TMI Blog1963 (4) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... er the laws of Belgium and carries on business as consulting and construction engineers at Brussels. The respondent Kamani Engineering Corporation Ltd--hereinafter called 'Kamani'--is a company registered under the Indian Companies Act, 1913. Kamani carries on business, amongst others, as an engineering concern. On April 22, 1959 Kamani entered into a 'Colloboration agreement with Traction whereby the latter undertook to provide to Kamani technical assistance for the construction of overhead railway electrification, tramway systems and trolley buses in India, Burma, Ceylon and/or Nepal. The agreement contained an arbitration clause in Articles X, which provided: All disputes arising in connection with this agreement during the period of the agreement or thereafter shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the Rules of the said International Chamber of Commerce. On September 1, 1961, Kamani instituted suit No. 296 of 1961 in the High Court of Judicature at Bombay on its original side, inter aria, for-- (1) a decree declaring that Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitration which shall appoint the third arbitrator. If the parties fail to agree on the number of arbitrators the Court of Arbitration shall appoint a sole arbitrator who shall choose the National Committee or Committees from which it shall request nominations. The sole arbitrators and third arbitrators must be nationals of countries other than those of the parties. If any challenge be made by one of the parties to the appointment of an arbitrator, the decision of the Court of Arbitration which is the sole Judge of the grounds of challenge, shall be final. On the death or refusal of an arbitrator to carry out his duties, or on resignation, the Court. of Arbitration if it appointed him, shall nominate another arbitrator in his place. Article 8 deals with initiation of arbitration proceedings. By Art. 13 it is provided that when the parties agree to submit their disputes to arbitration by the International Chamber of Commerce, they shall be deemed to submit to arbitration in accordance with the Rules and if a party raises a plea as to the existence or validity of the arbitration clause, if the Court of Arbitration is satisfied as to the prima facie existence of such a clause, it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Arbitration. The Court of Arbitration may lay down modifications as to its form and if need be draw the arbitrator's attention even to points connected with the merits of the case. and no award shall under any circumstances be issued until approved as to its form by the Court of Arbitration.. Articles 27 and 28 deal with the pronouncement and notification of the award. By Art. 28 the award is made final, it being undertaken by the parties that the award shall be carried out without delay, the parties having waived their right to any form of appeal, in so far as such waiver may be valid. By Art. 30 the award is required to be deposited with the Secretariat of the Court of Arbitration. This is followed by a general rule which states that in circumstances not specifically provided for, the Court of Arbitration and the arbitrator shall act on the basis of the rules and make their best efforts for the award to be enforceable at law. The scheme of arbitration contemplated by these Rules is different from the scheme contemplated by ss. 3 to 38 of the Arbitration Act. Some of the striking provisions of the Rules are the power of the Court of Arbitration to appoint arbitrato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Company to agree to refer differences to arbitration only in accordance with the provisions of the Indian Arbitration Act, 1940 i.e. if the Company desires to refer a dispute to arbitration under the Arbitration Act, 1940, it may do so, but the power to submit to arbitration being an (1) Appeal No. 63 of 1959 decided on September 22, 1960. (Unreported.) incident of the power to enter into contracts for the purpose of carrying on its business, is unrestricted, and that sub-s. (3) of s. 389 applies not to consensual arbitrations but only to statutory arbitrations in parsuance of the Companies Act, e.g. arbitrations under s. 494 (3) (b) of the companies Act 1956. It cannot be disputed that the use of the expression 'may' is not decisive. Having regard to the context, the expression 'may' used in a statute has varying significance. In some contexts it is purely permissive, in others, it may confer a power and make it obligatory upon the person invested with the, power to exercise it as laid down. A company under the Indian Companies Act is entitled to enter into contracts for all such purposes as are by its constitution within its competence. It is invested wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll arbitrations to which a company is a party: it is not restricted to mere statutory arbitrations to which a company is obliged to submit by virtue of the provisions of the Companies Act. To invest sub-s. (3) with a restricted meaning, is to make it redundant. The only provision of the Companies Act which compels a company to go to arbitration in respect of a dispute is s. 494 (3) (b). By that clause a member of a transferor company in voluntary liquidation expressing dissent against an arrangement relating to the acceptance of shares, policies or other interest or participation in profits in the transferee company in consideration of the business of the former may require the liquidator to purchase his interest at a price to be determined by agreement or by arbitration in the manner provided by s. 494, and sub-s. (6) expressly makes the provisions of the Arbitration Act applicable to such arbitration. It may be observed that the words other than those restricting the application of that Act in sub-s. (6) have no meaning. They have been merely copied from s. 208C of the Companies Act of 1913, in which they survived by some inadvertance, even after the repeal of the Arbitration A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; Sections 506 to 522 dealt with arbitration in a pending suit. If all the parties to a suit desired that any matter in difference between them in the suit be referred to arbitration, they could, at any time before judgment was pronounced, apply to the Court for an order of reference. By s. 523 provision was made enabling the parties to an arbitration agreement to file it in Court and the Court if satisfied as to the existence of the arbitration agreement could make a reference to the arbitrator appointed by the parties or nominated by the Court and the provisions relating to arbitration in the earlier sections in so far as they