2011 (4) TMI 1476 - HC - Indian Laws

Summary

Issues Involved:
1. Appointment of an Arbitrator
2. Limitation period for raising disputes
3. Applicability of amended Section 28 of the Indian Contract Act, 1872

Summary:

1. Appointment of an Arbitrator:
The petitioner sought the appointment of an Arbitrator for disputes arising from an Agreement executed between the parties concerning road construction work. The petitioner completed the work and requested final payment, which was delayed due to a rebate issue. After the final payment was made with deductions, the petitioner sought arbitration as per the contract terms.

2. Limitation period for raising disputes:
The petitioner was informed that the claim was time-barred, leading to the dismissal of the application for arbitration by the District Judge on the grounds that it was beyond the 180-day limitation period from the date of final payment. The petitioner then approached the High Court after withdrawing the revision petition filed against the District Judge's order.

3. Applicability of amended Section 28 of the Indian Contract Act, 1872:
The petitioner argued that restricting the right to raise disputes after 180 days contravenes Section 28 of the Indian Contract Act, 1872, as amended by Indian Parliament Act No.1 of 1997. The amendment renders void any contract clause that extinguishes the right to enforce claims within a specified period. The court noted that the amendment aimed to remove the anomaly where extinguishing rights was permissible while barring remedies was not. The court referenced judgments from the Delhi High Court and Madras High Court, which supported the prospective application of the amended Section 28 to contracts executed after the amendment.

The court concluded that the amended Section 28 applied to the present case, as the contract was executed in 2002, post-amendment. The mistaken belief that the amendment was repealed was clarified, affirming that the amendment remains effective despite the Repealing and Amending Act, 2001.

Conclusion:
The court held that the petitioner's right to arbitration could not be extinguished by the 180-day limitation clause in the Agreement. Consequently, the court appointed Shri B.R. Gupta, Addl. District Judge (Retd.), as the Arbitrator to adjudicate the disputes between the parties.