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PETITIONER: MOHD. USMAN MILITARY CONTRACTOR, JHANSI

       Vs.

RESPONDENT: UNION OF INDIA, MINISTRY OF DEFENCE

DATE OF JUDGMENT: 26/09/1968

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M.

CITATION:  1969 AIR  474            1969 SCR  (2) 232  CITATOR INFO :  D          1988 SC1172  (5)

ACT:         Indian   Arbitration   Act,   1940,   ss.   8    and 20--Applications  under--Whether subject to limitation  laid down, in Art. 181--Limitation Act, 1908--Effect  of--General Clauses Act, 1897, s. 8(1).

HEADNOTE:     The   appellant  entered  into  a  contract   with   the Government  of India. The contract contained an  arbitration clause.For  certain  supplies made under  the  contract  the appellant   made  representations  to  the  Government    or payment   and    for  arbitration     of   disputes.On    or about   July   10, 1958   Government   refused   to    refer the matter for arbitration.  On July 11, 1961 the  appellant flied  an  application in the Court of  the  District  Judge under ss. 8 and 20 of the Arbitration Act, 1940, for  filing the  arbitration agreement and for an order of reference  of the  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  there  was  no  limitation  for  making   an application under ss. 8 and 20.  The defendant’s appeal  was dismissed by the High Court as incompetent  in  so  far   as it   challenged  the order under s. 8 but was allowed in  so far as it challenged the order under s. 20.  The High  Court held  that an application under s. 20 is governed  ’by  Art. 181  of the Indian Limitation Act, 1908.  In coming to  this conclusion  the  High Court took into  account  the  settled judicial view that the. operation of Art. 181 is limited  to applications under the Code of Civil Procedure. and reasoned as follows: Article 181 should be construed as if the  words ’under  the  Code’ were added in it.  The  Arbitration  Act, 1940  repealed  paragraph 17 of the second schedule  to  the Code  and re-enacted it in s. 70 with  minor  modifications. That  being so s.  8(1)  of the General Clauses  Act,   1897 applied  and the implied reference in Art. 181 to  paragraph 17 of the second schedule to the Code should be construed as a  reference to s. 20 of the Arbitration Act, 1940.   Appeal against   the   High  Court’s  judgment   was   filed   with certificate.

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HELD: The ’appeal must be allowed.     By  the  Arbitration Act, 1940 the  Legislature  amended Arts.  158  and  178 of the Limitation  Act  and  made  them applicable to the relevant proceedings under the Arbitration Act  but  no  similar change was made in Art.  181.   It  is manifest  that save as provided in Arts. 158 and  178  there would not be any limitation for other applications under the Act.  Further  there is nothing to indicate  that  for   the purpose  of  limitation  s. 20 of the  1940  Act  should  be regarded as a re-enactment of the corresponding provision of the  Code and not of the Indian Arbitration Act, 1899.  [236 D-G]      In the circumstances it is not possible to construe the implied reference in Art. 181 to the Code of Civil Procedure as a reference to the Arbitration Act, 1940 or to hold  that Art.  181 applies to applications under that Act.  The  rule of  construction given in s. 8(1)of the General Clauses  Act cannot be applied, as it appears that the legislature had a 233 different  intention.  It follows that an application  under ss. 8 and 20 of the Arbitration Act, 1940 is not governed by Art. 181.  The Limitation Act does not prescribe any  period of limitation for such an application. [236 G-H]     The present application under ss. 8 and 20 was therefore not barred by limitation. [237 A]     Bai  Manekbai v. Manekji Kavasji, [1880] I.L.R. 7  Born. 213,   214 Hansraj Gupta v. Official Liquidator  Dehra   Dun Mussourie  Electric Tramway Company, (1933) L.R. 60 I.A. 13, 20,   Shah   Mulchand  & Co. v. Jawahar  Mills  Ltd.  [1953] S.C.R.  351,  371, Bombay Gas Co. v. Gopal Bhiva,  [1964]  3 S.C.R. 709 and Wazirchand Mahajan & Anr. v. Union of  India, [1967] 1 S.C.R. 303, referred

JUDGMENT:      CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 14   of 1968.      Appeal from the judgment and decree, dated December 12, 1964  of  the Allahabad High Court in F.A.F.O.  No.  401  of 1963.      R.M. Hazarnavis, K.L. Hathi and Atiqur Rehman, for  the respondent.      The Judgment of the Court was delivered by      Bachawat, J.  By a contract,  dated March 8, 1945,  the appellant agreed to supply meat to the Government of  India. The  contract contained an arbitration clause for  reference of disputes arising out of the contract to the officer named in  the  contract. The appellant claims that a  sum  of  Rs. 8,38,994/10/6/- is due to him in respect of the supplies  of meat made by him during the period between April 1, 1945 and March  31, 1946. He made representations to. the  Government for  payment  and for arbitration of the  disputes.   On  or about  July  10, 1958 the Government refused to.  refer  the matter  to.  arbitration.  On July 11,  1961  the  appellant filed  an  application in the Court of the  District  Judge, Jhansi, under ss. 8 and 20 of the Arbitration Act, 1940  for filing  the  arbitration  agreement  and  for  an  order  of reference of the disputes to an arbitrator appointed by  the Court.   The respondent contended that the  application  was barred  by  limitation.  The  District  Judge  allowed   the application.  He held that there was no period of limitation for making an application under ss. 8 and 20.  The defendant filed an appeal against the order.  The High Court dismissed the  appeal  as incompetent in so far as it  challenged  the

