Civil Revn. Appln. No.248 of 1974

16th December, 1976.

Petitioner Counsel: M.B. Mor and S.C. Mehadia, for Opponent No.1.

Cases Cited:
AIR 1976 SC 287 [Para 7]
AIR 1975 SC 946,1975 Lab IC 602,1975 Tax LR 479 [Para 16]
AIR 1973 Del 15 [Para 12]
AIR 1973 Gau 100 [Para 8]
AIR 1970 SC 209,1970 Lab IC 269 [Para 10]
AIR 1970 Bom 413 [Para 7]
AIR 1969 SC 474 [Para 13]
AIR 1969 SC 1335,1969 Lab IC 1538 [Para 10]
AIR 1967 SC 990 [Para 13]
AIR 1953 SC 98 [Para 16]
AIR 1950 EP 352 [Para 11]
AIR 1949 Cal 390 [Para 13]
AIR 1931 Bom 164 [Para 8]
AIR 1914 Bom 225 (2) [Para 9]
(1584) 3 WR 16,76 ER 637 [Para 10]

JUDGMENT

ORDER :-Opponent No.1 Brijmohan filed an application under S.20 of the Arbitration Act against the applicants as well as opponents Nos.2 to 5 contending that the original opponents had entered into an agreement with him on 24-11-1965 whereunder he had advanced an amount of Rs. 26,250/- to the opponents on the terms and conditions enumerated therein. Further, according to him, as the opponents failed to comply with the terms and conditions of the agreement, vide registered notice dated 11-11-1967 he asked them to pay an amount of Rs. 31,885.86 as dues on account of his business commission. Vide reply dated 27-9-1968 the opponents contended that the entire dues were pai dto his father and as no business was done for the concerned pictures for November 1967 onwards, nothing more was payable to him. Therefore, as according to opponent Brijmohan, a dispute or a difference had arisen between the parties, to which the arbitration agreement applied, he filed an application under S.20 of the Arbitration Act. The application in that behalf was filed on 2-1-1971.

2. The opponents to the original application opposed the said application on

various grounds. They also contended that the application was barred by limitation. Original applicant Brijmohan adduced evidence in support of his case and ultimately vide order dated 17-10-1973, the Civil Judge, Senior Division, Amravati, permitted filing of the said agreement and directed that reference should be made to the Arbitrators appointed by the parties. It is this order which is challenged in this revision application.

3. Initially when the matter came up for hearing before this Court on 3-12-1976, Shri Mehadia, the learned counsel for opponent No.1, was absent. After the matter was heard and was closed for judgment he appeared and requested that he could not appear before the Court on 3-12-1976 as his name was not shown in the cause list notified by this Court. In view of this, the matter was re-heard at his request. At the outset a contention was raised by Shri Mehadia that this revision application is not maintainable under S.115 of the Civil P.C.

4. In my opinion there is some substance in this contention of Shri Mehadia, S.39 of the Arbitration Act deals with appealable orders. The controversy involved in this revision application is covered by Cl.(iv) of S.39(1) of the Arbitration Act. In view of this, it is not disputed by Shri Manohar, the learned counsel for the applicants, that instead of filing a revision application, his clients should have filed an appeal before this Court. However, he contended before me that the present revision application should be treated as an appeal and should be decided on that footing. In my opinion, the request made by Shri Manohar deserves to be granted. In cases where an appeal lies but a revision application is wrongly preferred, the Court has wide discretion to treat it as an appeal if conditions laid down by law are fully satisfied. I find that all the necessary conditions are satisfied in the present case. Therefore, it will not be proper to dismiss this revision application at this stage on such technical ground. In view of this, the present revision application is permitted to be converted into an appeal and is directed to be registered as an appeal against an order.

5. Shri Manohar, the learned counsel for the appellants contended before me that the learned Judge of the trial Court committed an error apparent on the face of the record in not deciding the question of limitation at all. According to Shri Manohar, the provisions of Art.137 of the Limitation Act, 1963 apply to the present application and, therefore, respondent No.1 Brijmohan should have filed this application within a period of 3 years from the date when the right to apply accrued to him. According to Shri Manohar, the right to apply accrued to Brijmohan on 11-11-1967 when the first notice was issued by him. Therefore, the application filed by him on 2-1-1971 is obviously barred by limitation.

