, court fee would be payable as observed
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55
above under Article 13 of Schedule II of the Bombay
Court Fees Act, because the appeal will lie to the
High Court. The question, therefore, framed for our
consideration is answered thus:-
(i) Article 3 of Schedule I of the Bombay Court
fees Act does not apply to a petition, application or
memorandum of appeal filed for challenging an Award
made under the 1996 Act, and Court fee on a petition
filed under Section 34 of the 1996 Act challenging an
Award in this Court is payable according to Article 1
(f)(iii) of Schedule II.
(ii) No Court fee under the Bombay Court fees Act
is payable when a petition under section 34
challenging an Award is filed before any Principal
Civil Court of original jurisdiction which is not
High Court.
(iii) On an appeal filed in this Court under
Section 37 of the 1996 Act challenging an order
passed in a petition filed under section 34 of the
1996 Act court fee is payable according to Article 13
of Schedule II of the Bombay Court Fees Act.
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56
(D.K.DESHMUKH, J.)
(S.J.VAZIFDAR,J.)
(J.P.DEVADHAR, J.)
—
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