Case Note & Summary
The appeal arose from a judgment of a learned Single Judge of the Bombay High Court setting aside an arbitral award dated 19 July 2007 that had granted Rs.39,31,656/- with interest to the appellant, M/s. Bainds Associates, against the respondent, Konkan Railway Corporation Ltd. The appellant had been awarded a construction contract on 16 September 1991, which was terminated by the respondent on 5 February 1994 due to unsatisfactory performance. The appellant received the termination notice but did not participate in joint measurements, and the balance work was executed at its risk and cost. On 19 October 1994, a partner of the appellant informed the respondent that he had set up business in Bahrain and requested correspondence be sent there. After a gap of over 12 years, on 20 March 2006, the appellant raised claims challenging the termination and seeking payment. The matter was referred to arbitration, and the arbitral tribunal awarded the appellant Rs.39,31,656/- with interest. The respondent challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, and the learned Single Judge set aside the award on the grounds that the claims were barred by limitation and deemed abandoned. The appellant appealed. The Division Bench considered whether the claims were barred by limitation under Article 137 of the Limitation Act, 1963, and whether they were abandoned under the contract. The court noted that the cause of action arose on 5 February 1994 when the contract was terminated, and the appellant had three years to file a claim. The appellant's communication in 1994 about moving to Bahrain and the lack of any follow-up for 12 years indicated abandonment. The court held that the claims were clearly barred by limitation and that the appellant had abandoned its claims. The appeal was dismissed, and the judgment of the learned Single Judge was upheld.
Headnote
A) Limitation Act - Article 137 - Limitation for Arbitration Claims - Claims raised after 12 years from termination of contract held barred by limitation - The court held that the claim for arbitration was made beyond the period of three years from the date of termination, and no continuous cause of action was established (Paras 2-10). B) Contract Law - Abandonment of Claims - Deemed Abandonment under Contract - The appellant's failure to pursue claims for over 12 years and communication of setting up business abroad constituted abandonment - The court held that the claims were deemed abandoned under the contract terms (Paras 4-8).
Issue of Consideration
Whether the claims raised by the appellant after a lapse of 12 years from the termination of the contract were barred by the law of limitation and whether they were deemed to have been abandoned under the terms of the contract.
Final Decision
The appeal is dismissed. The judgment and order dated 17 February 2012 of the learned Single Judge setting aside the arbitral award is upheld.
Law Points
- Limitation Act
- 1963
- Article 137
- Arbitration and Conciliation Act
- 1996
- Section 34
- Contractual abandonment
- Deemed abandonment
- Termination of contract
- Limitation for arbitration claims
