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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • Article 137 of the Limitation Act, 1963, and Article 181 of the Limitation Act, 1908
  • Article 137 of the Limitation Act, 1963 Article 137
  • section 48 of the Code of Civil Procedure, 1908.
  • Article 181 of the Limitation Act, 1908
  • Article 137 of the Limitation Act, 1963.
  • Article 119 of the Limitation Act, 1968
  • Art. 181 of the Limitation Act of 1908.
  • SECTION 8 ARBITRATION ACT
  • Art. 181 of the Limitation Act, 1908
  • Art. 137 of the Limitation Act, 1963.
  • section 8(2) of the Arbitration Act,
  • U/S 8 of the Arbitration Act
  • Indian Partnership Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • Article 137 of the Limitation Act, 1963, and Article 181 of the Limitation Act, 1908
  • Article 137 of the Limitation Act, 1963 Article 137
  • section 48 of the Code of Civil Procedure, 1908.
  • Article 181 of the Limitation Act, 1908
  • Article 137 of the Limitation Act, 1963.
  • Article 119 of the Limitation Act, 1968
  • Art. 181 of the Limitation Act of 1908.
  • SECTION 8 ARBITRATION ACT
  • Art. 181 of the Limitation Act, 1908
  • Art. 137 of the Limitation Act, 1963.
  • section 8(2) of the Arbitration Act,
  • U/S 8 of the Arbitration Act
  • Indian Partnership Act
Smart Summary

Judgment Summary — M.L. Lodha, J. (Revision against District Judge, Sriganganagar order dated 30.05.1974)

Factual and Procedural Background

The revision petition challenged an order of the learned District Judge, Sriganganagar dated 30 May 1974, which had accepted an application under section 8(2) of the Arbitration Act made by M/s Mehta Chetandas Kishandas (the applicant) and appointed Shri Nahar Singh as arbitrator. The applicant was a registered partnership firm (now dissolved) which had contracted with the State of Rajasthan for manufacture and supply of pakka tiles and bricks under agreement No. 42 of 1962-63 through the Executive Engineer, Rajasthan Canal Project. The applicant alleged manufacture and supply of large quantities of bricks and tiles and claimed various sums due and illegal recoveries made by the State, aggregating Rs. 31,070.42 p., and that a sum of Rs. 28,894.04 p. had been illegally debited and a demand dated 10 January 1968 for Rs. 1,056/- was made. The applicant sent a registered letter dated 10 July 1972 asking the State to appoint the Superintending Engineer as arbitrator, received on 12 July 1972; no appointment was made. The applicant sought court appointment of an arbitrator under section 8(2) of the Arbitration Act. The State resisted the application and the District Judge framed seven issues (listed in the record) and decided in favour of the applicant on issues 1 to 6, appointing an arbitrator under section 8(2). The State filed this revision challenging certain findings, and the High Court heard argument on issues Nos. 3, 4 and 6 while confirming findings on issues Nos. 1, 2 and 5.

Legal Issues Presented

  1. Whether the petitioner (applicant in the application) was a registered partnership firm and whether Gian Chand Mehta was its partner (Issue No. 1).
  2. Whether all partners of the petitioner firm should have been impleaded as parties and the effect, if any, of non-impleading (Issue No. 2).
  3. Whether the petitioner had waived its right to refer the matter to arbitration under clause 19(a) of the agreement by failing to refer within 180 days (Issue No. 3).
  4. Whether the petition was barred by limitation — specifically whether Article 137 of the Limitation Act, 1963 (and by analogy earlier Article 181 of 1908) applied to an application under section 8(2) of the Arbitration Act (Issue No. 4).
  5. Whether notice under section 80 C.P.C. was necessary prior to institution of the petition and its effect, if any (Issue No. 5).
  6. Whether the petitioner was entitled under section 8 of the Arbitration Act to have an arbitrator appointed given that the arbitration clause named a State-nominated official (Issue No. 6).
  7. Relief — the appropriate remedy and directions (Issue No. 7).

Arguments of the Parties

State of Rajasthan (Government Advocate) — Principal Arguments

  • Clause 19(a) of the agreement contains a second paragraph prescribing extinguishment/waiver of rights if the contractor fails to refer the dispute to arbitration within 180 days of preparation of the final bill; the final bill was prepared on 19 December 1966, hence the applicant waived rights by not referring in time (Issue No. 3).
  • The applicant's cause of action arose earlier (pointing to the demand dated 10 January 1968 as giving knowledge of final bill preparation) and the application under section 8(2) was not filed within three years — it is time-barred under Article 137 of the Limitation Act, 1963 (analogised to old Article 181) (Issue No. 4).
  • Section 8(1)(a) is inapplicable because the arbitration agreement itself nominates the Superintending Engineer (i.e., the appointment is to be made by or is already designated by the State); the clause does not contemplate appointment by mutual consent in the sense required by section 8, so the Court lacked jurisdiction to appoint an arbitrator under section 8 (Issue No. 6).