6. On the other hand it is contended by Shri Mehadia, the learned counsel appearing for the respondent No.1, that the provisions of Art.137 of the Limitation Act, 1963 are not applicable to the present application at all. He further contended that no period of limitation is prescribed for filing of such an application. Further, according to learned counsel, even if it is assumed that Art.137 of the Limitation Act, 1963 applies to such an application, then also the application is within time as the right to apply accrued to the respondent No.1 on 27-9-1968 when a reply was given by M/s Rupam Pictures to the notice issued by him. Till then it cannot be said that any dispute or difference had arisen between the parties, to which the agreement could apply. The difference between the parties arose for the first time on 27-9-1968 and, therefore, the application filed on 2-1-1971 is within limitation.

7. From the rival contentions raised before me, therefore, it is quite obvious that the main controversy involved in this appeal relates to application of Art.137 of the Limitation Act 1963 to the present application which is filed under S.20 of the Arbitration Act, Art.137 of the Limitation Act, 1963 reads as under :

"Description of application.Period of limitation.Time from which period begins to run.Part II - Other applications.137. Any other application for which no period of limitation is provided elsewhere in this Division.Three years.When the right to apply accrues.

From the bare reading of his Article it is quite obvious that it applies to all other applications for which no period of limitation is provided elsewhere in Third Division of the Schedule to the Limitation Act, 1963. According to Shri Manohar, the Third Division of the Schedule to the Limitation Act, 1963 deals with applications

in the specified cases and as no period of limitation is prescribed by the said division so far as application under S.20 of the Arbitration Act is concerned, Art.137 will apply to such an application. In support of his contention Shri Manohar has relied upon a decision of Gauhati High Court in the Union of India v. Bimal Kumar Kar (AIR 1973 Gau 100) as well as upon the observations of the Supreme Court in Vulcan Insurance Co. Ltd. v. Maharaj Singh (AIR 1976 SC 287).

8. On the other hand Shri Mehadia is relying upon the earlier decision of the Supreme Court in Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubli (AIR 1969 SC 1335). He is also relying upon a decision of Delhi High Court in Union of India v. M/s. Risri Raj and Co., Delhi (AIR 1973 Delhi 15). According to Shri Mehadia, the law laid down by the Supreme Court in Town Municipal Council, Athani's case is still a good law and Art.137 of the Limitation Act applies only to the applications contemplated by Civil P.C. According to the learned counsel, the said article has no application to the applications filed under the special Acts, including the Arbitration Act.

9. In view of the contention raised by Shri Mehadia, it will be useful if a reference is made to the decision of the Supreme Court on which reliance is placed by him. The Supreme Court had an occasion to consider the scope of Art.137 of the Limitation Act, 1963 in the context of the provisions of the Industrial Disputes Act, 1947, in Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubli (AIR 1969 SC 1335) (supra). After making a reference to the various provisions of the Act as well as to the earlier decisions, ultimately in paras 10 and 11 of the said decision the Supreme Court observed as under (at p. 1342):

"10. It appears to us that the view expressed by this Court in those cases must be held to be applicable, even when considering the scope and applicability of Art.137 in the new Limitation Act of 1963. The language of Art.137 is only slightly different from that of the earlier Art.181 inasmuch as, when prescribing the three years' period of limitation, the first column giving the description of the application reads as "any other application for which no period of limitation is provided elsewhere in this division." In fact, the addition of the word "other" between the words "any" and "application" would indicate that the legislature wanted to make it clear that the principle of interpretation of Art.181 on the basis of ejusdem generis should be applied when interpreting the new Art.137. This word "other" implies a reference to earlier articles, and, consequently, in interpreting this Article, regard must be had to the provisions contained in all the earlier articles. The other articles in the third division to the schedule refer to applications under the Civil P.C. with the exception of applications under the Arbitration Act and also in two cases applications under the Cr.P.C. The effect of introduction in the third division of the schedule of reference to applications under the Arbitration Act in the old Limitation Act has already been considered by this Court in the case of Sha Mulchand and Co. Ltd., 1953 SCR 709 : (AIR 1953 SC 98) (supra). We think that, on the same principle, it must be held that even the further alteration made in the articles contained in the third division of the schedule to the new Limitation Act containing reference to applications under the Cr.P.C. cannot be held to have materially altered the scope of the residuary Art.137 which deals with other applications. It is not possible to hold that intention of the legislature was to drastically alter the scope of this article so as to include within it all applications, irrespective of the fact whether they had any reference to the Civil P.C.

