{"id":103299,"date":"2007-05-14T00:00:00","date_gmt":"2007-05-13T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/punjab-state-and-ors-vs-dina-nath-on-14-may-2007"},"modified":"2015-10-17T09:40:45","modified_gmt":"2015-10-17T04:10:45","slug":"punjab-state-and-ors-vs-dina-nath-on-14-may-2007","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/punjab-state-and-ors-vs-dina-nath-on-14-may-2007","title":{"rendered":"Punjab State And Ors vs Dina Nath on 14 May, 2007"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Punjab State And Ors vs Dina Nath on 14 May, 2007<\/div>\n<div class=\"doc_author\">Author: T Chatterjee<\/div>\n<div class=\"doc_bench\">Bench: Tarun Chatterjee, Altamas Kabir<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  5197 of 2000\n\nPETITIONER:\nPunjab State and Ors\n\nRESPONDENT:\nDina Nath\n\nDATE OF JUDGMENT: 14\/05\/2007\n\nBENCH:\nTarun Chatterjee &amp; Altamas Kabir\n\nJUDGMENT:\n<\/pre>\n<p>J U D G M E N T<\/p>\n<p>W I T H<br \/>\nCIVIL APPEAL NO.5198 OF 2000<br \/>\nThe Executive Engineer, Anandpur<br \/>\nSahib Hydel Construction Division<br \/>\n VERSUS<br \/>\nDina Nath and Ors. Respondents    <\/p>\n<p>TARUN CHATTERJEE, J.\n<\/p>\n<p>1.\tThe crucial question that needs to be decided in these<br \/>\nappeals is whether Clause 4 of Work Order No.114 dated 16th of<br \/>\nMay, 1985 (in short &#8216;Work Order&#8217;) which says that: &#8220;Any dispute<br \/>\narising between the department and the contractor\/society shall be<br \/>\nreferred to the Superintending Engineer, Anandpur Sahib, Hydel<br \/>\nCircle No. 1 Chandigarh for orders and his decision will be final<br \/>\nand acceptable\/binding on both the parties&#8221; constituted an<br \/>\narbitration agreement.\n<\/p>\n<p>2.\tBefore proceeding further, we may bring it on record<br \/>\nthat though the facts in both the appeals are identical, but for<br \/>\npurposes of disposal of these appeals, the facts in CA No. 5197 are<br \/>\nbeing considered which are as follows:\n<\/p>\n<p>3.\tThe parties entered into a contract for the work of<br \/>\ndowel drain and wire crate at RD No. 9400 to 10400 kms. in the<br \/>\nState of Punjab. The appellants made running payments to the<br \/>\nrespondent during the period of execution of the works in terms of<br \/>\nthe Work Order. However, after completion of the work, the final<br \/>\nmeasurements were not made, nor the final bills were prepared.<br \/>\nThe dispute remained pending with the department for which the<br \/>\nrespondent called upon the appellants to finalise the dispute and<br \/>\nprepare the final bill as per the rates quoted by the respondent and<br \/>\naccepted by the appellants. A final notice was issued on 16th April,<br \/>\n1990, calling upon the appellants to refer the dispute to an<br \/>\narbitrator as per Clause 4 of the Work Order. Since the appellants<br \/>\nhad failed to appoint an Arbitrator, the respondent filed an<br \/>\napplication before the Additional Senior Subordinate Judge, Ropar,<br \/>\nPunjab under Section 20 of the Arbitration Act, 1940 (in short &#8216;the<br \/>\nAct&#8217;) seeking appointment of an Arbitrator.\n<\/p>\n<p>4.\tBy an order dated 20th October, 1993 the learned<br \/>\nAdditional Senior Subordinate Judge, Ropar, Punjab after hearing<br \/>\nboth the parties, allowed the application filed by the respondent<br \/>\nand referred the dispute for decision to the Superintending<br \/>\nEngineer, Anandpur Sahib, Hydel Circle No. 1 Chandigarh. The<br \/>\nAdditional Senior Subordinate Judge, Ropar, while allowing the<br \/>\napplication, held that Clause 4 of the Work Order must be<br \/>\nconstrued to be an arbitration agreement within the meaning of<br \/>\nSection 2(a) of the Act and that the application filed under Section<br \/>\n20 of the Act was filed within the period of limitation. According<br \/>\nto the learned Additional Senior Subordinate Judge, Ropar, the<br \/>\ncause of action arose from the date the final notice of demand was<br \/>\nsent, i.e., 16th April 1990, which was well within the period of 3<br \/>\nyears from the date of filing the application as contemplated under<br \/>\nArticle 137 of the Limitation Act 1963.  