D.K. Kapur, J.

(1) THE petition under S. 20 of the Arbitration Act, 1940, before the Court has

given rise to some important question of law. There is a clash in the instant case

between the provisions of the Arbitration Act, 1940, and the provisions of the Public

Premises (Eviction of Unauthorised Occupants) Act, 1971. I have considered the

question whether the case should not be referred to a large Bench, but in view of

the fact that a right of appeal would be lost to the parties by this procedure, I have

preferred to give my own decision on the points which have arisen.

(2) THE facts of the case are that an area of 2,743 sq. yards belonging to the

Northern Railway,. e. the land being Railway land was leased out to the petitioner

on 9th May, 1969. An amount of Rs. 30,611. 88 has been paid as rent yearly for this

plot. The land used is for stacking or storing materials and for parking vehicles. The

period of the lease was for ten years and according to the petitioner, the period

commenced on 1st January, 1963, which means that the lease was made long after

the term actually commenced. According to the petitioner, the period of ten years

was automatically to be extended for another ten years period. However, according

to the respondents, the term was ten years which would be automatically extended

for another ten years if the lease is not terminated by giving a notice terminating

the lease, which notice was to be for a period of three calendar months before the

first period of ten years expired. In the lease-deed, there is an arbitration clause

contained in paragraph No. 19. That clause reads as follows:"19. That in case of any

dispute arising between the parties with regard to the intent and meaning of this

agreement and subject-matter referred to therein the same shall be referred to the

sole arbitration of the General Manager, Northern Railway, or any other officer of

the Railway appointed by him, who shall conduct the proceedings in accordance

with the provisions of the Indian Arbitration Act 1940. "one of the disputes which

has arisen regarding the lease is the question whether the period of ten years has

not been extended to 20 years. It may have been extended because it was

automatically extended or, it may have been extended because no notice was given,

even according to the interpretation of the respondent. Then there are other

disputes concerned with the rent to be paid for the period after ten years had

expired, because, the petition was filed in 1977 and if the lease expired after ten

years had expired, it expired at the end of December, 1972. There are several other

disputes regarding constructions made on the land which according to the

respondents the petitioner could not make. Furthermore, there is the question as to

how the petitioner is to be evicted. There is, therefore, no doubt that disputes exist

and there is an arbitration clause. However, the matter is not quite simple and

several fine questions of law have arisen. On the pleadings, the following issues

were framed by myself:"1. Is the petition under Section 20 belated in the sense that

the suit based on cause of action was or is barred by time or the application is

otherwise filed beyond the period of limitation 2. Has this court no jurisdiction to

deal with the matter because the matter is pending before the Estate Officer under

the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 3. Is the

matter not referable to arbitration because it is before the Estate Officer or within

his competency 4. Is the dispute specified in the petition, particularly in paragraph

10 of the. same, covered by arbitration agreement dated 9-5-1969 5. Is the matter

to be not referred to arbitration for any reason 6. Relief. "at that time, a direction

was given that the questions seem to be purely legal and could be decided merely

by filing of documents and affidavits. Eventually, the case has been heard on the

basis of the affidavits and documents filed and it is now necessary to deal with the

various issues. 1. Limitation. The first issue relates to the question whether the

petition is not barred by time. This has led to contentions by both sides as to what

was the date on which the application could have been filed. The matter is again not

a simple one. The application was filed on 11th May 1977. The first period of ten

years of lease expired even according to the petitioner on 12th Dec. , 1972, so more

than three years had expired from the alleged termination of the lease according to

the respondent. According to the petition, the cause of action arose in July, 1975

and April, 1977. when the respondent sought to recover rents contrary to the terms

of the agreement and also sought to recover possession of the land. It was also

stated in the petition, that instead of going to arbitration, the respondents were

seeking to evict the petitioner under the Public Premises (Eviction of Unauthorised

Occupants) Act, 1971. and this they were not entitled to do. According to the reply,

the cause of action arose in 1967 when the demand for increase of rent was made

and at least on 1st January, 1973. when the lease of the petitioner came to an end,

and therefore, the petition is barred by time.

(3) VARIOUS decisions of the Courts have been cited on the question of limitation.

