High Court Of Calcutta
CHITTATOSH MUKHERJEE, SUDHANSHU SEKHAR GANGULY
NANALAL M.VARMA, CO.LTD. - Appellant
Versus
ALEXANDRA JUTE MILLS LTD. - Respondent
A. F. O. O. 405 Of 1980
Decided On : 05/14/1987
{'KEYWORD': 'ARBITRATION', 'SUBJECT': 'Validity of an Arbitral Award', 'ACT SECTION LIST': ['Arbitration Act, 1940', 'Limitation Act, 1963'], 'SUMMARY': 'The court upheld the validity of an arbitral award, finding that there was a dispute within the meaning of the arbitration clause and that the non-payment of the contract price constituted a repudiation of the contract, giving rise to a dispute subject to arbitration. The court distinguished the case from Union of India v. Birla Cotton and Weaving Mills Ltd., where the refusal to pay was not a denial of liability but an attempt to appropriate the amount towards another claim under an independent contract.'}
Fact of the Case:
The appellant and respondent entered into a contract for the sale of goods. The appellant failed to pay the agreed price, and the respondent initiated arbitration proceedings. The appellant challenged the validity of the arbitral award, arguing that there was no dispute within the meaning of the arbitration clause and that the application to set aside the award was barred by limitation.
Finding of the Court:
The court found that the non-payment of the contract price constituted a repudiation of the contract, giving rise to a dispute subject to arbitration. The court also found that the application to set aside the award was filed within the limitation period prescribed by the Limitation Act, 1963.
Issues: 1. Whether there was a dispute within the meaning of the arbitration clause? 2. Whether the application to set aside the award was barred by limitation?
Ratio Decidendi: 1. The court held that a dispute exists when there is an assertion of a right by one party and repudiation thereof by another. In this case, the non-payment of the contract price by the appellant amounted to a repudiation of the contract, giving rise to a dispute subject to arbitration. 2. The court held that the application to set aside the award was filed within the limitation period prescribed by the Limitation Act, 1963, as the appellant was entitled to exclude the time taken in obtaining a certified copy of the award.
Final Decision: The court dismissed the appeal and upheld the validity of the arbitral award.
( 1 ) ON April 19, 1973 the appellant and the respondent whose management had been taken over by the Central Government under S. 18a of the Industrial (Development and Regulation) Act, 1951 had entered into a contract, under which the respondent had sold to the appellant goods whose agreed value was Rs. 84,867. 71. In spite of demand the appellant did not pay the said amount. Purporting to rely upon the arbitration clause contained in the contract, the respondent had applied to the Bengal Chamber of Commerce and Industry for adjudicating by Tribunal of Arbitrators the dispute in respect of the non-payment of the said amount. Upon the receipt of the notice the appellant had disputed the authority of the Tribunal of Arbitrators to adjudicate the said dispute, inter alia, on the ground that the subject-matter of reference was not covered by the arbitration clause inasmuch as the said non-payment did not amount to a dispute within the arbitration clause in question. The Tribunal proceeded with the Reference and the appellant did not participate in the same.
( 2 ) THE award having been given the appellant was served with a notice under S. 14 (1) of the Arbitration Act. It had filed in this Court an application under Ss. 30 and 31 of the Arbitration Act for setting aside the said award. The appellant impugned the award on the ground that there was no dispute within the meaning of the arbitration clause and, therefore, the award was without jurisdiction and was liable to be set aside.
( 3 ) BY the order and judgment complained of in this appeal the learned trial Judge. dismissed the appellant's application for setting aside the award on two grounds. In the first place, according to the learned trial Judge, the application for setting aside the award was filed beyond the time prescribed by Art. 119 of the First Schedule to the Limitation Act, 1963. Secondly the learned trial Judge was of the view that the nonpayment of the said amount of Rs. 84,867. 71 p. was a dispute within the meaning of the arbitration clause and, therefore, the award which was not otherwise invalid was perfectly legal and binding upon the parties.
( 4 ) MR. Chatterjee, learned counsel who has appeared on behalf of the appellant, has rightly pointed out that in computing the period of limitation prescribed by Art. 119 of the Limitation Act the appellant was entitled under S. 12 of the Limitation Act to exclusion of time taken by it in obtaining the certified copy of the award. In the instant case the appellant had applied for a certified copy and after taking into reckoning the time spent in obtaining a certified copy thereof the application under S. 30 of the Arbitration Act, filed by the appellant was within a period of 30 days from the date of service of notice under S. 14 (1) of the Act. This legal position is not disputed by Mr. Bachawat who has appeared on behalf of the respondent.
( 5 ) WE have considered the matter ourselves and we hold that the learned trial Judge was not right in finding the application for setting aside the award to be barred by limitation.
( 6 ) HAVING given our anxious consideration to the matter we are of the view that the learned trial Judge had applied the correct principles of law in finding that in the instant case a dispute did arise between the parties which was covered by the arbitration clause of the contract and, therefore, the award was not liable to be set aside on the ground that the same was beyond the scope of the arbitration clause. The learned trial Judge has elaborately set out the case law on the point. Therefore, we do not propose to again set out the judicial precedent on the point in extenso, particularly when the learned counsel appearing in either side relied on the same set of authorities which lay down the relevant principles. It is the settled law that the existence of a dispute covered by the relevant arbitration clause in question is an essential condition and pre-requisit
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