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Delhi High Court
M. R. A. ANSARI
Union of India - Appellant
Versus
Rishi Raj and Co., Delhi - Respondent
F. A. O. No. 3 of 1972
Decided On : 04/26/1972
ARBITRATION - APPLICATION UNDER SECTION 20 OF THE INDIAN ARBITRATION ACT, 1940 - LIMITATION - ARTICLE 137 OF THE LIMITATION ACT, 1963 - APPLICABILITY - SCOPE OF ARTICLE 137 - WHETHER INCLUDES APPLICATIONS UNDER THE ARBITRATION ACT, 1940 - WHETHER RULE OF EJUSDEM GENERIS APPLIES - INTERPRETATION OF ARTICLE 137 - WHETHER APPLICATIONS UNDER SECTION 20 OF THE ARBITRATION ACT, 1940 ARE GOVERNED BY ARTICLE 137 - WHETHER FIRST PROVISO TO CLAUSE 19 OF THE AGREEMENT BARS THE COUNTER-CLAIM OF THE RESPONDENT AGAINST THE GOVERNMENT - WHETHER RESPONDENT ESTOPPED FROM DISPUTING THE GOVERNMENT'S CLAIM BY ADMISSION OF LIABILITY IN LETTER EX. R/2.
Fact of the Case:
The respondent filed an application under Section 20 of the Indian Arbitration Act, 1940, for referring certain disputes between the respondent and the appellant to arbitration. The appellant opposed the application on various grounds, the main ground being that the application was barred by limitation. The learned Subordinate Judge held all the issues against the appellant and in favour of the respondent, and referred the disputes between the parties to the arbitration of the arbitrator to be appointed by the Secretary, Government of India, Ministry of Food and Agriculture.
Finding of the Court:
The Court held that Article 137 of the Limitation Act, 1963 does not apply to applications under Section 20 of the Arbitration Act, 1940, as the rule of ejusdem generis applies to Article 137 and applications under the Arbitration Act, 1940 are not ejusdem generis with applications under the Code of Civil Procedure. However, even if Article 137 were to apply, the application filed by the respondent is within the time prescribed under Article 137, as the claim made by the Government against the respondent is the only dispute that can be referred to arbitration under the main arbitration clause of the agreement. The Court further held that the first proviso to Clause 19 of the agreement bars the counter-claim made by the respondent against the Government, as it is a claim in respect of which a demand for arbitration has to be made within one year of the date of termination of the contract. The Court also held that the respondent is not estopped from disputing the Government's claim by admission of liability in letter Ex. R/2, as the admission was made within two days of the receipt of the notice from the Government and the respondent had a good explanation for the delay in seeking arbitration.
Issues: 1. Whether Article 137 of the Limitation Act, 1963 applies to applications under Section 20 of the Arbitration Act, 1940? 2. Whether the first proviso to Clause 19 of the agreement bars the counter-claim made by the respondent against the Government? 3. Whether the respondent is estopped from disputing the Government's claim by admission of liability in letter Ex. R/2?
Ratio Decidendi: 1. Article 137 of the Limitation Act, 1963 does not apply to applications under Section 20 of the Arbitration Act, 1940, as the rule of ejusdem generis applies to Article 137 and applications under the Arbitration Act, 1940 are not ejusdem generis with applications under the Code of Civil Procedure. 2. The first proviso to Clause 19 of the agreement bars the counter-claim made by the respondent against the Government, as it is a claim in respect of which a demand for arbitration has to be made within one year of the date of termination of the contract. 3. The respondent is not estopped from disputing the Government's claim by admission of liability in letter Ex. R/2, as the admission was made within two days of the receipt of the notice from the Government and the respondent had a good explanation for the delay in seeking arbitration.
Final Decision: The appeal was allowed in part. The judgment of the learned Subordinate Judge referring the entire dispute to arbitration was modified accordingly and the appeal was allowed in part to that extent. The parties were directed to bear their own costs in the appeal.
JUDGMENT :- The respondent herein M/s. Rishi Raj and Company filed an application in the Court of the Subordinate Judge, 1st Class, Delhi, under Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act) for referring certain disputes between the respondent and the appellant to arbitration of the arbitrator named in the agreement dated 5-11-1963. According to the averments in the application, the Regional Director (Food), Northern Region, had issued an invitation to tender dated 21-9-1963 for the appointment of loading/unloading and transport contractors at Government of India Godowns and Railway Heads at Agra. The tender submitted by the respondent was accepted by the Government by its letter of acceptance dated 11-10-1963. The respondent commenced the work but before the work was completed and before the expiry of the period of the contract, the Regional Director (Food) cancelled the contract on 25-6-1964. The Regional Director further claimed a sum of Rs. 21,314.15 paise from the respondent by way of damages and loss alleged to have been sustained by the Government as a result of getting the work completed by other contractors. The respondent repudiated the claim of the Government and, on the other hand, made a counter-claim against the Government for Rs. 5,000/- by way of damages for the wrongful termination of the contract by the Government. The respondent called upon the appellant to refer the disputes between them to the sole arbitration of a person nominated by the Secretary to the Government of India, Ministry of Food and Agriculture according to the arbitration clause contained in the agreement dated 5-11-1963. The appellant, however, declined to refer the disputes to arbitration. The respondent, therefore, prayed that the Court should call upon the appellant to file the arbitration agreement and that the disputes be referred to arbitration in terms of the arbitration clause contained in the said agreement.
2. The appellant opposed the application on various grounds, the main ground being that the application filed by the respondent was barred by limitation. The following issues were framed by the learned Subordinate Judge :-
1. Whether the application is not within time?
2. Whether the applicant is estopped by his act and conduct to seek arbitration?
3. Whether the petition is filed verified by a competent person?
4. Relief.
Only one witness was examined on behalf of the respondent and no witnesses were examined on behalf of the appellant. Both sides filed a number of documents. On a consideration of this evidence, the learned Subordinate Judge held all the issues against the appellant and in favour of the respondent, and referred the disputes between the parties to the arbitration of the arbitrator to be appointed by the Secretary, Government of India, Ministry of Food and Agriculture. The appellant has preferred the present appeal against the said judgment of the learned Subordinate Judge.
3. The learned lower Court following the decision of the Supreme Court in Mohd. Usman v. Union of India, AIR 1969 SC 474 has held that no period of limitation was prescribed under the Limitation Act for an application under Section 20 of the Act. The learned counsel for the appellant, Shri A.B. Saharia, has disputed the correctness of this finding and he has contended that whatever the position might have been under the Limitation Act, 1908, an application under Section 20 of the Act was now governed by Article 137 of the Limitation Act, 1963 and such an application had to be filed within three years from the date when the right to file the application accrues. The learned counsel referred to the entire case law as well as the history of the legislation on this subject in support of his contention. But it will not be necessary to consider this contention in detail, because the application filed by the respondent under Section 20 of the Act so far as it relates to the claim of the appellant against the
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