Gokal Chand Mital, C.J (Oral):— Two questions of law arise for our consideration in this appeal:—
(1) Is it for the court or the arbitrator to decide whether the claim is made within the time specified in the agreement or not?
(2) Is it for the court or the arbitrator to decide whether there was accord and satisfaction between the parties or not?
We are of the opinion that both the questions stand answered-first by the two decisions of this Court in Jai Chand Bhasin v. Union of India, AIR 1983 Delhi 508 (D.B) and Ved Prakash Mital v. The Union of India, AIR 1984 Delhi 325 (F.B) and second by the decision of the Supreme Court in Bharat Heavy Electricals Limited Ranipur v. Amar Nath Bhan Prakash, (1982) 1 SCC 625.
Briefly adverting to the facts of the case, there was a contract between the parties under which the respondent was to supply 2600 metric tonnes of gram whole to the appellant and the appellant was to convert that gram whole into gram-dal and return gram-dal to the respondent There was a time schedule for lifting of gram whole and after grinding for supply of gram-dal. It appears that the appellant did not lift gram whole with expedition and as a result demand was made from it on account of demurrage, wharfage and storage charges and interest. When on the aforesaid three counts, total sum of Rs. 62,586.47 was sought to be deducted from other contracts, the appellant made payment of the aforesaid sum. Ultimately, the appellant made delivery of gram-dal by 4th January, 1973.
On 16th April, 1975 the appellant made an application under Section 20 of the Arbitration Act. 1940, to recover payment of Rs. 62,586.47, which it was made to pay on account of demurrage, wharfage, storage charges and interest and since the full amount of charges for converting gram whole into gram-dal was not paid, Rs. 5,320/- was claimed on this count. An amount of Rs. 59,000/- was also sought to be demanded, details of which are not available on record.
The respondent took the stand that the claim of Rs. 5,320/- is barred by time as under the agreement the same had to be made within one year and since the supply was made on 4th January, 1973, the petition filed on 16th April, 1975 was beyond one year and, therefore, should be dismissed. Regarding other claim of Rs. 62,586.47, the stand was that it did not arise out of the contract and in any case the amount having been paid, there was no dispute liable to be referred to arbitration.
The learned Single Judge agreed with both the contentions of the respondent and dismissed the application vide order dated 3rd October, 1978. This is contractor's appeal against the aforesaid order.
As noticed at the outset, a Division Bench of this Court in Jai Chand Bhasin's case (supra), clearly held that when an application is made to Court under Section 20 of the Act by the contractor for making reference to arbitration as per agreement, this is not for the court making the reference to decide the question whether the demand for arbitration had been made by the contractor within the stipulated time and whether his claim should be deemed to have been waived in terms of the clause in the agreement. It was clearly answered that it was for the Arbitrator to decide the question and section 37(4) of the Act has no applicability. This decision was approved by a Full Bench of this Court in Ved Prakash Mithal's case (supra). Accordingly, following the aforesaid decision, we hold that the claim with regard to Rs. 5320/- could not be held to be barred by time by the Court deciding the application under Section 20 of the Act and it was for the Arbitrator to decide as per the dictum of the aforesaid cases. The decision of the learned Single Judge is contrary to the aforesaid decisions and is hereby reversed.
Referring to the other question, the Supreme Court in Bharat Heavy Electrical Ltd.'s case (supra) clearly held that the question whether or not, there was discharge of the contract by accord and satisfaction should have been referred to the arbitration. We may refer with advantage the following words from the aforesaid decision:
“hence the application of the respondent under Section 20 of the Indian Arbitration Act should have been allowed and the matters in dispute between the parties, including the question whether or not there was discharge of the contract by accord and satisfaction should have been referred to arbitration.” (emphasis added)
In the aforesaid decision, it was clearly held that it was not for the Court to decide the matter and the matter should have been referred to the Arbitrator who will first determine the question whether there was accord and satisfaction between the parties and/or whether the contract was discharged. Accordingly, we reverse the decision of the learned Single Judge in this behalf also.
Accordingly, the appeal is allowed and after setting aside the order of the learned Single Judge, we grant the application of the contractor filed under Section 20 of the Act and direct the Managing Director, respondent No. 2, to appoint an Arbitrator within a period of two months from the receipt of our order. The Arbitrator will first decide whether the claims made are within time or not and whether the claim should be deemed to have been waived as per the clause of the agreement. The Arbitrator would also decide whether or not there was discharge of the contract by accord and satisfaclion and in case one of these points is decided in favour of the contractor, then he will proceed to determine the other claims made in the application under Section 20 of the Act. It would also be open to the respondent-Food Corporation of India to raise its counter claim, if any, before the Arbitrator, which would also be decided, in case the Arbitrator proceeds to determine the claims of the contractor on merits.
No costs.