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1929 Supreme(SC) 4
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKIN, LORD SALVESEN, AND SIR JOHN WALLIS.
RAMDUTT RAMKISSENDASS - Appellant
Versus
F. D. SASSOON AND COMPANY - Respondents
On Appeal from the High Court at Calcutta.
Decided On : Jan. 29. 1929.
Solicitors for appellants :W. W. Box & Co. Solicitors for respondents: Sanderson, Lee & Co.
The Indian Limitation Act applies to arbitration via an implied term in mercantile contracts. Section 14, which excludes time spent bona fide prosecuting a claim in a court lacking jurisdiction, applies by analogy to arbitration proceedings to ensure consistency with court-led litigation.
Headnote:(A) Indian Limitation Act, 1908 - Section 3, Section 14 and Schedule I, Article 115 - Application of limitation to arbitration proceedings - Although the Act does not explicitly mention arbitration, in mercantile references, it is an implied term of the contract that the arbitrator must decide the dispute according to the existing law of contract. Consequently, every defence that would be open in a court of law, including the defence of limitation, can be proponed for the arbitrator's decision unless the parties have agreed to exclude such a defence.
(B) Indian Limitation Act, 1908 - Section 14 - Exclusion of time spent in prosecuting another civil proceeding in good faith - The provision allowing the exclusion of time spent prosecuting a proceeding in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it, applies by analogy to arbitration proceedings. If the terms "suit instituted, appeal preferred, and application made" in Section 3 are interpreted to include arbitration, the same interpretation must be applied to Section 14 to ensure consistency and avoid anomaly.
Facts of the case:
The respondents entered into several contracts for the sale of goods. A dispute arose regarding the quality of the goods supplied, leading to a first arbitration. The sole arbitrator in that proceeding issued an award, which was subsequently challenged and eventually declared void by the court on the grounds that the arbitrator's appointment was illegal. Following this decision, the respondents initiated a second arbitration. The appellant argued that the claim was barred by the three-year limitation period prescribed under the law for breach of contract.
Findings of Court:
The court held that the limitation act applies to arbitration proceedings. While the second arbitration was not a mere continuation of the first, the time spent by the respondents in good faith prosecuting their claim before the first arbitrator (who lacked jurisdiction) and the subsequent legal proceedings to set aside that award must be excluded from the limitation period under Section 14 of the Act.
Issues: Whether the Indian Limitation Act, 1908, applies to arbitration proceedings and whether the time spent in a void arbitration proceeding can be excluded when computing the limitation period under Section 14.
Ratio Decidendi: In mercantile contracts, there is an implied agreement that the arbitrator will apply the law of contract, including statutes of limitation. To prevent a disparity between court-led and arbitrator-led disputes, the statutory protection provided by Section 14 for bona fide prosecution of a claim in a forum lacking jurisdiction extends by analogy to arbitration.
Result: Appeal dismissed with costs to the respondents.
Legal Category Hierarchy
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practice and procedure
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arbitration
- limitation
- jurisdiction
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arbitration
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contract law
- breach of contract
Judgement
Appeal (No. 107 of 1927) from an order of the High Court in its appellate jurisdiction (November 8, 1926) affirming an order of that Court in its original jurisdiction (April 19, 1926).
The appeal arose out of an award of arbitrators appointed in 1922 whereby the respondents were awarded damages for the defective quality of jute delivered by the appellants under contracts of sale made in 1913 and 1914 ; the award was subject to the opinion of the Court on the questions (1.)
Law Rep. 56 Ind. App. 128 ( 1928- 1929) Ramdutt Ramkissendass V. F. D. Sassoon and Company
8
whether the defence of limitation could be raised, and if so (2.) whether the buyers (respondents) claim was barred.
The facts appear from the judgment of the Judicial Committee.
The opinion of the Court delivered by Sanderson C.J. and Rankin was that the defence of limitation could be raised but that the claim was not barred.
That judgment not being open to appeal the appellants petitioned that the award (to which the opinion of the Court had been directed to be added) should be set aside on the ground that there was an error upon its face. The petition was dismissed by Buckland J. and that decision was affirmed on appeal by Rankin C.J. and Ghose J.
1928. Nov. 13,15. De Gruyther K.C. and W. Wallach for the appellant. The respondents claim was barred by limitation. The High Court rightly held that the defence of limitation could be raised In re Astley and Tyldesley Coal and Salt Co. (( 1899) 68 L. J. (Q. B.) 252.); and Russell on Arbitration, 11th ed., p. 394. In Board of Trade v. Cayzer Irvine & Co. ([ 1927] A. C. 610, 614.) in the House of Lords the above decision was referred to with approval by Viscount Cave L.C. The claim was therefore barred by the Indian Limitation Act, 1908, Sch. L, art. 115. The view of the Appellate Court that the arbitration of 1922 was a continuation of that commenced in 1915 was erroneous. When the first award was made the proceedings of 1915 ended; the arbitrator became functus officio. The terms of s. 14 makes it impossible to apply that section to the period between 1917 and 1922 occupied by the appellants suit to set aside the earlier award. During that period the respondents were not even by analogy " prosecuting " a civil proceeding. If the respondents had brought a suit in 1922, s. 14 clearly would not have applied.
Dunne K.C. and S. Hyam for the respondents. The principle of In re Astley and Tyldesley Coal and Salt Co. (( 1899) 68 L. J. (Q. B.) 252.) does not apply to this case. In England procedure by arbitration in mercantile matters was established after the Statute of Limitations. In India it was established before the Indian Limitation Act, 1908, and the Indian Arbitration Act, 1899. Yet the Indian legislature expressly refrained from prescribing any period of limitation for arbitration proceedings. If, however, the defence of limitation could be raised in the present case, the claim was not barred. The High Court rightly held that the arbitration was a continuous proceeding commenced in 1915. Further, it would be inequitable to apply the provisions of Sch. I. of the Limitation Act without applying by analogy s. 14. Upon the facts of this case, and so applying s. 14, the claim was not barred. In any case it is submitted that the proceedings being under the Indian Arbitration Act, not under the Code of Civil Procedure, the present appeal does not lie.
De Gruyther K.C. in reply. The arbitration in Champsey Bhara & Co.s case (( 1923) L. R. 50 I. A. 324.) was under the Indian Arbitration Act, but it was not suggested that the appeal did not lie. It is conceded that the language of ss. 13, 19 and 20 of the Limitation Act makes it possible to apply them by analogy to an arbitration, but that is not so in the case of s. 14.
1929. Jan. 24. The judgment of their Lordships was delivered by
LORD SALVESEN. This is an appeal from an order of the High Court of Judicature at Fort William in Bengal, dated November 8, 1926, whic
