STATE OF KERALA v. RAJAN — 1991 DIGILAW 375 (KER)

JUDGMENT Radhakrishna Menon, J. - The defendant in O.S. (Arb.) No. 14/1985 in the court of the Subordinate Judge, Thiruvananthapuram, are the appellants. 2. The appeal is directed against the judgment disposing of the suit. The operative portion of the judgment reads : "In the result the disputes and differences made mention of in para 10 of the plaint are hereby ordered to be referred to an arbitrator for arbitration ...". 3. Relevant facts : The agreement dated 19.2.1966 entered into between the appellants and the respondents to execute the work of "Anti-sea Erosion Work at Ponnthura - Constructing 488 sea wall between Singarathope and Muthalapozhy bar" was terminated on 19.12.1968 by the appellants for the alleged breach of contract. The loss sustained by the Government on account of the reassignment of the work was sought to be recovered by initiating proceedings under the Revenue Recovery Act. Those proceedings however were resisted by the Respondent by commencing proceedings made mention of in paragraph 16 of the written statement. They did not bring results and consequently the arbitration suit under Section 20 was instituted on 19.1.1985 by the respondent; but after 17 years of the termination of the contract. 4. The appellants in the written statement inter alia contended that the suit was barred by limitation. If this contention is accepted it is unnecessary to go into the other question namely whether there exists any dispute that requires to be referred for arbitration. The question arising for consideration therefore is, whether the suit under Section 20 is barred by limitation. 5. Before we find an answer to the question it has become necessary to dispose of some hypertechnical contentions raised by the counsel for the respondent in the course of his argument. According to the learned counsel this issue in fact does not arise for consideration because the appellants-defendants have not raised it either before the trial court or before this court by raising specific grounds in that regard. The appellants therefore are not entitled to raise this contention at the hearing of the appeal. It is all the more so because such questions cannot be decided without taking evidence. Yet another argument advanced by the counsel can be stated thus : The non-raising of the contention before the trial court has resulted in the respondent not getting an opportunity to meet the same effectively. It is all the more so because such questions cannot be decided without taking evidence. Yet another argument advanced by the counsel can be stated thus : The non-raising of the contention before the trial court has resulted in the respondent not getting an opportunity to meet the same effectively. We are not impressed by these arguments. The question as to whether a proceeding before the court is barred by limitation, in certain circumstances at least, is a pure question of law; in that, if the facts available on record are incapable of being disputed and on the basis of such facts the question of law can be considered and decided, then the appellate court can allow the said question to be raised for the first time at the hearing of the appeal. From the facts available on record it could be held without fear of contradiction that the above question is a pure question of law and therefore, it should be allowed to be raised even in the course of the argument of the appeal. A reference to Order 41, Rule 2, C.P.C. is relevant in the context. We shall reproduce the provision for easy reference : "2. Grounds which may be taken in appeal. The appellant shall not, except by leave of the Court, urge or be heard in support of any ground of objection not set forth in the memorandum of appeal; but the Appellate Court, in deciding the appeal, shall not be confined to the grounds of objection set forth in the memorandum of appeal or taken by leave of the Court under this rule : Provided that the Court shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of contesting the case on that ground." It can be seen from this provision that a ground not raised in the memorandum of appeal, an appellant is not entitled to raise as of right at the hearing of the appeal though he can do so with the permission of the court. It should in this connection be remembered that it is well established principle that as a general rule an appellate court will permit a point of limitation though not raised in the memorandum of appeal to be raised at the hearing of the appeal, where it is apparent on the face of the proceedings and does not involve any new question of fact. After hearing the counsel representing the parties on this point we are satisfied that the ground sought to be urged by the appellants in the course of the argument is a pure question of law and therefore, the same, we are of the view, shall be allowed to be raised by the appellants. We accordingly allowed the counsel to urge this ground although this does not find a place in the memorandum of appeal. 