S. Saghir Ahmad, J. - (1.) Appellant is a Chit Fund Private Limited Company-respondent No. 1 subscribed to the appellant's chit fund scheme for the value of Rs. 1000/- which was to be repaid in instalments. Respondent Nos. 2 and 3 were the sureties for respondent No. 1. On a dispute having arisen between the parties for non-payment of instalments, the matter was referred by the appellant to the named arbitrator who passed an award. In proceedings for making the award a rule of the Court, it was held that the award was liable to be set aside on the ground that the reference to the arbitration was not proper as there could not be a unilateral reference without notice to the respondents.
(2.) On the award being set aside, the appellant filed a civil suit which was held to be barred by time.
(3.) Learned counsel for the appellant has placed reliance upon the provisions of Section 37 of the Arbitration Act, 1940 and has contended that the entire period taken by it in pursuing the matter before the arbitrator ought to be excluded under Section 14 of the Limitation Act which has been made applicable to the proceedings under the Arbitration Act. Relevant provisions of Section 37 are quoted below:- "37. Limitations.- (1) All the provisions of the Indian Limitation Act, 1908 (9 of 1908), shall apply to arbitrations as they apply to proceedings in Court. ********** (3) For the purposes of this section and of the Indian Limitation Act, 1908 (9 of 1908), an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement requiring that the difference be submitted to the person so named or designated. ********** (5) Where the Court orders that an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred, the period between commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Indian Limitation Act, 1908 (9 of 1908), for the commencement of the proceedings (including arbitration) with respect to the difference referred." ;