The material question is, what is the starting point of limitation for moving a petition

under Section 20 of the Arbitration Act. In this case, an interesting situation arises

because according to the petitioner, the lease is still subsisting, and according to the

respondents it has come to an end. It is the undisputed case of both sides that

unresolved disputes do exist, yet according to the respondents the limitation period

had expired. The principal judgment relied upon on the question of limitation is that

given by the Supreme Court in Kerala State Electricity Board, Trivandrum v. T. P.

Kunhaliumma, AIR 1977 SC 282 [LQ/SC/1976/406] , in which the Court held that Art. 137 of the

Limitation Act, 1963, would apply to all applications. Assuming, that this also means

that applications under Section 20 of the Arbitration Act are governed by Art. 137 of

the Limitation Act, it would mean that the period of limitation is three years from the

date when the right to apply accrues. This raises other difficulties which I shall

presently deal with. This judgment of the Supreme Court has been applied in several

other cases even in this Court to applications under Section 20 of the Arbitration Act,

but the judgments are not altogether consistent as to when the right to apply

accrues for computing the period of three years mentioned in Art. 137 of the

Limitation Act. As most of these judgments are unreported, the present point of

limitation has to be decided on its own merits.

(4) IT was submitted on behalf of the respondents that as the lease expired in

1972, the application was barred by time in 1977 when it was filed. On the other

hand, there was no occasion for the petitioner to move the Court till a cause of

action actually arose for referring the matter to arbitration. The provisions of Section

20 of the Arbitration Act can now be usefully referred to. The section states in subsection (1):"where any persons have entered into an arbitration agreement before

the institution of any suit with respect to the subject-matter of the agreement or any

part of it, and where a difference has arisen to which the agreement applies, they or

any of them, instead of proceeding under Chapter II, may apply to a Court having

jurisdiction in the matter to which the agreement relates, that the agreement be

filed in Court. "the important words in this section are the existence of the

arbitration agreement and the existence of a difference between the parties.

Secondly, this section presents an alternative to the parties other than proceeding to

arbitration on their own,. e. , without coming to the Court. The way the is

framed suggests that first you have to have a contract concerning the reference of

certain types of disputes to arbitration. If you have this contract, still you cannot

apply until you have a difference. The starting point of the reference under Section

20 is. therefore, the date on which a difference arises, to which the arbitration

agreement applies. Neither party can move the Court without the existence of a

difference between them. So, the material question is, when the difference arose

between the parties and not when the lease expired, nor when it was entered into.

In the present case. the noteworthy feature is that the agreement was made in

1969 concerning a lease which started on 1st January, 1963. We have, therefore, to

examine for the purpose of the question of limitation as to when the disputes arose

which are required to be referred to arbitration. As a matter of fact, paragraph No.

11 of the petition states as follows:"11. That the petitioner requested the

respondent several times to have the matters decided by arbitration as per Cl. 19 of

the said agreement executed between the parties. Letters dated 10-12-1975. dated

20-2-1976 and dated 13-12-1976 were sent by the petitioner to the Railway

authorities requesting them to take action for having all the disputes between the

parties decided by arbitration but the respondent has failed to have the matter

referred to arbitration. "thus, according to the petition, the disputes arose not more

than three years before the date 11th May, 1975, when the petition was filed.

(5) IN reply to paragraph No. 11 the respondents stated as follows:"para No. 11 of

the petition as stated is not admitted. As the matters set up by the petitioner in

para. No. 10 above, are matters to be decided by the Estate Officer alone under the

Public Premises (Eviction of Unauthorised Occupants) Act, 1971, therefore, there

could not be a matter of reference to arbitration. "no other date has been

mentioned as being the date on which the disputes actually arose.

(6) IT is stated in para. No. 15 of the reply as follows :"para. No. 15 of the petition

is wrong and denied. The cause of action arose in 1967 when the demand for the

increased rate of rent was made by the respondent on the petitioner and then on 1-

1-1973 when the lease of the petitioner came to an end. therefore, the present

petition is not within time. "as I have said, the case of the petitioner and the case of

the respondents operate on quite different planes. The case of the petitioner is that

the lease has not ended and then there are disputes which have arisen which are

required to be referred to arbitration. The case of the respondents is that the lease

came to an end in 1972 and the cause of action for the increased rent arose in

1967.

(7) WITH respect, I think the respondents have missed the real question which is

that in order to charge the increased rent, the parties had to go to arbitration. The

difference between them would arise when there was a demand by one side and a

refusal by the other.

