Heard Sri S.K. Misra, learned counsel for the petitioner and Ms. Rishu Mishra, learned counsel for respondent No.2.
The respondent No. 2 entered into a contract on 8.1.1993 which contains an Arbitration Clause. Certain work as per the work order was completed by the plaintiff contractor on 12.8.1993. Final bill was submitted by the Contractor and was paid to him on 24.3.1995. By a letter dated 12.9.1994, the Contractor invoked condition no. 17 of General conditions of the contract and requested for appointment of Arbitrator to adjudicate in the matter of payment of final bill dated 28.9.1993. By a letter dated 12.8.1995 the appointing authority had declined to refer the matter for arbitration stating therein that the contractor had signed the bill and received payment without protest, as such the case was not referable to arbitration. Thereafter the contractor wrote several letters demanding the matter to be referred for arbitration. The department opened the case of the contractor and decided the claim thereafter and request of the contractor for appointment of the arbitrator vide letter dated 10.5.1997 has been rejected. It was stated that the claim made by the contractor was an after thought as the residual amount of final bill of Rs.48,656/- has already been paid to him on 24.4.1994. On 18.10.2000, the contractor moved an application under Section 20(4) of Arbitration and Conciliation Act, 1940 in the Court of Civil Judge(Senior Division), Agra for referring the dispute to Arbitrator. His claim was contested by the petitioner on the ground that the application itself was not maintainable as per clause 65 of General Conditions of Contract of IAFW2249. The matter has become barred by time as final bill has been paid in the year 1994-95. Vide judgment and order dated 23.7.2002, the Court below has rejected the application of the contractor under Section 20(4) of the Act for appointment of Arbitration.
Aggrieved, the contractor preferred a Civil Appeal No.152 of 2002 which was allowed on 21.2.2006. Hence this writ petition.
Challenging the order passed by the court below, Sri S.K. Mishra, learned counsel submits that final bill was submitted by the Contractor in the year 1993 and he had signed the same without any protest. As per condition no. 65 of the General Conditions of Contract, after submission of the final bill moved for the claim made by the Contractor, no further claim could be entertained. All further claims shall be deemed to have been waived and extinguished. In the instant case with the signing of the final bill by the contractor without protest, all claims are supposed to be extinguished. The contractor had invoked condition no. 70 of General conditions of Contract for appointment of Arbitrator vide letter dated 12.9.1994. The said request of the contractor was rejected by the competent authority on 12.8.1995. The application under Section 20(4) of the Indian Arbitration Act was moved on 18.10.2000 by the contractor at a highly belated stage. The said claim of the contractor was hit by Article 137 of the Indian Limitation Act and hence was not maintained. The Appellate Court below while allowing the claim of the contractor for appointment of the Arbitrator had committed patent illegality by condoning the delay in filing the application by giving benefit of Section 5 of the Limitation Act and thereby bringing life to a stale claim. It is wrongly recorded in the order passed by the appellate court that the claim of the contractor for appointment of Arbitrator was rejected in the year 1997.
The appellate court held that the request of the contractor for appointment of Arbitrator was made by letter dated 12.9.1994 and was rejected on 12.8.1995 with the specific assertion that the contractor had signed the bill and received payment without any protest and as such the case was not referable to arbitration. The rejection of claim of the contractor on 10.5.1997 was merely reiteration of the letter dated 12.8.1995. At the best, it can be assumed that right to move an application under Section 20(4) of the Arbitration Act accrues to the contractor in the year 1995 when his request was rejected. The application has been filed after a gap of more than 5 years and hence was beyond the period provided under Section 137 of the Limitation Act.
Placing reliance upon judgment of the Supreme Court in Union of India vs. M/s. Momin Construction Company; AIR 1995 SC 1927; Steel Authority of India Ltd. vs. J.C. Budharaja, Government and and Mining Contractor AIR 1999 SC 3275(1), the constitution bench of the Apex Court in M/s. S.B.P. and Company vs. M/s. Patel Engineering Limited AIR 2006 SC 450 and judgment of the Apex Court in Punjab State & others vs. Dina Nath decided on 14.5.2007 in Civil Appeal No. 5197 of 2000, learned counsel for the petitioner submits that while deciding the application for appointment of Arbitrator, the Court has to decide the question whether the claim was a dead one or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection.
