THYSSEN STAHLUNION GMBH ETC. v. STEEL AUTHORITY OF INDIA LTD.

OCTOBER 7, 1999

B

Arbitration :

Arbitration Act, 1940-Sections 2(e), 14, 17, 30, 48--Arbitration and Conciliation Act, 1996-Sections 9, 10, 11(4)(b), 32, 34, 36, 42, 85-Arbitral proceedings commenced before the 1996 Act came into force-Award c rendued after commencement of the 1996 Act-Enforcement of award-Ap- plicability of provisions-Held, the provisions of Arbitration Act, 1940 shall apply in relation to arbitral proceedings which have commenced before coming into force of the Arbitration and Conciliation Act, 1996--Expression 'in relation to' occurring in Section 85(2)(a) of 1996 Act has to be given full D effect to, which saves not only the proceedings pending at the time of commencement of 1996 Act but also the provisions of the 1940 Act for enforcement of the award under that Act-Both the Acts being vastly different to each other, multiple and complex problems would arise if the award given under 1940 Act is said to be enforced under the 1996 Act-The 1996 Act E would be applicable in relation to arbitral pruceedings which commenced on or after the 1996 Act came into force-Hence-Section 6 of the General Clauses Act would be inapplicable-General Clauses Act, 1897-Section 6.

Accrued right-Existence of-Held, once the arbitral proceedings have commenced under the 1940 Act, the right to be governed by that Act for enforcement of the awa!t! is certainly a right accrued-It is 11ot necessary that for such right to accrue, some legal proceedings for enforcement must be pending under the 1940 Act at the time when 1996 Act came into force-Saving clause as enshrined in Section 85(2)(a) of the 1996Act has the effect of saving the whole of the 1940 Act until the time of enforcement of the award and preserves the existing rights accrued under the 1940 Act.

Parties entering into an agreement for application of the 1996 Act even before that Act came into force-Tenability of-Held, in cases where arbitral proceedings commenced before coming into force of the 1996 Act and are pending before the arbitrator, it is open to the parties to agree that 1996 Act H 461

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A be applicable to such arbitral proceedings and they could so agree even before the coming into force of the 1996 Act-Parties can always agree that provisions that are in. force at the relevant time would apply and it is not necessary.Jor the parties to know what law will be in force at the time of the conduct of arbitration proceedings-That would not be in restraint of legal B proceedings under Section 28 of the Contract Aa-However, the parties 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-Contract Act, 187'2:- Exception I to Section 28.

C Foreign Awards (Recognition and Enforcement) Act, 1961-Foreign award given after the commencement of the Arbitration and Conciliation Act, 1996-Enforcement of-Held, a foreign award given after the commencement of the 1996 Act can be enforced only under the 1996 Act as there is no vested right to have the foreign award enforced under the Foreign Awards Act-This D is imspective of the fact that the arbitral proceedings. commenced in a foreign jurisdiction-Applicability of the Foreign Awards Act is not saved by virtue of the saving clause in Section 85(2)(a) of the 1996Act as the Foreign Awards Act contains provisions only for the enforcement of the foreign award and not for the arbitral proceedings-Moreover, there is not much difference in the provisions of the Foreign Awards Act and the 1996 Act for the enforcement E of the arbitration award-Since no right accmed, Section 6 of the General Clauses Act would not apply.

Civil Appeal numbers 6036/98, 4928/97 and 61/99 raise three dif- ferent questions relating to the construction and interpretation of Section F 85 of the Arbitration and Conciliation Act, 1996 which contains repeal and saving provision of the three Acts namely, t~ Arbitration (Protocol and Convention) Act, 1937; the Arbitration Act, 1940; and the Foreign Awards (Recognition and Enforcement) Act, 1961.

In CA No. 6036/98, the arbitration proceedings commenced on Sep- G tember 14, 1995 under the Arbitration Act, 1940. Hearing before the sole arbitrator took place from January 7, 1997 till January 28, 1997 and the · award was given on September 24, 1997. By this time on January 25, 1996, the Arbitration and Conciliation Act, 1996 had come into force. In October 1997, the appellant filed a petition in the High Court under the Arbitra- H tion Act, 1940 for making the award rule of Court. While these proceed-

THYSSEN STAHLUNION GMBH v. STEEL \\UTHORITY OF INDIA 463

ings were pending in the High Court, the appellant filed an application A under Section 151 of the Code of Civil Procedure for stay of the proceed- ings. Thereafter the appellant filed an application in the High Court for execution of the award under the 1996 Act on the ground that the arbitra- tion proceedings had been terminated with the making of the award and therefore, the 1996 Act was applicable for enforcement of the award. The respondent opposed the maintainability of the execution petition. A Single B Judge of the High Court held that proceedings would be governed by the 1940 Act. Feeling aggrieved, the appellant has preferred the presen~ ap- peal.

In CA No. 4928/97, the arbitration proceedings were held in United C Kingdom prior to the enforcement of the Arbitration and Conciliation Act, 1996. The award was made on February 25, 1996 in London. With regard to enforcement of the award, a Single Judge of the High Court held that the Arbitration and Conciliation Act, 1996 would be applicable and not the Foreign Awards (Recognition and F;nforcement) Act, 1961. D Hence the present appeal.

In CA No. 61/99, the disputes having arisen, the same were referred to the sole arbitrator on December 4, 1993. The arbitrator gave his award on February 23, 1996 after the 1996 Act had come into force. Difference of opinion having occurred in two judgments rendered by Single Judge E of High Court as to the applicability of the Act, reference was made to the Division Bench which held that the case was governed by Arbitration Act, 1940. Hence the present appeal.

On behalf of the appellant in CA No. 6036/98, it was contended that after the termination of arbitral proceedings and makings of final award, reference has to be made to the new Act for enforcement of the award as when award was given, the old Act stood repealed; that the law governing arbitration proceedings can be different than that governing the award; that ·an award made pursuant to arbitration proceedings which com- menced under the old Act, could be governed by the old Act only if any vested. right accrued to the party; that until award is made, M party has an accrued right and thus an award made after coming into force of new Act would be governed by new Act; that the claim of the respondents that they had acquired vested right to challenge the award under the old Act in view of Section 6 of foe General Clauses Act is also incorrect. H

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A On behalf of the appellant in CA No. 4928/97, it was contended that it would b~ ..t.~e Forejgn_Awards Act.that would apply-and not the 1996 Act; that since the proceedings had - already commenced, ff • Section 21 of the 1996 Act stipulating as to wht)Ir arbitratid'n proceedings commence, had no application; that the ~pplicability of all the provisions of the old B Acts were saved where the,arbitral proceedings commenced before the cut off date.

On 'benalf of the appellant in CA No. 61/99, it was contended that the parties cannot agree to the applicability of the old Act after the new Act had come into force when arbitration proceedings though under an agreement under the old Act, commence after the coming into force of the new Act; that Section 28 of the Contract Act does not bar the agree- ment between the parties if they wish that arbitration proceedings be governed by any enactment relating to arbitration that may be in force at the relevant time; that agreement could be entered into even before the new Act coines into force with regard to its applicability; that High Court was wrong in holding that the agreelilent for the application of the new Act has to be entered into only after the coming into force of the new Act.

On behalf of the respondent in CA No. 6036/98, it was contended that there could not be two segments, namely, one uptill the award and second after the award; that when an award is made under the old Act, for its enforcement, provisions of the old Act have to be looked into; that when arbitration proceedings have started before coming into force of the new Act, then, under the new Act, the award may not be sustainable; that it is difficult to comprehend a situation where though the award is given under p the old Act, its validity has to be decided under the new Act, provisions of which are vastly different from those of the old Act; that if the legislature intended that the new Act would apply to the award given under the old Act made after the coming into force of the new Act, it would not use the expression 'in relation to' in Section 85(2)(a) of the new Act but would use the word 'to'; that it was not necessary that for the right to accrue, legal proceedings must be pending when the new Act comes into force.

On behalf of the respondent in CA No. 4928/97, it was contended that Section 85(2)(a) of the 1996 Act cannot save the operation of the Foreign Awards Act; that there was no accrued right in favour of the appellant to challenge the foreign award under the Foreign Awards Act, 1961 and hence,

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Section 6 of General Clauses Act by implication is inapplicable; that Section A 85(2)(a) of the new Act saves only those provisions of the old Act and the Foreign Awards Act that would apply to arbitral proceedings and not the ' proceedings to enforce the arbitral award.

On behalf of the respondent in CA No. 61/99, it was contended that tbe enforcement of the award under the new Act would not be compatible with B the arbitration proceedings held under old Act resulting in the award; that expression "arbitral proceedings" in Section 85(2)(a) of the new Act could not be given restricted meaning of being confined merely to the conduct of the proceedings by the arbitrator and excluding the enforcement of the award from the purview of the old Act; that the agreement contemplated in c the later part of Section 85(2)(a) could be entered into only after the enforcement of the new Act and any agreement if entered into before this date would be void and would be hit by Section 28 of the Contract Act.

