JUDGMENT
Usha, J.
1. Challenge in this appeal at the instance of State of Kerala and two others is against the judgment of Principal Sub Judge of Trivandrum in O. S. (Arb) No. 92/86. The respondent herein was the plaintiff and the appellants were defendants. The respondent herein had taken on contract the execution of work NH 47 widening and strengthening of single lane section to two lines — Quilon, Alleppey road portion from KM4I6/2 to 421/4 road formation balance works. He had entered into an agreement on 9-8-1976 and the site was handed over to him on 20-8-1976. As per the stipulation in the contract he should have completed the work on 19-2-77. But actually the work was completed only on 15-7-1977. Payment as per final bill was made on 24-6-1978.
2. According to the appellants, the respondent received the final bill without any demur. He filed a petition on 12-11-1981 to the Chief Engineer, National Highway raising certain objection regarding payment. Thereafter he filed a claim petition before the arbitrator on 30-3-1983. The arbitrator thereupon issued notices to the parties. The appellants contended that in view of the provisions contained under clause 23 of the terms of contract between the parties, the claim has to be rejected. As per the above provision, if, the contractor does not make any demand for, arbitration in respect of any claims in writing within 90 days of receiving the intimation from the Government that the final bill is ready for payment, the right of the contractor or arbitration in respect of all matters connected with the contract shall stand forfeited absolutely and the Government shall be discharged and released of all liabilities in respect of the contract. The arbitrator upheld the objection raised by the appellants. The respondent then filed a petition
under Sections 2, 5, 8 and 20 of the Arbitation Act for filing the arbitration agreement and referring the matter for arbitration to an arbitrator. It was contended by the appellants that petition is not maintainable, since the arbitrator has already made an award rejecting the claim and therefore the remedy if at all any of the respondent was to get the award set aside before filing an application under Section 20. It was also contended that the petition under Section 20 is barred by limitation.
3. The Court below took the view that the order passed by the arbitrator is “against the total spirit and tenor of arbitration agreement which favours adjudication in all respects”. According to the Court below, “if the conditions in NIT are not properly adhered to that too can be verified and the time stipulated in the NIT can be enlarged by the arbitrator or by the Court……. If it is found
that the valid claims are not honoured and admitted the bill paid reasonable becomes only a part bill and arbitrator can come to areasonable conclusion only after verifying all matters related with the execution of the work and its reasonable assessment and payment is done. So a hasty decision without looking into the details and considering the preliminary objections about is unwarranted as per the agreement conditions and this act amounts only to a partial investigation into that matters and a decision taken without considering the total merits is wrong and unsustainable.” The Court below did not consider the question of limitation at all. It directed the dispute to be referred to a Chief Engineer whose name was suggested by the Counsel for the plaintiff.
4. The appellants contend that the’ Court below has committed a grave error ‘in not considering the appellants’ contention that the application under. Section 20 was barred by limitation and that it is not open to the respondent to seek remedy under Sections 5 and 8 when it has opted to file an application under Section 20. In the alter native; the learned Government Pleader would submit that even an application under Section 20 is not maintainable in this case as the arbitrator had already passed an award and the remedy of the, respondent was to file a petition under Section 30 of the Arbitration Act to get the award set aside. Without getting the award setting aside, no application under Section 20 is maintainable.
5. Sections provides that the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement. Section 8 deals with the power of Court to appoint arbitrator or umpire under certain circumstances namely, when all the parties could not concur in the appointment of an arbitrator as per the agreement where it is provided that the arbitrators are to be appointed by consent of the parties, where appointed arbitrator or umpire neglects or refused to act or is incapable of acting, or dies and as per the terms of the agreement the vacancies are to be supplied but the parties or the arbitrators do not do so and where the parties or the arbitrators are required to appoint an umpire and do not appoint him. The relief under Section 20 is entirely different. It provides for a situation where instead of proceeding under Chapter II containing Sections 5, 8, etc. parties to an agreement with arbitration clause is enabled to apply to a Court that the agreement to be filed in the Court. After hearing both sides the Court may order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties or if they cannot agree upon an arbitrator, to an arbitrator appointed by the Court. The above would clearly show that a party cannot move both under Section 8 as well as Section 20 simultaneously. The difference in the jurisdiction of the Court under the above mentioned sections had come up for consideration in a different context before the Supreme Court in Union of India v. Om Prakash, AIR 1976 SC 1745.The Supreme Court observed that Sub-section (1) of Section 20 makes it plain that the provisions of the section can be availed of only if no proceeding under Chapter II has been initiated. Therefore we are inclined to accept the contention raised by the appellants that the O.S. (Arb.) 92/86 filed by the respondent is not maintainable under the provisions of Sections 2, 5, 8 and 20 simultaneously.
6. It is not disputed before us that clause 23 of the terms of the agreement, relevant portion of which is quoted below, was, binding oh the respondent:
“If the contractor does not make any demand for arbitration in respect of any claims in writing
within 90 days of receiving the intimation from the Government that the final bill is ready for payment, the right of the contractor for arbitration in respect of all matters connected with the contract shall stand forfeited absolutely and the Government shall be discharged and released of all liabilities in respect of the contract.”
