Andhra HC (Pre-Telangana)
Meda Narsimhulu vs Council Of Scientific And Industrial ... on 30 April, 1999
Equivalent citations: 1999(3)ALD422, 1999(3)ALT330, AIR 1999 ANDHRA PRADESH 345, (1999) 37 ARBILR 648, (1999) 3 ANDHLD 422, (1999) 3 ANDH LT 330, (1999) 3 CURCC 59, (1999) 4 ICC 137
ORDER
1. This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 read with the Scheme framed by the Chief Justice of Andhra Pradesh under Section 11(10) of the said Act seeking appointment of Arbitrator for resolving the disputes and claims arising out of the Agreement dated 1-9-1982 entered into between the applicant and the 1st respondent for the construction of the buildings for the 2nd respondent-Institution. The Agreement contains an arbitration clause (No.8) read with clause 30 of the general conditions of the contract. Under the arbitration clause, the Director General. Council of Scientific and Industrial Research, New Delhi is named as sole Arbitrator and if he is unable or unwilling to act, a person appointed by him shall be the sole Arbitrator. The applicant by his letter dated 13-12-1996 addressed to the 2nd respondent sought reference of the dispute for arbitration. This was preceded by several letters starting from April, 1995 claiming the amounts alleged to be due to him under various heads. The applicant in his letter dated 11-3-1996 claimed a total sum of Rs.93.93 lakhs. The request for arbitration was turned down by a letter dated 4-3-1998 addressed by the 2nd respondent to the applicant. The letter reads as follows;
"You are aware that your request for appointment of an Arbitrator for the disputed measurements/extra items and on the final bill prepared by this Centre on the work of Construction of South Wing, Animal House, Stores Block and Workshop, has been referred to CSIR, New Delhi for appointment of an Arbitrator.
In this contention, I am directed to inform you, that your request was carefully examined by the CSIR, Head Quarters and since the work was completed in 1986/87, the matter is barred by limitation. Under the circumstances, the competent authority has rejected your request for appointment of an arbitrator in this matter."
Thus, the request was negatived mainly on the ground of limitation. The applicant made a further unsuccessful attempt on 9-3-1998 in requesting the respondents to reconsider their decision. Once again, the 2nd respondent by its communication dated 26-6-1998 reiterated its earlier decision and informed the applicant that the matter shall be treated as closed. Thereafter, the present application is filed.
2. While I was Acting Chief Justice, I heard the matter and order were reserved. Thereafter, I ceased to function as Chief Justice. In as much as under subsections (6) & (8) of Section 11, the Chief Justice or the person or Institution designated by him is empowered to appoint the Arbitrator, by way of abundant caution, I directed the Registry to obtain the orders of the Honourable Chief Justice as regards the dealing with this case further. The learned Chief Justice authorised me to deal with the case further. The case was once again posted for arguments. The learned Counsel for the applicant initially expressed some doubts as regards my competence to decide the application. The learned Counsel however expressed in categorical terms that he has no objection for the matter being heard by me and that their is no need to resolve the doubt expressed in this regard.
3. The question is whether Arbitrator should be appointed to adjudicate on the disputes and claims arising out of the aforementioned agreement and if so who is to be appointed as Arbitrator.
4. As already noticed, the stand taken by the 2nd respondent is that the work was completed as long back as in June, 1986 and the Contractor did not submit his final bill within two months from the date of the completion of the work. It is also their case that the applicant-Contractor did not turn up for taking measurements despite repeated opportunities given to him and therefore, the measurements were taken in his absence in December, 1989. It is the plea of the respondents that any monetary-claim in connection with the contract should have been made within a period of three years which will end by August, 1989 at the most and the request for arbitration should also have been made within that time. In this context, reliance is placed on the decision of the Supreme Court in State of Orissa v. Damodar Das, , wherein their Lordships, while dealing with an application under Section 20 of the Arbitration Act, observed as under:
"There is no right to apply until there is a clear and unequivocal denial of that right by the respondent. It must, therefore, be clear that 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".
5. The learned Counsel for the respondents has also drawn my attention to the reiteration of law on the same lines in Panchmi Gopal Bose v. Board of Trustees, Calcutta Port, , wherein it was observed as follows;
"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."
6. It is further submitted by the learned Counsel for the respondent that the applicant has come forward with untenable claims only as a counter blast to the action taken by the respondent in demanding interest for the excess amount drawn.
7. Certain correspondence that passed between the parties between November, 1985 and December, 1989 has also been relied upon by the respondents' Counsel.
