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1956 Supreme(All) 193

IN THE HIGH COURT OF ALLAHABAD
Desai and Beg, JJ.
L.AMARNATH - Appellant
Versus
UNION OF INDIA - Respondents
F. A. F. O. 284 Of 1956
Decided On : 11/05/1956

Advocates Appeared:
Brij Lal Gupta

Headnote:

ARBITRATION - LIMITATION - APPLICATION UNDER SECTION 20 OF THE ARBITRATION ACT - LIMITATION PERIOD - COMPUTATION - CAUSE OF ACTION - WHEN ACCRUES.

Fact of the Case:

The appellant and respondent No. 1 had a contract for the supply of fuel for one year. A dispute arose between the parties about the quality of the fuel supplied, and respondent No. 1 rescinded the contract. The appellant asked respondent No. 1 to refer the dispute to arbitration, but respondent No. 1 refused. The appellant filed an application under Section 20 of the Arbitration Act more than three years after the date of rescission.

Finding of the Court:

The court held that the application under Section 20 of the Arbitration Act was time-barred. The cause of action for the application accrued on the date of rescission of the contract, not on the date of respondent No. 1's refusal to refer the dispute to arbitration.

Issues: 1. When does the cause of action for an application under Section 20 of the Arbitration Act accrue? 2. Whether the application under Section 20 of the Arbitration Act is time-barred?

Ratio Decidendi: 1. The cause of action for an application under Section 20 of the Arbitration Act accrues on the date when the difference arises between the parties, not on the date of the other party's refusal to refer the dispute to arbitration. 2. The application under Section 20 of the Arbitration Act is time-barred if it is filed more than three years after the date of accrual of the cause of action.

Final Decision: The appeal was dismissed.

DESAI, J.

( 1 ) THIS is an appeal from an order of the Civil Judge Bareilly dismissing the appellants application under Section 20 of the Arbitration Act.

( 2 ) THERE was a contract between the appellant and respondent No. 1 about the supply of fuel by the former to the latter for one year ending on 20-2-1952; it contained an arbitration clause for reference of a dispute arising under it to the arbitration of respondent No. 2. Some dispute arose between the parties about the quality of the fuel supplied and on 28-6-1951 respondent No. 1 informed the appellant that it had rescinded the contract. The appellant protested against the decision, but his protests were ignored and on 12-7-1951 respondent No. 1 informed him by telegram that the decision to rescind the contract was final. On 3-11-1951 the appellant asked respondent No. 1 to refers the dispute between them to the arbitration of respondent No. 2 according to the arbitration clause of the contract but the respondent refused to do so and communicated its refusal to him on 23-11-1951. After remaining quiet for some time he filed, the application under Section 20 of the Arbitration act, in the court below on 3-8-1954. The trial court held that the cause of action for filing the application accrued to the appellant on 12-7-1951, that the period of limitation for the application, as provided in Article 181 of the Limitation Act, was three years from the date and that since the application was made more than three years from that date it was barred by time.

( 3 ) THE decision of the learned Civil Judge is correct. Article 181 is contained in the 3rd division of the 1st Schedule of the Limitation Act and provides for the limitation of three years to be computed from the date on which the right to apply accrues, for an application for which no period of limitation is prescribed elsewhere in the schedule. It is conceded that the schedule does not contain any other provision prescribing a period of limitation for an application under Section 20 of the Arbitration Act; but it was contended that the schedule applies to an application made under the Code of Civil Procedure and not to an application made under any other Code or Act such as the Arbitration Act. This was the decision of this Court in--shiam Lal J. Dewan v. Official Liquidator of U. P. Oil mills Co. Ltd. , AIR 1933 All 789 (FB) (A ). The reason given for the decision was that all other articles in the 3rd division of the schedule refer to applications made under the Code of Civil procedure and therefore Article 181 should be interpreted to refer to an application made under the Code of Civil Procedure and not to an application made under any other Code or Act. That case was decided when there was no Arbitration Act and provisions relating to arbitration were part of the Civil Procedure Code itself. The Arbitration Act was enacted in 1940 and subsequently two articles, namely, 158 and 178 have been added in the third division of the schedule; these relate to applications made under the Arbitration Act, 1940. It can, therefore, no longer be contended that the third division is restricted to applications to be made under the Civil Procedure Code and that consequently Article 181 cannot apply to an application made under any other Code or Act. On the contrary the opposite view is to be taken and Article 181, 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 is made elsewhere in the third division. We are fortified in our view by two decisions, one of the Punjab High Court reported in--union of India v. Firm Kiroo Mal Nawal Kishore, AIR 1952 Punj 423 (B), and the other of the Calcutta high Court reported in--shah and Co. v. Ishar Singh Kripal Singh and Co. , AIR 1954 Cal 164 (C ). We hold that an application under Section 20 of the Arbitration Act must, be made within three years of the date on which the right








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