ORDER
P.S. Narayana, J.
1. These Civil Revision Petitions arise out of a common order made in A.O. Ps. 86/93, 87/93 and 88/93 on the file of Additional Senior Civil Judge, Gudur under Section 8(2) of the Arbitration Act 1940 seeking a direction to the 1st respondent to appoint a sole arbitrator to decide the claims of the petitioner enumerated in his letter dated 23-5-1992 addressed to the 1st respondent and if the 1st respondent fails to do so requesting the Court to appoint an arbitrator.
2. C.R.P. No. 947/99 is preferred against A.O.P. No. 87/93, C.R.P. No. 948/99 is preferred against A.O.P. 88/93 and C.R.P. No. 949/99 is preferred against A.O.P. No. 89/93. Since all these Civil Revision Petitions arise out of a common order and a common question is involved, these Civil Revision Petitions are being disposed of by this Common Order.
3. The facts in brief are that the tender of the petitioner for a sum of Rs. 99,86,737-90 was accepted in relation to the construction of various facility buildings for IREX Expansion of PSLV. The work was to be completed within 18 months from the 15th day of the issue of the work order and it has to be completed on or before 20-2-1986. But in fact, the work was completed by 6-8-1988 and this delay was on account of the laches on the part of the Department. The 2nd respondent by his letter dated 29-6-1991 requested the petitioner to pay Rs. 1,43,172-53 on the ground that the excess amount was drawn and the petitioner had addressed a letter dated 23-5-1992 explaining various circumstances and claiming a sum of Rs. 1,06,051-10 towards final bill and the petitioner also addressed another letter dated 4-6-1992 making claims and also seeking for a claim of Rs. 1,00,000/- being the Bank guarantee and the petitioner also addressed another letter dated 4-6-1992 seeking reference to an arbitrator. The petitioner also addressed a letter dated 8-6-1992 for appointment of an arbitrator which was turned down and the Chief Engineer had asked the petitioner to furnish the particulars of claims for the purpose of making a reference to an arbitrator and the petitioner accordingly had furnished particulars, but however the request of the petitioner was turned down and as far as the preparation of final bill is concerned it is averred that it is the Department which has to prepare the final bill and ultimately prayed for the relief of appointment of an arbitrator.
4. The respondents filed a detailed counter and had specifically stated that the petitioner had not prepared and submitted his final bill though he is bound to submit the final bill as per the Clause 7 of the contract and the Department had prepared a final bill and intimated the same to the petitioner requesting to give his consent or protest by letter dated 29-5-1991 and the petitioner has neither accepted the bill nor had protested for the said bill. It was also stated that as per the final bill the petitioner himself has to pay the amount to the Department and the Department had addressed a letter dated 11-3-1992 demanding the payment and the petitioner had failed to pay the same and on the contrary the petitioner had addressed a letter on 23-5-1992 with certain allegations and making certain vague claims and he was requested to furnish the details of the claims and there was prolonged correspondence and after a long delay the petitioner had submitted the claims and the claims were not tenable and inasmuch as the request was not made within the stipulated time of 90 days under Clause 25 of the contract the request was refused and hence the request of the petitioner for appointment of an arbitrator may not be granted.
5. Both the parties had not adduced any oral evidence and with the consent of the parties Exs.A-1 to A-11 and B-1 to B-27 were marked and the Court below had framed the following points for consideration:-
1. Who has to prepare the final bill ?
2. Whether the preparation of final bill was intimated by the Department to the petitioner ?
3. Is the petitioner bound to present his claims within 90 days from the date of receiving the information of preparation of final bill ?
4. Whether the petitioner presented the claims with details within the stipulated time ?
5. Whether the petitioner’s right to ask for appointment of an arbitrator is bared under Cl.25 of the contract ?
6. Whether there were valid claims for the petitioner ?
7. Whether the Court has got power to appoint an arbitrator ?
6. The Court below after detailed discussion and after giving findings on the points framed held that the petitioner has no right to ask the 1st respondent to appoint an arbitrator since he had not submitted the claims within the stipulated time of 90 days and thereby it is deemed that he had waived his claims and hence he is not entitled for the direction of appointment of an arbitrator for the purpose of deciding the claims. Aggrieved by the said orders passed in the above A.O.Ps., the Revision Petitioners have preferred the Civil Revision Petitions stated supra.
7. For the purpose of convenience, the Arbitration Act, 1940, hereinafter is referred as “old Act” and the Arbitration and Conciliation Act, 1996, is referred to as “present Act”.