On the other hand, Ms.Rishu Mishra, learned counsel for respondent contractor referring to the letter dated 25.6.1995 submitted by the contractor regarding payment of final bill, submits that the cheque dated 22.5.1995 for an amount of Rs.35,943/- was received under protest and the receipt to this effect was given by the contractor on 25.6.1995 indicating his protest against payment of final bill dated 28.9.1993. Thus, the contention of the petitioner that the payment was received by the contractor without protest and the rejection of the claim of the contractor for appointment of Arbitrator on the said ground was not acceptable.
The question as to whether the claim made by the contractor was stale claim and whether the payment was received by the contractor without protest are disputed questions and the Court was required to leave the matter for adjudication by the Arbitrator. The issue of limitation is a question of fact which is to be decided on the basis of evidence. In view thereof, the Court below had committed illegality in rejecting the claim of the contractor as barred by limitation.
The appellate court, on the other hand, found that the contractor had raised his claim for appointment of arbitrator as early as possible in the year 1994. His claim was finally rejected only in the year 1997 and therefore, the application under Section 20(4) of the Arbitration Act filed by the contractor was well within the period of three years as provided under Article 137 of the Limitation Act. Moreover, the contractor was approaching the authorities and making representations and sending reminders from time to time in making an effort to negotiate with the authorities. When he did not receive any response, he was constrained to move an application in the Court for appointment of arbitrator. The delay in filing the application has been rightly condoned. There is no infirmity in the order passed by the appellate court and hence requires no interference.
Placing reliance upon judgment of the Apex Court in Indian Oil Corporation Limited vs. SPS Engineering Limited reported in (2011) 3 SCC 507, learned counsel for respondent No.2 submits that the Court can only refuse to decide a dead claim (long time barred claim) which is evidently and patently long time barred and then there is no need of detailed consideration of evidence. However, the Court will not enter into a disputed question whether the claim was barred by limitation or not. The court will leave the matter to the decision of the Arbitrator. Reliance is placed upon the decision of the Apex Court in Chairman and Managing Director, National Thermal Power Corporation Limited vs. Reshmi Constructions, Builders and Contractors AIR 2004 SC 1330 to submit that in the fact situation of the present case, arbitration claim subsists because the dispute with regard to final bill arose prior to its acceptance in view of the fact that the same was not accepted by the contractor. Upon submission of the final bill, as prepared by the contractor, the contractor immediately after receiving the payment lodged his protest. As per the conditions of the contract, the dispute which arose between the parties pertaining to the contract was referable to arbitrator. Prima facie case has been made out to the extent that there was a triable issue before the arbitrator so as to invoke Section 20 of the Arbitration Act and in view thereof, the order passed by the appellate court cannot be said to be perverse or unreasonable.
Referring to the decision of Division Bench of this Court in Om Prakash Mishra vs. Union of India and others 2011(8) ADJ 23(DB) learned counsel for respondent No.2 submits that the law of limitation is not meant to take away the right of the litigant. The discretion should be exercised in favour of hearing and not to shut down hearing. The process of justice should not be scuttled on technicalities. Keeping the view of settled principles of law of limitation, the appellate court below had committed no illegality in condoning the delay in filing the application for appointment of arbitrator and thereby allowing the same.
Having heard learned counsel for the parties and perused the record, the Court finds that admittedly, the final bills were prepared and submitted by the contractor in the year 1993. At the time of submission of bills no protest was lodged by the contractor. The payment was subsequently made vide cheque dated 24.5.1995. In the letter dated 12.9.1994, the contractor stated that the work against the work order was completed on 12.8.1993 and completion report was issued on 18.8.1993.The final bills though prepared but have not been paid uptill now resulting in breach of contract. It was further stated that on going through the final bill, it was observed that certain claims of the contractor have also not been calculated in the final bill. In the meantime, payment against the final bill was received by the contractor on 24.5.1995. Vide letter dated 25.6.1995, the contractor received the cheque for Rs.35,943/- under protest against payment of final bill dated 28.9.1993. Attention of the court was drawn towards letter dated 24.5.1995 sent to the contractor for payment of final bill. It has been indicated in the said letter that payment of Rs.48,656/- was due against the final bill which includes income tax and service tax whereas the cheque for an amount of Rs.35,943/- only was given to the contractor. It appears from receipt issued by the contractor dated 25.6.1995 that he protested against the payment of Rs.35,943/-as against the amount of Rs.48,656/- indicated in the letter dated 24.5.1995. Thus, it appears that the protest raised by the contractor was with regard to the cheque for a lessor amount than what has been indicated in the letter dated 24.5.1995.
