P L D 1960 (W (PLP)

3. If the facts were as simple as stated above, the con tention of the applicant's counsel could have been supported by simple reasons. They are complicated for the purpose of computing the period of limitation. Respondent No. 1 appointed its arbitrator and called upon the applicant to appoint an arbitrator in February 1951. At that time the disputes were well within time. The arbitrators did not give an award and, therefore, in July 1951 another attempt to refer the disputes to arbitration was made. At that time also the claim was not barred by time. The second submission to arbitration proved equally abortive, for no award was given by the arbitrators. The disputes were, therefore, referred to an umpire in October, 1953. This reference, according to counsel for respondent No. 1 was a continuation of the earlier references and, therefore, was not barred by time. The umpire also did not give an award, and, therefore, respondents No. 2 and 3 were appointed arbitrators under bye‑law No. 39 (9) of the Karachi Cotton Association Limited by a public notice on the 2nd of March, 1956.

4. Counsel for the applicant has contended that this was a new reference and as such, the claim clearly was barred by time. Counsel for respondent No. I has, on the other hand, contended that the time wasted by fruitless references should be excluded in terms of subsection (5) of section 37 of the Arbitration Act, 1940, or under section 14 of the Limitation Act. Moreover, the arbitration commenced under subsection (3) of section 37, Arbitration Act, 1940, by the first notice in February 1951, by which respondent No. 1 claimed arbitration and as such there was no question of the proceedings becoming barred by time after wards. The subsection is as follows :‑ " For the purposes of this section and of the Indian Limi tation Act, 1908, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties there to a notice requiring the appoint ment of an arbitrator, . . . . . " Under this provision, according to counsel for respondent No. 1, arbitration proceedings commenced when the arbitrators were appointed in 1951. If they did not perform their duty dili gently the parties could not be blamed for it. Counsel for the applicant has met this argument by pointing out that references to arbitration made in 1951 were under bye‑law No. 39 (1) of the Karachi Cotton Association Limited, and as that bye‑law was not applicable to the contract in dispute, the correct E and only reference to arbitration should be taken to have been made under bye‑law No. 39 (2) in March, 1956. If the former arbitrators were inactive respondent No. 1 ‑was blameable for not moving the Court in time for redress. Those proceedings were abandoned and a new procedure was adopted in 1956. The arbitration proceedings that commenced in 1951, even if all the proceedings from February 1951 to 1953 are taken to be the continuation of one arbitration, came to an end and new arbitration proceedings commenced, after following a different procedure of appointing the arbitrators, on the 2nd of March, 1956. He has further supported his contention by arguing that subsection (5) of section 37 of the Arbitration Act is applicable in those circumstances only " where the Court orders that an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred ". In the present case, no such order was made by a Court, and therefore, the provision did not help respondent No.

1. Similarly, the pro visions of section 14 of the Limitation Act are not applicable because those provisions apply when time is wasted to prose cuting a suit in a Court which " from defect of jurisdiction or other cause of like nature is unable to entertain it ". No suit was filed by respondent No. 1, and therefore, there was no question of excluding any time in terms of section 14 of the Limitation Act.

5. The above contentions led to the question : Whether a dispute relating to a time‑barred claim could not be referred to arbitration ? Counsel for the applicant cited official Receiver v. Kersondas Mavji (A I R 1926 Sind 209) and S. L. Balmokand v. Uttamchand Brijlal (A I R 1927 Sind 177). In the first‑mentioned case, Rupchand Bilaram, A. J. C., held :‑ "The Official Receiver could only refer subsisting differences to arbitration, as he has purported to do. He clothed Mr. Brachi with authority to decide those disputes on 28th March 1924, more than three years after the right to sue for recovery of the claim had become statute barred. There were, therefore, no subsisting differences between the parties at the date of reference. The applicant was not bound to go to arbitration." In the latter case, Tyabji, A. J. C., held "Assuming that the principle of Article 115 of the Limitation Act applies one party may contend and the other deny that a suit (or other legal proceedings in Court) would be barred. That question would be a `difference' or `dispute' and would have to be decided by the arbitrator. In some cases that would be a question of law ; in others of fact." Counsel for the applicant contended that the view taken by Tyabji, A. J. C., was not correct, because the condition precedent for making a reference to arbitration is that disputes should exist between the parties. If the claim of a party is barred by time, no dispute exists in law, and reference of such matters to arbitra tion would be outside the scope of the law of arbitration and misuse of legal process. He further contended that since the enactment of subsection (1) of section 37 of the Arbitration Act, 1940, there cannot be any disagreement on the applicability of the law of limitation to arbitration proceedings.

