D.K. Enterprises vs The Employees State Insurance Corporation and Another

Mukul Mudgal, J.—This is an appeal against the judgment of the learned Single Judge dated 09.11.1998, by which the objections preferred by the appellant herein (who was the respondent No. 1 before the learned Single Judge) to the award were disposed off and the award was partly modified and made a Rule of the Court. The facts of the case have been summarized by the learned Single Judge and the same are as follows:

By purchase order No. D-16/14/HQ/3/77-Genl.-Col.II dated 4/7.8.1978 the petitioner placed an order on respondent No. 1 for supply of 17350 loose leaf binders to the petitioner at the rates quoted by the said respondent. Respondent No. 1 did not appear to have supplied the entire quantity of the said loose leaf binders and certain disputes arose between the parties regarding payment of dues to respondent No. 1. These disputes were referred for arbitration to Smt. A.R. Soparkar, Sole Arbitrator. While the matter was pending before the Arbitrator the petitioner also made counter claim of Rs. 55,178.83 being the difference in the cost of ledgers not supplied by the respondent and the cost at which they were purchased by it at the risk and cost of respondent No. 1. Mrs. Soparkar, the Sole Arbitrator made and published her award on 29.1.1982. While certain amount was awarded in favour of respondent No. 1 the claim of the petitioner for Rs. 55,178.83 was not adjudicated by the Arbitrator being premature. This award came to this Court and the learned Single Judge of this Court while dismissing the objections of the petitioner made the award a rule of the court and a decree in terms thereof was passed. The petitioner filed an appeal (FAO(OS) 13/84) against the order of the learned Single Judge and on 9th May, 1984 the Division Bench of this Court passed the following order:

In our opinion it is open to the appellant to make a claim before the arbitrator by invoking the arbitration clause once again. Their claim in respect of damages was held by the arbitrator to be pre-mature. Therefore, the claim can be made again if it is not pre-mature now.

With these observations, the appeal is dismissed in limine.

Consequently, the respondent ESIC approached its own Director General for reference of its claims to the arbitrator and by an order of reference dated 27.02.1985 the Director General in exercise of power under Clause 19 of the general conditions of the contract referred the disputes and differences to Sh. G.R. Nayyar, Joint Insurance Commissioner for adjudication. The only claim referred to arbitration at the behest of the ESIC, who is the respondent in this appeal, was the amount of Rs. 54,439.90 claimed on account of loss towards risk purchase of 5259 loose leaf binders and 65 keys not supplied by the appellant. The arbitrator published the award on 23.06.1986 awarding the amount of Rs. 54,439.90 to the respondent ESIC. The interest claimed by ESIC was rejected.

Learned Counsel for the appellant submits that the learned Single Judge erred in holding that the claim of the respondent was not barred by limitation. He submits that the claim had not been preferred within three years of the day the cause of action lastly arose. However, the learned Single Judge had disallowed the objection of the appellant merely because the same was not raised before the learned Arbitrator.

The learned Single Judge held that the objection that the claim was barred by limitation was not even taken before the arbitrator, or in the objection petition and was only urged at the time of arguments before the learned Single Judge. In the absence of such a plea being taken before the learned Arbitrator, there was no occasion for the learned Arbitrator to hold or give his decision on the said belatedly raised objection at the stage of arguments. Moreover, the learned Single Judge held that the order of the Division Bench left it open to the respondent to make a claim once again before the arbitrator in case the same was not premature. The judgment in Panchu Gopal Bose Vs. Board of Trustees for Port of Calcutta, , relied upon by the appellant to contend that the provisions of the Limitation Act are applicable, was found to be inapplicable by the learned Single Judge.

A perusal of the order of the Division Bench in FAO(OS) 13/84 clearly shows that the respondents claim was held to be premature by the earlier arbitrator and that finding of the arbitrator was affirmed by the learned Single Judge as well as by the Division Bench. Consequently, the ESIC was permitted to raise a fresh claim if it is not premature.

In our view, in the first instance, the appellant took advantage of the fact that the respondent''s claim was held to be premature, which finding of the arbitrator stood affirmed even by the Division Bench. The appellant cannot now be permitted to take a counter stand to say that the finding that the respondent''s claim was premature was not a correct finding. Whatever be the legality of the earlier finding of the arbitrator, affirmed by the Division Bench, such a finding nevertheless binds the appellant as the order of the Division Bench was not challenged in appeal and had become final and binding. Accordingly, we are of the view that the learned Single Judge was right in holding that the claim of the respondent was not beyond limitation, and was fully justified in distinguishing the judgment relied by the learned Counsel for the appellant.

Accordingly, we find no merit in the appeal. The same stands dismissed.