{"id":11148,"date":"2003-05-08T00:00:00","date_gmt":"2003-05-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-n-s-nayak-sons-vs-state-of-goa-on-8-may-2003"},"modified":"2015-10-14T11:04:05","modified_gmt":"2015-10-14T05:34:05","slug":"ms-n-s-nayak-sons-vs-state-of-goa-on-8-may-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-n-s-nayak-sons-vs-state-of-goa-on-8-may-2003","title":{"rendered":"M\/S N.S. Nayak & Sons vs State Of Goa on 8 May, 2003"},"content":{"rendered":"
Supreme Court of India<\/div>\n
M\/S N.S. Nayak & Sons vs State Of Goa on 8 May, 2003<\/div>\n
Author: Shah<\/div>\n
Bench: M.B. Shah, Arun Kumar.<\/div>\n
           CASE NO.:\nAppeal (civil)  97 of 2002\nAppeal (civil)  98 of 2002\nAppeal (civil)  99 of 2002\nAppeal (civil)  100 of 2002\nAppeal (civil)  101 of 2002\n\nPETITIONER:\nM\/s N.S. Nayak & Sons\nM\/s Heera Constructions\nM\/s Rani Constructions Pvt. Ltd.\nM\/s Rani Constructions Pvt. Ltd.\nM\/s Pioneer Engineering Syndicate\n\nRESPONDENT:\nState of Goa\nState of Goa\nState of Goa & Another\nState of Goa & Another\nBoard of Trustees of Port Mormugao\n\nDATE OF JUDGMENT: 08\/05\/2003\n\nBENCH:\nM.B. SHAH & ARUN KUMAR.\n\nJUDGMENT:\n<\/pre>\n
\t\t\t\tJ U D G M E N T<\/p>\n
Shah, J.\n<\/p>\n
\tThese appeals are directed against the judgment and order dated
\n27th April, 2000 passed by the High Court of Bombay, Goa Bench, in
\nArbitration Appeal No.1 of 1993 etc. etc.<\/p>\n
In pending appeals, a contention was raised by the appellant
\nthat appeals filed by the respondents under Section 37 of the
\nArbitration Act, 1940 (hereinafter referred to as the ‘Old Act’), are
\nrequired to be decided on the basis of the Arbitration and Conciliation
\nAct, 1996 (hereinafter referred to as the ‘New Act’) because the
\narbitration agreement provides as under:\n<\/p>\n
“Subject as aforesaid the provisions of the
\nArbitration Act, 1940, or any statutory modification or
\nre-enactment thereof and the Rules made thereunder and
\nfor the time being in force shall apply to the arbitration
\nproceedings under this clause.”\n<\/p>\n
That contention was rejected by the High Court.\t Hence, these
\nappeals.\n<\/p>\n
In support of aforesaid contention, learned senior counsel Mr.
\nDesai for the appellant relied upon the decision in Thyssen
\nStahlunion GMBH v. Steel Authority of India Ltd.<\/a> [(1999) 9 SCC
\n334].\n<\/p>\n
\tBefore referring to the decision in Thyssen’s case, we would
\nfirst refer to Section 85 of the New Act, which reads as under:\n<\/p>\n
“85. Repeal and saving. (1) The Arbitration (Protocol
\nand Convention) Act, 1937 (6 of 1937), the Arbitration
\nAct, 1940 (10 of 1940) and the Foreign Awards
\n(Recognition and Enforcement) Act, 1961 (45 of 1961)
\nare hereby repealed.\n<\/p>\n
\t(2)\tNotwithstanding such repeal,<\/p>\n
(a)\tthe provisions of the said enactments shall
\napply in relation to arbitral proceedings
\nwhich commenced before this Act came into
\nforce unless otherwise agreed by the parties
\nbut this Act shall apply in relation to arbitral
\nproceedings which commenced on or after
\nthis Act comes into force;\n<\/p>\n
(b)\tall rules made and notifications published,
\nunder the said enactments shall, to the extent
\nto which they are not repugnant to this Act,
\nbe deemed respectively to have been made
\nor issued under this Act.”\n<\/p>\n
Section 85 (2) (a) specifically provides that  (1) the provisions
\nof the Old Act shall apply in relation to arbitral proceedings which
\ncommenced on or before the New Act came into force, unless
\notherwise agreed by the\t parties; (2) it also provides that the New Act
\nshall apply in relation to arbitral proceedings which commenced on or
\nafter the New Act came into force.\n<\/p>\n
In all these matters arbitrators were appointed prior to 25th
\nJanuary 1996.  Arbitral proceedings started before that date and the
\nawards in CA No.97\/2002, CA No.99\/2002, C.A. No.100\/2002 and
\nC.A. No.101\/2002 were passed on 20.12.1991, 17.5.1994, 7.5.1992,
\n3.2.1989 respectively, i.e. prior to 25th January, 1996, and in CA
\nNo.98\/2002, the award was passed on 30.9.1996, i.e. after 25th
\nJanuary, 1996.\tOn the basis of sub-section 2(a), the provisions of the
\nOld Act would apply to the arbitral proceedings which commenced on
\nor before the New Act came into force.\n<\/p>\n
Further, the part of the arbitration clause which is quoted above
\nalso provides that the provisions of Arbitration Act, 1940 which were
\nfor time being in force were to apply to the arbitral proceedings
\nbetween the parties.  It nowhere provides that once the arbitral
\nproceedings have commenced under the Old Act, they should be
\nconducted under the New Act as soon as the New Act comes into
\noperation.  Hence, in the proceedings where the award is passed under
\nthe Old Act, the remedy of filing appeal or petition for setting aside
\nthe said award would be as per the provisions of the Old Act.\n<\/p>\n
Further, the complete answer to the contention of the learned
\ncounsel for the appellant is in the following paragraph (para 32) of