Applicant — Principal Arguments

  • The extinguishment provision in clause 19(a) (second paragraph) cannot operate in the absence of a nomination by the State; until the State nominates the Superintending Engineer the arbitration mechanism is not activated and rights are not extinguished — thus no waiver occurred (Issue No. 3).
  • No period of limitation is provided in the Arbitration Act for an application under section 8(2); Article 137 of the Limitation Act does not govern such an application; earlier Supreme Court authority (Mohd Usman) and subsequent High Court decisions support that applications under section 8 are not governed by Article 137/181 (Issue No. 4).
  • Where an agreement vests the power to nominate an arbitrator in one party or a designated official and that power is not exercised, that failure is equivalent to lack of consent and the court may act under section 8; prior High Court decisions hold that nomination by a designated official is effectively appointment by consent, and where that appointment is not made, section 8 is available (Issue No. 6).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Indo Russian Railway Labour Co-operative Society Ltd. (S.B. Civil Revision Petition No. 357 of 1967, decided 9 Jan 1968) Interpreting a clause (clause 21) similar to clause 19(a): the first part of the clause (general arbitration reference) remains subsisting even if the second part (extinguishment) is alleged; incapacity to refer issues of applicability of extinguishment to the arbitrator; party not disentitled from moving court under section 8. The Court expressly agreed with the Kan Singh J. reasoning and applied it to hold that in the absence of a State nomination the extinguishment paragraph of clause 19(a) cannot operate to extinguish the contractor's rights; thereby upholding the District Judge on Issue No. 3.
Mohd Usman v. Union of India Held that an application under section 8 or section 20 of the Arbitration Act is not governed by Article 181 of the Limitation Act, 1908; the Limitation Act provided no period for such applications. Used to support the conclusion that Article 137 of the Limitation Act, 1963 (the successor provision) does not apply to applications under section 8(2) and that no period of limitation is prescribed for such an application (Issue No. 4).
Monghyr Electric Supply Co. Ltd. (Single Judge, Patna High Court) Interpreted that the Supreme Court's interpretation of Article 181 should prevail in construing Article 137; held Article 137 cannot be read to govern all applications for which no period is provided. Referred to as part of High Court decisions supporting the view that Article 137 does not govern section 8(2) applications; used to reinforce the conclusion on limitation (Issue No. 4).
Sha Mulchand & Co. Ltd. v. Jawaher Mills Ltd. Cited as part of the body of authority relevant to the scope of Articles 181/137 and their application to non-CPC applications. Noted in the discussion of authorities; relied upon as part of the jurisprudential background to conclude Article 137 does not govern section 8(2) applications (Issue No. 4).
Bombay Gas Co. Ltd. v. Gopal Bhiva Considered in the context of Article 181/137 scope; assisted in shaping the view that Article 137 should not be taken to govern all non-specified applications. Referred to in support of the limitation analysis and the view that Article 137 does not attract to section 8(2) applications (Issue No. 4).
Town Municipal Council, Atbani v. Presiding Officer, Labour Court, Hubli Observed that the earlier High Court/Supreme Court decisions on Article 181/137 raised questions and required serious consideration whether Article 137 includes applications other than those under the Civil Procedure Code. Cited to show that the question whether Article 137 applies beyond CPC-related applications remained open and to support the High Court's reluctance to apply Article 137 to section 8(2) (Issue No. 4).
Nityanand M. Joshi v. Life Insurance Corporation of India Considered prior decisions and observed it might require serious consideration whether Article 137 covers applications beyond the Code; treated earlier decisions when considering Article 137's scope. Used as part of the discussion showing the Supreme Court had noted the issue and that until reviewed, established approach limited Article 137's reach; supported the conclusion on limitation (Issue No. 4).
Union of India v. Rishi Raj & Co., Delhi Held (Single Judge, Delhi High Court) that no period of limitation under the Limitation Act is prescribed for an application under section 20 and that such an application is not governed by Article 137. Referred to as consistent High Court authority reinforcing that Article 137 does not govern analogous arbitration-related applications (Issue No. 4).
Kerala State Electricity Board v. Illippadical Parvathi Amma Observed that Article 137 applies only to applications under the Civil Procedure Code until the Supreme Court re-examines the matter; reiterated that High Courts are bound by Supreme Court precedent unless reviewed. Quoted to buttress the conclusion that Article 137 should not be applied to the section 8(2) application at hand (Issue No. 4).
Chander Bhan Harbhajan Lal v. The State of Punjab (two appeals) Supreme Court held that section 8 empowers courts to appoint arbitrators/committees even where the agreement provides for appointment by one party (e.g., a Settlement Committee nominated by Government); section 8 could be applied even if appointment by one party is contemplated. The Court relied on this Supreme Court authority to hold that section 8 applies even when the agreement contemplates nomination by the State; therefore the District Judge rightly proceeded to appoint an arbitrator (Issue No. 6).
Union of India v. D.P. Singh (Patna High Court) Held that an application under section 8(1)(a) is maintainable where the party having the sole power under the arbitration agreement to appoint the arbitrator fails to make the appointment when called upon to do so — effectively treating such nomination mechanism as resulting from consent. Followed as supporting authority for the proposition that failure by the nominating party to appoint allows recourse to section 8; used in deciding Issue No. 6.
Surendranath Paul v. Union of India (Calcutta High Court) Reasoned that appointment by a designated official (e.g., Secretary) is effectively an appointment made by consent of the parties because the parties had agreed to leave the choice to that designated person. Adopted to support that where an agreement provides for appointment by a designated official and no appointment is made, the court may treat the matter as within section 8(1)(a) and appoint an arbitrator (Issue No. 6).
State of Orissa v. Govinda Choudhury Followed Patna and Calcutta decisions and held there was implied consent that a Chief Engineer would make the selection; clause fell within the ambit of section 8(1)(a). Cited to confirm the line of authority that an agreement vesting appointment in a designated official comes within section 8 when that official's nomination is not made (Issue No. 6).