Feeling aggrieved by the<br \/>\naforesaid order, the appellants preferred an appeal in the Court of<br \/>\nthe District Judge, Roopnagar, Punjab, which by an order dated<br \/>\n24th April, 1997 was allowed, inter alia, on a finding that Clause 4<br \/>\nof the Work Order could not be held to be an &#8216;arbitration<br \/>\nagreement&#8217; nor the dispute was covered within the ambit of the<br \/>\nAct. On the question of limitation in filing the application under<br \/>\nSection 20 of the Act, the appellate court held that the application<br \/>\nunder   Section 20 of the Act was barred by limitation. Feeling<br \/>\naggrieved by the order of the learned Additional District Judge,<br \/>\nRoopnagar, Punjab, reversing the order of the Additional Senior<br \/>\nSubordinate Judge, Ropar, the respondent filed a Civil Revision<br \/>\nCase before the High Court of Punjab and Haryana at Chandigarh,<br \/>\nwhich by the impugned order was allowed and the order of the<br \/>\nAdditional Subordinate Judge, Ropar was restored. Dissatisfied<br \/>\nwith this order of the High Court, a special leave petition was filed<br \/>\nby the appellants, which on grant of leave was heard in the<br \/>\npresence of the learned counsel for the parties.\n<\/p>\n<p>5.\tHaving heard the learned counsel for the parties and<br \/>\nafter going through the impugned order of the High Court as well<br \/>\nas the orders of the appellate court and the trial court and the<br \/>\nmaterials on record and considering the clauses in the Work Order,<br \/>\nwe are of the view that the High Court was fully justified in setting<br \/>\naside the order of the appellate court and restoring the order of the<br \/>\nAdditional Subordinate Judge by which the dispute was referred to<br \/>\narbitration for decision. Before proceeding further, we may,<br \/>\nhowever, take note of some of the relevant clauses in the Work<br \/>\nOrder which read as under: &#8211;\n<\/p>\n<p>&#8220;Clause 13 of the Work Order: &#8211; &#8220;If the contractor does not carry<br \/>\nout the work as per the registered specifications, the department<br \/>\nwill have the option to employ its own labour or any other agency<br \/>\nto being the work to the departmental specification and recover the<br \/>\ncost therefrom.&#8221;\n<\/p>\n<p>Clause 4: &#8220;Any dispute arising between the department and the<br \/>\ncontractor\/society shall be referred to the Superintending Engineer,<br \/>\nAnandpur Sahib, Hydel Construct Circle No. 1, Chandigarh for<br \/>\norders and his decision will be final and acceptable\/binding on both<br \/>\nparties.&#8221;\n<\/p>\n<p>6.\tAs pointed out herein earlier, the trial court on<br \/>\nconsideration of Clause 4 of the Work Order held that Clause 4 of<br \/>\nthe Work Order must be held to be an arbitration agreement and<br \/>\naccordingly an arbitrator was appointed in compliance with Clause<br \/>\n4 of the Work Order \tAt this stage we feel it appropriate to<br \/>\nexamine in detail whether clause 4 of the Work Order can be held<br \/>\nto be an arbitration agreement within the meaning of Section 2(a)<br \/>\nof the Act.\n<\/p>\n<p>7.\tSection 2[a] of the Act defines &#8216;arbitration agreement&#8217;<br \/>\nwhich means a written agreement to submit present or future<br \/>\ndifferences to arbitration whether arbitrator is named therein or not.