Union of India (UOI) vs Gopalan

Balakrishnan, J.—The Respondent Railway contractor entered into an agreement with Appellants herein for the construction of quarters at Olavakkode in Putuppariyaram Amsom. The work was to be completed on 14th September 1973. In spite of several extensions given to the Respondent, he could not complete the work and ultimately the Appellants rescinded the contract with effect from 31st December 1977. The Respondent made several correspondence with the Appellants Railway for cancellation of the rescission of the contract and also to permit him to complete the remaining work. This prayer was rejected by the General Manager and thereafter the Respondent filed a suit u/s 20 of the Arbitration Act for appointment of an Arbitrator. The suit was resisted by the Appellants on the ground that the suit was barred by limitation. The Court below rejected that contention and held that the petition u/s 20 of the Act is within time. The Appellants challenge the finding.

The short question that arises for consideration is whether the respondent''s suit u/s 20 of the Arbitration Act is barred by time. The provisions of the Limitation Act are made applicable to Arbitration proceedings by virtue of Section 37(1) of the Arbitration Act. Section 37(1) of the Arbitration Act reads:

All the provisions of the Indian Limitation Act, 1908 shall apply to Arbitration....

However, no specific period of limitation has been prescribed for the filing of the petition u/s 20 of the Arbitration Act. Article 137 of the Limitation Act, 1963 is the relevant provision applicable to these proceedings. In The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, the Supreme Court considered the scope of amplitude of Article 137 of the Limitation Act, 1963. The Court considered whether this provision would apply to a petition filed u/s 16(3) of the Indian Telegraphs Act for enhancement of compensation. The Supreme Court considered the distinction between Article 137 of the Limitation Act, 1963 and Article 181 of the Limitation Act, 1908. The Court held:

Section 2(6) of the Act defines ''application'' to include a a petition. This changed definition in the 1963 Act indicates the object of the Act to include petitions, original or otherwise, under special laws.

Article 137 includes patitions within the words "applications". The alteration of the division as well as the change in the collocation of words in Article 137 of the Limitation Act, 1963 compared with Article 181 of the 1908 Limitation Act shows that applications contemplated under Article 137 are not applications confined to the Code of Civil Procedure. In the 1908 Limitation Act there was no division between applications in specified cases and other applications as in the 1963 Limitation Act. The words any other application under Article 137 cannot be said on the principle of ejusdem generis to be applications under the CPC other than those mentioned in Part I of the third division (Article 137 occurs in Part II). Any other application under Article 137 would be petition or any application under any Act. But it has to be an application to a Court for the reason that sections 4 and 5 of the 1963 Limitation Act speak of courts.

Hence the conclusion is that Article 137 of the 1963 Limitation Act will apply to any petition or application filed under any Act to a civil Court.

Now where by statutes matters are referred for determination by a Court of record with no further provision the necessary implication is that the Court will determine the matters as a Court.

In the instant case the Appellant Railway terminated the contract with effect from 31st December 1977 by letter dated, 1st July 1978. The Appellants contended that an arbitration suit filed after a period of three years from 1st July 1978 is barred by limitation. To rebut this contention the Respondent contractor stated that on 21st June 1978 the Respondent requested the Appellants to consider his claim for enhancement of rate and also to cancell the rescission of contract. This was rejected by the Railway on 30th June 1978 by Ext. B-3 letter. The Respondent appealed to the General Manager (Construction) to reconsider the decision. That was rejected by the General Manager on 20th January 1981. Thereafter the Respondent requested for arbitration on 10th February 1981 as per Ext. A-5 letter. This request was turned down by the Railway on 16th October 1981 by Ext. P-7 reply. The Respondent also made a further request on 18th November1 1981. That also was rejected on 21st November 1981 as per Ext. A-10 letter. The Respondent approached the Court below as per Section 20 of the Arbitration Act only on 2nd June 1982. The contention of the Respondent contractor that he had all along been waiting for a final reply from the Railway to file a suit u/s 20 of the Arbitration Act cannot be accepted. The cause of action, if at all, arose when the contract was terminated by the Railway. There is considerable force in the argument of the learned counsel for the Appellant Railway that a suit filed after 3 years of the rescission of the contract is barred by limitation.

The learned counsel for the Respondent contended that this is a case where the Respondent made an honest attempt to revoke the cancellation of the contract effected by the Railway. It was pointed out that on a former occasion the Appellants Railway had cancelled the Respondents contract. However, the cancellation was later revoked and the Respondent was allowed to carry on the work. The Respondent sent several communications to the Railway and these communications show that he had honestly believed that the Railway would permit him to carry on the work. Therefore we feel that this is a fit case where Section 5 of the Limitation Act can be made applicable. In view of Section 37(1) of the Arbitration Act, which provides that all the provisions of the Limitation Act, 1963 will apply to Arbitration proceedings, the benefit of Section 5 of the Limitation Act also can be invoked by the parties. In view of the fact that the Respondent had various correspondence with the Appellants Railway to settle the claim, we hold that the Respondent had sufficient cause for not preferring the application u/s 20 of the Arbitration Act. Therefore, we hold that the order passed by the Court below does not call for any interference.

The M.F.A. is dismissed without costs.