@JUDGMENTTAG-ORDER
D.K. Kapur, J.@mdashThe petition under S. 20 of the Arbitration Act, 1940, before the Court has given rise to some important question of law. There is a clash in the instant case between the provisions of the Arbitration Act, 1940, and the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. I have considered the question whether the case should not be referred to a large Bench, but in view of the fact that a right of appeal would be lost to the parties by this procedure, I have preferred to give my own decision on the points which have arisen.
2. The facts of the case are that an area of 2,743 sq. yards belonging to the Northern Railway, i. e. the land being Railway land was leased out to the petitioner on 9th May, 1969. An amount of Rs. 30,611.88 has been paid as rent yearly for this plot. The land used is for stacking or storing materials and for parking vehicles. The period of the lease was for ten years and according to the petitioner, the period commenced on 1st January, 1963, which means that the lease was made long after the term actually commenced. According to the petitioner, the period of ten years was automatically to be extended for another ten years period. However, according to the respondents, the term was ten years which would be automatically extended for another ten years if the lease is not terminated by giving a notice terminating the lease, which notice was to be for a period of three calendar months before the first period of ten years expired. In the lease-deed, there is an arbitration clause contained in paragraph No. 19. That clause reads as follows:-
"19. That in case of any dispute arising between the parties with regard to the intent and meaning of this agreement and subject-matter referred to therein the same shall be referred to the sole arbitration of the General Manager, Northern Railway, or any other officer of the Railway appointed by him, who shall conduct the proceedings in accordance with the provisions of the Indian Arbitration Act 1940."
One of the disputes which has arisen regarding the lease is the question whether the period of ten years has not been extended to 20 years. It may have been extended because it was automatically extended or, it may have been extended because no notice was given, even according to the interpretation of the respondent. Then there are other disputes concerned with the rent to be paid for the period after ten years had expired, because, the petition was filed in 1977 and if the lease expired after ten years had expired, it expired at the end of December, 1972. There are several other disputes regarding constructions made on the land which according to the respondents the petitioner could not make. Furthermore, there is the question as to how the petitioner is to be evicted. There is, therefore, no doubt that disputes exist and there is an arbitration clause. However, the matter is not quite simple and several fine questions of law have arisen. On the pleadings, the following issues were framed by myself:-
"1. Is the petition u/s 20 belated in the sense that the suit based on cause of action was or is barred by time or the application is otherwise filed beyond the period of limitation ?
2. Has this court no jurisdiction to deal with the matter because the matter is pending before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 ?
3. Is the matter not referable to arbitration because it is before the Estate Officer or within his competency?
4. Is the dispute specified in the petition, particularly in paragraph 10 of the same, covered by arbitration agreement dated 9-5-1969 ?
5. Is the matter to be not referred to arbitration for any reason ?
6. Relief."
At that time, a direction was given that the questions seem to be purely legal and could be decided merely by filing of documents and affidavits. Eventually, the case has been heard on the basis of the affidavits and documents filed and it is now necessary to deal with the various issues.
1. Limitation. The first issue relates to the question whether the petition is not barred by time. This has led to contentions by both sides as to what was the date on which the application could have been filed. The matter is again not a simple one. The application was filed on 11th May 1977. The first period of ten years of lease expired even according to the petitioner on 12th Dec, 1972, so more than three years had expired from the alleged termination of the lease according to the respondent. According to the petition, the cause of action arose in July, 1975 and April, 1977. when the respondent sought to recover rents contrary to the terms of the agreement and also sought to recover possession of the land. It was also stated in the petition, that instead of going to arbitration, the respondents were seeking to evict the petitioner under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. and this they were not entitled to do. According to the reply, the cause of action arose in 1967 when the demand for increase of rent was made and at least on 1st January, 1973. when the lease of the petitioner came to an end, and therefore, the petition is barred by time.
3. Various decisions of the Courts have been cited on the question of limitation. The material question is, what is the starting point of limitation for moving a petition u/s 20 of the Arbitration Act. In this case, an interesting situation arises because according to the petitioner, the lease is still subsisting, and according to the respondents it has come to an end. It is the undisputed case of both sides that unresolved disputes do exist, yet according to the respondents the limitation period had expired. The principal judgment relied upon on the question of limitation is that given by the Supreme Court in
4. It was submitted on behalf of the respondents that as the lease expired in 1972, the application was barred by time in 1977 when it was filed. On the other hand, there was no occasion for the petitioner to move the Court till a cause of action actually arose for referring the matter to arbitration. The provisions of Section 20 of the Arbitration Act can now be usefully referred to. The section states in sub-section (1):-
"Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court."
