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

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

A that all the provisions of the Excess Profits Tax Act, 1940 stood repealed so far as the District of Bellary was concerned w.e.f. December 21, 1956. Excess profits Tax Officer issued a Notice under Section 15 of the Excess Profits Tax Act to the appellants in 1960 in respect of the period from October 30, 1943 to October 30, 1944. It was contended by them that it B was not a case of repeal of that Act and so the provisions of Section 6 of the General Clauses Act could not be invoked to sustain the validity of the notices. It was argued that so far as the Excess Profits Tax Act was concerned, the Adaptation Laws Order 1956 did not repeal that Act as such and the effect of the modification was that the provisions of the Act C were no longer applicable to the Bellary District which comprised in the territory of Part 'B' State of Mysore immediately before November 1, 1956. This Court said that there was no justification for the argument put forward on behalf of the appellants. The Court proceeded to repel this argument as under:

D "The result of the Adaptation of Laws Order 1956 so far as the Act was concerned, was that the provisions of that Act were no longer applicable or in force in Bellary District. To put it different- ly, the Act was repealed so far as the area of Bellary District was concerned. Repeal of an Act means revocation or abrogation of the Act and, in our opinion, s. 6 of the General Clauses Act applies E even in the case of a partial repeal or repeal of part of an Act: Section 6 of the General Clauses Act states :

"Effect of repeal. - Where this Act or any Central Act or Regula- tion made after the commencement of this Act, repeals any enact- F ment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not -

(c) affect any right, privilege, obligation or liability acquired, ac- G crued or incurred under any enactment so repealed; or

Section 3(19) of the General Clauses Act defines an ~nactment" as including "a Regulation and also as including any provision contained in any Act or in any such Regulation as aforesaid''.

THYSSENSTAHLUNIONGMBHv. STEELAUTHORITYOFINDIA(D.P. WADHWA,J.) 503

The argument was also stressed on behalf of the appellants that even ifs. 6( c) of the General Clauses Act was applicable there was no "liability incurred or accrued" as there was no assessment of escaped profits before November 1, 1956 when the adaptation was made. We do not think there is any substance in this argument. The liability of the appellants to tax arose immediately at the end of the chargeable accounting period and not merely at the time when it is quantified by assessment proceedings. It follows there- fore that the notice issued under s. 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escaped taxation." c The Conclusions :

For the reasons to follow, we hold :

:\.. 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).

2. The phrase "in relation to arbitral proceedings" cannot be given a narrow meaning to mean only pendency of the arbitration proceedings before the Arbitrator. It would cover not only proceedings pending before the Arbitrator but would also cover the proceedings before the Court and · any proceedings which are required to be taken under the old Act for award becoming decree under Section 179 thereof and also appeal arising thereunder. F

3. In cases where arbitral proceedings have commenced before com- ing 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. ~- { G

9. "I 7. Judgment in terms of award - Where the Court sees no cause to remit the award or any of the matters, referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with the award." H

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A 4. The new Act would be applicable in relation to arbitral proceed- ings which commenced on or after the new Act comes into force.

5. Once the arbitral proceedings have commenced, it cannot be 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 that some legal proceedings for its enforcement must be pending under that Act at the time new Act came into force.

6. If narrow meaning of the phrase "in relation to arbitral proceedings" is to be accepted, it is likely to create great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the New Act. Challenge of award can be with reference to the conduct of arbitral proceedings. An interpretation which leads to unjust and inconvenient results cannot be accepted. D F '

7. A foreign award given after the commencement of the new Act can be enforced only under the new Act. There is no vested right to have the foreign award enforced under the Foreign Awards Act (Foreign Awards (Recognition and Enforcement) Act, 1961). E 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 and (2) new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. F First limb can further be bifurcated into two : (a) Provisions of old Act shall apply in relation to arbitral proceedings 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 tc(, is of widest import as held by various decisions of this Court in M/s. Doypack Systems Pvt. Ltd. (1988] 2 SCC 299; Mansukhlal Dhanraj Jain & Ors. [1995] 2 SCC 660; Mis. Dhanrajama/ Gobindram (1961] 3~CR 1020 and Naveen Chemicals Mfg. & Ors. (1993] 4 SCC 320. This expression "in relaticlri to" has to be given full effect to, particularly when read in conjunction with the word "the provisions" of the old Act. That would .