<br \/>\nMr. Tathore learned Additional Solicitor General appearing on<br \/>\nbehalf of the appellants contended that although the Work Order<br \/>\nwas allotted to the respondent on 16th May, 1985, the respondent<br \/>\nhad failed to execute the work allotted to him and the appellants<br \/>\nhad got the work executed at its own cost in terms of clause 13 of<br \/>\nthe Work Order which, as noted herein earlier, provides that in case<br \/>\nthe contractor does not execute the allotted work, the department<br \/>\ncould get the same executed by other agencies or by itself.  He<br \/>\nfurther contended that owing to such failure on the part of the<br \/>\nrespondent, final bills were not prepared nor were the final<br \/>\nmeasurements taken for the purpose of payment to the respondent.<br \/>\nAccordingly, Mr. Tathore contended that there was no existence of<br \/>\nany dispute and accordingly the question of referring such disputes<br \/>\nin terms of Clause 4 of the Work Order could not arise at all.  This<br \/>\nsubmission of Mr. Tathore was contested by the learned counsel<br \/>\nfor the respondent.  Therefore, a dispute arose as to whether the<br \/>\nrespondent had completed the work allotted to him under the Work<br \/>\nOrder.  This is an issue, according to the High Court as well as the<br \/>\nSubordinate Court, which should be referred for decision to an<br \/>\narbitrator.\n<\/p>\n<p>8.\tA bare perusal of the definition of arbitration<br \/>\nagreement would clearly show that an arbitration agreement is not<br \/>\nrequired to be in any particular form.  What is required to be<br \/>\nascertained is whether the parties have agreed that if any dispute<br \/>\narises between them in respect of the subject matter of the contract,<br \/>\nsuch dispute shall be referred to arbitration.  In that case such<br \/>\nagreement would certainly spell out an arbitration agreement. [<a href=\"\/doc\/1979603\/\">See<br \/>\nRupmani Bai Gupta v. Collector of Jabalpur AIR<\/a> 1981 SC 479]<br \/>\nHowever, from the definition of the arbitration agreement, it is also<br \/>\nclear that the agreement must be in writing and to interpret the<br \/>\nagreement as an &#8216;arbitration agreement&#8217; one has to ascertain the<br \/>\nintention of the parties and also treatment of the decision as final. If<br \/>\nthe parties had desired and intended that a dispute must be referred<br \/>\nto arbitration for decision and they would undertake to abide by<br \/>\nthat decision, there cannot be any difficulty to hold that the<br \/>\nintention of the parties to have an arbitration agreement; that is to<br \/>\nsay, an arbitration agreement immediately comes into existence.\n<\/p>\n<p>9.\tIn the case of <a href=\"\/doc\/48449\/\">Bihar State Mineral Development<br \/>\nCorporation v. Encon Building,<\/a> [(2003) 7 SCC 418], this Court<br \/>\nheld that &#8220;there is no dispute with regard to the proposition that for<br \/>\nthe purpose of construing an arbitration agreement, the term<br \/>\n&#8220;arbitration&#8221; is not required to be specifically mentioned therein.&#8221;<br \/>\nLooking to the opinion of the Hon&#8217;ble Judges in the said case and<br \/>\nalso considering clause 4 of the Work Order in depth, we are of the<br \/>\nopinion that Clause 4 of the Work Order between the parties can be<br \/>\ninterpreted to be an arbitration agreement even though the term<br \/>\n&#8220;arbitration&#8221; is not expressly mentioned in the agreement. In this<br \/>\ndecision of this Court the test of &#8216;dispute&#8217; and &#8216;reference&#8217; was<br \/>\nagain reiterated. In Para 17, it was stated that there cannot be any<br \/>\ndoubt whatsoever that an arbitration agreement must contain broad<br \/>\nconsensus between the parties that the disputes and differences<br \/>\nshould be referred to a domestic tribunal.\n<\/p>\n<p>10.\tWe have already noted Clause 4 of the Work Order as<br \/>\ndiscussed hereinabove.  