Court's Reasoning and Analysis

The High Court proceeded by first noting which findings of the District Judge were not challenged by the Government Advocate (Issues Nos. 1, 2 and 5) and confirmed those findings. The Court then dealt in turn with the contested issues (Nos. 3, 4 and 6) using the following reasoning, grounded in the agreement's wording and existing authorities:

Issue No. 3 — Waiver by failure to refer within 180 days

Clause 19(a) contained a broad arbitration reference clause followed by a paragraph stating that if the contractor failed to refer the matter to arbitration within 180 days from preparation of the final bill, all rights and claims would be extinguished and waived. The Government argued the applicant's application was out of time as the final bill had been prepared on 19 December 1966 (and subsequent events of 10 January 1968 or the registered letter of 10 July 1972 were relied upon). The Court relied on the interpretation in the Indo Russian Railway case to hold that the first part of an arbitration clause (broad reference to arbitration) remains subsisting and the extinguishment paragraph cannot operate where nomination by the State has not taken place; disputes about applicability of the extinguishment paragraph are matters for the arbitrator. Finding no illegality or material irregularity in the District Judge's decision on this point, the High Court upheld the District Judge's conclusion that the applicant had not waived its right to refer the matter to arbitration.

Issue No. 4 — Limitation

The Court examined whether Article 137 of the Limitation Act, 1963 (and by analogy the earlier Article 181 of 1908) governed an application under section 8(2). It observed that no period of limitation is prescribed for an application under section 8(2) in the Arbitration Act and that earlier Supreme Court and High Court authorities (including Mohd Usman and related decisions) had held or treated applications under section 8/20 as not governed by Article 181/137. The Court considered a series of authorities that left open or questioned the scope of Article 137 but consistently supported the conclusion that Article 137 should not be held to apply to such arbitration applications. The District Judge's additional point (that Article 119 provides a period only for filing and challenging awards, showing the Legislature did not provide limitation for other reliefs under the Act) was accepted. On this basis, the High Court held Article 137 did not apply and affirmed the District Judge's conclusion that the application under section 8(2) was not time-barred.

Issue No. 6 — Power of the Court under section 8 where nomination by one party is stipulated

The Government argued that because clause 19(a) provided for nomination of the Superintending Engineer by the State Government, the appointment was not a matter of concurrence between parties as contemplated by section 8(1)(a) and thus section 8 could not be invoked. The Court analysed section 8(1)(a) and (2) and examined authorities (including Patna and Calcutta High Court decisions and the Supreme Court's Chander Bhan Harbhajan Lal decision). It accepted the line of authority that where an agreement provides for appointment by a designated official or by one party, that scheme effectively results from the parties' consent (i.e., an implied form of consent), and where the power to nominate is not exercised, the court may act under section 8 to appoint an arbitrator. In view of clause 19(a) and the absence of State nomination, the Court held the applicant's case fell within section 8(1)(a) and that the District Judge rightly appointed an arbitrator under section 8(2). The Court therefore found no ground to interfere with the District Judge's decision on Issue No. 6.

Holding and Implications

DISMISSED — The revision petition was dismissed with costs.

Direct effect: The High Court upheld the District Judge's order appointing an arbitrator under section 8(2) of the Arbitration Act and confirmed the findings in favour of the applicant on the contested issues (that no waiver occurred under clause 19(a), that the application was not barred by limitation, and that section 8 applied even though the agreement envisaged State nomination). The appointment of Shri Nahar Singh as arbitrator and the direction made by the District Judge therefore stand.

The opinion does not purport to lay down any novel principle beyond the application and reconciliation of existing authorities; no broader new precedent is announced in the judgment beyond the conclusions applied to the facts before the Court.

    State Of Rajasthan v. M/S. Mehta Chetan Dass Kishan Dass

    M.L Lodha, J.:— This revision petition has been filed against the order of the learned District Judge, Sriganganagar dated May 30, 1974 by which he accepted the application under section 8(2) of the Arbitration Act, (which will hereinafter be referred to as ‘the Act’), filed by the non petitioner M/s Mehta Chetandas Kishandas, which will hereinafter be referred to as ‘the applicant’, and appointed Shri Nahar Singh, Superintending Engineer, Rajasthan Canal Project, Hanumangarh Junction as arbitrator to whom the applicant was held entitled to refer the dispute.

