SUPREME COURT OF INDIA

Before:- V.N. Khare and U.C. Banerjee, JJ.

Appeal No. 4259 of 1992. D/d. 6.5.1999.

Morena Mandal S. S. K. Ltd. - Appellant

Versus

New India Assurance Co. Ltd. - Respondent

Arbitration Act, 1940, Section 8(2) - Limitation Act, 1963, Article 137 - Arbitrator - Appointment of - Limitation - Limitation for the purpose of filing application under section 8 of the 1940 Act would begin only when the period of 15 days' notice expires - Appellant sent notice on 27.12.1975 - Respondent failed to concur the appointment of an arbitrator - Therefore, on expiry of 15 days the right to file application under section 8(2) accrued to the appellant - Since the application was filed within three years of the respondent's failure to concur with the appointment of arbitrator, the application filed by the appellant under section 8(2) of the Act was well within the period of limitation.

[Paras 5 and 6]

Cases Referred :-

Utkal Commercial Corporation v. Central Coal Fields Ltd. (1999) 2 SCC 571 .

JUDGMENT

This appeal is directed against the judgment of the Madhya Pradesh High Court dismissing the Civil Revision filed by the appellant herein. The facts giving rise to this appeal are as under :

2. The appellant herein is a co-operative society. In the year 1969, the appellant decided to set up a sugar factory and for that reason insured the transportation and erection of plant and machinery with New India Assurance Company Limited for any damage that may be caused during transit and erection thereof. The Insurance Policy contained an arbitration clause for references of disputes arising out of the agreement to an arbitrator. It appears that certain disputes arose between the appellant and the respondent and the appellant took proceedings under the Madhya Pradesh Co-operative Societies Registration Act. Ultimately, it was found that the said proceedings were not maintainable. On 27th December, 1975, the appellant sent a notice to the respondent to concur appointment of an arbitrator in view of the differences/disputes having arisen. The respondent declined to concur with the request of the appellant. Under such circumstances, the appellant filed an application under sub-section (2) of Section 8 of the Indian Arbitration Act, 1940 (hereinafter referred to as the 'Act') before the District Judge, Morena on 5-4-1976. It appears that on the objection taken by the respondent, the said application of the appellant was rejected on the ground that it was barred by time. The revision filed by the appellant was also rejected. It is in this way, the appellant is in appeal before us.

3. The short question which arises for consideration in this appeal is whether the application filed by the appellant under sub-section (2) of Section 8 of the Act was barred by limitation. We have heard learned counsel for the parties. To resolve the controversy it is necessary to look into the provisions of Limitation Act, 1963 and the Arbitration Act. The counsel for the parties could not lay their hands on any other provisions of Limitation Act excepting Article 137 which is extracted below :

"Description of suit	Period limitation	Time from which period begins to run
Any other application for which no period of limitation is provided elsewhere in this Division."	Three years	When the right to apply accrues.

4. The reading of Article 137 shows that the limitation for filing an application under Section 8 of the Act would begin when the right to make such an applications accrues. Section 8 of the Arbitration Act runs as under :

"8. Power of court to appoint arbitrator or umpire - (1) In any of the following cases -

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or

(b) (c) xxx xxx xxx xxx

any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in applying the vacancy.

(2) If the appointment is not made within fifteen clear days after service of the said notice, the court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."

5. A perusal of Section 8 of the Act would show that if parties do not concur in the appointment of an arbitrator and if one party serves a notice to another to concur in the appointment of an arbitrator and no appointment is made within 15 days of service of the notice, the right to file an application under Section 8 of the Act accrues. Thus the limitation for filing application under Section 8 of the Act would begin from the date when the right to file application arises. In the case of Utkal Commercial Corporation v. Central Coal Fields Ltd. (1999) 2 SCC 571 it was held as thus (para 8) :

"In view of the express language of Section 8, it is quite clear that unless a party who desires to apply has resorted to the process set out in Section 8, and has failed to secure the concurrence of the other party to the appointment of an arbitrator within the prescribed period, the court will not intervene under Section 8. The right to apply under Section 8, therefore, would accrue when, within 15 clear days of the notice, the other parties do not concur in the appointment of an arbitrator."

6. Following the aforesaid decision, we hold that the limitation for the purpose of filing application under Section 8 of the Act would begin only when period of 15 days' notice expires, as contemplated under Section 8 of the Act. In this case, we find that the appellant had sent a notice on 27th December, 1975 and the respondent failed to concur to the appointment of an arbitrator and, therefore, on the expiry of 15 days the right to file application under Section 8(2) of the Act accrued to the appellant. Since the application was filed within three years of the respondent's failure to concur the appointment of an arbitrator, the application filed by the appellant under Section 8(2) of the Act was well within the period of limitation.

7. Accordingly, for the reasons mentioned above, we set aside the order under appeal and send the case back to the District Judge, Morena who shall appoint an arbitrator as per Condition No. 5 of the Insurance Policy. It will, however, be open to the respondent to take any other plea which may be permissible under law.

8. The appeal is thus disposed of. There shall be no order as to costs.

Order accordingly.