THY SS EN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J. J 505

mean that the old Act will apply to whole gambit of arbitration culminating A -,. in the enforcement of the award. If it was not so, only the word "to" could have sufficed and when the legislature has used the expression "in relation 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 ·( B commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act. " The contention that if it is accepted that the expression "in relation to" arbitral proceedings would include proceedings for the enforcement of the award as well, the second limb of Section 85(2)(a) would become c superfluous. We do not think that would be so. 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. Reference in this connection be made to a decision of this

~ Court in MMTC Ltd. v. Sterlite Industries (India) Ltd., [1996] 6 SCC 716 D where this Court held that validity of an arbitration agreement did not depend on the number of arbitrators specified in Section 7 of the new Act and that the number of arbitrators is dealt with separately under Section 10 of that Act whic,h is a part of machinery provision for working of the arbitration agreement. In this case the question which came up for decision was the effect of the new Act on the arbitration agreement made prior to the commencement of the new Act which provided for appointment of one arbitrator by each of the parties who shall appoint an umpire before proceeding with the reference. The agreement was entered into on December 14, 1993 before the coming into force of the new Act. Section 10 of the new Act provides that parties are free to determine the number of arbitrators, provided that such number shall not be an even number. Further failing the determination of odd number of arbitrators, the arbitral tribunal shall consist of a sole arbitrator. This Court upheld the validity of the arbitration agreement dated December 14, 1993 and directed the Chief Justice of the High Court concerned to appoint the third arbitrator under G Section 11(4)(b) of the new Act in view of the failure of the two appointed mbitrators to appoint the third arbitrator. In this case it may be noticed • that the respondent had invoked arbitration clause in the agreement by letter dated January 19, 1996 which was received by the appellant on January 31, 1996. The arbitral proceedings would, therefore, commence H

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·. A under Section 21 of the new Act on January 31, 1996 as by that time new Act had come into force.

In this view of the matter, Section 6 of the General Clauses Act would be inapplicable. It is, therefore, not necessary for us to examine if any right to enforce the award under the old Act accrued to a party when B arbitral proceedings had commenced before the coming into force of the new Act and the SAIL (CA 6036/98) had acquired a right to challenge the award made under the old Act and there would be corresponding right with the Thyssen to enforce the award under the old Act.

C Present day 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. We have seen above this approach was adopted by this Court in MMTC Ltd. 's case [1996] 6 SCC 716. Provisions of both the Acts, old and new are very different and it has been so observed in Sundaram Finance ·D Ltd. 's case (1999] 2 SCC 479. In that case, this Court also said that provisions of the new Act have to be interpreted and construed inde- pendently and that in fact reference to old Act may actually lead to the misconstruction of the provisions of the new Act. The Court said that it will be more relevant, while construing the provisions of the new E Act, to refer to the UNCITRAL Model Law rather than the old Act. In the case of Kuwait Minister of Public Works v. Sir Frederick Snow and Partners, (1984) 1 ALL ER 733 HL the award was given before Kuwait became party to the New York Convention recognised by Order in Council in England. House of Lords held that though a foreign award could be enforced in England under the (U .K.) Arbitration Act, 1975 as when the F proceedings for enforcement of the award were initiated in England Kuwait had become party to the Convention. It n'egatived the contention that on the date the award was given Kuwait was not party to the New York Convention.

"The days have long passed when the courts adopted a strict H constructionist view of interpretation which required them to adopt

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.] 507

the literal meaning of the language. The courts now adopt a A purposive approach which seeks to give effect to the true purpose of legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted."