    2. In brief facts may be noticed. The applicant submitted an application under section 8(2) of the Act on July 27, 1973 against the State of Rajasthan stating that the applicant was a partnership firm registered under the Indian Partnership Act and Shri Gian Chand Mehta was one of its partners. That it worked as a Government contractor and that the applicant-firm at the time of the filing of the application under section 8(2) of the Act, stood dissolved. The case of the applicant further in the application was that it had entered into a contract with the State of Rajasthan for the work of manufacture and supply of pakka tiles and bricks on kiln No. 2 RD 98000 of Rajasthan Canal regarding which agreement No. 42 of 1962 63 was duly executed between the applicant and the State of Rajasthan through the Executive Engineer, Rajasthan Canal Project, Ist Desert Division, Suratgarh, which Division was later on abolished and merged in Rajasthan Canal Project, Talwara Division, Hanumangarh Junction. It was mentioned in the application that the original agreement was in the possession of the State of Rajasthan. The applicant further alleged that it manufactured and supplied 393, 680 Nos. of Pakka bricks, 25.47.766 Nos. of pakka tiles and 2.756 cft. of brick-bats of the standard size in respect of which, a balance of Rs. 9,036 was then due to it besides the security deposit of Rs. 18,802 04 p Certain items of illegal recovery from its running bills were also alleged for which it was stated that it was entitled to get the refund. According to the applicant, a sum of Rs. 31,070.42 p., as detailed in the application, was recoverable from the State of Rajasthan. The applicant further alleged in para 5 of the application that the State of Rajasthan illegally debited the account of the applicant with a total sum of Rs. 28,894 04 p on account of unsustainable recoveries and required it to deposit a sum of Rs. 1056/- as bah nee de vide letter No. Kiln/98.RCP/FDD/TLW/5 3/68/2 dated January 10, 1968 of the Executive Engineer, R.C.P, Talwara Division, Hanumangarh Junction. The applicant having come to know about illegal recoveries It immediately protested and repudiated the liability for the said recoveries, The matter was not decided for more than four years. Because of these circumstances, according to the applicant, dispute arose between it and the State of Rajasthan (petitioner in this revision and opposite-party in the application filed by the applicant) within the meaning of clause 19(a) of the agreement. The applicant therefore sent a registered letter dated July 10, 1972 calling upon the State of Rajasthan to appoint the Superintending Engineer of the Irrigation Department as an Arbitrator to arbitrate in the above matter. This letter was served on July 12, 1972, but no appointment of the Arbitrator was made as envisaged by clause 19(a) of the agreement within 15 days after the service of the said letter. The State of Rajasthan did not send any reply to the letter. It was therefore prayed by the applicant that an Arbitrator for settlement of the disputes and differences between the parties be appointed. The State of Rajasthan resisted this application on various grounds vide reply dated January 12, 1974. The learned District Judge framed the following seven issues on April 12, 1974—

    (1) Whether the petitioner was a registered partnership firm and Gian Chand Mehta was its partner ?

    (2) Whether all the partners of the petitioner firm should have been Page: 382impleaded as parties to his petition ? If not, what is its effect ?

    (3) Whether the petitioner has waived his right to refer the matter to arbitration as alleged in para 11 of the reply and if so, what is its effect ?

    (4) Whether the petition is not maintainable as alleged in para 13 & 14 of the reply ?

    (5) Whether notice U/s. 80 C.P.C was necessary prior to the institution of the petition ? If so, what is its effect ?

    (6) Whether the petitioner is entitled U/S 8 of the Arbitration Act to gat an arbitrator appointed ?

    (7) Relief?

    3. In the first place, the learned District Judge fixed issues Nos. 2 to 6 for arguments but at the time of argument?, they were heard on all the issues. The learned District Judge decided issue No. 1 in favour of the applicant and found that the applicant was a registered partnership firm and Gian Chand Mehta was its partner Issue No. 2 was not pressed before him on behalf of the State and therefore it was decided against the State of Rajasthan. Issue No. 3 was decided against the State of Rajasthan whereby negativing the contention of the State to the effect that the applicant has waived its right to refer the matter to arditration as alleged in para 11 of the reply to the application. Issue No. 4 related to period of limitation. The learned District Judge found that the application of the applicant under section 8(2) of the Act is not governed by any period of limitation as no period of limitation has been prescribed under section 8(2) of the Act and Article 137 of the Limitation Act has no application to such a case In these circumstances, issue No. 4 was decided in favour of the applicant and against the State of Rajasthan. Issue No. 5 was not pressed and therefore it was decided against the State of Rajasthan. After considering the arguments of the learned counsel for the parties in detail, the learned District Judge decided issue No. 6 against the State and held that the petitioner is entitled under section 8(2) of the Act to get an arbitrator appointed in terms of cl. 19(a) of the agreement. In view of the findings given by him regarding issues No. 1 to 6. the learned District Judge held that the applicant is entitled to a direction and therefore, he gave the directions as aforesaid.

