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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Raj Mohan Singh, J.
Extramarks Education India Private Limited - Appellant
Versus
M/s Dis Chain Of Institutions & Anr. - Respondents
Arb No. 49 of 2022 (O&M)
Decided On : 30-09-2022
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996, Section 11(5) - Scheme of Appointment of Arbitrators - Agreements dated 01.04.2011, 21.12.2011, 11.05.2012 and 25.03.2013 - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996, Section 11(5), Scheme of Appointment of Arbitrators - The court appointed HMJ Kuldip Singh (Retd.) as the sole Arbitrator to resolve the dispute/difference between the parties.
Fact of the Case:
The petitioner sought appointment of an Arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996 for a dispute arising from agreements with the respondents regarding the sale, implementation, and installation of hardware and multimedia system accessories for setting up Smart Learn Classes at school premises. The respondents delayed payments, leading to a demand notice and legal proceedings.
Finding of the Court:
The court found that the dispute between the parties needed to be referred to the sole Arbitrator for resolution, as the jurisdictional and admissibility issues were not time-barred and involved an arbitral issue.
Issues: The issues involved the appointment of an Arbitrator, the time-barred nature of the claim, and the admissibility of the dispute, which the court found needed to be referred to the sole Arbitrator for resolution.
Ratio Decidendi: The court held that the limitation for filing an application under Section 11 of the Arbitration and Conciliation Act is governed by Article 137 of the Limitation Act, and the issue of limitation is a mixed question of fact and law within the domain of the Arbitrator. The court also emphasized the distinction between jurisdictional and admissibility issues, and the need to refer disputes to arbitration unless there is no doubt that the claim is ex facie time-barred.
Final Decision: The court allowed the petition and appointed HMJ Kuldip Singh (Retd.) as the sole Arbitrator to resolve the dispute between the parties, with directions for the completion of proceedings within a specified time and the sharing of the Arbitrator's fee by both parties.
JUDGMENT
Raj Mohan Singh, J. - Petitioner has preferred this petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 read with 'Scheme of Appointment of Arbitrators' for appointment of an Arbitrator to decide the dispute.
2. Petitioner entered into agreements dated 01.04.2011, 21.12.2011, 11.05.2012 and 25.03.2013 with the respondents and agreed to sale, implement, install the hardware and multimedia system accessories for the purpose of setting up 510 Smart Learn Classes at the school premises. Respondents agreed to perform all the obligations under the agreements including the timely clearances of pending dues. The agreements dated 01.04.2011 and 21.12.2011 have the arbitration clause that in case of any dispute in connection with or arising out of agreements or part thereof, the dispute shall be referred to sole Arbitrator to be appointed by the mutual consent of the parties. The venue of the arbitration shall be Jalandhar and the language shall be English. The Courts in Jalandhar shall have the jurisdiction to entertain all the disputes between the parties and fee of the Arbitrator shall be equally shared by both the parties.
3. As per pleadings of the petitioner, the petitioner had delivered the hardware and installed Smart Learn Classes. The respondents started delaying the payments of installments. However, the respondents gave assurance to the petitioner for clearing outstanding payments of Rs.1,84,84,040/- along with the interest @ 18% per annum till the date of actual realisation of the amount. Petitioner sent a demand notice dated 18.09.2018 for recovery of the outstanding amount. Petitioner again sent a legal notice dated 29.01.2021 for recovery of the outstanding dues. The respondents sent a reply dated 15.02.2021, to which the petitioner sent a counter reply on 05.03.2021 and thereafter, the respondents sent a reply dated 17.03.2021, stating therein that the respondents want to amicably settle the present dispute. However, no settlement talks could take place due to the reasons solely attributable to the respondents. The agreement of extension was made on 25.03.2013 between the petitioner and Chain of DIPS Institutions, whereby EM and school agreed to increase 45 number of Smart Learn Class for the duration of 60 months commencing from May, 2013, the details of which were also annexed in the agreement of extension. It was also mentioned that the school shall make payment to EM of Rs.90,000/- per month payable on monthly basis for the duration of 60 months starting from May, 2013. School shall make the payment to EM as per payment schedule listed in the annexure attached with the agreement of extension. The period of 60 months started w.e.f 25.03.2013 till 25.03.2018.
4. The dispute arose between the petitioner and the respondents, due to which, the petitioner sent a demand notice dated 18.09.2018 to the respondents to pay outstanding amount of Rs.1,84,84,040/-. Thereafter, on 29.01.2021, the petitioner issued a legal notice-cum-demand notice for the recovery of the aforesaid amount plus interest calculated till 31.12.2020 and also interest @18% per annum till the date of actual realisation of the amount. The total amount computed for the aforesaid components was Rs.3,06,83,506/-, the break up of which was Rs.1,84,84,040/- as outstanding amount and Rs.1,21,99,466/-as interest till 31.12.2020 and further interest @18% per annum till the date of actual realisation of the amount. On receipt of the aforesaid legal notice dated 29.01.2021, the respondents replied to the same through their Advocate on 15.02.2021, thereby claiming that the amount has already been paid in excess to the petitioner. A request was made to withdraw the notice, claiming the same to be based on false and frivolous facts and also requested to the Advocate to advise the petitioner not to indulge in false and frivolous litigation and settle the accounts with the client of the Advocate for the respondents.
5. Perusal of the aforesaid
The issue of limitation is a matter for the Arbitrator to decide, and disputes should be referred to the Arbitrator for resolution.
Claims must be filed within the prescribed limitation period, and failure to do so renders them time-barred and non-arbitrable.
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 in the judgment is the application of the Limitation Act, 1963 to arbitration proceedings and the significance of acknowledging claims to extend the period of limitat....
The main legal point established in the judgment is that the limitation for filing an application under Section 11 of the Arbitration Act arises upon the failure to make the appointment of the arbitr....
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.
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