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Union Of India v. Momin Construction Company .
Factual and Procedural Background
The appellant and the respondents were parties to a construction contract containing an arbitration clause covering all disputes arising during or after completion of the work. The final bill was passed on 11-8-1965 after the respondents issued a “No Claim Certificate.” On 26-2-1971 the respondents filed an application under Section 20 of the Arbitration Act, 1940 before the City Civil Court, Ahmedabad, seeking reference of the disputes to arbitration. The appellant resisted the application as barred by limitation, but the trial court rejected this defence and allowed the petition.
The appellant’s appeal to the Gujarat High Court was dismissed. Relying principally on Town Municipal Council v. Presiding Officer, Labour Courts (1969) 1 SCC 873, the High Court held that Article 137 of the Limitation Act, 1963, did not apply to an application under Section 20. The appellant then approached the Supreme Court by way of the present civil appeals. All appeals involved identical facts and questions of law and were heard together.
Legal Issues Presented
- Whether Article 137 of the Limitation Act, 1963, governs an application made under Section 20 of the Arbitration Act, 1940, to a civil court.
- If Article 137 applies, whether the respondents’ application filed on 26-2-1971—more than three years after the cause of action arose on or before 11-8-1965—is time-barred.
Arguments of the Parties
Appellant's Arguments
- The Section 20 application was filed beyond the three-year limitation period prescribed by Article 137 of the Limitation Act and was therefore not maintainable.
The opinion notes that the respondents chose not to appear before the Supreme Court.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Town Municipal Council v. Presiding Officer, Labour Courts (1969) 1 SCC 873; (1970) 1 SCR 51 | Earlier view that Article 137 does not apply to certain applications, including those under statutes other than the CPC. | The High Court had relied on this decision, but the Supreme Court noted that it was later departed from. |
| Kerala SEB v. T.P. Kunhaliumma (1976) 4 SCC 634; (1977) 1 SCR 996 | Article 137 applies to any petition or application filed under any Act to a civil court. | Adopted by the Supreme Court to hold that Article 137 governs Section 20 applications. |
| Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority (1988) 2 SCC 338; (1988) 3 SCR 351 | Applied Kerala SEB to Section 20 of the Arbitration Act; affirmed that Article 137 governs such applications. | Cited to reinforce that the limitation period under Article 137 is applicable to the present case. |
Court's Reasoning and Analysis
The Supreme Court reviewed the evolution of the law on the applicability of Article 137. It observed that the two-Judge Bench decision in Town Municipal Council had been explicitly departed from in Kerala SEB, which held that Article 137 applies to all petitions or applications filed in civil courts irrespective of the statute under which they are made. This principle was subsequently reaffirmed in Major (Retd.) Inder Singh Rekhi specifically in relation to Section 20 of the Arbitration Act.
Applying these authoritative precedents, the Court held that Article 137, which prescribes a limitation period of three years, governs applications under Section 20. In the present case the respondents’ right to apply arose prior to 11-8-1965, the date on which the “No Claim Certificate” was issued and the final bill passed. Their Section 20 application, filed on 26-2-1971, was therefore well beyond the three-year window and was “plainly barred by time.” The same reasoning applied to the other connected appeals.
No other points were urged, and the respondents were unrepresented. Accordingly, the Court concluded that the trial court and the High Court had erred in entertaining and allowing the time-barred petitions.
Holding and Implications
Appeals Allowed; Section 20 applications dismissed as time-barred.
The Supreme Court set aside the judgments of the Gujarat High Court and the trial court, dismissed the Section 20 applications, and made no order as to costs. The ruling reaffirms that Article 137 of the Limitation Act applies to applications under Section 20 of the Arbitration Act, 1940, thereby reinforcing a uniform limitation framework for such applications. No broader doctrinal innovation was announced beyond the affirmation of existing precedent.
Order
1. These appeals raise the same question of law and can be decided by a common judgment.
2. For the purpose of convenience, the brief facts that are set out relate to the first appeal, Civil Appeal No. 1316 of 1977. The relevant dates in the other appeals are similar.
3. The appellant and the respondents entered into a contract which contained an arbitration clause, namely, that all disputes or matters of differences between them arising out of or connected with the contract during the progress of the construction work therein set out or after its completion would be decided by arbitration. The final bill in respect of the construction work was prepared and the respondents gave a “No Claim Certificate” on 11-8-1965, whereupon the final bill was passed. On 26-2-1971, the respondents filed a petition under Section 20 of the Arbitration Act to take on the file of the City Civil Court, Ahmedabad the arbitration agreement aforementioned. The appellant contested the petition and urged that it was barred by limitation. The issue was answered against the appellant and the petition was allowed.
4. The appellant preferred an appeal to the Gujarat High Court. The High Court relied upon various judgments and concluded, basing itself principally upon the decision of this Court in Town Municipal Council v. Presiding Officer, Labour Courts (1969) 1 SCC 873, (1970) 1 SCR 51 that Article 137 of the Limitation Act, 1963, did not apply to an application under Section 20 of the Arbitration Act. The High Court dismissed the appeal.
5. Two judgments of this Court subsequent to the decision in the case of the Town Municipal Council (1969) 1 SCC 873, (1970) 1 SCR 51 aforesaid must be noted.
6. In Kerala SEB v. T.P Kunhaliumma (1976) 4 SCC 634, (1977) 1 SCR 996 this Court held that Article 137 of the Limitation Act, 1963, would apply to any petition or application filed under any Act to a civil court. The view taken by the two-Judge Bench in the Town Municipal Council case (1969) 1 SCC 873, (1970) 1 SCR 51 aforementioned was expressly differed from and it was held that Article 137 was not confined to applications contemplated by or under the Code of Civil Procedure. In Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority (1988) 2 SCC 338, (1988) 3 SCR 351 the decision in the case of Kerala SEB (1976) 4 SCC 634, (1977) 1 SCR 996 just cited was applied in respect of an application under Section 20 of the Arbitration Act. It was held that Article 137 applied thereto.
7. The claim in the first appeal aforementioned arose to the respondents therein before 11-8-1965, when they issued the “No Claim Certificate” and the final bill was passed. The right to apply under Section 20 of the Arbitration Act, therefore, arose to the respondents before 11-8-1965. The application under Section 20 was made by them much after the expiry of three years therefrom. The application under Section 20 was, therefore, plainly barred by time. The cases in the other appeals are similar.
8. The respondents in the appeals have chosen not to appear. No point other than that mentioned above has been urged.
9. The appeals are allowed. The judgments and orders under appeal are set aside. The applications filed by the respondents under Section 20 of the Arbitration Act are dismissed.
10. There shall be no order as to costs.
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