6. This aspect can be viewed from another angle. We, in this connection, have to focus our attention on Section 3 of the Limitation Act. Section 3 provides that subject to the provision contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. Here, as already noticed, the limitation question is a pure question of law capable of determination on the facts incapable of being disputed and apparent on the face of the record. The court under such circumstances can even suo motu raise and decide the question. The hypertechnical pleas raised by the counsel for the respondent, in the light of the discussion are accordingly rejected. 7. The proceedings from which this appeal arises is one coming under Section 20 of the Arbitration Act. The proceedings under Section 20 the learned counsel for the appellants argues, shall be filed within three years of the date of the termination of the contract/agreement or in any event within three years of the notice demanding payment of the loss, the Government suffered on account of the reassignment of the work after termination namely 30.5.1974. In support of this plea the counsel made reference to Article 137 of the Limitation Act of 1963. On the other hand the learned counsel for the respondent submits that any question pertaining to limitation can be considered and decided only by the arbitrator. In support of this plea the counsel made reference to Article 137 of the Limitation Act of 1963. On the other hand the learned counsel for the respondent submits that any question pertaining to limitation can be considered and decided only by the arbitrator. In other words, according to the counsel, the proceedings under Section 20 can be initiated at any time. In support of this argument the counsel relied on two decisions of the Supreme Court; Wazir Chand v. Union of India (AIR 1967 SC 900) and Mohd. Usman v. Union of India (AIR 1969 SC 474) and a Division Bench ruling of this court in State of Kerala v. Gopalakrishan (1990 (1) KLT 311). The Supreme Court in the decisions was considering the scope of Article 181 of the 1908 Limitation Act. Article 181 roads : Applications for which no period of limitation Three years When the is provided elsewhere in this schedule or by right to Section 48 of the Code of Civil Procedure, apply 1908 (V of 1908) accrues On a reading of this Article it is clear that the Article applies only to applications initiated under Civil Procedure Code. The question as to whether this Article governs a proceeding under Section 20 was answered in the negative by the Supreme Court as is seen from the above judgments. The Supreme Court accordingly held that the application under Section 20, Arbitration Act is not governed by Article 181 of the Limitation Act. The Supreme Court further held that the question as to whether a claim is barred by limitation can be considered and disposed of not in a proceeding under Section 20 but only by the Arbitrator after the dispute was referred to him for arbitration. There cannot be any dispute as regards these aspects after the above pronouncements by the Apex Court. The Division Bench ruling of this court in State of Kerala v. Gopalakrishan (supra) has not relevance here because there also what was considered was whether a contesting party in a proceeding under Section 20, Arbitration Act can raise the contention that the claim is barred by limitation. 8. But the question before us is different from the one, the Supreme Court dealt with in those decisions. The question we have to tackle is whether Article 137 of the 1963, Limitation Act governs the proceeding under Section 20 of the Arbitration Act. 8. But the question before us is different from the one, the Supreme Court dealt with in those decisions. The question we have to tackle is whether Article 137 of the 1963, Limitation Act governs the proceeding under Section 20 of the Arbitration Act. The answer to this question depends upon the construction of Article 137. It may in this connection be relevant to refer to the changes introduced in the definition of the words 'applicant' and 'application' contained in Sections 2(a) and 2(b) of the 1963, Limitation Act. The changed definition of these words in the 1963, Limitation Act indicates that the object sought to be achived is to include petitions, original or otherwise, under special laws also. Having under stood the position thus, the Supreme Court in Kerala S.E. Board v. T. P. Kunhaliumma (AIR 1977 SC 282. has observed that the interpretation which was given to Article 181 of the 1908, Limitation Act on the principle of ejusdem generis is not applicable with regard to Article 137 of the 1963, Limitation Act. Article 137, in the words of the Supreme Court stands in isolation from all other Articles