Sardar Amarjeet Singh and Another vs State of M.P.

C.P. Sen, J.—This is an appeal u/s 39 (iv) of the Arbitration Act, 1940 against the order of the District Judge, rejecting the appellants application u/s 20 of the Arbitration Act for filing of the arbitration agreements and referring the dispute to the arbitrator.

The appellant was granted a contract Nos. 5 to 7 DL for collection of Moorum on the Belkheda-Maregaon section of National Highway No. 12 for 59 to 61 kilometers. It is common ground that the appellant did not complete the work. As per terms of the agreements, the work was completed through another contractor and the excess amount Incurred in completing the work, i. e., Rs. 91,244/- was sought to be recovered from the appellant. The appellant in turn made a claim of Rs. 60,000/- towards the work already completed, including refund of the security amount of Rs. 20,000. The appellant then requested the Superintending Engineer to refer the dispute for arbitration under clause 19 of the agreements. The Superintending Engineer by his order dated 15-12-1975 rejected the claim of the appellant and therefore the present application was filed u/s 20 of the Arbitration Act by the appellant. The respondents contended that the arbitration clause was not available to the appellant, as the Superintending Engineer has already communicated his decision on the claim made by the appellant. The appellant had voluntarily accepted the measurements, after due notice to him, and nothing remains to be paid to him and on the other band, he is liable to pay an amount of Rs. 91,244/- .

The learned District Judge by the impugned order held that the appellant has not detailed the claim of work actually undertaken, nor has claimed any damages for cancellation of his contract; mere averment regarding existence of dispute did not satisfy the requirements of section 20 of the Act; though the respondents has not expressly pleaded the bar of limitation, the application u/s 20 of the Act was barred under Article 137 of the Limitation Act, 1963, as the application was not moved within three years of the cause of action and as per clause 19 of the agreements, the decision of the Superintending Engineer has become final.

After having heard the parties, we are of the opinion that there is no merit in this appeal, though the order of the District Judge has to be upheld on some other ground also. Firstly, we have to consider whether clause 39 of the agreements, which is mentioned below, is an arbitration clause-

The decision of the Superintending Engineer for the time being shall be final, conclusive and binding on all the parties to the contract upon all questions relating to the meaning of specifications here-in-before mentioned and as to quality of materials or as to any other question, claim, right, matter or thing whatsoever in any way arising out of, or relating to the contract specifications, instructions, orders or those conditions or otherwise concerning the supplies whether arising during the progress of delivery or after the completion or abandonment thereof.

The Supreme Court had an occasion to consider a similar clause in State of U.P. Vs. Tipper Chand, which was on a much wider term, to hold the same to be an arbitration clause. There clause 22 of the agreement ran thus :-

Except where otherwise specified in the contract the decision of the Superintending Engineer for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, design, drawing and instructions hereinbefore mentioned. The decision of such engineer as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or things whatsoever, in any way arising out of or relating to the contract, designes, drawing, specifications, estimates, instructions, orders or those conditions, or otherwise concerning the works, or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment of the contract by the contractor, shall also be final, conclusive and binding on the contractor.

According to the Supreme Court this clause did not contain any express arbitration agreement nor could it be implied, there being no mention in it of any dispute, much less of a reference there of and this clause vested the Superintending Engineer only with the supervision and administrative control over the work.

Here, clause 19 of the agreement is much narrower and the decision of the Superintending Engineer is final regarding all questions relating to meaning of specifications and as to quality of materials or as to any other question, claim, right, matter or thing whatsoever in any way arising out of, or relating to the contract specifications, instructions, orders or those conditions or otherwise concerning the supplies, whether arising during the progress of delivery or after the completion or abandonment thereof. Rightly this is a finality clause giving the Superintending Engineer the right to decide all questions regarding specifications, as to quality of material and interpretation of instructions and orders issued in respect of the contract. Here, again in clause 19 there is no mention about any dispute or about reference of the dispute. this Court in The Chief Administrator, Dandakaranya Project, Koraput, Orissa and Another Vs. Prabartak Commercial Corporation Ltd., held that one of the essential ingredients of a submission to arbitration is that the parties should agree that the dispute, intended to be referred, should be determined in a quasi-judicial manner. If it is not to be so determined, the agreement does not amount to a submission to arbitration and the person, who decides the dispute, is not an arbitrator. Therein lies the distinction between an agreement for submission to an arbitration and an agreement to accept the decision of a valuer or appraiser. However, the Supreme Court held the following two clauses to be arbitration clauses; (i) any dispute between the contractor and the department the decision of the Chief Engineer, P. W. D. will be final and binding upon the contractor; and (ii) in the matter of dispute the case shall be referred to the Superintending Engineer of the circle, whose order shall be final. In both these clauses there is mention of the dispute and reference of the dispute to the engineer concerned. Therefore, on this ground alone the application of the appellant was liable to be dismissed.

The application is also liable to be dismissed as being barred by limitation. The claim of the appellant was rejected by the Superintending Engineer on 16-12-1975 while the application u/s 20 was filed on 28-4-1979. Under Article 181 of the old Limitation Act of 1908, all applications for which there is no prescribed period of limitation is provided in the schedule or by section 48 of the Code of Civil Procedure, 1908, period of limitation will be three years when the right to sue accrues. This was interpreted to apply to only applications made under the CPC and not to applications made under other enactments However, Article 137 of the present Limitation Act of 1963 provides that all applications for which no period of limitation is provided elsewhere, the period of limitation will be three years when the right to apply accrues. This change was necessitated in order to make this Article applicable to all applications made under other enactments also. Under the new Limitation Act, a new clause has been added to the definition of "applicant" u/s 2 (a) and a new clause (b) has also been inserted, which says that application includes a petition. This was made following the report of the Third Law Commission with the object to provide for original petitions and applications the period of limitation, as there was no such provision in the old Act. A Division Bench of the Gauhati High Court in Union of India v. B. K. Kar AIR 1973 Gau. 100 held that the legal position has changed after the commencement of the new Limitation Act and the provisions of the Limitation Act will be attracted to an application under the Special Act, such as the Arbitration Act, The matter is no longer in dispute that Article 137 apply to any application u/s 20 of the Arbitration Act. The Supreme Court in The Vulcan Insurance Co. Ltd. Vs. Maharaj Singh and Another, held that the period of three years prescribed under Article 137 of the new Limitation Act may be applicable to an application u/s 20 of the Arbitration Act. This has been further clarified by the Supreme Court in The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, that Article 137 will apply to any petition or application filed under any Act. The same view has been taken in Rupam Pictures and Another Vs. Brijmohan and Others, , V.G. Ghawda Pvt. Ltd. Vs. Union of India (UOI), , Bhagwat Dayal v. Pritam Dayal AIR 1980 Del 25 and Hawan Singh v. Union of India AIR 1982 Del 103.

In the present case the claim of the appellant was rejected by the Superintending Engineer on 16-12-1975. Therefore, the cause of action arose on that day. The application u/s 20 of the Arbitration Act should have been filed within 3 years, i. e. by 15-12-1978, where as it has been filed on 28-4-1979. Therefore, the application in clearly barred by limitation.

Accordingly the appeal fails and it is dismissed with costs. Counsel''s fee Rs. 250/- , if certified.