UNION OF INDIA vs RADHA CHEMICALS

Goods were supplied by the respondent to the Union of India under a contract/contracts between November 1987 and 1991.

In June, 2004, the respondent issued a notice under section 21 of the Arbitration and Conciliation Act, 1996 stating that disputes and differences had arisen between the parties out of the contract/contracts and that the matter should be referred to arbitration.

On 28th February, 2007 an officer of the Railways, Mr.Laxman Nath Murmu made and published an award directing the Union to pay the respondent Rs.21,60,440/- together with interest @ 12% per annum from 1st January, 2001 till the date of publication of the award.

The counter claim of the Union was dismissed on merit.

As Mr.Chatterjee, learned counsel for the petitioner Union of India has rightly pointed out, on the face of it the award seems to be hopelssly barred by the laws of limitation, as the time period to claim price for goods sold and delivered is three years under the Limitation Act [Art.14].Mr.Ghosh for the respondent tries to save the award by making the following arguments: The Railways had a procedure for receiving bills from contractORS.Each bill had to be in a format enclosing receipted challan, purchase order, etc.He referred to the system of payment mentioned in paragraph 2300 of the Indian Standard Conditions of Contract.

He says that the bills were ready for lodging only in 1991 and that is why the bills could not be submitted in time.

Secondly, in 1993 his client preferred a writ application in this court, inter alia, for a direction upon the respondents to make payment of the bills.

This writ application was disposed of sometime in 2002.

The respondent is entitled to exclusion of this time during which the writ was pending under section 14 of the Limitation Act, 1963.

In 2004 the section 21 notice was issued by the petitioner.

He also argued that the objection regarding limitation was not taken by the Union of India at any point of time.

It was only at the close of the arbitration that their learned counsel raised the point which was dealt with by the learned arbitrator at internal page 12 of the award.

As I have remarked earlier, Mr.Chatterjee was absolutely right when he submited that on the face of the award, the claim of the petitioner seemed to be hopelessly barred by limitation.

The contracts were between 1987 and 1991.

The claim in arbitration was made about 17 years after the fiRs.date of delivery.

The period of limitation is 3 years from the date of delivery.

Section 3 of the Limitation Act is explicit that even if the point of limitation is not taken by any party the court has a duty to dismiss a suit, appeal or application if it is beyond the prescribed period of limitation.

The expression used in section 3 is shall be dismissed although limitation has not been set up as a defence.

The judgment of the Supreme Court in Prasun Roy versus The Calcutta Metropolitan Development Authority and Anr. reported in AIR1988SC205was that if the point was not taken in the reference, it could not be taken to attack the award concerned, on the ground that the jurisdiction of the learned arbitrator to publish the award had ceased.

Thus the observation which Mr.Ghosh relied in paragraph 5 of the judgment was not regarding limitation and cannot apply to limitation in view of section 3 of the Limitation Act.

In fact, the court in BanaRs.Das versus Kanshi Ram & ORS.reported in AIR1963SC1165cited by Mr.Ghosh opined that the point of limitation should not be allowed to be taken so as to take the plaintiff by surprise and that the issue should be allowed to be properly contested.

That is my opinion regarding this case.

When the issue of limitation was raised before the learned arbitrator he should have gone into it in detail.

I am sorry to say that the arbitrator has given practically no reasons to support the case of the plaintiff on the point of limitation.

In fact, the one or two lines of reasons advanced by him are not legally tenable and do not save limitation for the plaintiff.

Limitation is a mixed question of fact and law.

In my opinion, the award should be remitted back to the learned arbitrator for consideration on the point of limitation only.

Mr.Ghosh will be at liberty to argue the exclusion of time allegedly available to him to prepare bills in proper format, in pursuing the writ petition in this court, the effect of admission, acknowledgement, etc.made by the Union, if any, and so on.

Mr.Chatterjees client will no doubt contest this issue raised by the respondent.

The parties will be allowed to discover documents, if necessary.

The award was made on 28th February, 2007.

The learned arbitrator does not enjoy the same designation any more in all probability.

We do not know where he is posted at this point of time.

He is deemed to be unable to act.

In those circumstances, I appoint Mr.Justice Shyamal Kumar Sen, a retired Judge of this court as the arbitrator to whom the award is remitted.

This award is remitted to his lordship to rule only on the point of limitation on taking evidence and hearing arguments.

His lordship will be paid remuneration of 2000 GMs.per sitting to be shared equally by the parties.

The fees of the learned arbitrators secretarial staff like stenographer and clerk to be appointed by him, and fixed by his lordship will be also paid in equal share by the parties.

His lordship is most humbly requested to make and publish the award within six months from the date of communication of a copy of this order.

The security of Rs.25 lakhs furnished by the Railways is hereby released.

Liberty to the respondent to ask for fresh security if and when the award made after remission is challenged in this court, if such right is available to them.