M/S Diljit Singh And Brothers ... vs Chief Engineer, Punjab And Anr
2023 Latest Caselaw 15450 P&H

                                                                               2023:PHHC:118216

                                In the High Court for the States of Punjab and Haryana
                                                 At Chandigarh
                                                                    ARB-132-2019 (O&M)
                                                                    Date of Decision:- 11.9.2023

                M/s Daljit Singh & Brothers Contractor                         ... Petitioner
                                                     Versus
                Chief Engineer, Punjab and Another                            ... Respondents

                CORAM: HON'BLE MR. JUSTICE GURVINDER SINGH GILL

                Present:-          Mr. Dheeraj Mahajan, Advocate for the petitioner.

                                   Mr. Aman Dhir, DAG, Punjab.

                                                     *****

                GURVINDER SINGH GILL, J.

1. The petitioner M/s Daljit Singh & Brothers Contractor has approached this

Court seeking appointment of an Arbitrator in terms of provisions of Section

11(6) of the Arbitration and Conciliation Act, 1996 (in short hereinafter

referred to as 'the Act').

2. Admittedly, the petitioner had entered into a contract with respondents for

'Special Repair to Amritsar Bhikhiwind-Khem Karan Road' on 1.9.2006.

Although, the petitioner had executed the work pertaining to construction of

road but the high level bridges which were also part of the contract had not

been constructed. The respondents accordingly closed the work and imposed

penalty of Rs. 9.76 lacs vide letter dated 30.6.2008. The petitioner filed an

appeal to the Superintending Engineer against imposition of aforesaid

penalty, which was reduced from Rs. 9.76 lacs to Rs. 2,500/-.

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2023.09.13 10:55
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                 ARB-132-2019 (O&M)                     (2)                 2023:PHHC:118216

3. It was subsequently on 27.10.2018 that the petitioner submitted a

representation to the Engineering-in-Chief submitting his claims in support of

the work done by him (Annexure P-3), which is as per terms of the contract

was to be decided within a period of 60 days but the same was not decided.

Consequently, the petitioner served a legal notice dated 31.1.2019 (Annexure

P-2) invoking arbitration but the same was not responded to leading to filing

of the instant petition wherein notice of motion was issued on 10.5.2019.

4. Respondent - State is contesting the petition and has filed reply wherein an

objection regarding limitation has been raised on the premises that the work

having been closed on 30.6.2008 on account of incomplete construction and

the respondents' department already having paid an amount of Rs.

3,87,17,595/-, being the final amount upto 31.3.2008 out of the total

contract/allotment amount of Rs.4,88,21,080/-, the cause of action, if any, as

alleged by the petitioner arose in 2008 for the alleged deficiency in payment

whereas it is only in the year 2019 (Annexure P-2) that a legal notice has

been served by the petitioner i.e. after a period of about 10 years, which is

hopelessly barred by limitation even if the limitation is taken to be 3 years,

though, as per the Contract it was only within a period of 6 months that the

petitioner could have moved for arbitration.

5. The learned counsel for the petitioner, on the other hand, has first of all

submitted that the limitation of six months as prescribed in the contract, is

against the settled position of law as has been authoritatively held by Hon'ble

Supreme Court in 2021(2) RCR (Civil) 337 Bharat Sanchar Nigam Ltd. &

Anr. Versus M/s Nortel Networks India Pvt. Ltd. It has further been submitted

that in case any provision incorporated in the terms and conditions of the

contract, which is contrary to Section 28 of the Contract Act, as in the present

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case where the arbitration clause tends to restrain the right of the petitioner to

avail of arbitration within a period of six months only instead of three years,

is bad in law. The learned counsel in order to hammer forth his aforesaid

submission places reliance upon a judgment of this Court rendered in 2011(3)

RCR (Civil) 36 Sunil Goyal versus Haryana State Agriculture Marketing

Board & Others and also a judgment of Hon'ble Supreme Court rendered in

2018(14) SCC 265 Grasim Industries Ltd. Versus State of Kerala.

6. The learned counsel for the petitioner next submitted that although the instant

petition has been filed after about 10 years from the day when partial

payment of Rs. 3,87,17,595/- was made but it was on account of the fact that

the respondent department itself had raised an issue pertaining to payment in

the present case during the course of proceedings arising out of another

contract between the parties, that the matter has virtually been re-opened.

