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2014 DIGILAW 386 (RAJ)

Shri Vikas Electricals v. Union of India

2014-02-06

ALOK SHARMA

body2014
JUDGMENT 1. - On restoration, the appeal is taken up for hearing. 2. The appellant is aggrieved of the impugned order dated 06.09.1999, passed by the Additional District Judge No.1, Kota, whereby its application under Section 20 of the Arbitration Act, 1940 (hereinafter 'the Act of 1940) has been dismissed on the ground of it being hit by limitation having been filed beyond a period of three years from the time when the right to apply accrued. 3. The facts of the case that that the appellant entered into a contract with the respondents-Railway Department on 12.02.1988 to supply and establish a 300 KVA DG Set and for erection, installation, testing and commissioning thereof. As per the agreement, the work was to be done within four months commencing 11.02.1988 and the approximate cost was Rs. 11,40,545/-. Owing to delays and differences or the reason therefor between the contracting parties, the appellant's contract was rescinded on 13.03.1991. In these circumstances, the appellant vide notice dated 11.09.1991 required the respondent-Railway to make payment of outstanding amount and purportedly for appointment of an Arbitrator in terms of clause 55 and 56 of the Contract between the parties. It was the case of the appellant that vide its letter dated 04.03.1992, the respondent-Railway negated the claim of the appellant. Whereupon it filed an application under Section 20 of the Act of 1940 before the Additional District Judge No.1, Kota for a direction that the arbitration agreement be filed in the court and an Arbitrator be appointed. 4. On service of the application under Section 20 of the Act of 1940 on the respondent-Railway, a reply of denial was filed. It was submitted that the application under Section 20 of the Act of 1940 was hit by limitation and therefore deserving of dismissal. Vide impugned order dated 06.09.1999, the learned lower court upheld the contention of the respondent-Railway and dismissed the appellant's application under Section 20 of the Act of 1940 on the ground of limitation. 5. Counsel for the appellant has submitted that the cause of action for filing the application under Section 20 of the Act of 1940 arose on the refusal of the respondent-Railway under its letter dated 04.03.1992. 5. Counsel for the appellant has submitted that the cause of action for filing the application under Section 20 of the Act of 1940 arose on the refusal of the respondent-Railway under its letter dated 04.03.1992. He submits that the application was filed on 20.01.1995 which was well within three years as mandated by Article 137 of the Limitation Act, 1963 (hereinafter 'the Act of 1963') from the date of rejection of the appellant's claim by the respondent-Railway. It was submitted that the learned lower court has misconstrued both the provisions of Section 20 of the Act of 1940 as also Article 137 of the Act of 1963 in holding that the application filed on 20.01.1995 was beyond limitation and therefore not maintainable. 6. I have heard the counsel for the appellant and perused the impugned order dated 06.09.1999 of the lower court. 7. Section 20 of the Act of 1940 merely provides that where any person has entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, the said person instead of proceedings under Chapter II of the Act of the 1940 may apply to a court having jurisdiction in the matter to which the agreement relates, praying that the agreement be filed in Court. Thereupon subsequent to notice by the court before which the application has been filed to the defendant and the failure of the defendant to show sufficient cause as to why the agreement should not be filed and the Arbitrator not be appointed under the agreement between the parties, the court is to direct the filing of the agreement and make an order of reference to the Arbitrator appointed by the parties, whether in the agreement or otherwise or where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court. Section 20 of the Act of 1940 does not provide for any limitation. That has to be drawn in terms of Article 137 Schedule I of the Act of 1963. Section 20 of the Act of 1940 does not provide for any limitation. That has to be drawn in terms of Article 137 Schedule I of the Act of 1963. Article 137 aforesaid provides that the limitation for filing any application for which no period of limitation is provided else where in any part of the Schedule I appended to the Act of 1963, the limitation would be three years commencing the time when the right to apply accrues. Construing Section 20 of the Act of 1940 and Article 137 of the Schedule to the Act of 1963, the inevitable conclusion is that an application under Section 20 of the erstwhile Act of 1940 is in law to be filed within three years of the differences arising between the parties to the Arbitration agreement. When the difference arises, the cause of action would accrue. 8. The question therefore to ask and answer in this misc. appeal is as to when differences arose between the parties to the contract dated 12.02.1988. 9. From the facts on record, it is evident that the contract between the appellant and the respondent-Railway was rescinded on 13.03.1991. That to my mind was the "arising of differences" between the parties. That was the cause of action and limitation began to run inexorably thereafter. Issue of notice or negation thereof are aspects which have no bearing on the issue of limitation in the instant case. It is trite that once limitation begins to run, it does not stop or go in abeyance except under Sections 624 of the Act of 1963. No such situation has been set up by the Railways before the trial court or even this Court. In terms of Article 137 of the Act of 1963, the period of limitation for moving an application under Section 20 of the Act of 1940 would begin to run effective 13.03.1991. Admittedly in the instant case, the application under Section 20 of the Act of 1940 was filed on 20.01.1995. In my considered view differences having arisen between the parties on 13.03.1991 with the rescinding of the contract dated 12.02.1988, the period of limitation expired three years thereafter i.e. on 12.03.1994. Consequently, the application as filed on 20.01.1995 was palpably beyond limitation. In my considered view differences having arisen between the parties on 13.03.1991 with the rescinding of the contract dated 12.02.1988, the period of limitation expired three years thereafter i.e. on 12.03.1994. Consequently, the application as filed on 20.01.1995 was palpably beyond limitation. The learned lower court vide its impugned order has rightly held that the application under Section 20 of the Act of 1940 filed by the appellant was not maintainable being hit by limitation.Therefore, I find no force in the appeal. The same is dismissed. Stay application needs no address in view of the appeal itself being disposed of.Appeal dismissed. *******