JUDGMENT :

S.K. SHRIRAM, J.

Both Appeals arise out of a common order dated 11th April 2005 passed by the learned Single Judge under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).

2. Appellant as well as Respondent had challenged the same Award dated 30th May 2003 passed by learned sole arbitrator directing Municipal Corporation of Greater Mumbai (Respondent) to pay certain amounts to the contractor M/s.R.N. Ghanekar & Co. (Appellant). Respondent's grievance against the Award was that the claim ought to have been set aside on the preliminary point that the reference of the dispute to the Arbitration was barred by law of limitation. It was Respondent’s case that the amounts that Appellant had claimed was on account of overheads from October 1994 till 25th September 1996 and the cause of action arose when Appellant became entitled to claim those amounts. According to counsel for Respondent the cause of action for going to arbitration would arise on the date on which, and if there being no arbitration clause between the parties, the cause of action for institution of suit could have been arisen.

3. It was Appellant's case in the Petition under Section 34 of Arbitration Act that so far as the claim for overheads for the period October 1994 till 31st March 1996, as also for the period beyond 31st March 1996, it was made before the Chief Engineer and he was requested to make payment. In view of the failure of the Chief Engineer to make payment, a reference to the Commissioner was made on 3rd February 1998, as required under Clause 96 of General Conditions of Contract (GCC). This claim was rejected by a letter dated 6th January 2000 whereby Respondent agreed to pay only a sum of Rs.63,370/-. Thus, the cause of action for making a reference to arbitration arose only on 6th January 2000, and, therefore, the reference made on 11th January 2001 was within limitation.

4. The Arbitrator had held that the claim was not barred by limitation because Appellant’s claim for overhead charges was denied by Respondent only by letter dated 6th January 2000 when Respondent informed Appellant that it was entitled to only Rs. 63,370/- and arbitration was invoked on 11th January 2001.

5. The learned Single Judge after referring to Clauses 96 and 97 of the GCC, which provided for the reference of dispute or difference to Commissioner and Arbitrator, respectively, came to the conclusion that the cause of action for making a reference to arbitration would arise from the date on which the right to claim the amount arises, and, therefore, a reference has to be made within a period of three years from the date of accrual of cause of action. The learned Single Judge observed that the steps that are required to be taken under Clause 96 of GCC have to be taken within the period of limitation, and the period that is taken up for taking steps under Clause 96 cannot be excluded while counting the period of limitation, and hence, the learned Arbitrator was not justified in saying that the cause of action arose when the claim was rejected by the Commissioner. As the reference to arbitration had not been made within the period of three years from the date on which the cause of action, i.e., right to claim amount arose, all claims made by Appellant were barred by limitation.

6. Mr.Shah submitted as under :

(a) The learned Single Judge erred in not appreciating that only when the claim was rejected by the Municipal Commissioner on 6th October 2000, the cause of action arose and since the reference invoking arbitration was made by giving notice on 11th January 2001, the claim was within limitation;

(b) Appellant was bound by the provisions of GCC and, particularly, Clause 96 which stipulates that if any doubt, dispute or difference arises between the contractor and engineer, the same shall be referred to the Commissioner. Appellant complied with the provisions, but, as there was no response, Appellant lodged their claim by a letter dated 3rd February