    4. I have heard Mr. A.K Mathur for the State of Rajasthan and Mr. Rajendra Mehta for M/s. Mehta Chetandas Kishandas and have gone through the record of the case, I must state at once that the learned Government Acdvocate agitated before me the findings on issues Nos. 3, 4 and 6 and did not challenge the findings in respect of issues Nos 1, 2 and 5 The findings in respect of issue Nos 1, 2 and 5 are, therefore, confirmed. I propose to deal with the Endings on issues Nos 3, 4 and 6 in the manner in which they have been argued.

    5. Issue No. 3 In para 11 of the reply, the state has alleged that as per clause 19(a) of the agreement, the applicant should have referred the matter to the Arbitrator within a period of 180 days after the finalisation of the bill which was authorised on December 19, 1966 and as this was not done, the applicant has waived his right and is cot entitled to any relief. Clause 19(a) of the agreement runs as under:—

    “If any question, difference, or objection whatever shall arise between the parties to these presents or their respective representative or between one of the parties hereto and the representative of the other of them touching these presents of or any clause or thing therein contained or the construction thereof or as to any matter in and way connected with or arising out of these presents or the operation thereof or the right duties or liabilities Page: 383of either part, then save in so far as the decision of any such question or difference or part thereof is already hereinbefore otherwise provided for and has been so decided every such question, difference or objection including any question or difference as regard whether the decision of any particular matter has been otherwise provided for and or whether it has been finally decided accordingly, whether the contract hereinbefore contained should be terminated or has been duly terminated and as regards the right and obligations of the parties as the result of such termination, shall be referred for arbitration to the Super in tending Engineer or Irrigation Branch as may be nominated by the State Govt. acting such at time of ref and his dectsion shall be final and blnding and where the matter involves a claim for or the payment or the recovery of monrey, only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.

    In the event of the contractor fialing to refer the matter in dispute to the arbitrator within 180 days from the preparation of the contract shall be deemed to have been extinguished and waived.

    6. For the purpose of this issue, it may be mentioned that this clause provides that any question, difference or objection of whatever kind arising out of the agreement shall be referred for arbitration to the Superintending Engineer of Irrigation Branch as may be nominated by the State Government acting as such at the time of refence and his decision shall be final and binding and where the matter involves a claim for or a payment or the recovery of money only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. It further provides that in the event of the contractor failing to refer the matter in dispute, to arbitration within 180 days from the preparation of the final bill, all his rights and claims under the contract shall be deemed to have been extinguished and waived. The contention of the State, as it was before the learned District Judge, is that the final bill in this case was prepared on December 19, 1966 and as the contractor failed to refer the matter in dispute to arbitration within 180 days therefrom, his application under Sec. 8(2) of the Act it not maintainable because all his rights and claims shall be deemed to have been extinguished and waived. Attention in this connection was invited to para 5 of the application which shows that the case of action to refer the dispute to arbitration arose on January 10, 1968 by which the Executive Engineer demanded Rs. 1056/-. This must have given the applicant knowledge of the preparation of the final bill but the application was not made within 180 days of the preparation of the final bill. It is further argued that in para 6 of the application it has been admitted by the applicant shat by its registered letter dated July 10, 1972, it called upon the State to appoint the Superintending Engineer of Irrigation Branch as arbitrator to arbitrate in the matter. This was received by the State on July 12, 1972 The application under Sec. 8, 2) of the Act was not made within 180 days from the date of service of the notice. It is therefore clear, according to the learned Government Advocate that the application was beyond 180 days from December 19, 1966 or January 10, 1968 or July 10, 1972 In Indo Russian Railway Labour Co-operative Society Ltd.'s case (S.B Civil Revision Petition No 357 of 1967 decided on January 9, 1968), clause 21 of the agreement in that case came up for consideration before this Court. Clause 21 of the agreement in that case is identical to clause 19(a) of the agreement before me. Hon'ble Kan Singh J. (as he then was) made the following observations in that case,—

