Chittatosh Mookerjee, C.J.@mdashOn April 19, 1973 the appellant and the respondent whose management had been taken over by the Central Government u/s 18A of the Industrial (Development and Regulation) Act, 1951 had entered into a contract under which the respondent had sold to the appellant goods whose agreed value was Rs. 84,867.71. In spite of demand the appellant did not pay the said amount. Purporting to rely upon the arbitration clause contained in the contract, the respondent had applied to the Bengal Chamber of Commerce and Industry for adjudicating by Tribunal of Arbitrators the dispute in respect of the non-payment of the said amount. Upon the receipt of the notice the appellant had disputed the authority of the Tribunal of Arbitrators to adjudicate the said dispute, inter alia, on the ground that the subject-matter of reference was not covered by the arbitration clause inasmuch as the said nonpayment did not amount to a dispute within the arbitration clause in question. The Tribunal proceeded with the Reference and the appellant did not participate in the same.
2. The award having been given the appellant was served with a notice u/s 14(1) of the Arbitration Act. It had filed in this Court an application under Sections 30 and 31 of the Arbitration Act for setting aside the said award. The appellant impugned the award on the ground that there was no dispute within the meaning of the arbitration clause and, therefore, the award was without jurisdiction and was liable to be set aside.
3. By the order and judgment complained of in this appeal the learned trial Judge dismissed the appellant''s application for setting aside the award on two grounds. In the first place, according to the learned trial Judge, the application for setting aside the award was filed beyond the time prescribed by Article 119 of the First Schedule to the Limitation Act, 1963. Secondly the learned trial Judge was of the view that the nonpayment of the said amount of Rs. 84,867.71 p. was a dispute within the meaning of the arbitration clause and, therefore, the award which was not otherwise invalid was perfectly legal and binding upon the parties.
4. Mr. Chatterjee, learned counsel who has appeared on behalf of the appellant, has rightly pointed out that in computing the period of limitation prescribed by Article 119 of the Limitation Act the appellant was entitled u/s 12 of the Limitation Act to exclusion of time taken by it in obtaining the certified copy of the award. In the instant case the appellant had applied for a certified copy and after taking into reckoning the time spent in obtaining a certified copy thereof the application u/s 30 of the Arbitration Act, filed by the appellant was within a period of 30 days from the date of service of notice u/s 14(1) of the Act. This legal position is not disputed by Mr. Bachawat who has appeared on behalf of the respondent.
5. We have considered the matter ourselves and we hold that the learned trial Judge was not right in finding the application for setting aside the award to be barred by limitation.
6. Having given our anxious consideration to the matter we are of the view that the learned trial Judge had applied the correct principles of law in finding that in the instant case a dispute did arise between the parties which was covered by the arbitration clause of the contract and, therefore, the award was not liable to be set aside on the ground that the same was beyond the scope of the arbitration clause. The learned trial Judge has elaborately set out the case law on the point. Therefore, we do not propose to again set out the judicial precedent on the point in extenso, particularly when the learned counsel appearing in either side relied on the same set of authorities which lay down the relevant principles. It is the settled law that the existence of a dispute covered by the relevant arbitration clause in question is an essential condition and pre-requisite for assumption of jurisdiction by an Arbitrator. A dispute implies an assertion of a right by one party and repudiation thereof by another, vide observation in the case of
7. The material point in this case was whether by not paying the price of the commodities supplied, the appellant had repudiated the contract dated the 19th April, 1978. Mr. Chatterjee, learned counsel for the appellant, was not very wrong when he submitted that every kind of non-payment of the price stipulated in a contract containing arbitration clause cannot be considered to be a repudiation giving rise to a dispute. A non-payment may arise by reason of one''s inability to pay while not disputing liability thereof. A non-payment, on the other hand, may be the result of repudiation or denial of its liability to pay. Thirdly, a non-payment of price may mean failure to fulfill ones obligation under the contract to pay within the time stipulated. When there is no repudiation or denial of liability a simpliciter non-payment or default in payment may not give rise to a dispute which can be referred to arbitration. On the other hand, when there is denial of liability and by reason thereof payment is not made by a party from whom demand is made by the other party, the same would be a case of repudiation. In our view the third kind of case mentioned by us, that is, failure to pay within the time provided in the contract resulting in breach of terms of the contract depending upon the terms of the particular arbitration clause could be validly the subject-matter of a reference to arbitration. In this connection we may refer to the observation of Rankin J. as his Lordship then was, in the case of
8. Viewed in the background of the above legal principles we have perused the correspondence between the parties and we are satisfied that prior to the reference the appellant had been seeking to withhold payment under a claim of right to appropriate the amount towards its other dues. In that sense there was a denial of the right of the respondent to receive payment under the contract which incidentally stipulated that the terms and conditions of the transferable specific delivery contracts of the East India Jute & Hessian Exchange Ltd., Calcutta would apply to the contract between the parties. Under the said terms the payment was to be made in the manner set out in R. 4 of Chapter 7.
9. Both parties relied upon the correspondence which passed between them. It would appear therefrom that after the respondent had performed its part of the contract had demanded payment from the appellant. The appellant did not pay. Originally it had claimed that it would pay as arid when it would receive payment from the Director General of Supply and Disposal, Govt. of India. Even after receiving the payment the appellant, according to the respondent, did not pay. Thereafter on 31st August, 1978 the respondent had submitted a bill to the appellant for Rs. 84,867.71 p. The same remained unpaid. By writing various letters the appellant continued to exercise its purported right to withhold the said bill and demanded the respondent to issue the Sales Tax Declaration Form or, in the alternative, to pay equivalent sum allegedly paid by the appellant as sales tax in respect of the other transactions of the appellant and the mill before its management was taken over.
10. It is unnecessary to deal with separately these letters which passed between the parties. Upon a proper construction of these letters there can be no escape from the conclusion that there was a denial on certain grounds on the part of the appellant. In (to) pay the amount claimed by the respondent in terms of the contract of supply. It is no longer relevant that the said grounds were untenable. Therefore we conclude that there was a dispute within the meaning of the arbitration clause and, therefore, the award was competent and otherwise valid.
11. In the result this appeal fails and is accordingly dismissed with costs.
Sudhanshu Sekhar Ganguly, J.
12. I agree.
