Birth of India's first Legislative Council
The first Legislative Council for India was formed in 1834, accompanied by the First Indian Arbitration Act on 01 July 1899. It came into power and said act was based on the British Arbitration Act, 1889 however the utilization of the Indian Arbitration Act was limited distinctly to the presidency towns' i.e Calcutta, Bombay, and Madras. An interesting feature of the Act was that the names of the arbitrators were to be mentioned in the agreement, the arbitrator by then can also be a sitting judge, as was in Nusserwanjee Pestonjee and Ors. v. Meer Mynoodeen Khan Wullud Meer Sudroodeen Khan Bahadoor. In the case of Gajendra Singh versus Durga Kunwar it was seen that the Award as went into the arbitration is nothing but a compromise between the parties. In Dinkarrai Lakshmiprasad versus Yeshwantrai Hariprasad, the Hon'ble High Court saw that the said Indian Arbitration Act, 1889 was extremely complex, bulky and required changes.
Arbitration Act 1940 – Unveiling Controversies
Under the British Regime a more explicit arbitration act was authorized on 11 March 1940, which came into power on 01 July 1940. named as 'The Arbitration Act, 1940'. It was applicable to the whole of India (counting Pakistan, Baluchistan). The same was altered vide an ordinance, post Independence.
The Act of 1940, was referred to numerous disputes yet the same was additionally under numerous criticism. In some of the cases, it was seen that the Arbitration Act, 1940, recognizes an application for setting aside an award and one for a decision that the award is a nullity. This implies that it doesn't lawfully exist and contemplates that an application for setting aside an award might be made under Section 30 and an application of that award is a nullity under Section 33. Further, it was also observed that the said act fails in perceiving that the arbitration will fail in the event of non-existence and invalidity of an arbitration agreement.
The Act was silent about the weaknesses characteristic in individual private contracts. The guidelines provided for filing awards contrasted with from one High Court to another. The absence of provisions restricting an arbitrator or umpire from resigning whenever over the span of the arbitration proceedings exposed the parties to heavy losses, particularly where the arbitrators or umpire acted mala fide. It was also observed that if an arbitrator delegated by the Court dies during the arbitration proceedings, there were no other provisions in the said Act for the appointment of a new arbitrator, which was also seen as a major flaw in the 1940 Act. Another worry in the act was that the Marginal Notes were not viewed as a component of an Act