Delhi High Court
Puran Chand Nagia vs The Aviation Employees Cooperative ... on 10 April, 1989
Equivalent citations: 1989(2)ARBLR207(DELHI), 38(1989)DLT188
Author: Y.K. Sabharwal
Bench: Y.K. Sabharwal
JUDGMENT Y.K. Sahbarwal, J.
(1) The work of construction of Roads-Storm Water Drains etc. was awarded by Respondent-Society to the petitioner on 26th December 1972. The contract admittedly contains an arbitration agreement. Petitioner seeks filing of the arbitration agreement in court and reference of disputes enumerated in Para Ii of the petition to arbitration. This contract is subject matter of Suit No. 200-A/81.
(2) In Suit No. 201-A/81 the work in question is construction of Sewerage work in the Colony of the Aviation Employees Cooperative House Building Society at Shahdara, Delhi. The said work was awarded by the respondent-Society to the petitioner on 28th May 1973. Admittedly this contract also contains an arbitration clause similar to the one which is subject matter of Suit No, 200A/81. In this suit also petitioner seeks filing of the arbitration agreement and reference of disputes enumerated in Para 11 of the petition to arbitration in accordance with the arbitration clause.
(3) There has been common correspondence between the parties in respect of the aforesaid two contracts. The facts arc more or less similar. This order will dispose of both the aforesaid suits.
(4) In reply the main defense raised by the respondent is that the petition is barred by limitation. The existence and validity of the arbitration agreement has not been disputed. On the pleading of the parties the follow- ing issues are framed: 1. Are there any disputes between the parties which are liable to be referred to arbitration ? If so, what the disputes are? (Onus objected to). 2. Is this petition within time ? 3. Relief.
(5) Parties were directed to file affidavits by way of evidence. The petitioner has filed his own affidavit by way of evidence whereas the respondent has filed the affidavit of Sh. Yash Pal Kapoor, its Secretary, by way of evidence in the suits. Issue No. 1 (6) The disputes are enumerated in Para 11 of the petition. The petitioner-contractor is claiming balance payment of running bills as also payment for additional work alleged to have been done by him. The petitioner has also claimed payment of final bill and certain damage etc. It has not been shown to me how the said disputes are not covered by the arbitration agreement. The arbitration agreement as contained in Clause 37 is very wide and applies to all the disputes and differences arising out of the contract or in connection with the contract or carrying out of the work. It cannot be' said that the payments of running bills or additional work or payment of final bill have not arisen out of the contract or in connection with the contract or the carrying out of the work under the contract. In my opinion, all the disputes enumerated in Para 11 of the petition are liable to be referred to arbitration. Learned counsel for the respondent has not disputed that the said disputes are covered by the arbitration agreement but has submitted that the petition is not within limitation which question will be considered under issue No. 2. In view of the above, issue No. 1 is answered in favor of the petitioner.
(7) Issue No. 2 The case of the petitioner is that the work was completed in the year 1977 and the petitioner repeatedly requested the Society to make the payment. The Society by its letter dated 18th March 1978 intimated the petitioner that after verifying and tallying their record with the bills submitted by the petitioner, it shall revert back to him in regard to decision of the Society. The letter dated 18th March 1978 is not disputed by the respondent-Society. The case of respondent-Society is that the Society was making ad-hoc payments to the petitioner in respect of the bills raised by him. The payments were made in accordance with the running bills raised and a sum of Rs. 4.18,600 approximately has been paid to the petitioner as on 6th May 1975 after making full and complete adjustments of the Income-tax deducted at source, price of coal-tar drums etc. The case of the respondent-Society is that the cause of action, if any, arose in favor of the petitioner on 6th May 1975 and in any case latest in the year 1977. Mr. Pandey, learned counsel for the Society has also drawn my attention to the effect that the work was completed in the year, 1977. The submission is that assuming that the work was completed in the year 1977, then also the present petition will be barred by limitation having been filed more than three years after the year 1977. The petition was filed on 12th March 1981. There is no dispute that Article 137 of Limitation Act is applicable and the period of three years for filing the petition is to be computed from the date when the right to apply accrues. Learned counsel relying upon Union of India v. Vijay Construction Company Air 1981 Delhi 193 submits that the period of limitation cannot be extended by the reply dated 18th March 1978 sent by the-Society. It is submitted that the period of limitation cannot be made dependent on the reply, if any, which may be sent by the respondent-Society as the right to apply for arbitration is dependent on