B But then if the construction of the new Act leads to inconvenient and unjust results, the concept of purposive approach has to be shed. Multiple and complex problems would arise if the award given under the old Act is said to be enforced under the new Act. Both the Acts are vastly different to each other. It has been rightly contended that when arbitration proceedings are held under the old Act, the parties and the arbitrator keep in view the c provisions of that Act for the·enforcement of the award. As noted above, under the old Act, there is no requirement for the arbitrator to give reasons for the award. That is not mandatory under the new Act. Section 27 of the old Act provides that arbitrator or umpire may, if they think fit, make an interim award, unless of course different intention appears from the ar- D bitration agreement. Interim award is also an award and can be enforced in the same way as the final award. It would certainly be a paradoxical situation if for the interim award, though given after the coming into force of the new Act, it would still be the old Act which would apply and for the final award, it would be the new Act. Yet another instance would be when under Section 13 of the old Act, the arbitrators or umpire have power to state a special case for the opinion of the Court on any question of law involved in the proceedings. Under sub- section (3) of Section 14 of the old Act when the Court pronounces its opinion thereon such opinion shall be added to and shall form part of the award. From this part of the award no appeal is maintainable under Section 39 of the old Act. There is no such provision under the new Act. In Sohan Lal & Ors. v. Amin Chand and Sons & Ors., [1974] 1 SCR 453. This Court was considering the powers of arbitrator under Section 13 of the old Act. Clause (b) of Section 13 provided that arbitrators or umpire shall have power to state a special case for the opinion of the court on any question of law involved, or state the award, wholly or in part, in the form of a special case of such question for the opinion of the court. Section 14 of the old Act provides for the award to be signed and filed. Under sub-section (3) of Section 14 where the arbitrators or umpire state a special case under clause (b) of Section 13, the court, after giving notice to the parties and hearing them, shall pronounce its opinion thereon and such opinion shall be added to, and H

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A shall form part of, the award. This Court said :

"We do not think that an opinion given under the first part of s. 13(b) should be added to and form part of the award. The reason why the opinion given under the latter part of s. 13(b) should be added to and becomes part of the award is because the arbitrators B have stated the award wholly or in part in the form of a special case of such question for the 'opinion of the court. This view is further strengthened by the circumstance. that under s. 39(1)(ii), an appeal is provided only against an order on an award stated in the form of a special case. The reason why an appeal is provided c for in such a case is that the opinion of the court has to be added to and form part of the award and it therefore becomes a decision of the court, notwithstanding the fact that it is incorporated in the award. There is no provision for an appeal against an opinion given by the court on a special case stated to the court under the first part of s.13(b) or against the decision to state a special case for D the opinion of the court for the reason that the opinion is not a decision. Nor is it to be incorporated in the award. If, as a matter of fact, the opinion given by the court on a special case stated .. under first part of s.13(b) is binding on the arbitrators and has to be incorporated in the award, there was no reason why the legis- E lature should not have provided for an appeal against the opinion or against the reference which led to the opinion. The scheme of the Act shows that the legislature wanted to provide for an appeal only when there is to be a decision by the court binding on the parties, not when it tenders an opinion which is not binding on the arbitrators and which is not to be incorporated .in the award. It F might be that the arbitrator may choose to act upon the opinion. But that is not for the reason that it is a binding determination or a decision. We have, therefore, no hesitation in holding that the appeals are incompetent."

G Section 85(2)(a) is the saving clause. It exempts the old Act from complete obliteration so far as pending arbitration proceedings are con- cerned. That would include saving of whole of the old Act uptill the time of the enforcement of the award. This Section 85(2)(a) prevents the accrued right under the old Act froin being affected. Saving provision H preserves the existing right accrued under the old Act. There is a presump-

THYSSEN STAHLUNION GMBHv. STEEL AUTHORITY OF IND!AfD.P. WADHWA, J.) 509

tion that Legislature does not intend to limit or take .away vested rights A . unless the language clearly points to the contrary. It is correct that the new Act is a remedial statute and, therefore, Section 85(2)(a) calls for strict construction, it being a repealing provision. But then as stated above 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. B

Enforcement of the award, therefore, has to be examined on the touchstone of the proceedings held under the old Act.

- Various decisions have been cited before us to show as to what is a C mere right and what is right accrued or acquired. We have to examine this question with reference to the provisions of Section 6 of the General Clauses Act if it could be said that when the arbitral proceedings have commenced under the old Act, a party has acquired a right to have the award given thereafter enforced under the old Act. The question that arises for consideration is if a right has accrued to the party or it is merely an inchoate right. The three cases referred to, namely, Abbott v. The Minister for Lands, (1895) AC 425 PC; Hungerfort Investment Trnst Ltd. v. Haridas Mundhra & Ors., [1972] 3 SCR 690 and D.C. Bhatia & Ors. v. Union of India & Anr., [1995] 1 SCC 104 show that something more is required for vested right to accrue. Right did exist but then nothing was done to show that any act was done or advantage taken of the enactment under which the right existed till it was repealed. An Act gave the right and the new Act which repealed the old Act took away that right. Mere right to take advantage of the provision of an Act is not a right accrued.

