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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Article 137 of the Limitation Act
  • the Indian Companies Act
  • Section 20 of the Act
  • Section 20 of the Arbitration Act, 1940
  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Article 137 of the Limitation Act
  • the Indian Companies Act
  • Section 20 of the Act
  • Section 20 of the Arbitration Act, 1940
  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The appellant, a public sector undertaking incorporated under the Indian Companies Act, awarded several work orders to the respondent for constructing 32 NHS (D/S) quarters at Rajpura Colliery, Kapasara, then in Bihar (now Jharkhand). An agreement contained an arbitration clause. Disputes arose over payment for the work executed. On 1 June 1990 the respondent invoked the arbitration clause, but the Chief Engineer rejected the request on 5 September 1990. In September 1990 the respondent filed a petition under Section 20 of the Arbitration Act, 1940 before the Calcutta High Court seeking appointment of an arbitrator. A learned Single Judge appointed an advocate, Mr Shyam Sunder Dutt, as arbitrator. The appellant filed a letters-patent appeal. The Division Bench, noting the respondent’s consent, set aside the appointment and directed the Chairman-cum-Managing Director (CMD) of Eastern Coalfields Ltd. to nominate an arbitrator within two weeks and for the award to be made within four months of the arbitrator entering reference. The present appeal to the Supreme Court is by the appellant against that Division Bench order.

Legal Issues Presented

  1. Whether the respondent’s Section 20 petition before the High Court was barred by limitation under Article 137 of the Limitation Act, 1963.
  2. Whether, in the absence of any express consent by the appellant, the Division Bench was justified in setting aside the advocate-arbitrator’s appointment and directing the CMD to nominate an arbitrator.
  3. Whether, having allegedly accepted final payment, the respondent was estopped from raising claims referable to arbitration.

Arguments of the Parties

Appellant's Arguments

  • The Section 20 petition, filed in September 1993, was time-barred because it exceeded the three-year period prescribed by Article 137 from the date the cause of action arose.
  • The appellant never consented to substitution of the advocate-arbitrator with a nominee of the CMD; therefore, the Division Bench’s direction was erroneous.
  • Since the respondent had accepted payment of the final bill, no arbitrable dispute subsisted.

The respondent was unrepresented at the Supreme Court hearing; no arguments from its side are recorded.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Roop Kumar v. Mohan Thedani, (2003) 6 SCC 595 The appellate court confines itself to issues actually argued and decided; un-addressed grounds may be pursued through review. Used to reject the appellant’s complaint that certain grounds (limitation and estoppel) were not dealt with by the High Court; the Court observed that the remedy was to seek review, which the appellant had not done.

Court's Reasoning and Analysis

On limitation, the Court calculated the period from 5 September 1990 (date of rejection of arbitration request) to the filing of the Section 20 petition in September 1993 and held that it fell within the three-year period prescribed by Article 137; hence the petition was not time-barred.

As to the substitution of the arbitrator, the Court noted that the Division Bench order clearly recorded the respondent’s willingness to have an arbitrator nominated by the CMD and that the only objection raised before that Bench by the appellant concerned the appointment of an advocate-arbitrator contrary to the contract’s stipulation. Therefore, no error was found in the Division Bench’s direction.

On the submission that acceptance of the final bill estopped the respondent, the Court observed—relying on Roop Kumar—that arguments not pressed or decided by the High Court should have been pursued by a review petition, which the appellant failed to file. Consequently, the Supreme Court declined to entertain this ground.

Holding and Implications

Appeal Dismissed.

The Supreme Court affirmed the Division Bench’s direction that the Chairman-cum-Managing Director of Eastern Coalfields Ltd. nominate an arbitrator and rejected all grounds advanced by the appellant. No costs were awarded. The decision maintains the contractual mechanism for nominating an arbitrator and underscores that parties must seek review before the High Court if they believe material arguments were overlooked; no new legal precedent was set beyond the specific dispute.

    Eastern Coalfields v. Joscon .

