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2011 DIGILAW 544 (JK)

Mir Faiz Hussain & Ors. v. State & Anr.

2011-10-17

FAKKIR MOHAMED IBRAHIM KALIFULLA, MOHAMMAD YAQOOB MIR

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JUDGMENT 1. Respondents admittedly have allotted various works from the year 1979 to the firm M/S Mir Ghulam Hussain Contractors, of which Mir Ghulam Hussain (deceased) was proprietor who is survived by the present appellants. For allotted nine works, firm was required to use 'Deodar' poles (timber logs). The works have been executed. 2. Respondents adopted the formula for measurement as G2/16xL which is known as 'quarter girth formula'. Under the said method the girth of each pile is measured at three different places i.e. top, centre and bottom. The appellant firm had requested the respondents to use different formula for measurement as the quarter girth formula was not the correct formula, which was not acceded to. In the meantime, the records of the respondent department gutted in the fire. The appellant firm invoked the arbitration clause of the agreement vis-a-vis all nine works. 3. Government vide its order No.131-HYD of 1999 dated 11.8.1999 referred the dispute as arose to the Arbitrator, namely, Mr. Justice A. Q. Parray (Retired). The arbitral proceedings relatable to all the works arising out of Arbitration Petition Nos. 38/94, 39/94, 40/94, 41/94, 42/94, 43/94, 44/94, 45/94 and 46/94 culminated in filing of the award dated 14th of September, 2002, same was objected by the respondents, based on which the Court framed the following issue: Whether the award is liable to be set aside on the ground that the Arbitrator has misconducted in the arbitral proceedings? (OP State of J&K) 4. During the course of arguments, respondents raised issue to the effect that the contract was entered into in the year 1979 whereas arbitral proceedings have been sought in the year 1994 i.e. after 14 years. The learned Single Judge while noticing the objection as raised has observed that same issue had been raised before the Arbitrator and Arbitrator has noticed that when the petition under Section 20 of the J&K Arbitration Act was filed for referring the matter for arbitration, the respondents had set up the plea of limitation, same did not prevail before the learned Single Judge and the appeal filed before the Division Bench met the same fate. What Arbitrator has observed has been noticed in the judgment, same is reproduced here-under: 'From the record it appears that when the claimants approach the Hon'ble High Court for appointment of an Arbitrator and filed petitions under Section 20 of the J&K Arbitration Act (now repealed), the respondents had set up limitation as a plea. It did not find favour with the Hon'ble Single Judge. Thereafter appeal was filed before the Division Bench and even before the Division Bench the plea did not find favour. There is no finding recorded by the Hon'ble high Court in respect of the said plea and I am of the opinion that the same having been specifically raised, shall be deemed to have been rejected. I, therefore, cannot sit in review over the judgment of the Hon'ble High Court. That apart, I have found on facts that none of the works executed by the claimants have been finaled. No final bill of any of the works has been produced before the Arbitrator. The Executive Engineer stated that at their own level they had prepared two final bills in respect of Pump House 1st Stage Rajpora and balance works of Pump House 1st Stage Kachkote but no such record has been produced. Final bills have neither been produced nor the works have been finaled. Further the claimant has laid its claim with regard to its deposits which again goes to show that the works have not been finaled up. There exists correspondence on the file even of the year 1993/94 which goes to show that the matters in controversy were still pending before the department. In these circumstances it cannot be said that the claim petitions filed by the claimants are barred by limitation.' 5. Learned Single Judge has noticed that the formula applied was accepted by the firm and received the final payment and it is only in the year 1994, when the record gutted in the fire, the firm filed arbitration petitions, so have not been filed within three years of the first measurement done by the State i.e. from the year 1983. The learned Single Judge has concluded as under: Under these circumstances I find that the claims put forth by the firm were barred by limitation. The Arbitrator should not have entertained a time barred claim. The award passed by the Arbitrator therefore cannot be made rule of the court. 6. The learned Single Judge has concluded as under: Under these circumstances I find that the claims put forth by the firm were barred by limitation. The Arbitrator should not have entertained a time barred claim. The award passed by the Arbitrator therefore cannot be made rule of the court. 6. The learned Single Judge has proceeded on two premises: (1) that the arbitration petition under Section 20 should have been filed within three years as permissible under Article 181 of the Limitation Act, (2) that the claims put forth by the firm were barred by limitation. 7. So far as question of limitation for filing petition under Section 20 of the Arbitration Act is concerned, no period of limitation is prescribed because amendments as have been introduced in the Central Act have not been introduced in the J&K Arbitration Act. This issue has already been settled by the Full Bench of this Court in the judgment rendered in M/S Megha Enterprises and etc. etc. Vs. The State and others, reported in AIR 1995 J&K 16 . Para 17 of the judgment is relevant to be quoted: 17. In the premises we hold that Article 181 of the State Limitation Act, 1938, does not govern and is not applicable to applications filed under the Special Acts including the applications under Section 20 of the Arbitration Act and is limited to application under the Code of Civil only. In other words, it does not prescribe any time limitation for an application under Section 20 of the Arbitration Act or for any application under the Special Act. We answer the reference accordingly but hasten to add that it will be the duty of the arbitrator to consider the plea of limitation and to decide whether or not the claims of the appellants are time barred. 