B.L. Grover vs Union of India and others

Sultan Singh, J.—This is a petition u/s 20 of the Arbitration Act for filing of arbitration agreement and appointment of an arbitrator. The Plaintiff entered into contract with the defendants for the execution of the work of "Construction of Delhi Side approach on Mai Mathura Road near Bhogal" and agreement No. SEDS/64 of 1956-57 was executed between the parties. The contract contained arbitration clause No. 25 under which it is provided that the disputes shall be referred to the Chief Engineer, Central Public Works Department and if he is unable or unwilling to act, to the sole arbitration of some other person to be appointed by him. Disputes arose between the parties and the plaintiff vide his letter dated 14th June, 1961 invoked the arbitration clause and required the defendants to appoint an arbitrator for adjudication of thirteen disputes detailed therein (Annexure B) to the petition. The Chief Engineer, vide letter dated 26th October, 1961 (Annexure-C) appointed an arbitrator to decide the disputes mentioned by the plaintiff except the disputes at items Nos. 10, 11, 12 (a), 12 (b), 12 (c) and 13 of Annexure-B, There was prosecution of the plaintiff and some officers of the department. The plaintiff was acquitted finally by this court on or about 30th May, 1975 as per judgment of V.D. Misra J. The arbitrator in the meantime had resigned, and no progress could be made in the proceeding before the arbitrator as all records of the case were lying with police. After his acquittal the plaintiff sought the appointment of an arbitrator and also the reference of other disputes which came to his light subsequently. He submitted 19 disputes as per his letter dated 24th August, 1976 (Annexure-L) including the disputes already submitted previously. The Chief Engineer, by letter dated 29th October, 1977 (Annexure-N) appointed Km. K.P. Sarojini Arbitrator, Ministry of Works & Housing, New Delhi, as sole arbitrator to decide and make award with respect to nine claims only. The plaintiff by this petition prays that the defendants be directed to file the arbitration agreement and that the Chief Engineer defendant No. 4 be directed to refer all the 19 disputes as detailed in the plaintiff''s letter dated 24th August, 1976 (Annexure-L) to the petition superseding the statement which he has sent to the arbitrator with his letter dated 29th October, 1977 (Annexure-N).

The defendants in their reply plead that the arbitrator had already entered on the reference and, therefore, the application u/s 20 of the Arbitration Act is not maintainable, that additional disputes raised by the plaintiff are barred by time and that thus the disputes are not referable to the arbitrator.

The following issues were framed on 6th of November, 1978:�

(1) Whether the disputes mentioned in Annexure to the plaintiff''s letter dated 24th August, 1976 to the Chief Engineer, P.W.D. New Delhi, are not referable to the arbitrator Miss. K. P. Sarojini, al ready appointed by the defendants?

(2) Relief.

The Plaintiff on 12-3-1979 filed an application (I.A. No. 805 of 1979) u/s 5 of the Limitation Act for condonation of delay in filing the petition u/s 20 of the Arbitration Act. The allegations are that certain disputes were referred to the arbitrator while the others were not referred by the Chief Engineer, that prosecution of the plaintiff ended and after his acquittal on 30-5-75 the plaintiff on 30-5-75 requested the defendants to appoint an arbitrator. The plaintiff prays that delay in filing petition u/s 20 of the Arbitration Act be condoned. The defendants in their reply plead that there is no sufficient cause for condonation of delay in filing the petition.

The learned counsel for the plaintiff submits that there was no period of limitation prescribed for filing of a petition u/s 20 of the Arbitration Act within the meaning of Limitation Act, 1908. In Mohd. Usman Military Contractor, Jhansi Vs. Union of India (UOI), Ministry of Defence, , the Supreme Court held that an application u/s 20 of the Arbitration Act was not covered by Article 181 of the Limitation Act and that the said article was restricted to application under the Code of Civil Procedure. In Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., it was again held that Article 137 of the Limitation Act, 1963 was confined to the applications under the Code of Civil Procedure.

In view of these authorities it was assumed and the plaintiff was under a bona fide impression that there was no period of limitation for filing an application u/s 20 of the Arbitration Act. In The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, , it was however held that Article 137, Limitation Act, 1963 applies to any petition or application filed under any Act. The Supreme Court differed with the view taken by it in Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., and held that Article 137 was not confined to applications contemplated by the CPC only. It was also observed that the interpretation given to Article 181 of the Limitation Act, 1908 was not applicable with regard to Article 137 of the Limitation Act, 1963.