    Order

    1. None appears on behalf of the respondent.

    2. The appellant is a public sector undertaking incorporated under the Indian Companies Act. It appears that the appellant herein issued several work orders to the respondent herein for construction of 32 units NHS (D/S) quarters at Rajpura Colliery, Kapasara, Bihar (now in the State of Jharkhand). As a result thereof, an agreement was executed between the appellant and the respondent. It appears that certain disputes arose as regards the payment for the work done by the respondent. Under such circumstances, the respondent by letter dated 1-6-1990 sought reference of dispute to the arbitrator. On 5-9-1990, the Chief Engineer rejected the request of the respondent for arbitration. Thereafter, the respondent in September 1990 filed a petition under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as “the Act”). A learned Single Judge of the Calcutta High Court appointed an advocate as an arbitrator to adjudicate upon the dispute between the appellant and the respondent. Aggrieved, the appellant filed a letters patent appeal before a Division Bench of the High Court.

    3. The appeal court disposed of the appeal stating that:

    “It is submitted by the learned advocate for the respondent that he does not oppose the prayer of the appellant in appointing named arbitrator in the agreement i.e the Chairman and/or Managing Director of Eastern Coalfields Ltd. It appears that by order dated 1-10-1993 the learned trial Judge appointed Mr Shyam Sunder Dutt, Advocate as arbitrator.
    In view of the submissions made by the respondent who was the petitioner before the trial court, the appeal is allowed. The order dated 1-10-1993 is set aside and the Chairman/Managing Director of Eastern Coalfields Ltd. is directed to nominate an arbitrator to hear the disputes between the parties. The Chairman will nominate an arbitrator within two weeks from the date of service within 4 weeks from his date of appointment and will make and publish his award within 4 months from the date of entering upon reference.”

    4. Aggrieved the appellant is in appeal before us.

    5. Learned counsel appearing for the appellant urged that in fact the petition filed by the respondent under Section 20 of the Arbitration Act was barred by limitation. Learned counsel urged that under Article 137 of the Limitation Act the petition under Section 20 could be filed within three years from the date when the cause of action arose. In this case we find that finally the Chief Engineer rejected the request of the respondent to refer the matter to arbitration by letter dated 5-9-1990 and the petition was filed in September 1993 which was well within the period of limitation. We, therefore, reject this argument.

    6. Learned counsel then urged that the appellant at no point of time gave any statement before the Court that instead of an advocate arbitrator the Managing Director be directed to appoint the arbitrator and in fact there was no dispute which could have been referred by the Managing Director to the arbitrator. We do not find any merit in this contention.

    7. The tenor of the order of the appeal court as set out hereinbefore is indicative of the fact that the only objection which was raised before it by the learned counsel for the appellant was that the learned Single Judge was not correct in appointing an advocate as an arbitrator in view of the fact that in terms of the arbitration agreement it is for the Managing Director of the company to nominate an arbitrator. As the respondent agreed to the nomination of an arbitrator by the Chairman-cum-Managing Director of the appellant Company, the Division Bench of the High Court passed the aforementioned order.

    8. Mr Ajit Kumar Sinha, learned counsel appearing for the appellant would urge that from the memo of appeal filed before the High Court, it would appear that not only the question of nomination but also the grounds to the effect that the application under Section 20 of the Act was barred by the limitation and furthermore, the respondent having accepted the payments under the final bill was estopped from raising a claim; were also taken. It is well known that in view of several decisions of this Court, this Court would look to only the judgment of the High Court (see Roop Kumar v. Mohan Thedani (2003) 6 SCC 595, (2003) 3 Scale 611). A party to a lis may raise several contentions in the petition on the grounds of appeal but would confine his argument only to one question. In the event, some other questions had been raised before the High Court which had not been dealt with by it, it is open to the party to file an application for review. In the instant case, the appeal was disposed of at an interlocutory stage by treating the appeal on day's list. It is, therefore, inconceivable that the learned Judges would not notice the arguments of the learned counsel appearing on behalf of the appellant.

    9. If the appellant was aggrieved against the statement of fact contained in the judgment, it was open to him to file a review before the High Court which he did not propose to do. Under such circumstances, we are not disposed to entertain this argument of the learned counsel for the appellant.

    10. We, therefore, do not find any merit in the appeal and it is, accordingly, dismissed.

    11. There shall be no order as to costs.

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    Comments

    Eastern Coalfields v. Joscon .
    (Jul 31, 2003)