in Part I of the third division. The Supreme Court accordingly concluded that any petitions and applications filed under any Act will be governed by Article 137. We therefore, are of the view that the proceeding under Section 20 of the Arbitration Act provided it is an Original Petition and not a suit as contended for by the respondent-plaintiff, is governed by Article 137. Having understood the position thus, let us see when did the cause of action for the proceedings arise. According to the appellants, the cause of action must be held to have arisen on 19.12.1968, the due on which the contact was terminated, or in any event, on 30.5.1974 the date on which the notice demanding payment of Rs. 1,19,258.10 representing the loss suffered by the Government due to rearrangement of the work on the termination of the contract was issued. A reference in this connection to the following excerpt from the written statement of the appellants is relevant : "The suit is not maintainable either in law or in facts. The contract agreement for the work was executed between the plaintiff and the Executive Engineer, Irrigation Division, Trivandrum on 19.2.1966. The work was unnecessarily delayed by the plaintiff. A reference in this connection to the following excerpt from the written statement of the appellants is relevant : "The suit is not maintainable either in law or in facts. The contract agreement for the work was executed between the plaintiff and the Executive Engineer, Irrigation Division, Trivandrum on 19.2.1966. The work was unnecessarily delayed by the plaintiff. The contract with the plaintiff was therefore, terminated as per Order No. AB-41344/68 dated 19.12.1968 of the Executive Engineer, Irrigation Division, Trivandrum. The balance work was awarded to other agency. The loss sustained to Government due to rearrangement of the work was Rs. 1,31,403.30. After adjusting the retention amount of Rs. 12.145.20 available with the department the net loss to Government was Rs. 1,19,258.10. The plaintiff failed to remit the amount to Government. Proceeding under R.R. Act for making good the above loss to Government was therefore, initiated against the plaintiff. Demand notice was issued to him on 30.5.1974. As the defaulter failed to pay the amount steps were taken to attach his properties ...." Instead of disputing the above demand and getting the said dispute referred for arbitration in terms of clause 3 of the agreement the respondent-plaintiff initiated proceedings made mention of in paragraph 16 of the written statement to resist the Revenue Recovery proceedings. The respondent-plaintiff under circumstances ought to have started proceedings to get the dispute referred for arbitration within three years of the notice demanding payment of the loss suffered by Government namely 30.5.1974. No such step for getting the dispute referred for arbitration however, was taken prior to 30.5.1977 is clear from the statements contained in paragraph 11 of the plaint. It reads : "The cause of action for this suit has arisen within the jurisdiction of this Hon'ble Court in Madathuvilakom Village in Trivandrum where agreement is executed from 6.6.1984 and various other dates including notice dated 22.8.1984." In these circumstances we are of opinion that the decisions cited by the respondent namely, Inder Singh v. Delhi Development Authority (AIR 1988 SC 1007), V. G. Ghawda Pvt. Ltd. v. Union of India (AIR 1978 Cal. 271), and Government of Kerala v. Kunha Abdulla (1989 (1) K.L.T. 784), in support of his argument that the cause of action arose only with effect from 22.8.1984, have no application here. 271), and Government of Kerala v. Kunha Abdulla (1989 (1) K.L.T. 784), in support of his argument that the cause of action arose only with effect from 22.8.1984, have no application here. It is relevant in the context to note that the respondent-plaintiff has not explained what exactly is the significance of the dated 6.6.1984 in the plaint. The notice demanding reference is dated 22.8.1984. The facts that should be stated in the plaint to enable one to verify whether the cause of action has properly been disclosed, have not been stated by the plaintiff-respondent. On the other hand, he has suppressed the real facts which are discernible from paragraph 16 of the written statement. To put it briefly the whole issue pertaining to the cause of action has been camouflaged in such a way that the court below was lead to believe that the suit was instituted within the period of limitation. From the discussion above, it could positively be said that the cause of action for the proceedings arose on and with effect from 30.5.1974, the date of the demand notice if not on 19.12.1968, the date in which the contract was terminated. If that be the position the proceeding ought to have been filed on or before 30.5.1977. The proceeding however, was filed only on 19.1.1985 and therefore, the same is time barred. 