7. On the other hand, the learned State counsel, while opposing the petition

submitted that the instant petition is hopelessely time barred inasmuch as the

dispute in question arises out of a contract for repair of a road which had been

awarded to the petitioner on 1.9.2006 and which was closed on 30.6.2008 by

the respondents as the petitioner had not executed the work and a penalty of

Rs.9.76 lacs had been imposed, which, upon an appeal having been filed by

the petitioner to the Superintending Engineer was reduced from Rs. 9.76 lacs

to Rs. 2,500/- and that the accounts stood closed in the year 2008 itself and in

case the petitioner was aggrieved on account of any deficient payment or any

outstanding dues, it was within 3 years from 2008 that he could have raised

any issue about the same but the petitioner having raised the issue in the year

2019, the same is barred by limitation.

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                 ARB-132-2019 (O&M)                             (4)                   2023:PHHC:118216

8. This Court has considered rival submissions addressed before this Court.

9. It is not in dispute that the accounts in respect of the contract for repair of

road stood closed in the year 2008 and the payment of Rs. 3,87,17,595/- had

also been made in the year 2008 itself. There is nothing on record to show

that the petitioner had ever raised any issue in respect of the said payment or

had ever issued any notice for invoking arbitration during the next three

years. While it is correct that the limitation for filing an application under

Section 11 of the Act would begin to run from the date when there is failure

to appoint Arbitrator but that would not mean that merely issuance of a notice

for invoking arbitration in stale claims would make the limitation start afresh.

Hon'ble Apex Court in 2021(2) RCR (Civil) 337 Bharat Sanchar Nigam Ltd.

& Anr. Versus M/s Nortel Networks India Pvt. Ltd. was seized of a similar

matter. Para 38 wherein the facts are noticed is reproduced herein-under :-

"38. Applying the law to the facts of the present case, it is clear that this is a case where the claims are ex facie time barred by over 5 ½ years, since Nortel did not take any action whatsoever after the rejection of its claim by BSNL on 04.08.2014. The notice of arbitration was invoked on 29.04.2020. There is not even an averment either in the notice of arbitration, or the petition filed under Section 11, or before this Court, of any intervening facts which may have occurred, which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act. Unless, there is a pleaded case specifically adverting to the applicable Section, and how it extends the limitation from the date on which the cause of action originally arose, there can be no basis to save the time of limitation."

10. Hon'ble the Apex Court, thereafter, held as under :-

"39. The present case is a case of deadwood/no subsisting dispute since the cause of action arose on 04.08.2014, when the claims made by Nortel were rejected by BSNL. The Respondent has not stated any event which would extend the period of limitation, which commenced as per

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Article 55 of the Schedule of the Limitation Act (which provides the limitation for cases pertaining to breach of contract) immediately after the rejection of the Final Bill by making deductions.

In the notice invoking arbitration dated 29.04.2020, it has been averred that:

"Various communications have been exchanged between the Petitioner and the Respondents ever since and a dispute has arisen between the Petitioner and the Respondents, regarding non payment of the amounts due under the Tender Document."

The period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters, or mere settlement discussions, where a final bill is rejected by making deductions or otherwise. Sections 5 to 20 of the Limitation Act do not exclude the time taken on account of settlement discussions. Section 9 of the Limitation Act makes it clear that : "where once the time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it." There must be a clear notice invoking arbitration setting out the "particular dispute" (including claims / amounts) which must be received by the other party within a period of 3 years from the rejection of a final bill, failing which, the time bar would prevail.

In the present case, the notice invoking arbitration was issued 5 ½ years after rejection of the claims on 04.08.2014. Consequently, the notice invoking arbitration is ex facie time barred, and the disputes between the parties cannot be referred to arbitration in the facts of this case."

11. The broad principles laid in the above cited judgment are as under :-

(i) The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator; It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an application

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under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings;

(ii) In rare and exceptional cases, where the claims are ex facie timebarred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference."

12. The law settled in the aforesaid judgment leaves no manner of doubt that

mere issuance of notice or any correspondence would not revive a claim,

which is otherwise hopelessely time barred. In the present case, there is a

delay of about a decade on part of the petitioner in invoking arbitration.

There is no reason justifying the said delay. Though, normally in case of a

question which is disputed which has some chequered or disputed facts, this

Court would leave it to the Arbitrator to decide on issue of limitation but the

present case is a case of undisputed facts where admittedly the accounts were

closed in the year 2008 and no steps thereafter were taken by the petitioner

for a decade and as such, the instant case would fall in one of those rare and

exceptional cases justifying dismissal at the very outset.

13. Under these circumstances, the petition being hopelessely time barred, is

dismissed.

                11.9.2023                                              ( GURVINDER SINGH GILL )
                kamal                                                           JUDGE


                                    Whether speaking /reasoned          Yes / No
                                    Whether Reportable                  Yes / No




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