CONART ENGINEERS LIMITED Vs. SHAMROCK INDUSTRIAL COMPANY LIMITED

JUDGEMENT

(1.) THE case of the petitioner is pursuant to their tender being accepted the contract was entered into on 8th February, 1996. Clause 37 of the contract provided for reference of disputes to arbitration. Disputes and differences having arisen between the parties the petitioners invoked the arbitral clause by their letter dated 2nd May, 2001. In the said letter it was set out that the respondents owed money to the petitioners. It is averred that on 31st March,, 1998 the respondents had issued a cheque for Rs. 1. 00 lakh in part payment. That cheque when deposited was dishonoured. By letter of 27th May, 1998 demand was made under section 138 of the Negotiable Instruments Act. A pay order for the sum of Rs. 1. 00 lakhs dated 28th May, 1998 was issued which was received by the petitioners on 30th May, 1998. It is averred that as there are disputes and differences the petitioners were invoking the arbitral clause. They appointed their arbitrator and called on the respondents to appoint their arbitrator. The respondents replied by their letter dated 8th June, 2001 wherein in so far as the Para 4 and 5 it was set out that the respondents did not admit what is set out in those paragraphs of the letter. Thereafter it was mentioned that in so far as Para 6 is concerned, the disputes arose on account of the defective works done by the petitioners. The respondents denied that the dispute can be decided by Arbitrator. In these circumstances it was intimated that the appointment of the arbitrator was misconceived and without prejudice informed that the respondents did not agree to the name of the arbitrator as appointed. It may be mentioned that the petitioners herein had earlier filed a Company petition which was dismissed by the Company Court on the ground that there was a bona fide dispute.

(2.) THE respondents have opposed the present application under section 11 of the Arbitration and Conciliation Act, 1996. It is their contention that the claim of the petitioner is barred by limitation. It is pointed out that even if the acknowledgement of the last payment is considered as 28th May, 1998 the application before this Court is only filed on 1st August, 2001, which is clearly beyond the period of 3 years. The mere fact that the arbitral clause was invoked by letter of 2nd May, 2001, it is contended, is of no consequences as arbitral clause had to be invoked within 3 years of the cause of action accruing. It is further pointed out that Article 137 of the Schedule to Limitation Act would cover the present case. Reliance in support was placed on the judgment of the Apex Court in (State of Orissa and another v. Shri Damodar Das), A. I. R. 1996 S. C. 942. In that case the issue was the limitation which would apply in an application under section 20 of the Arbitration Act, 1940. The Apex Court held that the claim for arbitration must be raised as soon as the cause for arbitration arises as in the like manner of the case of cause of action arising in civil suit. Reliance was placed on the judgment in (Panchu Gopal Bose v. Board of Trustees for Port of Calcutta), 1993 (4) S. C. C. 338. The Apex Court held that the provisions of the Arbitration Act would apply to arbitration and notwithstanding any term in the contract to the contrary. It is then set out that the cause of action for the purpose of limitation shall be deemed to have accrued to the party in respect of any such matter at the time when it should have accrued but for the contract. Cause of arbitration shall be deemed to have commenced when one party serves the notices on the other party requiring the appointment of an arbitrator. On the facts of that case it was found that the first contract was of the year 1967-68 and executed in 1967 itself. The amount was stated to have been received in September, 1967 itself. The notice was issued on September 15, 1980. This was held to be hopelessly barred by limitation. It is this judgment which is the basis for the arguments advanced by the petitioners.

(3.) THE first question is what was being considered in the judgment in State of Orissa (supra ). The question that was being considered was the application of the Limitation Act to an application under section 20 of the Act of 1940 the Apex Court held that it was governed by Article 137 of the Limitation Act. Section 20 is an application to the Court. In the instant case as per the law declared by the Apex Court a petition under section 11 is an invocation to the Chief Justice and/or his delegate. The exercise of power under section 11 is administrative in character. That application is, therefore, not to a Court. In these circumstances section 11 at least would not be governed by the provisions of Article 137 of the Indian Limitation Act.