It is true that in the aforesaid Clause 4 of<br \/>\nthe Work Order the words &#8220;arbitration&#8221; and &#8220;arbitrator&#8221; are not<br \/>\nindicated; but in our view, omission to mention the words<br \/>\n&#8220;arbitration&#8221; and &#8220;arbitrator&#8221; as noted herein earlier cannot be a<br \/>\nground to hold that the said clause was not an arbitration agreement<br \/>\nwithin the meaning of Section 2[a] of the Act.  The essential<br \/>\nrequirements as pointed out herein earlier are that the parties have<br \/>\nintended to make a reference to an arbitration and treat the decision<br \/>\nof the arbitrator as final.  As the conditions to constitute an<br \/>\n&#8216;arbitration agreement&#8217; have been satisfied, we hold that clause 4<br \/>\nof the Work Order must be construed to be an arbitration<br \/>\nagreement and dispute raised by the parties must be referred to the<br \/>\narbitrator. In the case of <a href=\"\/doc\/1777887\/\">K.K. Modi v. K.N. Modi<\/a> [(1998) 3 SCC<br \/>\n573], this Court had laid down the test as to when a clause can be<br \/>\nconstrued to be an arbitration agreement when it appears from the<br \/>\nsame that there was an agreement between the parties that any<br \/>\ndispute shall be referred to the arbitrator. This would be clear when<br \/>\nwe read Para 17 of the said judgment and points 5 and 6 of the<br \/>\nsame which read as under:\n<\/p>\n<p>&#8220;5. That the agreement of the parties to refer their<br \/>\ndisputes to the decision of the tribunal must be intended to<br \/>\nbe enforceable in law; and\n<\/p>\n<p>6. Agreement must contemplate that the tribunal will<br \/>\nmake a decision upon a dispute, which is already formulated<br \/>\nat the time when reference is made to tribunal.&#8221;\n<\/p>\n<p>11.\tThat apart, in Para 23 of the decision in the case of<br \/>\nK.K. Modi (supra), this Court also noticed its earlier decision in the<br \/>\ncase of State of U.P. v Tippar Chand [1980 (3) SCC 241]. In that<br \/>\ncase, the test as indicated above was also recorded in which it was<br \/>\nstated that &#8220;this court said that there was no mention in this clause<br \/>\nin any dispute much less any reference thereof.&#8221;\n<\/p>\n<p>12.\tKeeping the ingredients as indicated by this Court in<br \/>\nthe case of K. K. Modi (supra) in mind for holding a particular<br \/>\nagreement as an arbitration agreement, we now proceed to examine<br \/>\nthe aforesaid ingredients in the context of the present case.<br \/>\na.\tClause 4 of the Work Order categorically states that the<br \/>\ndecision of the Superintending Engineer shall be binding on the<br \/>\nparties.\n<\/p>\n<p>b.\tThe jurisdiction of the Superintending Engineer to decide<br \/>\nthe rights of the parties has also been derived from the consent of<br \/>\nthe parties to the Work Order.\n<\/p>\n<p>c.\tThe agreement contemplates that the Superintending<br \/>\nEngineer shall determine substantive rights of parties as the clause<br \/>\nencompasses all varieties of disputes that may arise between the<br \/>\nparties and does not restrict the jurisdiction of the Superintending<br \/>\nEngineer to specific issues only.\n<\/p>\n<p>d.\tThat the agreement of the parties to refer their disputes to<br \/>\nthe decision of the Superintending Engineer is intended to be<br \/>\nenforceable in law as it is binding in nature.\n<\/p>\n<p>13.\tIn view of the aforesaid conditions being satisfied,<br \/>\nwhich were based on the principles laid down by this Court in K.K.