Partly allowed

The Secretary to Government v. Sri P.Sunder Rami Reddy (Died as per LRs)

Telangana HC8 Jul 2013CMA/518/2013

Case brief

AI extract

What is this about?

This appeal challenged a trial court's appointment of an arbitrator under a 1976 agreement. The High Court held that while an arbitrator could be appointed, they could not adjudicate claims barred by limitation. The court directed that the arbitrator's scope be restricted to claims arising within three years prior to the suit's filing, excluding those relating to the 1982 final bill.

What did the court decide?

Appointment of arbitrator upheld, but restricted to claims within three years prior to suit filing, excluding those pertaining to final bill dated 11.06.1982.

The Secretary to Government Vs Sri P.Sunder Rami Reddy (Died… — Arbitration | Telangana HC (2013)

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THE HONOURABLE SRI JUSTICE L. NARASIMHA REDDY and THE HONOURABLE SRI JUSTICE S.V. BHATT

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C.M.A.No.518 of 2013

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JUDGMENT: - (Per the Hon’ble Sri Justice L. Narasimha Reddy)

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The first respondent was awarded a civil contract by the appellants through an agreement, dated 09.12.1976. The work was to be completed within a period of one year from the date of agreement. However, the first respondent did not complete the work and has cited disturbances said to have been caused on account of cyclone and fall of sky-lab. It was only on 31.01.1981, the work was completed and the final bill was paid to him on 11.06.1982. Stating that he signed the final bill under protest, the first respondent went on making claims. A notice was issued by him on 05.03.1990 to the fifth appellant demanding certain amounts. The correspondence ensued and it is stated that certain amounts were paid thereafter.

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Alleging that the appellants did not comply with the conditions of the contract, the first respondent prayed for appointment of an arbitrator in terms of the agreement. Since there was no positive response, he filed O.S.No.1167 of 1990 in the Court of V Senior Civil Judge, City Civil Court, Hyderabad. A detailed reference was made to the prolonged correspondence that ensued till the date of filing of the suit.

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The appellants filed written statements opposing the suit. According to them, most of the claims made by the first respondent are time barred and that the arbitrator cannot be appointed. During the pendency of the suit, the first respondent died and his legal representatives were brought on record.

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Through judgment dated 12.07.2012, the trial Court decreed the suit and appointed one Sri M. Chalapati Rao, Retired District Judge, as arbitrator. The appellants feel aggrieved by the same.

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The learned Government Pleader for Arbitration submits that though the first respondent was guilty of inordinate delay in execution of the works, the final bill was paid on 11.06.1982 showing sympathy towards him. He contends that a notice was issued by the respondent only on 05.03.1990, and by that time, all the claims were clearly time barred. The learned Government Pleader further submits that the trial Court did not take into account, the various legal and factual contentions advanced by the appellants and directed appointment of arbitrator, even in respect of the stale and time barred claims.

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Sri P. Vinayaka Swamy, the learned counsel for the respondents, on the other hand, submits that once there exists a clause, providing for arbitration in the agreement, the appellants cannot raise an objection for the appointment of arbitrator and it is for the arbitrator to decide the justification or otherwise of the respective claims. He submits that it is only in the suits that, the question of limitation can be examined and the discretion of the arbitrator cannot be circumscribed by any conditions nor the scope of reference can be restricted in any manner.

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The suit was filed, obviously under the Arbitration Act, 1940 for appointment of an arbitrator. The prayer was in terms of a clause contained in the agreement dated 09.12.1976.

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The trial Court framed the following issues and additional issues for its consideration:

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“Issues:

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1. Whether the defendants 1, 5 and 6 can be directed to produce the CRL Agreement No.23/SE/76-77 dt.9.12.76 relating to the Excavation of Kavali Cannal mile 11/2 to 12/2 K.Ms. in the court?

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2. Whether the plaintiff is entitled the decree as prayed for? Additional Issues:

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1. Whether this court has territorial jurisdiction to try suit? 2. Whether the suit is within the limitation?

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3. Whether the suit is maintainable in the interest of justice and fairplay?”

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On behalf of the respondents, the fifth respondent deposed as P.W.1 and Exs.A.1 to A.37 were filed. The agreement was marked as Ex.A.37 and the relevant clause was marked as Ex.A.21. Rest of the documents are either notices or the postal receipts thereof. On behalf of the appellants, D.Ws.1 and 2 were examined and Exs.B.1 and B.2measurement books for the concerned work, were filed.

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The trial Court appointed the arbitrator as prayed for.

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The points that arise for consideration before us are:

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(a) Whether an arbitrator can be appointed in respect of the claims, which are barred by limitation by the time the very request for appointment of arbitrator was made? and

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(b) Whether the trial Court was justified in appointing an arbitrator for the entire claim made by the respondents?

