Point of Law : Claim for payment sought to be made by the applicant on such an empty and non-existent basis, namely, non-existent bills not even filed with its application under Section 11(5) will give rise to an ‘ex facie, meritless, frivolous and dishonest litigation’. It is ‘deadwood’ not permissible.

JUDGMENT :

1. The judgment is being structured in the following framework to facilitate the discussion:

A. Remand Order

B. Pleadings

(i) Application under section 11;

(ii) Further pleadings;

(iii) Objections by respondent-IFFCO

C. Existence of Arbitration Agreement

D. Claim – time barred, deadwood

(i). Limitation Act: Section 18

E. Conditions for maintaining application under Section 11

F. Vexatious, frivolous dishonest claim

G. Conclusion

2. Heard Sri Anil Tiwari, learned Senior Counsel assisted by Sri Santosh Kumar Tiwari and Sri Dharmendra Shukla, learned counsels for the applicant/petitioner and Sri Sunil Gupta, learned Senior Counsel assisted by Ms. Sushmita Mukherjee and Sri Sanjay Grover, learned counsels appearing for the respondent. Parties were heard at length for several days.

A. Remand Order :

3. The instant application/petition has been filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, [Arbitration Act], invoking the jurisdiction of this Court for appointment of an arbitrator. The matter was heard pursuant to remand order dated 9 March 2021, [Civil Appeal No(s). 837 of 2021 (M/s Indian Farmers Fertilizer Cooperative Ltd. & others v. M/s Manish Engineering Enterprises)]. Relevant portion of the Supreme Court order reads thus:

“Our attention has been invited to the recent three Judge Bench decision of this Court in “Vidya Drolia & Ors. vs. Durga Trading Corporation”, reported in (2021) 2 SCC 1, which is directly on the point. Amongst others, it has been held that the High Court in a given case while deciding an application under Section 11(4) of the Arbitration and Conciliation Act, 1996, can undertake ‘the prima facie test’ examination to check manifest cases of nonexistent and invalid arbitration agreements and ex facie time barred and dead claims. This limited exercise is to weed out and stop barefaced and pellucid meritless, frivolous and dishonest litigation at the threshold. However, the principle ‘when in doubt, do refer’ applies. Therefore, when the contentions are arguable, when consideration in summary proceedings would be insufficient and inconclusive, when facts are contested etc., the matter/disputes should be 3 referred to the Arbitrator.

The counsel for the respondents vehemently submitted that they have placed on record the document, namely, the arbitration agreement, which is a genuine document. However, we need not elaborate on the arguments advanced before us for the nature of the order we propose to pass as we are of the opinion that the issue and contentions require reconsideration in accordance with law keeping in mind the legal ratio in Vidya Drolia (supra). These contentions can be considered by the High Court in the remand proceedings.

We accordingly set aside the impugned order and the judgment and relegate the parties to the High Court by restoring the application for appointment of the arbitrator to its original number for being considered afresh. The examination would be in terms of the ratio in Vidya Drolia (supra).

We may not be understood to have expressed any opinion either way on any of these contentions, or as may be available to the parties in the remanded proceedings. All contentions are left open.”

4. Supreme Court directed that while considering the application under Section 11 of the Arbitration Act, the Court to prima facie, examine: (i) whether the agreement exists; (ii) whether the litigation is meritless, frivolous and dishonest; (iii) whether the claim, ex facie, is time barred/deadwood, and/or, the application (Section 11) is itself barred under the Limitation Act, 1963, [Limitation Act].

5. The instant application under Section 11(5) of the Arbitration Act was presented on 17 December 2004, the application came to be disposed of vide order dated 22 January 2019, appointing an arbitrator. The respondent, Indian Farmers Fertilizer Cooperative Ltd., [IFFCO], a public