@JUDGMENTTAG-ORDER
1. Respondent in Arbitration O.P.No.l of 1996, on the file of Additional District Court, Karaikal, is the revision petitioner.
2. The revision is filed under Art. 227 of the Constitution of India. Respondent herein entered into three contracts with the petitioner on 20.7.1990, 8.8.1990 and 17.1.1992. All these agreements provide for arbitration in the event of dispute arising between the parties relating to the terms and conditions or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the terms and conditions of the contract. The contracts also provide for the appointment of a sole arbitrator to decide the dispute, who will have to be appointed by the petitioner on the request made by the party. During the progress of work, dispute arose between the parties in regard to certain matters and, therefore, as per registered letter dated 18.3.1993, respondent herein requested the petitioner to appoint an Arbitrator as per the arbitration clause. Petitioner received three separate notices dated 18.3.1993, on 22.3.1993. A reminder was also sent. But the purpose was not achieved. Petitioner-Oil and Natural Gas Commission refused to appoint any Arbitrator as per the clause. For the above reason, respondent herein prayed for the passing of an order directing the petitioner herein to appoint an Arbitrator to decide the dispute arising under the three contracts within a specified time.
3. In the counter filed by the petitioner, the main contention that was raised was regarding question of limitation. It was stated in the counter that the application is barred by limitation, and the respondent ought to have come forward with the application within three years from the date when the cause of action arose. When the petitioner himself has sent a notice admitting that there is a dispute, and wanted the appointment of an Arbitrator under Art 137 of the Limitation Act, the application ought to have been filed within three years thereafter. Other objections were also raised, i.e., application was filed u/s 8 of the Arbitration and Conciliation Act, which has no application and, therefore, the application itself could have been rejected. It was also contended that the Court at Karaikal has no jurisdiction, and the Application should have been filed only at Madras.
4. By the impugned Order, the lower Court rejected all the contentions of the petitioner and allowed the application. The lower Court found that after the notice dated 18.3.1993, under Exs.A-30, A-31 and A-32, there was correspondence between the parties upto 9.7.1993 and the application was filed with in three years thereafter, and it is therefore within time. It also held that the District Court, Karaikal has jurisdiction and regarding provision of law, it held that merely because a wrong provision of law has been quoted, that will not be a ground for rejection of the application.
5. The Order is challenged under Article 227 of the Constitution of India.
6. Before this Court also, learned counsel for petitioner mainly argued that the application is hopelessly barred by limitation.
7. To consider the same, let us took into the application itself filed before the lower Court. In paragraph IV, regarding cause of action, it is stated thus:-
"The cause of action for the petition arose at Noravi, Karaikal District, when the three letters dated 20.7.1990, 8.8.1990 and 18.1.1992 and the respective agreements dated 6.4.91, 22.12.90 and 12.8.1992 were executed and signed, and the place where the work was carried on and completed, where the commission is having its office, and where the petitioner has sent his three letters dated 18.3.1993, requesting appointment of Arbitrator all within the jurisdiction of this Court."
In the body of the application, it is further stated in para 6 that the notice dated 18.3.1993 was received by the petitioner on 22.3.1993. Exs.A-5, A-7 and A-9 are the signed postal acknowledgements, evidencing receipt of notice dated 18.3.1993. It is true that even thereafter there was correspondence between the petitioner and respondent, and this is how respondent states about it. In paragraph 6, it is further stated thus:-
"...This necessitated the petitioner to send several reminders by registered post and ordinary post to the respondent with no result or reply. The petitioner has also addressed the Regional Director of the Commission at Madras, and the Member Technical of the Commission at Dehradun, seeking redressal of his grievance in implementing the Arbitration clause for appointment of an Arbitrator by the respondent. In spite of alt those best efforts taken by the petitioner to have an Arbitrator appointed by the respondent, no relief was granted to the petitioner."
