Point of Law: In a rare and exceptional case where claims are ex facie time barred and it is manifest that there is no subsisting dispute, Court may refuse to make a reference.

ORDER :

1. This application under Section 11 (4) & (6) of the Arbitration and Conciliation Act, 1996 ('the Act, 1996') has been filed by the applicant seeking appointment of sole arbitrator for resolving the dispute between the applicant and the respondents.

2. Submissions have been made that the applicant company is manufacturing medicines and as it was desirous of purchasing fully automatic machines and the respondent company was involved in manufacturing of such machines, the applicant company issued a purchase order for supplying Wet Niacin handling System, Tray Conveyor System, Inclines Screw Conveyor, Niacinamide Packing System including installation, accessories and training regarding operation & handling of machines.

3. The agreement (Annex.1) entered into between the parties contained the arbitration clause for settling the dispute relating to the purchase order/service order.

4. The purchase order was placed on 1/10/2013 and the same was acknowledged by the respondents by issuing communication dated 4/10/2013 endorsing the acceptance on the purchase order. The applicant company sent a cheque amounting to Rs.5,56,150/-towards advance payment on 14/10/2013.

5. The respondent company informed the applicant that the machines were ready, however, it is alleged that on inspection the machines were found defective and despite further inspections, the defects were not rectified and, therefore, the applicant company sought repayment of advance amount. The respondent company instead of repaying the advance, demanded a sum of Rs. 8,33,446/- as the balance payment and storage charges.

6. Thereafter, it is indicated in the application that since despite repeated persuasion, the advance amount was not refunded, the applicant sent a notice dated 15/3/2017 calling for repayment of the advance amount. As no response was received, a registered notice dated 9/6/2017 was sent proposing the appointment of Mr. M.S.Senani as sole arbitrator. However, as the respondents have neither made the payment nor accepted the appointment of arbitrator, the present application has been filed.

7. A reply to the application has been filed inter alia raising objection that the claim made by the applicant is barred by limitation.

8. Submissions have been made that as per the purchase order, the machines were to be supplied within 8-12 weeks from the date of purchase order and latest by 31/12/2013, the cause of action arose on the said date and as the notice seeking appointment of arbitrator has been issued on 15/3/2017, the claim is barred by limitation. Further the averments made in the application have been denied and accusations have been made against the applicant.

9. A rejoinder has been filed refuting the averments pertaining to the claim being barred by limitation.

10. An additional affidavit has been filed in support of the application, wherein, an email dated 22/1/2015 has been annexed with the submissions that the respondents through the said email had indicated that the amount has been adjusted towards the advance received against the purchase order and further sought payment of sum of Rs. 10,94,280/-, which would be the relevant date for the cause of action in the present case and it cannot be said that the claim is barred by limitation.

11. Counter affidavit has been filed by the respondents inter alia reiterating that the claim is barred by limitation.

12. Learned counsel for the applicant made submissions that apparently there is an arbitration agreement between the parties and as the dispute has arisen between them, in terms of the arbitration agreement the applicant is entitled to seek appointment of arbitrator.

13. Further submissions have been made that the plea raised by the respondents in response is that the claim is barred by limitation, which issue has to be determined by the arbitrator and cannot be made subject matter of the present proceedings. It was further emphasized that even if the plea raised is examined, the same is ex facie baseless