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2000 DIGILAW 1239 (PAT)

Ajanta Construction Company v. State Of Bihar

2000-11-14

GURUSHARAN SHARMA

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Judgment Gurusharan Sharma, J. 1. These two appeals have been heard together as party thereto are same and the question to be decided is also common and are being disposed of by a common judgment. 2. M/s Ajanta Construction company filed Title Suit No. 57 of 1990 under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as the Act) for directing defendanrs 2 to 5 to file agreement no. 4F-2 of 1981-82 in the court and to refer the disputes of the parties relating thereto, to the arbitrator, appointed by court. 3. Plaintiffs case was that the department made payment of Rs. 9,61,731/- only towards its claim of Rs. 24,66,745/-, which was accepted on protest. The company was entitled to pay cost of additional work, which was beyond the scope of agreement at the schedule rate of the period when the work was done. Under Clause 23 of the agreement the Executive Engineer concerned failed to refer the dispute regarding plaintiffs claim to the arbitrator and its prayer was refused on 30.8.1989. Plaintiff, therefore, filed the suit under Section 20 of the Act. 4. Plaintiff filed another Title Suit no. 57 of 1990 under Section 20 of the Act for reference of disputes in respect of Agreement no. 1F-2 of 1984-85. This claim also related to additional work done beyond the scope of agreement on the sanctioned schedule rate of the area when the work was done. Department did not decide the claims and plaintiff received payment under protest on 4.7.1987 and 10.7.1987. 5. By separate judgment/order dated 29.6.1991 the trial court was pleased to hold that both suits were apparently barred by time and the plaintiffs claim being admittedly beyond the terms of agreement could not have been referred to arbitration, under Clause 23 of those Agreements. Accordingly, both suits were dismissed. 6. Mr. Sinha, counsel for the appellant placed reliance on a decision of the apex court in Wazir Chand Mahajan and another V/s. The Union of India ( AIR 1967 SC 990 ), wherein it was held that section 37(1) of the Act does not govern an application for filing an arbitration agreement under Section 20 of the said Act. In terms, it provides. that the provisions of the indian Limitation Act are to apply to arbitration as they apply to proceedings in court. In terms, it provides. that the provisions of the indian Limitation Act are to apply to arbitration as they apply to proceedings in court. In other words, arbitrator in dealing with a matter submitted to him is bound to apply the provisions of the Limitation Act. In this regard it is relevant to quote paragraph 7 of the said judgment which runs as under : "There is no doubt that Clause (1) of Section 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 Section 37(1) does not confer authority upon the court to reject the application for filing of an arbitration agreement under Section 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." 7. In the aforesaid circumstance, trial court erred in law in dismissing the suit under Section 20 of the Act on the ground that it was barred by time and claims beyond the terms of agreement also could not have been referred to the arbitration. 8. In the aforesaid circumstance, trial court erred in law in dismissing the suit under Section 20 of the Act on the ground that it was barred by time and claims beyond the terms of agreement also could not have been referred to the arbitration. 8. I, therefore, set aside the impugned judgments/orders and remit the matters to the court concerned to decide the suit, filed under Section 20 of the Act afresh after hearing the parties in the light of the observations made above and in accordance with law. The Lower Court records may be sent down forthwith. 9. These two appeals are disposed of accordingly.