MAJOR (RETD.) INDER SINGH REKHI versus DELHI DEVELOPMENT AUTHORITY

Citation: [1988] 3 S.C.R. 351 · Decided: 24-03-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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MAJOR (RETD.) INDER SINGH REKHI 
v. 
DELHI DEVELOPMENT AUTHORITY 
MARCH 24, 1988 
A 
[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.J 
B 
Arbitration Act, 1940: Sections 8 and 20-Dispute-Existence 
of-Essential for appointment of arbitrator-What constitutes a dis-
pute-Whether a dispute has arisen or not-Depends on facts and 
circumstances of a case. 
Limitation Act, 1963: Article 137-Petition/app/ication filed in a 
civil court-Applicability to-Application under s. 20 of the Arbitration 
Act-Period of limitation-What is-Accrual of cause of action-When 
arises. 
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The appellant undertook construction of certain houses for the 
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respondent-Development Authority and completed the same on 2nd 
April, 1980. 
The appellant sent several letters to the ·respondent requesting for 
finalisation of the bills; the first one on 28th February, 1983 and the last 
on 4th September, 1985. Ultimately, the appellant served notice, 
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through his counsel requesting the respondent to release the security 
amount and refer the dispute to arbitration. On respondent's failure to 
do so, the appellant tiled an application in the Co)lrt, under section 20 
of the Arbitration' Act, 1940 seeking a direction for tiling the arbitration 
agreement in the court .and referring the dispute to arbitration. A 
Single Judge of the High Court dismissed the application as barred by 
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time. This decision was upheld by the Division Bench. 
Allowing the appeal, 
HELD: 1.1 Article 137 ot' the Limitation Act, 1963 would apply to 
any petition or application tiled in a civil court. [:i53E-FI 
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Kerala State Electricity Board, Trivandrum v. T.P.K.K. Amsom 
and Bensom, Kerala, [1977] lS.C.R. 996reliedon. 
1.2 In or.der to be entitled to an order of reference under s. 20, it 
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351 
A 
B 
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352 
SUPREME COURT REPORTS 
(1988] 3 S.C.R. 
is necessary that there should be an arbitration agr•ement and sec-
ondly, difference must arise to which this agreement aiip!id. T~.~ exist-
ence or a dispute is, therefore, essential for appo~:tmeat vi an Arbi-
trator under s. 8 or a reference under s. 20 of the Act. [353H, 354A] 
·' 1.3 Dispute entails a positive element and assertion in denying, 
not merely inaction to accede to a claim or a request. Whether in a 
particular case, a dispute has arisen or not has to be found out from the 
facts-and circumstances of the case. [354F] 
. 1.4 .A right to get payment would normally arise on completion of 
the work and a party cannot postpone accrual of cause of action by~ 
writing reminders or sending reminders. But where a bill had not been 
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finally prepared, the claim made by the clalmant is the accrual of the .- . 
cause of action. [354C-D I 
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. 
. In the instant case there was an arbitration agreement. There has 
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been an assertion of claim by the appellant and silence as well as refusal 
in res[lfl:t or the same by the respondent. Therefore, a dispute has 
arisen regarding non-payment or the alleged dues or the appellant. 
Since rmaI bills had not been prepared, .and there was assertion of cla1m 
on 28th February, 1983 and there was non-paymenr, the caiise of action 
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arose on that date._[354A-B, DI / 
The application under :s. 20 of the Act having been r.Jed in the 
Court in January,-1986, i.e. within the period of three years from the 
date of causln>f action, it was withhi time and the High Court was in 
error in dismissing it on the" ground or limitation. [354G I 
CIVIL APPELLAlE JURISDICTION: Civil Appeal No. 1178 
of 1988. 
From the Judgment and Order dated 5.11.1986 of the Delhi High 
CourtinF.A.O. (OS) No. 231of1986. 
G 
Hardev Singh and Miss Madho Moolchandani for the Appellant. 
S.B. Saharya, V.B. Saharya and Ratna Nair for the Respondent. 
The Judgment of the Court was delivered by 
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SABY ASA CHI MUKHARJI, J. Special Leave granted . 
1 
MAJOR I.S. REKHI v. D.D.A. [MUKHARJI, J.[ 
353 
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The Delhi Development Authority vide its letter dated 5th 
October, 1976 accepted the tender of the appellant for construction of 
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240 Janta Houses at the estimated cost of Rs.24,49,262. The work was 
to commence on 15th October, 1976 and was required to be completed 
by 14th July, 1977. By a subsequent extension of time the work was 
finally completed on 2nd April, 1980 and the houses so constructed 
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have been allotted to several people. Between' February 1983 to 
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December 1985 the appellant sent several letters to the respondent 
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requesting them to finalise the bills. It appears, howeve

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