2.1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before coming into force of the new Act (The Arbitration and Conciliation Act, 1996). The . new Act would be applicable in relation to arbitral proceedings which G commenced on or after the new Act comes into force. (503-D; F] . . 2.2. Section 85(2) (a) of the new Act is in two limbs : (1) Provisions of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties H

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A and (2) new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. First limb can further be bifurcated into two : (a) Provisions of old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force and (b) old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression "in relation to" is of widest import. This expression "in relation to" has to be given full effect to, particularly when read in conjunction with the word "the provisions" of the old Act. That would mean that the old Act will apply to whole gambit ·of arbitration culminating in the enforcement of the .award. If ii was not so, only the word "to" could have suffixed and when the legislature has used the expression "in reli!tion to", a proper meaning has to be given. This expression does not admit of restrictive meaning. First limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings - pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act. The second limb also takes into account the arbitration agreement entered into under the old Act when the arbitral proceedings commenced after the coming into force of the new Act. Any other construction on Section 85(2) (a) would only lead to confusion and hardship. In this view of the matter, Section 6 of the General Clauses Act would be inapplicable. [504-E-G; H; 505-A; B; C; DJ E Mis. Doypack Systems Pvt. Ltd. v. Union of India & Ors., [1988) 2 SCC 299; Mansukhlal Dhanraj Jain & Ors. v. Eknath Vithal Ogale, [1995) 2 SCC 665; Mis. Dhanrajamal Gobindram v. Mis. Shamji Kalidas and Co., [1961) 3 SCR 1020; Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs, [1993) 4 SCC 320; MMTC Ltd. v. Ster/ite Industries (I~dia) Ltd., [1996) 6 F SCC 716 and Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Ors., [1953) SCR 987, relied on.

2.3. Presently the courts tend to adopt purposive approach while interpreting the statute which repeals the old law and for that purpose to take into account the objects and reasons which led to the enacting of the new Act. Provisions of both the Acts, old and new, are very different. If the construction of the new Act leads to inconvenient and unjust results, the concept of purposive approach has to be shed. When arbitration proceed· ings are held under the old Act, the parties and the arbitrator keep in view the provisions of that Act for the enforcement of the award. Multiple and complex problems would arise if the award given under the old Act is said

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to be enforced under the new Act. [506-C; D; 507-8-C] A· Sohan Lal & Ors. v. Amin Chand and Sons & Ors., [1974] 1 SCR 453, relied on.

Sundaram Finance Ltd. v. NEPC India Ltd., [1992] 2 SCC 479, referred to. B Kuwait Minister of Public Works v. Sir Frederick Snow and Partners, (1984) 1 All ER 733 HL and Pepper v. Hart, (1993) 1 All ER 42, referred to.

3.1. Once the arbitral proceedings have commenced, it cannot be c stated that right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act, some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force. Consequences for the parties against whom award is given after arbitral proceedings have been ". held under the old Act though given after the coming into force of the new Act, would be quite grave if it is debarred from challenging the award under the provisions of the old Act. [504-A·B]

3.2. Section 85(2)(a) of the new Act is the saving clause. It exempts the old Act from complete obliteration so far as pending arbitration proceed· ings are concerned. That would include saving of whole of the old Act uptill the time of the enforcement of the award. Section 85(2)(a) prevents the accrued right under the old Act from being affected. Saving provision preserves the existing right accrued under the old Act. The new Act is a F remedial statute and, therefore, Section 85(2)(a) calls for strict construc- tion, it being a repealing provision. But then where one interpretation would produce an unjust or an inconvenient result and another would not have those effects, there is then also a presumption in favour of the latter. Enforcement of the award, therefore, has tO be examined on the touchstone G of the proceedings held under the old Act. [508-G-H; 509-A-B]

Commissioner of Income Tax, U.P. v. Mis. Shah Sadiq and Sons, [1987] 3 SCC 516; Bansidhar & Ors. v. State of Rajasthan & Ors., .[1989] 2 SCC 557; Lalji Raja & Sons v. Finn Hansraj Nathuram, [1971] 1 SCC 721; Hungerford Investment Trust Ltd. v. Haridas Mundhra and Ors., [1972] H

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· A 3 SCR 690; D.C. Bhatia and Ors. v. Union of India and Anr., [1995) 1 SCC 104; M.S. Shivananda v. Kamataka State Road Transport Corporation & Ors., (1980) 1 SCC 149; Gajraj Singh and Ors. v. State Transport Appellate Tribunal and Ors., [1997) 1 SCC 650; Gujarat Electricity Board v. Shanti/al R. Desai, AIR (1969) SC 239 = [1969) 1 SCR 580; G. Ekambarappa & B Ors. v. Excess Profits Tax Officer, Bellary, [1967) 3 SCR 864, relied on. Abbott v. The Minister for Lands, (1895) AC 425 PC; Director of Public Works v. Ho Po Sang, (1961) 2 All ER 721 and Hamilton Gell v. White, (1922) 2 KB 422, referred to.

C 4.1. In cases where arbitral proceedings have commenced before coming into force of the new Act and are pending before the Arbitrator, it is open to the parties to agree that new Act be applicable to such arbitral proceedings and they. can so agree even before the coming into force of - the new Act. There is nothing in the language of Section 85(2)(a) which bars the parties from so agreeing. When the agreement uses the expres- D sions 'unless otherwise agreed' and 'law in force' it does give option to the parties to agree that the new Act would apply to the pending arbitra- tion proceedings. The expression "for the time being in force" 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 E proceedings, which would also include the enforcement of the award as well. There ·is, however ii bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitral proceed- ings have not commenced though the arbitral agreement was under the old Act. [503-F-G; 512-G, 513-E-B; 512-G-H]

F Sir Dinshaw Manekji Patit v. G.B. Badkas & Ors., AIR (1969) Bombay 151; Devkumarsingji Kasturchandji v. State of Madhya Pradesh and Ors., AIR (1967) ·M.P. 268 and Reshma Constructions v. State of Goa, (1999) 1 MIJ 462, approved.

4.2. Section 28 of the. Contract Act contains provisions regarding agreements in the restraint of legal proceedings. Exception I to Section 28 of the Contract Act does not render illegal a contract by which the parties agree that any future dispute shall be referred to arbitration. That being so, parties can also agree that the provisions of the arbitration law existing at that time would apply to arbitral proceedings. It is not necessary for the parties to know what law will be in force at the time of the conduct of

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arbitration proceedings. They can always agree that provisions that are in A force at the relevant time would apply. In this view of the matter, if the parties have agreed that at the relevanMime provisions of law as existing at that time would apply, there cannot be any objection to that. [514·H; 515-A; B; C]

5.1. A foreign award given after the commencement of the new Act B can be enforced only under the new Act. There is no vested right to have the foreign award enforced under the Foreign Awards (Recognition and Enforcement) Act, 1961. After the repeal of the Foreign Awards Act, a Foreign award can now be enforced under the new Act on the basis of the provisions contained in Part II of the new Act depending on whether it c - is New York Convention award or Geneva Convention award. It is ir· respective of the fact when the arbitral proceedings commenced in a foreign jurisdiction. Since no right has accrued, Section 6 of the General Clauses Act would not apply. Moreover, there is not much difference for .the enforcement of the foreign award in the provisions of the foreign Awards Act and new Act. Definition of foreign award is same in both the enactments. If provisions of the Foreign Awards Act and the new Act relating to the enforcement of the foreign award are juxtaposed there would appear to be hardly any difference. [515-C; D; E; 516-D]

5.2. Foreign Awards Act is concerned only with recognition ·and enfor· cement of the foreign awards and does not contain provisions for the conduct ofarbitral proceedings which would, of necessity, have taken place in a foreign country. Arbitral proceedings and enforcement of the award are two separate stages in the whole process of arbitration. When the Foreign Awards Act does not contain any pr11visions for arbitral proceedings, then it is not possible thatthe applicability of the Foreign Awards Act is saved by virtue of Section 85(2) (a) of the 1996 Act. [516-E-F; 515-H; 516-A]

Shetty's Construction Co. P. Ltd. v. Konkan Railway Constrnction, [1998) 5 sec 599, referred to.

_, Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Ors., [1998) 1 G SCC 305 and Oil and Natural Gas Commission v. Western Company of North America, [1987] 1 SCR 1024, cited.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6036 of 1998 Etc. H

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A From the Judgment and Order dated 21.9.98 of the Delhi High Court in E.P. No. 47 of 1998.

R.F. Nariman, R.P. Bhatt, S.G. Desai, Dipankar P. Gupta, AK. Ganguli, R.N. Karanjawala, Gourab Banerjee, Arvind Kumar, Ms. Seema Sapra, Ms. Suranya, Mrs. Manik Karanjawala, B.V. Desai, Siddharth B Chowdhury, R. Rahim, Kailash Vasdev, Jaideep Gupta, Buddy A Ranganadhan, Ms. S. Madan, Krishnan Venugopal, R. Sasiprabhu, Manish Garg, Uday N. Tiwary, K.K. Lahiri, Ejaz Maqbool, B.K. Mishra and Subu Ranjan for the appearing parties.

C The Jtidgment of the Court was delivered by

D.P. WADHWA, J. The Facts: - These three appeals raise three different questions relating to the construction and interpretation of Section 85 of th.e Arbitration and D Conciliation Act, 1996 (the 'new Act' for short) which contains repeal and saving provision of the three Acts, namely, the Arbitration (Protocol and Convention) Act, 1937, the Arbitration Act, 1940 (the 'old Act' for short) the Foreign Awards (Recognition and Enforcement) Act, 1961 (the 'Foreign Awards Act' for short). E This Section 85 of the new Act we reproduce at the outset :

"85. Repeal and saving - (1) The Arbitration (Protocol and Con- vention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) F 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 G 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;

(b) all rules made and notifications published, under the said H enactments shall, to the extent to which they are not repug-

THYSSEN SfAHLUNIONGMBHv. SfEELAUTHOR!TYOFINDIA [D.P. WADHWA,J.) 471

nant to this Act, be deemed respectively to have been made A · or issued under this Act."