\nThyssen’s case wherein the Court has specifically held that once the
\narbitral proceedings commenced under the Old Act, it would be Old
\nAct which would apply in arbitral proceedings and also for enforcing
\nthe award:\n<\/p>\n
32.\tPrinciples enunciated in the judgments show as to
\nwhen a right accrues to a party under the repealed Act.\t It
\nis not necessary that for the right to accrue legal
\nproceedings must be pending when the new Act comes
\ninto force.  To have the award enforced when arbitral
\nproceedings commenced under the old Act under that
\nvery Act is certainly an accrued right.\t Consequences
\nfor the party against whom award is given after arbitral
\nproceedings have been held under the old Act though
\ngiven after the coming into force of the new Act, would
\nbe quite grave if it is debarred from challenging the
\naward under the provisions of the old Act.  Structure of
\nboth the Acts is different. When arbitral proceedings
\ncommenced under the old Act it would be in the mind of
\neverybody, i.e., the arbitrators and the parties that the
\naward given should not fall foul of Sections 30 and 32 of
\nthe old Act.  Nobody at that time could have thought that
\nSection 30 of the old Act could be substituted by Section
\n34 of the new Act.  As a matter of fact appellant Thyssen
\nin Civil Appeal No.6036 of 1998 itself understood that
\nthe old Act would apply when it approached the High
\nCourt under Sections 14 and 17 of the old Act for making
\nthe award rule of the court. It was only later on that it
\nchanged the stand and now took the position that the new
\nAct would apply and for that purpose filed an application
\nfor execution of the award.  By that time limitation to set
\naside the award under the new Act had elapsed.\tThe
\nappellant itself led the respondent SAIL in believing that
\nthe old Act would apply.  SAIL had filed objections to
\nthe award under Section 30 of the old Act after notice for
\nfiling the award was  received by it on the application
\nfiled by Thyssen under Sections 14 and 17 of the old Act.
\nWe have been informed that numerous such matters are
\npending all over the country where the award in similar
\ncircumstances is  sought to be enforced or set aside under
\nthe provisions of the old Act.\tWe, therefore, cannot
\nadopt a construction which would lead to such
\nanomalous situations where the party seeking to have
\nthe award set aside finds himself without any remedy.
\nWe are, therefore, of the opinion that it would be the
\nprovisions of the old Act that would apply to the
\nenforcement of the award in the case of Civil Appeal
\nNo.6036 of 1998.  Any other construction on Section
\n85(2)(a) would only lead to confusion and hardship.  This
\nconstruction put by us is consistent with the wording of
\nSection 85(2)(a) using the terms “provision” and “in
\nrelation to arbitral proceedings” which would mean
\nthat once the arbitral\tproceedings commenced under
\nthe old Act it would be the old Act which would apply
\nfor enforcing the award as well.”\n<\/p>\n
The highlighted portion in terms emphasizes that in such cases
\nwhere the arbitral proceedings commenced under the Old Act, it is an
\naccrued right to proceed in accordance with that law and it would be
\nthe Old Act which would apply even for enforcing the award.\n<\/p>\n
Learned senior counsel Mr. Desai submitted that in Thyssen’s
\ncase, the phrase ‘in relation to arbitral proceedings’ is given wider
\nmeaning so as to include arbitral proceedings before the arbitrator as
\nwell as the proceedings before the Court and once New Act came into
\nforce, further proceedings including appeals are required to be dealt
\nwith and decided in accordance with the New Act as per the
\nagreement.  For this purpose, he placed reliance on paragraph 22 of
\nthe said judgment.\n<\/p>\n
In our view, paragraph 22 nowhere lays down that after the
\nNew Act came into force, even appeals filed under the provisions of
\nOld Act are to be decided on the basis of the provisions contained in
\nthe New Act.  Paragraphs 22 and 23 are as under:
\n“The Conclusions<\/p>\n
22.\tFor the reasons to follow, we hold:\n<\/p>\n
1.\tThe provisions of the old Act (Arbitration
\nAct, 1940) shall apply in relation to arbitral proceedings
\nwhich have commenced before the coming into force of
\nthe new Act (the Arbitration and Conciliation Act, 1996).\n<\/p>\n
2.\tThe phrase “in relation to arbitral
\nproceedings” cannot be given a narrow meaning to mean
\nonly pendency of the arbitration proceedings before the
\narbitrator.  It would cover not only proceedings pending
\nbefore the arbitrator but would also cover the
\nproceedings before the court and any proceedings which
\nare required to be taken under the old Act for the award
\nbecoming a decree under Section 17 thereof and also
\nappeal arising thereunder.\n<\/p>\n
3.\tIn cases where arbitral proceedings have
\ncommenced before the coming into force of the new Act
\nand are pending before the arbitrator, it is open to the
