Punjab-Haryana High Court
Food Corporation Of India And Anr. vs Ganesh Rice Mills And Anr. on 26 September, 1997
Equivalent citations: (1998)118PLR86
ORDER G.C. Garg, J.
1. Respondent herein filed a petition Under Section 20 read with Section 8 of the Indian Arbitration Act, 1940 (for shirt 'the Act') for appointment of an arbitrator for deciding the dispute on account of shelling charges of over 33000 quintals of paddy, regarding non-payment of security amount and release of bank guarantee pertaining to the crop year 1980-81. The respondent-firm claimed that paddy was supplied to the petitioner from 15.4.1980 to 30.9.1980 and the rice was supplied after milling such paddy from 24.4.1980 to 10.11.1980. The respondent submitted a bill for shelling charges of the aforesaid quantity of paddy, in the sum of Rs. 42834.61 paise to the District Manager of the Food Corporation of India, Sangrur but the Food Corporation of India did not make the payment, nor did it return the security amount and release the bank guarantee and this lead to a dispute between the parties which, by filing the aforesaid petition, was sought to be referred to the arbitrator for adjudication. In the reply filed on behalf of the present petitioner, the allegations contained in the petition were controverted. The Food Corporation of India however, admitted to have received a bill in the sum of Rs. 42,834.61 paise from the respondent, but it was alleged that the said bill did not pertain to the year 1980-81. While giving reason for non-payment of the bill, it was alleged that there was another civil litigation pending against Janta Rice Mills Khanaur, the partners of which are also the same persons who are partners in the respondent-firm. Besides, the petitioners also raised two preliminary objections that respondent has no cause of action to file the petition and the petition was barred by limitation.
2. On the aforesaid pleadings of the respective parties, the trial court framed the following issues :
1. Whether the matter in dispute is liable to be referred to the arbitration? OPA 2-A. Whether the application is not within time? OPR.
2. Relief.
3. Trial Court on a consideration of the entire matter decided both issues against the present respondent by holding that the claim in question was made by the respondent for the crop year 1980-81 after the expiry of three years from the date when the amount was due and therefore, the claim was barred by time and thus could not be ordered to be referred to the arbitration. The petition was consequently dismissed being barred by time by the trial court by order dated 22.10.1993. Respondent herein preferred appeal against the order of the trial court. Learned appellate court, however, by his order dated 5.1.1995 set aside the order of the trial court and referred the matter back to the Senior Sub Judge for disposal in accordance with law. Learned appellate court following the observations of Delhi High Court in Kochhar Construction Works v. Delhi Development Authority and another, (1994-1)106 P.L.R. (Delhi Section) 21 and the observations of the High Court of Jammu and Kashmir in Food Corporation of India v. Highway Furniture and Suppliers, 1994 Banking Cases 547 concluded that the order of the trial court was not sustainable. The view taken in the above said two judgments was that the question of limitation whether the claim is barred by time under the arbitration clause has to be decided by the Arbitrator and not by the Court. Hence this revision at the instance of the Food Corporation of India challenging the order of the appellate Court.
4. Learned counsel for the petitioners submitted that in respect of applications filed Under Section 20 of the Arbitration Act, the provisions of Article 137 of the Limitation Act would apply as a petition under any enactment for which no period of limitation is prescribed elsewhere is governed by Article 137 of the Limitation Act and thus such a petition can be filed within a period of three years from the date when the right to apply accrues to the party. Learned counsel while supporting the view taken by the trial court and further with a view to buttress his submission made above, placed strong reliance on two judgments of this Court in Gurdev Ram v. Food Corporation of India and others, (1983)85 P.L.R. 410 and Shri Des Raj v. Food Corporation of India, (1984)86 P.L.R. 760. In other words, the precise submission of the learned counsel for the petitioners is that the period for completion of each contract is one year and after the completion of the contract, the three years' period to bring an application Under Section 20 of the Arbitration Act, as provided under Article 137 of the Limitation Act would begin from the time of the completion thereof. On the other hand, learned counsel for the respondent while supporting the impugned order submitted that in the instant case there was no dispute" as there was assertion of claim by the respondent and admission of the petitioners regarding the amount of the claim pending with them and that in order to ask for a reference Under Section 20 of the Arbitration Act; there must not only be the assertion of the party for entitlement to the money but there must exist some dispute regarding payment of the amount.
5. After hearing learned counsel for the parties and perusing the impugned order, I am of the opinion that this revision deserves to succeed. Undisputedly, the petitioner-Corporation entered into an agreement with the respondent for shelling paddy for the crop-year 1980-81 and in pursuance of that agreement, petitioner Corporation delivered paddy for shelling to the respondent and in turn the respondent delivered rice to the Corporation after shelling. The respondent thereafter submitted bill for shelling charge of the paddy, in the sum of Rs. 42834.61 paise to the Corporation. It is also the admitted case of the respondent that since no payment was made of the above amount by the Corporation, it (respondent) through its counsel issued a notice on 16.4.1990 to the' Corporation and when the Corporation did not pay the amount despite legal notice and reminders, the respondent moved a petition Under Section 20 of the Arbitration Act, seeking reference to, obviously after a period of about ten years of the completion of the work. Thus the claim made for the amount relating to the period 1980-81 was clearly barred by limitation and the same was not liable to be referred for arbitration, in view of the judgments of this court noticed above. In Gurdev Ram's case (supra) it was held as under:-
"Therefore, in my view, a petition to a Court under any enactment for which no period of limitation is prescribed elsewhere is governed by Article 137 and can be filed within a period of three years from the date when the right to apply accrues."
6. In Desk Raj's case (supra), while rejecting the contention that once it is found that there existed a dispute between the parties when the application for arbitration was filed, it was obligatory on the Court to refer the dispute to the arbitrator and that thereafter it was for the arbitrator to decide whether the claim was within time or not, this Court observed thus :-
"In the present case, the right to apply under Article 137 of the Limitation would accrue to the petitioner from the date when each contract was completed for which the stipulated period was one year only. Thus, for the contract for the year 1973-74, the period would be three years from the date when the contract was completed. Since the application Under Section 20 of the Act was filed after more than three years from the completion thereof, it was clearly barred by time. Once it is so held that the application Under Section 20 of the Act was barred by time, then it becomes immaterial whether any dispute in regard to any claim, existed between the parties or not."
Thus in the facts and circumstances of this case as noticed above, the application Under Section 20 of the Arbitration Act moved by the respondent was clearly barred by time, for the right to apply accrued to the respondent immediately after the completion of the contract and the application was, admittedly, moved after a period of three years thereof. This revision petition is consequently allowed and the impugned order dated 5.1.1995 of learned Addl. District Judge is set aside and that of the trial court passed on 22.10.1993 is upheld. No costs.