Why I am referring to the very allegation in the petition is that there is no reference to Exs.A-30, A-31 and A-32 any where in the body of the petition. The respondent refers only to the notice dated 18.3.1993, signed acknowledgements and the subsequent reminders. The only documents that were filed along with the petition before the lower Court, were, the three agreements, followed by three notices dated 18.3.1993 and the three signed acknowledgements dated 22.3.1993. It is clear from the averments in the application that dispute arose even before 18.3.1993, and that was the reason why a notice was issued for appointment of an Arbitrator.
8. The question of limitation will have to be considered on the basis of pleadings. It is not disputed by either party that Article 127 of the Limitation Act, 1963 applies inview of Section 37 of the Arbitration and Conciliation Act. Section 37(3) of that Act provides as to when the limitation commences insofar as the case before us is concerned. It reads thus:-
"For the purposes of this section and of the Indian Limitation Act, 1998 (9 of 1988), an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated."
9. This question has been considered by the Honourable Supreme Court and also by our Court in various cases.
10. In S. Rajan v. State of Kerala, 1992 (3) S.C.C. 698 Their Lordships considered the question on the basis of earlier decisions of the Supreme Court reported in,
"According to subsection (1) where an arbitration agreement has been entered into before the institution of any suit with respect to subject matter of such agreement, and where difference has arisen to which the agreement applies, either or both the parties can apply to the court that the agreement be filed in court. According to the subsection, the occasion for filing the application arises when a difference arise between the parties to which the agreement applies. In such a case, it is open to a party to apply under this section instead of proceeding under chapter II. In other words, an application u/s 20 is an alternative to the section (3). Sub-section (4) provides that after hearing the parties and on being satisfied that the agreement should be filed, "the court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the court." (Italics supplied as in the original reports)
Reading Article 197 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. (Italics Supplied)
11. In,
"Section 37(1) of the Act provides that all the provisions of the Indian Limitation Act, 1998 (since amended Act came into force in 1963) shall apply to arbitrations as they apply to the proceedings in court. Sub-section (2), employing non obstane clause, says that notwithstanding any term in an arbitration agreement to the effect that no cause of action shall accrues in respect of any matter required by the agreement to be referred until an award is made under the agreement, a cause of action shall, for the purpose of limitation, be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the agreement. Sub-section (3) thereof states that for the purposes of this section and of the Indian limitation Act, 1988 an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other party thereto a notice requiring the appointment of an arbitration, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated. Sub-sections (4) and (5) are omitted as being not material. It would, therefore, be clear that the provisions of the Limitation Act would apply to arbitrations and notwithstanding any term in the contract to the contrary, cause of arbitration for the purpose of limitation shall be deemed to have accrued to the party in respect of any such mater at the time when it should have accrued but for the contract. Cause of arbitration shall be deemed to have commenced when one party serves the notice on the other party requiring the appointment of an arbitator. The question is, when the cause of arbitration arisen in the absence of issuance of a notice or omits to issue for long time or contract to the contrary?" (Italics supplied)
Their Lordships have further said thus in paras 9 to 11:-
"In Pegler v. Railway Executive, House of Lords held that just an in the case of actions the claim is not to be brought after the expiration of unspecified number of years from the date on which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued. While accepting the interpretation put up by Atkinson, J. as he then was in the judgment under appeal, learned Law Lords accepted the conclusion of Atkinson, J. in the language thus: "the cause of arbitration" corresponding in "the cause of Action" in litigation treating a cause of arbitration in the same way as a cause of action would be treated if the proceeding were in a court of law."
In West Biding of Yorkshire County Council v. Hudders field Corporation, the Queens Bench Division, Lord Goddard, C.J. (as he then was) held that the Limitation Act applies to arbitrations as it applies to actions in the High Court and the making, after a claim has become statute barred, of a submission of it to arbitration, does not prevent the statute of limitation being pleaded. Russel on Arbitration 19th edn. reiterates the above proposition. At page 4 it was further stated that the parties to an arbitration agreement may provide therein, if they wish, that an arbitration must be commenced within a shorter period than that allowed by statute; but the court then has power to enlarge the time so agreed. The period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to regular that an arbitration takes place upon the dispute concerned.