In the case of Thyssen Stahlunion GMBH (CA No. 6036 of 1998) the contract for sale and purchase of prime cold' rolled mild steel sheets in coils contains arbitration agreement. Relevant clauses are as under : B "CLAUSE 12: LEGAL INTERPRETATION

12.1 This contract shall be governed and construed in accordance with the laws of India for the time being in force.

12.2 To interpret all commercial terms and abbreviations used c herein which have not been otherwise defined, the rules· of "INCOTERMS 1990" shall be applied.

CLAUSE 13 : SETTLEMENT OF DISPUTES D All disputes of differences whatsoever between the parties hereto arising out of or relating to the construction, meaning or operation or effect of this contract or the breach thereof shall unless amicably settled between the parties hereto; be settled by arbitration in accordance with the Rules of Conciliation and Arbitration of the E International Chamber of Commerce (ICC), Paris, France by a sole Arbitrator appointed by the Chairman of the Arbitral Tribunal of the Court of Arbitration of ICC and the Award made in pursuance thereof shall be binding on both. the parties. The venue for the arbitration proceedings shall be New Delhi, India. F Disputes and differences having arisen, the arbitration proceedings commenced on September 14, 1995 under the old Act. On this date request for arbitration was made to the ICC under the arbitration clause in the contract. Mr. Cecil Abraham of the Malaysian Bar was appointed sole arbitrator on November 15, 1995. Terms of reference in the arbitration G were finalised on May 13, 1996. Hearing before the sole arbitrator took place from January 7, 1997 till January 28, 1997. Award was given on September 24, 1997. By this time on January 25, 1996 the new Act had ~, come into force. On October 13, 1997 Thyssen filed a petition in the Delhi High Court under Sections 14 and 17 of the old Act for making the award H

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A rule of court (Arbitration Suit No. 352-N97). While these proceedings were pending in the High Court, Thyssen, on February 12, 1998;filed an application under Section 151 of the Code of Civil Procedure for stay of the proceedings. On the following day Thyssen filed an application in the High Court for execution of the award under the new Act (Execution B Petition No. 47/98). The ground taken was that the arbitration proceedings had been terminated with the making of the award on September 24, 1997 and, therefore, the new Act was applicable for enforcement of the award. The respondent, Steel Authority of India Ltd. (SAIL) opposed the maintainability of the execution petition. SAIL also filed objections to the award on various grounds under the oldAct. The question which arose for c consideration is :

Whether the award would be governed by the new Act for its enforcement or whether provisions of the old Act would apply?

D A learned single Judge of the Delhi High Court by judgment dated September 21, 1998 held that proceedings would be governed by the old Act. Thyssen Stahlunion GMBH feeling aggrieved filed this appeal (CA 6036/98).

In the case of Western Shipbreaking Corporation (CA No. 4928 of E 1997) under Memorandum of Agreement dated November 4, 1994 M/s. Clareheaven Ltd. agreed to sell to Western Shipbreaking Corporation a ship "M.V. Kaldera". Clause (19) of the Memorandum of Agreement contained arbitration clause which is as under :

"If any dispute should arise in connection with the interpretation in fulfilment of this contract, same shall be decided by arbitration in the city of London, U .K. with English law to apply and shall be . referred to a single arbitrator to be appointed by the parties hereto. If the parties cannot agree on the appointment of the single arbitrator, the dispute shall be settled by three arbitrators, each party appointing one arbitrator the third .being appointed by London Maritime Arbitration (sic) Association in London.

If one party fails to appoint an arbitrator either or by way of substitution for two weeks after the other party having appointed his arbitrator, has sent the party making default notice by mail,

THYSSEN STAHLUNION GMBH_v: STEEL AUTHORITY OF INDIA (D.P. WADHWA, J.) 473

cable or telex to make the appointment, London Maritime Arbitra- A tion (sic) Association shall after application from the party having appointed his arbitrator also appoint on behalf of the party making default.

The Award ren~ered by the arbitrators shall be final binding upon the parties and may if necessary be enforced by any court or any B other competent authority in the same manner as a document in the court of justice~"

Arbitration proceedings in.this case were held in United Kingdom prior to the enforcement of the new Act. The award was made on February c 25, 1996 in London. The question which arises for consideration is :

Whether the award is governed by the provisions of the new Act for its enforcement or by the Foreign Awards Act? I A learned single Judge of.the Gujarat High Court by impugned D Judgment dated April 21, 1997 held that the new Act would be applicable. Western Shipbreaking Corporation is aggrieved and filed appeal against that judgment (CA 4928/97). I I

In the case of M/s. Rani Constructions Pvt. Ltd. (CA No. 61of1999) E > ·. under the cont~act which was for the construction of certain works of the Himachal Pradesh State Electricity Board, there was an arbitration agreement contained in clause 25 which, in relevant part, is 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 thereof and the rules made thereunder and for the time being in force shall apply to all arbitration proceedings under this clause." .. Disputes having arisen, these were referred to the sole arbitrator on December 4, 1993. The arbitrator gave his award on February 23, 1996 after the new Act had come into force. On account of difference of opinion, in two judgments of the Himachal Pradesh High Court, both rendered by single Judges, as to whether it is old or new Act will apply, a learned • single Judge of the High Court referred the following question to a larger Bench : H

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A "Whether the agreement referred to in Section 85(2)(a) of the Act of 19% for the purpose of applicability of the said Act to the pending arbitral proceedings which had already commenced under the Act of 1940 is one necessarily to be entered into after the commencement of the Act of 1996 or any clause to that effect in an agreement already entered into between the parties before the enforcement.of the Act of 1996 would be sufficient for that pur- pose."

Reference question does not appear to have been happily worded. What it means is that when clause (a) of Section 85(2) of the new Act uses the expression "unless otherwise agreed by the parties" can the parties agree for the applicability of the new Act before the new Act comes into force or they have necessarily to agree only after the new Act comes into force.

The Division Bench of the High Court by the impugned judgment dated July 16, 1998 held that clause 25 of the agreement "does not admit ' of interpretation that this case is governed by Act of 1996".

Arguments have been addressed in considerable detail for and against the application of the new Act or the old Act in the cases of Thyssen and Rani Construction and the Foreign Awards Act in the case of Western Shipbreaking Corporation. We would, however, refer to these arguments in brief insofar we consider these to be relevant to decide the issues before us.

The Submissions:

F Mr. F.S. Nariman, who appeared for Thyssen, made the following sub!11issions :

1Copy pinpoint1. Termination of arbitral proceedings by the final arbitration award and the enforcement of the award are two separate proceedings. Under Section 32 1 of the new Act arbitral proceedings shall terminate by the final award or by an order of the arbitral tribunal under sub-section (2) as provided therein. Thus after the arbitral proceedings are terminated and final award made, reference has to be made to the new . 1. 32.Termination of Proceedings . • (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2).

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J. J 475

Act for enforcement of the award as when award was given old Act stood repealed.

2Copy pinpoint2. In view of the savings provision under clause (a) of sub-sec- tion (2) of Section 85 of the new Act it is not necessary to refer to Section 6 of the General Clauses Act, 18972. B

3Copy pinpoint3. New Act is based on UNCITRAL Model Law. It is a progres- sive Act. Objects which led to passing of the new Act should be kept in view. For this, reference may be made to the Preamble3, of the new Act as well. In the Statement of Objects

2. The arbitral tribunal shall issue an order for the termination of the arbitral proceedings c where: (a) the claimant ~thdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or D ( c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

6. Effect of repeal. - Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactmerit hitherto made or hereafter to be made, then, unless a different i~tention appears, the repeal shall not :- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or ( e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.' 3 WHEREAS the United Nations Commission on International Trade Law (UN- G CITRAL) has adopted the UNCITRAL Model ·Law on International Commercial Arbitration in 1985; AND WHEREAS the General Assembly of the United Nations has recom- mended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law .of arbitral procedures and the specific needs of international commercial arbitration practice; H

476 SUPREME COURT REPORTS f1999J SUPP. 3 S.C.R;

A and Reasons4, the objectives behind introduction of the New

AND WHEREAS the UNCITRAL has adopted .the UNCITRAL Conciliation Rules in 1980; AND WHEREAS the General Assembly of the United Nations has recom- mended the use of the said Rules in cases where a dispute arises in the context of B international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation; AND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations; AND WHEREAS it is expedient to make Jaw respecting arbitration and con- c ciliation, taking foto account the aforesaid Model Law and Rules; Be it enacted by Parliament in the forty seventh year of the Republic as follows:-"

4Copy pinpoint4. STATEMENT OF OBJECTS AND REASONS ''The law on arbitration in India is at present substantially contained in three enact- ments, namely, the Arbitration Act, 1940, the Arbiiration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. It is widely felt that the 1940 Act, which contains the general law of arbitration, has become outdated. The Law Commission of India, several representative bodies of trade and industry and experts in the field of arbitration have proposed amendments to this Act to make it more responsive to contemporary requirements. It is also recognised that our economic reforms may not become fully effective if the law dealing with settlement of both domestic and international commercial disputes remains out of tune with such reforms. Like arbitration, conciliation is also getting increasing worldwide recognition as an instrument for Settlement of disputes. There is, however, no general law on the subject in India.

