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SUPREME COURT OF INDIA
A.N.Grover : J.C.Shah : K.S.Hegde
Ashok Construction Company
Versus
Union Of India
Case No. : 1749 of 1969
Date of Decision : 2/13/70
Indian Limitation Act, 1908 – Code of Civil Procedure, 1908 – Section 115 – Arbitration Act – Sections 37, 14 – Tender – Payment under terms of contract – Arbitrator made an award directing Union of India to pay to appellants Rs. 1,79,843.80, and filed it in he court of Deputy Commissioner. – Notice of the award was given under S. 14(2) of Arbitration Act to parties. – Application filed by Union of India for setting aside award was rejected. – In appeal against order, Deputy Commissioner se.i aside the award. – Appellant preferred a revision application under Section 36 of Rules ler Administration of Justice in Khasi and Jaintia Hills and under S. 1 15 of Code of Civil Procedure. – High court dismissed petiion. – Deputy Commissioner mad" the order setting aside award, on three grouds: (l) that the arbitrator in making the award acted in violation of the principles of natural justice; (2) that in making the award the arbitrator execeded his jurisdiction ; and (3) that the claim made by the appellants was barren by the law of limitation and the arbitrator had no authority to make the award. – High court agreed with the Deputy Commissioner that the arbitrator acted in violation of the rules of natural justice, but they did not consider the plea that the arbitrator acted in excess of his jurisdiction, nor that there was a bar of limitation to the entertainment of the claim – Held, It was urged that the appellants had made a claim which was in excess of the claim made before Malkani. – But before Malkani the appellants had not valued their claim; they had merely set out the heads of dispute without specifying the amounts claimed under each head. – It is true that before Dutta, two of the claims made before Malkani were given up. – But no inference can be raised therefrom that the claims made before Malkani did net aggregate to the amount decreed. – High court did not also deal with the place of the bar of limitation to the claim of the appellants. – Assistant to the Deputy Commissioner was of the view that the claim was within limitation; the Deputy Commissioner disagreed with that view. – Under S. 37 of the Arbitration Act, by subsection ( 1 ), it is provided that all the provisions of Indian Limitation Act, 1908, shall apply to arbitrations as they apply to proceedings in court. – Appellants had demanded of Superintending Engineer that a reference be made by letter – Request was repeated in the subsequent letter – First demand cannot on account of the second request be wiped out. – No objection was raised at the time when Dutta was appointed arbitrator by the order of the court of the Deputy Commissioner that the claim was barred by the law of limitation, nor was the contention raised before the Higli court or this court in appeal from the order of the High court confirming the appointment of Dutta. – Even before the arbitrator no contention appears to have been raised that the claim was barred by the law of limitation. – Question of limitation was not a pure question of law. – Whether the claim was barred by the law of limitation depended upon proof of facts. – From the date of the settlement of the claim three years had not elapsed before a notice asking for a reference was made. – Prima facie, the claim was not barred by the law of limitation. – Appeal Allowed
J.C. SHAH, J.
(1) THE Union of India invited tenders for constructibn of buildings at Tezu in the North-East Frontier Agency. The tender submitted by the appellants was accepted and a formal deed incorporating the terms of the contract was executed. Clause 25 of the contract provided that any dispute arising under the terms of the contract shall be submitted to arbitration of the Superintending Engineer, N. E. F. A. Circle or some person appointed by that Officer. The appellants completed the construction of the buildings on 12/10/1957. A final bill for payment to the appellants of the amount due under the contract was prepared on 20/03/1958. The appellants accepted payment under protest. On 29/10/1960, the appellants by a letter addressed to the Superintending Engineer applied for a reference to arbitration of the disputes relating to "payment under the terms of the contract". The request was repeated by another letter dated 30/08/1961. One Malkani who was appointed arbitrator by the Superintending Engineer died before he could make his award. After certain infructuous proceedings, which it is not necessary to set out, in an application moved by the appellant, the Deputy Commissioner, Shillong, made an order under S. 8 of the Arbitration Act appointing une G. N. Dutta as an arbitrator. This order was challenged before the High court of Assam in a revision petition, and later in appeal to this court, without success. In the meanwhile on . 21/05/1965 Dutta entered upon the reference. The appellants submitted a claim for Rs. 4,41,440-20 under the terms of the contract. On 17/01/1966, the arbitrator made an award directing the Union of India to pay to the appellants Rs. 1,79,843.80, and filed it in the court of the Deputy Commissioner, Shillong. Notice of the award was given under S. 14(2) of the Arbitration Act to the parties. The application filed by the Union of India for setting aside the award was rejected. In appeal against the order, the Deputy Commissioner se.i aside the award. The appellant preferred a revision application under Section 36 of the Rules ler the Administration of Justice in Khasi and Jaintia Hills and under S. 1 15 of the Code of Civil Procedure. The High court dismissed the petiion. With special leave, this appeal has been filed by the,appellants.
(2) THE Deputy Commissioner mad" the order setting aside the award, on three grouds: (l) that the arbitrator in making the award acted in violation of the principles of natural justice; (2) that in making the award the arbitrator execeded his jurisdiction ; and (3) that the claim made by the appellants was barren by the law of limitation and the arbitrator had no authority to make the award. The High court agreed with the Deputy Commissioner that the arbitrator acted in violation of the rules of natural justice, but they did not consider the plea that the arbitrator acted in excess of his jurisdiction, nor that there was a bar of limitation to the entertainment of the claim.
(3) IN our view, the judgment of the Deputy Commissioner, for reasons to be presently set out, cannot be sustained. The arbitrator entered upon the reference on 21/05/1965. The proceeding continued before him till December 31, 1965. On 31/12/1965, counsel appearing for the Union of India requested for time till 10/01/1966, to submit "written legal arguments". The arbitrator acceded to the request and gave time till 10/01/1966. On that day counsel for the Union of India did not submit his "written arguments", and addressed a telegram asking for time till 15/01/1966, "to despatch the written arguments". On 15/01/1966, no intimation was received from counsel for the Union of India. The arbitrator then proceeded to make his award on 17/01/1966. In the view of the Deputy Commissioner the arbitrator did not "adopt the principle of fairness in giving time to partips" and that he could not "by any standard of equity and justice be said to have closed their case".
(4) THE
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