disputes having arisen, Learned counsel submits that in this case the disputes, if any, arose in the year 1975 and in any case in the year 1977 when petitioner claims that the work was completed and the period of limitation cannot be extended by the letter of Society dated 18th March 1978. Reference has also been made to the affidavit of Mr. Yash Pal Kapoor explaining the circumstances that the letter dated 18th March 1978 was written after the election of the Society when the new members were in the process of taking charge of the affairs and business of the Society. It is further stated by Mr. Kapoor in his affidavit that upon verification it was found that full and final payment had been made to the petitioner in the month of May 1975. Admittedly the respondent-Society did not revert back to the petitioner even though it stated in letter dated 18th March 1978 that after verification of records it will revert back to the petitioner. The dispute in Vijay Construction Company (Supra) was whether the recession of the contract was justified or not and in the background of the said dispute, the Bench held that awaiting reply from the Railways cannot save limitation which had already started running from the date of the recession of the contract. The facts of the case in hand are altogether different. The present case is not of recession of contract. It is a case of non-payment. The disputes will arise on refusal of the Society to make the payment. The letter of Society dated 18th March 1978 was in reply to petitioner's letter dated 2nd February 1978 received by the Society on 15th' March 1978. Even while sending letter dated 18th March 1978, Society did not refuse to make the payment but only said that it will revert back to the petitioner. By 18th March 1978, there was no refusal to make the payment. From the above discussion it is evident that the aforesaid Bench decision relied on behalf of the Society, has no applicability to the facts and circumstances of the present case.
(8) The respondent-Society has also relied upon judgment of the Supreme Court in Major (Retired) Inder Singh v. D.D.A. for the proposition that a party cannot postpone the accrual of cause of action by writing reminders and as such learned counsel, argues that the letter dated 18th March 1978 will not extend the period of limitation, the petition having been filed more than three years after 2nd February 1978, the date of letter to which reply dated 18th March 1978 was sent. In my view, the contention raised on behalf of the Society is without any substance. It may be noticed that petitioner's letter dated 2nd February 1978 was received by the Society on 15th March 1978. The judgment in Inder Singh's case rather fully supports the case of the contractor. In the said case the Supreme Court held that it is true that on completion of work a right to get payment would normally arise but it was also held that where final bill had not been prepared the cause of action would arise from the date of assertion of the claim. The judgment of the High Court holding that limitation will start running from date of completion was reversed. The Supreme Court also held that although writing reminders or sending reminders would not extend the period of limitation or postpone the accrual of cause of action but where the bill had not been finally prepared the claim made by the claimant is the accrual of the cause of action. A dispute arises where there is a claim and denial and repudiation of the claim. In the instant case, the respondent-Society itself says that : "However, the petitioner did not bother to complete the work and sent in his final bills, though be purported to state that the work had been completed on the 22nd of September 1977. On the 15th of November, 1977 he made a request to finalise his payments, but the Respondent Society pointed out a large number of defects in the works and also called upon him to rectify the defects and damage."
(9) Thereafter on 18th March 1978, the Society says that it will verify facts and get back to the petitioner which it never did. Accordingly, in my opinion, the limitation did not start running against the contractor and in any case, the letter dated 2nd February 1978, on respondent's own showing, was received in their office on 15th March 1978 and even if period of three years is computed from 15th March 1978 the petition would be within limitation. Looking from any angle it cannot be held that the petition is barred by limitation. Consequently, I answer Issue No. 2 in favor of the petitioner and hold that the petition is within time.
(10) Issue No. 3 In view of my conclusion above, I direct the respondent-Society to file the arbitration agreement in court within eight weeks and refer the disputes enumerated in Para Ii of the petition in Suit No. 200-A/81 and Suit No. 201-A/81 to arbitration in accordance with Clause 37 of the arbitration agreement. In case parties are unable to agree to a single arbitrator within a period of eight weeks, in accordance with the arbitration agreement the reference of disputes will be made to two arbitrators as provided for in the said arbitration clause. Suit No. 200-A/81 and Suit No. 201-A/81 are allowed in the above terms leaving the parties to bear their own costs.