<br \/>\nModi&#8217;s case (supra), there cannot be any doubt in our mind that the<br \/>\narbitration agreement does exist. Clause 4 of the Work Order is an<br \/>\nArbitration Agreement. The learned Counsel appearing on behalf<br \/>\nof the appellants contended that the ingredients laid down in the<br \/>\ncase of K.K. Modi are not satisfied in the present case and<br \/>\ntherefore following the principles laid down in that case, this Court<br \/>\nmust hold that clause 4 of the Work order cannot be construed as<br \/>\nan arbitration agreement. We are unable to accept this contention<br \/>\nof the learned counsel of the appellants for two reasons. First, in<br \/>\nview of our discussions herein earlier, to the effect that all the<br \/>\ningredients to hold a particular agreement as an arbitration<br \/>\nagreement have been satisfied in the preset case. Secondly, the<br \/>\nfactual situations in the case of KK Modi (supra) and in the case<br \/>\nbefore us are very different. That case dealt with the evaluation and<br \/>\ndistribution of assets, which required expert decision rather than<br \/>\narbitration. The clause in the K.K Modi case (supra) had a very<br \/>\nrestricted operation as it dealt with only disputes regarding<br \/>\nimplementation of contract whereas, in the case before us, Clause 4<br \/>\nis much wider in its ambit as it deals with any dispute between the<br \/>\ncontractor and the department.\n<\/p>\n<p>14.\tThe words &#8220;any dispute&#8221; appears in Clause 4 of the<br \/>\nWork Order.  Therefore only on the basis of the materials produced<br \/>\nby the parties in support of their respective claims a decision can be<br \/>\narrived at in resolving the dispute between the parties. The use of<br \/>\nthe words &#8216;any dispute&#8217; in Clause 4 of the Work Order is wide<br \/>\nenough to include all disputes relating to the said Work Order.<br \/>\nTherefore, when a party raises a dispute for non-payment of money<br \/>\nafter completion of the work, which is denied by the other party,<br \/>\nsuch a dispute would come within the meaning of &#8216;arbitration<br \/>\nagreement&#8217; between the parties.  Clause 4 of the Work Order also<br \/>\nclearly provides that any dispute between the department and the<br \/>\ncontractor shall be referred to the Superintending Engineer, Hydel<br \/>\nCircle No. 1, Chandigarh for orders. The word &#8216;orders&#8217; would<br \/>\nindicate some expression of opinion, which is to be carried out, or<br \/>\nenforced and which is a conclusion of a body (in this case<br \/>\nSuperintending Engineer, Hydel Circle No. 1, Chandigarh). Then<br \/>\nagain the conclusion and decision of the Superintending Engineer<br \/>\nwill be final and binding on both the parties. This being the<br \/>\nposition in the present case and in view of the fact that Clause 4 of<br \/>\nthe Work Order is not under challenge before us, the decision that<br \/>\nwould be arrived at by Superintending Engineer, Hydel Circle No.<br \/>\n1, Chandigarh must also be binding on the parties as a result<br \/>\nwhereof Clause 4 must be held to be a binding arbitration<br \/>\nagreement.\n<\/p>\n<p>15.\tIn the decision of this Court in the case of State of UP<br \/>\nv. Tippar Chand (supra), this Court however held that the clause<br \/>\nin dispute in that decision between the parties did not amount to an<br \/>\narbitration agreement.  In that decision, this Court further held that<br \/>\nclause under consideration before them which provided that except<br \/>\nwhere otherwise specified in the contract the decision of the<br \/>\nSuperintending Engineer for the time being shall be final,<br \/>\nconclusive and binding on all the parties to the contract upon all<br \/>\nquestions relating to the meaning of the specifications etc and the<br \/>\ndecision of the Superintending Engineer as to the quality,<br \/>\nworkmanship etc. shall be final, conclusive and binding between<br \/>\nthe parties does not constitute an arbitration agreement but while<br \/>\narriving at such a conclusion this Court referred to a decision of the<br \/>\nJammu and Kashmir High Court in the case of  <a href=\"\/doc\/177330\/\">Dewan Chand v.