Moreover, indisputably, the request of the contractor for referring the dispute to arbitrator was rejected categorically on 12.8.1995. It was stated in the said letter that the contractor had signed the bill and received payment without protest as such the case was not referable to arbitration. Despite the said communication having been received by the contractor, he did not file the application for appointment of arbitrator within time. The plea of the contractor having submitted representations and reminders from time to time to the appropriate authority cannot be a ground for condonation of delay in filing the application for renewal of a stale claim.
So far as fresh representation of the contractor on 10.5.1997 is concerned, suffice is to say that the said representation would not revive the stale claim of the contractor. In any case, the right to apply under Section 20(4) of the Arbitration Act accrues to the contractor in the year 1998 i.e. three years from 12.8.1995. However, the respondent contractor filed an application under Section 20 of the Arbitration Act only on 18.10.2000 which was much beyond 3 years from the rejection of his claim. The application under Section 20(4) of the Arbitration Act was hit by Article 137 of the Indian Limitation Act wherein three years period has been provided for making the said application. It has been held in Union of India vs. Momin Construction Company(supra) that Article 137 of the Limitation Act would apply to a petition filed under Section 20 of the Arbitration Act and in view thereof, the application which has been filed much after expiry of three years from the date when right to apply accrues, was liable to be rejected, being plainly barred by time.
In Indian Oil Corporation Limited vs. M/s S.P.S. and Engineering Limited (supra) it has been held that while referring the dispute to arbitration, the Court has to decide the question as to whether the claim was a dead claim and whether the final payment has been received without protest. In Punjab State and Others (supra) referring to decision of Apex Court in case of S. Rajan vs. State of Kerala(1992) 3 SCC 608 it was held that the right to apply for arbitration proceedings under Section 20 of the Arbitration Act, 1940 runs from the date when the dispute arises. The question as to when the right to apply accrues is a question of fact to be determined in each case having regard to facts of that case.
In State of Orissa vs. Damodar Das AIR 1996(2) SCC 216 it has been held that Section 3 of the Limitation Act 1963 enjoins the Court to consider the question of limitation whether it is pleaded or not. In paragraph 5 of the said order, it has been held that the period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrues i.e. from the date when the claimant first acquired either a right of action or a right to require that an arbitration takes place upon the dispute concerned. The period of limitation for commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued. The same plea has been reiterated in Panchu Gopal Bose vs. Board of Trustees for Port of Calcutta AIR 1994 SC 1615.
Applying the aforesaid ratio in the present case, it can be safely concluded that the right to apply to refer the dispute to the arbitrator arose in 1995, when contractor made a request demanding appointment of arbitrator and his request was rejected on 12.8.1995. The cause of action for filing the application under Section 20(4) of the Arbitration Act arose from 12.8.1995. However, the contractor after moving his claim for appointment of arbitrator on 12.9.1994 received the payment. While rejecting his claim, it is indicated in the letter dated 12.8.1995 that payment was received by the contractor without any protest. Indisputably, the contractor had received the letter dated 12.8.1995 whereby his claim for appointment of arbitrator was rejected. However, he kept on moving various representations and had approached the Court only after a period of 5 years. As the application filed by the contractor under Section 20(4) of the Arbitration Act was much beyond the period of 3 years as such the application was barred by time. The appellate court had erred in condoning the delay in filing the application by applying provision of Section 5 of the Limitation Act observing that request of the contractor was rejected only in the year 1997 and therefore, the application dated 18.10.2000 for appointment of Arbitrator was maintainable and benefit of Section 5 of the Limitation Act could be given to the contractor. The appellate court committed patent illegality in ignoring the provisions of Article 137 of the Limitation Act and the fact that the contractor had received cheque for payment of final bill in the year 1995.
Thus, it is held that the claim made by the respondent contractor was long barred claim and could not have been revived by the appellate court.
In view of above discussion, the order passed by the appellate court dated 21.2.2006 in Civil Appeal no. 152 of 2002 is hereby quashed. The writ petition is allowed. The order passed by the Civil Judge(Sr. Division), Agra dated 23.7.2002 in Arbitration Case No. 104 of 2000 is hereby affirmed. No order as to costs.
Order Date :- 16.12.2014 P.P.