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2019 Supreme(Mad) 1930
IN THE HIGH COURT OF JUDICATURE AT MADRAS
SENTHILKUMAR RAMAMOORTHY, J.
The Superintending Engineer (Highways), Madurai & Others - Petitioner
Versus
S. Jayamani & Another - Respondent
O.P. No. 293 of 2011
Decided On : 04-10-2019
Advocate Appeared:
For the Petitioners: M. Sricharan Rangarajan, Spl. Government Pleader (CS).
For the Respondents:K.J. Parthasarathy, Advocate.
The main legal point established in the judgment is that the clause in P.S. 111 limiting the period of limitation was void under Section 28 of the Contract Act, and G.O.Ms.No.1545 was not incorporated by reference in the contract.
Headnote:
Arbitration - Limitation, Jurisdiction - Arbitration and Conciliation Act, 1996, Limitation Act, 1963 - [Section 34] - [Arbitration] - [Section 11 of the Arbitration and Conciliation Act, 1996, Article 137 of the Limitation Act, 1963, Clause 48 of the tender conditions, P.S. to SSRB, G.O.Ms.No.1545] - The court discussed the limitation period for filing an application under Section 11 of the Arbitration Act, the incorporation of P.S. to SSRB in the contract, and the jurisdictional challenge based on G.O.Ms.No.1545. The court found that the Section 11 Petition was filed within the limitation period, the clause in P.S. 111 limiting the period of limitation was void under Section 28 of the Contract Act, and G.O.Ms.No.1545 was not incorporated by reference in the contract. The challenge to the Award on merits was also rejected.
Fact of the Case:
The case involved a challenge to the Preliminary Award and Final Award passed by the Sole Arbitrator. The Petitioners contended that the Awards were challenged primarily on the ground of limitation and jurisdiction. The Respondents argued that the Section 11 Petition was filed within the limitation period and that the claims were not time-barred as per P.S. 111. The Petitioners also raised a jurisdictional challenge based on G.O.Ms.No.1545.
Finding of the Court:
The court found that the Section 11 Petition was filed within the limitation period, the clause in P.S. 111 limiting the period of limitation was void under Section 28 of the Contract Act, and G.O.Ms.No.1545 was not incorporated by reference in the contract. The challenge to the Award on merits was also rejected.
Issues: The issues involved the limitation period for filing an application under Section 11 of the Arbitration Act, the incorporation of P.S. to SSRB in the contract, and the jurisdictional challenge based on G.O.Ms.No.1545.
Ratio Decidendi: The court held that the Section 11 Petition was filed within the limitation period, the clause in P.S. 111 limiting the period of limitation was void under Section 28 of the Contract Act, and G.O.Ms.No.1545 was not incorporated by reference in the contract. The court also emphasized that construction of the contract and appraisal of evidence is within the domain of the Arbitral Tribunal and would not be interfered with except on limited grounds.
Final Decision: The court rejected all objections to the Award and dismissed the Petition to set aside the Award.
JUDGMENT :
Prayer:- Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Preliminary Award dated 03.06.2010 and Final Award dated 08.04.2011 passed by the Sole Arbitrator.
1. The Respondents in the Arbitration Proceedings are the Petitioners before this Court. The First Respondent herein initiated Arbitration Proceedings wherein a sum of Rs.1,65,30,698/- with interest at 18% per annum on Rs.52,76,662/- was claimed. By Preliminary Award dated 03.06.2010, the learned Arbitrator held that the First Respondent herein is entitled to an aggregate sum of Rs.51,90,602/- with interest thereon. By Final Award dated 08.04.2011, the learned Arbitrator directed the Petitioners herein to pay a sum of Rs.1,12,63,051.02 with interest on the principal sum of Rs.51,90,602/- at 18% per annum from 22.11.2010 till the date of payment; Arbitrator's fees; lawyer's fees, expenses etc., as specified in the said Final Award. The said Awards are impugned herein and are referred to as the Award hereafter.
2. I heard the learned counsel for the Petitioners and the learned counsel for the First Respondent.
3. The learned counsel for the Petitioners submitted that the Award is challenged primarily on the ground of limitation and jurisdiction. He subsequently circulated written submissions wherein some contentions were made on the merits also. With regard to limitation, he submitted that the admitted position is that the Arbitration Proceedings commenced on or about 21.04.1999, when the First Respondent herein invoked the arbitration clause. After invoking the arbitration clause on 21.04.1999, he submitted that the Petition under Section 11 of the Arbitration and Conciliation Act, 1996(the Arbitration Act) was filed only on 24.03.2005, whereas, as per Article 137 of the Limitation Act, 1963(the Limitation Act), the limitation period for filing an application under Section 11 of the Arbitration Act is three years from the date when the cause of action accrues. Accordingly, if calculated from the date of final bill, namely, 27.03.1999, the Section 11 Petition should have been filed on or before 27.03.2002 and, if calculated from the date of commencement of Arbitration, namely, 21.04.1999, the Section 11 Petition should have been filed on or before 21.04.2002. Consequently, he submitted that the Section 11 Petition filed on 24.03.2005 is clearly barred by limitation. In support of this submission, he referred to and relied upon the judgments, which are set out below along with context and principle:
(i) Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority, (1988) 2 SCC 338, wherein, at paragraph 4, the Hon'ble Supreme Court held that the period of limitation for filing an application under Section 20 of the Arbitration Act, 1940 commences from the date when the dispute arises and is a period of three years from the date when the dispute arose.
(ii) Golden Chariot Recreations Pvt Ltd. Vs. Mukesh Panika & another, (2018) SCC Online Del 10050, wherein, it was held by the Hon'ble Delhi High Court that a Petition under Section 11 of the Arbitration Act, which was filed more than three years after the notice invoking the Arbitration clause, is barred under Article 137 of the Limitation Act.
(iii) Panchu Gopal Bose Vs. Board of Trustees for Port of Calcutta (1993) 4 SCC 338, wherein, the Hon'ble Supreme Court held that the cause of arbitration commences when one parties serves notice on the other party requiring the appointment of an arbitrator and that Section 3 of the Limitation Act applied to arbitral proceedings.
4. He further submitted that this question was not decided in the order passed in the Section 11 Petition, wherein the Court merely recorded that this is a fit case for making a reference under Section 11(5) of the Arbitration Act. Therefore, he submitted that the question of limitation should have been decided by the Arbitral Tribunal. Instead, he submitted that the Arbitral Tribunal rejected the