In I. T. Commissioner v. Shah Sadiq & Sons, [1987] 3 SCC 516 this F Court said that right which had accrued and had become 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. In the case of Bansidhar & Ors. v. State of Rajasthan & Ors., [1989] 2 SCC 557 this Court had said that what G is unaffected by the repeal is a right "acquired" or "accrued" under the repealed statute and not "a mere hope or expectation" of acquiring a right or liberty to apply for a right. In the case of Lalji Raja Sons v. Finn Hansraj Nathuram, [1971] 1 SCC 721 this Court had said that "a provision to preserve the right accrued under a repealed Act was not . intended to H

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A 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 spesified in statute." We think the observations of Lord · Morris in Director of Public Works v. Ho Po Sang, (1961) 2 ALL E.R. 721 are quite apt which have been quoted elsewhere in the judgment. In M.S. B Shivanda v. K.S.R. T.C., (1980] 1 SCC 149 this Court again said that if the right created by the statute is of an enduring character and has vested in the person, the right cannot be taken away because the statute by which it · was created has expired. In Hemilton Gell v. White, [1922) 2 KB 422 Court of Appeal referred to the decision of the House of Lords in Abbott v. C Minister for Lands, (1895) A.C. 425. In the case before it, the Court said that under the old Act (the Agricultural Holdings Act, 1908) which was repealed by the Agricultural Holdings Act, 1914 necessary event had happened under which the tenant "acquired a right" which would accrue when he was quitting his holding to receive compensation from the D landlord. The event which occurred was the notice by the landlord to quit to the tenant in view of a $ale of the holding. While Section 11 of the 1908 Act treated this as unreasonable disturbance to the tenant entitling him to compensation, the latter Act of 1914 repealed Section lL The Court held that in spite of the repeal of Section 11 tenant had acquired right to claim compensation inasmuch as notice to quit was given to him when Section E 11 of the old Act was in operation. In Gajraj Singh & Ors. v. State Transport Appellate Tribunal & Ors., [1997] 1 SCC 650 this Court said that some positive Act is required to be done for the right to accrue under enactment which is repealed. In this case reference was made to a decision of this Court in Gujarat Electricity Board v. Shanti/al R. Desai, AIR (1969) SC 239 F = (1969) l SCR 580 where the Court had pointed out that before Section 71 of the Electricity (Supply) Act, 1948 was amended, the appellant had issued a notice under Section 7 thereof, exercising the option to purchase the undertaking. It was held that a right to purchase the electrical undertaking, which had accrued to the Electricity Board, was saved by G Section 6 of the General Clauses Act. In the case of G. Ekambarappa & Ors. v. Excess Profits Tax Officer, Bellar;', [1967] 3 SCR 864 there was repeal of an enactment levying tax. No assessment had been made by the time the . Act was repealed and there could, therefore, be no liability. Nevertheless, this Court said that liability to tax arose immediately at the end of the accounting period when the Act was in force though the liability had not

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.l 511

been quantified by assessment proceedings. The Court upheld validity of the notice for assessment of proceedings after the repeal of the Act.

Principles enunciated in the judgments show as to when a right accrues to a party under the repealed Act. It is not necessary that for the right to accrue that legal proceedings must be pending when the new Act B comes into force. To have the award enforced when arbitral proceedings commenced under the old Act under that very Act is certainly an accrued· right. Consequences for the parties against whom award is given after arbitral proceedings have been held under the old Act though given after the coming intQ force of the new Act, would be quite grave if it is debarred from challenging the award under the provisions of the old Act. Structure C of both the Acts is different. When arbitral proceedings commenced under the old Act it would be in the mind of everybody, i.e., arbitrators and the parties that the award given should not fall foul of Sections 30 and 32 of the old Act. Nobody at that time could have thought that Section 30 of the old Act could be substituted by Section 34 of the new Act. As a matter of fact appellant Thyssen in Civil Appeal No. 6036/98 itself understood that the old Act would apply when it approached the High Court under Sections 14 and 17 of the old Act for making the award rule of the Court. It was only later on that it changed the stand and now took the position that new Act would apply arid for that purpose filed an application for execution of the award. By that time limitation to set aside the award under the new Act had elapsed. Appellant itself led the respondent SAIL in believing that the old Act would apply. SAIL had filed objections to the award under Section 30 of the old Act after notice for filing of the award was received by it on the application filed by the Thyssen under Sections 14 and 17 of the old Act. We have been informed that numerous such p matters are pending all over the country where the award in similar circumstances is sought to be enforced or set aside under the provisions of the old Act. We, therefore, cannot adopt a construction which would lead to such anomalous situations where the party seeking to have the award set aside finds himself without any remedy. We are, therefore, of the opinion that it would be the provisions of the old Act that would apply to G the enforcement of the award in the case of Civil Appeal No. 6036 of 1998. Any other construction on the Section 85(2)(a) would only lead to the confusion and hardship. This construction put by us is consistent with the wording of Section 85(2)(a) using the terms "provision" and "in relation to arbitral proceedings" which would mean that once the arbitral proceedings H