2. The United Nations Commission on International Trade Law (UNCITRAL) adopted in 1985 the Model Law on International Commercial Arbitration. The General Assembly of the United Nations has recommended that all countries give due con- sideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice. The UNCITRAL also adopted in 1980 a set of Condliation Rules. The General Assembly of the United Nations has recommended the use of these Rules in cases where the disputes arise in the context of int~mational commercial relations and the parties seek amicable settlement of their disputes by recourse to conciliation. An important feature of the said UNCITRAL Model Law and Rules is that they have harmonised concepts on arbitration and conciliation of different Jegal systems of the world and thus contain provisions which are designed for universal application. G

3. Though the said UNCITRAL Model Law and Rules are intended to deal with international commercial arbitration and conciliation, they could with appropriate modifications, serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consolidate and amend the law relating to domestic arbitra- tion, international commercial arbitration, enforcement of foreign arbi.tral awards and to define the law relating to conciliation, taking into account the said UNCITRAL H Model Law and Rules.

THYSSEN STAHLUNION GMBHv. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.] 477

Arbitration law have been explained. A

It is clearly intended that the enforcement of the award given after the new Act came into force would be governed by the new Act. Interpretation of · the provisions of Section 85 has to be purposeful which advances the object · of the new Act. In Sundaram Finance Ltd. v. NEPC India Ltd., [1999] 2 sec 479 the question that arose for consideration was whether under B Section 9 of the new Act court has jurisdiction to pass interim orders even before arbitral proceedings· commence and before an arbitrator is ap- pointed. Under this Section court is empowered to pass interim orders before or during arbitral proceedings or at any time after the making of the arbitral award but before its enforcement. During the course of discus- c sion this Court referred to the statement of objects and reasons which led to the promulgation of the new Act and said :

"The 1996 Act (new Act) is very different from the Arbitration Act, 1940 (old Act). The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to the· 1940 Act may actually lead to misconstruction. In other words, the provisions of the 1996 Act (new Act) have to be . 4. The main objectives of the Bill are as under : (i) to comprehensively cover international and commercial arbitration and conciliation as also domestic arbitration and conciliation; (ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration; (iii) to provide that the arbitral tribunal gives reasons for its arbitral award; (iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction; (v) to minimise the supervisory role of courts in the arbitral process; F (vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes; (vii) to provide that eveiy final arbitral award is enforced in the same manner as if it were a decree of the court; (viii) to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on G ·agreed terms on the substance of the dispute rendered by an arbitral tribunal; and (ix) to provide that, for purposes of enforcement of foreign awards, eveiy arbitral award made in a country to which one of the two intCrnational Conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award.

5Copy pinpoint5. The Bill seeks to achieve the above objects." H

478 SUPREME COURT REPORTS (1999] SUPP. 3 S.C.R.

A interpreted being uninfluenced by the principles underlying the 1940 Act (old Act). In order to get help in construing these 0

provisions, it is more relevant to refer to the U NCITRAL Model Law rather than the 1940 Act."

4. Law governing arbitration proceedings can be different than that· B· governing the award. In this connection reference may be made to a decision of this Court in Sumitomo Heavy Industries Ltd., v. ONGC Ltd. and Others,[1998] 1 SCC 305.

In Sumitomo Heavy Industries Ltd. 's case (supra) under the arbitra- C tion agreement between the parties proceedings were to be held at London in accordance with the provisions of International Chamber of Commerce and the rules made thereunder as amended from time to time. Award was made on June 27, 1995. ONGC Ltd. filed a petition in the High Court at Bombay praying that the respondent be directed under Section 14 of the old Act to file the award in that court. It was contended by ONGC that the award was invalid, un-enforceable and liable to be set aside under the provisions of the Arbitration Act, 1940. This petition of the ONGC was allowed by the High Court. It was noticed that during the course of preliminary hearing in the Queens Bench Division, Commercial Court, in London, Potter, J. had observed that one of the aspects of the case for consideration was : "(4) The curial law, i.e., the· law governing the arbitration proceedings themselves, the manner in which the reference is to be conducted. It governs the procedural powers and duties of the arbitrators, questions of evidence and the determination of the proper law of the contract."

Decision of the Bombay High Court was challenged in this Court. This Court said that the central issue in the appeal was as to what was the area of operation of the curial law and went on to observe as under : G "The conclusion that we reach is that the curial law operates during the continuance of the proceedings before the arbitrator to govern the procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties · to arbitrations being conducted within their jurisdiction for the purpose of ensuring that the procedure that is adopted in the

J THYSSEN SfAHLUNION GMBH v. STEEL AUTHORITY OF INDIA(D.P. WADHWA, J.) 479

proceedings before the arbi~rator conforms to the requirements of the curial law and for reliefs incidental thereto. Such authority of the courts administering the curial law ceases when the proceed- ings before the arbitrator are concluded.

The proceedings before the arbitrator commence when he enters upon the reference and conclude with the making ofthe award. As the work by Mustill and Boyd (in Law and Practice of Commercial Arbitration in England, 2nd Edn.) aforementioned puts it, with the making of a valid award the arbitrator's authority, powers and duties in the reference come to an end and he is ''functus officio" (p. 404). The arbitrator is not obliged by law to file his award in court but he may be asked by the party seeking to enforce the award to do so. The need to file an award in court arises only if it is required to be enforced, and the need to challenge it arises if it is being enforced. The enforcement process is subsequent to and independent of the proceedings b~fore the arbitrator. It is not governed by the curial or procedural law that governed the procedure that the arbitrator followed in the conduct of the arbitration."

5. Section 85 of the new Act provides for a limited repeal. This Section be contrasted with Section 48 of the old Act, which is as under : E "48. Saving for pending references. - The provisions of this Act shall not apply to any reference pending at th~ commencement to this Act, to which the law in force immediately before the commence- ment of this Act shall notwithstanding any repeal effected by this Act continue to apply." F

This departure from the language used in Section 48 of the old Act is deliberate and has to be given effect to while considering the scope of Section 85 of the new Act.

6Copy pinpoint6. Assuming that Section 6 of the General Clauses Act applies; the G question whether a party gets a right at the time when the arbitration proceedings commenced under the old Act and that the award given after coming into force of new Act would yet be governed under the old Act, can be answered only if any vested right accrued to the party. Vested rights accrued when proceedings for enforcement of the award are taken and not H

i 480 SUPREMECOURTREPORTS (1999JSJPP.3S.C.R.

A before that. Right to take advantage of an enactment is not a \vested right. One cannot have mere abstract right but only accrued right. Until award is made no party has an accrued right. Till the award is· made nobody knows his rights. In this connection reference may be madb to a decision of the privy Council in Abbott v. The Minister for Lands, (1895) AC 425 PC, B which was followed by this Court in Hungerford Investment Tmst Limited v. Haridas Mundhra and Others, (1972] 3 SCR 690. Reference may also be made to another decision of this Court in D.C. Bhatia and Others v. Union of India and Another, (1995] 1 SCC 104.

lnAbbott v. The Minister for Lands, (1895) AC 425 PC the Court said that "the mere right, existing at the date of a repealing statute, to take advantage of provisions of the statute repealed is not a 'right accrued' within the meaning of the usual saving clause." The appellant had con- tended that under the repealed enactment he had a right to make the additional conditional purchase, and this was a "accrued right" at the time the Crown Lands Act of 1884 was passed and that notwithstanding the repeal it remained unaffected by such repeal. The 1884 Act had repealed earlier Crown Lands Act of 1861. The Board observed :

"It has been very common in the case of repealing statute to save all rights accrued. If it were held that the effect of this was to leave it open to any one who could have taken advantage of any of the repealed enactments still to take advantage of them, the result would be very far-reaching . • It may be, as'Windeyer J. observes, that the power to take ad- F vantage of an enactment may without impropriety be termed· a "right". But the question is whether it is a "right accrued" within the meaning of the enactment which has to be construed.

Their Lordships think not, and they are confirmed in this opinion by the fact that the words relied on are found in conjunction with the words "obligations incurred or imposed". They think that the mere right (assuming it to be properly so called) existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards availing himself of that right, cannot properly be deemed a "right accrued" within the meaning of the enactment.

THYSSEN STAHLUNION'GMBHv. STEELAlITHORITY OF INDIA (D.P. WADHWA, J.j 481

Even· if the appellant could establish that the language of sec. A 2(b) was sufficient to reserve to him the right for which he con- tends, he would have to overcome further difficulties. That enact- ment only renders "rights accrued" unaffected by the repeal "subject to any express provisions of this Act in relation thereto".

This Court in Hungerford Investment Trust Limited v. Haridas B Mundhra and Others, [1972] 3 SCR 690 followed decision of Privy Council in Abbott v. The Minister for Lands, (1895) AC 425 PC holding that the mere right to take advantage of provisions of an Act is not an accrued right.

