High Court Of Calcutta
D. K. SETH, JYOTESH BANERJEE
FOOD CORPORATION OF INDIA - Appellant
Versus
GOPAL CHANDRA MUKHERJEE - Respondent
F. M. A. T. 2775 Of 2000
Decided On : 03/17/2003
ARBITRATION - Limitation - Applicability - Claims raised after one year from the date of termination or completion of the agreement - Deemed to be wiped and absolutely barred - Corporation discharged of all liabilities under the agreement in respect of those claims - Whether claims raised through amendment dated 19th June, 1996 and 7th July, 1997 are barred by limitation.
Fact of the Case:
The Food Corporation of India (FCI) had entered into an agreement with the respondent/claimant for the storage of food grains. The agreement contained a clause 41 which provided that any demand for arbitration in respect of any claims for the agent under the Agreement, shall be in writing and made within one year of the date of termination or completion (expiry of the period) of the Agreement and where such demand is not made within that period, the claim/s of the Agent be deemed to have been wiped and absolutely barred and the corporation shall be discharged and released of all liabilities under the Agreement in respect of those claims. The agreement was alleged to have been terminated by the claimant through a notice of termination by a letter dated 2nd November, 1991 in terms of the agreement. The FCI accepted the termination through its letter 6th September, 1993. The original claim petition was filed on 30th of May, 1990. The claim petition was amended on 19th June, 1996 and again on 7th of July, 1997.
Finding of the Court:
The Court held that the claims raised through amendment dated 19th June, 1996 and 7th July, 1997 are barred by limitation. The Court observed that the claims for the period till 2nd January, 1992 would be governed by the provisions contained in the agreement itself, particularly, clause 41 thereof respecting limitation. Any claim for the period till 2nd January, 1992, if not included in the original statement of claim and unless it is in respect of a claim already made and is in the nature of continuous one, without a demand raised within one year from 2nd January, 1992, would be barred by limitation. So far as the claims for the period after 2nd of January, 1992 would be governed by section 70 of the Contract Act and not by the terms of the agreement, the limitation provided in clause 41 of the agreement would not be applicable.
Issues: Whether the claims raised through amendment dated 19th June, 1996 and 7th July, 1997 are barred by limitation.
Ratio Decidendi: Section 3 of the Limitation Act being applicable in an arbitration proceeding by reason of section 40 of the 1940 Act, even if the question is not taken or set up, the Arbitrator is duty bound to examine the question of limitation. This section cast a liability on the Arbitrator to ascertain whether it was barred by limitation or not. If in the process of such ascertainment, the Arbitrator fails to note the question of limitation in its proper perspective, such question even if not raised before the Arbitrator or before the learned trial Court, still then it can be raised before the first Appellate Court where facts can be assessed and when there are materials available on record and the question was gone into as an issue in the award and the trial Court had occasion to deal with the same.
Final Decision: Appeal allowed in part.
( 1 ) THE award made by the Arbitrator in the dispute between the parties, was made rule of the Court after rejecting the appellants' application under section 30 of the Arbitration Act, 1940 (1940 Act), by a judgment dated 10th of May, 2000 passed in T. S. No. 74 of 1987 by the learned Civil Judge (Senior Division), 3rd Court, Howrah. Against this decision the present appeal has been filed by the Food Corporation of India (FCI ). In the award, the claim of the respondent/claimant was allowed and the counter-claim of FCI was denied altogether.
( 2 ) ONE of the grounds taken before this Court is the point of limitation. It appears from clause 41 at page 84 of the Paper Book (PB) that the scope of arbitration was related to "all disputes and differences arising out of or any way touching or concerning this Agreement whatsoever (except as to any matter the decision of which is otherwise expressly provided for in the agreement) shall be referred to the sole arbitration of any person appointed by the Managing Director of the FCI". It further provided "that any demand for arbitration in respect of any claims for the agent under the Agreement, shall be in writing and made within one year of the date of termination or completion (expiry of the period) of the Agreement and where such demand is not made within that period, the claim/s of the Agent be deemed to have been wiped and absolutely barred and the corporation shall be discharged and released of all liabilities under the Agreement in respect of those claims". The agreement was alleged to have been terminated by the claimant through a notice of termination by a letter dated 2nd November, 1991 (Exhibit-6) in terms of the agreement. The said notice was due to take effect from 2nd January, 1992. The FCI accepted the termination through its letter 6th September, 1993. The Arbitrator had held that the agreement stood terminated with effect from 2nd of January, 1992.
( 3 ) THE acceptance of the termination would be relevant for two purposes. First, whether the claims up to 2nd January, 1992 or 6th September, 1993 would be governed by the terms of the agreement. Inasmuch as, if the agreement is deemed to have been terminated on 2nd January, 1992, the claims till that date would be governed by the terms of the agreement. Those claims arising after 2nd January, 1992 would be governed by section 70 of the Contract Act without being confined to the terms of the agreement. If 6th September, 1993, the date on which the termination was accepted by FCI, is taken to be the date of termination of storing agency, in that event, claims up to that date would be governed by the terms of the agreement and any claim beyond that period would not be governed by the terms of the agreement, but by the general principles of contract. Secondly, this date has another relevance having regard to clause 41 of the Agreement providing for demand for arbitration in respect of any claim to be made in writing within one year of the date of termination or completion of the Agreement. Inasmuch any claim raised after one year from this date 'shall be deemed to have been wiped and absolutely barred and the corporation shall be discharged of all liabilities under the Agreement in respect of those claims'.
( 4 ) IT appears that the original claim petition was filed on 30th of May, 1990. The claim petition was amended on 19th June, 1996 and again on 7th of July, 1997. The second question of limitation would arise as to whether the claims raised through amendment dated 19th June, 1996 and 7th of July, 1997 are barred by limitation. Mr. Anindya Mitra, learned senior counsel for the claimant/respondent, had pointed out that the point with regard to limitation was never taken either before the Arbitrator or in the application for setting aside the award before the learned trial Court. Therefore, for the first time, the question of limitation cannot be raised before the Appellate Court. The period of limitation
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