The important words in this section are the existence of the arbitration agreement and the existence of a difference between the parties. Secondly, this section presents an alternative to the parties other than proceeding to arbitration on their own, i. e., without coming to the Court. The way the Act is framed suggests that first you have to have a contract concerning the reference of certain types of disputes to arbitration. If you have this contract, still you cannot apply until you have a difference. The starting point of the reference u/s 20 is therefore, the date on which a difference arises to which the arbitration agreement applies. Neither party can move the Court without the existence of a difference between them. So, the material question is, when the difference arose between the parties and not when the lease expired, nor when it was entered into. In the present case, the noteworthy feature is that the agreement was made in 1969 concerning a lease which started on 1st January, 1963. We have, therefore, to examine for the purpose of the question of limitation as to when the disputes arose which are required to be referred to arbitration. As a matter of fact, paragraph No. 11 of the petition states as follows:-
"11. That the petitioner requested the respondent several times to have the matters decided by arbitration as per CI. 19 of the said agreement executed between the parties. Letters dated 10-12-1975. dated 20-2-1976 and dated 13-12-1976 were sent by the petitioner to the Railway authorities requesting them to take action for having all the disputes between the parties decided by arbitration but the respondent has failed to have the matter referred to arbitration."
Thus, according to the petition, the disputes arose not more than three years before the date 11th May, 1975, when the petition was filed.
5. In reply to paragraph No. 11 the respondents stated as follows:-
"Para No. 11 of the petition as stated is not admitted. As the matters set up by the petitioner in para. No. 10 above, are matters to be decided by the Estate Officer alone under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, therefore, there could not be a matter of reference to arbitration."
No other date has been mentioned as being the date on which the disputes actually arose.
6. It is stated in para. No, 15 of the reply as follows:-
"Para. No. 15 of the petition is wrong and denied. The cause of action arose in 1967 when the demand for the increased rate of rent was made by the respondent on the petitioner and then on 1-1-1973 when the lease of the petitioner came to an end therefore, the present petition is not within time."
As I have said, the case of the petitioner and the case of the respondents operate on quite different planes. The case of the petitioner is that the lease has not ended and then there are disputes which have arisen which are required to be referred to arbitration. The case of the respondents is that the lease came to an end in 1972 and the cause of action for the increased rent arose in 1967.
7. With respect, I think the respondents have missed the real question which is that in order to charge the increased rent, the parties had to go to arbitration. The difference between them would arise when there was a demand by one side and a refusal by the other.
8. In this case there is a total absence of dates as to when the difference arose, and, therefore, the first issue has to be decided on the reading of the petition. If according to the petition, the lease is subsisting and disputes have arisen in 1975 and 1976, the petition is within time. No earlier date has come to light as to the date on which the difference arose.
9. In this connection, it is necessary to note that a difference can arise long after some work has been done under a contract. There can be negotiations between the parties and all sorts of correspondence. But, it is only when they come to the conclusion that they cannot resolve the dispute between them, that it can be said that a difference arises. A difference under the arbitration agreement is a claim made by one party which is refuted by the other party. At that stage, it is open to the parties or any of them to say-now let us go to arbitration to get this difference settled. It is at this stage that it is possible to say that a difference has arisen between them. In this sense, Section 20 of the Arbitration Act differs from the normal kind of claims that arise in suits. In the case of a suit, the date on which the cause of action arises is the date from which the limitation period starts. u/s 20. it is the date on which the right to apply accrues that determines the starting point. That starting point does not coincide with the date on which the cause of action for filing a suit arises.
10. To take a simple illustration. If there are two parties to a contract in which one claims a breach of contract by the other, then the period of limitation for filing the suit starts from the date of the breach. That is not the determining date if the contract is subject to an arbitration clause. If there is an arbitration clause, then the concerned party will make a demand from the other party and it is only when the demand is refuted or declined that the difference arises. It, therefore, follows that the bar contemplated by the Limitation Act for filing an application u/s 20 of the Arbitration Act is different from that contemplated by the same Act for instituting a suit.
11. This question can also be further emphasised by reference to Sec. 37 of the Arbitration Act. In sub-section (1), it is stated that all the provisions of the Indian Limitation Act shall apply to arbitrations as they apply to proceedings in Court. It is further provided in sub-section (3) as follows:-
"For the purposes of this section and of the Indian Limitation Act, 1908, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties a notice requiring the appointment of an arbitrator, etc................"