6. I should mention that it does not follow from the above contentions of counsel for the applicant that as soon as the bar of limitation is pleaded a claim ceases to be a subsisting claim and that a dispute relating to it ceases to be referable to arbitra tion. The operation of the law of limitation changes according to the facts to which it is applied. Rupchand, A. J. C., has observed in Uttamchand v. Balmokand (A I R 1929 Sind 55) "Where the agreement between the parties falls within the four corners of exception to section 28, Contract Act, . . . no question of limitation can ever arise, for, in that case, the claimant has no cause of action for instituting a suit so long as his damages have not been ascertained by recourse to arbi tration." If the claimant contended that his claim was not barred by time, such a contention may itself be a subsisting dispute and as such may be a subject of arbitration proceedings.

7. The correct angle of view from which the situation should be seen, when a claim that is submitted for decision by arbitration is disputed as barred by time, is to see whether the dispute is real or a mere pretence. If it is real, then it can be a proper subject of arbitration and leave under section 5 of the Arbitration Act, 1940, to revoke the authority of an appointed arbitrator cannot be granted. Similarly no relief can be granted under section 33 of the Arbitration Act, 1940, when the dispute is genuine, because neither the existence nor validity of the arbitration agreement and ,t award, nor their effect can be questionable merely on the ground that a claim is disputed as barred by time. It is only where the dispute is a mere pretence and it appears that none really exists that the question of the `effect' of arbitration agreement under section 33, would arise. If there be no real difference or dispute the provisions of an arbitration clause will be inapplicable because they apply to disputes and differences : The Court will not leave a mere pretence of a dispute to an arbitrator for decision because, in the language of Russell its determination "in favour of one of the parties will necessarily imply that he can have no jurisdic tion". To the extent that in a given case it may not be easy to distinguish between pretence and reality, it is simpler to treat a subject of this nature under section 20 of the Act because the language of that section is wider. Under it the Court is em powered to decline to refer a question to arbitration if "sufficient cause" is shown for doing so.

8. The present application was not made under section 20 of the Act. It is, therefore, necessary to decide whether the con tention of the applicant that the claim is barred by time is real and as such can attract the provisions of the arbitration clause. In this case the decision depends on the answer to question whether the last reference to arbitration was a continuation of the previous references or not. If it was not, the claim is clearly barred by time, because, as argued by counsel for the applicant, neither section 14 of the Limitation Act nor section 37 (5) of the Arbitration Act, 1940, can help the respondent. I agree with counsel for the applicant, for reasons given by him and stated above that the last reference was not a continuation of the previous references.

9. Counsel for the respondent questioned the correctness of the view that section 14 of the Limitation Act did not help the respondent and relying on subsection (1) of section 37 of the Arbitration Act, 1940, contended that in spite of the last reference not being a continuation of the previous proceedings the time during which the respondent prosecuted the previous arbitration proceedings must be excluded under section 14 of the Limitation Act because all proceedings before the arbitrators were proceedings before a `Court'. He referred to Firm Behari Lai Baij Nath Prasad v. Punjab Sugar Mills Co. Limited (A I R 1943 All. 162) and Fatehchand Ganeshram Agarwal v. Wasudeo Shrawan Dalai and another (A I R 1948 Nag. 334) in support of his contention. The opposite view was taken in Purshottamdas Hassaram Sabnani v. Impex (India) Ltd., (A I R 1954 Bom. 309). Without deciding whether section 14 of the Limitation Act is applicable for excluding the time spent in prosecuting arbitration proceedings, I find that it does not apply in terms to the present facts because the previous arbitration proceedings were not fruitless owing to "defect o jurisdiction or other cause of like nature".

10. I think that the claim of the respondent is clearly barred by time and that, therefore, no real dispute exists between the parties. The provisions of the arbitration clause are not attracted as it is necessary under them that a dispute should exist. The arbitrators have thus no jurisdiction to enter on arbitration. Leave is accordingly hereby granted to revoke their authority. Order accordingly.