WAZIR CHAND MAHAJAN Vs. UNION OF INDIA

JUDGEMENT

(1.) UNDER an agreement, dated 1/11/1950, with the State of Himachal Pradesh, Triloknath Mahajan-second appellant in this appeal-purchased the right to extract and collect certain medicinal herbs from the forests of Chamba District. The period of the agreement was one year from September l, 1950. By Cl.y Cl. 22 of the agreement it was provided that all disputes between the parties arising under the agreement or under any clause thereunder or in any manner connected with or arising out of the agreement or the operation thereof, or the rights, duties or liabilities of either parties thereunder including the dispute or difference as to the construction of the agreement shall be referred to the sole arbitration of the Deputy Commissioner, Mandi District, Himachal Pradesh, and if that officer be unable or unwilling to act, to such Assistant as the Deputy Commissioner shall appoint as the sole arbitrator. Triloknath Mahajan transferred all his right, title and interest under the agreement to Wazirchand Mahajan-the first appellant-with the permission of the State of Himachal Pradesh.

(2.) DISPUTES arose in October 1950 between the appellants and the State of Himachal Pradesh regarding the right to collect herbs from certain areas and the failure of the State authorities to prevent trespassers from removing herbs, the right to which was granted to the second appellant. The appellants addressed a letter on 30/05/1952 to the Chief Conservator of Forests, Himachal Pradesh, requiring that Officer to submit the matters in difference to the arbitration of the Deputy Commissioner, Mandi District. By his reply, dated 23/06/1952, the Chief Conservator declined to agree to a reference contending that the matters desired to be referred to were outside the arbitration claues. On 22/06/1952, the appellants applied to the District Court of Chamba for an order that the agreement dated 1/11/1950 be filed in the Court and that the disputes between them and the State be referred to the sole arbitration of the Deputy Commissioner Mandi District. The State of Himachal Pradesh contended inter alia that the application for filing the arbitration agreement was barred by the law of limitation as the right to apply, if any, arose in the year 1950 and not on 23/06/1952, as alleged. The Court of First Instance held that the' Limition Act did not govern an application for filing an arbitration agreement under S. 20 of the Arbitration Act, 1940 and that even if the application was governed by Art 181 of Sch. I of the Limitation Act. 1908, since the application was made within three years from the date on which the Chief Conservator of Forests, Himachal Pradesh, declined to make a reference, it was not barred. The Court accordingly ordered that the agreement be filed and the disputes be referred to the arbitrator named in the agreement. During the pendency of this application before the trial Court, the Part 'C' State of Himachal Pradesh became Union Territory, and the Union of India was substituted as a party in place of the State of Himachal Pradesh. In appeal by the Union of India, the Judicial Commissioner, Himachal Pradesh, reversed the order of the Trial Court. In the view of the Judicial Commissioner an application for filing an arbitration agreement under S. 20 of the Arbitration Act is governed by Art. 181 of the Limitation Act, and since the period of three years prescribed thereby commences to run from the date on which differences arose between the parties, i.e., about the month of September -October 1950, and in any case on 1/09/1951, the application for reference filed by the appellants was barred.

(3.) IN Hansraj Gupta v. Official Liquidators of the Dehradun-Mussorie Electric Tramway Co. Ltd., 60 INd App 13: (AIR 1933 PC 63), the Judicial Committee of the Privy Council observed at p. 20 (of INd App):