related to or were consistent with the agreement applied. Section 525 enabled any person interested in the award made in a matter referred to arbitration without the intervention of a Court of Justice to file the same in Court and if no ground for setting aside the award was made out, the Court could order that the same be filed. Chapter XXXVII therefore dealt with arbitration generally--arbitration in pending proceedings, arbitrations pursuant to orders passed by the Court referring a dispute on an agreement filed in Court, and filing of awards made by ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Second Schedule applicable to all arbitrations other than those governed by the Indian Arbitration Act, 1899 or any other law for the time being in force. Therefore since the enactment of' the Code of Civil Procedure, 1908 all arbitrations out of Court where a company was a party had to be conducted in the manner provided by the Companies Act, 1882 but arbitrations during the pendency of a suit or references to arbitrations by filing an arbitration agreement could be made under the appropriate clauses of the Code of Civil procedure. The Indian Companies Act, 1882 was repealed by the Companies Act 7 of 1913. By s. 290 of that Act read with Schedule IV the Indian Companies Act of 1882 and the second proviso to s. 3 of the Indian Arbitration Act, 1899 were, repealed. The Indian Companies Act, 1913incorporated a new section 152 which by the first clause authorised a company by written agreement to refer to arbitration, m accordance with the Indian Arbitration Act, 1899, an existing or future difference between itself and any other company or person, and by the third subsection enacted that the provisions of the Indian Arbitration Act, 1899, other than those. restricting the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a written statement or taking any other steps in the proceedings, apply to the Court to stay the proceedings; and the Court, unless satisfied that the agreement of arbitration has become inoperative or cannot proceed, or that there is not m fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings. By this enactment an obligation in the conditions set out in s. 3 was imposed upon the Court, unless it was satisfied that the agreement of arbitration had become inoperative or could not proceed, to direct that the suit filed in any Court in India against any other party to the submission shall be stayed. This provision applied to all arbitration agreements whether a company was or was not a party thereto. This Act was followed by the Arbitration Act, X of 1940. The Act was enacted in the form of a complete code on the law of arbitration in India. All consensual arbitrations were governed by the Arbitration Act and by s. 46 the provisions of the Act, except sub-s (1) of s. 6 and ss. 7, 12, 36 and 37 were made applicable to every arbitration under any other enactment for the time being in force, as if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the debtor was attached. The debtor contended that the award and the decree by the Court were invalid, because arbitration .to which a company was a party had, in view of the provisions of s. 152 of the Indian Companies Act, to take place in accordance with the provisions of the Arbitration Act, 1899 and the award could only be filed in the Court of the District Judge and not in the Court of the Senior Subordinate Judge and therefore the proceedings in execution were ultra vires . The High Court held that s. 152 of the Indian Companies Act, 1913, enacted an enabling provision and did not make it obligatory upon the parties one of which was a company, to go to arbitration in accordance with the requirements of the Indian Arbitration Act, 1899. The provisions of s. 152 in the view of the Court being permissive, the Company could apply to have an award filed in Court under paragraph 21 (1) of Sch. II to the Code of Civil Procedure and the decree passed by the Senior Subordinate Judge was not a nullity as contended by the debtor. Bhide, J, who delivered the judgment of the Court observed that the general policy of the Legislature as disclosed by s. 152 of the Indian Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the Court and the Act had no application to arbitration relating to the subject- matter of a pending suit by the force and effect of s.152 I.L.R. (1940) 2 Cal.237 of the Indian Companies Act. The view expressed in Jhirighat Native Tea Company's Case (1), was approved by the Madras High Court in The Catholie Bank Ltd. Mangalore v.F.P.S. Albuquerque (2). In that case the Court held that after the enactment of.the Indian Companies Act, 1913 and before the Indian Arbitration Act, 1940, came into force, a company could submit difference. s to arbitration only under the provisions of the Indian Arbitration Act, 1899. and consequently Companies were (for the purpose of arbitration out of court) not governed by Sch. II of the Gode of Civil Procedure, All these cases arose under the Indian Arbitration Act, 1899 read with the Indian Companies Act, 1913, and the question mooted was whether the Subordinate Judge, who was approached on the assumption that Sch. II of the Code of Civil Procedure applied, was competent to pass a decree on an award made out of court, or to entertain a petition for filing such an award. In 1960 the Bombay High Court had occasion to consider the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration Act, 1940, applied to all arbitrations to which an Indian Company was a party. That however is not decisive of the question which falls to be determined before us. Section 47 of the Arbitration Act, 1940, is as much a part of the Indian Arbitration Act as any other provision and that section makes the provisions of the Arbitration Act applicable to all arbitrations and to all proceedings thereunder but subject to the provisions of s. 46 and save in so far as is otherwise provided by any law for the time being in force. We arc not concerned in the present case with a statutory arbitration. But by the use of the words save in so far as is otherwise provided by any law for the time being in force , the Legislature has clearly made the provisions of the Arbitration (Protocol and Convention) Act, 1937, applicable to consensual arbitrations under the Arbitration Act of 1940 when the conditions prescribed for the application of that Act are attracted, even if the scheme of arbitration recognised thereby is inconsistent with ss. 3 to 38 of the Arbitration Act, 1940. The Arbitration (Protocol and Convention) Act 6 of 1937 was enacted for giving effect to the protocol on arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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