Important point
Right to make an application u/s 8 of the Arbitration Act asking the Court for appointing an arbitrator would accrue on the failure of the other party to contract concur appointment of arbitrator nominated by a party and as such limitation period of 3 years to make application to Court u/s 8 would begin to run from the expiry of 15 days notice given to the other party.

Headnote:Arbitration Act, 1940-Section 8-Limitation Act-Article 137- Appointment of arbitrator by Court -Time limit for making application-Right to apply u/s 8 would accrue on failure of other party to concur in appoint of an arbitration -3 years period would begin to run on expiry of 15 days notice issued by applicant to other party.
       Held : Under Section 8 before an application can be made to the Court under that section the following requirements should be satisfied:
        (1) The arbitration agreement should be provide for appointment of arbitrator/s by consent.
        (2) Parties do not concur in the appointment of an arbitrator.
        (3) One party serves notice on the other party to concur in the appointment.
        (4) No appointment is made within 15 days of the service of the notice.
       Thereupon the court may, on the application of the party who gave the notice and after giving the other party an opportunity of being heard, appoint an arbitrator. (Paras 7 and 8)
       In view of the express language of Section 8, it is quite clear that unless a party who desires to apply has resorted to the process set out in Section 8, and has failed to secure the concurrence of the other party to the appointment of an arbitrator within the prescribed period, the Court will not intervene under Section 8. The right to apply under Section 8, therefore, would accrue when, within 15 clear days of the notice, the other parties do not concur in the appointment of an arbitrator. (Para 9)
       In the present case, the notice was served by the appellant asking the respondent to concur in the appointment of an Arbitrator on 12.9.1976. The application before the Calcutta High Court under Section 8 was made on 22.12.1977 and the application before the Subordinate Judge, Ranchi under Section 8 of the Arbitration Act was made on 9.8.1978. Both these applications are within the period prescribed under Article 137. The High Court was, therefore, not right in coming to the conclusion that the application under Section 8 of the Arbitration Act was barred by limitation. Since even the second application was within the period prescribed under Article 137, we have not considered the question of exclusion of the time spent before the Calcutta High Court from the period of limitation. It has been submitted before us by the respondent that since the contract expired on 28.2.1975, that is the date from which the period of limitation under Article 137 would start. We do not see any merit in this contention, because the requirements of Section 8 of the Arbitration Act have to be met before limitation would start under Article 137 of the Limitation Act for an application under Section 8. (Paras 11 and 12)

Order

The only question which requires to be determined in this appeal is whether the application of the appellant under Section 8 of the Arbitration Act for appointment of an Arbitrator was barred by limitation. A few dates may be noted in this connection. The term ‘respondent’ occurring hereinafter applies also to predecessors-in-interest of the respondent.

2. On 7th September, 1974 the appellant entered into a contract with the respondent under which the appellant agreed to supply Allumina Ferric of I.C.I. specification to the respondent. The contract was operative till 22.8.1975. On account of certain disputes and differences which arose between the parties the appellant, on 12.9.1976, gave a notice to the respondent. The notice is not on the record of the proceedings. From the judgment of the High Court which refers to this notice, it seems that under that notice, the appellant stated that huge amounts were due to it under the said contract and it appointed one Sohan Lal Saraf, Barrister-at-Law as its Arbitrator and called upon the respondent to concur in that appointment. No response was given to the notice.

3. Thereafter negotiations seem to have taken place between the parties for settlement of the disputes. Ultimately since the negotiations did not fructify, the appellant on 22.12.1977 filed an application before the Calcutta High Court under Section 8 of the Arbitration Act. The Calcutta High Court by its judgment and order dated 26.4.1978 held that it had no jurisdiction to entertain the application and directed the appellant to file an application before the appropriate Court. Accordingly on 9.8.1978 the appellant filed an application under Section 8 of the Arbitration Act before the Subordinate Judge, Ranchi. Its application was allowed on 18.9.1979 and the Court appointed one A.N. Singh, Retired District & Sessions Judge to act as an Arbitrator.

4. The Arbitration has given a reasoned award dated 16.6.1980. The award is for a small amount of Rs. 41,342/- with interest. And we are surprised at the costly litigation indulged in by the appellant for this small amount. Be that as it may, the appellant had filed a revision before the High Court at Ranchi from the order of the Subordinate Judge granting the application under Section 8 of the Arbitration Act. The High Court has, by the impugned order, held that the application of the appellant under Section 8 of the Arbitration Act was barred by limitation. Hence no Arbitrator could have been appointed. In the present appeal we have to consider whether the application of the appellant under Section 8 of the Arbitration Act was barred by limitation.

5. The relevant Article of the Limitation Act is Article 137 which provides as follows:

“Description of Period of Time from which suit Limitation period begins to run

Any other Three When the right application for years to apply accrues which no period of limitation is provided elsewhere in this Division.”

6. Therefore, the time for the purposes of limitation begins to run from the date when the right to make an application under Section 8 accrues. Section 8 of the Arbitration Act, which is relevant for our present purposes, is reproduced below:

“Section 8. Power of Court to appoint arbitrator or umpire.-(1) In any of the following cases-

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) xxx xxx xxx

any party may serve the other partie

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1999 Supreme(SC) 52

Cases Referred (1)