JUDGMENT
N.N. Mathur, J.
1. Both these Revision Applications under Section 12 of the Gujarat Public Works Contract Act, 1992, (In short, ‘the Act of 1992’) are filed against the order of the Tribunal rejecting the reference barred by lapse of time. As a common question of law arises, they are disposed of by this common order. The necessary facts are set out as follows:
C.R.A. No. 1283 of 1996
The petitioner-contractor was granted contract for construction of rural roads upto S.T. stage including C.D. works in Mehsana District. The work order was issued on 11-9-1989. He did not complete the work within the stipulated period, i.e., by 10-3-1991 but completed on 31-7-1992. The petitioner’s Advocate served a notice dated 7-9-1994 on the Executive Engineer to settle the disputes under Clause 51 of the General Conditions of the contract. The petitioner also addressed an appeal to the Chief Engineer on 22-10-1994 under Clause 51. The Executive Engineer, by his letter dated 16-12-1994 informed the petitioner that there was no dispute covered by Clause 51 required to be decided by him. The plea was also taken that Clause 51 is intended to be resorted promptly while the work is in progress so that the work may not be unnecessarily hampered. The Tribunal held that cause of action arose on 15-7-1993, the date on which the full and final payment was made. The Tribunal further held that even if the time taken by the Executive Engineer in replying the petitioner’s notice is excluded, the reference is time-barred, as the same was not filed before 31-12-1994. Thus, the Tribunal rejected the reference by the impugned order dated 15-3-1996.
C.R.A. 1284 of 1996
2. The petitioner firm was awarded contract for construction of rural roads upto S.T. stage including C.D. works in Mehsana District, with a stipulation to complete within 18 month, i.e., upto 26-10-1990. However, the work could be completed only on 31-7-1992. The petitioner represented to the Executive Engineer on 7-9-1994 to settle the claims to the tune of Rs. 62,71,936/- under Clause 51 of the General Conditions of the contract. The Executive Engineer replied on 7-10-1994 stating that resort to Clause 51 of the General Conditions of the contract is misconceived as none of his claims arises under Clause 51. It was further stated that the purpose of Clause 51 is that the contractor may rush to the Engineer in-charge promptly in order that the Engineer may issue immediate written instructions to avoid crisis so that the work in process may not be hampered. It was further stated that the final bill was paid to the petitioner on 14-7-1993. The reference was filed on 1-9-1995. The Tribunal rejected the claim by the impugned order dated 15-3-1996 as barred by limitation holding that the cause of arbitration had arisen on 14-7-1993, the day on which the final bill was paid.
3. The question is whether the Tribunal was right in rejecting the Reference Application under Section 8 of the Act of 1992 barred by lapse of time? Section 8 of the Act provides limitation of one year to make a reference within one year from the date when the dispute has arisen. Under the Arbitration Act, 1940, the limitation for application under Section 20 of the Act is of 3 years, in view of the decision of the Apex Court in the case of Kerala State Electricity Board v. T.P. Kunhallumma reported in AIR 1977 SC 282. In the said case, the Apex Court held that Article 137 of the Limitation Act, 1963 would apply to any petition or application filed in civil Court under Sub-section (1) of Section 20 of the Arbitration Act. Thus, the core question arises for consideration is:
When the ’cause of arbitration’ arises or what is the crucial date for computation of limitation for the purpose of reference under Section 8?
4. In order to appreciate the controversy, it would be appropriate to read Sub-section (1) of Section 8 of the Act of 1992 which reads as under:
Section 8(i) – Where any dispute arises between the parties to the works contract, either party shall, irrespective of whether such works contract contain an arbitration clause or not, refer, within one year from the date when the dispute has arisen, such dispute in writing to the Tribunal for arbitration in such form and accompanied by such documents or other evidence and by such fees, as may be prescribed.