11. This point, in our opinion, may be looked at from another angle also. When this Court earlier held that all the articles in the third division to the schedule including Art.181 of the Limitation Act of 1908 governed applications under the Civil P.C. only, it clearly implied that the applications must be presented to a Court governed by the Civil P.C. Even the applications under the Arbitration Act that were included within the third division by amendment of Arts.158 and 178 were to be presented to Courts whose proceedings were governed by the Civil P.C. At best the further amendment now made enlarges the scope of the third division of the schedule so as also to include some applications presented to courts governed by the Criminal P.C. One factor at least remains constant and that is that the applications must be to courts to be governed by the articles in this division. The scope of the various articles in this division cannot be held be held to have been so enlarged as to

include within them applications to bodies other than Courts, such as quasi-judicial tribunal, or even an executive authority. An industrial Tribunal or a Labour Court dealing with applications or references under the Act are not courts and they are in no way governed either by the Civil P.C. or the Cr.P.C. We cannot, therefore, accept the submission made that this article will apply even to applications made to an Industrial Tribunal or a Labour Court. The alterations made in the article and in the new Act cannot, in our opinion, justify the interpretation that even applications presented to bodies, other than courts, are now to be governed for purposes of limitation by Art.137."

10. However, in a subsequent decision namely, Nityanand v. Life Insurance Corporation of India (AIR 1970 SC 209), the decision in Town Municipal Council, Athani's case (AIR 1969 SC 1335) (cit. supra) again came for consideration of the Supreme Court. After making a reference to the said decision in paras 3 and 4 of the later decision, namely, Nityanand's case, the Supreme Court observed as under (at p. 210):

"3. In our view Art.137 only contemplates applications to Courts. In the Third Division of the Schedule to the Limitation Act, 1963, all the other applications mentioned in the various articles are applications filed in a court. Further S.4 of the Limitation Act, 1963 provides for the contingency when the prescribed period for any application expires on holiday and the only contingency contemplated is "when the court is closed". Again under S.5 it is only a court which is enabled to admit an application after the prescribed period has expired if the Court is satisfied that the applicant had sufficient cause for not preferring the application. It seems to us that the scheme of the Indian Limitation Act is that it only deals with applications to courts, and that the Labour Court is not a court within the Indian Limitation Act, 1963.

4. It is not necessary to express our views on the first ground given by this Court in Civil Appeals Nos. 170 to 173 of 1968 D/- 20-3-1969 (AIR 1969 SC 1335). It seems to us that it may require serious consideration whether applications to courts under other provisions, apart from Civil Procedure Code are included within Art.137 of the Limitation Act, 1963, or not."

The High Court of Delhi in Union of India v. M/s Rishi Raj and Co., Delhi (AIR 1973 Delhi 15) has held that in view of the decision of the Supreme Court in Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubli (cit. supra) the contention that the application under S.20 of the Arbitration Act falls within the scope of Art.137 of the Limitation Act, 1963 cannot be accepted. Therefore Delhi High Court has not considered the questions on merits.

11. This Court had also an occasion to consider these two decisions of the Supreme Court in M/s Popular Process Studio v. Employees' State Insurance Corporation (AIR 1970 Bom 413). After making a detailed reference to these two decisions of the Supreme Court, ultimately in para 7 of the said judgment this Court observed that "it is thus finally settled that Art.137 of the Limitation Act, 1963 is confined to applications to 'Courts' within the meaning of that Act but the question whether it applies to applications to Courts under provisions other than those of the Code of Civil Procedure is left open." Therefore it is not possible for me to accept the view taken by the Delhi High Court.

12. Although the statement of objects and reasons leading to the passing of an enactment cannot be looked into as a direct aid to the construction, yet it could be used for the limited purpose for finding out the intention behind the legislation as well as the conditions prevailing at the time of passing of the enactment. It is further well settled that it is a sound rule of interpretation that a Statute should be so construed as to prevent the mischief and to advance the remedy according to the true intention of the makers of the Statute. While deciding the true scope of the Legislation, it is permissible to have regard to all such factors as can legitimately be taken into account in ascertaining the intention of the Legislature, such as the history of the Statute, the reason which led to its being passed, the mischief which it intended to suppress and the remedy provided by the statute for curing the mischief. This was the rule laid down in Heydon's case (1584) 3 W.R. 16 : 76 ER 637, which is accepted by the Supreme Court in various cases. It is no doubt true that as a general principle of interpretation of a statute, where the words of the statute are plain, precise and unambiguous, the intention of the Legislature is to be gathered from the language

of the statute itself and no external evidence is admissible to construe it, but where the statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more than one meaning or shades of meaning, then external evidence as to the evils, if any, which the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertaining the object which the Legislature had in view in using the words in question and in enacting the legislation. (see Anandji Haridas and Co. Pvt. Ltd v. Engineering Mazdoor Sangh, AIR 1975 SC 946).