8. Now it is clear that no limitation is prescribed for any application under Section 20 of the Arbitration Act. It is also clear that the Arbitrator has to consider as to whether the claims were time barred. The Full Bench judgment appear not to have been brought to the notice of the learned Single Judge. The finding that the petition under Section 20 of the Arbitration Act should have been filed within three years, runs contrary to the law as has been laid down such finding recorded by the learned Single Judge is unsustainable. 9. The Full Bench judgment appear not to have been brought to the notice of the learned Single Judge. The finding that the petition under Section 20 of the Arbitration Act should have been filed within three years, runs contrary to the law as has been laid down such finding recorded by the learned Single Judge is unsustainable. 9. The second question as to whether claims were barred by limitation has not been elaborately dealt with in the impugned judgment. While considering as to whether the claims were barred arbitrator on scanning the evidence concluded that on facts none of the works executed by the claimants have been finaled, no final bill of the works has been produced and has further noticed that the existing correspondence on the file even of the year 1993/94 would suggest that the matters in controversy were still pending before the department, under such circumstances claims of the claimants are not barred by limitation. 10. We have bestowed our consideration on this aspect of the case. The learned Arbitrator in his detailed award has made reference to various communications as referred to in the award from internal page 60 to internal page 72, careful perusal of which would reveal that in the letter dated 14.9.1987, addressed by claimants to the Chief Engineer, the claimants had claimed 5% payment over and above the quarter girth formula and objected to the reduction of the same to 3% on the recommendations of REC. (a) In the letter dated 7th January, 1988, addressed to Technical Officer of the Chief Engineer, it has been mentioned that the Forest Department and Forest Corporation are using the formula G2Lx16 so any other method does not seem to be very rational. (b) In the letter dated 6.12.1990, addressed by Assistant Executive Engineer Lift Irrigation Scheme to the Executive Engineer, Tral Rajpora Irrigation Division, orders have been solicited for submission of final bill. (c) Again in the year 1990 the firm had requested for making correct assessment by application of Newton's formula and a request was made for clearing all the dues as payable by the department. (c) Again in the year 1990 the firm had requested for making correct assessment by application of Newton's formula and a request was made for clearing all the dues as payable by the department. (d) In the letter dated 17.1.1991, addressed by Executive Engineer Irrigation Division Tral, it has been mentioned that the claimants have not taken steps for dumping the material at the constructional site for executing the balance work of construction of 1st Stage Pump House at Rajpora and the claimants have been asked to execute the work failing which the work will be got executed at the risk and cost of the claimants through some other agency. (e) Again in the letter dated 7.2.1991 addressed by claimants to the Chief Engineer, stating therein that the claimants will execute all the remaining works only after due payments are released. (f) In the letter dated 27.9.1994 written by Executive Engineer to the Managing Director, State Forest Corporation, it has been requested to indicate prevailing formula regarding measurement of deodar wooden logs of varying girth and it is added therein that information is required for filing reply to the arbitration petitions before the High Court. (g) Again in terms of letter dated 29.9.1994, addressed by Regional Manager (S&M) State Forest Corporation, Srinagar, to Executive Engineer, Irrigation Division, Tral, formula for measurement of logs is indicated to be (G/4)2x length. 11. Reference to aforesaid letters is made with the purpose of showing that the controversy regarding application of correct method for measurement was not resolved, instead was kept alive. When it is so, the claim laid by the firm cannot be said to be barred by limitation because cause was recurring. In case respondents in clear terms at the very outset in the year 1983 or 1987 would have informed the appellant firm that the method adopted by them is correct and there is no question of reconsideration, then it was for the firm to raise claim within that period itself, instead respondents have entertained representations of the firm (claimants) and in terms of above referred letters have kept the matter open, therefore, cause was recurring. Learned counsel for the appellants was right in saying that the claimant firm all along tried to get the controversy vis-a-vis application of method for measurement amicably settled as is evidenced by the series of communications. Learned counsel for the appellants was right in saying that the claimant firm all along tried to get the controversy vis-a-vis application of method for measurement amicably settled as is evidenced by the series of communications. Therefore, dispute has to be deemed to have arisen only after the last communication i.e. in the year 1994, as such, claim raised would not be said to be barred by limitation. 12. Viewed thus, the position of law relatable to the applicability of the period of limitation for filing application under Section 20 of the Arbitration Act has not been correctly appreciated in view of the law laid down by the Full Bench of this Court in AIR 1995 J&K 16 . 13. The issue of bar of limitation vis-`-vis claim has been intermingled with the question of limitation applicable to application under Section 20. The finding recorded by the Arbitrator vis-`-vis question of bar of limitation relatable to the claims has not been correctly appreciated in the impugned judgment and the said finding of the Arbitrator cannot be found fault with. The judgment impugned, as such, is set aside. 14. Now what shall be the merit of the claims and as to whether on the basis of findings recorded by the Arbitrator award can be made rule of the Court, is a question to be determined by the learned Single Judge because merit of the claims was not considered by the learned Single Judge instead on the point of limitation award has not been made rule of the Court. Therefore, on determination of merit of the claims, it has to be decided as to whether award can be made rule of the Court or not. As such, the matter be listed before learned Single Judge having the roaster. 15. All the appeals are accordingly allowed.