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2009(2) Supreme 622
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
Markandey Katju and R.M. Lodha, JJ.
Visakhapatnam Port Trust — Appellant
versus
M/s Continental Construction Company — Respondent
Civil Appeal No. 5849-5850 of 2002
Decided on : 20-02-2009
(b) Limitation Act, 1963 – Article 137 – VPT recovering the disputed amount on 8th August 1974 – Limitation began to run from that date – Contractor’s agitation for the claim on 22nd September, 1984 was therefore barred by limitation. (Para 17)
(c) Arbitration Act, 1940 – Section 37(3) – Contractor appointing its arbitrator only after three months of the dispute and 12 days after rejection of the disputed claim – Contractor’s claim cannot be said to be time barred. (Para 21)
(d) Arbitration Act, 1940 – Section 17, Proviso – Proviso inserted by amendment in 1990 – Arbitral award having been made in 1985, the Proviso is not applicable – Although giving reasons was not required in the pre-amendment Act, the arbitrators did give their reasons – Award is valid – Reasonableness of the reasons given by arbitrators cannot be gone into by the Court. (Paras 25 and 27)
Facts of the case :
1. There was a dispute between VPT and the contractor with regard to return of 950 jack rods valuing Rs. 9,65,155/-, which was referred to arbitration in the year 1975. On 23rd March, 1980, the arbitrators rejected the claim of VPT. The award dated 23rd March, 1980 was challenged by VPT before the Civil Judge, Visakhapatanam who dismissed the said petition on 10th September, 1984.
2. After this rejection, the contractor raised dispute for refund of Rs. 74,810.38 which was recovered by VPT from the contractor’s running bill no. 21. This dispute was also ultimately referred to arbitration who by their award dated 27th October, 1985 accepted the claim of the contractor and passed an award for Rs.74,810.38 in favour of the contractor.
3. VPT challenged the award by filing petition raising the objection that the claim of the contractor was time barred. The Court of the Principal Subordinate Judge, Visakhapatnam vide his judgment dated 16th February, 1994 allowed the application; set aside the award of the arbitrators and held that the claim of the contractor was barred by limitation.
4. The High Court upturned the judgment of the Principal Subordinate Judge, Visakhapatnam and held that the claim of the contractor for Rs. 74,810.38 was within limitation.
5. In another dispute arising out of of C-3 contract for execution of marine works and break waters at the outer harbour at Lova Garden, Visakhapatnam in respect of the charges for power driven survey boat used by the contractor, the arbitrators allowed the claim of the contractor for Rs. 6,44,500/- but no interest or cost were allowed.
6. VPT challenged the award dated 20th November, 1985 in the Court of Subordinate Judge, Visakhapatnam who allowed the petition and set aside the award.
7. The contractor, then carried the matter to the High Court in appeal which has been allowed.
Finding of the Court :
Contractor’s claim for Rs. 74,810.38 was barred by limitation; his other claim, however, was not.
Result : Appeals disposed of.
JUDGEMENT
R.M. Lodha, J.—
Both these appeals by special leave, arise out of one and the same judgment dated 26th April, 2002 rendered by the High Court of Judicature Andhra Pradesh whereby it allowed the two appeals being CMA No. 1559/1994 and CMA No. 77/1995.
2. For the sake of convenience, we shall refer the appellant -Visakhapatnam Port Trust, “VPT” and the respondent - M/s Continental Construction Company, “the Contractor”.
3. In CMA No. 1559/1994 before the High Court, the dispute between the parties was in respect of refund of an amount of Rs. 74,810.38 which was recovered by VPT from the contractor’s running bill no. 21. VPT entered into an agreement with the contractor on 7th January, 1973 whereunder the contractor was to construct the ore berth 263 meters long 29.73 meters wide comprising of eight numbers of 18 meters x 27.73 meters long concrete cribs spaced at 35M centres on prepared foundations and connected by pre-cast pre-stressed deck and R.C.C. slab and construction of two Mooring Dolphins comprising concrete deck supported on 900mm internal diameter Racker bored piles. For the execution of the said contract, VPT was to supply various equipments comprising of hydraulic jacks, hydraulic pumps, steel yoke assembly, jack rods etc. and it appears to be fairly admitted position that 950 nos. of jack rods were supplied by VPT to the contractor. Towards cost of 500 jack rods, on 8th August, 1974, from the contractor’s running bill no. 21, an amount of Rs.74,810.38 was recovered by VPT.
4. As there was a dispute between VPT and the contractor with regard to return of 950 jack rods valuing Rs. 9,65,155/-, VPT referred to the dispute to arbitration in the year 1975. The statement of claim was filed by VPT before the arbitrators on 4th June, 1976. On 23rd March, 1980, the arbitrators rejected the claim of VPT. The award dated 23rd March, 1980 was challenged by VPT before the Civil Judge, Visakhapatanam by filing a petition under Sections 30 & 33 of the Arbitration Act, 1940 (for short, ‘Act, 1940 ). The Civil Judge, Visakhapatanam dismissed the said petition on 10th September, 1984.
5. It is pertinent to notice here that until the rejection of claim made by VPT for Rs. 9,65,155/- towards the cost of 950 jack rods vide award dated 23rd March, 1980, the contractor did not raise any dispute with regard to recovery of Rs. 74,810.38 made by VPT on 8th August, 1974 from the contractor’s running bill no. 21. It was only thereafter, to be specific on 27th March, 1980 that the contractor called upon VPT to release the sum of Rs. 74,810.38. Then on 22nd of September, 1984, the contractor initiated proceedings under the Act, 1940 in respect of claim of Rs.74,810.38 by appointing its arbitrator and also called upon VPT to appoint its arbitrator. The arbitrators entered upon the reference on 1st February, 1985 and they also appointed an Umpire. The contractor filed its statement of claim before the arbitrators on 16th March, 1985. The arbitrators by their award dated 27th October, 1985 accepted the claim of the contractor and passed an award for Rs.74,810.38 in favour of the contractor.
6. VPT challenged the award by filing petition (O.P.No. 10/1986) under Sections 30 and 33 of the Act, 1940, inter alia raising the objection that the claim of the contractor was time barred. The Court of the Principal Subordinate Judge, Visakhapatnam vide his judgment dated 16th February, 1994 allowed OP No. 10/1986; set aside the award of the arbitrators and held that the claim of the contractor was barred by limitation.
7. The contractor challenged the judgment of the Principal Subordinate Judge, Visakhapatanam dated 16th February, 1994 by filing an appeal before the High Court which was registered as CMA No. 1559/1994. The High Court upturned the judgment of the Principal Subordinate Judge, Visakhapatnam and held that the claim of the contractor for Rs. 74,810.38 was within limitation.
8. The other appeal being CMA No. 77/1995 before the High Court
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