In D.C. Bhatia and Others v. Union of India and Another, [1995] 1 c SCC 104 the question which arose for consideration before this Court related to the interpretation and constitutional validity of Section 3(c) of the Delhi Rent Control Act. Delhi Rent Control Act was amended with effect from December 1, 1988 when Section 3(c) was introduced which provided that the provisions of that Act will not apply to any property at D a monthly rent exceeding Rs. 3,500. This Court while upholding the con- stitutional validity of the provisions as contained in Section 3(c) of Delhi Rent Control Act observed that "we are unable to uphold the contention that the tenants had acquired a vested right in the properties occupied by them under the statute. We are of the view that the provisions of Section 3(c) will also apply to the premises which had already been let out at the monthly rent in excess of Rs. 3,500 when the amendment made in 1988 came into force". One of the contentions raised by the tenants was that they had acquired vested rights which could not be disturbed unless the amend- ing Act contained specific provisions to that effect. They said that under the existing law tenants had acquired valuable property rights and they could neither be evicted nor the rent could be enhanced and that even a suit could not be brought against a tenant on the expiry of the lease. This Court repealed the contention and said :

"52. We are unable to uphold this contention for a number of reasons. Prior to the enactment of the Rent Control Act by the various State Legislatures, the legal relationship between the landlord and tenant was governed by the provisions of the Transfer of Property Act. Delhi Rent Control Act provided protection to the tenants from drastic enhancement of rent by the landlord as well as eviction, except on certain specific grounds. The legislature H

482 SUPREME COUkT REPORTS [1999) SUPP. 3 S.C.R.

A by the Amendment Act No. 57 of 1988 has partially repealed the Delhi Rent Control Act. This is a case of express repeal. By Amending Act the legislature has withdrawn the protection hither- to enjoyed by the tenants who were paying Rs. 3,500 or above as monthly rent. If the tenants were. sought to be evicted prior to the amendment of the Act, they could have taken advantage of the B provisions of the Act to resist such eviction by the landlord. But this was nothing more than a right to take advantage of the enactment. The tenant enjoyed statutory protection as long as the statute remained in force and was applicable to him. If the statute ceases to be operative, the tenant cannot claim to continue to have c the old statutory protection. It was observed by Tindal, C.J ., in the case of Kay v. Goodwin, (1830) 6 Bing 576 : 130 ER 1403 : (ER p.1405)

"The effect of repealing a statute is to obliterate it as com- pletely from records of the parliament as if it had never been passed; and, it must be considered as a law that never existed, except for the purpose of those actions which were com- menced, prosecuted, and concluded whilst it was an existing law."

53. The provisions of a repealed statute cannot be relied upon after it has been repealed. But, what has been acquired under the Repealed Act cannot be disturbed. But, if any new or further step is needed to be taken under the Act, that cannot be taken even after the Act is repealed."

7Copy pinpoint7. The expression "in relation to" appearing i_n Section 85(2)(a) of the new Act refers to stage of arbitration proceedings under the old Act. Reference is made to various provisions of the new Act employing the words "arbitral proceedings" or "arbitral proceedings and award" to stress that in the new Act there are different stages in the process of arbitration. G Section 425 of the new Act uses the expression "arising out of that agree- ment and the arbitral proceedings". There is a difference between the -... expressions "arising out of' and that "relating to".

8Copy pinpoint8. Section 366 of the new Act is a deeming provision which provides for the enforcement of the award as if it is a decree of a civil court under H the Civil Procedure Code. This stage comes after application for setting

THYSSEN STAHLUNIOJ:l'GMBH v. STEEL AUTHORITY OFINDIA[D.P. WADHWA, J.) 483

aside of the arbitral· award under Section 34 has been been dealt with. This A Court in Oil and Natural Gas Commission v. Western Company of North America, [1987) 1 SCR 1024 while dealing with the old Act said that till an award is transform¢d into a judgment and decree under Section 17 of the Arbitration Act, 19~, it is altogether lifeless from the point of view of its enforceability. Life is infused into the award in the sense of its becoming B enforceable only after it is made rule of the court upon the judgment and decree and in terms of the award being passed.

9Copy pinpoint9. Claim of the respondents that they had acquired vested right to challenged the award under the old Act in view of Section 6 of the General

- Clauses Act is also incorrect. In this connection reference be made to · Section 100 of the Code of Civil Procedure, which was amended by Section 37 of the Code of Civil Procedure (Amendment) Act, 1976. Now, by C

Section 100 provisions of second appeal were made more stringent. But then the right which a party had acquired before the amendment came into operation was saved specifically by clause (m) 7 of Section 97 of the Code D of Civil Procedure (Amendment) Act, 1976.

Mr. S.G. Desai, learned counsel appearing for Rani Con;tructions, supported Mr. Nariman in his submissions. He also said that the expression "in relation to" appearing in Section 85(2)(a) refers to different stages of arbitration proceedings under the old Act and does not cover the proceed- ings after the award is given. We sum/llarise his submissions as well:

1. Parties can agree to the applicability of the new Act even before 5 "42. Jurisdiction. - Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this part has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court. 0 __, 6 36. Enforcement - Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court.

7. "(m) the provisions of section 100 of the principal Act, as substituted by section 37 of -~ this Act, shall not apply to or affect any appeal from an appellate decree or order which _... had been admitted, .before the commencement of the said section 37, after hearing under rule 11 of j)rder XLI, and evety such admitted appeal shall be dealt with as if the said section ~7 had not come into force; 11 H

484 SUPREME COURT REPORTS [1999J SUPP. 3 S.C.R.

A the new Act comes into force. There is, however, bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitration proceedings though under an agreement under the old Act commence after the coming into force of the new Act. Reference may be made to Sir Dinshaw Manekji Patil v. G.B. Badkas & Others, AIR (1969) B Bombay 151 for the expression "for the time bei~g in force" and also construction of the similar expression in Devkumafsingji Kasturchandji v. State of Madhya Pradesh and Others, AIR (1967) M.P. 268. In Sir Dinshaw Manekji Patit's case the question before the High Court was the scope of the expression "in any law for the time being in force" as appearing in

- clause (g) of Section 19(1) of the Defence of India Act, 1939. This clause C is as under : "(g) Save as provided in this section and in any rules made , thereunder, nothing in any law for the time being in force shall apply to arbitrations under this section."

D The learned single Judge of the High Court considered the expression "law for the time being in force" and said that the natural import of the words "for the time being" indicate indefinite future state of thing, and in this connection reference was made to Stroud's Judicial Dictionary, (3rd Edi- tion) Vol. IV page 3030 which is as follows : E "The phrase 'for the time being' may, according to its context, mean the time present, or denote a single period of time, but its general sense is that of time indefinite, and refers to an indefinite state of facts which will arise in the future, and which may (and probably ·will) vary from time to time Ellison v. Thomas, (1861) 31 LJ Ch F 867 and (1862) 32 LJ Ch 32; Coles v. Pack, (1869) LR 5 CP 65. See also Re Gunter's Settlement Trust, (1949) Ch 502."

High Court said that in their ordinary sense, the words "law for the time being in force" referred not only to the law in force at the time of the G passing of the Defence of India Act but also to any law that may be passed subsequently and which is in force at the time when the question of applicability of such law to arbitrations held under said Section 19 arose.

In Devkumarsingji Kasturchandji v. State of Madhya Pradesh & Ors., AIR (1967) M.P. 268 (DB) Section 132(1) and Section 135 of the Madhya H Pradesh Municipal Corporation Act, 1956 empowered the Municipal Cor-

· THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.) 485

poration to impose a tax on lands and buildings which the Corporation did under the exercise of that power. The State Legislature enacted a law called the Madhya Pradesh Nagriya Sthavar Sampati Kar Adhiniyam, 1964 which provided for the levy of tax on lands and buildings in the urban areas in the State of Madhya Pradesh. Sub-section (3) of Section 4 of the Madhya Pradesh Corporation Act provided that the tax levied and payable under that Act shall be in addition to any other tax for the time being payable under any other enactment for the time being in force in respect of the land or the building or portion thereof. Act of 1964 was challenged and one of the grounds of challenge was that the State Legislature having delegated its power to impose tax on lands and buildings in favour of the ·Municipal Corporation and Municipalities under the Municipal Corpora- c tion Act, 1956 and the M.P. Municipalities Act, 1961 and the local .... authorities having imposed a tax on lands and buildings, the State Legisla- ture had no power to levy tax on lands and buildings. The Court said that the expression "any other enactment for the time being in force" did not mean an enactment which was already in force at the time the Corporation D imposed a tax under Section 132 of the Municipal Corporation Act but meant any legislation enacted whether before or after the imposition of

- the tax by the Corporation. The Court said that the general sense of the words "for the time being" is that of time indefinite and refers to indefinite state of facts which will arise in future and which may vary from time to time. E

2. Section 288 of the_ Contract Act does not bar the agreement 8 "28. Agreements in res/Taint of legal proceedings void. - Every agreement, - (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, or (b) which extinguishes the rights of any party; or discharges any party thereto from any liability; under or in respect of any contract on the expiry of a specified period so as to r~strict any party from enforcing his rights is void to that extent. Exception. 1. - Saving of con/Tact to refer to arbitTation dispute ihat may arise - This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration and that only the amount awarded in such arbitration · shall be re.coverable in respect of the dispute so referred. Exception 2 - Saving of con/Tact to refer questions that have already arisen - Nor shall t.his section render illegal any contract in writing, by whi_ch two or more persons agree to ·refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to reference to arbitration.' H

486 SUPREMECOURTREPORTS [1999]SUPP.3S.C.R.

A between the parties if they wish that arbitration proceedings be governed by any enactment relating to arbitration that may be in force at the relevant time.