8. It is the stand of the applicant that the limitation starts to run from 5-12-1996 or at the most from 15-2-1996 when the claims of the applicant were categorically rejected and the applicant was called upon to visit the Office for signing the final bill for taking further necessary action. These letters were in response to the representation made by the applicant on 10-4-1995 and 11-3-1996 requesting for preparation of the final bill on the basis of the claims made by him. It is submitted by the learned Counsel for the applicant that the matter has been under correspondence right from the dale of completion of work and it is only in the year 1996 that there was final rejection of the claims and the respondent wanted to finalise the bill without conceding to any of the claims made by the applicant. The communication dated 5-12-1996 reads as follows:
"With reference to your letter dated 11th March, 1996 regarding admission of claims vide Statement I and IV connected to Construction of South Wing, Animal House and Stores Block, it has been decided that the measurements as furnished in the bills made already have no error or whatsoever and therefore your claim for additional entries are not justified. You arc therefore requested to visit us and sign the bills for further necessary action before 16th December, 1996."
9. According to the Counsel for the contractor, the limitation actually starts on the date of receipt of the said communication. The learned Counsel submits that the legal position clarified by the Supreme Court in the aforementioned cases does not apply to the present case in the peculiar fact-situation. The learned Counsel places reliance on the decision of the Supreme Court in Wazir Chand v. Union of India, , and submits that the question whether the claim is barred by limitation, has to be decided by the Arbitrator after the reference of the dispute to him and it is not open to the Court to reject the application under Section 20 of the Act on the ground that the claim has not been made within three years from the date on which the right to apply arose. The Supreme Court observed as follows:
"In dealing with an application for filing an arbitration agreement, the Court must satisfy itself about the existence of a written agreement which is valid and subsisting and which has been executed before the institution of any suit, and that a dispute has arisen with regard to the subject-matter of the agreement which is within the jurisdiction of the Court. But the Court is not concerned in dealing that application to deal with the question whether the claim of a party to the arbitration agreement is barred by the law of limitation; that question falls within the province of the arbitrator to whom the dispute is referred."
10. In dealing with this application, the said observations, according to the learned Counsel, apply afortiori to the proceedings in connection with the appointment of Arbitrator under Section 11 of the new Act.
11. There are certain larger questions which may arise in the context of Section 11 of the new Act - the nature and amplitude of the power conferred on the Chief Justice or a person designated by him; whether the Chief Justice or his nominee is expected to pass a judicial order, if there is a controversy on the question of arbitrability of the claims. I need not express any opinion on these larger questions. I am satisfied that the question as regards the limitation is a debatable one in the instant case and in such a situation, it is within the domain of the Arbitrator to decide the question of limitation in addition to the several issues that may arise. The decision of the Supreme Court in Wazir Chand's case (supra) is a clear authority for the proposition that it is for the Arbitrator to decide the objection that the claim is bared by limitation. That proposition laid down by the Supreme Court applies with equal if not greater force to the application under Section 11 of the Act. It can be safely said that the jurisdiction conferred on the Chief Justice or a person designated by him under Section 11(4) & 11(6) does not comprehend the power to decide debatable and arguable questions which could otherwise be decided by the Arbitrator. I am unable to pursuade myself that the question of limitation however debatable it is, should first be decided by the Chief Justice or a person designated by him, before a decision is take on the appointment of Arbitrator. Therefore, I see no bar to appoint an Arbitrator under subsection (6) of Section 11 read with other allied provisions inasmuch as the respondent failed to respond to the applicant's request for appointment of Arbitrator in terms of the agreement and the Agreement does contain arbitration clause providing for appointment of sole Arbitrator.
12. I have considered the question, whether having due regard to the terms of the arbitration clause in the agreement, to appoint the Director General, CSIR who is the named Arbitrator in the Agreement. However, I am told by both the Counsel that the Director-General himself had taken a decision not to concede the applicant's claim for arbitration. As the Director General has already taken such view, it is not proper to appoint him as Arbitrator.
13. I hereby appoint Mr. Justice Upendralal Waghray (a retired Judge of A.P. High Court and residing at Hyderabad) as the sole Arbitrator to decide the disputes/claims between the applicant-Contractor and the respondents. In case the said Arbitrator is not willing to act, the parties may apply to the Court for appointment of another Arbitrator. Such application should be filed by the re-opening day 7-6-1999.
14. The Arbitrator shall endeavour to pronounce the Award within a period of four months on entering the reference. The fee of the Arbitrator is fixed at a maximum of Rs.5,000/- for effective day of sitting, which is payable by both the parties in equal proportion. However, the learned Arbitrator may, if he thinks fit, stipulate minimum fee subject to the sanction of Court.
15. The interim order passed earlier by this Court shall remain in force till the Arbitrator enters on the reference.
The application is accordingly, allowed.