<br \/>\nState of Jammu and Kashmir<\/a>  [AIR 1961  J &amp; K 58]. In the<br \/>\nDewan Chand case (supra) the relevant clause runs as follows:- &#8221;<br \/>\nFor any dispute between the contractor and the Department the<br \/>\ndecision of the Chief Engineer PWD Jammu and Kashmir, will be<br \/>\nfinal and binding upon the contractor.  This Court in that decision<br \/>\nhad put strong reliance on the expression &#8220;any dispute between the<br \/>\ncontractor and the department&#8221; and approved the conclusions<br \/>\narrived at by the J &amp; K High Court.  It came to the conclusion by<br \/>\ninterpretation of that clause that there did not exist any arbitration<br \/>\nagreement as the decision of the Superintending Engineer in<br \/>\nconnection with the work done by the contractor was meant for<br \/>\nsupervision and execution of the work and administrative control<br \/>\nover it from time to time.  However, in Clause 4 of the Work Order<br \/>\nin the present case, which specifically states that in case of any<br \/>\ndispute between the appellants and the contracting parties, the<br \/>\nmatter shall be referred to the Superintending Engineer. Therefore,<br \/>\nthe use of the words &#8220;any dispute&#8221; would clearly mean that it<br \/>\nwould lead to conclude that the said agreement was in fact an<br \/>\narbitration agreement and thus these words do not restrict the scope<br \/>\nof the contract.\n<\/p>\n<p>16.\tBefore parting with this aspect of the matter we may<br \/>\nnote the decision of <a href=\"\/doc\/64556\/\">State of Orissa v.  Damodar Das<\/a>  [1996(2)<br \/>\nSCC 216] on which strong reliance was placed before us by the<br \/>\nlearned counsel for the appellants. This decision of this court may<br \/>\nnot be helpful to the appellants as we find the agreement in<br \/>\nquestion in that case was different from Clause 4 of the Work<br \/>\nOrder. For proper appreciation, we may reproduce the agreement in<br \/>\nthe case of Damodar Das which reads as under:-\n<\/p>\n<p>&#8220;25. Decision of Public Health Engineer to be final &#8211;<br \/>\nExcept where otherwise specified in this contract, the<br \/>\ndecision of the Public Health Engineer for the time being<br \/>\nshall be final, conclusive and binding on all parties to the<br \/>\ncontract upon all questions relating to the meaning of the<br \/>\nspecifications; drawings and instructions hereinbefore<br \/>\nmentioned and as to the quality of workmanship or materials<br \/>\nused on the work, or as to any other question, claim, right,<br \/>\nmatter or thing, whatsoever in any way arising our of, or<br \/>\nrelating to, the contract, drawings specifications estimates,<br \/>\ninstructions, orders or these conditions, or otherwise<br \/>\nconcerning the works or the execution or failure to execute<br \/>\nthe same, whether arising during the progress of the work or<br \/>\nafter the completion or the sooner determination thereof of<br \/>\nthe contract.&#8221;\n<\/p>\n<p>17.\tA plain reading of this clause in the case of Damodar<br \/>\nDas, it is evident that the powers of the Public Health Engineer<br \/>\nwere essentially to supervise and inspect. His powers were limited<br \/>\nto the questions relating to the meaning of the specifications;<br \/>\ndrawings and instructions, quality of workmanship or materials<br \/>\nused on the work, or any other question, claim, right, matter,<br \/>\ndrawings specifications estimates, instructions, orders or these<br \/>\nconditions, or otherwise concerning the works or the execution or<br \/>\nfailure to execute the same. However, in the case before us, the<br \/>\nSuperintending Engineer was given full power to resolve any<br \/>\ndispute arising between the parties which power in our view is<br \/>\nwide enough to cover any nature of dispute raised by the parties.