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RAJASTHAN HIGH COURT BENCH AT JAIPUR
Sanjeev Prakash Sharma, J.
M/s Trade Swift Developers Private Limited - Appellant
Versus
Gopal Prasad Kanodia & Ors. - Respondents
S.B. Arbitration Application No. 53 of 2019
Decided On : 20-12-2021
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Sections 11, 21, 43(1) - The court emphasized the limited scope of intervention under Section 11 post-2015 amendment, focusing solely on the existence of an arbitration agreement and leaving other issues, including limitation, to the arbitrator.
Fact of the Case:
An application was filed under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator due to a dispute arising from a Memorandum of Understanding regarding property sale, with the respondents contesting the application on grounds of limitation and insufficient stamping.
Finding of the Court:
The court found that the applicant had been vigilant in pursuing arbitration and that the matter should be referred to an arbitrator, as the MoU was duly stamped and the applicant's actions did not constitute deliberate delay.
Issues: The primary issues were whether the application for arbitration was time-barred and whether the MoU was sufficiently stamped.
Ratio Decidendi: The court held that under Section 11(6A) of the Arbitration Act, it must only examine the existence of an arbitration agreement, and limitation issues should be determined by the arbitrator unless they are manifestly time-barred.
Result: The application for arbitration was allowed, and an arbitrator was appointed.
JUDGMENT
1. An application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, 'the Act of 1996') has been filed by the applicant for appointment of an Arbitrator in order to resolve the dispute which has arisen in pursuance to the MoU/agreement of sale entered into between the parties on 19.10.2007 with regard to sale of property situated at revenue village Barodia, station road Tehsil and District, Jaipur bearing Khasra No.330 for the total sale consideration of Rs.50.51 crores.
2. The MoU contained arbitration clause as under:
3. The applicant has stated that they had paid a total advance sum of Rs.6.20 crore to the respondents and despite repeated requests, the respondents failed to hand over title of the property while the applicants are ready and willing to perform their part.
4. It is further stated that vide notice dated 24.10.2010 the MoU was cancelled by the respondents-non-applicants. It appears that the applicant has been pursuing the matter relating to appointment of arbitrator since service of a legal notice to the respondents on 07.01.2012 under Section 21 of the Act of 1996 invoking arbitration clause whereafter an application was filed under Section 11 of the Act of 1996 before Calcutta High Court.
The said application No.129/2012 was dismissed by the Hon'ble Calcutta High Court vide its order dated 14.09.2012 solely on the ground of lack of territorial jurisdiction.
5. It appears that thereafter a dispute arose regarding who should be appointed as the Arbitrator and no consensus could be arrived at whereafter an arbitration application was filed by the applicant before this Court under Section 11 of the Act of 1996.
6. This time, the respondents raised objection regarding the MoU being insufficiently stamped and the High Court dismissed the application No.30/2014 on the ground that the MoU was not sufficiently stamped and further granted liberty to the applicant to file fresh application after paying the deficit stamp duty.
7. The applicant staes that he deposited the deficit stamp duty and whereafter he again filed an application No.52/2018 but this time, this Court dismissed the application vide order dated 01.02.2019 on the ground that the notice under Section 21 was not served on the opposite party for nominating the Arbitrator. A liberty was granted again to approach the court upon failure to nominate an Arbitrator and comply with the service of notice under Section 21. It appears that in compliance thereof the applicant again served a notice under Section 21 and names were also suggested of proposed arbitrator. However, the respondents have not agreed to appointment of Arbitrator whereafter the present application has been filed.
8. The respondents have contested this application on the ground of limitation and it is submitted that as per Section 43(1) of the Act of 1996 read with Article 137 of the Limitation Act, the present application is time barred as it has not been filed within three years from the date on which the cause of action accrued. It is stated that a cause of action firstly accrued on 18.04.2008 that is on expiry of six months period set for execution of sale deed under Clause 16 of the MoU or at least on expiry of 15 days in its period that is on 03.05.2008.
9. The respondents submitted that the cause of action cannot be said to have arisen on the day when the MoU was cancelled or on the date when the first notice under Section 21 was issued to them. It is stated that the original title deeds of the property have been misplaced and were unavailable. The only valid notice under Section 21 has been firstly issued on 19.03.2019 which is the ba
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