In Municipal Corporation of Delhi v. Shah Construction Co., Suit No. 160A of 1976 by order dated 22nd December, 1978 it was held by this court that an application u/s 20 of the Arbitration Act is governed by Article 137 of the Limitation Act, which article prescribes a period of three years from the date when the right to apply accrues. In view of this state of authorities the plaintiff was justified in holding the bona fide impression that there was no period of limitation for the petition u/s 20 of the Arbitration Act. It was, therefore, only after the decision of this court announced on 22nd December, 1978 that the plaintiff realised that Article 137 of the Limitation Act would apply to a petition u/s 20 of the Arbitration Act. This state of affairs is a sufficient cause within the meaning of Section 5 of the Limitation Act and, therefore, I hold that there was sufficient cause for the plaintiff for not filing the petition u/s 20 of the Arbitration Act earlier. The petition u/s 20 of the Arbitration Act is, therefore, admitted beyond the period of limitation prescribed in Article 137 of the Limitation Act, 1963.

The contention of the learned counsel for the defendants is that the claims raised by the plaintiff are barred by time. The question whether the claims are within time is a matter for decision by the arbitrator and not by the court. The next contention of the learned counsel for the defendant is that the present petition u/s 20 of the Arbitration Act is not maintainable because the plaintiff has already taken proceedings under chapter II of the Arbitration Act meaning thereby that an arbitrator has already been appointed without intervention of the court and, therefore, no arbitrator can be appointed. It is correct that Km. K.P. Sarojini has already been appointed as an arbitrator by the Chief Engineer, Central Public Works Department but the disputes now sought to be referred were never referred to the said arbitrator at all. It cannot, therefore, be said that the plaintiff has taken any proceedings within the meaning of Chapter II of the Arbitration Act. The differences that have arisen between the parties have not already been referred to the arbitrator. S. 20 (1) of the Arbitration Act reads as under:�

Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in court.

In order to attract the provisions of Section 20 of the Arbitration Act the following conditions are necessary:�

(i) That the arbitration agreement must have been entered into before the institution of any suit, with respect to the subject-matter of the agreement or any part of it.

(ii) That a difference has arisen to which the agreement applies, and it sought to be referred.

(iii) That proceedings under Chapter II of the Act have not been started i.e. arbitrator has not been appointed without intervention of court for adjudication of such disputes.

It is admitted that the disputes which are now sought to be referred by the plaintiff have not been referred so far by the Chief Engineer, to any arbitrator and, therefore, it cannot be said that proceedings under Chapter II of the Arbitration Act have been taken. The learned counsel for the defendants has cited Ravu Venkata Surya Rao Vs. Ravu Venkata Rao and Others, and Mangal Prasad Vs. Lachhman Prasad, . The facts of these two authorities are not at all applicable to the facts of the present case. In both these authorities arbitrator had already been appointed outside court and the disputes were already referred to the arbitrator who for one reason or the other could not proceed with the arbitration and the aggrieved party sought appointment of arbitrator for reference of the same disputes for the second time.

Disputes which have been detailed in Annexure-L are the disputes relating to the contract and the work in question. They are all, it is admitted covered within the meaning of clause 25 of the Arbitration Clause. I, therefore, hold that all the disputes raised by the plaintiff are referable to arbitration. The disputes detailed in the reference letter dated 29th October, 1977 (Annexure-N) are already pending before the arbitrator. I, therefore, order that all the disputes mentioned in the plaintiff''s letter dated 24th August, 1976 (Annexure-L) excluding the disputes already pending before the arbitrator as detailed in (Annexure-N) shall be referred by the Chief Engineer defendant No. 4 to an arbitrator. The plaintiff''s counsel states that Kumari K.P. Sarojini arbitrator is not acting at present as such and, therefore, a new arbitrator is to be appointed. The Chief Engineer defendant No. 4 is, therefore, directed to appoint an arbitrator within two months from the date of this order referring all the disputes detailed in the plaintiff''s letter dated 24th August, 1976 (Annexure-L) to the petition but excluding the disputes which have already been referred by him as per his reference letter dated 29th October, 1977 (Annexure-N to the petition). Parties are left to bear their own costs. A copy of this order with copies of Annexure ''L'' including ''X'' and Annexure ''N'' be sent to the Chief Engineer, defendant No. 4.