Andhra HC (Pre-Telangana)
Pesco Engineer, Vijayawada vs Union Of India, S.C. Railway (East), ... on 10 November, 1998
Equivalent citations: 1998(6)ALD813, 1998(6)ALT299
Author: R. Bayapu Reddy
Bench: R. Bayapu Reddy
ORDER
R. Bayapu Reddy, J
1. This appeal is filed by the plaintiff in O.S.2088/88 on the file of the V Additional Judge, City Civil Court, Hyderabad questioning the impugned judgment dated 20.1.1996 by which the suit filed under Section 20 of the Arbitration Act, 1940 (Old) was dismissed.
2. The appellant, who is the plaintiff in the suit, entered into an agreement with the respondents, who represent the Government of India, for executing the work of construction of New Broad Guagc Railway line and other connected works and a written agreement dated 14-7-1983 was executed between them- The said agreement contains an arbitration clause to enable the parties to refer to the arbitrator if any disputes arise between them in connection with the execution of the said work. As disputes arose relating to payment of sonic amounts in connection with the above said work, the appellant submitted eight claims to the respondents on 9-7-1986 claiming the amount covered by the said claims. The respondents allowed claim No.2 and rejected the claims 1 and 3 to 8 by the proceedings dated 14-12-1987. Thereupon, the appellant requested the first respondent on 21-12-1987 to refer the disputed claims to the arbitrator for decision as per the arbitration clause in the agreement. As the first respondent did not respond for such request, the appellant again renewed such request on 17-8-1988. The first respondent rejected such request on 21-11:1988. Thereupon, the appellant filed the suit O.S.2088/88 under Section 20 of the Arbitration Act requesting the Court to direct the first respondent to file the agreement dated 14-7-1983 into Court and make order of reference for appointment of an arbitrator in respect of the said agreement regarding the disputed claims enumerated in the plaint covering an amount of Rs.18,72,540/-. The respondents/defendants contested the said suit mainly contending that the appellant is not entitled for the amounts mentioned in the claims; that such claims are excluded from the purview of arbitration as per the arbitration clause and cannot, therefore, be referred to arbitration; that such claims are also barred by limitation and as such the appellant is not entitled for the relief prayed for in the suit. On the basis of the documentary evidence produced before it, consisting of Exs.Al to A8, the lower Court dismissed the suit on the ground that the disputed claims are excepted from the purview of arbitration in view of the terms of the arbitration clause and as such, they cannot be referred for arbitration and that the claims are also barred by limitation. Questioning the said judgment, the plaintiff has fifed the present appeal.
3. The points that arise for consideration tn this appeal are:
1. Whether the claims made by the appellanl/plaintiff cannot be referred to the arbitration under the terms of the agreement on the ground that they arc excepted matters as provided in clause 63 of the agreement?
2. Whether the claims made by the appellant are barred by limitation?
Point No. 1 : One of the grounds on which the suit was dismissed by the low:cr Court is that the claims made by the appellant for reference to the arbitrator are "excepted matters" as per the provisions of clause-63 of the agreement and as such they are beyond the purview of arbitration. But such view expressed by the lower Court is not sustainable. Clause 63 of the agreement is extracted in the judgment of the lower Court. Clause-63 no doubt provides that matters for which provision lias been made in some of the clauses of General Conditions of Contract or in any clause of the Special Conditions of Contract shall be deemed as "excepted matters", and decision of the Department on such matters shall be final and binding on the Contractor and that such "excepted matters" shall stand specifically excluded from the purview of the arbitration clause and shall not be referred to arbitration. But, the question whether a particular claim is included or excluded from the purview of the arbitration as per the terms of the agreement is a matter to be decided by the arbitrator and not by the Court at the time of appointing the arbitrator. Such view was clearly held by various Courts including this Court, hi the decision of this Court reported in Y. FarthasaraihyFirmv. General Manager, Rfy.
Electrification, , it is observed that what is the nature of the claims put forward and whether such claims arc really covered by the excluded matters referred to in Clause-63 of the Standard General Conditions of Contract, are matters for consideration and decision by the arbitrator and that the Court cannot embark upon an enquiry into such aspects at the stage of considering the request of the claimant under Section 20 of the Arbitration Act for appointment of an arbitrator. The same view was held by the High Court of Orissa in the decision reported in Union of India v. Prohallad Moharana, AIR 1996 On. 19, and by the Delhi High Court in the Division Bench decisions reported in Jaichand Bhasin v. Union of India, 1983 Arb.LR 191, and Central Warehousing Corporation v. Batra Contractors, 1991 (2) Arb.LR 150. Therefore, the lower Court has clearly erred in dismissing the suit on the ground that the claims mentioned in the suit arc exccpted matters as per the provisions of clause 63 of the General Conditions of Contract and such finding given by the lower Court is unsustainable and is set aside.
