1995 (8) TMI 353 - HC - Indian Laws

Summary

Issues Involved:

1. Applicability of the Limitation Act to arbitration proceedings.
2. Determination of the starting point for the limitation period in arbitration cases.
3. Whether the claim is barred by limitation.
4. Competence of the arbitrator to decide on the issue of limitation.

Detailed Analysis:

1. Applicability of the Limitation Act to Arbitration Proceedings:

The judgment discusses the applicability of the Limitation Act to arbitration proceedings. It is established that Article 137 of the Limitation Act, 1963, applies to arbitration proceedings. This is supported by the precedent set in the case of Kerala State Electricity Board v. T.P. Kunhaliumma, which held that Article 137 is applicable to arbitration proceedings. The judgment further reiterates that Section 37 of the Arbitration Act mandates that the provisions of the Limitation Act apply to arbitration as they do to court proceedings.

2. Determination of the Starting Point for the Limitation Period in Arbitration Cases:

The court examined when the limitation period begins to run in arbitration cases. The judgment refers to the Supreme Court decision in Panchu Gopal Bose v. Board of Trustees for Port of Calcutta, which clarifies that the limitation period for arbitration runs from the date when the claimant first acquires the right to require arbitration. This is akin to the date on which the cause of action would have accrued if there were no arbitration clause. The court emphasized that the cause of arbitration arises when the claimant becomes entitled to raise the question, i.e., when the claimant acquires the right to require arbitration.

3. Whether the Claim is Barred by Limitation:

The central issue in the case was whether the respondent's claim was barred by limitation. The court noted that the respondent demanded final payment on various dates in 1985 and 1986, and the appellant repudiated the liability soon after. The final bills were passed between 1987 and 1988, but the suits were filed only on 5.3.1991, which was beyond the three-year limitation period prescribed by Article 137 of the Limitation Act. The court held that the cause of action arises at least from the date of repudiation of liability. The court rejected the respondent's argument that reminders or subsequent demands could extend the limitation period, citing that a party cannot postpone the accrual of the cause of action by sending reminders.

4. Competence of the Arbitrator to Decide on the Issue of Limitation:

The judgment also addressed whether the arbitrator could decide on the issue of limitation. The learned single Judge initially held that the question of limitation could be referred to the arbitrator. However, the appellate court disagreed, stating that if on admitted facts the claim is barred by limitation, there is no purpose in referring the matter to an arbitrator. The court emphasized that the issue of limitation is a preliminary matter that should be decided by the court before referring the dispute to arbitration.

In conclusion, the appellate court set aside the judgment of the learned single Judge, holding that the claims were barred by limitation and dismissing the suits. The court emphasized the importance of adhering to the limitation period to prevent injustice to the appellant, thus allowing the appeals without any order as to costs.