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A commenced under the old Act it would be the old Act which would apply for enforcing the award as well.

Because of the view of Section 85(2)(a) of the new Act which we have taken, it is not necessary for us to consider difference in the repealing provisions as contained in Section 48 of the old Act and Section 85 of the new Act. We may, however, note that under Section 48 of the old Act concept is of "reference" while under the new Act it is "commencement''. Section 2(e) of the old Act defines "reference". Then under Section 48 the word used is "to", and under Section 85(2)(a) the expression is "in relation to". It, therefore, also appears that it is not quite relevant'to consider the provision of Section 48 of the old Act to interpret Section 85(2)(a).

In Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Others, [1953) SCR 987, this Court said that pre-existing right of appeal is not destroyed by the amendment if the amendment is not retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. In this case, law had changed and the appellate authority could exercise jurisdiction only if the appeal was ac- companied by the deposit of the assessed tax when before the amendment of the provision it only provided for deposit of admitted tax. The Court said that any requirement for deposit of the assessed tax overlooks the fact of existence of the old law for the purpose of supporting the pre-existing right where appeal could be filed only on depositing the admitted amount of tax. The law interpreted by this Court in this judgment, it seems, is to what Civil Procedure Code (Amendment) Act provided by clause (m) of Section 97 of the Code of Civil Procedure (Amendment) Act.

Parties can agree to the applicability of the new Act even before the new Act comes into force and when the old Act is still holding the field. G There is nothing in the language of Section 85(2)(a) which bars the parties from so agreeing. There is, however, a bar that they cannot agree to the applicability of the old Act after the new Act has come into force when arbitral proceedings under the old Act have not commenced though the arbitral agreement was under the old Act. Arbitration clause in the con- tract in the case of Rani Constructions (Civil Appeal 61 of 1999) uses the expression "for the time being in force" meaning thereby that provision of

= THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA, J.) 513

that Act would apply to the arbitration proceedings which will be in force at the relevant time when arbitration proceedings are held. We have been referred to two decisions - one of Bombay High Court and the other of Madhya Pradesh High Court on the interpretation of the expression ''for the time being in force" and we agree with them that the expression aforementioned not only refers to the law in force at the time the arbitra- tion agreement was entered into but also to any law that may be in force for the conduct of arbitration proceedings, which would also include the enforcement of the award as well. Expression "unless otherwise agreed" as appearing in Section 85(2)( a) of the new Act would clearly apply in the case of Rani Construction in Civil Appeal No. 61 of 1999. Parties were clear in their minds that it would be the old Act or any statutory modifica- c tion or re-enactment of that Act which would govern the arbitration. We accept the submission of the appellant Rani Construction that parties could anticipate that the new enactment may come into operation at the time the disputes arise. We have seen Section 28 of the Contract Act. It is difficult for us to comprehend that arbitration agreement could be said to be in restraint of legal proceedings. There is no substance in the submission of respondent that parties could not have agreed to the application of the new Act till they knew the provisions thereof and that would mean that any such agreement as mentioned in the arbitration clause could be entered into only after the new Act had come into force. When the agreement uses the expressions "unless otherwise agreed" and "law in force" it does give option to the parties to agree that new Act would apply to the pending arbitration proceedings. That agreement can be entered into even before the new Act comes into force and it cannot be said that agreement has to be entered into only after coming into force of the new Act. F Mr. Desai had referred to a decision of the Bombay High Court (Goa Bench), rendered by single Judge in Reshma Constructions v. State of Goa, (1999) 1 MU 462. In that case arbitration clause in the contract provided as under :

"Subject as aforesaid, the provisions of the Arbitration Act, 1940 G or any statutory modification or re- enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause."

