Case Note & Summary
The dispute arose from a contract dated March 8, 1945, under which the appellant agreed to supply meat to the Government of India. The contract contained an arbitration clause. The appellant claimed a sum of Rs. 8,38,994/10/6/- in respect of supplies made between April 1, 1945 and March 31, 1946. After making representations, the Government refused to refer the matter to arbitration on or about July 10, 1958. On July 11, 1961, the appellant filed an application before the District Judge, Jhansi, under Sections 8 and 20 of the Arbitration Act, 1940, seeking filing of the arbitration agreement and reference of disputes to an arbitrator appointed by the court. The respondent contended that the application was barred by limitation. The District Judge allowed the application, holding that no period of limitation applied. The High Court partly dismissed the appeal, holding that the application under Section 20 was barred by the three-year limitation under Article 181 of the Indian Limitation Act, 1908. The High Court reasoned that Article 181 should be read as if it contained the words 'under the Code' and that by virtue of Section 8(1) of the General Clauses Act, 1897, the reference to paragraph 17 of the second schedule to the Code of Civil Procedure in Article 181 should be construed as a reference to Section 20 of the Arbitration Act. The appellant appealed to the Supreme Court. The core legal issue was whether Article 181 of the Limitation Act, 1908 governed an application under Section 20 of the Arbitration Act, 1940. The Supreme Court re-examined the well-settled principle that Article 181 applies only to applications under the Code of Civil Procedure. It noted that the legislature, when enacting the Arbitration Act, 1940, amended only Articles 158 and 178 of the Limitation Act to explicitly refer to applications under the Arbitration Act, but deliberately left Article 181 unchanged. This indicated a legislative intent that no limitation should apply to other applications under the Arbitration Act. The Court also held that the rule of construction in Section 8(1) of the General Clauses Act could not be applied because a different intention appeared from the scheme of amendments. Consequently, the Supreme Court allowed the appeal, set aside the High Court’s order, and held that the application under Sections 8 and 20 was not barred by any limitation period. The case was remanded for disposal on merits.
Headnote
A) Limitation - Application under Arbitration Act - Article 181 Limitation Act, 1908 - Section 20 Arbitration Act, 1940 - Section 8(1) General Clauses Act, 1897 - The court considered whether an application under Section 20 of the Arbitration Act, 1940 for filing arbitration agreement and reference of disputes was barred by Article 181 of the Limitation Act, 1908. The High Court had held that the application was barred by limitation, construing Article 181 as if it contained the words 'under the Code' and applying the rule in Section 8(1) of the General Clauses Act to treat the reference to the Code as including Section 20 of the Arbitration Act. The Supreme Court, following settled precedents, held that Article 181 applies only to applications under the Code of Civil Procedure; the legislature, by amending Articles 158 and 178 but not Article 181 when enacting the Arbitration Act, 1940, evinced a different intention, and the rule in Section 8(1) of the General Clauses Act cannot be invoked. Held, an application under Sections 8 and 20 of the Arbitration Act, 1940 is not governed by any period of limitation under the Limitation Act, 1908. (Paras 1-5).
Issue of Consideration
Whether an application under Section 20 of the Arbitration Act, 1940 is governed by Article 181 of the Indian Limitation Act, 1908
Final Decision
Appeal allowed; the order of the High Court was set aside and the application under Sections 8 and 20 of the Arbitration Act, 1940 was held not barred by limitation. The case was remanded for disposal according to law.
Law Points
- Legal points not extracted
- Article 181 of Limitation Act applies only to applications under Code of Civil Procedure
- legislative intent against extending limitation to other applications under Arbitration Act
- section 8(1) of General Clauses Act cannot be applied when different intention appears
- Arbitration Act 1940 specifically amended only Articles 158 and 178 of Limitation Act