9. The issue can be considered from another angle. The proceedings under Section 20, going by sub-section 2 of Section 20 can be said to partake of all the characteristics of a regular suit. Sub-section 2 in fact indicates that all those parties who are interested in the claim shall be impleaded as plaintiffs and all those who resist the claim shall be impleaded as defendants. This sub-section accordingly has directed that the proceedings shall be numbered and registered as suit. Construing this provision, one of us (Radhakrishna Menon, J.) in Food Corpn. of India v. A. Ibrahim (1989 (1) KLT 251) has observed thus : "The suit, O.S. 107/78 instituted by the plaintiff contains all the particulars that should contain in a regular suit. Whether the suit is one under Section 20 or a regular suit the cause of action is the same. The difference between a suit filed under Section 20 and a regular suit is only in regard to the reliefs prayed for. Whether the suit is one under Section 20 or a regular suit the cause of action is the same. The difference between a suit filed under Section 20 and a regular suit is only in regard to the reliefs prayed for. In a suit under Section 20 the relief prayed for is that the claim be referred for the decision of the arbitrator whereas in the regular suit, the prayer is that a decree for the claim be passed. The suit under Section 20 in my view, is in the nature of the regular suit. A similar view has been expressed by Mehta, J. of the Gujarat High Court (See M/s. Korthari & Associates, Baroda v. State (AIR 1985 Guj. 42))". It can therefore be said that the proceeding under Section 20 of the Arbitration Act does have all the trappings of a regular suit; and if that be the position as to what shall be the period of limitation within which the said suit shall be filed is the question we have to tackle. A reference in this connection to Article 113 of the Limitation Act, 1963 is profitable. It reads : Suits for which there is no prescribed period. Any suit for which no period of limitation Three years When the right is provided elsewhere in this schedule. to sue accrues. This is the residuary Article. Any suit for which no period of limitation is provided elsewhere in the schedule shall be filed within three years of the accrual of the right to sue. The words employed in the Article "any suit" must be held to refer to suits other than those that are dealt with under the other Articles preceding this Article. If that be the position we are of the view that the proceeding under Section 20 which requires to be treated as a suit, shall be filed within three years of the accrual of the right to sue. The right to sue must be field to have arisen, in any even on and with effect from 30.5.1974 the date of the demand notice. The suit, therefore, ought to have been filed on or before 30.5.1977. It however was filed only on 19.1.1985. The suit, therefore, is barred by limitation. 10. From the discussion above, it is clear that the proceeding initiated under Section 20 is barred by limitation. 11. The suit, therefore, ought to have been filed on or before 30.5.1977. It however was filed only on 19.1.1985. The suit, therefore, is barred by limitation. 10. From the discussion above, it is clear that the proceeding initiated under Section 20 is barred by limitation. 11. The learned counsel for the respondent then argued that a proceeding under Section 20 of the Arbitration Act under the circumstances, can be treated as an application within the meaning of Section 5 of the Limitation Act and hence the respondent has the right to approach the court for condonation of the delay in filing the applications. In support of this argument he made reference to a Division Bench ruling of this court in Union of India v. Gopalan (1986 K.L.T. 127). Assuming that Section 5 of the Limitation Act applies to an application under Section 20 of the Arbitration Act, we are of the view that this is not a fit case where we shall entertain such a plea and condone the delay. The delay in the case on hand is more than seven years. The various proceedings, the respondent had initiated to resist recovery of the damages, in our view, do not provide sufficient ground to condone the delay. It should in this connection be remembered that those proceedings were initiated only after the expiry of the period of limitation. 12. The proceedings from which this appeal arises, for the reasons stated above, must be held to be an abuse of the process of law. The same, therefore, is liable to be dismissed with exemplary cost. The judgment under attack therefore, is set aside. The appeal is allowed with costs. Lawyers' fee we fix at Rs. 5,000 and this shall be paid to Government Pleader Sri M. C. John directly. The Government Pleader, we make it clear, is not bound to account the same to the Government. Appeal allowed.