Therefore, the period of limitation for the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued. Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date on which the cause of action accrued, so in the case of arbitration, the claim is not to be put forward after the expiration of the specified number of years from the date when the claim accrued." (Italics supplied)
Their Lordships thereafter extracted a passage from the book ''The Law of Arbitration'' by Justice Bachawat and approved the dictum of the learned Judge and held thus:-
"...The cause of arbitration, therefore, arises when the claimant becomes entitled to raise the question, i.e., when the claimant acquires the right to require arbitration. The limitation would run from the date when cause of arbitration would have accrued, but for the agreement." (Italics supplied)
The said principle was reiterated in,
12. In Russell on Arbitration'' - 1997 edition at pages 183 and 184, the learned Authors have said thus:-
"Commencement for limitation purposes. The parties are free to agree when an arbitration is to be regarded as commencing both under the Arbitration Act 1996 and for limitation purposes. In the absence of agreement, an arbitration is treated as being commenced when a notice in writing is served on the other party requiring him ;to agree to the appointment of an arbitrator, or, if the parties are each to make an appointment, requiring him to appoint an arbitrator. When however the arbitration agreement specifies the person to be appointed as arbitrator, the arbitration is treated as being commenced when a notice in writing is served on the other party requiring him to submit the dispute to that person. Finally, if the arbitrator is to be appointed by some one other than a party to the arbitration proceedings, such as an arbitral institution, the arbitration is treated as being commenced when notice in writing is given to that other person requesting him to make the appointment. It is prudent to send to the respondent a copy of the notice addressed to the person requested to make the appointment as this may avoid arguments about when the notice is given."
In this connection, it may be noted that Sections 13 and 14 of the English Arbitration Act, 1996 are similar to section 37 of our Act.
13. Learned counsel for respondent submitted that after 22.2.1993, there had been so many reminders and only when the respondent failed to reply, they were compelled to file the petition, and the documents relied on by the lower court also have to be taken into consideration for consideration the question of limitation.
14. I do not think that the said submission put forward by learned counsel for respondent could be accepted. Even according to respondent, all these are only reminders. Sending a reminder alone will not extend the period of limitation. I take guidance from the decision reported in, Major (Retd.) Indar Singh Rekhi v. Delhi Development Authority, 1988 (3) S.C.C. 338 where in para 4 of the judgment, Their Lordships have said thus:-
"...It is also true that a party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of Arbitrator u/s 8 or a reference u/s 20 of the Act..."
Most of the above decisions were taken into consideration by our High Court in the decision reported in, The Madras Metrowater Supply and Sewerage Board v. O. Ramakrishnan Reddy, 1995 (2) L.W. 694.
15. On the basis of the averments made in the application filed by the respondent before the lower Court, the only conclusion that could be arrived at is that the application was filed beyond three years from the date when the cause of action arose. The application before the lower Court was presented on 3.7.1996. Respondent himself has issued notice that there is a dispute which has to be resolved by Arbitrator, on 18.3.1993, and the same was received by the petitioner on 22.3.1993. The application is, therefore, hopelessly barred by limitation, under Article 137 of the Limitation Act read with section 37 of the Arbitration and Conciliation Act.
16. Even though the Order of the lower Court is challenged on various other grounds also, I do not think that the same call for discussion. One of the questions raised was that the lower court has no jurisdiction to consider the same. It is seen from the Order of the lower Court that the question of jurisdiction was conceded by the petitioner before it and it did not want a decision on that point. Since it is only a question of territorial jurisdiction, even if there is any defect, the same could be waived By conceding that the Court has got jurisdiction it amounts to subjecting to the jurisdiction of that Court. Therefore, I do not find any ground for interference on that point.
17. It was further contended that the application was filed u/s 8 of the Arbitration land Conciliation Act. It is a patent mistake, and merely because a wrong provision has been stated, that should not be a ground for dismissing the application. Petitioner has also understood the scope of the application under the new Act. Since I hold that the application is barred by time, I set aside the impugned Order and Arbitration O.P. No.1 of 1996 is dismissed. The Revision Petition is allowed. No Costs. C.M.P. No. 5038 of 1998 for stay is closed.
