UNION OF INDIA Vs. L K AHLUJA AND CO

JUDGEMENT

(1.) SPECIAL leave granted. The appeal is disposed of by the judgment hereunder.

(2.) IT appears that on or about 18/09/1969, four agreements were entered into between M/s. L. K. Ahuja and Co. and Union of India represented by the Executive Engineer, Northern Railway, Allahabad, for the construction of certain quarters. IT was followed by supplementary agreement entered into sometime in 1972. IT is stated that all the four contracts were executed and completed by the first respondent on diverse dates. The last one was on 30/05/1971. Between 29/05/1972 to 19/06/1972, the respondent accepted the four final bills and gave no claim declaration in respect of the four contracts. The respondent wrote a letter to the Additional Chief Engineer, R.E.N.R. Allahabad, stating that Rs. 1,91,137.00 were due on account of the work executed and requested him to refer the dispute to the Arbitrator. On 4/06/1976 a reply was sent to the above letter stating that there was no dispute between the parties and, hence, no question of appointment of any Arbitrator arose. On 13/12/1976, an application was filed by the respondent in the Court of Civil Judge, Allahabad, for appointment of an Arbitrator under Section 20 of the Arbitration Act, 1940 (hereinafter called 'the Act'). That application was dismissed on 10/02/1978 as being barred by limitation. There was an appeal from the said decision to the High Court of Allahabad and the High Court by its impugned judgment and Order dated 14/08/1986 allowed the appeal. Hence, this appeal.

(3.) THE aforesaid view has to be harmonised with the view of this Court in Wazirchand Mahajan v. Union of India, (1967) 1 SCR 303 : (AIR 1967 SC 990). THEre this Court found that the second appellant had purchased from the Himachal Pradesh Government the right to extract and collect certain medicinal herbs from the forests of Chamba District. THE period of agreement was one year from 1/09/1960. Under an arbitration clause in the agreement all dispute between the parties were to be referred to the Deputy Commissioner, Mandi District Himachal Pradesh. THE second appellant transferred all his rights under the agreement to the first appellant with the consent of the State of Himachal Pradesh. Disputes arose between the parties in October, 1950. On 30/05/1952 the appellants addressed a letter to the Chief Conservator of Forests, Himachal Pradesh requiring that officer to submit the matters in difference to the arbitration of the Deputy Commissioner, Mandi Distt. By a letter dated 23/06/1952, the Chief Conservator declined to agree to a reference contending that the matters desired to be referred were outside the arbitration clause. On 22/06/1955 the appellants applied to the District Court of Chamba for an order that the agreement be filed in Court and the disputes between them and the State be referred to the sole arbitration of the Deputy Commissioner of Mandi Distt. THE State of Himachal Pradesh contended, inter alia that the application for filing the arbitration agreement was barred by law of limitation as the right to apply if any arose in 1950 and not in June, 1952 as alleged. THE Court of First Instance held in favour of the appellants. In appeal the Judicial Commissioner reversed the order of the Trial Court. In the view of the Judicial Commissioner an application for filing an arbitration agreement under Section 20 of the Act was governed by Article 181 of the Limitation Act, 1908 and since the period of three years prescribed thereby commenced to run from the date on which the differences arose between the parties from the month of September, 1950, and in any case on 1/09/1951, the application of the appellants was held to be barred. THE Judicial Commissioner was in error, hence, according to this Court in rejecting the application of the appellants for filing the arbitration agreement as barred under Article 181 of the Limitation Act. It was reiterated that the terms of Article 181, though general and apparently not restricted to applications under the Code of Civil Procedure have always been interpreted as so restricted. In the aforesaid background this Court directed the arbitration agreement to be filed.