The Court held that these terms in the clause disclosed that the H

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A parties had agreed to be governed by the law which was in force at the time of execution of the arbitration agreement as well as by any further statutory changes that may be brought about in such law. This is how the High Court considered the issue before it :

"Considering the scheme of the Act, harmonious reading of the B said provision contained in sub-section (2) of Sec. 85 thereof would disclose that the reference "otherwise agreed" necessarily refers to the intention of the parties as regards the procedure to be followed in the matter of arbitration proceedings and not to the time factor as regards execution of the agreements. It provides that c though the law provides that the provisions of the old Act would continue to apply to the pending proceedings by virtue of the said saving clause in Sec. 85, it simultaneously provides that the parties can agree to the contrary. Such a provision leaving it to the discretion of the parties to the proceedings to decide about the procedure to be followed - other in terms of the new Act or the old Act - is certainly in consonance with the scheme of the Act, whereunder most of the provisions of the new Act, the procedure regarding various stages of the arbitration proceedings is made subject to the agreement to the contrary between the parties, thereby giving ample freedom to the parties to decide about the procedure to be followed in such proceedings; being so, it is but natural that the legislature in its wisdom has left it to the option of the parties in the pending proceedings to choose the procedure for such pending proceedings. The reference "otherwise agreed by the parties" .in Sec. 85(2)(c) of the new Act, therefore, would include an agreement already entered into between the parties even prior to enforcement of the new Act as also the agreement entered into after enforcement of the new Act. Such a conclusion is but natural since the expression "otherwise agreed" do not refer to the time factor but refers to the intention of the parties regarding G ·-... applicability of the provisions of the new or old Act."

We agree with the High Court on interpretation put to the arbitration clause in the contract.

H Section 28 of.the Contract Act contains provJS1on regarding

THYSSEN STAHLUNION GMBHv. STEEL AUTHORITY OF INDIA(D.P. WADHWA,1.J 515

agreements in the restraint of legal proceedings. Exception 1 to Section 28 A 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 the arbitral proceedings. It is not necessary for the parties to know what law will be in force at the time of the conduct of B arbitration proceedings. They can always agree that provisions that are in force at the relevant time would apply. In this view of the matter, if the parties have agreed that at the relevant time provisions of law as existing at that time would apply, there cannot be any objection to that. Thus construing the clause 25, in Rani Constructions (CA 61/99) new Act will apply. c

Foreign Awards Act gives the party right to enforce the foreign award under that Act. But before that right is exercised Foreign Awards Act has been repealed. It cannot, therefore, be said that any right had accrued to the party for him to claim to enforce the foreign award under D the Foreign Awards Act. 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 whether it is a New York Convention Award or Geneva Convention Award. It is irrespec- tive of the fact when the arbitral proceedings commenced in a foreign jurisdiction. Since no right has accrued Section 6 of the General Clauses E Act would not apply.

. In the very natural of the provisions of Foreign Awards Act it is not possible to agree to the submissions that Section 85(2)(a) of the new Act would keep that Act alive for the purpose of enforcement of a foreign F award given after the date of commencell(ent of the new Act though arbitral proceedings in foreign land had commenced prior to that. It is correct that Section 85(2)(a) uses the words "the said enactments" which would include all the three Acts, i.e., the old Act, Foreign Awards Act and the Arbitration (Protocol and Convention) Act, 1937. Foreign Awards Act G and even the 1937 Act contain provisions only for the enforcement of the foreign award and not for the arbitral proceedings. 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 provision for arbitral proceedings it is difficult to agree to the argument that in spite of that the applicability of the Foreign Awards Act is saved H

