The Orissa High Court has ruled that the limitation period for commencing arbitration proceedings starts from the date when the cause of action accrues, not from when a dispute arises or arbitration is invoked. This significant judgment was delivered by Justice D. Dash while disposing of an appeal against an arbitral award in the case of Principal Secretary to the Govt. of Odisha & Others vs M/s. Jagannath Choudhury (ARBA No.28 of 2019).
Background:
The case arose from a contract dispute between the Odisha government and M/s. Jagannath Choudhury regarding construction work. After completion of the work, disputes arose over pending payments and extra work claims. In 2007, M/s. Jagannath Choudhury invoked arbitration. An arbitrator was appointed who passed an award in favor of the contractor in 2016. The government challenged this award under Section 34 of the Arbitration Act, which was dismissed by the District Judge. The government then filed this appeal before the High Court.
Key Legal Issues:
1. When does the limitation period for arbitration commence?
2. Scope of judicial interference in arbitral awards under Section 34 of the Arbitration Act
Court’s Decision:
On the limitation issue, Justice Dash held:
“The period of limitation for commencing an arbitration runs from the date on which the cause of arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned.”
The court clarified that the cause of action arises when the claimant becomes entitled to raise the question, not when the dispute arises or arbitration is invoked. In this case, the court found that the arbitrator had correctly considered the limitation aspect.
Regarding judicial interference in arbitral awards, the court emphasized the limited scope under Section 34:
“The court cannot undertake an independent assessment of the merits of the award with the speculative possibility of arriving at a different conclusion. The arbitrator is the sole judge of the quality as well as the quantity of evidence.”
The court relied on Supreme Court precedents to reiterate that courts should not interfere with arbitral awards unless there is patent illegality going to the root of the matter.
Important Observations:
Justice Dash made some noteworthy observations:
“If an infringement of a right happens at a particular time, the whole cause of action will be said to have arisen then and there. In such a case, it is not open to a party to sit tight and not to file an application for settlement of dispute of his right, which had been infringed, within the time provided by the Limitation Act, and, allow his right to be extinguished by lapse of time.”
“The arbitrator being the sole judge of quality and quantity of evidence, the Court cannot re-appreciate the evidence before the arbitrator.”
Conclusion:
The High Court dismissed the appeal, upholding the arbitral award. It modified the interest rate to 9% per annum from the date of the award till realization.
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Case Details:
Case Title: Principal Secretary to the Govt. of Odisha & Others vs M/s. Jagannath Choudhury
Case Number: ARBA No.28 of 2019
Bench: Justice D. Dash
Appellant’s Counsel: Mr. S.N. Das
Respondent’s Counsel: Mr. Pratik Parija