(8) IN this case there is a total absence of dates as to when the difference arose,

and, therefore, the first issue has to be decided on the reading of the petition. It

according to the petition, the lease is subsisting and disputes have arisen in 1975

and 1976, the petition is within time. No earlier date has come to light as to the date

on which the difference arose.

(9) IN this connection, it is necessary to note that a difference can arise long after

some work has been done under a contract. There can be negotiations between the

parties and all sorts of correspondence. But, it is only when they come to the

conclusion that they cannot resolve the dispute between them. that it can be said

that a difference arises. A difference under the arbitration agreement is a claim

made by one party which is refuted by the other party. At that stage, it is open to

the parties or any of them to say now let us go to arbitration to get this difference

settled. It is at this stage that it is possible to say that a difference has arisen

between them. In this sense, Section 20 of the Arbitration Act differs from the

normal kind of claims that arise in suits. In the case of a suit, the date on which the

cause of action arises is the date from which the limitation period starts. Under

Section 20. it is the date on which the right to apply accrues that determines the

starting point. That starting point does not coincide with the date on which the

cause of action for filing a suit arises.

(10) TO take a simple illustration. If there are two parties to a contract in which

one claims a breach of contract by the other, then the period of limitation for filing

the suit starts from the date of the breach. That is not the determining date if the

contract is subject to an arbitration clause. If there is an arbitration clause, then the

concerned party will make a demand from the other party and it is only when the

demand is refuted or declined that the difference arises. ft, therefore, follows that

the bar contemplated by the Limitation Act for filing an application under Section 20

of the Arbitration Act is different from that contemplated by the same Act for

instituting a suit.

(11) THIS question can also be further emphasised by reference to Sec. 37 of the

Arbitration Act. In sub-section (1), it is stated that all the provisions of the Indian

Limitation Act shall apply to arbitrations as they apply to proceedings in Court. It is

further provided in sub-section (3) as follows: for the purposes of this section and of

the Indian Limitation Act, 1908, an arbitration shall be deemed to be commenced

when one party to the arbitration agreement serves on the other parties a notice

requiring the appointment of an arbitrator, etc. . . . . . . . . . . . . . . . "it means that

the arbitration commences not when the application, under Sec. 20 is filed, but

when the notice is given to appoint the arbitrator. In the present case, the notice

was given, according to the petitioner, sometime in 1975 or 1976. It is that date

which determines whether the arbitration claim by the present petitioner is within

time. It cannot be that there are two different limitation periods prescribed for the

same thing in the same Act It would, therefore, be reasonable to suppose that the

limitation period for the purpose of Section 20 is different from the limitation period

contemplated by subsection (3) of S. 37 because the two provisions deal with

different things. In the one case, the limitation period is identical with the one which

applies to suits. In the other, there is a different period altogether; To put it in

another way, the notice under Section 37 (3) has to be given within the period of

limitation prescribed for suits.

(12) WHEN such a notice has been given, one of two things can happen. Either the

other party can agree to the arbitrator or it can refuse to appoint the arbitrator. In

the present case, the respondents chose not to appoint the arbitrator on some

ground or the other. It is only after this that it could be said that the petitioner was

compelled to come to the Court

(13) THERE is yet another aspect of the matter which raises an interesting

conundrum. The limitation period for the State to claim a sum payable to it is much

greater than that available to an ordinary person. For instance, in the present case,

the Railway authorities could refer the matter to arbitration within 30 years later,

because Art. 112 makes the limitation period for recovery of the amount due to the

Central or a State Government, 30 years. It would be indeed peculiar that when the

claim is not barred by time that the limitation period under Section 20 would expire

much earlier, after only three years, thus making it impossible for the parties to

move the Court. This example shows the difference between the applicability of the

provisions of the Limitation Act as far as suits go and applications for getting an

appointment of an arbitrator through the Court. To take an instance that might well

arise in practice, suppose there is a contract between the State and a private

contractor for the supply of certain goods in which there is an arbitration clause to

the effect that a mutually acceptable arbitrator will be appointed. A difference

relating to this agreement could well arise on a Government claim made 20 years

after the contract came to an end. If such a difference arises, the parties may have

to have recourse to Section 20 of the. It could not then be claimed that the

period of three years commenced from the date on which the cause of action arose

because the State has got 30 years in which to file a suit. The cause of action for

applying to the Court would arise when the parties do not agree to have a common

arbitrator. It is that contingency which requires recourse to the Court. Hence, I

would come to the conclusion that the limitation period for filing the present petition

is three years under Art. 137 of the Limitation Act, but the three years period does

not commence from either 1967 or December, 1972, when it is claimed that the

lease came to an end or any other date prior to the date on which the differences

between the parties arose. In my view, the differences arose when the parties could

not resolve the same and an application was made that the matter should be

referred to arbitration. This date has been mentioned in the petition as being 10th

