M/S GEO MILLER & CO. PVT. LTD. versus CHAIRMAN, RAJASTHAN VIDYUT UTPADAN NIGAM LTD.

Citation: [2019] 11 S.C.R. 1108 · Decided: 03-09-2019 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Dismissed
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Judgment (excerpt)

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1108
SUPREME COURT REPORTS
[2019] 11 S.C.R.
M/S GEO MILLER & CO. PVT. LTD.
  v.
CHAIRMAN, RAJASTHAN VIDYUT UTPADAN NIGAM LTD.
(Civil Appeal No. 967 of 2010)
SEPTEMBER 03, 2019
[N. V. RAMANA, MOHAN M. SHANTANAGOUDAR
AND AJAY RASTOGI, JJ.]
Arbitration:
Arbitration proceedings – Determination as regards
applicability of Arbitration Acts viz. Arbitration Act, 1940 or
Arbitration and Conciliation Act, 1996 – Held: For the purpose
of deciding as to which of the Acts is applicable, on conjoint
reading of ss.21 and 85(2)(a) of 1996 Act, the date of
commencement of arbitration proceedings shall be the date on
which notice was served on the other party requesting appointment
of arbitrator – If the date of notice was prior to 25.1.1996 (i.e.
the date on which 1996 Act came into force) 1940 Act would apply
and if the date of notice was on 25.1.1996 or after that, 1996
would apply – Arbitration and Conciliation Act, 1996 – ss.21 and
85(2)(a) – Arbitration Act, 1940.
Arbitration and Conciliation Act, 1996:
s.43(3) – Limitation – Limitation period for reference of
dispute to arbitration or for seeking appointment of an arbitrator
before a Court is three years from the date on which course of
action or the claim which is sought to be arbitrated, first arises –
On certain sets of facts and circumstances, the period during which
the parties were bonafide negotiating towards an amicable
settlement may be excluded for the purpose of computing the
period of limitation – However, in such cases, entire negotiation
history must be specifically pleaded and placed on record – In
commercial disputes, failure to respond to the claim has to be
treated as denial of claim giving rise to dispute and hence cause
of action for reference to arbitration – Mere correspondence
subsequent to this date of cause of action would not extend the
time of limitation – In the facts of the present case, application for
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   [2019] 11 S.C.R. 1108
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reference of the dispute to the Arbitrator is barred by limitation –
Rather, appellant company’s case has certain element of mala fide
as it has remained silent on specific actions taken to recover the
dues during certain period – Under s.114(g) of Evidence Act, the
Court can presume that evidence which would be and was not
produced, would, if produced be unfavourable to the person who
withholds it – Appellant’s own fault in sleeping over his right for
14 years will not constitute a case of ‘undue hardship’ justifying
extention of time u/s.43(3) – Limitation Act, 1963 – First Schedule,
Art.137 – Limitation.
Dismissing the appeals, the Court
HELD: 1.1 The date of commencement of arbitration
proceedings for the purpose of deciding which Act (Arbitration
Act 1940 or Arbitration and Conciliation Act, 1996) applies,
upon a conjoint reading of Sections 21 and Section 85(2)(a) of
the 1996 Act, shall be regarded as the date on which notice was
served to the other party requesting appointment of an arbitrator.
[Para 6] [1117-B-C]
Milkfood Ltd. v. GMC Ice Cream (P) Ltd. (2004) 7 SCC
288 : [2004] 3 SCR 854 ; Shetty’s Constructions
Co.Pvt. Ltd. v. Konkan Railway Construction and
Another (1998) 5 SCC 599 – relied on.
1.2 Though strictly speaking the 1996 Act came into force
from 22.8.1996, for all practical purposes it is deemed to have
been effective from 25.1.1996, which is when the Arbitration and
Conciliation Ordinance, 1996 came into force. Hence if the date
of notice was prior to 25.1.1996, the 1940 Act will apply. If the
date of notice was on or after 25.1.1996, the 1996 Act will apply
to the arbitral proceedings though the arbitration clause
contemplated proceedings under the 1940 Act.  In the present
case, since notice was served to the respondent in 2002, the
provisions of the 1996 Act will be deemed to apply to the present
Arbitration Applications filed by the appellant. [Para 6] [1117-
D-E-G]
Fuerst Day Lawson Ltd v. Jindal Exports Ltd. (2001)
6 SCC 356 : [2001] 3 SCR 479 – relied on.
M/S GEO MILLER & CO. PVT. LTD. v. CHAIRMAN,
RAJASTHAN VIDYUT UTPADAN NIGAM LTD.
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SUPREME COURT REPORTS
[2019] 11 S.C.R.
2.1 By virtue of Article 137 of the First Schedule to the
Limitation Act, 1963 the limitation period for reference of a
dispute to arbitration or for seeking appointment of an arbitrator
before a Court under the 1940 Act as well as the 1996 Act is
three years from the date on which the cause of action or the
claim which is sought to be arbitrated first arises. [Para
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