3. Expression "unless otherwise agreed" used in Section 85(2)(a) of the new act would clearly apply to the case (Civil Appeal No. 61of1999). B Parties were clear in their mind that the old Act or any other statutory modification or re-enactment of that Act would govern the arbitration: Parties can anticipate that the new enactment may come into operation at the time the disputes arise. It cannot be said that snrh an agreement is in restraint of legal proceedings. Agreement can be entered into even before or after the new Act comes into force.

4. There is no right in procedure. Right to challenge the award is still there in the new Act though now in the restricted form. It cannot be said - that any prejudice has been caused to a party when it has to challenge the award under the new Act. High Court was wrong that the arbitration clause was hit by Section 28 of the Contract Act and that the agreement for the application of the new Act has to be entered into only after the coming into force of the new Act.

At this stage itself we may also note the submissions made by Mr. - E Krishnan Venugopal, counsel appearing for M/s. Clareheaven Ltd. (CA 4928/97) in support of the decision of the High Court holding that for enforcement of the foreign award new Act would apply :

1. Section 85(2)(a) of the new Act cannot save the operation of the Foreign Awards Act. On true construction of clause (a) it will have no F application to the F~reign Awards Act, 1961. There is no accrued right in favour of the appellant in CA No. 4928/97 to challenge the foreign award under the Foreign Awards Act, 1961. Reference in this connection was made to a decision of this Court in M.S. Shivananda v. Kamataka State Road Transport Corporation & Ors., (1980] 1 SCC 149. In that case this G Court said as under :

"In considering the effect of an expiration of a temporary Act, it would be unsafe to lay down any inflexible rule. It certainly requires very clear and unmistakable language in a subsequent Act of the legislature to revive or re-create an expired right. If, however, the right created by the statute is of an enduring character and has

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA (D.P. WADHWA, J.) 487

vested in the person, that right cannot be taken away because the statute by which it was created has expired. In order to see whether the rights and liabilities under the repealed Ordinance have been put to an end by the Act, 'the line of enquiry would be.not whether", in the words of Mukherjee, J. in State of Punjab v. Mohar Singh, [1955) 1 SCR 893, 'the new Act expressly keeps alive old rights and liabilities under the repealed Ordinance but whether it manifests an intention to destroy them'. Another line of approach may be to see as to how far the new Act is retrospective in operation.

It is settled both on principle and authority, that the mere right existing under the repealed Ordinance, to take advantage of the provisions of the repealed Ordinance, is not a right accrued. Sub-section (2) of Section 31 of the Act was not intended to preserve abstract rights conferred by the repealed Ordinance. The legislature had the competence to so restructure the Ordinance as to meet the exigencies of the situation obtaining after the taking over of the contract carriage services. It could re-enact the Or- dinance according to its original terms, or amend or alter its provisions."

Provisions of Foreign Awards Act, 1961 cannot be put into operation as that Act has been repealed. In this eventuality, Section 6 of the General >-· Clauses Act would apply. But then Western Shipbreaking Corporation did not acquire any vested right to enforce the foreign award under the Foreign Awards Act and as such Section 6 of General Clauses Act by implication is inapplicable. F

2. Western Shipbreaking Corporation did not acquire any vested right as by the time the foreign award was made new Act had come into force for enforcement of the foreign award. Reference was made to two English decisions in Abbott v. The Minister for Lands, (1895) AC 425 and Hamilton Gell v. White, (1922) 2 KB 422. G In Hamilton Gell v. White, (1922) 2 KB 422 (Court of Appeal) facts are plainly stated in the head note, which we quote :

"In September, 1920, the landlord of an agricultural holding, being desirous of selling it, gave his tenant notice to quit. By the H

488 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A Agricultural Holdings Act, 1914, when the tenancy of a holding is determined by a notice to quit given in view of a sale of the holding the notice to quite is treated as an unreasonable disturbance within s. 11 of the Agricultural Holdings Act, 1908, and the tenl!nt is entitled to compensation upon the terms and subject to the con- ditions of that section. One of the conditioi1s of the tenant's right B to compensation under that section was that he should within two months after the receipt of the notice to quite give the landlord notice of his intention lo claim compensation, and another condi: tion was that he should make his claim for compensation within three months after quitting the holding. The tenant duly gave notice c of his intention to claim compensation within the time so limited; but before the tenancy had expired, and therefore before he could satisfy the second condition, s. 11 of the Act of 1908 was repealed. He subsequently made his claim within the three months limited by the section." D The: question was if the tenant has acquired any right for him to maintain the claim. For that purpose the court was considering the provisions of Section 38 of the English Interpretation Act, 1889, which provides : "Where this Act or any Act passed after the commencement ~f this Act re peals any other enactment, then, unless the contrary intention .. E appears the repeal shall not ....... affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed''·

Bankes LJ said :-

"Ill my opinion the tenant had acquired a right under s. 11 of the F Act of 1908. This is not like the case which was cited to us Abbot v. Minister for Lands, (1895) AC 425 in argument where the tenant's · right depended upon some act of his own. Here it depends upon the act of the landlord - namely, the giving of a notice to quit in view of a sale - in which event the section itself confers a right to compensation subject to the tenant complying with the condi- G tions therein specified, and so far as it was possible to comply with them down to the time when the section was repealed he did in fact comply with them. For these reasons I think the question must be answered in the affirmative ....... "

H Scrutton LJ said :-

THYSSEN STAHLUNIONGMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.J 489

"The conditions imposed by s. 11 were conditions, not of the acquisition of the right, but of its enforcement. Sec. 38 says that repeal of an Act shall not (c) "affect any right... .. acquired ...... under any enactment so repealed" ,or (e) affect any investigation, legal proceeding, or remedy in respect of any such right." As soon as the tenant had given notice of his intention to claim compensation under s. 11 he was entitled to have that claim investigated by an arbitrator."

Atkin LI said :- c "It is obvious that that provision was not intended to preserve the abstract rights conferred by the repealed Act, such for instance as the right of compensation for disturbance conferred upon tenants generally under the Act of 1908, for if it were the repealing Act would be altogether inoperative. It only applies to the specific rights given to an individual upon the happening of one or other of the events specified in the statute. Here the necessary event has happened, because the landlord has, in view of a sale of the property, given the tenant notice to quite. Under those circumstan- ces the tenant has "acquired a right," which would "accrue" when he has quitted his holding, to receive compensation. A case was cited in support of the landlord's contention : Abbott v. Minister for Lands (1895) AC. 425, where the question was whether a man who had purchased certain land was entitled to exercise a right to make additional purchases of adjoining land under the powers conferred by a repealed Act, the repealing Act containing the usual saving clause. The Privy Council held that he was not. They said (1) that "the mere right (assuming it to be properly so called) existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards availing himself of that right, cannot properly be deemed to be a 'right accrued' within the meaning of the · enactment." I think that bears out the proposition that I have stated above. The result is that the tenant in this case has acquired a right to claim compensation under the Act of 1908 on his quitting his holding, and therefore the second question asked by the arbitrator should be answered in the affirmative." H

490 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A 3. There can be no accrued right to have a decree or an award enforced under a particular procedure that has been repealed by statute. Reference was made to decision of this Court in Lalji Raja & Sons v. Firm Hansraj Nathuram, [1971] 1 SCC 721 and of the House of Lords decision. in the case of Kuwait Minister of Public Works v. Sir Frederick Snow and B Partners, (1984) All ER 733.

In Lalji Raja & Sons v. Firm Hansraj Nathuram, [1971] 1 SCC 721 this Court relying on the decision of the House of Lords in Abbott v. Minister for Lands, (1895) AC 425 said that "the mere right, existing at the date of repealing statute, to take advantage of provisions of the statute repealed is not a 'right accrued' within the meaning of the usual saving clause." Further relying on another decision in Hamilton Gell v. White, (1922) 2 KB 422 the Court said that a provision to preserve the right accrued under a repealed Act "was not intended to preserve the abstract rights conferred by the repealed Act". "It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute."

