JUDGMENT
Usha Mehra, J.
(1) The Delhi Development Authority (in short DDA) has sought for appointment of an arbitrator for its counter claims. According to the D.D.A. these disputes arose out of the same cause of action/facts on which basis claims of the respondent were referred to the arbitration.
(2) The facts of the case are that when the dispute arose between the respondent here with the D.D.A., he sought for referring his disputes to arbitration and accordingly filed a petition under Section 20 of the Arbitration Act. Vide the order of this Court dated 8th August,1988, those disputes as mentioned in the petition were directed to be referred to an arbitrator within eight weeks. Since the D, failed to appoint an arbitrator within eight weeks, hence this Court vide order dated 27th April,1989 appointed Shri J.D.Goel as the sole arbitator. By the present petition, the D.D.A. wants its counter claim to be referred to an arbitrator.
(3) This petition has been contested by the respondent, inter alia, on the grounds that the counter claim of the D.D.A. now sought to be raised ought to have been raised in response to the petition filed by the respondent under Section 20 of the Arbitration Act listed as Suit No.2379-A/87. Having not done so, the present petition is barred by the principle of resjudicata as well as under Order 2 Rule 2 Civil Procedure Code . Further the contract in this case was rescinded by the D.D.A. on 21st May,1986 in which it was mentioned that the balance work would be got done from another contractor at the risk and cost of the respondent here. The respondent had challenged the rescission of the contract before the arbitrator by raising claim in that regard. The D.D.A. having failed to file its claim within three years from the date of rescission of the contract, the present petition is barred by time. On merits respondent denied that the counter claims are admissible. Moreover, these have already been argued before the arbitrator. The D.D.A. participated in the proceedings before the learned Arbitrator Shri J.D.Goel and got these claims adjudicated. Therefore, the present petition is not maintainable. On the pleadings of the parties following issues were framed :
1. Whether the petition discloses a cause of action?
2.Whether the petition is barred by time?
3.Whether the petition is barred by the principles of resjudicata under Section 11 and By order 2 Rule 2 of Civil Procedure Code .?
4.Whether the petitioner deliberately delayed the preparation of the final bill and if so, to what effect ?
(4) Vide order dated 7th March,1995, it was decided that issues 2 and 3 would be taken up as preliminary issues being purely legal and do not require any evidence. I have heard arguments on these two issues. Since, these issues are inter-connected hence disposed of by one order. My finding on these issues is as under. Issues No.2 And 3 :
(5) So far as material facts are concerned, these are not in dispute. This contract was rescinded on 21st May,1986. The question for consideration is from which date the period of three years has to be counted? Whether from the date the contract was rescinded i.e. 21st May,1986 or from the date the balance work was got completed by the D.D.A. at the risk and cost of the respondent which in this case is alleged to be 7th November,1989 or from the date the final bill was paid to the other contractor? Mr.Dalip Singh, appearing for the respondent contended that the limitation has to be counted from the date the contract was terminated. The cause of action accrued on the date the rescission took place and not when the Dda choose not to get the work done at the risk and cost of the respondent. If this assertion of the D.D.A. is accepted then the respondent’s fate will always hang and would depend on the mercy of the D.D.A. That is not the intention of the legislature. Article 137 of the Limitation Act says three years from the date the contract was rescinded and not when D.D.A. got the balance work done. To support his arguments, he placed reliance on the decision of this Court in the case of Union of India & ors. Vs. M/s Vijay Construction Co., Air 1981 Delhi 193. In that case, the Division Bench was considering a similar point i.e. from which date the limitation would be counted. After considering various provisions of the law, the Court came to the conclusion that the right to apply under Section 20 of the Arbitration Act would accrue to the party from the date the contract was rescinded. The limitation would be counted from that date. So relying heavily on these observations of the Division Bench, Mr.Dalip Singh contended that the limitation to file this petition by D.D.A. expired on 20th May,1989 i.e. three years from 21st May,1986. Whereas the present petition has been filed in December,1990, which is much beyond the limitation period. Having not filed the petition within three years from that date, the present petition is barred by time.
