U.P. STATE SUGAR CORPN. LTD. versus JAIN CONSTRUCTION CO. AND ANR.

Citation: [2004] SUPP. 3 S.C.R. 826 · Decided: 25-08-2004 · Supreme Court of India · Bench: N. SANTOSH HEGDE · Disposal: Leave Granted & Allowed

Judgment (excerpt)

A 
B 
U.P. STATE SUGAR CORPN. LTD. 
V. 
JAIN CONSTRUCTION CO. AND ANR. 
AUGUST 25, 2004 
[N. SANTOSH HEGDE AND S.B. SINHA, JJ.) 
Arbitration Act, 1940-Sections 20 and 39(iv)-Arbitration and 
Conciliation Act, 1996-Sections 21 and 85(2)(a)-Application for 
C appointment of arbitrator in terms of arbitration clause in case of dispute 
between parties-Trial Court holding thatfirm being unregistered as such 
application not maintainable even though applicant firm filed amendment 
application with regard to the same-High Court holding that since 1996 
Act has come into force parties to relegate under the new Act-On appeal 
held : Since the arbitral proceedings commenced before coming into force 
D of the 1996 Act, provisions of 1940 Act applicable and matter remitted to 
High Court-Furthermore firm must be registered at the time of the 
institution of the suit and not later-Also, the High Court is to consider 
the correctness of the order passed by trial court-Partnership Act, 1932-
Section 69. 
E 
Appellant-State Sugar Corporation and respondent-construction 
company entered into a contract. Dispute arose between the parties but 
the appellant did not appoint any arbitrator as per the arbitration 
clause in the contract. Respondent filed application under section 20 
F of the Arbitration Act, 1940. Civil Judge held it to be not maintainable 
as the respondent firm was not registered even though the respondent 
had admitted that it failed to make necessary averment in the plaint 
as regard registration of the firm inadvertently and had filed an 
application for amendment of the petition. Respondent then filed an 
appeal. High Court allowed the appeal directing that since the 
G Arbitration and Conciliation Act, 1996 has come into force, parties are 
to relegate under the new Act. Hence the present appeal. 
Appellant-State Sugar Corporation contended the application for 
appointment of an arbitrator was not maintainable under the 1940 Act 
H and the 1996 Act as the respondent firm was not registered; and that 
826 
U.P. STATE SUGAR CORPN. LTD. v. JAIN CONSTRUCTION CO. 827 
in any event, the impugned judgment is unsustainable in law as the A 
arbitral proceeding was initiated prior to coming into force of the 1996 
Act. 
Respondent-firm contended that in a similar matter this Court 
directed the trial court to appoint an arbitrator in terms of arbitration B 
clause of the contract between the parties, on remitting the matter, and 
as such there being a similar stipulation in the instant case, it must be 
acted upon. 
Allowing the appeal, the Court 
c 
HELD : I. I. In the event it is found by the High Court that the 
Civil Judge was wrong in rejecting the application for amendment of 
the plaint and in fact the respondent-firm was registered under the 
Partnership Act, the question of throwing out the said suit on that 
ground would not arise. High Court would consider these questions. D 
Further, it is true that the arbitral proceedings would not be 
maintainable at the instance of an unregistered firm having regard to 
the mandatory provisions contained in Section 69 of the Partnership 
Act, 1932. The firm must be registered at the time of institution of the 
suit and not later. [830-F-G] 
E 
Delhi Development Authority v. Kochhar Construction Work and 
Anr., (1998] 8 SCC 559, relied on. 
Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., AIR (1964) F 
SC 1882 and Firm Ashok Traders and Anr. v. Gurumukh Das Saluja and 
Ors., [2004] 3 SCC 155, referred to. 
1.2. Disputes and differences between the parties arose in the year 
1991 and the respondent filed an application under Section 20 of the 
Arbitration Act, 1940 in the same year. It invoked the arbitration G 
clause in the agreement. The arbitral proceeding was set in motion. In 
terms of Section 21 of the Arbitration and Conciliation Act, 1996 the 
arbitral proceedings in respect of a particular dispute commences on 
a date on which the request for that dispute to be referred to 
arbitration was received by the respondent. Therefore, in respect of the H 
828 
SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R. 
A arbitral proceedings commenced before coming into force of the 1996 
Act, the provisions of the 1940 Act would apply. Hence, the matter is 
remitted to High Court for afresh consideration. [831-A-B; 832-A-B] 
Milkfood Ltd. v. Mis. GMC Ice Cream (P) Ltd. , JT (2004) 4 SC 393, 
B relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5479 of 
2004. 
C 
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