13. The Division Bench of Gauhati High Court had an occasion to consider this aspect of the matter in Union of India v. Bimal Kumar Kar (cit. supra), (AIR 1973 Gau 100). After making a reference to the earlier decisions of the Supreme Court in Wazir Chand v. Union of India (AIR 1967 SC 990) and Mohd. Usman v. Union of India (AIR 1969 SC 474) as well as to the provisions of the new Limitation Act, the Gauhati High Court came to the conclusion that the legal position has changed after the commencement of the new Limitation Act. The Gauhati High Court has also made a reference to the recommendations of Law Commission. In this context a reference could be usefully made to the following observations of the Gauhati High Court in para 8 of the said decision:

"It is, therefore, clear that the legal position has changed after the commencement of the new Limitation Act and the provisions of the Limitation Act will be attracted to an application under the Special Act, such as the Arbitration Act. The matter is no longer in dispute about Art.137 applying to any applications. An application under S.20 of the Act is also an application within the meaning of S.2(b) of the Limitation Act, 1963 and the 'applicant' therein is a 'petitioner' within the meaning of S.2(a)(i) of the Limitation Act. That being the position, Art.137, which is a residuary article, will apply to an application under S.20 of the Arbitration Act and the period will be three years from the time the right to apply accrues."

It is no doubt true that in this decision the Gauhati High Court has not made any reference to the decisions of the Supreme Court in Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubli, (AIR 1969 SC 1335) and Nityanand v. Life Insurance Corporation of India (both cit. supra) : (AIR 1970 SC 209). However, if the decision of the Gauhati High Court is considered in the light of the observations of the Supreme Court in para.11 of the judgment in Town Municipal Council, Athani's case and in paras.3 and 4 of the Nityanand's case, then in my opinion, the view taken by the Gauhati High Court is the only possible view having regard to the object as well as the intention of the Legislation. It is quite obvious that this provision is made by the Legislature for the purpose of resolving the controversy raised in this behalf under the old Limitation Act.

14. For properly understanding this aspect of the matter, a reference could be usefully made to the provisions of the new Limitation Act. In cl.(b) of S.2 of the Limitation Act, 1963, a new definition of the word "application" has been inserted. Cl.(b) of S.2 provides that "application" will include a petition. In view of the said new definition of the word "application", the scope of the Limitation Act has been enlarged by making it applicable to the applications as well as to the petitions under the Special Enactments. This intention of the legislature is further clear from the Statement of Objects and Reasons of the Limitation Act, 1963, which declares as follows:

"A new definition of application is being inserted so as to include a petition, original or otherwise. The object is to provide a period of limitation for original applications and petitions under special laws as there is no such provision now."

15. In this context a reference also could be made to the provisions of S.20 of the Arbitration Act itself which read as under:

"20(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder

as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.

(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.

(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise or where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court.

(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act, so far as they can be made applicable."

The application contemplated by S.20 of the Arbitration Act is to be filed before a Court having jurisdiction in the matter. The term "Court" is defined in S.2(c) of the Arbitration Act which means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference. Sub-sec.(2) of S.20 then provides that such an application is to be numbered and registered as a suit. Therefore, the application under S.20 of the Arbitration Act is to be filed in a Civil Court. These proceedings are governed by the Civil P.C. Art.137 of the Limitation Act only contemplates application to Court. In the Third Division of the Schedule to the Limitation Act, 1963, all other applications mentioned in the various Articles are applications filed in a Court. Art.119 deals with an application filed in a Court, though under the Arbitration Act. If this is so, then, in my opinion, the residue Article will obviously apply to an application under S.20 of the Arbitration Act, which is to be filed before a Civil Court and for which no period of limitation is provided elsewhere in the Third Division of the Schedule to the Limitation Act, 1963.

16. The view which I am inclined to take in this behalf also finds support in the observations of the Supreme Court in Vulcan Insurance Co. Ltd. v. Maharaj Singh (AIR 1976 SC 287), (cit. supra). In this context a reference could usefully be made to the observations of the Supreme Court in para 23 of the said decision which read as under; (at pp. 293, 294)