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order under s. 8, and allowed it in so far as it  challenged the  order  under  s.  20.  The High  Court  held  that  the application   was  governed  by  Art.  181  of  the   Indian Limitation Act, 1908 and was barred by limitation as it  was made  more than three years after the disputes  had  arisen. The  appellant  has  filed this  appeal  after  obtaining  a certificate from the High Court.        The point in issue is whether an application under s. 20  of the Arbitration Act, 1940 is governed by Art. 181  of the Indian L2Sup. CI 69--16 234 Limitation  Act.   Since  the decision in  Bai  Manekbai  v. Manekli Kavasji(1) it is well settled that the operation  of Art.   181   is limited to applications under  the  Code  of Civil   Procedure.   In  that  case  Westropp,  C.J.   after referring  to  the  corresponding Art.  178  in  the  second schedule to the  Limitation  Act  of  1877 observed:                   "An examination of all the other  articles               in    the   second   schedule   relating    to               "applications",  that is to say of  the  Third               division  of  that schedule,  shows  that  the               applications therein contemplated are such  as               are  made under the Code of  Civil  Procedure.               Hence  it  is  natural to  conclude  that  the               applications  referred to in Article  178  are               applications     ejusdem    generis,     i.e.,               applications   under   the   Code   of   Civil               Procedure.  The preamble of the Act, moreover,               purports  to deal with ’certain  applications’               only, and not with all applications." This  decision  was  followed  in  numerous  cases  and  was approved in Hansraj Gupta v. Official Liquidator Dehra  Dun, Mussourie  Electric  Tramway Company(2).  Having  regard  to these  decisions,  Das, J. said in Shah Mulchand &  Co.,  v. Jawahar  Mills Ltd. (3): "This long catena of decisions  may well  be said to have as it were, added the word ’under  the Code’ in the first column of that Article=."  The Court held that  the amendment of Arts. 15 8 and 178 and the  insertion of  the words "under the Arbitration Act, 1940" in place  of the words "under the Code of Civil Procedure, 1908" did  not alter the settled meaning of Art. 181. To the  same   effect is   the  decision  in Bombay Gas Ca.:  v.  Gopal  Bhiva.(4) Following  these  decisions  the Court  held  in  Wazirchand Mahajan  &  Anr. v. Union of India(5)  that  an  application under  s.  20  of the Arbitration Act,  1940  not  being  an application  under  the  Code of  Civil  Procedure  was  not governed by Art. 181.     The  High  Court  has come to  the  conclusion  that  an application  under s. 20 of the Arbitration Act is  governed by Art. 181 for the following reasons: Article 181 should be construed as if the words "under the Code" were added in it. The  Arbitration  Act,  1940 repealed paragraph  17  of  the second schedule to the Code and re-enacted it in s. 20  with minor modifications.  That being so, s. 8(1) of the  General Clauses Act. 1897 applied and the implied reference in  Art. 181  to  paragraph  17 of the second schedule  to  the  Code should  be  construed  as  a  reference  to  s.  20  of  the Arbitration  Act,  1940.   No different intention is  to  be found  in the Arbitration Act, 1940 and there is nothing  to indi- (1) [1880] I.L.R. 7 Bom. 213, 214. (2) [1933] L.R. 60 I.A.13, 20. (3) [1953] S.C.R. 351,371. (4) [1964] 3 S.C.R. 709.