December, 1975, 20th February, 1976 or 13th December, 1976. No alternative date

is mentioned in the written statement So, I come to the conclusion that the petition

is within time. No. 2. Jurisdiction.

(14) THE second point arising in this case is the question whether this Court has

jurisdiction to deal with the present petition. No doubt, there is an arbitration clause

and there is the Arbitration Act and normally, there would be little doubt that this

Court had jurisdiction. However, the contention of learned counsel for the

respondents is that Section 15 of the Public Premises (Eviction of Unauthorised

Occupants) Act, 1971, bars the present proceedings. That section reads as

follows :"15. Bar of jurisdiction. No Court shall have jurisdiction to entertain any suit

or proceeding in respect of the eviction of any person who is in unauthorised

occupation of any public premises or the recovery of the arrears of rent payable

under sub-section (1) of S. 7 or the damages payable under sub-section (2) of that

section or the costs awarded to the Central Government or the corporate authority

under sub-section (5) of S. 9 or any portion of such rent. damages or costs. "it is

contended that this Court is entertaining a proceeding which is concerned with the

eviction of a person who is in unauthorised occupation or it is entertaining a

proceeding in respect of the recovery of arrears of rent payable in respect of the

property. Shortly put. the contention is that the land which is the subject-matter of

the lease is public premises and, therefore, the question of eviction from that land or

the question of recovery of rent in respect of that land cannot be entertained by this

Court. As it happens, this Court is not entertaining any such proceedings, but is

merely considering the question whether the matter is referable to arbitration. If the

Government chooses to have an arbitration clause in respect of property covered by

the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, I do not think

that it was the intention of the Legislature to nullify that arbitration. I would not

reach this conclusion, unless I am compelled to do so. It is open to the parties to

have an arbitration agreement whenever there is a dispute. If there is an arbitration

agreement between the parties then the provisions of the Arbitration Act have to

apply. The wording of the section Just reproduced states that the Court shall not

have jurisdiction to entertain any suit or proceeding in respect of eviction of a

person who is in unauthorised occupation of any public premises or for the recovery

of arrears of rent payable under Section 7 (1) or 7 (2) of the. This section was

introduced in the in view of the Supreme Courts decision in Northern India

Caterers (Pvt.) Ltd. v. State of Punjab, AIR 1967 SC 1581 [LQ/SC/1967/114] . In that case, Section 5 of

the Punjab Public Premises and Land (Eviction and Bent Recovery) Act had been

held to be invalid as a more drastic remedy was introduced in eviction of tenants

which deprived the person opposing the Government of certain rights under the

ordinary law. The existence of two possible remedies which could be selected at

random led the majority of the Supreme Court to hold that the section was violative

of Art. 14 of the Constitution. At that time. the 1958 Act was in force being the

Public Premises (Eviction of Unauthorised Occupants) Act, 1958. That section did

give a choice of procedure to the Government. The fact that a discriminatory

process could be followed led to the repeal of the 1958 Act and the enactment of

the Public Premises (Eviction, etc.) Act, 1971, which introduced Section 15 of the

Act. It may be mentioned that even earlier Section 10-E had been introduced into

the of 1958. In the 1971 Act, there was a validation section being No. 20 which

declared that proceedings and actions taken under the of 1958 shall be deemed

to be valid and effective as having been taken under the of 1971. This validation

section was considered in the Supreme Courts judgment in Hari Singh v. Military

Estate Officer, Delhi Circle, Delhi Cantt. , AIR 1972 SC 2205 [LQ/SC/1972/286] , Section 15 was

declared to be constitutionally valid. Keeping in view the fact that Section 15 was

introduced into the of 1971 with the object of making the constitutionally

valid and not violative of Art. 14 it must also be interpreted in the same light.