A reading of Section 8 shows that the one year is to be computed from the date when the dispute has arisen. Again the question is when the dispute is said to have arisen? This question came up for consideration before the Apex Court in the case of Inder Singh v. Delhi Development Authority wherein it is held that there should be a dispute and there can be a dispute only when a claim has been asserted by one party and denied by another party on whatever grounds. In Inder Singh’s case (supra), the work was finally completed on 3-4-1980. Between February 1983 and December 1985, the contractor sent several letters to the Delhi Development Authority requesting them to finalise the bills. In January 1986, the contractor filed arbitration reference under Section 20 of the Arbitration Act seeking direction that the D.D.A. should file arbitration agreement in the Court and the dispute be referred to the Arbitrator. The Delhi High Court rejected the application as time-barred on the basis that the work was completed in 1980, and therefore, the contractor became entitled to payment from the date, thus the cause of action under Article 137 arose from that date. The Apex Court disagreed with the view of the Delhi High Court and held that in order to be entitled to ask for a claim under Section 20 of the Act, there must not only be entitlement to payment but there must be difference or a dispute must arise. Thus, according to the Supreme Court, the limitation is to be computed from 28-7-1983, when the contractor made assertion of the claim first time. The application was made for reference in January, 1986, and therefore, it being within a period of 3 years, was within limitation. The same view has been taken by the Apex Court in Panchu Gopal Bose v. Board of Trustees for Port of Calcutta , wherein the Court held that the period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrue, i.e., to say from the date when the claimant first acquires either the right of action or the right to require that arbitration takes place upon the dispute concerned. In the case of State of Orissa v. Damodar Das , the Supreme Court held that there is no right to apply until there is clear and unequivocal denial of that right by the respondent. However, it must be raised as soon as the cause of arbitration arises. The Court further said that delay defeats justice and equity aids promptitude and reluctant consequences. Defaulting party should bear the hardship and should not transmit the hardship to other party. Thus, the following principles emerges for computation of limitation to entertain a reference under Section 8 of the Act of 1992:
(1) There must be an assertion of claim by one party and refusal in respect of the same by the other party. Though no limitation is provided for first assertion, it should not be later than the limitation available as per the law prevalent on the date of payment of final bill.
(2) On completion of the work, the right to get payment would normally arise but just because the final bill is prepared and payment is made, the cause of action will not arise.
(3) The party cannot postpone the real cause of action by asking or writing reminders, or waiting for the reply for unreasonable period, which should normally be not beyond six months from the date of first assertion.
5. Section 8 of the Act of 1992 provides not only the change of limitation but also the change of forum. Thus, there is a change of adjectival or procedural law and not substantive law. Such a change of law operates retrospectively and a person has to go to the new forum even if his cause of action or right of action accrued prior to the change of forum. The jurisdiction of the Civil Court is ousted w.e.f. 1-1-1994 and the only remedy available in the matter of works contract is of application under Section 8 of the Act of 1992, whether the works contract contains arbitration clause or not. It is significant to notice that the limitation provided by Article 137 of the Limitation Act of three years has been curtailed by Section 8 of the Act of 1992. The limitation of three years stands curtailed on 1-1-1994 but survives upto 31-12-1994 under Section 8 of the Act of 1992. However, if the cause of arbitration has arisen after 1-1-1994, in the matter prior to commencement of the Act of 1992, it would be governed by Section 8 and one year period of limitation shall run from that date.
6. In C.R.A. No. 1283, the final payment was made on 15-9-1993, but the petitioner gave notice under Clause 51 of General Conditions to the Contract on 9-11-1994, for settlement, which was replied on 16-12-1994. According to the Tribunal, the cause of action for arbitration arose on 15-9-1993, the date on which full and final payment was made. As such the reference filed on 1-9-1995 was clearly beyond one year and as such time-barred. The Tribunal committed manifest error in considering that the cause of action arose on 15-7-1993, the day on which the final payment was made. The notice dated 9-11-1994 under Clause 51 can be considered as first assertion of claim and it was denied by reply dated 16-12-1994, and as such the dispute arose on 16-12-1994. Thus, computing one year taking 16-12-1994 as the crucial date, reference filed on 1-9-1995 was clearly within the limitation. The Tribunal committed error of jurisdiction in rejecting the reference application as barred by lapse of time.
7. The C.R.A. No. 1284 of 1996, the final payment was made on 14-7-1993. The petitioner gave first notice under Clause 51 of General Conditions of Contract to Executive Engineer on 17-9-1994, which was replied on 7-10-1994. Thereafter he served notice to the Chief Engineer and Joint Secretary on 22-10-1994, which was replied on 21-11-1994. The reference was filed on 1-9-1995. According to the Tribunal, cause of action arose on 14-7-1993, when the full and final payment was made. The learned Tribunal committed manifest error in computing the limitation of one year from 14-7-1993. The petitioner made first assertion of the claim on 17-9-1994, which was replied by letter dated 7-10-1994. Though the second notice was given on 22-10-1994 and replied on 21-11-1994, the same will not have relevance, as the limitation is to be computed from the date of first reply, may be of first or second assertion of the claim.
8. Thus, the cause of action arose on 22-10-1994, when the notice was replied. The notice under Clause 51 can be considered as assertion of claim. Taking 22-10-1994 as the crucial date, the reference filed on 1-9-1995, being within one year was clearly within limitation. The Tribunal committed error of jurisdiction in rejecting the reference application as barred by lapse of time.
9. Consequently, both these Civil Revision Applications are allowed and the order of the Tribunal dated 15-7-1996 rejecting the Reference Application Nos. 44 of 1996 and 46 of 1996 are quashed and set aside. The Tribunal is directed to entertain the petitioner’s application under Section 8 of the Act of 1992 and proceed with the Reference No. 44 of 1996 and Reference No. 46 of 1996 in accordance with law.
Rule made absolute in each case. No order as to costs.