It means that the arbitration commences not when the application under Sec. 20 [is filed, but when the notice is given to appoint the arbitrator. In the present case, the notice was given, according to the petitioner, sometime in 1975 or 1976. It is that date which determines whether the arbitration claim by the present petitioner is within time. It cannot be that there are two different limitation periods prescribed for the same thing in the same Act. It would, therefore, be reasonable to suppose that the limitation period for the purpose of Section 20 is different from the limitation period contemplated by subsection (3) of S. 37 because the two provisions deal with different things. In the one case, the limitation period is identical with the one which applies to suits. In the other, there is a different period altogether. To put it in another way, the notice u/s 37 (3) has to be given within the period of limitation prescribed for suits.
12. When such a notice has been given, one of two things can happen. Either the other party can agree to the arbitrator or it can refuse to appoint the arbitrator. In the present case, the respondents chose not to appoint the arbitrator on some ground or the other. It is only after this that it could be said that the petitioner was compelled to come to the Court.
13. There is yet another aspect of the matter which raises an interesting conundrum. The limitation period for the State to claim a sum payable to it is much greater than that available to an ordinary person. For instance, in the present case, the Railway authorities could refer the matter to arbitration within 30 years later, because Art, 112 makes the limitation period for recovery of the amount due to the Central or a State Government, 30 years. It would be indeed peculiar that when the claim is not barred by time that the limitation period u/s 20 would expire much earlier, after only three years, thus making it impossible for the parties to move the Court. This example shows the difference between the applicability of the provisions of the Limitation Act as far as suits go and applications for getting an appointment of an arbitrator through the Court. To take an instance that might well arise in practice, suppose there is a contract between the State and a private contractor for the supply of certain goods in which there is an arbitration clause to the effect that a mutually acceptable arbitrator will be appointed. A difference relating to this agreement could well arise on a Government claim made 20 years after the contract came to an end. If such a difference arises, the parties may have to have recourse to Section 20 of the Act. It could not then be claimed that the period of three years commenced from the date on which the cause of action arose because the State has got 30 years in which to file a suit. The cause of action for applying to the Court would arise when the parties do not agree to have a common arbitrator. It is that contingency which requires recourse to the Court. Hence. I would come to the conclusion that the limitation period for filing the present petition is three years under Art. 137 of the Limitation Act, but the three years period does not commence from either 1967 or December, 1972, when it is claimed that the lease came to an end or any other date prior to the date on which the differences between the parties arose. In my view, the differences arose when the parties could not resolve the same and an application was made that the matter should be referred to arbitration. This date has been mentioned in the petition as being 10th December, 1975, 20th February, 1976 or 13th December, 1976. No alternative date is mentioned in the written statement. So, I come to the conclusion that the petition is within time.
No. 2. Jurisdiction.
14. The second point arising in this case is the question whether this Court has jurisdiction to deal with the present petition. No doubt, there is an arbitration clause and there is the Arbitration Act and normally, there would be little doubt that this Court had jurisdiction. However, the contention of learned counsel for the respondents is that Section 15 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, bars the present proceedings. That section reads as follows;-
"15. Bar of jurisdiction.- No Court shall have jurisdiction to entertain any suit or proceeding in respect of the eviction of any person who is in unauthorised occupation of any public premises or the recovery of the arrears of rent payable under sub-section (1) of S. 7 or the damages payable under sub-section (2) of that section or the costs awarded to the Central Government or the corporate authority under sub-section (5) of S. 9 or any portion of such rent, damages or costs."
