Munjal & Ors Vs. Atul Grover & Anr  Insc 314 (5 May 2005)
Hegde & S.B. Sinha
S.L.P. (Civil) No. 5177 of 2005] S.B. SINHA, J:
appeal is directed against a judgment and order dated 8.2.2005 passed by a
Division Bench of the High Court of Delhi in F.A.O.(OS) No. 177 of 2004 whereby
and whereunder the parties herein had been asked to approach this Court for
seeking clarification of an order dated 16.1.2003 passed in Civil Appeal No.
1920 of 1997 which is to the following effect:
respondent herein filed a complaint before the National Consumer Dispute Redressal
Commission, New Delhi (in short 'the Commission') for
recovery of compensation from the appellants herein for deficiency in service.
It appears when the matter came up before the Commission, the appellant and the
respondent agreed for a consensual adjudication by an Arbitrator.
the commission referred the matter to retired judge of the High Court for
arbitration. It is not disputed that the Arbitrator gave an Award and the same
was remitted to the Commission. The Commission, in terms of the Award decided
the complaint of the respondent. Aggrieved, the appellants have preferred this
have heard learned counsel for the parties and are of the view that this case
stand covered by a decision Ltd. reported in 2000(5) SCC 294, wherein it was
held that the complaint filed under Section 22 of the Consumer Protection Act
requires the Commission to decide the matter in accordance with the evidence,
documents and the respective case of the parties including the submission made
before it and not by referring the matter to an Arbitrator by giving an Award.
view of the said decision, this appeal deserves to be allowed. Consequently,
the judgment under challenge is set aside. The appeal is allowed. There shall
be no order as to costs.
clarify that it will be open to the respondent to enforce the Award under the
provisions of the Arbitration and Conciliation Act, 1996. Any amount deposited
by the appellants shall be refunded to them forthwith." The basic fact of
the matter is not in dispute.
Appellant Nos. 2 and 3 herein had been working as stock brokers in the Delhi
Stock Exchange Limited and governed by the rules and byelaws framed under the
Securities Contract Regulations Act, 1956. In relation to trading in shares
through the Appellants by Shri Ramesh Grower, father of the First Respondent,
resulting in filing of a complaint by him through his mother Mrs. Amita Grower
in National Consumer Disputes Redressal Commission which was marked as
complaint No. 129 of 2004. The dispute at the request of the parties was
referred for consensual adjudication by arbitration in terms whereof Shri Avadh
Bihari Rohtagi, a former Judge of the Delhi High Court was appointed as the
sole arbitrator in terms of an order dated 19.5.1995. He made an award on
19.8.96. The said award was accepted by the National Commission by an order
dated 23.10.1996, the correctness whereof came to be questioned by the Appellants
herein before this Court. By reason of an order dated 16.1.2003, the appeal
preferred by the Appellants herein was allowed on the premise that the question
of law arising therefrom is covered by the judgment of this Court in Skypak Court, however, issued directions which
have been noticed hereinbefore.
Respondents herein filed an execution petition wherein a warrant of attachment
was issued by an order dated 5.2.2003. The Appellants herein filed their
objections in respect of the award before the High Court of Delhi on 21.4.2003.
interlocutory application being I.A. No. 4 in Civil Appeal No.
of 1997 for clarification of the said order dated 16.1.2003 was moved in this
Court by the Appellants but in terms of an order dated 25.7.2003 it was
observed that no order was required to be passed therein.
learned Single Judge of the High Court dismissed the objections to the award
filed by the Appellants herein as being not maintainable, inter alia, on the
premise that this Court in its order dated 16.1.2003 did not grant any liberty
to them to challenge the award of the sole arbitrator by filing an
application/objections either under Sections 30 and 33 of the 1940 Act or under
the 1996 Act. It was, however, also observed that the arbitration award dated
19.8.1996 having been passed by the arbitrator after enforcement of the 1996
Act, the 1996 Act shall apply. On an appeal preferred by the Appellants herein
before the Division Bench, the impugned order was passed.
K.T.S. Tulsi, learned senior counsel appearing on behalf of the Appellants, has
raised a short question in support of this appeal. The learned counsel would
contend that keeping in view of the fact that the dispute was referred to the
arbitrator by an order dated 19.5.1995 having regard to Section 21 of the 1996
Act, the provisions of the 1940 Act would apply.
Cream (P) Ltd. [(2004) 7 SCC 288].
S.V. Deshpande, learned counsel appearing on behalf of the Respondent, on the
other hand, would contend that the 1996 Act having come into force on 22nd
August, 1996 and the award sought to be questioned having been passed on 19th
August, 1996, the 1996 Act shall apply. The learned counsel in support of the
said contention relied upon on the Exports Ltd. [(2001) 6 SCC 356].
counsel would contend that in any event, the application for clarification
filed by them having been dismissed by this Court, this appeal is not
21 and 85 of the 1996 Act read as under:
Commencement of arbitral proceedings.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."
Repeal and savings.
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.
Notwithstanding such repeal,
the provisions of the said enactments shall apply in relation to arbitral
proceedings which commenced before this Act came into force unless otherwise
agreed by the parties but this Act shall apply in relation to arbitral
proceedings which commenced on or after this Act comes into force;
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."
not a case where the parties accepted or proceeded on the basis that the 1996
Act would govern the arbitral proceedings. The reference admittedly was made
prior to coming into force the 1996 Act. The question before this Court in
Civil Appeal No. 1920 of 1997 was as to whether the National Consumer Disputes Redressal
Commission had the jurisdiction to refer the dispute to an Arbitral Tribunal,
whether by consent of the parties or otherwise. In view of the decision of this
Court in Skypak Couriers Ltd. (supra), it was held that it had no such
jurisdiction. In the meantime, however, as the parties before the Commission
had agreed to such a reference to the arbitrator, the arbitrator had entered
into a reference and passed an award; this Court allowed the parties to enforce
the said award.
