MILK FOOD LTD. versus M/S. GMC ICE CREAM (P) LTD.

Citation: [2004] 3 S.C.R. 854 · Decided: 05-04-2004 · Supreme Court of India · Bench: V.N. KHARE

Cited by 7 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
MILK FOOD LTD. 
v. 
MIS. GMC ICE CREAM (P) LTD. 
APRIL 5, 2004 
B 
[V.N. KHARE, CJ., S.B. SINHA AND S.H. KAPADIA, JJ.] 
Arbitration Act, 1940; Sections 3, 8, 33, 34, 37(3)/Arbilralion and 
Conciliation Act, 1996; Sections 21, 43 (I) & (2) and 85/limilalion Act, 1963. 
C 
Agreement between the Supplier and the Manufacturer-Arbitration 
Clause-Dispute-Sui I for permanent injunction filed by the manufacturer-
App/ication for stay of suit filed by the supplier-Al/owing the application, 
trial Court stayed the suit directing lo refer the dispute to Arbitrator-Appeal 
dismissed by first appellate Court-On revision, High Court referred the dispute 
D to Arbitral Tribunal-Arbitration proceedings initiated by Tribunal as per 
provisions of 1996 Ae1-Challenged by the supplier on ground that 1940 Act 
H'as applicable-Rejected by the Tribunal holding that 1996 Act was rightly 
applied-High Court holding that since the disputes were referred to arbitration 
when new Act already came into force and both the parties gave clear consent 
to refer the matter to Arbitrator, new Act could be applied 
E 
Held Per majority: 
Commencement of arbitration proceeding depends upon terms of the 
agreement/various factors/purposes ii seeks lo achieve-Issuance of no/ice is 
necesswy under both the Acts for invoking provision of law for arbitration of 
F dispute-Notice has to be interpreted broadly-A Notice of Arbitration is the 
first essential step towards making of appointment of Arbitrator/Arbitrators-
Their appointment by the Court not mandato1y-Service of Notice by one 
party to another for appointment of an Arbitrator indicative of deemed 
commencement of arbitration proceeding/or the purpose of/imitation-Hence, 
G notice for appointment of an Arbitrator/Arbitrators would be relevant for 
determining commencement of the arbitration proceeding-However, change 
in constitution of the arbitral Tribunal irrelevant-Repealing provisions under 
the 1996 Act makes 1940 Act applicable in respect of the arbitral proceeding 
commenced le/ore the new Act came into force-Since arbitral proceedings 
already commenced, procedure laid down under the old Act would be 
H 
854 
) 
J. 
( 
'r 
MILK FOOD LTD. v. GMC ICE CREAM (P) LTD. 
855 
applicable-However. since the proceeding before the Arbitrators not stayed A 
and they had entered into 1he reference, proceedings need not be re-opened-
Arbitrators may proceed to give award-Parties may proceed in terms of the 
old Act after filing of the Award in the Cou;·t. 
Arbitration agreement-Invoking of-It may be invoked by a party 
to a dispute not exclusively by claimant. 
Commencemenl of an arbitration proceeding-Meaning of-Section 21 
must be read with Section 85(2)(a) of the New Act to construe its meaning-
construing so service of notice for appointment of Arbitrator/Arbitrators 
determines the commencement of arbitral proceeding. 
Words and Phrases: 
'Commencement of an arbitration proceeding' and 'Commencement of 
proceeding before an Arbitrator-Distinction between-Discussed. 
Held: Per minority: 
Construcrion of transitional provisions under Section 85(2)(a) of the 
new Act must depend upon its own terms-Not to be cons/rued on the basis 
B 
c 
D 
of provision under Section 21 of the Act-Notice to concur is an essential 
step-However, date of constitution of arbitral tribunal and charging them 
with authority would determine commencement of arbilral proceedings-Since E 
for all practical purposes arbitration proceeding commenced when the 1996 
Act came into force, the proceedings would be governed by the provisions of 
the 1996 Act. 
Words and Phrases: 
'Reference' as under Section 48 of the 1940 Act, vis-a-vis 
'commencement' as per Section_ 85(2)(a) of 1996 Act-Meaning of in the 
context of Section 21 of the 1996 Act-Discussed. 
F 
The question which arose for consideration in these appeals was as G 
to whether the provisions of Arbitration Act, 194.0 or the Arbitration and 
Conciliation Act, 1996 would apply to the facts and circumstances of the 
cases and in this connection interpretation of certain provisions of the Acts 
was also required to be examined by this Court. 
It was contended by the appellant-supplier that since the notice H 
856 
SUPREME COURT REPORTS 
[2004] 3 S.C.R. 
A appointing the arbitrators had been served upon the respondent and in 
terms thereof arbitration proceeding commenced before the new Act came 
into force, the 1940 Act would be applicable; and that meaning of the 
expressio

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