(15) THE contention of learned counsel for the respondent is that Section 15 bars

this Court from dealing with the arbitration proceedings as, in effect, the Court is

dealing with a proceeding which relates to the eviction of a person who is in

unauthorised occupation or relates to the recovery of damages. I do not agree with

this contention. The parties have agreed to have an arbitration relating to matters

arising out of the lease. Once there is an arbitration agreement, the parties are free

to refer the matter to arbitration in accordance with the agreement. The Court is not

adjudicating on any dispute relating to eviction or recovery of rent. etc. The Court is

concerned rather with the enforcement of the rights of the parties under the

Arbitration Act. The disputes have to be dealt with by the arbitrator appointed by

the parties. I, therefore, hold that Section 15 of the Public Premises (Eviction of

Unauthorised Occupants) Act, 1971, has nothing to do with this Courts jurisdiction,

under the Arbitration Act which is quite an independent jurisdiction. In fact, if the

parties do go to arbitration, and an award is given, then there is no choice for the

parties but to approach the Court under the Arbitration Act for the purpose of

making the award a rule of the Court or for getting those matters arising in

arbitration proceedings or relating to the same settled through the Court. By no

means can it be said that the Court will then be dealing with a proceeding for the

eviction of a person in unauthorised occupation or for recovery of rent or damages.

The Court is merely concerned with the arbitrator, the arbitration agreement, the

award and the subsequent stages through which that award or arbitration

proceedings may pass. I, therefore, overrule the objection relating to the jurisdiction

of this Court.

(16) THE result of the above discussion is, I hold Issues Nos. 1 and 2 in favour of

the petitioner. Q. 3. Ouster of arbitration due to the reference to the Estate Officer.

(17) I cannot see in what way the matter has become non-referable to arbitration

on the Estate Officer taking proceedings under the Public Premises (Eviction of

Unauthorised Occupants) Act, 1971. There is nothing in the or even in the

Arbitration Act barring the arbitration proceedings going on. I am, therefore, of the

view that the matter can be referred to arbitration notwithstanding the. tact that the

Estate Officer may have chosen to take action under the Public Premises (Eviction of

Unauthorised Occupants) Act. 1971. No. 4. Scope of the arbitration agreement.

(18) IN the present case the wording of the arbitration agreement which is clause

19 of the agreement is as follows: that in case of any dispute arising between the

parties with regard to the intent and meaning of this Agreement and subject matter

referred to therein the same shall be referred to the sole arbitration of the General

Manager, Northern Railway, or any other officer of the Railway appointed by him,

who shall conduct the proceedings in accordance with the provisions of the Indian

Arbitration Act, 1940. "in my view, the disputes which have arisen between the

parties are in relation to the intent and meaning of the agreement or the subjectmatter

referred to therein. The statements of the claims set out in paragraph No.

10, if shortly summarised are as follows:1. Dispute relating to the period of the

beginning from 1st January, 1963. 2. Dispute relating to the quantum of rent for the

agreed period up to the end of 20 years. 3. Dispute relating to rate of rent,

according to the petitioner, the rate is not more than Rs. 30611. 88 per year. 4. The

question whether the petitioner can be evicted during the period of 20 years. All

these matters arise from the agreement and have to be decided by an interpretation

thereof. Whether the disputes are to be decided in favour of one party or the other

is not for this Court to decide. There are certainly disputes which require recourse to

the contract and, therefore, they arise in relation to the same and have to be

decided by arbitration, under well-settled rules relating to the scope of arbitration

agreements. I am, therefore, of the view that the matter does fall within the scope

of the arbitration agreement.

(19) IN view of this discussion. I cannot see any reason why the matter cannot be

referred to arbitration. I would accordingly allow the petition, direct the filing of the

arbitration agreement and in accordance with the agreement direct the disputes to

be referred to an arbitrator to be appointed by the General Manager Northern

Railway under the terms of the agreement. The General Manager can himself be the

arbitrator or he may appoint any other officer. The appointment should be made

within three months. In view of the nature of the points involved in this petition, I

would leave the parties to bear their own costs.

(20) THERE is an order passed earlier in this case on 30th August, 1977, which

restrains the respondents from evicting the applicant during the pendency of the

arbitration proceedings. I would extend the order to operate till the award is given

so that the respondents will not evict the petitioner during the pendency of the

arbitration proceedings. After the award has been made it will be for the Court in

which the award is filed to consider what order to pass.