Admittedly the final bill was received by the respondent on 24-6-1978. He has no case that at the time of receiving the final bill he had simultaneously made any protest. Only claim which he made was by way of a petition to the Chief Engineer on 12-11 -1981. The arbitration was sought and claim before the designated arbitrator was made only on 30-7-1983. In the light of the above admitted facts, it has to be taken that within the time prescribed under clause 23 of the terms of contract no arbitration was sought. Failure to seek arbitration within the time thus prescribed would not only deprive the respondent of his right for arbitration of any dispute relating to the contract but it will also discharge and release the Government of all liabilities in terms of the contract. In such cases authorities are to effect that the claimant cannot even maintain a civil suit. Similar terms are usually found in shipping contracts. In Atlantic Shipping and Trading Company, Limited v. Louis Dreyfus and .Co., (1922) 2 AC 250, the relevant condition in the agreement was as follows :–
“Any claim must be made in writing and claimant’s arbitrator appointed within three months of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred.”
It was held by House of Lords that such a
condition is perfectly legal. In Metalimex Foreign
Trade Corporation v. Eugenic Maritime Company
Ltd., (1962) 1 Lloyd’s Rep 378 a clause in the
agreement which came’ up for consideration was
as follows:–
“Arbitration to be in London, Owners and Charterers each to appoint one arbitrator and the two thus chosen shall nominate an umpire. Any claim arising under this Charter Party has to be made in writing within 6 months after final discharge. Should one of the parties neglect or refuse to appoint an arbitrator within 21 days
after receipt of written request from the other party, the arbitrator of this other party shall decide the dispute as a sole arbitrator and his decision will be final and binding for both parties.”
Interpreting the above provision it was held that no claim arising under the charter-party shall be admissible if not made in writing within six months after final discharge and therefore even a claim in the Civil Court will not be maintainable.
7. In the nature of the wording of clause 23 we have no hesitation to hold that the respondent had lost his right for arbitration due to delay and that for the very same’ reason the Government is discharged of all its liabilities under the contract. The arbitrator was, therefore, fully justified in rejecting the claim put forward by the respondent herein. The respondent had put forward a contention that the decision rendered by the arbitrator is not an award, since it is titled as an order. We find no merit in this contention. Whatever be the nomenclature given to the proceeding, it is the decision of the arbitrator on the claim put forward by the respondent herein in the light of the objections raised by the department. Such decision can only be characterised as an award.
8. In order to seek a remedy if at all available under Section 20 of the Arbitration Act the respondent herein should have got the award set aside by filing an application under Section 30 of the Arbitration Act. The order or award passed by the arbitrator will be a bar for any further proceeding for adjudicating the claim put forward by the contractor in respect of the same work. House of Lords had occasion to consider a similar issue in Ayscough v. Sheed, Thomson & Co. Ltd., (1924) 19 LiL Rep 104. The relevant clause in the contract was as follows :–
“In case any dispute arises as to such quality and/or condition, the question shall be referred to arbitration as herin after mentioned, provided that such reference be claimed in writing within three days after the goods shall have been landed, or, if the goods be landed before the buyer has sighted draft and/or received invoice, then within three days after such sighting or receipt.”
The claim was put forward by the buyers only
after the period prescribed was over. It was therefore contended before the arbitrator that the claim has only to be rejected as out of time. The arbitrator accepted the contention and passed an award to that effect. Later, the buyers brought a separate civil proceeding. House of Lords affirmed the decision of the Court of appeal in rejecting the claim. Viscount Finlay in his separate judgment observed as follows :–
“It is the first rule that if there has been submission to arbitration and something in the nature of an award made, the first thing to do if you mean to take proceedings law is to get rid of the so-called award, but no steps were taken and I very much doubt whether any steps would have been successful. Anyhow, they were not taken.”
In the present case even though it is not a civi! suit that is brought by the respondent herein, but a petition under Section 20 of the Arbitration Act, the same principle would apply. Before getting a decision of the arbitrator i.e., rejecting the claim of the contractor whether it is called an award or not, set aside the contractor cannot seek remedy under Section 20 of the Arbitration Act.
9. Viewing from another angle also we are convinced that the Court below has committed an error in allowing the application. Any action to get the matter referred to an arbitrator should have been taken by the contractor within 90 days of intimation of the final bill, as per provisions contained under clause 23. Even if the earlier proceedings before the arbitrator are completely ignored, we have to hold that the prayer in the petition before the Court below cannot be allowed as it is are quest made for appointing an arbitrator beyond the period prescribed under clause 23.
10. We now consider the question of limitation. In the light of the decision of the Supreme Court in Rajan v. State of Kerala (1992) 2 Ker LT 435 :(AIR 1992 SC 1918), it is settled position’ that a petition under Section 20 has to be filed within three years from the date on which the cause of action arose as provided under Article 137 of the Limitation Act, 1963. The cause of action in this case for filing application under Section 20 should betaken to have arisen on 12-11-1981 when the respondent had made a demand to the Chief Engineer. It cannot be 30-7-1983 namely the dale on which he put forward a claim before the designated arbitrator. The petition under Section 20
was filed on 1-3-1986 i.e., certainly beyond the period of limitation prescribed under Article 137. On this ground also the Court below should have dismissed the application filed by the respondent herein.
11. In the light of the above, we set aside the judgment under challenge and allow this appeal. There will be no order as to costs.