M/S Jindal Frozen Foods Ltd vs Union Of India And Anr
2014 Latest Caselaw 2766 Del

`*         IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       FAO 155/2014
                                                          28th May, 2014

     M/S JINDAL FROZEN FOODS LTD                                  ..... Appellant
                        Through       Mr.Anurag Tomar, Advocate.

                        versus

     UNION OF INDIA AND ANR                     ..... Respondents

Through Mr.Malaya Chand, Advocate for UOI.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

C.M.No.9631/2014 For the reasons mentioned in the application, delay of 86 days in re-filing the appeal is condoned, subject to just exceptions. CM stands disposed of.

C.M.No.9630/2014 Exemption allowed, subject to all just exceptions. C.M stands disposed of.

FAO No.155/2014

1. This appeal under Section 37(1) of Arbitration and Conciliation Act,1996 impugns the judgment of the court below dated 01.10.2013 by which the objections of the respondent/Union of India filed under Section 34 of the Arbitration and Conciliation Act, 1996 were allowed by setting aside the Award of the arbitrator dated 19.5.2011 and remanding the matter to the arbitrator for a fresh decision in accordance with law.

2. By the Award the arbitrator had dismissed the claim petition of the respondent herein which was filed for recovery of loss on account of risk purchase undertaken by the respondent on account of breach of the appellant in failing to supply 30 MT Pineapple (Tinned) for defence services. The claim petition was dismissed by the arbitrator as time barred in view of Clause 23 of the contract, which provides that if the contractor within a period of one year from the date of completion of the contract does not make request for arbitration, the claim petition should not be entertained. This clause reads as under:-

" II TIME LIMIT FOR REFERECE TO ARBITRATION

(a) if no request in writing for arbitration is made by the contractor within a period of one year from the date of completion of the contract all claims of the contractor under the contract shall be deemed to be waived and absolutely barred and the purchaser, i.e. President of India, shall be discharged and released of all liabilities under the contract.

(b) The date of completion of the contract shall mean and include:-

i) The date when the goods are delivered according to the terms of delivery;

ii) In case of warranty clause contract, the date when warranty expires;

iii) In case where the contract is cancelled wholly or partly the date when the letter of cancellation is issued."

3. The court below has rightly held that the aforesaid clause provides for time limit for the contractor; and not for the Union of India; for invoking arbitration and accordingly it is held that the claim petition filed by the Union of India/respondent was within limitation.

4. I would like to observe that independent of the language of clause

23 of the contract, Section 28 of the Indian Contract Act,1872 is determinative of the issue that arbitration could always be invoked before three years, and which period of three years is provided under Article 137 of the Limitation Act,1963. The period of three years of limitation is calculated from the date of arising of the disputes which have to be referred to the arbitration. Section 28 of the Contract Act was amended by the Act 1 of 1997, and as a result of the amendment, all clauses in the contract which extinguish rights before the period of limitation specified other than the Limitation Act, have to be held to be illegal and void.

5. In the present case therefore clause 23 providing for a limitation period of one year; even assuming the period of one year binds both the appellant/objector and the respondent/Union of India/claimant; is a clause which would be illegal and void by virtue of Section 28 of the Contract Act as amended.

6. In view of the above, there is no merit in the appeal, and therefore the same is dismissed, leaving the parties to bear their own costs. C.M.No.9629/2014 (Stay) Since the appeal is dismissed, this application is also dismissed. C.M stands disposed of.

VALMIKI J. MEHTA, J

MAY 28, 2014 KA