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1995 Supreme(AP) 364
Andhra Pradesh High Court
Judges : B.S.RAIKOTE
Union of India, General Manager, South Central Railway, Secunderabad - Appellant
Versus
P.Kameswar Rao Contractor, Hyderabad - Respondent
Decided On : 07-20-95
A condition in a contract that provides for the waiver of claims if the contractor does not prefer his final claim within a specified period of time is not a mandatory clause and does not take away the limitation prescribed under Article 137 of the Limitation Act.
Headnote:
ARBITRATION - GENERAL CONDITIONS OF CONTRACT - LIMITATION - WAIVER OF CLAIMS - INTERPRETATION OF CLAUSE 64 OF THE GENERAL CONDITIONS OF CONTRACT - WHETHER THE CONDITION IN CLAUSE 64 (1) (III) TAKES AWAY THE LIMITATION PRESCRIBED UNDER ARTICLE 137 OF THE LIMITATION ACT.
Fact of the Case:
The respondent, a contractor, entered into an agreement with the appellants, the South Central Railway, for the construction of a Central CHE Repair Shop. The respondent alleged that the Railway Department shifted the construction site, causing him losses. He made representations to refer the matter to arbitration, but the Department terminated the contract. The respondent filed a suit under Section 20 of the Arbitration Act, seeking the appointment of an arbitrator.
Finding of the Court:
The court held that the suit was not barred by limitation. The court interpreted Clause 64 of the General Conditions of Contract and held that the condition in Clause 64 (1) (iii), which provided that the contractor would be deemed to have waived his claims if he did not prefer his final claim within 90 days of receiving the intimation of the final bill, was not a mandatory clause and did not take away the limitation prescribed under Article 137 of the Limitation Act.
Issues: 1. Whether the suit was barred by limitation. 2. Whether the condition in Clause 64 (1) (iii) of the General Conditions of Contract took away the limitation prescribed under Article 137 of the Limitation Act.
Ratio Decidendi: 1. The court held that the suit was not barred by limitation because the cause of action arose only after the final preparation of the bill on 12-12-1988, as per the decision of the Supreme Court in (1) AIR 1988 SC 1007. The suit was filed on 15-4-1991, which was within three years from the date of the cause of action. 2. The court held that the condition in Clause 64 (1) (iii) of the General Conditions of Contract was not a mandatory clause and did not take away the limitation prescribed under Article 137 of the Limitation Act. The court relied on its own decision in (2) 1994 (1) ALT 293, where it had held that a similar clause in a contract was only for the convenience of the parties and did not lay down a rule of limitation.
Final Decision: The court dismissed the appeal and held that the suit was not barred by limitation. The court also held that the condition in Clause 64 (1) (iii) of the General Conditions of Contract did not take away the limitation prescribed under Article 137 of the Limitation Act.
( 1 ) THIS appeal is preferred by the South Central Railway by its Officers being aggrieved by the judgment and order passed by the III Additional Judge, city Civil Court, Hyderabad, at Secunderabad dated 22nd November, 1994 in o. S. No. 97 of 1991. By the impugned judgment, the suit was decreed by appointing sri M. Markandeya, retired District judge as sole arbitrator to settle the disputes arisen between the parties to the suit agreement.
( 2 ) THE present appellants were the defendants in the suit. The learned counsel for the appellants contended that the impugned judgment and decree are illegal, contrary to the arbitration clause. On the basis of the conditions stipulated in the agreement which was entered into between the appellants and the respondent-contractor, the present dispute could not have been referred to the arbitrators. On the other hand, the learned counsel for the respondent contractor strenuously supported the impugned judgment and decree.
( 3 ) IN order to appreciate the rival contentionsof both parties, it is necessary to note a few facts of the case. The fact that is not disputed is that the respondent entered into an agreement for the construction of Central CHE Repair Shop at kazipet with the defendants under an agreement No. 29/den/vbre/kaj/ 1982, dated 6-9-1982. But, alleging that the Railway Department subsequently shifted the construction site to a place 4 k. Ms. away from the original site and the new site was inaccessible for the movement of the vehicles of the contractor, the plaintiff claimed 12% over and above the s. S. R rates to compensate the loss sustained by him over and above the tender rate. He further alleged that there was delay in commencing the work itself due to laches on the part of the Railway department for non-supplying the drawings and in the meanwhile, there was rise in the prices of the materials and the labour charges. He made a representation to that effect. The Department, instead of considering the same, terminated the contract illegally. In these circumstances, he made several representations to the defendants to refer the matter to the arbitrator as per Clause 64 (3) of the General conditions of Contract. Since the defendants failed to do that, the present suit was filed. The suit was contested by the defendants by filing written statement. They alleged that the plaintiff did not make any attempt to commencethe work or to collect the material to carry out the construction. In these circumstances, number of letters were addressed to him, but without any response and ultimately, there was no alternative, but to terminate the contract. As such, the contract was terminated. They further contended that as per the tender conditions, particulars of work were specified and special conditions were provided in addition to the general conditions of the contract which the plaintiff had accepted. They alleged that the plaintiff himself was guilty in not performing his part of the contract. In these circumstances, the plaintiff was not entitled to the relief as prayed for in the suit. They further contended that the suit claim was barred by limitation.
( 4 ) NO oral evidence was adduced either by the plaintiff or by the defendants. However, documents were got marked vide Exs. A-1 to A-13. After hearing the arguments on both sides, the Court below has decreed the suit as prayed for by the plaintiff. In these circumstances, the present appeal is preferred by the defendants.
( 5 ) THE learned counsel for the Railway department strenuously contended that the impugned order is liable to be set aside because the claims sought to be referred for the arbitration were barred by time, in view of the general conditions contemplated in the contract. By elaborating his argument, he contended that under clause 64 (1) (i) of the general conditions, the contractor has to make his claim within a reasonable time. At any rate, not later than 90 days after final bill and within 180 days
