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IN THE HIGH COURT OF DELHI AT NEW DELHI
Navin Chawla, J.
Zenith Erectors Private Limited – Appellant
Versus
Brahmaputra Cracker And Polymer Limited – Respondent
Arb.P. 1118 of 2022 & I.As.67 of 2023, 2399 of 2023
Decided On : 27-02-2023
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11(6)
Fact of the Case:
The petitioner filed a petition seeking appointment of an Arbitrator for adjudicating disputes arising from a Contract Agreement. The respondent raised objections based on the law of limitation.
Finding of the Court:
The Court held that the plea raised by the petitioner required detailed examination and should be left for adjudication by the Arbitral Tribunal. The Court appointed a Sole Arbitrator and referred the parties to the Delhi International Arbitration Centre for conduct of the arbitration proceedings.
Issues: Invocation of Arbitration Agreement, Law of Limitation, Appointment of Arbitrator, Conduct of Arbitration Proceedings
Ratio Decidendi: The Court's jurisdiction at the stage of Section 11 of the Act is limited. The Court should not undergo a detailed examination of facts to determine limitation. The Arbitral Tribunal is the preferred authority to decide questions of non-arbitrability. The Court should interfere only when claims are ex facie time-barred and dead, or there is no subsisting dispute.
Final Decision: The Court appointed a Sole Arbitrator and referred the parties to the Delhi International Arbitration Centre for conduct of the arbitration proceedings.
JUDGMENT
Navin Chawla, J. (Oral)
1. This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Contract Agreement dated 03.08.2011 executed between the parties whereby the petitioner was awarded the work of "Composite Works of C2+ Recovery & Gas Sweetening Unit (GSU) of M/s Brahmaputra Cracker and Polymer Limited at Lakwa, (Assam)".
2. The Arbitration Agreement between the parties is contained in Clause 107 of the General Conditions of Contract.
3. The petitioner invoked the Arbitration Agreement vide notice dated 28.11.2020. The petitioner thereafter filed a petition under Section 11 of the Act before the High Court of Calcutta, being A.P No.373/2021. The said petition was withdrawn on 14.12.2021, stating that as the seat of the arbitration is New Delhi, the High Court of Calcutta would not have the territorial jurisdiction to entertain the said petition. The present petition has thereafter been filed by the petitioner on 22.09.2022.
4. The learned counsel for the respondent, drawing reference to the dates and events as explained in the reply of the respondent, and specifically with respect to the claims that have been raised by the petitioner, submits that the petitioner seeks reference of claims which are ex facie barred by the law of limitation. In this regard he submits that in terms of the contract, the work was to be completed by the petitioner on or before 13.03.2013. Due to dismal performance of the petitioner, the respondent vide letter dated 03.11.2012, was constrained to off-load the contract from the petitioner with immediate effect with liberty to get the contract executed through another agency at the risk and cost of the petitioner. He submits that the petitioner vide its replies dated 06.11.2012 and 07.12.2012, admitted that it is the petitioner who was at default due to its own financial issues. Finally, the respondent awarded the off-loaded balance work to M/s North East Engineering and Construction (in short 'NEECON') on 14.02.2013. The respondent also invoked the two bank guarantees of the petitioner on 19.02.2013. The petitioner, thereafter, claims to have written various mails/letters to the respondent, however, it is not the case of the petitioner that the respondent ever admitted to any amount being due to the petitioner from the respondent. In fact, vide letter dated 11.08.2016, the respondent denied each and every allegation of the petitioner. On 03.07.2019, the respondent raised a claim of Rs.1,25,87,991/- (Rupees One Crore Twenty-Five Lakhs Eighty-Seven Thousand Nine Hundred and Ninety-One only) on the petitioner towards the risk and cost amount. The same was reiterated by the letter dated 03.10.2019 by the respondent. It is only thereafter, that the petitioner invoked the Arbitration Agreement vide letter dated 28.11.2020, that is much beyond the period of limitation. He submits that the cause of action for filing of the claims, if any, would have arisen on 03.11.2012, the date of termination of the contract and off-loading of the same, and/or on 19.02.2013, when the bank guarantees were invoked by the respondent. The invocation of arbitration having been made only on 28.11.2020, clearly as on that date, the claims were ex facie barred by the limitation.
5. Placing reliance on the judgment of this Court in GAIL (India) Limited. v. Kesar Alloys & Metals Private Limited, Neutral Citation No.2022/DHC/001101, he submits that where the claim is ex facie barred by the law of limitation, this Court would not relegate the parties to arbitration. He submits that the unilateral letters written by the petitioner would not extend the period of limitation.
6. On the other hand, the learned counsel for the petitioner submits that upon termination of the contract, the petitioner had raised its claims before the
The Court's jurisdiction at the stage of Section 11 of the Act is limited, and the Arbitral Tribunal is the preferred authority to decide questions of non-arbitrability.
The period of limitation for filing a petition seeking appointment of an Arbitrator is distinct from the period of limitation for the substantive claims made in the underlying commercial contract.
Arbitration requests must be filed within three years of the cause of action; failure to act in time bars subsequent petitions.
An application under Section 11 for appointment of an arbitrator is time-barred if filed after three years from the refusal to appoint, with delays not justified.
The main legal principle established is that the Court should not reject an application for appointment of an arbitrator at the threshold unless the claim is manifestly, ex-facie and hopelessly time-....
The appointment of an Arbitrator should proceed if there is doubt about the subsistence of the disputes, and objections regarding claims should be left to be determined by the Arbitrator.
Claims withdrawn do not reset the limitation period; the original cause of action's date governs the timeliness of arbitration requests.
The main legal point established is the limited scope of examination under Section 11 of the A&C Act, which focuses solely on the existence of an arbitration agreement.
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