UNION OF INDIA Vs. RISHI RAJ AND CO

JUDGEMENT

(1.) THE respondent therein M/s. Rishi Raj and Company filed an application in the Court of the Subordinate Judge, 1st, Class, Delhi, under Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act) for referring certain disputes between the respondent and the appellant to arbitration of the arbitrator named in the agreement dated 5-11-1963. According to the averments in the application, the Regional Director (Food), Northern Region, had issued an invitation to tender dated 21-9-1963 for the appointment of loading/unloading and transport contractors at Government of India Godowns and Railway Heads at Agra. THE tender submitted by the respondent was accepted by the government by its letter of acceptance dated 11-10-1963. THE respondent commenced the work but before the work was completed and before the expiry of the period of the contract, the Regional Director (Food) cancelled the contract on 25-6-1964. THE Regional Director further claimed a sum of Rs.21,314.15 paise from the respondent by way of damages and loss alleged to have been sustained by the Government as a result of getting the work completed by other contractors. THE respondent repudiated the claim of the Government and, on the other hand, made a counterclaim against the Government for Rs.5,000/- by way of damages for the wrongful termination of the contract by the Government. the respondent called upon the appellant to refer the disputes between them to the sole arbitration of a person nominated by the Secretary to the Government of India, Ministry of Food and Agriculture according to the arbitration clause contained in the agreement dated 511- 1963. THE appellant, however, declined to refer the disputes to arbitration. THE respondent, therefore, prayed that the Court should call upon the appellant to file the arbitration agreement and that the disputes be referred to arbitration in terms of the arbitration clause contained in the said agreement.

(2.) THE appellant opposed the application various grounds, the main ground being that the application filed by the respondent was barred by limitation. the following issues were framed by the learned Subordinate Judge :-1. Whether the application is not within time?

(3.) THE entire dispute raised by the respondent cannot be referred to arbitration. THE only dispute that can be referred to arbitration. THE only dispute that can be referred to arbitration is in respect of the claim made by the Government against the respondent. THE dispute raised by the respondent in respect of its counterclaim against the Government cannot be referred to arbitration as it is barred by limitation. THE judgment of the learned Subordinate Judge referring the entire dispute to arbitration is, therefore, modified accordingly and the appeal is allowed in part to that extent. THE parties will bear their own costs in this appeal.