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(5) [1967] 1 S.C.R. 303. 235 cate that an application under s. 20 can be made at any time without any limitation.     The  argument that the implied reference in   Art.   181 to paragraph 17 of the second schedule to the Code should be construed as a reference to s. 20 of the Arbitration Act and not  raised and considered in Wazirchand Mahalan’s  case(1). It is, therefore, our duty to examine this contention.     Section 8 (1) of the General Clauses Act corresponds  to the  Interpretation  Act, 1889 (52 & 53 vict. c.   63)   and runs   as follows:  "Where this Act, or any Central  Act  or Regulation made after the commencement of this Act,  repeals and  re-enacts, with or without modification, any  provision of  a  former   enactment,  then  references  in  any  other enactment or in any instrument to the provision so repealed, shall, unless a different intention appears, be construed as references  to  the provision so  reenacted."   The  section embodies  the rule of construction that where the  provision of  an  Act  is  repealed and  re-enacted  with  or  without modification,  a reference to the repealed provision in  any other  enactment  should be regarded as a reference  to  the provision re-enacted in the new form unless it appears  that the legislature had a different intention.     The  Arbitration  Act, 1940 was passed with  a  view  to consolidate  and  amend  the law  relating  to  arbitration. Formerly  the general law relating to arbitration was to  be found  in the Indian Arbitration Act, 1899 and the  Code  of Civil  Procedure,  1908.  Paragraphs 1 to 16 of  the  second schedule  to the Code applied to all arbitrations in  suits. As  to  arbitrations  otherwise than in  suits,  the  Indian Arbitration  Act,  1899  applied  to  cases  where,  if  the subject-matter submitted to arbitration were the subject  of a suit, the  suit could be instituted  in a Presidency town; in  other cases, the Code of Civil Procedure, 1908   applied The Arbitration Act, 1940 repealed both the enactments.   It extends to the whole of India except the State of Jammu  and Kashmir,  and  save  as provided in s.  47  applies  to  all arbitrations.  As  to the provisions of the  new  Act  under which  applications can be made to Court, ss. 8, 14, 16,  28 and 30, correspond to provisions which are found in both the repealed  enactments,  ss.  5 and 9  correspond  to  similar provisions  in the Indian Arbitration Act, 1899, and ss.  15 and  20  correspond  to similar  provisions  in  the  second schedule to the Code and some sections such as sec. 11,  are entirely  new.  In the circumstances, a question  may  arise whether  the  provisions of the new Act can be  regarded  as reenactments  of  the  repeated  provisions  of  the  Indian Arbitration  Act, 1899 or of the Code.  But for the  purpose of this case we shall ,assume that s. 20 of the new Act is a re-enactment  with (1) [1967] 1 S.C.R. 303. 236 modification  of paragraph 17 of the second schedule to  the Code.We  shall also assume that Art. 181 of  the  Limitation Act  as  construed  by  the Courts  should  be  regarded  as containing  a  reference  to the  Code  of  Civil  procedure including paragraph 17 of the second schedule thereof.  Even after making those two assumptions it appears to us that the implied reference in Art. 181 to the Code of Civil Procedure cannot  be construed as a reference to the Arbitration  Act, 1940. Before their amendment by the Indian Arbitration Act, 1940, Art.  158  of  the Limitation Act  applied  to  applications "under  the  Code of Civil Procedure, 1908 to set  aside  an

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award" and Art. 178 applied to applications. "under the same Code  for the filing in Court of an  award".The  Arbitration Act,  1940 amended Arts. 158 and 178.  The amended Art.  158 applies to applications "under the Arbitration Act, 1940  to set  aside  an  award  or  to  get  an  award  remitted  for consideration", that is to say, to application under ss.  16 and  30  of  the  Act.  The  amended  Art.  178  applies  to applications "under the Arbitration Act, 1940 for the filing in Court of an award", that is to say to applications  under s.  14  of  the  Act.  In amending Arts.  158  and  178  the legislature  acted upon the view that the references to  the Code of Civil Procedure, 1908 in the second schedule t9  the Limitation Act could not in the absence of the amendment  be construed  as references to. the Arbitration Act, 1940.   At the  same time the legislature refrained from amending  Art. 181  and  providing  that the article will  apply  to  other applications  under  the  Arbitration  Act,  1940.   It   is manifest that the legislature intended that save as provided in  articles 158 and 178 there would not be  any  limitation for  other applications under the Act,  Take the case of  an application  under s. 28 of the Act for enlargement  of  the time  for  making the award.  A  similar  application  under paragraph 8 of the second schedule to the Code was  governed by Art. 181,but a like application under s. 12 of the Indian Arbitration  Act,1899  was  not subject  to  any  period  of limitation.   There  is  nothing to indicate  that  for  the purpose  of  limitation  s.  20 of the  new  Act  should  be regarded as a re-enactment of the corresponding provision of the. Code and not of the Indian  Arbitration  Act, 1899.  An application  under  s.  8 of the new  Act  corresponding  to paragraph  5 of the second schedule to the Code and s. 8  of the Indian Arbitration Act, 1899 stand on the same  footing. In  the  circumstances, it is not possible to  construe  the implied reference in Art. 181 to the Code of Civil Procedure as a reference to the Arbitration Act, 1940, or to hold that Art. 181 applies to applications under that Act. The rule of construction  given in s. 8 (1) of the General  Clauses  Act cannot be applied, as it appears that the legislature had  a different  intention. It follows that an  application  under ss. 8 and 20 of the Arbitration Act,  1940  is  not 237 governed by Art. 181. The Limitation Act does  not prescribe any  period  of  limitation for  such  an  application.   It follows  that the present application under ss. 8 and 20  is not  barred  by limitation.     In conclusion we must observe that the appellant’s claim relates to supplies during the period between April 1,  1945 and  March 31, 1946.  There is a serious contention  whether the  claim is barred by limitation.  It will be the duty  of the  arbitrator  to consider this matter  carefully  and  to decide whether or not the claim is so barred.     In the result, the appeal is allowed, the order of   the High  Court  is  set aside and the order  of  the  District. Judge,  Jhansi,  is restored.  In the circumstances  of  the case, there will be no order as to costs in this Court. G.C.                                        Appeal allowed. 238