Mangat Ram Chauhan and Sons vs The State of Himachal Pradesh Etc.

T.R. Handa, J.—The Petitioner is a firm of forest contractors and has made this application u/s 8 read with Section 20 of the Indian Arbitration Act praying for issue of directions to the Respondents to file the agreement of arbitration entered into between the parties in Court.

It is alleged that the Petitioner purchased a lot of forest trees in an open auction held on 15-1-1965 from the Himachal Pradesh Forest Department for Rs. 1,12,000/- and an agreement incorporating the terms of such sale was duly executed between the parties thereafter. Clause 29 of the said agreement provided that in the event of any dispute or difference arising between the parties, the same shall be referred for arbitration to the Deputy Commissioner, Sirmur or should he be unable or unwilling to act, to such Assistant as the said Deputy Commissioner, Sirmur shall appoint. The Petitioner carried out felling, conversion and carriage operations in the said forest after investing huge amounts and later carried the timber to Chhaila Depot. The Petitioner also paid Rs. 1,16,177.95 paise by way of cash payment and adjustment for the timber supplied to the various Government Departments by way of royalty. The Petitioner made several requests to the authorities concerned to allow him proportionate release of timber against the payment of the aforesaid royalty amount in accordance with the terms of the agreement but the Department instead seized the entire timber of the Petitioner lying at Chhaila Depot on or about 11-9-1968. This timber though it was of the value of over two lacs of rupees was later on disposed of by the Forest Department of the Respondent State for a petty sum of Rs. 1,000/- in March, 1974. The Respondents have now set up a further demand of Rs. 11,628.75 paise against the Petitioner. The Petitioner in turn claims that he has already paid a sum of Rs. 1,16,177.95 P. to the Respondents and in addition his timber worth over two lacs of rupees was illegally seized and disposed of for a petty sum of Rs. 1,000/-. A dispute thus having arisen between the parties, the same has to be referred to arbitration in accordance with Clause 29 of the agreement. The Respondents having refused to refer the matter to arbitration, the Petitioner has approached this Court with the prayer as aforesaid. A preliminary objection has been raised on behalf of the Respondents that the contract between the parties having expired on 31-3-1967 the present petition which purports to have arisen out of the said agreement is hopelessly time barred.

This is only this preliminary objection which calls for determination at this stage. According to the learned Counsel for the Respondents the present application is governed by Article 137 of the Limitation Act, 1963, which prescribes a period of three years for filing such an application and this period of three years is to be reckoned from the date when the right to apply accrues to the Petitioner. In this case it is admitted at the Bar that the period of the contract expired on 31-3-1967 and thereafter it was in September, 1968, that the Respondents seized the timber of the Petitioner for realization of the dues and that timber was ultimately sold in March, 1974. Ever since then the Respondents have been repeating their demand against the Petitioner. If not any earlier, the right to apply u/s 20 of the Arbitration Act thus accrued to the Petitioner in 1974. The present petition which was filed in 1979 is thus hopelessly time barred.

With regard to this question of limitation Shri Prem Goel, the learned Counsel for the Petitioner, submits that Article 137 of the Limitation Act, 1963, which corresponds to Article 181 of the Limitation Act as it stood before its amendment in 1963 is not applicable in the instant case. As per learned Counsel this Article applies only to application or petition made under the CPC and not to any application or petition made under the Indian Arbitration Act. In support of his contention the learned Counsel has cited a decision of the Supreme Court reported in Wazirchand Mahajan and Another Vs. Union of India (UOI), . It was of course laid down by the Supreme Court in the aforesaid case that Article 181 of the Limitation Act, 1908, governed applications under the CPC and that application u/s 20 of the Arbitration Act was not governed by that Article unless any provision in the Arbitration Act indicated contrary intention. It was further held by the Supreme Court that Section 37(1) of the Arbitration Act was not such a provision as indicated to the contrary. This decision of the Supreme Court was, however, given under the Limitation Act of 1908 but the Limitation Act as it now stands has undergone certain important amendments which have the effect of attracting the provisions of Article 137 to the applications made under the Arbitration Act. The Limitation Act, 1963, as it now stands contains an additional clause to the definition of ''applicant'' given in Section 2(a). This definition now includes (i) a Petitioner; (ii) any person from or through whom an applicant derives his right to apply; (iii) any person whose estate is represented by the applicant as executor, administrator or other representative. A new Clause 2(b) was also inserted. This provides that ''application'' includes a petition. As observed in Union of India and Ors. v. Bimal Kumar Kar ( AIR 1973 Gauhati 100) these additions were made in the definition section following the recommendations of the Third Report of the Law Commission of India the relevant paragraph of which runs as under:

Section 2. Definitions:

We recommend that a new definition of the word ''application'' so as to include any petition, original or otherwise, should be added. The object is to provide a period of limitation for original petitions and applications under special laws as there is no such provision now. Consequential alterations in the definition of the word ''applicant'' should also be made.

On a reading of the amendments made in the definition Section 2 of the Limitation Act with the recommendations of the Law Commission it would be clear that these amendments in the definition section were made with the express object of attracting the provisions of the Limitation Act to the applications under the special Acts like the Arbitration Act also. It is true that prior to this amendment the provisions of the Limitation Act were not applicable to the applications under the special Acts and it is equally true that it was with the specific object of bringing such like applications under the special Acts within |the ambit of Limitation Act that these amendments were made. An application u/s 20 of the Arbitration Act falls within the definition of ''application'' as defined in Section 2(b) of the Limitation Act and the applicant who moved such an application is also covered by the definition of ''Petitioner'' as given in Section 2(a)(i) of the Limitation Act. This being so the residuary Article 137 of the Limitation Act, will certainly apply to an application u/s 20 of the Arbitration Act and the period of limitation for such an application would be three years commencing from the time when the right to apply accrues. The learned Counsel for the Petitioner then cited another Supreme Court decision: The Vulcan Insurance Co. Ltd. v. Maharaj Singh and Anr. reported in AIR 1976 SC 87. This authority, however, has no application to the facts of the present case. In that case the insurance policy which contained the arbitration clause provided that "in no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration". An objection was raised that since the application u/s 20 of the Arbitration Act had been moved after the expiry of twelve months from the date of the alleged damage or loss, the claim of the Petitioner was time barred in view of the aforesaid clause in the insurance policy. It was to repel this objection that their Lordships of the Supreme Court held that such a clause did not prescribe a period of twelve months for filing of an application u/s 20 of the Arbitration Act. Their Lordships further observed that there was no limitation prescribed for filing of such an application under the Limitation Act, 1908. They further observed that the period of three years prescribed in Article 137 of the Limitation Act, 1963, might be applicable to an application u/s 10 though they did not express any definite opinion on this point as it was not the subject matter of an issue in that case. This authority also thus is not of any help to the Petitioner. On the other hand it does speak of the possibility of attracting the provisions of Article 137 of the Limitation Act to an application of the present nature.

For the reasons earlier stated I would hold that though Article 181 of the Limitation Act, 1908, was not applicable to an application u/s 20 of the Arbitration Act, Article 137 of the Limitation Act, 1963, in view of the amendment made in section 2 of the said Act does apply to such an application and the present application having been admittedly made more than three years after the date when the right to make this application accrued to the Petitioner, this application is time barred. This is accordingly dismissed with no order as to costs.