In Kuwait Minister of Public Works v. Sir Frederick Snow & Partners (a firm) a11d Others, (1984) 1 All ER 733 (House of Lords) there. was a contract between the parties entered into sometime in 1958 relating to the construction of an international airport in Kuwait. Parties to the contract were the Government of the State of Kuwait and an English firm of civil engineering consultants (English firm). Disputes having arisen award was given by Kuwaiti arbitrator on September 15, 1973. The award required payment by the English firm to the Government of the State of Kuwait an amount well over 3.5 Million. Proceedings to enforce the award were initiated in England on March 23, 1979. In 1975 an Act with the title "An Act to give effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards" came into force. The award was a foreign award or a convention award. New York Convention came into being on June 10, 1958. United Kingdom became party to the Convention on December 23, 1975 and the 1975 Act was passed to give effect to the New York Convention. Kuwait became party to the Convention on July 27,

1978. On April 12, 1979 an Order in Council was. made declaring Kuwait a party to the Convention. Now the award was made before Kuwait had become party to the Convention but when proceedings were initiated to enforce the award Kuwait had done so. It was contended by the English

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA (D.P. WADHWA, J.] 491

firm that the foreign arbitral award could only qualify as a Convention A award for the purpose of 1975 Act if the State in which it was made was already a party to the Convention at the date of the award. Accordingly it was contended that the award was not a convention award and could n~ be enforced by the State of Kuwait against the English firm. The plea of the English firm was negatived. It was held that the award was maintainable if the State in which the award was made is a party to the convention at B the date when proceedings to enforce the award began, even if it was not a party at the date when the award was made. The court considered in all Section 3 of the 1975 Act which provided : "An award made in pursuance to an arbitration agreement in the territory of a State, other than the United Kingdom, which is a party to the New York Convention shall, c subject to the following provisions of this Act, be enforceable -". The court said that the use of the present tense in the word 'is' in the phrase 'which is a party to the New York Convention' must, as a matter of the ordinary and natural interpretation of the words used, mean that the phrase relates to the time of enforcement and not to any other time. In particular, if it D had been the intention of the Legislature that the phrase should relate to the date of the award, then the draftsman would surely have used the words which made that intention clear such as 'which is and was at the date.pf the award a party to the New York Convention'. The court repelling the argument of the English firm observed as under : E "The first answer is that the presumption against interpreting a statute as having retrospective effect is based on the assumption that, if retrospective effect were to be given to it; the result would be to deprive persons of accrued rights or.defences. In the present case I am not persuaded that to give the 1975 Act retrospective effect in the sense which has been discussed would deprive anybody either of an accrued right or of an accrued defence. On the footing that awards made in a foreign state before that state became a party to the convention are not convention awards for the purposes of the 1975 Act, and cannot therefore be enforced under it, the result is simply that a person wishing to enforce such an award in the United Kingdom would be obliged to bring an action on it at common law, the right to do this being expressly preserved by s. 6 of the 1975 Act. It cannot therefore be said that, if the construction of the 1975 Act which I prefer is correct, the result is to make an award, which could not previously have been H

492 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A enforced against a person at all, newly enforceable against him under the 1975 Act. On the contrary, the award could always have been enforced against him by one form of procedure, and the only result is that it subsequently becomes enforceable against him by a second and alternative form of procedure."

B 4: The expression "in relation to" cannot expand the scope of the saving clause in Section 85(2)(a) beyond "arbitral proceedings" to the enforcement of an award. Section 85(2)(a) of the new Act saves only those provisions of the old Act and the Foreign Awards Act that would apply to arbitral 'proceedings and not the proceedings to enforce the arbitral award. C Reference in this connection may be made to a decision of this Court in Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs, [1993] 4 sec 320. In Navin Chemicals Mfg. & Trading Co. Ltd. 's case (supra) this Court was considering the expression "the determination of any question having D a relation to the rate of duty of customs or to the value of goods for purposes of assessment" appearing in Section 129-C of the Customs Act, 1962. Section 129-C of the Customs Act, 1962, in relevant part, is as under:

"129-C. Procedure of Appellate Tribunal - (1) The powers and E functions of Appellate Tribunal may be exercised and discharged by Benches constituted by the President from amongst the mem- bers thereof.

(2) Subject to the provisions contained in sub- sections (3) and (4) F a Bench shall consist of one judicial member and one technical member.

(3) Every appeal against a decision or order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes G of assessment shall be heard by a Special Bench constituted ·by the President for hearing such appeals and such Bench shall consist of not less than two members and shall include at least one judicial member and one technical member."

H This Court held that the appeal could have been heard and decided by a

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.] 493

member of the Appellate Tribunal, sitting singly. It said that the phrase A "relation to" is, ordinarily, of wide import but, in the context of its use in the said expression in Section 129-C, it must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment.

Mr. Dipankar Gupta, senior advocate, appearing,for the SAIL (in B CA No. 6036/98) made his submissions which we record in brief :

1. There cannot be two segments : (1) uptil the award and (2) after the award. While under Section 17 of the old Act an award has to be made into a decree, under Section 36 of the new Act it is already stamped with C the decree. The dispute is, thus, between the enforcement of the award and the corrective process. Question is under which law, the corrective process should take place? Section 85 of the new Act deals with transitional provisions. When an award is made under the old Act, for its enforcement provisions of the old Act have to be looked into. This is what Section 85(2)(a) of the new Act saves. D

2. Procedure for the appointment of arbitrator and holding of ar- bitration proceedings and the making of award is different in the old Act and in the new Act. Under the old Act, arbitrator is not required to give reasons unless the agreement between the parties so envisages. Under the E new Act, however, arbitrator has to give reasons. This one illustration is advanced to show that when arbitration proceedings have started before coming into force of the new Act, then, under the new Act, the award may not be sustainable.

3. When arbitration proceedings are held under the old Act, ar- F bitrator. is conscious of Section 30 of the old Act which gives grounds for setting aside the awards. Parties also proceed with that end in view. It is difficult to comprehend a situation where though the award is given under the old Act, its validity has to be decided under the new Act, provisions of which are vastly different than that of the old Act. It is not possible that G proceedings be split into two separate segments. This is not warranted by the new Act.

4. The expression "in relation to" is significant. Ii is of widest amplitude. If the Legislature intended that the new Act would apply to the award given under the old Act made. after the coming into force of the new H

494 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A Act, it would not use the expression "in relation to" but would use the word "to". The expression "in relation to" takes into account stages after the award. There is no difference between the expression "arising out" or "in relation to" or "arising out of' which are expansive expressions and also rather interchangeable. The expression "arising out of' has been used in B Section 42 of the new Act. As to what these expressions mean, reference may be made to decisions of the Supreme Court in Mis. Doypack Systems Pvt. Ltd. v. Union of India & Ors., [1988] 2 SCC 299; Mansukhlal Dhanraj Jain & Ors. v. Eknath Vithal Ogale, (1995] 2 SCC 665 and M/s. Dhanrajamal .. Gobindram v. Mis. Shamji Kalidas & Co., (1961] 3 SCR 1020.

c In Mis. Doypack Systems Pvt. Ltd. 's case (1988] 2 SCC 299 this Court was considering the expression "in relation to". In the context it will be appropriate to quote paras 48, 49 and 50 of the judgment, which are as under :

D "48. In view of the language used in the relevant provisions, it appears to us that Section 3 has two limbs : (i) textile undertakings; and (ii) right, title and interest of the company in relation to every such textile undertaking. The expression "textile undertakings" has been defined in Section 2(k) to mean the six textile undertakings of the company specified therein. The definition of the said ex- E pression in Section 2(k) is, however, subject to the opening words of the section which ·provide, "In this Act, unless the context otherwise requires". In the context of the expression "textile un- dertakings" employed in Section 3(1) of the Act, Section 4(1) provides that the textile undertakings referred to in Section 3 shall .F be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immov- v able, including lands, buildings, workshops, stores ..... investments and book debts pertaining to the textile undertakings and all rights and interest in or arising out of such property as are, immediately before the appointed, day, in the ownership, possession, power or G control of the company in relation to all six undertakings. The expression "pertaining to", "in relation to" and "arising out of', used in the deeming provision, are used in the expansive sense, as per decisions of courts, meanings found in standard dictionaries, and the principles of broad and liberal interpretation m con- H sonance with Article 39(b) and (c) of the Constitution.

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA (D.P. WADHWA, J.] 495

49. The words "arising out of' have been used in the sense that it A comprises purchase of shares and -lands from income arising out of the Kanpur undertaking. We are of the opinion that the words "pertaining to", and "in relation to" have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. B The word "pertain" is synonymous with the word "relate", see Corpus Juris Secundum, Volume 17, page 693.

50. The expression "in relation to" (so also "pertaining to"), is a very broad expression which presupposes another subject matter. C These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Azeez, AIR (1968) Mad. 79 at 81 paras 8 and· 10), following and approving Nitai Charan Bagchi v. Suresh Chandra Paul, (66 Cal WN 767), Shyam Lal v. M. D Shayamlal, AIR (1933) All 649 and 76 Corpus Juris Secundum

621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference E may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term "relate" is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to". The F expression "pertaining to" is an expression of expansion and not of contraction."

In Mansukhlal Dhanraj Jain and Others v. Ef<nath Vithal Ogale, [1995] 2 SCC 665 this Court was considering Section 41(1) of the Presidency Small Cause Courts Act, 1882 and the scope of the expression "relating to the G recovery of possession of any immovable property" appearing in that Section. Section 41(1) is as under :

"41. (1) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force but subject to the H

496 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A provisions of sub-section (2), The Court of Small Causes shall have jurisdiction to entertain and try all suits and proceedings between • a licensor and licensee, or a landlord and tenant, relating to the · ' recovery of possession of any immovable property situated in Greater Bombay, or relating to the recovery of the license fee or charges or rent thereof, irrespective of the value of the subject- B matter of such suits or proceedings."

"It is, therefore, obvious that the phrase "relating to recovery of c possession" as found in Section 41( 1) of the Small Cause Courts Act is comprehensive in nature and takes in its sweep all types of suits and proceedings which are concerned with the recovery of possession of suit property from the licensee and, therefore, suits for permanent injunction restraining the defendant from effecting D forcible recovery of such possessions from the licensee-plaintiff would squarely be covered by the wide sweep of the said phrase."