<br \/>\nThe Clause in the instant case categorically mentions the word<br \/>\n&#8220;dispute&#8221; which would be referred to him and states &#8220;his decision<br \/>\nwould be final and acceptable\/binding on both the parties.&#8221;\n<\/p>\n<p>18.\tThat being the position, we are of the view that the<br \/>\nclause in the case of Damodar Das and Clause 4 of the Work Order<br \/>\nof the present case are totally different. We accordingly do not find<br \/>\nany reason to hold otherwise.\n<\/p>\n<p>19.\tAt the risk of repetition we may also say before<br \/>\nparting with this judgment that Clause 4 of the Work Order speaks<br \/>\nfor a dispute between the parties.  It also speaks of a dispute and all<br \/>\nsuch disputes between the parties to the Work Order shall be<br \/>\ndecided by the Superintending Engineer, Anandpur Sahib Hydel<br \/>\nCircle No. 1.  Obviously, such decision can be reached by the<br \/>\nSuperintending Engineer, Anandpur Sahib Hydel Circle No. 1 only<br \/>\nwhen it is referred to him by either party for decision.  The<br \/>\nreference is also implied.  As the Superintending Engineer will<br \/>\ndecide the matter on reference, there cannot be any doubt that he<br \/>\nhas to act judicially and decide the dispute after hearing both the<br \/>\nparties and permitting them to state their claim by adducing<br \/>\nmaterials in support.  In Clause 4 of the Work Order it is also<br \/>\nprovided as noted herein earlier that the decision of the<br \/>\nSuperintending Engineer shall be final and such agreement was<br \/>\nbinding between the parties and decision shall also bind both the<br \/>\nparties.  Therefore, the result would be that the decision of the<br \/>\nSuperintending Engineer would be finally binding on the parties.<br \/>\nAccordingly, in our view, as discussed herein above that although<br \/>\nthe expression &#8220;award&#8221; or &#8220;arbitration&#8221; does not appear in Clause 4<br \/>\nof the Work Order even then such expression as it stands in Clause<br \/>\n4 of the Work Order embodies an arbitration clause which can be<br \/>\nenforced.\n<\/p>\n<p>20.\tFor the reasons aforesaid, we are of the view that<br \/>\nClause 4 of the Work Order can safely be interpreted to be an<br \/>\narbitration agreement even though the term &#8216;arbitration&#8217; is not<br \/>\nexpressly mentioned in the agreement. In view of our discussions<br \/>\nmade herein earlier, we therefore conclude that Clause 4 of the<br \/>\nWork Order constitutes an arbitration agreement and if any dispute<br \/>\narises, such dispute shall be referred to Superintendent Engineer for<br \/>\ndecision which shall be binding on the parties.\n<\/p>\n<p>21.\tBefore parting with this judgment, we may consider a<br \/>\nshort submission advanced at the Bar on the question of limitation<br \/>\nin filing the application under Section 20 of the Act. At the risk of<br \/>\nrepetition, we may keep it on record that the Additional Senior<br \/>\nSubordinate Judge, Ropar, held that the application was filed in<br \/>\ntime whereas the appellate court held that the application was<br \/>\nbarred by limitation. However, the High Court in revision restored<br \/>\nthe order of the Additional Senior Subordinate Judge, Ropar, by<br \/>\nholding that application was filed within the period of limitation.\n<\/p>\n<p>22.\t For the purpose of deciding the question of limitation,<br \/>\nit may be stated that the application under Section 20 of the Act<br \/>\nwas filed within 3 years from the date the demand notice was made<br \/>\nby the respondent as contemplated under Article 137 of the<br \/>\nLimitation Act.\n<\/p>\n<p>23.