Arbitration Case No. 79 of 2006 [1]
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
Arbitration Case No. 79 of 2006
Date of Decision: 31.07.2009
M/s Bhagwan Dass & Sons ..Petitioner
versus
Union of India and others ..Respondents
CORAM: HON'BLE MR. JUSTICE T.S.THAKUR,CHIEF JUSTICE
1.Whether Reporters of local papers may be allowed to see the
judgment ?
2. Whether to be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest?
Present : Mr.S.K.S.Bedi, Advocate for the petitioner
Mr. Kamal Sehgal, Advocate for the respondents.
*****
T.S.Thakur, C.J. (Oral)
In this petition, under Section 11(6) of the Arbitration &
Conciliation Act, 1996, the petitioner has prayed for the appointment
of an independent Arbitrator for adjudication of the disputes that have
arisen between the parties in connection with a contract which
contained the following arbitration clause:-
70. Arbitration :- All disputes between the
parties to the Contract(other than those for which
the decision of the C.W.E. or any other person is by
the Contract expressed to be final and binding) shall,
after written notice by either party to the Contract to
Arbitration Case No. 79 of 2006 [2]the other of them, be referred to the sole arbitration
of an Engineer Officer to be appointed by the
authority mentioned in the tender documents.
Unless both parties agree in writing such
reference shall not take place until after the
completion or alleged completion of the Works or
termination or determination of the Contract under
Condition Nos. 55, 56 and 57 hereof.
Provided that in the event of abandonment of
the Works or cancellation of the Contract under
Condition Nos. 52, 53 or 54 hereof, such reference
shall not take place until alternative arrangements
have been finalised by the Government to get the
Works completed by or through any other Contractor
or Contractors or Agency or Agencies.
Provided always that commencement or
continuance of any arbitration proceeding hereunder
or otherwise shall not in any manner militate against
the Government’s right of recovery from the
contractor as provided in Condition 67 hereof.
If the Arbitrator so appointed resigns his
appointment or vacates his office or is unable or
unwilling to act due to any reason whatsoever, the
authority appointing him may appoint a new
Arbitrator to act in his place.
The Arbitrator shall be deemed to have
entered on the reference on the date he issues notice
to both the parties, asking them to submit to him
their statement of the case and pleadings in defence.
The Arbitrator may proceed with the
arbitration, exparte, if either party, inspite of a
notice from the Arbitrator fails to take part in the
proceedings.
The Arbitrator, may, from time to time with the
consent of the parties, enlarge, the time upto but not
Arbitration Case No. 79 of 2006 [3]
exceeding one year from the date of his entering on
the reference, for making and publishing the award.
The Arbitrator shall give his award within a
period of six months from the date of his entering on
the reference or within the extended time as the case
may be on all matters referred to him and shall
indicate his findings, along with sums awarded,
separately on each individual item of dispute.
The venue of Arbitrator shall be such place or
places as may be fixed by the Arbitrator in his sole
discretion.
The Award of the Arbitrator shall be final and
binding on both parties to the Contract.”
The petitioner’s case as set out in the petition is that after
the completion of the contracted work, a claim was raised by him for
payment of the outstanding amount due to the petitioner, which claim
was eventually turned down by the respondents in terms of a
communication dated 22.04.1999. The respondents also appear to be
disputing the satisfactory completion of the contracted work in the said
communication and claiming compensation and other charges from the
petitioner-contractor. This has, according to the petitioner, given to the
petitioner a right to apply for reference of the disputes to an Arbitrator
which the respondents have not appointed despite a notice in that
regard. Relying upon the decision of the Supreme Court in Datar
Switchgears Ltd. V. Tata Finance Ltd. & Anr. 2000(8) S.C.C. 151,
learned counsel for the petitioner submitted that the respondents having
forfeited their right to make an appointment at this stage, the only
option left for them is to seek an appointment of an independent
Arbitrator from this Court.
Arbitration Case No. 79 of 2006 [4]
On behalf of the respondents, it was argued by Mr. Sehgal,
that the present petition seeking reference of the disputes to Arbitration
was barred by limitation. He contended that the work in question
having been completed on 23.8.1993, any claim beyond the period of
three years from the said date, would be time barred and so would any
petition seeking appointment of an Arbitrator. A claim was, for the
time, received from the petitioner firm only on 27.06.1998 i.e. much
beyond the period of limitation. He drew my attention to the provisions
of Article 137 of the Limitation Act, and the decision of the Supreme
Court in Punjab State and Ors. V. Dina Nath & Ors. 2007(3) RCR
(Civil) 171, to urge that period of limitation for filing of an application
under Section 11(6) of the Act ought to be reckoned from the date the
disputes and differences arose between the parties. He contended that
disputes and differences in the instant case must be deemed to have
arisen on 23.08.1993 when the contract works were completed by the
contractor meaning thereby that any request made by the petitioner firm
for payment of any claim in June, 1998 and the present application
seeking appointment of Arbitrator filed on 19.07.1999 would be barred
by limitation.
