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1986 Supreme(AP) 13

Andhra Pradesh High Court
Judges : K.RAMASWAMY
SENIOR REGIONAL MANAGER, FOOD CORPORATION OF INDIA, HYDERABAD - Appellant
Versus
HYDERABAD ROLLER FLOUR MILLS COMPANY LIMITED, HYDERABAD - Respondent
Decided On : 01-01-86

The provisions of the Limitation Act, 1963 apply to arbitration proceedings, and it is the duty of the arbitrator to consider the plea of limitation. The counsel for a party cannot waive the statutory plea of limitation, and the non-consideration of the question of limitation by the arbitrator is an error apparent on the face of the record or a legal misconduct.

Headnote:

ARBITRATION - LIMITATION - APPLICABILITY OF LIMITATION ACT TO ARBITRATION PROCEEDINGS - DUTY OF ARBITRATOR TO CONSIDER PLEA OF LIMITATION - WAIVER OF PLEA OF LIMITATION BY COUNSEL - EFFECT - ERROR APPARENT ON THE FACE OF THE RECORD - LEGAL MISCONDUCT - REMISSION OF MATTER TO ARBITRATOR.

Fact of the Case:

The appellant, Food Corporation of India, entered into an agreement with the respondent, Hyderabad Roller Flour Mills Company Limited, for the supply of wheat. Disputes arose regarding the quantum of shortage of wheat, and the appellant deducted the claimed amount from the bills payable to the respondent. The respondent filed an arbitration proceeding before the first arbitrator, who rejected claims 1 and 2 as premature. The respondent then filed a fresh reference before the second arbitrator, who passed an award in favor of the respondent. The appellant filed an OP to set aside the award, and the respondent filed a suit to make the award the rule of the Court.

Finding of the Court:

The Court held that the provisions of the Limitation Act, 1963 apply to arbitration proceedings, and it is the duty of the arbitrator to consider the plea of limitation. The Court further held that the counsel for the appellant could not waive the statutory plea of limitation, and that the appellant was not estopped from raising the same. The Court also held that the non-consideration of the question of limitation by the arbitrator was an error apparent on the face of the record or a legal misconduct, and that it impinged upon the jurisdiction of the arbitrator.

Issues: 1. Whether the provisions of the Limitation Act, 1963 apply to arbitration proceedings? 2. Whether the counsel for the appellant could waive the statutory plea of limitation? 3. Whether the non-consideration of the question of limitation by the arbitrator was an error apparent on the face of the record or a legal misconduct?

Ratio Decidendi: 1. The Court held that the provisions of the Limitation Act, 1963 apply to arbitration proceedings, as Section 37 (1) of the Arbitration Act, 1940 provides that all the provisions of the Limitation Act shall apply to arbitrators, as they apply to proceedings in Court. 2. The Court held that the counsel for the appellant could not waive the statutory plea of limitation, as there can be no estoppel against an act of legislature and parties cannot waive or contract themselves out of the law of limitation. 3. The Court held that the non-consideration of the question of limitation by the arbitrator was an error apparent on the face of the record or a legal misconduct, as it is a statutory duty cast on the arbitrator to give full effect to Section 3 of the Limitation Act, 1963.

Final Decision: The Court allowed the CMA and the CRP, set aside the award, and remitted the matter to the arbitrator for adjudication afresh.

K. RAMA SWAMY, J.

( 1 ) AN interesting question relating to limitation, applicable to arbitration, but with some complexity, has arisen for adjudication demanding deep peep in these cases.

( 2 ) CMA. No. 100/81 arises against OP. No. 238/77 and CRP. No. 554/81 arises against OS. No. 466/71. The appellant is the petitioner in the OP and the 2nd defendant in the suit. The 1st respondent is the plaintiff in the suit and the 2nd respondent is the arbitrator. The suit was filed to make the award dated April 22, 1976 the rule of the Court and the op. was filed by the appellant to set aside the same. The Court below dismissed the OP. and decreed the suit making the award rule of the Court. Thus the CMA and the CRP came to be filed. Since they arise out of the award, they are disposed of by a common judgment.

( 3 ) THE Hyderabad Roller Flour Mills Company Limited (for short "the respondent") entered into an agreement with the Food Corporation of india (for short, "the appellant") on April 8, 1965 and to be in force upto june I, 1966. Pursuant thereto, certain wagons of wheat were consigned from Madras Fort to the respondent deliverable at Moulali Station, hyderabad. It is the claim of the appellant that there is shortage of wheat in respect of which disputes arose regarding the quantum of shortage. The shortage there of was quantified and valued at Rs. 7, 925-45 in respect of the first claim and Rs. 17,703-00 in respect of the second claim, apart from the other claims. The appellant deducted the afore stated amounts from the bills payable to the respondent and it was duly communicated to the respondent by a letter dated May 31,1967. The respondent disputed the right of the appellant to deduct and claimed for the payment thereof. But by letters dated June 5, 1967 the claims were rejected. Under Clause 25 of the agreement, the the parties have chosen to have their disputes adjudicated by an arbitrator. Tn terms thereof the respondent laid the arbitration proceedings in respect of all the claims including claims 1 and 2 before one P. Suryanarayana appointed as the sole arbitrator. It is claimed by the respondent that the said arbitrator rejected claims 1 and 2 as premature on the premise that they are pending consideration with the appellant and by letter dated April 19, 1971 the appellant is stated to have intimated the respondent that the deduction of the amounts was proper. Tt thereby furnishes cause of action to the respondent to make further reference in this regard before the arbitrator the 2nd respondent, on February 8, 1972, for adjudication of the two claims. The appellant in their counter dated April 24, 1972 pleaded justification for recovery by way of deduction and its correctness, binding nature on the respondent, apart from the bar of limitation. No rejoinder was filed by the respondent. During the course of the enquiry, the arbtrator noted by his unsigned proceedings dated February 13, 1975, that the plea of limitation was not pressed by the junior counsel for the appellant in the presence of an officer appeared on behalf of the appellant. Without considering the plea of limiotation in the award the claims were accepted. Accordingly the award dated April, 22, 1976 came to be made. As stated, to make it rule of the Court, the respondent laid the suit and to set it aside, the appellant filed the OP. In the Court below, the main defence of the appellant was that the junior counsel has no authority to waive the defence of imitation. The arbitrator did not consider the bar imitation in his award. Therefore the 2nd rspondent committed misconduct. The arbitrator filed the counter stating that since the point was not pressed, it was not dealt with Thereby, by implication he admits that the bar of limitation though was raised, was not considered justifying the concession of the counsel as basis. The Court below put its seal of approval. Therefore it held that having conceded the claim before the arbitrator, it is not open to the app












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