LexASIA RESORTS LTD. versus USHA BRECO LTD.
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A B c D ASIA RESORTS LTD. v. USHA BRECO LTD. OCTOBER 30, 2001 [D.P. MOHAPATRA AND K.G. BALAKRISHNAN, JJ.] Arbitration Act 1940/Limitation Act, 1963-Seciion 20/SectiOns 5 and 18 and Article 137. Reference o.f arbitration~Limitation period-Contract between parties- Difference arose on 17.4.1990-Notice-De.finite reply given on 17.5.1990- Notice intimating initiation o.f arbitration proceedings given in 1993-No indicatiun in notices that mutual consultatiQn for resolution of differences continued upto 1993-Arbitration applicationfiled-:Held, the application was time barred since cause o.f action had arisen on 17.5.1990-Yet the delay could be condoned if it was not wilfitl. Applicability of Article 137-Petition filed u/s. 20 o.f Arbitration Act- Held, applicable-Article 137 is applicable on any petition or application filed under any Act to a Civil Court, including special laws, for which no period o.f E limitation is provided elsewhere. Words and Phrases: 'applicant' and 'application'-Meaning of in the context of Limitation Act, 1963. . / App~llant entered into contract with respondent to complete the F work of ropeway system. After completion of work, since the system did not function properly and was for lesser capacity than agreed for, appel· lant sent notice on 17.4.1990 to respondent which was replied by the respondent on 17.5.1990. On 24.3.1993 appellant had sent letter to re· spondent to which respondent replied on 6.4.1993 making complaint therein G that the minutes of the discussion held on certain dates were not properly recorded. Thereafter appellant sent another notice dated 16.6.1993 inti· mating the respondent of initiation of arbitration proceedings. On 30.11.1993 appellant filed petition under Section 20 of Arbitra- tion Act, 1940. Respondent objected that the petition was barred by limita· H tion. Single Judge of the High Court held the petition to be within limita- 564 '- - ASIA RESORTS LTD. v. USHA BRECO LTD. 565 tion period since the parties had made correspondence regarding the dis- A putes till 1993 and that the letter dated 6.4.1993 by the respondent would amount to acknowledgement under Section 18 of the Limitation Act. In appeal Division Bench held that the petition was barred by limitation and there was no acknowledgement on the part of the respondent to extend the period of limitation. B In appeal to this court appellant contended that the petition was not barred by limitation since in view of the arbitration clause contained in the agreement the petition should be filed only after making a bona fide at- tempt to resolve the differences by mutual consultations and since the mutual consultations continued even after 17.4.1990 and the agreement C between the parties was terminated on 16.6.1993, cause of action arose thereafter. It was also contended that the notice dated 17.4.1990 was not sent with intention to initiate arbitration proceedings. Respondent contended that the petition was barred by limitation as D definite reply was given on 17.5.1990 to the notice dated 17.4.1990. Disposing of the appeal, the Court HELD : 1.1. Under Section 20 of the Arbitration Act, 1940 the cause of action for filing an application may arise whenever "a difference has E arisen to which the agreement applies". Regard must be had to the rel- evant arbitration clause in the agreement. H any specific terms are used in the arbitration clause, that would govern the parties as to when a petition for reference of arbitration shall be filed in Court. [572-F] 1.2. In the present case, cause of action for filing the application had F arisen, the moment the appellant received the reply notice denying the claims made by the appellant. Thereafter, the Division Bench has rightly held that the application was barred by time. Though from the arbitration clause it is clear that parties should have made an effort to settle the · differences by mutual consultations and only on failure of such attempt G steps could have been taken by the parties for making a reference to the arbitrator, but the notices issued between the parties hardly give any indication that these mutual consultations for resolution of differences continued upto 1993. A perusal of the notice sent by the appellant on 17.4.1990 to the respondent and the reply received from the latter would H 566 SUPREME COURT REPORTS (2001] SUPP. 4 S.C.R. A show that the cause of action had arisen for
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