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

A by virtue of Section 85(2)(a). As a matter of fact if we examine the provisions of Foreign Awards Act and the new Act there is not much difference for the enforcement of the foreign award. Under the Foreign Awards Act when the court is satisfied that the foreign award is enforce- able under that Act the court shall order the award to be filed and shall proceed to pronounce judgment accordingly and upon the judgment so B pronounced a decree shall follow. Sections 7 and 8 of the Foreign Awards Act respectively prescribe the conditions for enforcement of a foreign award and the evidence to be produced by the party applying for its enforcement. Definition of foreign award is same in both the enactments. Sections 48 and 47 of the new Act correspond to Sections 7 and 8 C respectively of the Foreign Awards Act. While Section 49 of the new Act states that where the court is satisfied that the foreign award is enforceable under this Chapter (Chapter I, Part II, relating to New York Convention Awards) the award is deemed to be decree of that court. The only difference, therefore, appears to be that while under the Foreign Awards Act a decree follows, under the new Act foreign award is already stamped D as the decree. Thus if provisions of the Foreign Awards Act and the new Act relating to enforcement of the foreign award are juxtaposed there would appear to be hardly any difference.

Again a bare reading of the Foreign Awards Act and the Arbitration (Protocol and Convention) Act, 1937 would show that these two enact- E ments are concerned only with recognition and enforcement of the foreign awards and do not contain provisions for the conduct of arbitral proceed- ings which would, of necessity, have taken place in a foreign country. The provisions of Section 85(2)(a) in so far these apply to the Foreign Awards Act and .1937 Act, would appear to be quite superfluous. Literal interpreta- F tion would render Section 85(2)(a) unworkable. Section 85(2)(a) provides for a dividing line dependent on "commencement of arbitral proceedings" which expression would necessarily refer to Section 2110 of the new Act. This Court has relied on this Section as to when arbitral proceedings commence in the case of Shetty's Construction Co. P. Ltd. v. Konkan Railway Construction, [1998] 5 SCC 599. Section 2(2) 11 read with Section G 2(7) 12 and Section 21 falling in Part-I of the new Act make it clear that

10Copy pinpoint10. 21. Commencement of arbitra/ proceedings. - Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."

11Copy pinpoint11. "2(2) This Part shall apply where the place of arbitration is in India."

12Copy pinpoint12. "2(7) An arbitral award made under this Part shall be considered as a domestic award."

THYSSEN STAHLUNION GMBH v. STEEL AUTHORITY OF INDIA [D.P. WADHWA,J.] 517

these provisions would apply wh.en the place of arbitration is in India, i.e:, A only in domestic proceedings. There is no corresponding provision anywhere in the new Act with reference to foreign arbitral proceedings to hold as to what is to be treated as "date of commencement" in those foreign proceedings. We would, therefore, hold that on proper construc- tion of Section 85(2)(a) the provision of this sub- section must be confined to the old Act only. Once having held so it could be said that Section 6 of B the General Clauses Act would come into play and foreign award would be enforced under the Foreign Awards Act. But then it is quite apparent that a different intention does appear that there is no right that could be said to have been acquired by a party when arbitral proceedings are held in a place resulting in a foreign award to have that award enforced under ·c the Foreign Awards Act.

We, therefore, hold that the award given on September 24, 1997 in the case of Thyssen Stahlunion GMBH v. St(!el Authority of India Ltd., (Civil Appeal No. 6036 of 1998) when the arbitral proceedings commenced before the Arbitration and Conciliation Act, 1996 came into force on 22nd D August 1996, would be enforced under the provisions of Arbitration Act,

1940. We also hold that clause 25 containing the arbitration agreement in the case of M/s. Rani Constrnctions Pvt. Ltd. v. Himachal Pradesh State Electricity Board, Civil Appeal No. 61 of 1999 does admit of interpretation that the case is governed by the provisions of the Arbitration and Concilia- tion Act, 1996. We further hold that the foreign award given in the case of E Western Shipbreaking Corporation v. M/s. Clareheaven Ltd., (Civil Appeal No. 4928 of 1997) would be governed by the provisions of the. Arbitration and Conciliation Act, 1996. Thus we affirm the decisions of the Delhi High Court in Execution Petition No. 47 of 1998 and of the Gujarat High Court in Civil Revision Application No. 99 of 1997, and set aside that of F Himachal Pradesh High Court in Civil Suit No. 52 of 1996.

Accordingly Civil Appeal Nos. 6036 of 1998 and 4928 of 1997 are dismissed, while Civil Appeal No. 61 of 1999 is allowed. Parties shall bear their own costs. G M.P. C.A. No. 6036/98 and C.A. No. 4928/97 dismissed. C.A. No. 61/99 allowed.