Andhra HC (Pre-Telangana)
M. Venkata Rao vs Union Of India (Uoi) Rep. By General ... on 4 February, 2008
Equivalent citations: 2008(2)ALT535
Author: B. Seshasayana Reddy
Bench: B. Seshasayana Reddy
JUDGMENT B. Seshasayana, J.
1. This Civil Miscellaneous Appeal is directed against the judgment dated 1-9-2005 passed in O.P. No. 1717 of 2003 on the file of XIV Additional Chief Judge, City Civil Court (Fast Track Court), at Hyderabad, whereby and whereunder the learned Additional Chief Judge dismissed the application filed under Section 34 of the Arbitration and Conciliation Act, 1996, (for short, 'the Act').
2. The parties entered into a contract for proposed repairs to the cess and widening of bank between KMS 138-155 in Vikarabad-Parli Section of South Central Railway on 17-2-1992. The date of completion of the work was 16-8-1992. The value of the contract was Rs. 9,22,200/-. The General Conditions of Contract (for short "GCC") formed part of the agreement that was entered into between the parties. The contractor was to deposit a sum of Rs. 53,6101- towards security deposit, but at the request of the Contractor (hereinafter referred to as 'the Claimant') it was agreed to deduct it from the running bills. The work comprises of earthwork of 17400 cubic metres in the embankment to be obtained from quarries outside the Railway land limits. On 1-10-1992 the Claimant requested for extension of time upto 31-3-1993 and extension was accordingly granted. As the work could not be completed within the extended time, the Claimant requested further extension of time upto 30-9-1993 which request was considered by South Central Railway (hereinafter referred to as 'the Department') and extended the time. Yet another extension was requested upto 30-3-1994. But the extension was granted by the Department upto 31-12-1993. Thereafter, the Claimant kept quiet. It was only on 26-4-1996 the Claimant sought for further extension of time upto 31-12-1996, which was also considered by the Department. As on 21-5-1996 the Claimant completed 60% of the work. The Claimant by letter dated 21-8-2001 requested the Department to release the payment for the work done so far. As he did not receive any reply, he requested the Department by letter dated 1-11-2001 either to settle his claim or to refer the dispute to an Arbitrator. Finding no response from the Department, he approached the High Court by filing an application under Section 11(6) of the Act for appointment of an Arbitrator. His application came to be allowed appointing the 3rd respondent herein as the sole arbitrator, by order dated 19-8-2002. The claimant submitted claims statement before the Arbitrator claiming Rs. 14,81,025/- under various heads as shown hereunder:
1. Refund of the amount for the workd done Rs. 2,00,000/-
Interest at 24% p.a. from 1-1-1997 to 18-1-2003.
Rs. 2,90,394/-
2. Refund of security deposit Rs. 53,610/-
Interest at 24% from 1-1-1997 to 18-1-2003. Rs. 77,843/-
3. Loss of legitimate earnings for not refunding the above amounts Rs. 6,08,664/-
Arbitration costs Rs. 2,50,514/-
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Total Rs. 14,81,025/-
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3. The Department filed counter resisting the claims made by the Claimant. It is pleaded in the counter that the Claimant in spite of granting liberal extensions of time could not show any progress in the work. Measurements of the earthwork executed by the Claimant were taken in May, 1996. Total quantity of the work done by the Claimant was 5223.765 cubic metres, out of which payment for 4000 cubic mefres was already arranged. Out of the balance of 1,223.765 cubic metres, payment for 1,000 cubic metres was arranged under CC/3 Bill in May, 1996. As the Claimant failed to carry out the balance work, which was considerable, the payment for 223.765 cubic metres was not arranged. The Department further pleaded in the counter that the claim of the Claimant was barred by limitation as the Claimant kept quiet since May, 1996 and put in claims only on 1-11-2001.
4. The learned Arbitrator took up preliminary objection as to maintainability of the claims made by the Claimant on the ground of limitation. On considering the material brought on record and on hearing the counsel for the parties, the learned Arbitrator came to the conclusion that the claims made by the Claimant are barred by limitation and accordingly passed a 'Nil' award on 27-4-2003. The Claimant filed application being O.P. No.1717 of 2003 before the XIV Additional Chief Judge, City Civil Court (Fast Track Court), at Hyderabad, to set aside the Award dated 27-4-2003 passed by the Arbitrator. The learned Additional Chief Judge, on hearing the counsel for the parties, did not find any valid ground to interfere with the findings recorded by the Arbitrator and dismissed the application accordingly by judgment dated 1-9-2005. The said judgment is under challenge in this Civil Miscellaneous Appeal.
5. Heard learned Counsel appearing for the appellant/Claimant and learned Standing Counsel appearing for the Department/Respondents 1 and 2.
6. Learned Counsel appearing for the appellant/Claimant submits that as on the date of the appellant/Claimant made a request to the Department under letter dated 21-8-2001 to release the payments for the works so far done, his final bill was not settled and therefore, the claims made by him by letter dated 1 -11 -2001 are not barred by limitation. In support of his submission, reliance has been placed on the following decisions:
(1) Prathyusha Associates v. Rashtriya Ispat Nigam Ltd. .