    “The question centres round the interpretation of clause 21 of the agreement. Now if the arbitration clause can be held to be a subsisting one then, in my view, the party can be held entitled to seek an arbitration in terms thereof The first part of clause 21, which has already been set out above, is couched in wide terms and it envisages the reference of any question, difference or objection whatsoever arising between the parties to the presents touching the presents or any clause or thing therein contained or the construction thereof or as to any matter in any way connected with or arising out of the presents or the operation thereof or the rights, duties and liabilities of either party. This wide language, in my view will apply and cover even if there is any dispute regarding the applicability of the second part of this clause itself. Both the parts of clause 21 have to be read harmoniously and one should not be so read as to destroy the other. In my view, part II only deals with the question of extinguishment of rights and claims under the contract under the stated Page: 384circumstances. It does not clearly say that part I will in such a situation cease to apply. To test this, let us envisage a converse case where inspite of the final bill the State wants to recover some dues from the contractor on the plea that there has been an over-payment or there had been some other mistake in the preparation of the final bill which mistake comes to be discovered later. Part II in such a case will not, in my view, stand against the State and it can enforce part-I alright. In other wodrs, Part I of clause 21 will not cease to exist and will still be a subsisting clause in the agreement. In such a context even if there is any dispute or controversy about part II of clause 21 that too has to be dealt with by the arbitiator and it cannot be said that any of the contrecting partiets will be incompetent to refer the dispute to he arbitrator. It is not for me to anticipate what opinion they would hold if any dispute relating to the application of part II of clause 21 is raised before the arbitrator in a proper manner. Nor can i anticipate what view the courts would take regarding the correct application or validity of part II of clause 21. As the matter stands, the respondent cannot be held disentitled from moving the court under section 8 of the Arbitration Act.”

    7. I respectfully agree with the conclusion reached by the learned Single Judge while interpreting clause 21 of the agreement before him and hold that in the absense of a nomination by the State, the second para of clause 19(a) of the agreement cannot come into operation so as to extinguish all the rights and claims of the contractor, namely, the applicant, who had moved the court under Sec. 8(2) of the Act. The Government Advocate could not satisfy me as to what illegality or material irregularity has been committed by the learned District Judge while deciding issue No, 3. In these circumstances, I uphold the findings of the learned District Judge in respect of issue No. 3.

    8. Issue No. 4:— This issue relates to limitation. In additional pleas para 13 in reply to the application under Sec. 8(2) of the Act, it has been pleaded by the S ate that the claim of the applicant is time-barred. As the agreement was entered in the year 1962 and the work was completed on July 24, 1965, the claim, if any, is time barred and is not entertainable In para 14 of the additional pleas of the reply, it has been stated that the Arbitiator to be appointed is when agreed upon by both the parties and as such, the provisions of Sec 8(2) are not applicable and the application is liable to be rejected. On the basis of the reply as contained in paras 13 and 14 of additional pleas, issue No. 4 was framed. I may in passing observe that issue No. 6 was specifically framed with respect to the averments contained in para 14 of the reply. It was argued before the learned District Judge that there are two aspects of this issue, namely, (1) that the claim was time-birred as the work was completed on July 14, 1965 and therefore nothing remains to be referred to arbitration and (2) that the application itself was barred by time The learned District Judge rightly declined to go into the question of the claim being time barred. He dealt with the second aspect of this issue, namely, that the application under Sec. 8(2) of the Act was time-barred The contention of the learned Government Advocate is that because of the cause of action arose in this case on January 10, 1958 when a demand for payment of Rs. 1056/- was made by the S ate from the applicant and since the application was not submitted within three years from the accrual of the cause of action, this application was time barred under Article 137 of the Limitation Act, 1963 Article 137 has merely replaced old Article 181 of the Limitation Act, 1908 with some modification. In order to appreciate the controversy regarding limitation, Article 137 of the Limitation Act, 1963, and Article 181 of the Limitation Act, 1908 are reproduced below,—

    “(Limitation Act, 1963)

    137 —Any other application for which no period of limitation is provided elsewhere in this Division Three years When the right to apply accrues.

    (Limitation Act, 1908)

    181—Application for which no period of limitation is provided else-where in this Schedule or by section 48 of the Code of Civil Procedure, 1908. Three years When the right to apply accrues.”

    9. In my opinion, the change that has been made in Art. 137 will not effect the interpretation that was put on Art. 181 of the Limitation Act of 1908. It may be mentioned here that no period of limitation is prescribed for an application under Sec. 8(2) of the Act in any of the provisions of the Act. Learned Government Advocate could not point out to me any provision in this regard from the Act. He based his submission of the expiry of Article 137 of the Limitation Act, 1963. The matter whether application under Sec. 8 of the Act is governed by Art. 181 of the Limitation Act, 1908 came up for consideration before their Lordships of the Supreme Court in Mohd Usman v. Union Of India. (1). It was held therein that an application under Sec 8 or Sec 20 of the Act is not governed by Art 181 of the Limitation Act, 1908, which, it is well settled, was restricted to application under the Code of Civil Procedure. It was further held in that case that the Limitation Act did not provide any period of limitation for such application. The learned Single Judge of the Patna High Court in In the matter of Monghyr Electric Supply Com. Ltd. (2) took the view that the interpretation put upon by their Lordships of the Supreme Court on Art. 181 of the Limitation Act, 1908 should still prevail in interpreting Art. 137 of the Limitation Act, 1963. The relevant decisions which were noticed are Sha Mulchand and Co., Ltd. v. Jawaher Mills Ltd., Salem (3) and the Bombay Gas Co. Ltd. v. Gopal Bhiva (4). He held that Art. 137 of the Limitation Act, 1963, cannot be interpreted to mean that it will govern all applications or petitions under all laws for which no period of limitation has been provided. From this decision, it is clear that Art. 137 of the Limitation Act, 1963, will not govern the applications under sec. 8(2) of the Act. This matter again came up lor consideration before their Lordships of the Supreme Court in Town Municipal Council, Atbani v. Presiding Officer, Labour Court, Hubli (5) wherein it was observed that the view expressed by the Supreme Court in Sha Moolchand's case (3) and The Bombay Gas Company's case (4) must be held to be applicable even when considering the scope and applicability of Art. 137 of the Limitation Act. 1963 as the language of Art 137 is only slightly different from that of the earlier Art 181 of the Limitation Act, 1908. The two decisions in Town Municipal Council's case (5) and the Bombay Gas Co. Ltd.'s case (4) were noticed by their Lordships in a subsequent decision in Nityanand M. Joshi v. The Life Insurance Corporation of India (6). As regards the Town Municipal Council's case (5), their Lordships made the following observations, in Nityanand's case (6),—