\tIn order to determine when the cause of action arose,<br \/>\nit is essential for us to refer to a case decided by this court. In the<br \/>\ncase of <a href=\"\/doc\/1415267\/\">S. Rajan v. State of Kerala<\/a> [(1992) 3 SCC 608] it was<br \/>\nheld by this Court that the right to apply for arbitration proceeding<br \/>\nunder Section 20 of the Arbitration Act, 1940 runs from the date<br \/>\nwhen the dispute arises. It observed:\n<\/p>\n<p>&#8220;Reading Article 137 and Sub-section (1) of Section 20<br \/>\ntogether, it must be said that the right to apply accrues when the<br \/>\ndifference arises or differences arise, as the case may be, between<br \/>\nthe parties. It is thus a question of fact to be determined in each<br \/>\ncase having regard to the facts of that case.&#8221;\n<\/p>\n<p>24.\tAccepting the principles laid down in the case of S.<br \/>\nRajan (supra), this Court in the case of <a href=\"\/doc\/954540\/\">Hari Shankar Singhania<br \/>\nand Ors. v. Gaur Hari Singhania and Ors.<\/a> [(2006) 4 SCC 658]<br \/>\nagain reiterated the principle that an application under section 20 of<br \/>\nthe Act for filing the arbitration agreement in Court and for<br \/>\nreference of the dispute to arbitration in accordance therewith is<br \/>\nrequired to be filed within a period of three years when the right to<br \/>\napply accrues and that the said right accrues when difference or<br \/>\ndispute arises between the parties to the arbitration agreement.<br \/>\nKeeping the principles in mind, let us now examine as to when<br \/>\ndifference or dispute arises between the parties to the arbitration<br \/>\nagreement, when the right to apply accrues. As noted herein earlier,<br \/>\ndemand notice was served on the appellants by the respondent on<br \/>\n16th April 1990 and the application under section 20 of the Act was<br \/>\nfiled on 13th November 1990 which is admittedly within the period<br \/>\nof limitation as contemplated under Article 137 of the Limitation<br \/>\nAct.\n<\/p>\n<p>25.\tThe Additional District judge, Roopnagar, Punjab,<br \/>\nheld on the question of limitation in filing the application under<br \/>\nsection 20 of the Act that the cause of action did not arise when<br \/>\nnotice of demand was served but arose when the respondent first<br \/>\nacquired either the right of action or the right to require that<br \/>\narbitration takes place upon the dispute concerned.\n<\/p>\n<p>26.\tKeeping the decisions of this court in the cases of S.<br \/>\nRajan (supra) and Hari Shankar Singhania (supra) in mind, in our<br \/>\nopinion, the view of the Additional District Judge was totally<br \/>\nerroneous. In the aforesaid two decisions, it was held that the right<br \/>\nto apply accrued for the difference arising between the parties only<br \/>\nwhen service of demand notice was effective, which should be the<br \/>\ndate for holding that the difference had already arisen between the<br \/>\nparties. Such being the settled law, we are of the view that the<br \/>\napplication under section 20 of the Act was clearly filed within the<br \/>\nperiod of limitation.\n<\/p>\n<p>27.\tFor the reasons aforesaid we do not find any merit in<br \/>\nthese appeals. Accordingly, the appeals are disposed of with no<br \/>\norders as to cost.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Punjab State And Ors vs Dina Nath on 14 May, 2007 Author: T Chatterjee Bench: Tarun Chatterjee, Altamas Kabir CASE NO.: Appeal (civil) 5197 of 2000 PETITIONER: Punjab State and Ors RESPONDENT: Dina Nath DATE OF JUDGMENT: 14\/05\/2007 BENCH: Tarun Chatterjee &amp; Altamas Kabir JUDGMENT: J U D G M E [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-103299","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Punjab State And Ors vs Dina Nath on 14 May, 2007 - Free Judgements of Supreme Court &amp; 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