(2) Inder Singh v. Delhi Development Authority .
(3) State of Orissa and Anr. v. Damodar Das .
(4) Bharat Coking Coal Ltd. v. Annapurna Construction .
7. Per contra learned Standing Counsel appearing for the Department/Respondents 1 and 2 submits that the Claimant kept quiet after receipt of letter dated 21-3-1997/3-4-1997 and therefore, limitation for raising any claim commences from that date. He would further contend that the claims made by the Claimant under his letter dated 1-11-2001 are hopelessly barred by limitation, which fact the learned Arbitrator took into consideration and passed 'Nil' award and therefore, the findings recorded by the learned Arbitrator as confirmed by the civil court are legal and proper and the same are not required to be interfered in this appeal. To buttress his submissions, reliance has been placed on the following decisions:
(1) Panchu Gopal Bose v. Board of Trustees for Port of Calcutta (2) State of Orissa and Anr. v. Damodar Das .
(3) Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor .
8. The facts which are not in dispute are: The work of attending for repairs to the cess and widening of bank between KMS 138-155 in Vikarabad Parli Section was to be completed on 16-8-1992. The value of the contract was Rs. 9,22,200/-. The Claimant sought for extension of time. His request was considered by the Department from time to time and extension was granted upto 31-12-1996. Under letter dated 2-1-1997 the Department informed the Claimant to submit an application for extension of time in terms of Clause 17(1) of General Conditions of Contract. For better appreciation, we may refer letter dated 2-1-1997.
South Central Railway, Office of the Divl. Railway Manager, (Works) III Floor, Sanchalan Bhavan, Secunderabad-500071.
No. CW/148/WV/W, Dated 2-1-97. To Shri M. Venkat Rao, Railway Contractor, 1-80/1. Kukatpally, Hyderabad-500872. Sir,
Sub: VKB-PRLI Section - Proposed repairs to Cess and Widening of bank between KM 138-155.
Ref.: Agreement No. 14/W/BG/92, dated 6-5-92.
The contract for the above work was awarded to you for faithful fulfillment of contractual obligation on or before the due date of completion stipulated i.e., 16-8-92 in the agreement. You are well aware that the time is the essence of the contract as per General Conditions of Contract.
It is observed that you have been given extension upto 31-12-96 without penalty for completion of the work. Kindly intimate the present position of work.
In case if extension of time is required due to any genuine reasons, you may submit your application in terms of Clause 17 (1) of General Conditions of Contract, to consider granting extension.
Receipt of the letter may please be acknowledged with immediate reply by return post.
Finding no response from the Claimant, another letter dated 21-3-97/3-4-97 came to be addressed by the Department to the Claimant which reads as hereunder:
South Central Railway, Divl. Rly. Manager (W) BG Officer/Secunderabad.
No. CW/148/WV/W/4805/IV. Dated 21-3-97/3-4-97. To Shri M. Venkat Rao, Rly. Contractor, 1-80/1/Kukatpally, Hyderabad Sir,
Sub: VKB-PRLI Sec, Proposed Repairs to Cess and Widening of bank between KM 138-155.
Ref.: Agt. No. 14/W/BG/92 of 6-5-92.
*** The contract for the above work was awarded to you for faithful fulfillment of contractual obligation on or before the due date of expiry of date of completion stipulated in the agreement. You are will aware that the time is the essence of the contract as per General Conditions of the Contract.
It is observed that you have done only 60% of the work and the balance work is not being done since February, '96 and you have not sought for any extension of time beyond 31-12-96.
In view of the above, 7 days Notice is hereby issued to you to make good your default immediately duly progressing the work by mobilizing adequate machinery and ensure completion on or before due date of completion failing which the contract will have to be terminated at your risk and cost and liquidated damages will be advised to recover from you.
In case if extension of time is required due to any genuine reasons you may submit your application well within a month in advance in terms of Clause 17(1) of General Conditions of Contract.
Receipt of the letter may please be acknowledged with immediate reply by return post.
