IN THE HIGH COURT OF ALLAHABAD
Raghubar Dayal and B. R. James, JJ.
SARWAT YAR KHAN - Appellant
Versus
STATE OF UTTAR PRADESH - Respondents
F. A. F. O. 201 Of 1955
Decided On : 01/06/1959
ARBITRATION ACT, 1940 - SECTION 20 - LIMITATION ACT, 1908 - ARTICLE 181 - APPLICATION FOR REFERENCE TO ARBITRATION - LIMITATION - DISPUTE ABOUT COMPENSATION - WHEN ACCRUES.
Fact of the Case:
Appellant filed an application under Section 20 of the Indian Arbitration Act, alleging abrupt cancellation of lease and possession taken by respondents, claiming compensation. Respondents contested, stating appellant accepted 250 acres of land in compensation and executed a registered lease on 10th September 1951, pleading limitation and want of jurisdiction.
Finding of the Court:
The court held that the dispute about compensation accrued on or after 10th September 1951, when the registered lease was executed, and the application filed on 16th August 1954 was within three years of the accrual of the cause of action. The court also directed the correction of the decree with respect to the amount taxed for the defendants' pleaders' fee.
Issues: 1. Whether Article 181 of the Limitation Act applies to applications under Section 20 of the Arbitration Act? 2. When did the dispute about compensation accrue? 3. Whether the pleaders' fee taxed in the decree should be corrected?
Ratio Decidendi: 1. The court observed that it was not essential to decide whether Article 181 of the Limitation Act applies to applications under Section 20 of the Arbitration Act, as the application was filed within three years of the accrual of the cause of action even if Article 181 applied. 2. The court held that the dispute about compensation accrued on or after 10th September 1951, when the registered lease was executed, as the negotiations about compensation concluded on that date. 3. The court directed the correction of the decree with respect to the amount taxed for the defendants' pleaders' fee, as per the amended Rule 24, Chapter XXI General rules (Civil).
Final Decision: The court allowed the appeal, set aside the order of the court below, and sent the case back for further proceedings according to law. The court also directed the correction of the decree with respect to the amount taxed for the defendants' pleaders' fee.
( 1 ) SARWAT Yar Khan filed an application under Section 20 of the Indian Arbitration Act on the 16th oi August 1954 before the District Judge of Kumaur. alleging that on the 8th of May 1949 the Deputy Commissioner Nainital abruptly cancelled the lease executed by the latter in favour of the appellant on the 7th of July 1945 and took possession of the land along with the houses built by the appellant and the groves and other trees that stood on the land. He also alleged that according to the terms of the lease he was entitled to compensation. He represented to the respondents about his claim for compensation and when they paid no heed to his request he made the aforesaid application praying that the agreement of reference to arbitration contained in the lease deed be filed and a reference be made to the Board of Revenue for determining fhe amount of compensation to which the appellant was entitled.
( 2 ) THE opposite parties contested the application. They accepted the allegations of the appellant and further stated that they had given 250 acres of land in village Aimnaganj to the appellant in compensation for the land resumed and that the appellant had accepted that land. They pleaded that a duly registered lease had been executed in favour of the appellant on the 10th of september 1951 and that therefore there was no question of any dispute being referred to arbitration. They further pleaded want of jurisdiction and limitation.
( 3 ) THE learned District Judge of Kumaun dismissed the application on the ground of limitation holding that it should have been filed within three years of the 8th of May 1949 when the right to apply accrued to the appellant on the cancellation of the lease and the arising of a dispute about com- pensation to which he was entitled. He was ot opinion that Article 181 of the First schedule of the-Limitation Act applied to applications under Section 20 of the Indian Arbitration act.
( 4 ) SARWAT Yar Khan thereupon filed a First. Appeal from Order in this Court. The learned-Judges before whom the appeal was placed for hearing directed the matter to be referred to a Bench of two Judges in view of there being no-direct authority on the question whether Article-181 of the limitation Act applied to Arbitration Act or not. It is thus that this First Appeal from Order has come before us.
( 5 ) IN the case of L. Amar Nath v. Union of India, 1957 All LJ 18: ( (S) AIR 1957 All 206), Desai and Beg JJ. held that Article 181 of the Limitation Act, which is a residuary Article, must be held to apply to applications not only under the Code of Civil Procedure but also under the arbitration Act, for which no provision was made elsewhere in the third division of the First schedule of the Limitation Act and that therefore an application under Section 20 of the arbitration Act must be-made within three years of the date on which the right to make it accrues. The Full Bench case of Shiam Lal J. Dewan v. U. P. Oil Mills Co. Ltd. , AIR 1933 All 789 observing: "it has been held that in view of the fact that all preceding Articles apply to applications-made under the Code of Civil Procedure Article 181 also applies to other applications under the same code,. e. , the application contemplated there-in is ejusdem generis with the other applications-which are specially specified. In this view of the matter even Article 181 would not have applied, and, of course, none of the other special Articles would have been applicable," was not followed as subsequent to the enactment of the Arbitration Act in 1940 two Articles namely 158 and 178 had been added in the third division of the First Schedule--the Articles relating to applications made under the Arbitration Act 1940. Support to the view was obtained from the cases of Union of India v. Firm Kiroo Mal Nawal Ki-shore, AIR 1952 Punj 423 and shah and Co. v. Ishar Singh Kirpal Singh and Co. , AIR 1954 Cal 164. The rationale of this decision loses much of its force in
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