Judgment:
S.D. Anand, J.
1. The petitioner-Haryana Vidyut Parsam Nigam Ltd.(erstwhile Haryana State Electricity Board) filed a petition before the learned Trial Court under Section 20 of the Arbitration Act (hereinafter referred to as 'the Act') with a request that the dispute between the parties may be referred to the Arbitrator. The plea was dismissed by the learned Trial Court as time barred. The view obtained by the learned Trial Court was affirmed by the learned Ist Appellate Court, vide judgment and decree dated 13.8.2007.
2. Facts relevant for the disposal of the controversy before this Court are as under:
The petitioner-nigam invited tenders (vide tender enquiry No. WX-443 dated 3.5.1988) for the supply of 11 KV Post Insulators with metallic cap and pedestal pin suitable for use in the manufacture of 11 KV GO switches with nuts and bolts. A quotation submitted by the respondent was accepted by the. petitioner-nigam which placed a detailed purchase order with the respondent for the supply of the material. In terms of the contract, the supply was to be made upto 30.10.1989 and it was indicated in the contract itself that time was essence of the contract. Respondent did not make the required supply within indicated time. In terms of the below quoted stipulation in the contract, the dispute between the parties was referrable to the Arbitrator:All matters, questions, disputes, differences and or claims arising out of and/or concerning and/or connection and/or in consequences of relating to this contract whether or not obligation of ether or both parties under this contract by subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed, shall be referred to be sole Arbitration of the Chairman of an officer appointed by the Chairman as his nominee. The award of the Arbitrator shall be final and binding on the parties to this contract.
It is common ground that the application under Section 20 of the Act could have been validly filed only within three years of the date the cause of action accrued.
3. The petitioner-nigam filed the impugned application under Section 20 of the Act on 20.8.1994.
It was initially vide letter dated 13.3.1990 (Annexure P-1) that the petitioner-nigam informed the respondent that the period within which the delivery of material had to be made was over. The respondent was requested to offer the balance material for inspection within 10 days of the receipt of this notice. The respondent further informed that in case needful was not done it will be presumed that you are no more interested in supplying the material against the above cited P.O. And this office will proceed to invoke the risk purchase clause No. 17 of the agreement (i.e. P.O.) besides taking other action like black-listing etc.
4. In response dated 16.4.1990 (Annexure P-2), the respondent informed the petitioner-nigam that our factory was under lock-out for a period of 8 to 9 months during 1989 and after the opening of the factory we have already supplied 1500 Nos. 11 KV Post Insulators in the month of 'December, 1989'. It assured the petitioner-nigam that we are still trying to execute your above purchase order at an early date and further informed that 'entire order shall be executed during this year and we are offering some quantity in the month of April itself. Hope you will find the above in order and please bear with us far some more time.' The petitioner-nigam responded to that letter on 22.4.1992 (Annexure P-3). While informing the respondent thereby that a decision had been taken to purchase the said material 'by making purchase from other source at your sole risk and responsibility', the petitioner-nigam gave a concession to the respondent by announcing that it has been decided to give you another opportunity to complete the supplies of the material under the agreement within the period specified in para 5 of this notice. That communication was categorical in the following announcements to the respondent:
6. That in case you still fail to complete the supplies of the material to the consignee, HSEB will take the work of supply of material under the above said agreement out of your hands and shall contract with any other person at your risk, cost and responsibility.
7. It is made clear that the risk purchase of the material in this case will be entirely at your risk and cost and you will be entirely liable to make good the loss to the Board on account of said risk, purchase keeping in view the Clauses 21 & Clause 23 of Schedule D signed by you while submitting quotation against the subject cited P.O. This will be in additions and without prejudice to our other rights under the agreement like penalties/damages recoverable from your at law or otherwise on account of breach of the above said agreement'. In further response thereto on the respondent addressed letter dated 13.5.1994 (Annexure P-4) to the petitioner-nigam, while intimating the facts and circumstances indicated in the course thereof, on account whereof the material could not be supplied in time, the respondent made the following request to the petitioner-nigam:
1. The RISK PURCHASE initiation proceedings may please be dropped.
2. The penalty for the late deliveries be waived off.
3. The delivery schedule of the material be regularised.
5. The learned Trial Court and also the learned Ist Appellate Court, took a view that the cause of action (for filing of an application under Section 20 of the Act) would be deemed to have accrued with effect from 13.3.1990 itself when the petitioner-nigam (for the first time) informed the respondent that the time for supply of the contracted material was over. On that premise, the plea under Section 20 of the Act was rejected as time barred.
6. Learned Counsel for the petitioner-nigam argued that cause of action validly stood deferred to the subsequent period because the response offered by the respondent amounted to acknowledgment of the controversy. Things would have been different, it was argued, if respondent had denied the liability to comply with the terms and conditions of the impugned agreement. It was argued in the alternative, that even if it is assumed that there was delay in filing of the petition under Section 20 of the Act, the Court could hold that delay was not willful and was liable to be condoned. Reliance, in support of the advocated view, was placed upon Asia Resorts Limited v. Usha Breco Limited : AIR2002SC55 .
7. The plea was resisted by the learned Counsel for the respondent by arguing that the cause of action did accrue to the petitioner-nigam with effect from the date on which Annexure P-1 was issued and it could not have been validly deferred to any subsequent period of time. I find myself in agreement with the plea put forward on behalf of the petitioner-nigam. It would be apparent from a perusal of Annexure P-1 that though the petitioner-nigam informed the respondent that delivery period for the supply of contracted material was over, it also simultaneously afforded to it yet another opportunity to offer the balance material for inspection within 10 days of the receipt of this notice. The letter was categorical in informing the respondent that in case of the non supply of the material within extended period, the petitioner-nigam would invoke the risk purchase clause, besides taking other action like black listing etc. In response thereto, the respondent explained the circumstances under which the contracted clause could not be complied with and further held out an assurance that the order shall be executed during this year. As a proof of bonafides, the respondent also informed the petitioner-nigam that we are offering some quantity in the month of April itself. Further correspondence continued and it was ultimately vide letter dated 13.5.1992 that the respondent made the following request to the petitioner-nigam:
1. The RISK PURCHASE initiation proceedings may please be dropped.
2. The penalty for the late deliveries be waived off.
3. The delivery schedule of the material be regularised.
8. There is, thus, no escape from the conclusion that the cause of action cannot be deemed to have accrued to the petitioner-nigam with effect from the date of issue of letter dated 13.3.1990 (Annexure P-l). It would be deemed to have been validly deferred to the 13.5.1992 when the respondent made a request for the aforementioned three reliefs which was not agreed to by the petitioner-nigam. In that view of things, the application under Section 20 of the Act which was filed on 28.8.1994 was obviously within time.
9. Even if it is assumed, for the sake of arguments, that the application under Section 20 of the Act was timed barred, the Court would condone the delay in the relevant behalf in view of the fact that it was the respondent who had been throughout pleading for compassion at the hands of the petitioner-nigam which (the petitioner-nigam), in appreciation of the difficulty explained by the respondent, kept on extending time in the relevant behalf from time to time. There is, thus, warrant for an inference that the petitioner-nigam throughout acted in a bonafide manner and, thus, delay in filing of the plea under Section 20 of the Act shall stand condoned.
10. In the light of the fore-going discussion, the petition shall stand allowed. The orders dated 7.10.2006 and 13.8.2007 (of the learned Trial Court and the learned Additional District Judge) shall stand set aside.
The learned Trial Court shall proceed to dispose of the application under Section 20 of the Act on merits.