    “It is not necessary to express our views on the first ground given by this Court in Civil Appeals Nos. 170 to 173 of 1968, D/- 20-3-1969 = ((1969) 1 SCC 873 : AIR 1969 SC 1335). It seems to us that it miv require serious consideration whether applications to courts under other provisions, apart from Civil Procedure Code, are included within Article 137 of the Limitation Act, 1963, or not.”

    10. Learned counsel for the parties inform me that the Town Municipal Council's case (5) has not been reconsidered by their Lordships of the Supreme Court so far. In Union of India v. Rishi Raj & Co, Delhi (7), it was held by the learned Single Judge of the Delhi High Court that no period of limitation has been prescribed under the Limitation Act for an application under Section 20 of the Act and as such, an application under section 20 is not governed by Art. 137. The learned Judge took note of para 4 of the judgment of their Lordships in Nityanand's case (6) and proceeded to observe that until the rule laid down in Athany Municipality's case is actually considered by the Supreme Court and modified, the rule is binding on the High Court and it does not appear that so far any reconsideration or modification of the Rule laid down therein has been made. While considering the argument that was advanced before them, the learned Judges of the Kerala High Court in Kerala State Electricity Board… v. Illippadical Parvathi Amma…. (8) observed that Art. 137 applies only to applications under the Civil Procedure Code and till the matter is re-examined by the Supreme Court, it cannot be held that to such Page: 386applications as were before them, Art. 181 is applicable. The following passage may usefully be abstracted from that decision,—

    “Counsel for the petitioner stressed the above passage and contended that the question as to whether applications other than those under the Code are covered by Article 137 or not would require serious re examination. We are afraid, this can only be by the Supreme Court and not by us. The matter has been concluded by the Supreme Court in ((1989) 1 SCC 678 : AIR 1989 SC 1335) not to refer to the earlier decisions, under Art. 181. In the light of the said decision, which is binding on us, till the position is reviewed by the Supreme Court, it must be held that Article 137 applies only to applications under the Civil Procedure Code.”

    11. The learned District Judge has also given an additional reason also in support of the conclusion to which he arrived at in regard to limitation for which there is ample justification. He has stated that Article 119 of the Limitation Act, 1968 provides be period of limitation for the filing in court of an award and for setting aside an award or getting an award remitted for consideration under the Act. This goes to show that for other applications under the Act, the Legislature did not think fit to provide for any period of limitation. In this view of the matter also Art. 137 cannot be attracted. I, therefore, hold that there is no period prescribed for making an application under Sec. 8(2) of the Act and Art 137 of the Limitation Act, 1963, has no application. No valid exception can be taken to the decision of the learned District Judge in respect of issue No. 4. I am, therefore, of the opinion that issue No. 4 has been correctly decided Issue No. 6. As observed by me above, issue No. 6. has been framed on the basis of the averments made in para 14 of the additional pleas in the reply. The argument of the learned Government Advocate is that the arbitrator to be appointed is as agreed upon by both the parties and so the provisions of sec 8(1)(a) are not applicable. In order to appreciate the contention raised by the learned Government Advocate, I may read sec. 8 of the Act which is as follows,—

    “8. Power of Court to appoint arbitrator or umpire (1) In any of the following cases:

    (a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by the consent of the parties and all the partis do not, after differences have arisen, concur in the appointment or appointments, or

    (b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or

    (c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him;

    any party may save the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.

    (2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if be or they had been appointed by the consent of all parties.”

    12. So far as the scope of Sec. 8(1)(a) is concerned, it is attracted only when differences or disputes have arisen between the parties and the following conditions are fulfilled,—

    (1) the arbitration agreement provides that reference shall be to one or more arbitrators to be appointed by consent of the parties and;

    (2) all the parties do not, after differences have arisen, concur in the appointment on appointments.

