Point of Law: Limitation for making claim - Arbitration is an alternative dispute resolution mechanism to a suit. In the circumstances, the period of limitation for making claims by respondent by way of a suit or arbitration is six years from the date when the cause of action arose.

JUDGMENT :

B.V.Nagarathna, J.

The appellant herein was the plaintiff in A.S.No.25/2014. The said suit was filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act, 1996” for the sake of brevity), seeking setting aside of the arbitral award dated 26/12/2013, passed by sole Arbitrator/respondent No.2 herein. By the impugned judgment and decree dated 10/06/2020, passed by the VI Additional City Civil and Sessions Judge at Bengaluru City, the suit for setting aside the award dated 26/12/2013 was dismissed. Hence, this appeal.

2. Briefly stated the facts are that, the appellant/plaintiff being in the business of outdoor advertisement, responded to a tender, inviting potential bidders to develop and maintain the road medians and also to earn revenue from the same. Plaintiff entered into three agreements with defendant No.1/respondent No.1 herein as the successful bidder. The details of the agreements are as under:

(a) Agreement dated 13/04/2004 for Road Median from Windsor Manor to Mekhri Circle;

(b) Agreement dated 13/04/2004 for Road Median from Domlur Girls High School to Airport Exit Gate and

(c) Agreement dated 30/12/2004 for Road Median from Hebbal Flyover to Mekhri Circle.

The plaintiff was permitted and licenced to beautify the road medians at the specified locations under the agreement and was allowed to install translite boxes in the road medians for displaying commercial advertisements of its clients. The plaintiff undertook to pay advertisement tax, cess and other statutory dues to respondent No.1/Bruhat Bengaluru Mahanagara Palike, which is a Municipal Corporation for the City of Bengaluru (hereinafter referred to as “BBMP”, for short) at the rates prescribed from time to time. There were various terms and conditions under the agreement with regard to payment of licence fee, advertisement tax, service tax, etc.

3. It is the case of respondent No.1/BBMP that the appellant fell into arrears in the payment of licence fee and other dues. Hence, demand notice dated 15/12/2009 was issued. Notices dated 15/12/2009, 14/09/2010 and 21/10/2010 were issued claiming arrears of licence fee, advertisement tax, etc. The said notices were issued under Rules 27 and 28 of Taxation Rules of Karnataka Municipal Corporation Act, 1976 (hereinafter referred to as “the KMC Act” for the sake of convenience).

4. The appellant also preferred a claim for Rs.1,90,00,000/-(Rupees one crore and ninety lakh only) as compensation against respondent No.1/BBMP and pursuant to an order passed in CMP.Nos.34-36/2006 an Arbitrator was appointed. However, the claim of the appellant was dismissed by award dated 10/06/2011. The appellant preferred A.S.Nos.67, 68 and 69/2011 before the City Civil Court, Bengaluru, under Section 34 of the Arbitration Act, 1996. The same are still pending.

5. However, with regard to the agreement made by respondent No.1/BBMP, notice dated 16/03/2012 was issued stating that the plaintiff’s denial of its liability on the demand notices referred to above had given rise to a dispute. In the circumstances, CMP.No.44/2012 was filed before this Court seeking appointment of a sole Arbitrator. The said petition was allowed and the sole Arbitrator was appointed to decide the dispute under the provisions of the Arbitration Act, 1996. The claim statement was filed before the Arbitrator. The appellant herein filed the defence statement, inter alia, contending that the claim is untenable, baseless and barred by time.

6. On the basis of the rival pleadings, the Arbitrator framed as many as eight issues, the first of them being, whether the claims made by the claimant are barred by time. The aforesaid issue was considered along with issue Nos.2 and 5 and on the basis of Section 474 of the KMC Act read with Section 21 of the Arbitration Act, 1996, learned Arbitrator held that it was open to the claimant/respondent No.1 herein to undertake arbitration within six years from the date of cause of acti