8. Sri T. Veerabhadraya, the learned counsel representing the Revision Petitioners in all the Civil Revision Petitions had contended that these proceedings though were commenced under the old Act, they are saved by virtue of Section 85(2) of the present Act. The learned counsel also had drawn my attention to the certain portions of the correspondence in Exs.A-3, A-4, A-6, A-7 and had submitted that the dismissal of A.O.Ps. by the learned Additional Senior Civil Judge, Gudur is totally unsustainable in law, especially on the question of limitation. The learned counsel also had submitted that though the application was made under Section 8 of the Act and quoting of a wrong provision may not be of much consequence when the substance of the allegations goes to show that a particular provision is attracted and if the Court is satisfied that on the allegations made the relief can be granted on the substance of the allegations, the mere wrong quoting of the provision is of no consequence. The learned counsel also had placed reliance on Section 21 of the present Act. The learned counsel also had contended that the general law of limitation and the legal rights relating thereto cannot be taken away by such a stipulation in the contract. Further, the learned counsel also had contended that if the correspondence is carefully gone through it is doubtful whether there is any attainment of finality relating to the disputed claims. The learned counsel had placed reliance on several decisions in support of his contentions.
9. Sri L. Narsimha Reddy, representing the respondents had vehemently contended that the very foundation to have a right of arbitrator itself is created by a contract and when the agreement itself stipulates the period of limitation and it is specifically stated that if the right is not exercised within the period stipulated in the agreement, the right will get itself extinguished and the order of the Court below declining to appoint an arbitrator is legal and justified. The learned counsel also had drawn my attention to Clause 25 of the agreement and also had pointed out the detailed discussion of the Court below relating to Point Nos. 3, 4 and 5. The learned counsel also had contended that the contractor is bound to submit the claims within 90 days from the date of receiving the intimation and though the contractor was intimated on 29-5-1991 itself relating to preparation of final bill, the claims were not made within the stipulated period of 90 days and hence it should be taken that his right to invoke the arbitration clause itself is extinguished or at any rate it should be taken that the right was waived by the party. The learned counsel also had stressed on the words “which commenced before the Act” in Section 85(2) of the present Act and had contended that unless the arbitrator was already appointed it will not amount to commencement before the Act.
10. Having heard both the counsel, the short question which falls for consideration is whether the orders made by the court below in A.O.P. No. 86, 87 and 88 of 1993 on the file of Additional Senior Civil Judge, Gudur are sustainable in law, or they are liable to be set aside.
11. It may be relevant to refer to that portion of Clause 25 of the contract which deals with this aspect, which reads as follows:-
“It is also the term of the contract that if the Contractor(s) do/does not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving intimation from the department that the bill is ready for payment, the claim of the contractor(s) will be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the Contract in respect of those claims”.
12. On the strength of this clause, the learned counsel for the respondents had strenuously contended that the claims are barred by time and at any rate the right to enforce the claims had been extinguished by virtue of the term of the contract or at any rate it should be taken to have been waived. Since the facts are not in dispute, all the facts in detail need not be narrated. But, however, certain relevant aspects may be noted for the purpose of better appreciation of the facts of the case.
13. The Revision Petitioner in Ex.A-3 letter dated 23-5-1992 had made a request as follows:-
“We request you to approve the above claims. In case you decide not to approve the claims, the disputes may be referred to arbitration immediately”.
14. Ex.A-1 is dated 4-6-1992 in which claim No. 26 was added and a request was made to refer the dispute to arbitration immediately. Ex.A-6 is dated 1-9-1992 in which the construction engineer had stated
“It is noted that you have made unreasonable claims which are without any basis. It may also be noted that you have to pay the department an amount of Rs. 1,22,839/- for which you have encashed Bank guarantee and adjusting to your other bills available with us”.
15. Ex.A-7 is dated 7-9-1992 by the Chief Engineer who had stated
“Your request for appointment of an arbitrator for all the above works has been examined in detail with reference to the conditions of contract. All your claims in accordance with the terms of the contract are absolutely time barred and hence your request for appointment of an arbitrator cannot be considered”.
16. In the light of the above facts, the question now is whether the petitioner is entitled to have the appointment of arbitrator for the purpose of deciding the disputed claims in spite of the fact that the said request was made beyond the stipulated time of 90 days as specified by Clause 25 of the contract.
17. Section 85(2) of the present Act reads as follows:-
“Notwithstanding such repeal, –
(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;
(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issue under this Act”.
