IN THE HIGH COURT OF ALLAHABAD
S. D. Agarwala, J.
STATE OF U.P. - Appellant
Versus
SINGHAL AND CO. - Respondents
Second Appeal 3278 Of 1972
Decided On : 07/04/1980
LIMITATION ACT - SECTION 14 - ARBITRATION ACT, 1940 - SECTION 37(5) - APPLICABILITY OF SECTION 14 OF THE LIMITATION ACT TO ARBITRATION PROCEEDINGS - EXCLUSION OF TIME TAKEN IN ARBITRATION PROCEEDINGS UNDER SECTION 37(5) OF THE ARBITRATION ACT.
Fact of the Case:
The plaintiff, M/s. Singhal and Company, entered into a contract with the State of U.P. for the supply and fixing of steel windows. There was a delay in executing the contract, and the State of U.P. deducted the security from the plaintiff and levied a penalty. The plaintiff filed a suit for recovery of the amount of the price, deduction of security, refund of penalty, and interest thereon. The trial court dismissed the suit as barred by time, but the lower appellate court allowed the suit, holding that the plaintiff was entitled to the benefit of Section 14 of the Limitation Act.
Finding of the Court:
The High Court held that Section 14 of the Limitation Act does not apply to arbitration proceedings, and that the plaintiff was entitled to the benefit of Section 37(5) of the Arbitration Act, 1940, which excludes the time taken in arbitration proceedings from the computation of the limitation period.
Issues: Whether Section 14 of the Limitation Act applies to arbitration proceedings.
Ratio Decidendi: The High Court held that Section 14 of the Limitation Act does not apply to arbitration proceedings, as Section 37(5) of the Arbitration Act, 1940, specifically provides for the exclusion of time taken in arbitration proceedings from the computation of the limitation period. The court also held that the words "shall cease to have effect" in Section 37(5) should be given a liberal interpretation, and that they apply to cases where a court of law decides that an arbitration clause does not apply to the difference in question.
Final Decision: The High Court dismissed the appeal, holding that the lower appellate court was right in giving the benefit of the exclusion of time to the plaintiff-respondent.
( 1 ) THIS is a second appeal filed by the State of U. P. arising out of a suit filed by the plaintiff-respondent M/s. Singhal and Company for recovery of Rs. 4757. 45p.
( 2 ) BRIEFLY, the facts are that the plaintiff-respondent entered into a contract with the State of U. P. through the Executive Engineer P. W. D. Temporary Division, Allahabad for supply and fixing steel windows and north light windows as provided under the contract. There was certain delay in executing the contract. The case of the plaintiff-respondent was that the delay was caused not due to the fault of the plaintiff-respondent but because of the appellant State of U. P. The State of u. P. did not pay the full price of the contract, also deducted the security from the plaintiff-respondent and levied penalty on the plaintiff-respondent. The plaintiff-respondent, therefore, filed a suit for recovery of the amount of the price, deduction of security, refund of penalty and interest thereon. The appellants contested the suit on the ground that the plaintiff-respondent did not complete the work within time and as such the action of the appellants was justified and the plaintiff-respondent was not entitled to the amount claimed in the suit. It was further pleaded that the suit was barred by time and the plaintiff-respondent was not entitled to the benefit of Section 14 of the Limitation Act.
( 3 ) THE trial Court held on merits that the plaintiff-respondent was entitled to the amount claimed but dismissed the suit on the ground that it was barred by time and that the plaintiff-respondent is not entitled to exclude the time under Section 14 of the Limitation Act. The judgment of the trial court is dated 16th October, 1971.
( 4 ) AGAINST the judgment dated 16th October, 1971 an appeal was filed before the lower appellate court. The lower appellate Court also on merits held that the plaintiff-respondent was entitled to the amount claimed by it. It also held that the plaintiff-respondent was entitled to the benefit of section 14 of the Limitation Act and as such decreed the plaintiff-respondents suit. The appeal was accordingly allowed by judgment dated 15th April, 1972 and the suit decreed. The judgment dated 15th April, 1972 has been impugned in the present appeal.
( 5 ) SHRI Ravikant, learned Standing Counsel appearing on behalf of the appellants has contended that the finding recorded by the lower appellate Court that the plaintiff-respondent is entitled to the amount claimed is a finding vitiated in law.
( 6 ) THE second submission of the learned counsel is that the plaintiff-respondent was not entitled to the benefit of Section 14 of the Limitation Act and as such the suit could not have been decreed.
( 7 ) I have heard Shri Radha Krishna, learned senior counsel on behalf of the respondent.
( 8 ) SO far as the first submission of the learned Standing Counsel is concerned, I have examined the judgment of the trial Court as well as the lower appellate Court. The finding by both the trial court and the appellate Court is that the plaintiff-respondent was not responsible for the delay in execution of the contract, and in fact, it was the Public Works Department of the State of U. P. who was responsible for the said delay. This finding clearly is a finding of fact and I do not find any legal infirmity in the said finding.
( 9 ) IN regard to the second submission, the relevant facts are that the work was completed on 15th october, 1963. On 24th of March, 1966 in pursuance of Clause 23 of the Contract Bond, the matter was referred to the Arbitration of Shri J. K. Saxena. The Public Works Department of the state of U. P. filed a written statement on 9-11-1966. Shri J. K. Saxena did not give an award within the time prescribed by law. The plaintiff-respondent awaited the delivery of the award but since the award was not given then on 4-9-1967 another application was moved by him before the Superintending Engineer for appointment of another Arbitrator.
REFERRED TO : Commr. of Sales Tax v. Parson Tools and Plants, Kanpur
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