Arbitration Case No. 79 of 2006 [1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Arbitration Case No. 79 of 2006 Date of Decision: 31.07.2009 M/s Bhagwan Dass & Sons ..Petitioner versus Union of India and others ..Respondents CORAM: HON'BLE MR. JUSTICE T.S.THAKUR,CHIEF JUSTICE 1.Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present : Mr.S.K.S.Bedi, Advocate for the petitioner Mr. Kamal Sehgal, Advocate for the respondents. ***** T.S.Thakur, C.J. (Oral) In this petition, under Section 11(6) of the Arbitration & Conciliation Act, 1996, the petitioner has prayed for the appointment of an independent Arbitrator for adjudication of the disputes that have arisen between the parties in connection with a contract which contained the following arbitration clause:- 70. Arbitration :- All disputes between the parties to the Contract(other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to Arbitration Case No. 79 of 2006 [2] the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Works or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalised by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in Condition 67 hereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence. The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings. The Arbitrator, may, from time to time with the consent of the parties, enlarge, the time upto but not Arbitration Case No. 79 of 2006 [3] exceeding one year from the date of his entering on the reference, for making and publishing the award. The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute. The venue of Arbitrator shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The Award of the Arbitrator shall be final and binding on both parties to the Contract.” The petitioner's case as set out in the petition is that after the completion of the contracted work, a claim was raised by him for payment of the outstanding amount due to the petitioner, which claim was eventually turned down by the respondents in terms of a communication dated 22.04.1999. The respondents also appear to be disputing the satisfactory completion of the contracted work in the said communication and claiming compensation and other charges from the petitioner-contractor. This has, according to the petitioner, given to the petitioner a right to apply for reference of the disputes to an Arbitrator which the respondents have not appointed despite a notice in that regard. Relying upon the decision of the Supreme Court in Datar Switchgears Ltd. V. Tata Finance Ltd. & Anr. 2000(8) S.C.C. 151, learned counsel for the petitioner submitted that the respondents having forfeited their right to make an appointment at this stage, the only option left for them is to seek an appointment of an independent Arbitrator from this Court. Arbitration Case No. 79 of 2006 [4] On behalf of the respondents, it was argued by Mr. Sehgal, that the present petition seeking reference of the disputes to Arbitration was barred by limitation. He contended that the work in question having been completed on 23.8.1993, any claim beyond the period of three years from the said date, would be time barred and so would any petition seeking appointment of an Arbitrator. A claim was, for the time, received from the petitioner firm only on 27.06.1998 i.e. much beyond the period of limitation. He drew my attention to the provisions of Article 137 of the Limitation Act, and the decision of the Supreme Court in Punjab State and Ors. V. Dina Nath & Ors. 2007(3) RCR (Civil) 171, to urge that period of limitation for filing of an application under Section 11(6) of the Act ought to be reckoned from the date the disputes and differences arose between the parties. He contended that disputes and differences in the instant case must be deemed to have arisen on 23.08.1993 when the contract works were completed by the contractor meaning thereby that any request made by the petitioner firm for payment of any claim in June, 1998 and the present application seeking appointment of Arbitrator filed on 19.07.1999 would be barred by limitation. I have given my careful consideration to the submissions made at the bar and perused the record. The Limitation Act does not specifically provide for the period of limitation for making an application under Section 11(6) of the Act. This would mean that any such application shall be governed by Article 137 of the Limitation Act, 1963 which prescribes the period of limitation for applications for which no period of limitation is Arbitration Case No. 79 of 2006 [5] specifically provided for in the said Act. Article 137 of the Limitation Act reads as under:- ARTICLE 137 : PART-II OTHER APPLICATIONS Description of application Period of limitation Time from which period beings to run 137. Any other application for which no period of limitation is provided elsewhere in this division. Three years When the right to apply accrues. The crucial words in the above provision as is evident from a plain reading of the same are “when the right to apply accrues”. The right to apply in the matter of reference to arbitration in turn would depend upon when the disputes sought to be adjudicated upon arise between the parties. That indeed is the view taken by the Supreme Court in S.Rajan V. State of Kerala and another, 1992(3) S.C.C. 608 where the Court observed:- “Reading Article 137 and Sub-Section (1) of Section 20 together, it must be said that the right to apply accrues when the difference arises or differences arise, as the case may be, between the parties. It is thus a question of fact to be determined in each case having regard to the facts of that case.” The question as to when differences and disputes arose between the parties then would, however,depend upon the facts and circumstances of each case. In the present case, the petitioner's version is that he had completed the contracted work to the satisfaction of the respondents on 23.08.1993 leaving certain claims unpaid for which he made a request vide letter dated 27.06.1998. The respondents, do not subscribe to that version. According to the respondents, the work in Arbitration Case No. 79 of 2006 [6] question had not been completed by the contractor which he was advised to complete in terms of a communication dated 22.04.1999. That communication may be extracted in extenso:- “ M/s Bhagwan Dass & Sons 179, The Mall, Ambala Cantt. 133001 CA No. GEA-64/91-92 : TERM CONTRACT (REPAIR AND MINOR WORKS) FOR AFW ZONE 'D' UNDER AGE B/R NO. 2 AT AMBALA Dear Sir, 1. Reference your letter No. GEA-64/108/91-92 dated 15 April, 1999. 2. Your contention conveyed vide your letter under reference neither tenable nor agreed to. As you have failed to complete the work/contract, you are contractually liable for compensation and other charges. Thus you alleged claim is not agreed to. However, you are advised to complete the balance work. Yours faithfully, Sd/- (Bhisham)EE Garrison Engineer (North)”. From the above, it is evident that according to the respondents, the work had remained incomplete and the contractor continued to be under a contractual obligation to complete the same. Not only did the latter deny the petitioner's claim for payment of outstanding dues it advised him to complete the balance work also. The dispute between the parties, in relation to the completion of the work and the right of the petitioner to seek payment of outstanding dues, can therefore, be said to have arisen only upon issue of the above communication by the respondents. That being so, any petition filed within three years from the date of receipt of communication aforementioned on 22.7.1999 should be taken as within limitation. I Arbitration Case No. 79 of 2006 [7] have, therefore, no hesitation in rejecting the contention urged on behalf of the respondents that the present petition seeking appointment of an Arbitrator is barred by limitation. In the result, I allow this application and direct that the disputes and the differences that have arisen between the parties in relation to the contract in question shall stand referred to the arbitration of Justice Bakshish Kaur, former Judge of this Court for adjudication. I, however, make it clear that this order shall not be interpreted to be expressing any final opinion about the claims of the petitioner being within limitation. That is a matter which is left open to be determined by the Arbitrator in accordance with law uninfluenced by any observation made in this order. Keeping in view the stake involved and the time that may be required to be devoted by the Arbitrator, I fix the fee of the Arbitrator to be Rs. 5000/- per hearing subject to a maximum of Rs. 50000/- to be deposited by the parties in such proportion as the Arbitrator may direct. Parties are directed to appear before the Arbitrator on 21.08.2009. (T.S.THAKUR) CHIEF JUSTICE 31.07.2009 'ravinder'