Orissa High Court
Prafulla Kumar Singh Deo vs State Of Orissa And Ors. on 16 January, 1987
Equivalent citations: AIR1989ORI107, AIR 1989 ORISSA 107, (1987) 1 ARBI LR 209, (1987) 8 REPORTS 118, (1987) 1 ORISSA LR 667
Author: D.P. Mohapatra
Bench: D.P. Mohapatra
ORDER D.P. Mohapatra, J.
1. The short question that arises for consideration in this revision petition is whether the application filed by the petitioner under Section 8(2) of the Arbitration Act (for short 'the Act') for appointment of an arbitrator to adjudicate the disputes is barred by limitation. The trial Court having answered the question in the affirmative, the petitioner has moved this Court in revision challenging the said order.
2. The facts relevant for the present proceeding may be shortly stated thus : The petitioner was entrusted with the work of construction of "S/R to approach road of Budhabalanga Bridge on 54th Mile of S.N.K.U.B. Midnapur Border Road - MDR 5 for 1974-75." The parties executed an agreement bearing No. 92/F2 of 1974-75 for the purpose. After completion of the work, the amount under the final bill was paid to the petitioner on 30th July, 1978. The amount mentioned therein having fallen short of his claims, the petitioner is said to have represented to the authorities for paying him the balance dues. Having failed in his attempt to get his dues settled amicably, the petitioner issued a notice on 29-7-81 to the Chief Engineer (R. and B.), Government of Orissa, for appointment of an arbitrator 'as contemplated under Clause 23 of the agreement. The notice having received no favourable response from the said authority, he filed the application under Section 8(2) of the Arbitration Act before the Subordinate Judge, Baripada on23-12-81 praying to appoint an arbitrator.
3. The application was contested by the opposite parties on several grounds including the plea of limitation. It is not necessary to go into other grounds of challenge since they were negatived by the Court below. As noticed earlier, the sole ground on which the application was rejected was the plea of limitation. The Court below referring to several decisions of the Supreme Court and other High Courts held and rightly, that Article 137 of the Limitation Act applies to proceedings under the Arbitration Act. On consideration of the facts of the case, the Court held that since the final bill was paid in -July, 1978 the application under Section 8(2) of the Act having been filed on 23-12-81, it was beyond the prescribed period of limitation (three years) and therefore barred.
4. The learned counsel for the petitioner has challenged the aforesaid finding. According to him it is based on misconstruction of the provisions under Article 137 and erroneous impression of the law on the point.
5. The finding regarding applicability of Article 137 of the Limitation Act is not in controversy between the parties. The core question to be considered is when does the right to apply accrue or, in other words when does limitation commence to run in respect of the application under Section 8(2) of the Act. It is pertinent to note here that there is a clear distinction between the plea that the claims raised are barred by limitation and the plea that the application for appointment of arbitrator is barred by limitation. The former question is to be considered by the arbitrator while the latter is to be considered by the Court at the time of disposing of the application for appointment of arbitrator. The question that arises for consideration in this case is no longer res integra. Identical question was considered by this Court in the case of Ghaneshyam Behera v. Orissa State Cooperative Marketing Federation. (1984) 1 Orissa LR 581, where it was observed as follows :
"It is not in dispute that in any of the cases falling under Clauses (a), (b) and (c) of Sub-section (1) of Section 8 of the Arbitration Act any party may serve the other parties with a written notice to concur in the appointment of Arbitrator, Sub-section (2) of Section 8 provides that if the appointment is not made within 15 clear days after service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator who shall have the power to enter the reference and make an award as if he has been appointed by consent of the parties. Therefore, the notice contemplated under Sub-section (1) of Section 8 is a condition precedent to the filing of an application under Section 8(2) of the Act. It is well settled in law that Limitation Act applies to applications to be filed in the Court and not to the notice contemplated under Sub-section (1) of Section 8 of the Act. Therefore, the cause of action for filing an application under Sub-section (2) arisen only after a written notice is served as per the provisions of Sub-section (1) of Section 8 and fifteen clear days lapse thereafter. Even if the Article 137 applies to application under Sub-section (2) of the Arbitration Act, it would begin to run on expiry of fifteen clear days after the service of notice under Section 8(1). It is one thing to say that the claim made by the petitioner is barred by limitation and it is another thing to say that the application under Section 8(2) is barred by limitation. In the impugned order, the Sub-Judge has not appreciated that the limitation for filing application under Section 8(2) of the Arbitration Act does not have any relation with the cause of action for preferring a claim for realisation of the dues. It may be that the claim of the contractor has been barred by limitation, yet he may issue a notice under Section 8(1) of the Act and pray for appointment of an arbitrator under Section 8(2) of the Act on expiry of fifteen clear days after the service of notice. In such a situation the Court is not called upon to decide about the merits of the claim which the claimant might lay for adjudication by the Arbitrator or to decide as to whether the claim is barred by limitation. It is for the arbitrator to decide those questions. In this view of the matter the application under Section 8(2) cannot be said to be barred by limitation."
From the observations quoted above, it is clear that the period of limitation for filing an application under Section 8(2) of the Act runs from the expiry of fifteen days from the date the aggrieved party issues notice to the authority mentioned in the arbitration clause (the Chief Engineer concerned in this case) for appointment of an arbitration. This position is manifest from the provisions of the Act where under the Court cannot be moved under Section 8(2) for appointment of arbitrator without exhausting the procedure laid down under Section 8(1) of the Act. The aforementioned decision was followed in another case (between the same parties as in the present case) reported in (1986) 2 Orissa LR 41.
6. Applying the principles discussed above to the facts of the present case, it is clear that the trial Court erred in rejecting the application under Section 8(2) of the Act on the ground of limitation. Admittedly, notice for appointment of arbitrator was issued by the petitioner on 29-7-81 while the application under Section 8(2) was filed in Court on 23-12-81, well within the prescribed period of limitation. The impugned order is therefore unsustainable and it is to be set aside.
The other question that arises for consideration is regarding appointment of the arbitrator. It is agreed by the learned counsel for both parties that in view of the amended provisions under Section 41A of the Arbitration Act, the disputes are to be referred to the Arbitration Tribunal constituted by the State Government.
7. Accordingly, the revision petition is allowed and the impugned order is set aside. The application under Section 8(2) of the Arbitration Act is allowed. The claims of the petitioner amounting to Rs. 6,28,089/-, as stated in the impugned order and accepted by the counsel for the petitioner, shall be referred to the Orissa Arbitration Tribunal for adjudication in accordance with law. Both parties will bear their respective costs of this proceeding.