IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
Salil Kant – Appellant
Versus
Meneta Automotive Component Pvt. Ltd. – Respondent
Arb.P. 545 of 2023
Decided On : 07-07-2023
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11(6)
Fact of the Case:
The petitioner sought appointment of an Arbitrator for adjudication of disputes arising from an agreement dated 31.12.2013. The respondent opposed the petition on grounds of invalid notice and limitation of the claim.
Finding of the Court:
The court found that the notice issued by the petitioner clearly invoked arbitration, and the claim was not barred by limitation due to the liberty granted by the court to initiate arbitration proceedings again.
Issues: Validity of notice invoking arbitration and limitation of the petitioner's claim.
Ratio Decidendi: The court held that the contents of the notice, not the form, were relevant for invoking arbitration. The court also emphasized that the liberty granted by the court to initiate arbitration proceedings again prevented the claim from being barred by limitation.
Final Decision: The petition was allowed, and an Arbitrator was appointed for adjudication of disputes between the parties. The court clarified that it had not expressed any opinion on the merits of the petitioner's claims.
JUDGMENT
Rekha Palli, J. (Oral)--The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act), seeks appointment of an Arbitrator for adjudication of the disputes which have arisen between the parties in relation to agreement dated 31.12.2013.
2. The petition is sought to be opposed by the respondent on two grounds. The first being that the legal notice dated 17.02.2023 issued cannot be treated as a valid notice in consonance with Section 21 of the Act. In support of his plea, learned counsel for the respondent has relied on the decision of a Coordinate Bench of this Court in Alupro Building Systems Pvt. Ltd. vs. Ozone Overseas Pvt. Ltd., 2017 SCC OnLine Del 7228.
3. The second submission of the respondent is that the petitioner's claim is on the face of it grossly barred by limitation. Learned counsel for the respondent submits that the cause of action if any, in favour of the petitioner having arisen in the year 2013, his claim was liable to be rejected at this stage itself as no useful purpose would be served by referring the parties to arbitration. He therefore, prays that the petition being an abuse of the process of law be dismissed.
4. In response, learned counsel for the petitioner submits that the respondent was well aware that the petitioner was invoking arbitration in accordance with the liberty granted to him by the learned Additional District Judge on 30.08.2022 in ARBTN No. 244/2018. He submits that vide his notice dated 17.02.2023, the petitioner had unequivocally invoked arbitration and therefore the respondent's plea that there was non-compliance of Section 21 of the Act was wholly misconceived. He further submits that even the respondent's plea that the petitioner's claim was barred by limitation was equally misconceived. He submits that the respondent having failed to assail the order dated 30.08.2022 vide which the petitioner was granted liberty to invoke arbitration cannot now be permitted to urge that the petitioner's claim was barred by limitation.
5. He further submits that even otherwise, this aspect as to whether the petitioner's claim is barred by limitation can be determined only by the learned Arbitrator after considering the evidence to be led before him. He therefore prays that the petition be allowed and an Arbitrator be expeditiously appointed so that the petitioner can receive his dues which have remained pending since 2013.
6. Having considered the submissions of the parties, I find that the primary submission of learned counsel for the respondent is that the notice dated 17.02.2023 could not be treated as a notice invoking arbitration as envisaged under Section 21 of the Act. It would therefore be apposite to first note the relevant extracts of para 7 and 8 of the notice whereby the petitioner claims to have invoked arbitration. The same read as under:
"7. That my client started Arbitration proceedings against you as per the terms and conditions of the contract and wherein the Arbitrator passed the Arbitral Award against you on 17th July 2017 and wherein you also participated therein. After the Arbitral Award you challenge the same before the Hon'ble Court and" wherein the Hon'ble Court set aside the said Arbitral Award on the ground of not compliance of the Section 21 of Arbitration-C 85 Conciliation Act and not adhere to the Arbitration Clause of the Contract and wherein my client unilaterally appoint the sole `Arbitrator which is against the public policy, therefore, the said Arbitral Award dated 17th July 2017 was set by the Hon'ble Court vide order dated 30th August 2022 and therein the Hon'ble Court also granted the liberty to initiate Arbitration proceedings again as per law. Therefore, the present notice is issued to you for initiating the Arbitration proceedings of dispute between you and my client.(Emphasis supplied)
8. XXX
NOW BY MEANS OF THIS NOTICE, I hereby call upon you to pay the entire outstanding amount of Rs.12,38,512/- (Rs.Twelve Lacs,
The referral court under Section 11 of the Arbitration and Conciliation Act must determine the prima facie existence of an arbitration agreement and appoint an arbitrator if satisfied.
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.
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.
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 point established in the judgment is that issues of limitation and notice under Section 21 of the Arbitration and Conciliation Act, 1996, fall within the realm of admissibility issues ....
The period of limitation for invoking arbitration runs from the date of the order referring the parties to arbitration, not from the date of the first notice invoking arbitration.
The arbitration application under Section 11(6) was not barred by limitation as it was filed within three years from the date of notice invoking arbitration, factoring delays linked to the Covid-19 e....
The Arbitration and Conciliation Act requires strict adherence to limitation periods for the appointment of arbitrators; delays exceeding three years render petitions ex-facie time-barred.
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