\nparties to agree that the new Act be applicable to such
\narbitral proceedings and they can so agree even before
\nthe coming into force of the new Act.\n<\/p>\n
4.\tThe new Act would be applicable in relation
\nto arbitral proceedings which commenced on or after the
\nnew Act comes into force.\n<\/p>\n
\t5.\tOnce the arbitral proceedings have
\ncommenced, it cannot be stated that the right to be
\ngoverned by the old Act for enforcement of the award
\nwas an inchoate right.\tIt was certainly a right accrued.  It
\nis not imperative that for right to accrue to have the
\naward enforced under the old Act some legal proceedings
\nfor its enforcement must be pending under that Act at the
\ntime the new Act came into force.\n<\/p>\n
6.\tIf a narrow meaning of the phrase “in
\nrelation to arbitral proceedings” is to be accepted, it is
\nlikely to create a great deal of confusion with regard to
\nthe matters where award is made under the old Act.
\nProvisions for the conduct of arbitral proceedings are
\nvastly different in both the old and the new Act.
\nChallenge of award can be with reference to the conduct
\nof arbitral proceedings.  An interpretation which leads to
\nunjust and inconvenient results cannot be accepted.\n<\/p>\n
7.\tA foreign award given after the
\ncommencement of the new Act can be enforced only
\nunder the new Act.  There is no vested right to have the
\nforeign award enforced under the Foreign Awards Act
\n[Foreign Awards (Recognition and Enforcement) Act,
\n1961].\n<\/p>\n
23.\tSection 85(2)(a) of the new Act is in two
\nlimbs: (1) provisions of the old Act shall apply in
\nrelation to arbitral proceedings which commenced before
\nthe new Act came into force unless otherwise agreed by
\nthe parties and (2) the new Act shall apply in relation to
\narbitral proceedings which commenced on or after the
\nnew Act came into force.  The first limb can further be
\nbifurcated into two: (a) provisions of the old Act shall
\napply in relation to arbitral proceedings commenced
\nbefore the new Act came into force, and (b) the old Act
\nwill not apply in such cases where the parties agree that it
\nwill  not apply in relation to arbitral proceedings which
\ncommenced before the new Act came into force.  The
\nexpression “in relation to” is of the widest import as held
\nby various decisions of this Court in Doypack Systems
\n(P) Ltd., Mansukhlal Dhanraj Jain, Dhanrajamal
\nGobindram and Navin Chemicals Mfg.  This expression
\n“in relation to” has to be given full effect to, particularly
\nwhen read in conjunction with the words “the provisions”
\nof the old Act.\t That would mean that the old Act will
\napply to the whole gambit of arbitration culminating in
\nthe enforcement of the award.  If it was not so, only the
\nword “to” could have sufficed and when the legislature
\nhas used the expression “in relation to”, a proper
\nmeaning has to be given.  This expression does not admit
\nof restrictive meaning.\t The first limb of Section 85(2)(a)
\nis not a limited saving clause.\t It saves not only the
\nproceedings pending at the time of commencement of
\nthe new Act but also the provisions of the old Act for
\nenforcement of the award under that Act.”\n<\/p>\n
As stated in paragraph 22, Conclusion1 without any
\nreservation provides that the provisions of Old Act shall apply in
\nrelation to arbitral proceedings which have commenced before coming
\ninto force of the New Act.  Conclusion2, in our view, is required to
\nbe read in context with Conclusion1, that is to say, the phrase ‘in
\nrelation to arbitral proceedings’ cannot be given a narrow meaning to
\nmean only pendency of the proceedings before the arbitrator.  It would
\ncover not only proceedings pending before the arbitrator but would
\nalso cover the proceedings before the court and any proceedings
\nwhich are required to be taken under the old Act for the award
\nbecoming a decree under Section 17 thereof and also appeal arising
\nthereunder.  Hence, conclusions1 and 2 are to be read together which
\nunambiguously reiterate that once the arbitral proceedings have
\nstarted under the Old Act, the Old Act would apply for the award
\nbecoming decree and also for appeal arising thereunder.\n<\/p>\n
Conclusion3 only reiterates  what is provided in various
\nSections of the Arbitration Act, which gives option to the parties to
\nopt for the procedure as per their agreement during the arbitral
\nproceedings before the arbitrator.  The phrase ‘unless otherwise
\nagreed by the parties’ used in various Sections namely, 17, 21, 23(3),
\n24(1), 25, 26, 29, 31, 85(2)(a) etc. indicates that it is open to the
\nparties to agree otherwise. During the arbitral proceedings, right is
\ngiven to the parties to decide their own procedure.  So if there is an
\nagreement between the parties with regard to the procedure to be
\nfollowed by the arbitrator, arbitrator is required to follow the said
\nprocedure.  Reason being, arbitrator is appointed on the basis of the
\ncontract between the parties and is required to act as per the contract.
