Decided on October 27,1952

H. Chandanmull And Co. Appellant
Mohambal M. Mehta Respondents


Venkatarama Aiyar, J. - (1.) THE question that is raised in this appeal is whether Section 5, Limitation Act, is applicable to an application filed under the Arbitration Act, to set aside an award. In certain arbitration proceedings to which the appellant was a party an award was pronounced and it was filed on the Original Side of this Court in O.P. No. 66 of 1951. Notice of this petition was served on the appellant on 27 -3 -1951. Article 158, Limitation Act, provides that an application to set aside as award should be filed within 30 days from the date of service of the notice of filing of the award. The appellant did not file any application to set aside the award with in the time limited by Article 158. The High Court was closed for summer recess on 28 -4 -1951 and on the day of reopening the appellant filed Appln. No. 2355 Of 1951 under Section 5, Limitation Act, for excusing the delay in filing the application to set aside the award. That application was dismissed by Krishnaswami Nayudu J. on the ground that Section 5, Limitation Act, was inapplicable, and this appeal has been brought against that order of dismissal.
(2.) S . 5, Limitation Act, rims as follows: "Any appeal or application for a review of judgment or for leave to appeal or any other application to which this section may be applicable by or under any enactment for the time being in force may be admitted after the period of limitation prescribed therefore, when the appellant or applicant satisfied the Court that he had sufficient cause for not preferring the appeal or making the application within such period." As we are concerned in these proceedings with an application to set aside as award, the only question to be determined is whether there is any enactment which had made Section 5 applicable to such proceedings.
(3.) BEFORE the Arbitration Act of 1940 the law was well settled that the Court had no power under Section 5, Limitation Act, to extend the time prescribed by Article 158 for filing an application to set aside an award. That was held by Mookerjce and Holmwood JJ. in - - 'Suryanarain v. Banwarijha', IS, Cal L.J. 35 (A) and that view was followed by the Lahore High Court in - -'Devi Ditta v. Baburam',, AIR 1927 Lah 273 (B). The learned advocate for the appellant does not dispute the correctness of the law as laid down in those decisions. What he contends is that the law has been changed by the Arbitration Act, and under Section 37(1) of the Act properly construed, Section 5, Limitation Act, would be applicable to an application to set aside an award. Section 37(1) runs as follows: "All the provisions of the Limitation Act, 1908, shall apply to arbitrations as they apply to proceedings in Court." The question is, what is the precise meaning of the word "arbitration" in this section? The contention of the appellant is that arbitration proceedings mentioned in the section include not only proceedings before the arbitrators, but also applications taken out for filing the awards in Court or for setting them aside. He contends that they are also arbitration proceedings and that by virtue of Section 37(1) the provisions of the Limitation Act, including Section 5 will apply. He relied upon certain observations of the Privy Council occurring in - - 'Ramdutt Ramklssen T. E. D. Sasoon & Co.',, AIR 1929 P.C. 103 (C), as supporting this position. The facts in that ease were these. There were certain arbitration proceedings which resulted in an award. But that award was set aside. Subsequently the applicant commenced fresh arbitration proceedings with reference to the same subject -matter. The opposite party pleaded that 'at the time of the new proceedings an action by the applicant would be barred and that therefore no relief should be granted to him in arbitration proceedings. The applicant pleaded that he was entitled to the benefit of Section 14, Limitation Act, and to deduction of the time taken in the prior arbitration proceedings. It was this question that came up for consideration before the Privy Council. Lord Salvesan held that the applicant was entitled to the benefit of Section 14, Limitation Act. His Lordship observed that the Limitation Act was in its own terms inapplicable to proceedings before the arbitrators and that if the opposite party was entitled to rely on a plea of limitation based on the Limitation Act, the applicant would likewise be entitled to rely on Section 14 of that Act. Then occur the observations on which the advocate for the appellant relies: "Arbitrations under the Arbitration Act are not prosecuted by filing suits and preferring appeals from the decrees in such suits but by procuring awards and filing them in Court and resisting applications to set them aside". It is contended on the