    13. Sub sec. (2) of Sec 8 lays down that if appointment is not made within 15 clear days after service of the notice, the Court may, on the application of the parly who gave the notice and after giving the other party an opportunity of being heard, appoint an arbitrator who shall have like power to act in the reference and to make an award as if he had been appointed by the consent of the parties. The submission of the learned Government Advocate is that the arbitrator Page: 387under the agreement is agreed upon by both the parties and therefore the provisions of Sec. 8(1)(a) of the Act are not applicable. He has elaborated the submission by saying that clause (a) of sub-sec. (1) of Sec. 8 of the Act is attracted when the arbitration agreement provides that reference shall be to an arbitrator to be appointed by the consent of the parties. In this case, the agreement itself speaks of the named arbitrator and therefore, the question of concurrence in the appointment of the other party does not arise and if such a question does not arise, then the Court has/had no jurisdict on to appoint an arbitrator. This argument has been met by the learned counsel for the applicant by saying that where the party having the sole power under the arbitration agreement to appoint an arbitrator, fails to make the appointment when called upon to do so, it shall be deemed that the appointment of the arbitrator by one party is agreed to be by the consent of both the parties. In Union of India v. D.P Singh (9), it has been held by a learned Single Judge of the Patna High Court that an application under Sec. 8(1)(a) is maintainable where the party having the sole power under the arbitration agreement to appoint the only arbitrator fails to make the appointment when called upon to do so, even if the agreement has not expressly provided that the appointment should be made by the consent of both the parties. The reasoning given in the Patna case was followed in Surendranath Paul v. Union of Indian (10). Base C.J made the following observations,—

    “It appears to me however that the appointment by the Secretary, as contended by the learned counsel for the respondent, is virtually an appointment made by consent of parties because the parties agreed while entering into the contract to leave the choice of another personas Arbitrator to the Secretary, mease the Secretary himself was unable or unwilling to act as Arbitrator. So in effect instead of the parties themselves choosing or appointing an Arbitrator, they consented that the appointment would be made by the person designated in the agreement, namely, the person holding the office of Secretary, Ministry of works, Housing and Supply. In other words, the appointment was the result of consent of the parties themselves.”

    (Emphasis added)

    14. The Patna (9) and the Calcutta (10) decisions were followed in State of Orissa v. Govinda Choudhury (11) where it was held that there was an implied consent amongst both the parties that the concerned Chief Engineer would make the selection out of the two groupe referred to in the arbitration clause. The agreement case within the ambit of Sec. 8(1)(a) of the Act. Sec 8 of the Act and the following arbitration clause came up for consideration before their Lordships of the Supreme Court in Chander Bhan Harbhajan Lal v. The State of Punjab (two appeals) (2). Para 5 of the report runs as follows,—

    “On a careful reading of the condition relating to arbitration we agree with the High court as well as the trial Court that there is no bar to the Government appointing a fresh Committee for going into the dispute consisting of three officers as stipulated in the condition. As the appellant would not reply to the letter of the Government seeking to nominate a Settlement Committee the Government moved the court for appointment of the Committee. The trial Court gave an option to the appellant to furnish names but as he did not furnish the names the trial Court accepted the names suggested by the Government. On our finding that the Government was entitled to appoint a Committee under the new agreement the Government could have very well appointed a committee by itself without coming to Court. But may be by way of abundant caution the Government came to court and the court has appointed a committee as suggested by the State. We are equally clear that under Sec 8 the Court is entitled to act and appoint a Committee. As already found by us when the second Settlement Committee ceased to function the Committee became “incapable of acting” and therefore it was within the competency of the court to proceed to appoint a new committee. Equally untenable is the contention that Section 8 is not applicable to cases where the condition stipulates the appointment of a Settlement Committee by one of the parties This submission was made relying on the wording of the section that any party may serve the over parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy. This part of the section no doubt contemplates two parties but the section cannot be read as not being applicable where the agreement provides for the nomination of the Committee by one of the parties for the section itself says that the party may serve the other parties “May serve the other parties” will include not serving other parties in cases in which the service on the other party is not contemplated.”

    15. Clause 19(a) inter alia clearly provides that ‘every such question, difference or objection………….. shall be referred to arbitration to the Superintending Engineer of Irrigation Branch as may be-nominated by the State Government acting such at the time of reference. It is inherent in the arbitration agreement itself that the nomination of the Superintending Engineer to act as an arbitrator will be deemed to have been made by the consent of both the parties and hence it was not necessary to make any express provision that the demand will be made with the consent of the parlies In this view of the matter, an application under Sec. 8(1)(a) is maintainable. The State Government has not nominated the Superintending Engineer as the arbitrator. Since no such nomination has taken place prior to the making of the application under Sec. 8(2) of the Act, the question of refusal or negligence by such nominated person does not arise. Obviously, therefore clause (b) of Sec. 8 will not be applicable. I accordingly hold that the case of the applicant is fully covered by the provisions of Sec. 8(1)(a) of the Act and consequently, the learned District Judge was right in proceeding to appoint an arbitrator under Sec. 8 of the Act. Issue No, 6 was also correctly decided by the learned District Judge and the finding does not call for any interference in the revisional jurisdiction.

    16. For the foregoing reasons, I find no force in this revision application and it is hereby dismissed with costs.

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