Case Note & Summary
The dispute arose from a contract between the appellant and the State of Kerala, where the appellant was to complete certain work within ten months but failed to do so, leading to the contract's termination in December 1968. The State initiated recovery proceedings under the Revenue Recovery Act, serving a notice of demand on the appellant on 30.5.1974. The appellant challenged this notice in the High Court, which dismissed the petition in November 1978. In 1983, the appellant requested the State to refer the disputes to arbitration, which was refused in 1984. Subsequently, the appellant filed an application under Section 20 of the Arbitration Act in 1985 for the appointment of an arbitrator. The Subordinate Judge directed both parties to submit their panels of arbitrators, but the State appealed, claiming the application was barred by limitation. The High Court agreed, stating that the limitation period began on the date of the demand notice, thus making the 1985 application untimely. The Supreme Court upheld this view, clarifying that the right to apply under Section 20 accrues when a difference arises, which was determined to be on 30.5.1974. The court also noted that since the arbitration agreement specified an arbitrator, the Subordinate Judge should have referred the dispute to that arbitrator rather than seeking panels. The appeal was dismissed with costs, reinforcing the importance of adhering to specified arbitration clauses.
Headnote
A) Arbitration Law - Limitation Period - Applicability of Limitation Act to Arbitration Applications - Article 137 of the Limitation Act, 1963 applies to applications under Section 20 of the Arbitration Act, 1940. The court held that the right to apply accrues when a difference arises, which in this case was determined to be on 30.5.1974, thus rendering the application filed in 1985 barred by limitation (Paras 1.01-1.05). B) Arbitration Law - Appointment of Arbitrator - Court's Jurisdiction to Appoint Arbitrator - The court emphasized that when an arbitration agreement specifies an arbitrator, the court must refer the dispute to that arbitrator unless they refuse or fail to act. The Subordinate Judge was bound to refer the dispute to the named arbitrator and had no authority to call for panels of arbitrators (Paras 2.01-2.03).
Issue of Consideration
Whether the application under Section 20 of the Arbitration Act was barred by limitation.
Final Decision
The Supreme Court dismissed the appeal, affirming the High Court's ruling that the application under Section 20 was barred by limitation, as the right to apply accrued on 30.5.1974. The court also held that the Subordinate Judge should have referred the dispute to the arbitrator specified in the agreement, rather than seeking panels.
Law Points
- Limitation period
- Arbitration agreement
- Appointment of arbitrator
- Right to apply
- Revenue Recovery Act
