2013 Supreme(Cal) 841

CALCUTTA HIGH COURT
Sanjib Banerjee, J.
M. D. Enterprise and others - Petitioners
Versus
M/s. Whirlpool of India and others - Respondents
A. P. No. 783 of 2013
Decided on : 02-08-2013

The right of a party to an arbitration agreement to seek an arbitral reference is also governed by the laws of limitation and, notwithstanding the commencement of arbitral proceedings, the party's right to have a reference in accordance with such agreement may not be pursued beyond the period of limitation.

Headnote:

ARBITRATION - APPOINTMENT OF ARBITRATOR - FORUM SELECTION CLAUSE - WAIVER - LIMITATION - SECTION 14 OF LIMITATION ACT - JURISDICTION OF CIVIL COURT - SECTION 42 OF ARBITRATION AND CONCILIATION ACT - SECTION 11 OF ARBITRATION AND CONCILIATION ACT - SECTION 2(1)(E) OF ARBITRATION AND CONCILIATION ACT - SECTION 11(12)(B) OF ARBITRATION AND CONCILIATION ACT

Fact of the Case:

Petitioner was appointed in 1990 for selling consumer durables manufactured by the respondent. The agreement was terminated by a notice dated August 9, 2008. The petitioner filed a suit for damages and a decree of about Rs.66 lakh. The respondent applied under Section 8 of the Arbitration and Conciliation Act, 1996 and the parties were referred to arbitration. A subsequent petition under Section 9 of the 1996 Act, filed by the petitioner, was dismissed on January 11, 2013. The petitioner invoked the arbitration agreement on April 3, 2013. The respondent did not reply to the notice. The petitioner carried the present request for the constitution of the arbitral tribunal to the Chief Justice of this Court or his designate.

Finding of the Court:

1. The respondent's objection that the claim is barred by limitation is without merit. Section 14 of the Limitation Act has no application to the present case. The clock of limitation is stopped upon the institution of the suit or the lodgment of the plaint relating thereto. The clock of limitation would not start to tick again merely because the suit has subsequently been disposed of on a petition under Section 8 of the 1996 Act. 2. The petitioner's right to pursue the claim in arbitration has been exercised at the appropriate time. 3. The forum selection clause contained in the agreement does not preclude the Chief Justice of this court or his designate to entertain the present request under Section 11 of the 1996 Act. Section 42 of the Act, in such context, recognises the principle of waiver. 4. The Chief Justice of this Court or his designate has due authority to receive the present request in view of Section 11(12)(b) of the Act read with Section 2(1)(e) thereof. 5. Justice Sailendra Prasad Talukdar (Retired) is appointed arbitrator to adjudicate upon the disputes between the parties covered by the arbitration agreement.

Issues: 1. Whether the petitioner's claim is barred by limitation? 2. Whether the forum selection clause contained in the agreement precludes the Chief Justice of this court or his designate to entertain the present request under Section 11 of the 1996 Act?

Ratio Decidendi: 1. The date of commencement of arbitral proceedings is akin to the date of presentation of a plaint if the claim were to be carried by way of a civil suit to a regular forum. Once the arbitration clause is invoked and arbitral proceedings commence within the meaning of Section 21 of the 1996 Act, the clock of limitation is stopped. 2. A civil court having due authority to receive a suit, notwithstanding the subject-matter of the suit being governed by an arbitration agreement or a forum selection clause, cannot be regarded as a forum without jurisdiction, within the meaning of Section 14 of the Limitation Act, upon such court refusing to proceed with the suit following the invocation of the arbitration agreement or the forum selection clause governing the subject-matter of the action. 3. Section 42 of the Act empowers the Chief Justice of a High Court or his designate to receive a request under Section 11 of the Act if the relevant principal civil court referred to in Section 2(1)(e) of the Act is situate within the local limits of that High Court or, if such principal court is that High Court itself in exercise of its ordinary original civil jurisdiction.

Final Decision: The petition is allowed. Justice Sailendra Prasad Talukdar (Retired) is appointed arbitrator to adjudicate upon the disputes between the parties covered by the arbitration agreement.