\nHowever, this would not mean that in appeal parties can contend that
\nappellate procedure should be as per their agreement.  Appellate
\nprocedure would be governed as per the statutory provisions and
\nparties have no right to change the same. It is also settled law that the
\nright to file an appeal is accrued right that cannot be taken away
\nunless there is specific provision to the contrary.  There is no such
\nprovision in the New Act.  In the present cases, the appeals were
\npending before the High Court under the provisions of the Old Act
\nand, therefore, appeals are required to be decided on the basis of the
\nstatutory provisions under the said Act.  Hence, there is no substance
\nin the submission made by the learned counsel for the appellant.\n<\/p>\n
Learned counsel for the appellant however relied upon
\nparagraph 35 of Thyssen’s case.\t In our view, it nowhere lays down
\nanything contrary to what we have stated above.\t Relevant portion of
\nthe said discussion is as under:\n<\/p>\n
” The expression “unless otherwise agreed” as
\nappearing in Section 85(2)(a) of the new Act would
\nclearly apply in the case of Rani Constructions in Civil
\nAppeal No.61 of 1999.  Parties were clear in their minds
\nthat it would be the old Act or any statutory modification
\nor re-enactment of that Act which would govern the
\narbitration.  We accept the submission of the appellant
\nRani Constructions that parties could anticipate that the
\nnew enactment may come into operation at the time the
\ndisputes arise.\t We have seen Section 28 of the Contract
\nAct.  It is difficult for us to comprehend that arbitration
\nagreement could be said to be in restraint of legal
\nproceedings.  There is no substance in the submission of
\nthe respondent that parties could not have agreed to the
\napplication of the new Act till they knew the provisions
\nthereof and that would mean that any such agreement as
\nmentioned in the arbitration clause could be entered into
\nonly after the new Act had come into force.  When the
\nagreement uses the expressions “unless otherwise
\nagreed” and “law in force” it does give an option to the
\nparties to agree that the new Act would apply to the
\npending arbitration proceedings.  That agreement can be
\nentered into even before the new Act comes into force
\nand it cannot be said that agreement has to be entered
\ninto only after the coming into force of the new Act.”\n<\/p>\n
The aforesaid discussion only deals with the contention that
\nparties could not have agreed to the application of the New Act till
\nthey had the knowledge about the provisions thereof and, therefore,
\nthe agreement to the effect that to the arbitral proceedings, the
\nprovisions of the Arbitration Act, 1940 or any statutory modification
\nor re-enactment thereof would be applicable, is not valid.  The Court
\nnegatived the said contention by interpreting the expression ‘unless
\notherwise agreed’.  The Court held that such agreement could be
\nentered into even before coming into force of the New Act.  However,
\nit nowhere lays down that in a pending arbitral proceeding, which was
\nbeing conducted as per the procedure prescribed under the Old Act,
\nthe parties have option of changing the procedure.\n<\/p>\n
In this view of the matter, there is no substance in these appeals
\nand they are accordingly dismissed.  The appellant in each case shall
\npay the costs of Rs.10,000\/- to the respondent within a period of three
\nmonths from today.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India M\/S N.S. Nayak & Sons vs State Of Goa on 8 May, 2003 Author: Shah Bench: M.B. Shah, Arun Kumar. CASE NO.: Appeal (civil) 97 of 2002 Appeal (civil) 98 of 2002 Appeal (civil) 99 of 2002 Appeal (civil) 100 of 2002 Appeal (civil) 101 of 2002 PETITIONER: M\/s N.S. Nayak […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-11148","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nM\/S N.S. 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