Case: Union of India Vs. Momin Construction Company

2. For the purpose of convenience, the brief facts that are set out relate to the first appeal, Civil Appeal No. 1316 of 1977. The relevant dates in the other appeals are similar3. The appellant and the respondents entered into a contract which contained an arbitration clause, namely, that all disputes or matters of differences between them arising out of or connected with the contract during the progress of the construction work therein set out or after its completion would be decided by arbitration. The final bill in respect of the construction work was prepared and the respondents gave a "No Claim Certificate" onwhereupon the final bill was passed. Onthe respondents filed a petition under Section 20 of the Arbitration Act to take on the file of the City Civil Court, Ahmedabad the arbitration agreement aforementioned. The appellant contested the petition and urged that it was barred by limitation. The issue was answered against the appellant and the petition was allowed4. The appellant preferred an appeal to the Gujarat High Court. The High Court relied upon various judgments and concluded, basing itself principally upon the decision of this Court in Town Municipal Council v. Presiding Officer, Labour Courts ( 1969 (1) SCC 873  : 1970 (1) SCR 51 ) that Article 137 of the Limitation Act, 1963, did not apply to an application under Section 20 of the Arbitration Act. The High Court dismissed the appeal

Reasoning:
7. The claim in the first appeal aforementioned arose to the respondents therein beforewhen they issued the "No Claim Certificate" and the final bill was passed. The right to apply under Section 20 of the Arbitration Act, therefore, arose to the respondents beforeThe application under Section 20 was made by them much after the expiry of three years therefrom. The application under Section 20 was, therefore, plainly barred by time. The cases in the other appeals are similar