Though the Claimant asserts that he submitted letter on 9-4-1997 in response to the letter dated 21-3-97/3/4/97, he did not substantiate the same. The learned Arbitrator considered the material brought on record and came to the conclusion that the Claimant failed to substantiate his plea of addressing letter dated 9-4-1997. Para 19 of the Award passed by the learned Arbitrator reads as hereunder:
The facts of this case on the other hand, convey that the claimant in fact had no grievance as to the amount paid to him on 24-5-1996 after the measurements were taken and payment received. That was the reason, why the applicant has not made any complaint or grievance about it. In Ex. R-4 it is sent hat he had certified that the measurements taken in the "Third on Account Bill" dated 21-5-1996 for the period 30-9-1992 to 18-5-1996 had been accepted by him as correct. Obviously therefore no letter was addressed by the claimant seeking the alleged amount of Rs. 2 lacs. The letter dated 9-4-1997 where it was stated that the work had not been measured and that an amount of Rs. 2,00,000 was due to him is now disputed by the respondents as a fabricated document and that it was not received by the respondents. As seen, in all the letters addressed by the claimant to the respondents, the stamp of the South Central Railway is not found on the said letter dated 9-4-1997 as a token of receipt of the letter by the Railways which raises the suspicion supporting the plea of the respondents. If this letter-is excluded, it becomes clear that no dispute was indeed raised by the claimant after the payment was made on 24-5-1996 for the work done by him. For the first time, the claim was made claiming an amount of Rs. 2,00,000/- in the letter dated 21-8-2001 Ex. C-14 and thereafter on 1-11-2001 Ex. C-15 making the detailed claims for the same amount and refund of the security deposit etc., which were admittedly beyond the three years period of limitation provided under Article 137 of the Limitation Act.
9. Since the reasoning given by the learned Arbitrator as to non-receipt of letter dated 9-4-1997 by the Department is cogent and convincing, we are not inclined to interfere with the said finding.
10. The period of limitation for the commencement of an arbitration runs from the date on which had there been no arbitration clause, the cause of action would have accrued. Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
11. In State of Orissa and Anr. v. Damodar Das (3 supra), the Supreme Court held that Section 3 of the Limitation Act, 1963, enjoins the Court to consider the question of limitation whether it is pleaded or not. Paras 5 and 6 of the judgment need to be noted and it is thus:
5. Russell on Arbitration by Anthony Walton (19th Edn.) at pp.4-5 states that the period of limitation for commencing an arbitration runs from the date on which the "case of arbitration" accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned. The period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued:
Just as in the case of actions the claim is not to be brought after the expiration of the specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
Even if the arbitration Clause contains a provision that no cause of action shall accrue in respect of any matter agreed to be referred to until an award is made, time still runs from the normal date when the cause of action would have accrued if there had been no arbitration clause.
6. In Law of Arbitration by Justice Bachawat at p.549, commenting on Section 37, it is stated that subject to the Limitation Act, 1963, every arbitration must be commenced within the prescribed period. Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date when the cause of action accrues, so in the case of arbitrations the claim is not to be put forward after the expiration of a specified number of year from the date when the claim accrues. For the purpose of Section 37(1) 'action' and 'cause of arbitration' should be construed as arbitration and cause of arbitration. The cause of arbitration arises when the claimant becomes entitled to raise the question, that is, when the claimant acquires the right to require arbitration. An application under Section 20 is governed by Article 137 of the schedule to the Limitation Act, 1963 and must be made within 3 years from the date when the right to apply first accrues. There is no right to apply until thee is a clear and unequivocal denial of that right by the respondent. It must, therefore, be clear the claim for arbitration must be raised as soon as the cause for arbitration arises as in the case of cause of action arises in a civil action.
In the above referred decision, the Supreme Court referred the earlier decision in Panchu Gopal Bose v. Board of Trustees for Port of Calcutta (5 supra), wherein it is observed as hereunder:
...The period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to require that an arbitration takes place upon the dispute concerned.
Therefore, the period of limitation for the commencement of an arbitration runs from the date on which had there been no arbitration clause, the cause of action would have accrued. Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued.
12. Applying the afore referred ratio, in the present case, the right to refer the dispute to the arbitrator arose in the year 1997 when the Department addressed a letter informing the Claimant to seek extension of time in terms of Clause 17(1) of the General Conditions of Contract. The Claimant was put on notice that he did only 60% of the work as on 31-12-1996. If the Claimant has any grievance against the Department, he would have taken steps for referring the dispute to the arbitrator. He must have sought for reference of the dispute to the arbitrator within three years from that date. It is well settled that the period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to require that an arbitration takes place upon the dispute concerned. It is also now well settled that Article 137 of the Limitation Act, 1963 would apply to any petition or application filed in Court. Much argument has been advanced by the learned Counsel appearing for the appellant/Claimant that since the final bill was not prepared as on 1-11-2001, the request of the Claimant under his letter dated 1-11-2001 to refer the dispute for arbitration is within the limitation. His contention appears to be sound on the first blush, but on close scrutiny of the record, we do not detain ourselves long to reject his contention. The Claimant was specifically informed in the year 1997 itself that the work completed was only 60% and he was asked to seek extension of time. Indisputably the Claimant did not seek extension of time nor raised any objection with regard to the measurements taken by the Department on 21-5-96 and amounts paid based on it vide Ex. R-4 an account bill till the year 2001. As on 21-8-2001 the claims made by the Claimant are barred by limitation under Article 137 of the Limitation Act. The Arbitrator as well as the civil court considered the material brought on record in right perspective and found that the claims made by the appellant/Claimant are barred by limitation. We do not see any flaw in the judgment impugned in this Civil Miscellaneous Appeal.
13. Accordingly, this Civil Miscellaneous Appeal is dismissed. No costs.