18. The words “which commenced before this Act came into force” clearly got to show that the arbitral proceedings commenced can be continued notwithstanding the repeal and it is a saving clause. Section 21 of the present Act reads as follows:-
“Commencement of arbitral proceedings: –
Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”
19. In the light of the said provisions, these proceedings where a request was made for appointment of arbitrator can be continued and hence these matters can be decided on merits. In WAZIR CHAND MAHAJAN AND ANOTHER Vs. THE UNION OF INDIA , the Apex Court was pleased to observe as follows:-
“There is no doubt that Cl.(1) of S.37 of the Arbitration Act deals only with the authority of the arbitrator to deal with and decide any dispute referred to him: it has no concern with an application made to the Court to file an arbitration agreement and to refer a dispute to the arbitrator. After an agreement is filed in Court and the matter is referred to the arbitrator, it is for the arbitrator to decide by the application of the law contained in the Limitation Act, whether the claim is barred. But S.37(1) does not confer authority upon the Court to reject the application for filing of an arbitrator agreement under S.20 of the Arbitration Act because the claim is not made within three years from the date on which the right to apply arose. In dealing with an application for filing an arbitration agreement, the Court must satisfy itself about the existence of a written agreement which is valid and subsisting and which has been executed before the institution of any suit, and also that a dispute has arisen with regard to the subject-matter of the agreement which is within the jurisdiction of the Court. But the Court is not concerned in dealing that application to deal with the question whether the claim of a party to the arbitration agreement is barred by the law of limitation: that question falls within the province of the arbitrator to whom the dispute is referred”.
20. In fact this decision was followed in MEDA NARSIMHULU Vs. COUNCIL OF SCIENTIFIC AND INDUSTRIAL RESEARCH . In MAJOR (RETD) INDER SINGH REKHI Vs. DELHI DEVELOPMENT AUTHORITY it was held that the limitation for an application for reference under Section 20 and 8 of the Arbitration Act 1940, Article 137 of the Limitation Act is applicable and the period of limitation has to be computed from the date of claim asserted by one party and the payment denied by the other party. In UNION OF INDIA Vs. P.KAMESWARA RAO 1995(3) A.L.D. 389, it was held that the term in a contract that if the contractor fails to prepare the final claim within 90 days of intimation of final bill, he shall be deemed to have been waived his right, is only meant for convenience and it does not take away the right of the contractor to prefer his claim within the period of limitation. In the light of these decisions, the principle that emerges is that though there is some time stipulated in the contract, if under the general law of limitation there is an enforceable right, it cannot be said that such claims are barred by limitation by virtue of such a clause in the agreement.
21. However, the matter does not end there. In NATIONAL INSURANCE CO. LTD., Vs. SUJIR GANESH NAYAK AND CO.AND ANOTHER ,the apex Court observed as follows:-
“From the case law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provides for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. Such a clause would fall outside the scope of Section 28 of the Contract Act. This, in brief, seems to be the settled legal position. We maynow apply it to the facts of this case”.
22. In the present case, on the strength of the condition incorporated in Clause 25 of the contract, as already stated supra, it was strenuously contended that on behalf of the Government that since bynon-exercising the right within the stipulated time of 90 days, the very right itself will get extinguished or at any rate such a right should be taken as waived by the authority and to substantiate this contention strong reliance was placed on the decision cited (5) supra. Here itself, I may point out that the above decision is a matter relating to a clause in the insurance policy providing for higher period than prescribed by law for filing a claim. However, the decision cited (1) and also (3) supra, relate to the matters under the Arbitration Act. Apart from this aspect of the matter, the general principle is that the law of limitation bars the remedy, but cannot extinguish the right as such since under general law of limitation we cannot enforce the claims only since such claims are barred by limitation under the provisions of the Limitation Act. In fact, in The Law of Limitation, 1963, 2nd Edition, at page 44, by me, I have expressed the opinion that law of limitation does not extinguish the right, but only bars the remedy. In the light of the view expressed by me, I am not inclined to agree with the learned counsel representing the respondents that the condition stipulated in Clause 25 of the contract should be construed in such a way so as to go to the extent of extinguishing the right of the petitioner to enforce the arbitration clause itself for non-compliance of the condition within the period of 90 days stipulated by the said clause.
23. For the foregoing reasons, the impugned orders made in A.O.Ps. 86/93, 87/93 and 88/93 on the file of Additional Senior Civil Judge, Gudur dated 18-9-1998 are liable to be set aside and consequently the 1st respondent is directed to appoint an arbitrator to decide the claims of the petitioner. The Civil Revision Petitions are allowed accordingly, with costs.