strength of these observations that proceedings taken in Court for setting aside awards must also be considered to be arbitration proceedings. We are unable to agree that that was what was Intended in those observations. The Privy Council was dealing with the question as to whether the provisions of the Limitation Act were applicable to proceedings before the arbitrator. They were not concerned with an application before the Court arising out of arbitration proceedings, and taken in their context the observations do not amount to a decision that an application to set aside an award must be taken to be an arbitration proceeding. The matter has to be decided on an interpretation of the language of Section 37(1). Whatever force there might have been in the contention of the appellant if Section 37(1) had stopped with the words "apply to the arbitrations", it is wholly untenable In view of the words that follow, namely, "as they apply to proceedings in Court". The section makes a sharp distinction between arbitrations and proceedings in Court. Whatever justification there might be for considering an application to set aside an award in a Court as an arbitration proceeding, there can be none for holding it to be not a proceeding in Court. In the context, therefore, the word "arbitration" should be limited to proceedings before the arbitrations; and an application to set aside an award being a proceeding In Court, cannot be held to be an arbitration proceeding. Moreover, Section 37(1) is intended to apply to proceedings in arbitration the provisions of the Limitation Act which would otherwise be Inapplicable. But even apart from Section 37(1), Article 158 in terms applies to an application to set aside an award. On the construction of the section, therefore we are of opinion that "arbitration " referred to in Section 37(1) cannot include a proceeding taken in Court for setting aside the award. That this is the correct conclusion will be clear if regard is had to the history of the legislation on the subject. Section 37(1) is a reproduction of Section 16 (1), English Arbitration Act of 1934. Before that Act the statutory law in England relating to arbitration contained no provision similar to Section 10 (1). In the absence of such a provision the question was raised whether a party could plead limitation hi proceedings before the arbitrators. In, the decision in 'In re Astley and Tyldesley Coal Co',, (1899) 68 L. J.Q.B. 252, a Bench of the Divisional Court in England had held that it was open to the defendant to plead limitation in proceedings before the arbitrator. That the law laid down in that case was not accepted without question would be clear from the observations of the Court of appeal in the case reported in - - 'Cayzerr Irvine & Co. v. Board of Trade',, (1927) 1 K. B. 239 (E), where Scrutton L. J. in particular expressed doubts as to the correctness of the decision in, (1899) 68 L. J. Q. B. 252 (D). When that case was taken in appeal to the House of Lords Viscount Cave L. C. observed that it was not necessary in that case to express an opinion as to whether is, (1899) 68 L. J. Q. B. 252 (D) correctly decided. It was only in 1929 that the Privy Council; held in the case reported in, AIR 1929 P.O. 103 (C) that the law as laid down in '(192) 1 K.B. 269 (E)' was correct. As late as 1931 in Halsbury's Laws of England, Vol. 1, p. 653, para. 1104, the law on the subject is stated in these terms: "In mercantile references it is an implied terms of the contract that the arbitrator must decide the dispute according to the existing law of contract and every defence which would have been open in a Court of law can be legally raised for the arbitrator's decision unless the parties have agreed to exclude the defence", and the statute of Limitation is mentioned as one of the law in accordance with which the arbitrators should pronounce their decision. It was in this state of the law that the Arbitration Act of 1934 was enacted and Section 16(1) provided that the rules of limitation applicable to proceedings in. civil Court should also be applicable to proceedings before the arbitrators. It was this provision that has been enacted in Section 37(1), Indian Arbitration Act. The true scope of this provision is therefore that when proceedings are taken before the arbitrator the parties are entitled to plead limitation exactly as if the proceedings had been taken in a civil Court. That being the scope of Section 37(1), Its operation should be limited to proceedings before the arbitrator and not to proceedings taken in a Court, though they might arise out of arbitration proceedings. In this view we are of opinion that Section 37(1) does not have the effect of making Section 5, Limitation Act, applicable to an application to set aside the award.;

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