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Point No.1:

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The contract of civil work was awarded to the deceased first respondent, in the year 1976. The work was supposed to be completed within one year. He did not adhere to the schedule and even according to him, the work was completed only by 31.01.1981 i.e., about four years after the schedule. The final bill was paid one and half years thereafter. The reason appears to be that the delay in execution of the work had to be condoned at various levels. As required under the relevant norms and procedure, the first respondent signed the final bill. It is, no doubt, true that the first respondent stated that he signed the final bill under protest. However, he did not prove that contention either by filing the final bill or by adducing any other evidence.

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The notice demanding certain payments, which is marked as Ex.A.1, was issued only on 05.03.1990. No other correspondence,

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earlier to that was mentioned. After issuing Ex.A.1, the first respondent submitted an application for appointment of arbitrator on 21.03.1990. It is marked as Ex.A.7. The second appellant herein addressed letter, dated 18.04.1990, requiring the first respondent to furnish some information. Thereafter, the suit was filed, complaining inaction on the part of the appellants.

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In the written statement, the appellants have raised several objections. It was pleaded that the bills for the works executed by the first respondent were paid.

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In the matters of this nature, the question of limitation needs to be dealt with a bit of care and caution. The reason is that if an arbitrator is appointed, it is for him to decide the acceptability or otherwise of the claims and is not bound by strict principles of law.

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Reliance is placed on the judgment of the Supreme Court in Wazir Chand Mahajan v. The Union of India^[1] . That was a case in which the question was as to whether Article 181 scheduled to the Limitation Act would apply to the petitions or suits filed for appointment of arbitrators. On facts, the Court found that the suit was filed within the limitation. An observation was made to the effect that Article 181 does not apply to the suits or applications, filed for the relief of appointment of arbitrator.

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That, however, is not the question here. The suit was filed very much within the limitation from the date on which the appellants herein refused to accede to the request of the first respondent for appointment of arbitrator. The question is as to whether the appointment of arbitrator can be sought in relation to the claims that are already barred by time.

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As observed earlier, the final bill was paid to the first respondent on 11.06.1982. If he was not satisfied with that, he could have

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requested the appellants to appoint an arbitrator in terms of the agreement or filed a suit. The perceptible reaction from him was only on 05.03.1990 when he got issued Ex.A.1. By that time any claim in relation to the final bill dated 11.06.1982 is barred by limitation.

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Though the facility of arbitrator exists in the agreement, Ex.A.37, it does not have the effect of injecting life, into the claims, which became barred by law. The trial Court, however, examined the question only from the point of view of the filing of the suit from the date on which Ex.A.1 was issued. It did not take into account, the fact that the claim in relation to the final bill was barred by limitation. We are of the view that a party to an arbitration agreement cannot submit claims in relation to the matters, which became barred by limitation by the time the request is made. Even if the defendant in a suit of this nature does not press the issue beyond a point, the Court cannot ignore its obligation under Section 3 of the Limitation Act.

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Even from the point of view of the general principles of law, a party to an agreement, which shows a clause to refer the disputes to arbitration, does not have the luxury to sleep over the matter for years or decades and pursue the stale claims after he wakes up from slumber. The point is answered accordingly.

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Point No.2:

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The respondents certainly were entitled to seek appointment of an arbitrator. However, they would be entitled to submit only such claims as are permissible under law. Viewed from that angle, it is only in respect of the claims that have arisen within three years, preceding the filing of the suit, that they can seek adjudication before the arbitrator.

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A perusal of the evidence on record discloses that the claim in relation to final bill is barred by limitation by 10.06.1985. A request made for appointment of arbitrator in the year 1990 cannot cover the

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claims in relation to the final bill. As observed by us earlier, it is only in respect of such claims as have arisen within three years prior to the date of filing of the suit, that the arbitration can be sought.

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Hence, the appeal is partly allowed upholding the appointment of arbitrator, but directing that the claims before him do not include those pertaining to the final bill, dated 11.06.1982, but shall be only in respect of such claims as are within three years prior to the date of filing of the suit. There shall be no order as to costs.

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The Miscellaneous Petitions filed in this appeal shall stand disposed of.

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_______________________ L. NARASIMHA REDDY, J.

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Date: 08.07.2013

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______________________ S.V. BHATT , J

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Note: Mark L.R. Copy B/o. va

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[1] AIR 1967 SC 990

The Secretary to Government v. Sri P.Sunder Rami Reddy (Died as per LRs)

Case brief

What is this about?

What did the court decide?

The Secretary to Government v. Sri P.Sunder Rami Reddy (Died as per LRs)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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