(6) To urge that principle of resjudicata are applicable, he placed reliance on the decision of the Supreme Court reported in K.V.George Vs. Secretary To Government, Water and Power Department, Trivandrum and anr. . In that case the aggrieved party got his disputes referred to arbitration. The arbitrator made the award. On objection being raised the award was remitted to the arbitrator as he had not considered the counter claims of the department. After remittance when counter claims were taken up by the arbitrator the appellant therein filed second claim petition before the arbitrator challenging the wrongful termination of the contract and also raised 13 items of claims therein. Arbitrator made award against the second claim petition preferred by the appellant. This was challenged by the respondent on the ground the second claim petition before the arbitrator was barred under Order 2 Rule 2 Civil Procedure Code . and under Section 11 Civil Procedure Code . Supreme Court upheld these contentions and observed that since the contract was terminated by the respondent/department on 26th April,1980 and as such all the issues arose out of the termination of the contract and they could have been raised in the first petition before the arbitrator, raising the remaining disputes subsequently is barred. Mr.Dalip Singh relying on these observations of the Apex Court contended that the D.D.A. ought to have filed its counter claims pertaining to termination of contract when the respondent filed his petition under Section 20 of the Arbitration Act. As per D.D.A’s own showing in para No.12 of this petition, the counter claims were in extricably mixed and arose out of the same cause of action/facts on the basis of which claims were filed by the respondent and defended by the D.D.A. before the learned Arbitrator. It has also been stated in this para that the D.D.A. defended the claims of the respondent before the arbitrator alleging that it was the respondent herein who committed breach of contract, did defective work and left the work incomplete, which was got executed at the his risk and cost. Even the levy of compensation under Clause 2 was also argued before the arbitator. Shri Dalip Singh, therefore, contended that having admitted that all these facts were urged before the learned arbitrator as a defense by the D.D.A. and the matter having been adjudicated, the present counter claim sought to be referred to arbitrator are clearly barred. The D.D.A. in response to the petition filed by the respondent ought to have raised all these claims. Having not done so, the present claim petition is barred under Order 2 Rule 2 Civil Procedure Code . and also under Section 11 Civil Procedure Code ..
(7) On the other hand Ms.Anusuya Salwan, appearing for the D.D.A. admitted that Article 137 of the Limitation Act applies to a petition filed under the Arbitration Act, but according to her the period of three years has to be counted only from the date cause of action accrued i.e. when the work was got completed at the risk and cost of the respondent. Otherwise how could the D.D.A. know how much money was to be recovered from the respondent. To support her argument that limitation would run from the date balance work was got done, she placed reliance on the decision of the Supreme Court in the case of Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, . In that case Mr.Rekhi constructed houses for the D.D.A. and the work was completed in April,1980. Appellant sent letters of request to the D.D.A. between 1983 to 1985 requesting for finalising the bills. When the D.D.A. failed to do so, he asked for the appointment of an arbitrator by filing a petition under Section 20 of the Arbitration Act. The single Judge of this High Court dismissed the application considering it to be barred by time. That decision was upheld by the Division Bench. Reversing the decision of this Court, Supreme Court held that for the entitlement to ask for an arbitrator under Section 20 of the Arbitration Act there must not only be an entitlement to money but there must be a difference or a dispute which must have arisen. In the facts of that case observed that though on completion of the work a right to get payment arose but when the final bills had not been prepared and the right was asserted in February,1993 and denied by the D.D.A. by not making payment, the cause of action arose to that appellant in February,1983. Hence his petition filed in January,1986 was within time. It was further observed that a dispute arises when there is a claim and denial or repudiation of the same. The existence of dispute is essential for appointment of an arbitrator. How these observations are applicable to the facts of this case, I have failed to understand? It is nobody’s case that the dispute arose when the respondent filed the petition under Section 20 of the Arbitration Act challenging the rescission of the contract. This Court appointed the arbitrator to go into that dispute. As per the petitioner’s own showing the counter claims were in extricably mixed and arose out of the same cause of action/facts on the basis of which the respondent preferred his claims before the arbitrator. It has already been admitted in para 12 of the petition that the petitioner argued the claims of the respondent, namely, breach of contract, defective work and incomplete work left by the respondent which was got completed by the petitioner at the risk and cost of the respondent and the levy of penalty. Having argued these before the learned arbitarator, it cannot be said that the cause of action arose in favor of the D.D.A. only when it got the balance work completed at the risk and cost of the respondent. If what Mrs.Salwan contends is accepted then there will always be uncertainty hanging for the parties regarding their claims. For example, D.D.A. may not be able to get the balance work completed for number of years, that means the sword of counter claims would always hang on the other party even after five years even though contractor’s claims stand adjudicated and at times award also in his favor. Keeping in view such eventuality, the arguments of Mrs.Salwan cannot be accepted. Moreover, Article 137 makes it clear that period of three years has to be counted from the date contract was terminated. The counter claims of the D.D.A. arose out of the termination of the contract hence the period of three years has to be counted from 21st May,1986. Hence, relying on the observation of the Division Bench judgment in Union of India Vs. M/s Vijay Construction Co. (supra) it can conclusively be held that the cause of action arose when the D.D.A. rescinded the contract in May,1986. Since the petition has been filed in December,1990 i.e. beyond the period of three years, therefore, the same is barred by time. Even otherwise these counter claims ought to have been preferred or right reserved when the respondent filed his petition under Section 20 of the Arbitration Act, having not done so these counter claims are barred under Order 2 Rule 2 Civil Procedure Code .
(8) For the reasons stated above, these issues are decided against the D.D.A. In view of my above finding the present petition is held to be barred by limitation hence dismissed.