Court did not have any jurisdiction to direct that the award should be enforced
in terms of the provisions of the 1996 Act which was not applicable. This Court
also could not have deprived the parties from a remedy which is otherwise
available to them in law. It is true that this Court did not pass an order when
such an application was filed by the Appellants herein being I.A. No. 4 in
Civil Appeal No. 1920 of 1997 but the same was not necessary to do as the
parties were at liberty to raise the said question before the High Court.
court of law has no jurisdiction to direct a matter to be governed by one
statute when provisions of another statute are applicable. This Court merely
directed the parties to enforce the said award which would mean that the same
should be enforced in accordance with law. If a party to the lis has a right to
question an award in terms of the 1940 Act, no court has the requisite
jurisdiction to deprive him therefrom.
decisions of this Court in Thyssen Stahlunion GMBH (supra) and Furest Day
Lawson Ltd. (supra) whereupon Mr. Deshpande relied upon were considered by a
3-Judge Bench of this Court in Milkfood Ltd. (supra).
Court upon taking into consideration a large number of decisions observed:
"Commencement of an arbitration proceeding" and "commencement of
a proceeding before an arbitrator" are two different expressions and carry
notice of arbitration or the commencement of an arbitration may not bear the
same meaning, as different dates may be specified for commencement of
arbitration for different purposes. What matters is the context in which the
expressions are used. A notice of arbitration is the first essential step
towards the making of a default appointment in terms of Chapter II of the
Arbitration Act, 1940. Although at that point of time, no person or group of
persons was charged with any authority to determine the matters in dispute, it
may not be necessary for us to consider the practical sense of the term as the
said expression has been used for a certain purpose including the purpose of
following statutory procedures required therefor. If the provisions of the 1940
Act apply, the procedure for appointment of an arbitrator would be different
than the procedure required to be followed under the 1996 Act. Having regard to
the provisions contained in Section 21 of the 1996 Act as also the
common-parlance meaning given to the expression "commencement of an
arbitration" which, admittedly, for certain purpose starts with a notice
of arbitration, is required to be interpreted which would be determinative as
regards the procedure under the one Act or the other required to be followed.
It is only in that limited sense the expression "commencement of an
arbitration" qua "a notice of arbitration" assumes
significance." Noticing that Thyssen Stahlunion GMBH (supra) and Furest
Day Lawson Ltd. (supra) were concerned with the enforcement of a foreign award
and further noticing that the former itself is an authority for the proposition
that in relation to a domestic arbitration proceeding, commencement thereof
shall coincide with service of request/notice, held:
Section 85 of the 1996 Act repeals the 1940 Act.
(2) of Section 85 provides for a non obstante clause. Clause (a) of the said
sub-section provides for saving clause stating that the provisions of the said
enactments shall apply in relation to arbitral proceedings which commenced
before the said Act came into force.
those arbitral proceedings which were commenced before coming into force of the
1996 Act are saved and the provisions of the 1996 Act would apply in relation
to arbitral proceedings which commenced on or after the said Act came into
force. Even for the said limited purpose, it is necessary to find out as to
what is meant by commencement of arbitral proceedings for the purpose of the
1996 Act wherefor also necessity of reference to Section 21 would arise. The
court is to interpret the repeal and savings clauses in such a manner so as to
give a pragmatic and purposive meaning thereto. It is one thing to say that
commencement of arbitration proceedings is dependent upon the facts of each
case as that would be subject to the agreement between the parties. It is also
another thing to say that the expression "commencement of arbitration
proceedings" must be understood having regard to the context in which the
same is used; but it would be a totally different thing to say that the
arbitration proceedings commence only for the purpose of limitation upon issuance
of a notice and for no other purpose. The statute does not say so. Even the
case-laws do not suggest the same. On the contrary, the decisions of this Court
operating in the field beginning from Shetty's Constructions are ad idem to the
effect that Section 21 must be taken recourse to for the purpose of
interpretation of Section 85(2)(a) of the Act.
is no reason, even if two views are possible, to make a departure from the
decisions of this Court as referred to hereinbefore." In view of the fact
situation obtaining therein this Court held that the 1940 Act shall apply and
not the 1996 Act.
Ltd. (supra) was followed by this Bench in U.P.
State Sugar 332].
therefore, are clearly of the opinion that the provisions contained in the 1940
Act would govern the proceedings arising out of the award and not the 1996 Act.
Reference to the 1996 Act was a mere inadvertence on the part of this Court.
The learned Single Judge of the High Court was also not correct in holding that
as no leave to challenge the award was granted by this Court, the Appellants
could not avail the remedies provided for under the 1940 Act.
not in dispute that the question as regard applicability of the 1940 Act and
the 1996 Act has not been gone into by this Court or the Division Bench of the
High Court. The order of this Court dated 25.7.2003, in our opinion, would not
be a bar for the Appellants to approach this Court again;
in view of the fact that the Division Bench itself has refused to go into the
said question and asked the parties to file an application before this Court
for clarification. The principle of res judicata in a situation of this nature
cannot be said to have an application.
clearly laid down the law that principle of res judicata has certain
exceptions, one of which would be a case where the earlier declaration obtained
by the court is established to be contrary to an existing law.
the reasons aforementioned, this appeal succeeds which is allowed and the
matter is remitted to the High Court for considering the Appellants' objections
under Sections 30 and 33 of the 1940 Act by a bench having requisite
determination thereover on its own merit. The parties are directed to bear
their own costs.