From M/s. Dhanrajamal Gobindram's case [1961] 3 SCR 1020 we quote the following passage : . E "We may dispose of here a supplementary argument that the dispute till now is about the legal existence of the agreement including the arbitration clause and that this is not a dispute arising out of, or in relation to a cotton transaction. Reference was made to certain observations in Heyman v. Darwins Ltd., (1942) AC 356. F In our opinion, the words of the Bye-law "arising out of or in relation to contracts" are sufficiently wide to comprehend matters, which can legitimately arise under s. 20. The argument is that, when a party questions the very existence of a contract, no dispute can be said to arise out of it. We think that this is not correct, and 0

even if it were, the further words "in relation to" are sufficiently G wide to comprehend even such a case. In our opinion, this argu- ment must also fail."

5. Distinction sought of the repealing provisions as contained in Section 48 of the old Act and Section 85 of the new Act is not correct. H Under Section 48 of the old Act, concept is of "reference while under the

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA[D.P. WADHWA, J.] 497

new Act it is "commencement". Section 2(e) of the old Act defines A "reference". Earlier under Section 48, the word used was "to" but now under Section 85(2)(a), it is the expression "in relation to". There would certainly serious anomalies arise if the expression "in relation to" is given restricted meaning.

6. It is not necessary that for the right to accrue, legal proceedings B must be pending when the new Act comes into force. As to what the accrued right is, reference was made to two decisions of this Court in Commissioner of Income Tax, U.P. v. M/s. Shah Sadiq and Sons, [1987] 3 SCC 516 and Bansidhar & Ors. v. State of Rajasthan & Ors., [1989] 2 SCC ~ c In Commissioner of Income Tax, U.P. v. Mis. Shah Sadiq and Sons, [1987] 3 SCC 516 this Court was considering Section 6 of General Clauses Act, 1897 with reference to the Income-Tax Act, 1922 repealed by Section · 297 of the Income-Tax· Act, 1961. This is how this Court dealt with the question raised before it : D "14. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years. The right of carrying forward and set of accrued to the assessee under the Act of 1922. A right which had accrued and had become E vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the repealing statute took away such right expressly or by necessary implication. This is the effect of Section 6 of the General Clauses Act, 1897. F

15. In this case the 'savings' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever rights are expressly saved by the 'savings' provision stand saved. But; that does not mean that rights which G are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c) of the General Clauses Act, 1897. The right to carry H

498 SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R.

A forward losses which.had accrued under the repealed Income Tax Act of 1922 is not saved expressly by Section 297 of the Income Tax Act, 1961. But, it is not necessary to save a. right expressly in order to keep it alive after the repeal of the old Aci of 1922. Section 6( c) saves accrued rights unless they are taken away by the repeal- ing statute. We do not find any such taking away of the rights by B Section 297 either expressly or· by implication."

In Bansidhar and Others v. State of Rajasthan and Others, [1989] 2 SCC 557 this Court referred to the observations made in I. T. Commissioner v. Shah Sadiq and Sons, [1987] 3 SCC 516 and said a saving provision in a repealing statute is not necessarily exhaustive of the rights and obligations so saved or the rights that survive the repeal. The Court ·said that for the purpose of clauses (c) and (e) of Section 6 of the Rajasthan General Clauses Act, 1955 which provided, respectively, that the repeal of an enactment shall not, unless a different intention appears, "affect any right, privilege, obliga- tion or liability, acquired, accrued or incurred under any enactment so repealed" or "affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, fine, penalty, for- feiture or punishment as aforesaid'', the "right" must be "accrued" and not merely an inchoate one. Distinction between what is and what is not a right preserved by Section 6 of the General Clauses Act is often one of great fineness, what is unaffected by the repeal is a right 'acquired' or 'accrued' under the repealed statute and not "a mere hope or expectation or acquir- ing a right or liberty to apply for a right. This Court relied on its earlier decision in Lalji Raja & Sons v. Firm Hansraj Nathuram, 1971] 1 SCC 721. It also referred to observation of Lord Morris in Director of Public Works v. Ho Po Sang, (1961) 2 All ER 721, which had been quoted with approval in an earlier decision of this Court in M.S. Shivananda v. K.S.R. T. C., [1980] 1 sec 149, as under:

"It may be, therefore, that under some repealed enactment, a right has been given but that, in respect of it, some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification, is necessary. But there is a manifest distinction between an inves- tigation in respect of a right and an investigation which is to decide whether some right should be or should not be given. On a repel, the former is preserved by the Interpretation Act. The latter is not."

THYSSENSTAHLUNIONGMBHv. STEELAUTHORITYOFINDIA[D.P. WADHWA,J.] 499

Mr. R.P. Bhatt, senior advocate appearing for Western Shipbreaking A Corporation (CA No. 4928/97) submitted that it would be the Foreign Awards Act that would apply and not the new Act. Mr. Bhatt supported Mr. Dipankar Gupta in his submissions. All the three Acts are saved by Section 85(2)(a). Arbitral proceedings include enforcement of award otherwise these Acts would become redundant. He said that the arbitration B proceedings were governed by the laws in the U.K. under the (UK) Arbitration Act, 1950. Proceedings began on May 15, 1995. Awards was given in England on February 25, 1996 after the. new Act had come into force on January 25, 1996. As to when arbitration proceedings commence· have been given in Section 21 of the new Act. Under Section 32 of the new Act, arbitral proceedings terminate by the final award. Since the c proceedings had already commenced in England, Section 21 of the new Act has no application. Therefore, one has to look into the Foreign Awards Act, 1961. Mr. Bhatt said pronouncement of an Arbitration Award after the cut off date is not condition precedent for applicability of saving clause under Section 85(2)(a). It does not use the words "Arbitral Award passed before" in place of "Arbitral Proceedings which commenced before". Thus what is saved is applicability of all the provisions of the old Acts, where the Arbitral proceedings have commenced before the cut off date and it is further clarified in second portion of the saving clause viz., section 85(2)(a) of the new Act that the new Act will apply where the Arbitral proceedings have commenced after the cut off date.

Mr. AK Ganguli, senior advocate, appeared for Himachal Pradesh State Electricity Board (CA 61/99). He supported the impugned judgment of the High Court. He drew distinction between the various provisions of the old Act and the new Act and said that the enforcement of the award under the new Act would not be compatible with the arbitration proceed- ings held under the old Act resulting in the award. Any restricted inter- pretation to the expression "arbitral proceedings" appearing in Section 85(2)(a) would lead to several anomalies. One such instance was that under the old Act arbitrator would not be required to give reasons unles~ the arbitration agreement so provided. He said when the savings clause makes the provision of the old Act applicable to arbitral proceedings commencing before January 25, 1996 without there being any further condition, the legislative intent was clear that the old Act would apply to the enfcp-cement of the award under that Act. He said such interpretation, apart from being H

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A in conformity with the legislative intent, would also be in consonance with justice, equity and fair pl.iy. Expression "arbitral proceedings" in Section 85(2)(a) could not be given restricted meaning of being confined merely to the conduct of the proceedings by the arbitrator and excluding the enfor- cement of the award from the purview of the old Act. Mr. Ganguli said that it was not disputed that provisions of the new Act were vastly different than that of the old Act. He said use of the expression "provisions" in Section 85(2)( a) would include all provisions of the old Act, insofar as they have a nexus with the arbitral award. ·Enforcement of the award is integral part of the process "in relation to arbitral proceedings". Reference was also made to the meaning of expression "in relation to" and to various decisions of this Court in that connection. Provisions of Section 6 of General Clauses Act were also invoked to contend that provisions of the old Act were saved which included provisions for enforcement of the award under the old Act. L~stly, Mr. Ganguli submitted that the agreement contemplated in the later part of Section 85(2)(a) would be entered into only after the enforcement of the new Act and that is January 25, 1996. Any agreement if entered into before this date would be void and would be hit by Section 28 of the Contract Act and as rightly held so by the High Court. Accordingly, Mr. Ganguli said that the clause in the arbitration agreement where the parties agreed that provisions of the old Act or any statutory modification or re-enactment thereof "for the time being in force" would have no meaning insofar as applicability of new Act to the enforcement of the award is concerned. Parties could not agree to a provision in advance without knowing what that provision would be.

Reference may yet be made to two more decisions of this Court on the question of effect of repeal of an enactment and as to what is right accrued. In Gajraj Singh and Others v. State Transport Appellate Tribunal and Others, [1997] 1 SCC 650 this Court was examining the provisions of Section 217(1) and (2)(a) & (b) and (4) of the Motor Vehicles Act, 1988, which contained repeal and saving provisions of the Motor Vehicles Act,

G 1939. The Court examined various judgments of this Court and Treatises on the rules of interpretation and said :

"22. Whenever an Act is repealed it must be considered, except as to transactions past and closed, as if it had never existed. The H effect thereof is to obliterate the Act completely from the record

THYSSENSTAHLUNIONGMBHv. STEELAUTHORITYOFINDIA[D.P. WADHWA,J.] 501

of Parliament as if it had never been passed; it never existed except for the purpose of those actions which were commenced, prosecuted and concluded while it was an existing law. Legal fiction is one which is not an actual reality and which the law recognises and the court accepts as a reality. Therefore, in case of legal fiction the court believes something to exist which in reality does not exist. It is nothing but a presumption of the existence of the state of affairs which in actuality is non-existent. The effect of such a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances."