Decided on December 15,1983

UNION OF INDIA Respondents


Pratibha Bonnerjea, J. - (1.) THIS is an application under Section 20, Arbitration Act, for filing the arbitration agreement arising out of tender dated 13th June, 1977 and the letter of acceptance dated 10-1-1978. THIS contract contained an arbitration clause.
(2.) IT is the petitioner's case that this contract was terminated by the respondent on 16/17th June, 1978 and the petitioner's claim consisting of Rs. 2,25,000/- was submitted to the respondent by letter dated 15th June, 1981 wherein the petitioner requested the respondent to pay the amount within 30 days from the date of receipt of the letter or to refer the disputes to arbitration in accordance with the arbitration agreement. In view of the inactivity of the respondent in the matter the petitioner gave another reminder by its letter dated 14th June, 1982 but no response came from the respondent. Under the circumstances, the petitioner took out this application on 11th May, 1983. In the affidavit-in-opposition filed in this proceeding the respondent raised the point of limitation. Mr. Sen appearing on behalf of the respondent relied on the cases (L. Amarnath v. Union of India), AIR 1980 Delhi 25 (Bhagwat Dayal Galgotia v. Pritam Dayal Galgotia) and AIR 1981 Delhi 193 (Union of India v. Vijay Construction Co., Meerut) in support of his contention that the cause of action for taking out this application arose on the date of termination of the contract on 16/17-6-1978. This application is governed by Article 137, Limitation Act and is barred by limitation as it has been taken out beyond the period of 3 years permitted by the law of limitation.
(3.) IN the contract had been rescinded. It was held: "It is not the law that no application can be made to a Court under Section 20 unless the other party has refused to refer the dispute to arbitration as provided under Chap. II". "A difference arose between them in respect of this supply at the latest on 28th June 1951 when respondent 1 rescinded the contract, forfeited the security furnished by the appellant and informed him that it would receive the supplies from elsewhere in future. The appellant became entitled to proceedings under Section 20 on receipt of this information from respondent 1; so, that is the date on which the cause of action accrued to him".;

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