It is contended that this Court is entertaining a proceeding which is concerned with the eviction of a person who, is in unauthorised occupation or it is entertaining a proceeding in respect of the recovery of arrears of rent payable in respect of the property. Shortly put. the contention is that the land which is the subject-matter of the lease is public premises and, therefore, the question of eviction from that land or the question of recovery of rent in respect of that land cannot be entertained by this Court. As it happens, this Court is not entertaining any such proceedings, but is merely considering the question whether the matter is referable to arbitration. If the Government chooses to have an arbitration clause in respect of property covered by the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, I do not think that it was the intention of the Legislature to nullify that arbitration. I would not reach this conclusion, unless I am compelled to do so. It is open to the parties to have an arbitration agreement whenever there is a dispute. If there is an arbitration agreement between the parties then the provisions of the Arbitration Act have to apply. The wording of the section just reproduced states that the Court shall not have jurisdiction to entertain any suit or proceeding in respect of eviction of a person who is in unauthorised occupation of any public premises or for the recovery of arrears of rent payable u/s 7 (1) or 7 (2) of the Act. This section was introduced in the Act in view of the Supreme Court''s decision in
15. The contention of learned counsel for the respondent is that Section 15 bars this Court from dealing with the arbitration proceedings as, in effect, the Court is dealing with a proceeding which relates to the eviction of a person who is in unauthorised occupation or relates to the recovery of damages. I do not agree with this contention. The parties have agreed to have an arbitration relating to matters arising out of the lease. Once there is an arbitration agreement, the parties are free to refer the matter to arbitration in accordance with the agreement. The Court is not adjudicating on any dispute relating to eviction or recovery of rent, etc, The Court is concerned rather with the enforcement of the rights of the parties under the Arbitration Act. The disputes have to be dealt with by the arbitrator appointed by the parties. I, there-fore, hold that Section 15 of the Public Premises (Eviction of Unauthorised Occupants Act, 1971, has nothing to do with this Court''s jurisdiction under the Arbitration Act which is quite an independent jurisdiction. In fact, if the parties do go to arbitration, and an award is given, then there is no choice for the parties but to approach the Court under the Arbitration Act for the purpose of making the award a rule of the Court or for getting those matters arising in arbitration proceedings or relating to the same settled through the Court. By no means can it be said that the Court will then be dealing with a proceeding for the eviction of a person in unauthorised occupation or for recovery of rent or damages. The Court is merely concerned with the arbitrator, the arbitration agreement, the award and the subsequent stages through which that award or arbitration proceedings may pass. I, therefore, overrule the objection relating to the jurisdiction of this Court.
16. The result of the above discussion is, I hold Issues Nos. 1 and 2 in favour of the petitioner.
Q. 3. Ouster of arbitration due to the reference to the Estate Officer.
17. I cannot see in what way the matter has become non-referable to arbitration on the Estate Officer taking proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. There is nothing in the Act or even in the Arbitration Act barring the arbitration proceedings going on. I am, therefore, of the view that the matter can be referred to arbitration notwithstanding the fact that the Estate Officer may have chosen to take action under the Public Premises (Eviction of Unauthorised Occupants) Act. 1971.
No. 4. Scope of the arbitration agreement,
18. In the present case the wording of the arbitration agreement which is clause 19 of the agreement is as follows:
"That in case of any dispute arising between the parties with regard to the intent and meaning of this Agreement and subject matter referred to therein the same shall be referred to the sole arbitration of the General Manager, Northern Railway, or any other officer of the Railway appointed by him, who shall conduct the proceedings in accordance with the provisions of the Indian Arbitration Act, 1940."
In my view, the disputes which have arisen between the parties are in relation to the intent and meaning of the agreement or the subject-matter referred to therein. The statements of the claims set out in paragraph No. 10, if shortly summarised are as follows :-
1. Dispute relating to the period of the beginning from 1st January, 1963.
2. Dispute relating to the quantum of rent for the agreed period up to the end of 20 years.
3. Dispute relating to rate of rent, according to the petitioner, the rate is not more than Rs. 30611.88 per year.
4. The question whether the petitioner can be evicted during the period of 20 years.
All these matters arise from the agreement and have to be decided by an interpretation thereof. Whether the disputes are to be decided in favour of one party or the other is not for this Court to decide. There are certainly disputes which require recourse to the contract and, therefore, they arise in relation to the same and have to be decided by arbitration, under well-settled rules relating to the scope of arbitration agreements. 1 am, therefore, of the view that the matter does fall within the scope of the arbitration agreement.
19. In view of this discussion. I cannot see any reason why the matter cannot be referred to arbitration. I would accordingly allow the petition, direct the filing of the arbitration agreement and in accordance with the agreement direct the disputes to be referred to an arbitrator to be appointed by the General Manager Northern Railway under the terms of the agreement. The General Manager can himself be the arbitrator or he may appoint any other officer. The appointment should be made within three months. In view of the nature of the points involved in this petition, I would leave the parties to bear their own costs.
20. There is an order passed earlier in this case on 30th August, 1977, which restrains the respondents from evicting the applicant during the pendency of the arbitration proceedings. I would extend the order to operate till the award is given so that the respondents will not evict the petitioner during the pendency of the arbitration proceedings. After the award has been made it will be for the Court in which the award is filed to consider what order to pass.