Point No.2 : The other ground on which the lower Court dismissed the suit is the ground of limitation. Even in this regard, the lower Court has clearly erred and has utterly failed to take into consideration the relevant circumstances, which clearly show that the suit filed under Section 20 of the Arbitration Act is not barred by limitation. While considering the question of limitation, two aspects have to be borne in mind - the first relates to the question whether the disputed claims made by the appellant arc barred by limitation and the second aspect is whether the suit filed by the appellant containing the request to direct the Department to file the agreement into Court and make reference to tlte arbitrator to decide the disputed claims is barred by limitation. Regarding the first aspect, it is to be seen from a perusal of the judgment of the lower Court that the learned Additional Judge was not specific relating to which aspect the suit was found to be barred by limitation. It is to be seen that when a claim is sought to be referred for arbitrator for decision as per the arbitration clause in the agreement, it is for the arbitrator to go into the question of limitation and decide whether any particular claim is barred by limitation and it is not for the Court to decide in a suit filed under Section 20 of the Arbitration Act whether such claim which is sought to be referred to the arbitrator for decision is barred by limitation. Such view is clearly expressed by various Courts. In the above cited decision of the Orissa High Court reported in Union of India v. Prahallad Moharana (supra) it is observed that the question of limitation is not one for decision by the Court but is a matter for asscssion of the arbitrator. The Delhi High Court has also observed in the above cited decision reported in Jaichand Bhasin v. Union of India (supra) that the question whether any particular claim is time barred, is for the arbitrator to decide. In the decision of the Supreme Court reported in Wazir Chand v. Union of India, , also it is observed in para-7 that it is for the arbitrator to decide by applying the law of limitation contained in the Limitation Act whether a particular claim is barred by time. Therefore, the suit filed under Section 20 of the Arbitration Act cannot be dismissed on the ground that a particular claim is barred by limitation, as such question of limitation is to be considered and decided only by the arbitrator after the arbitrator is appointed.
4. The second aspect regarding the question of limitation is whether the suit filed under Section 20 of the Arbitration Act seeking a direction to the Department to file the agreement into Court and refer the claims to the arbitrator for decision is barred by limitation, hi this regard, it is now a well settled proposition of law that the provisions of Article 137 of the Limitation Act arc applicable even to the proceedings under the Arbitration Act and that the applications or suils filed for appointment of an arbitrator beyond three years from the date when the right to apply accrues, can be said to be barred by limitation. This view was clearly expressed by the Supreme Court in the decisions reported in Inder Singh v. Delhi Development Authority, , S. Rajcm v. State of Kerala, , Addl.Spl.Land Acquisition Officer v. Thakoredas, and Union of India v. M/s. Momin Construction Co., . The same view was also expressed by a Division Bench of this Court (consisting of one of us, viz., N.Y. Hamtmanthappa, J. and Neelatn Sanjiva Reddy, J) in CMA No.362/94 dated 12.10.1998. The present suit, which was filed on 22-11-1988 under Section 20 of the Arbitration Clause, cannot be said to be barred by limitation in view of the facts and circumstances of this case as revealed from the evidence placed on record. In this case, the appellant referred his claims to the first respondent under Ex.A2 dated 9.7.1986. The first respondent accepted the claim of the appellant relating to Claim No.2 and rejected the rest of the claims by Ex.A4 proceedings dated 14-12-1987. The appellant, thereupon, requested the first respondent on 21-12-1987 to refer the disputed claims to the arbitrator as per the terms of the agreement. As the first respondent did not respond, the appellant issued a reminder on 10-5-1988. Thereupon, the first respondent called the appellant for negotiations on 9-6-1988. As the first respondent did not accede to his request to refer the disputed claims to the arbitrator, the appellant again addressed Ex.A7 letter dated 17-8-1988 requesting the first respondent to refer the disputed claims to the arbitrator. The first respondent finally rejected such request on 21-11-1988 and these facts are admitted by the respondents in their written statement also. So, when such request of the appellant was finally rejected on 21-11-1988, the appellant filed the suit on 22-11-1988 itself under Section 20 of the Arbitration Act. The cause of action for the appellant to file the suit arose when his request was finally rejected by the first respondent on 21-11-1988. Therefore, he will be having three years time thereafter to file the suit as per Article 137 of the Limitation Act. But the suit was filed on 22-11-1988 itself and as such, it cannot be said to be barred by limitation. The lower Court has observed in para-10 of its judgment that the plaintiff referred the disputed claims to the first defendant for consideration on 9-7-1986 under Ex.A2; that when the first defendant did not consider the same, the plaintiff requested him to refer the disputed claims to the arbitrator on 21-12-1987; that the final Bill was sent on 29^-1988 and the plaintiff once again made a request to the first defendant on 17-8-1988 under Ex.A7 to refer the disputes to the arbitration and that when such dates are taken into consideration, the suit is barred by limitation. But, it is not clear as to how the suit can be said to be barred by limitation when those dates are taken into consideration and when Article 137 of the Limitation Act provides three years time for filing the suit under Section 20 of the Arbitration Act. As already stated above, the final request of the appellant made on 17.8.1988 under Ex.A7 was rejected by the first respondent on 21-11-1988 and the suit was filed on 22-11-1988 under Section 20 of the Arbitration Act and as such, the suit is quite within time. The finding of the lower Court in this regard also is, therefore, liable to be set aside. In view of such circumstances, the decree and judgment of the lower Court dismissing the suit are not sustainable and are liable to be set aside.
5. In the result, the appeal is allowed and the decree and judgment of the lower Court are set aside and the suit is decreed directing the first respondent herein to file the agreement dated 14-7-1983 into Court and make an order of reference for appointment of arbitrator in respect of the suit claims as per the provisions of Clause 64 of the General Conditions of Contract. Each party is directed to bear his own costs throughout.