"23. We do not propose, as it is not necessary, to decide whether the action commenced by respondent no.1 under S.20 of the Act for the filing of the arbitration agreement and for appointment of arbitrators was barred under Cl.19 of the policy. It has been repeatedly held that such a clause is not hit by S.28 of the Contract Act and is valid; vide - Baroda Spinning and Weaving Co. Ltd. v. Satyanarayan Marine and Fire Insurance Co. Ltd., ILR 38 Bom 344 : (AIR 1914 Bom 225 (2)); Dawood Tar Mahomed Bros, v. Queensland Insurance Co. Ltd., AIR 1949 Cal 390 and the Ruby General Insurance Co. Ltd. v. Bharat Bank Ltd. (AIR 1950 EP 352). Cl.19 has not prescribed a period of 12 months for the filing of an application under S.20 of the Act. There was no limitation prescribed for the filing of such an application under the Indian Limitation Act, 1908 or the Limitation Act, 1963. Art.181 of the former did not govern such an application. The period of three years prescribed in Art.137 of the Act of 1963 may be applicable to an application under S.20. Nor are we concerned in this case to decide whether the time taken by respondent no.1 in prosecuting his application in Muzaffarnagar court could be excluded under S.14(2) of the Limitation Act, 1963. Nor do we propose to decide whether the application under S.20 could be defeated on the ground of the extinction of the liability of the company under Cl.19. We may, however, observe in passing that in view of the decision of this Court in Wazir Chand Mahajan v. Union of India (1967) 1 SCR 303 at p.308 : (AIR 1967 SC 990 at p. 993) if the difference which had arisen between the parties was the one to which the arbitration clause applied then the application under S.20 of the Act could not be dismissed on the ground that the claim would not ultimately succeed either on facts or in law. The matter will have to be left for the decision of the Arbitrator. Without any discussion we may just state that the High Court is not right in its view that respondent no.1's claim was not barred under cl.19 because of the provisions of law contained in S.37(3) of the Act."

(Underlining is mine)

In this decision in the clearest terms it is laid down by the Supreme Court that there was no limitation prescribed for

filing an application under S.20 of the Arbitration Act under the Indian Limitation Act, 1908, or in the Limitation Act, 1963. Art.181 of the former did not govern such an application, but the period of 3 years prescribed in Art.137 may be made applicable to the application under S.20 of the Arbitration Act. If these observations of the Supreme Court are read in the context of the amended provisions of Limitation Act, 1963 as well as the observations of the Supreme Court in para 11 of the decision in Town Municipal Council, Athani's case (AIR 1969 SC 1335) and para 4 of the decision in Nityanand's case (AIR 1970 SC 209) (cit. supra) it is quite obvious that a change has been brought out in this behalf by the Limitation Act, 1963. Therefore, in my opinion, the provisions of the Limitation Act, 1963, namely, Art.137, which is a residue Article, will obviously apply to an application under S.20 of the Arbitration Act, and, therefore, the period of limitation for filing such an application will be three years from the time the right to apply accrues.

17. The next question, therefore, which requires consideration in the present appeal is to find out as to when the right to apply accrued to the applicant. S.20 of the Arbitration Act deals with a dispute or difference between the parties to which arbitration agreement applies. All that S.20(1) of the Arbitration Act provides is that (a) the petitioner should establish first that he entered into an arbitration agreement before the institution of the suit with respect to the subject-matter of the agreement and (b) the differences had arisen to which the agreement applied. In the present case it is the contention of Shri Manohar that the difference or dispute arose on 11-11-1967 when the first notice was issued by respondent no.1 Brijmohan. On the other hand it is contended by Shri Mehadia that the dispute or difference in this case arose on 27-9-1968 when the reply was given by the appellant M/s Rupam Pictures to the second notice issued by Brijmohan. According to him, till then no dispute was raised at all by the appellant M/s Rupam Pictures. Unless there was denial of the claim or a dispute raised in that behalf, it cannot be said that any difference has arisen between the parties. According to Shri Mehadia, the existence of a difference or a dispute is an essential condition for the arbitrator's jurisdiction. Failure to pay the amount is not necessarily a difference or a dispute and the mere fact that a party could not or did not pay does not in itself amount to a dispute unless a party who chooses not to pay raises a point of controversy in that behalf. In this context he has relied upon a decision of this Court in Dawoodbhai v. Abdulkadar (AIR 1931 Bom 164). However, it is not necessary to decide this question at this stage.

18. It is quite obvious from the order passed by the learned Judge of the trial Court that the trial Court has not at all considered the question of limitation. Though the question as to whether the provisions of Art.137 of the Limitation Act, 1963 will apply to such an application or not is a pure question of law, the question as to when the right to apply accrued is a question of fact, or in any case is a mixed question of law and fact, which cannot be gone into for the first time in this appeal. In this view of the matter, in my opinion, this is a fit case where the matter should be remitted back to the trial Court for deciding the whole question over again in accordance with law.

19. In the view which I have taken, therefore, this appeal is allowed. The order passed by the trial Court is set aside and the matter is remitted back to the trial Court for deciding the whole matter afresh in accordance with law after giving a reasonable opportunity of being heard to both the parties. It is needless to say that after remand the parties are at liberty to amend their pleadings and to adduce such evidence, both oral and documentary, as they desire. However, in the circumstances of the case there will be no order as to costs.

Appeal Allowed