I have given my careful consideration to the submissions
made at the bar and perused the record.
The Limitation Act does not specifically provide for the
period of limitation for making an application under Section 11(6) of
the Act. This would mean that any such application shall be governed
by Article 137 of the Limitation Act, 1963 which prescribes the period
of limitation for applications for which no period of limitation is
Arbitration Case No. 79 of 2006 [5]
specifically provided for in the said Act. Article 137 of the Limitation
Act reads as under:-
ARTICLE 137 :
PART-II OTHER APPLICATIONS
Description of application Period of Time from which
limitation period beings to run
137. Any other application Three years When the right to
for which no period of apply accrues.
limitation is provided
elsewhere in this division.
The crucial words in the above provision as is evident from
a plain reading of the same are “when the right to apply accrues”. The
right to apply in the matter of reference to arbitration in turn would
depend upon when the disputes sought to be adjudicated upon arise
between the parties. That indeed is the view taken by the Supreme
Court in S.Rajan V. State of Kerala and another, 1992(3) S.C.C. 608
where the Court observed:-
“Reading Article 137 and Sub-Section (1) of
Section 20 together, it must be said that the right to
apply accrues when the difference arises or
differences arise, as the case may be, between the
parties. It is thus a question of fact to be determined
in each case having regard to the facts of that case.”
The question as to when differences and disputes arose
between the parties then would, however,depend upon the facts and
circumstances of each case. In the present case, the petitioner’s version
is that he had completed the contracted work to the satisfaction of the
respondents on 23.08.1993 leaving certain claims unpaid for which he
made a request vide letter dated 27.06.1998. The respondents, do not
subscribe to that version. According to the respondents, the work in
Arbitration Case No. 79 of 2006 [6]
question had not been completed by the contractor which he was
advised to complete in terms of a communication dated 22.04.1999.
That communication may be extracted in extenso:-
” M/s Bhagwan Dass & Sons
179, The Mall, Ambala Cantt. 133001CA No. GEA-64/91-92 : TERM CONTRACT
(REPAIR AND MINOR WORKS) FOR AFW
ZONE ‘D’ UNDER AGE B/R NO. 2 AT AMBALADear Sir,
1. Reference your letter No. GEA-64/108/91-92 dated 15
April, 1999.
2. Your contention conveyed vide your letter under
reference neither tenable nor agreed to. As you have
failed to complete the work/contract, you are
contractually liable for compensation and other charges.
Thus you alleged claim is not agreed to. However, you
are advised to complete the balance work.
Yours faithfully,
Sd/- (Bhisham)EE
Garrison Engineer (North)”.
From the above, it is evident that according to the
respondents, the work had remained incomplete and the contractor
continued to be under a contractual obligation to complete the same.
Not only did the latter deny the petitioner’s claim for payment of
outstanding dues it advised him to complete the balance work also. The
dispute between the parties, in relation to the completion of the work
and the right of the petitioner to seek payment of outstanding dues, can
therefore, be said to have arisen only upon issue of the above
communication by the respondents. That being so, any petition filed
within three years from the date of receipt of communication
aforementioned on 22.7.1999 should be taken as within limitation. I
Arbitration Case No. 79 of 2006 [7]
have, therefore, no hesitation in rejecting the contention urged on
behalf of the respondents that the present petition seeking appointment
of an Arbitrator is barred by limitation.
In the result, I allow this application and direct that the
disputes and the differences that have arisen between the parties in
relation to the contract in question shall stand referred to the arbitration
of Justice Bakshish Kaur, former Judge of this Court for adjudication. I,
however, make it clear that this order shall not be interpreted to be
expressing any final opinion about the claims of the petitioner being
within limitation. That is a matter which is left open to be determined
by the Arbitrator in accordance with law uninfluenced by any
observation made in this order. Keeping in view the stake involved and
the time that may be required to be devoted by the Arbitrator, I fix the
fee of the Arbitrator to be Rs. 5000/- per hearing subject to a maximum
of Rs. 50000/- to be deposited by the parties in such proportion as the
Arbitrator may direct.
Parties are directed to appear before the Arbitrator on
21.08.2009.
(T.S.THAKUR)
CHIEF JUSTICE
31.07.2009
‘ravinder’