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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K. Lakshman, J.
M/s. Terra Infra Development Limited – Petitioner
Versus
M/s. NCC Limited – Respondent
Arbitration Application No.113 of 2021
Decided On : 20-06-2022
Arbitration - Appointment of Presiding Arbitrator - Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996 - [Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996] - The court discussed the application of the Limitation Act, 1963 to arbitration proceedings and the relevance of acknowledging claims to extend the period of limitation. The court found that the applicant's claim was barred by limitation and dismissed the Arbitration Application.
Fact of the Case:
The case involved a dispute between the Applicant and the Respondent regarding claims related to a construction project. The Applicant raised claims for compensation, which were disputed by the Respondent. The Applicant initiated arbitration proceedings for the appointment of a presiding arbitrator.
Finding of the Court:
The court found that the Applicant's claims were barred by limitation as the Respondent disputed the claims in 2013, and the Applicant initiated arbitration proceedings only in 2020. The court also rejected the Applicant's argument that the Respondent's appointment of a nominee arbitrator acknowledged its liability. The court held that the claims were time-barred and dismissed the Arbitration Application.
Issues: The key issue was whether the claims of the Applicant were barred by limitation, and if a presiding arbitrator could be appointed in the case.
Ratio Decidendi: The court applied the principles of the Limitation Act, 1963 to arbitration proceedings and emphasized that the period of limitation starts from the date when the claim is disputed. The court also clarified that mere correspondence and appointment of nominee arbitrator does not extend the period of limitation. The court's decision was based on the finding that the Applicant's claims were time-barred.
Final Decision: The court dismissed the Arbitration Application, concluding that the Applicant's claims were barred by limitation.
ORDER :
The present Arbitration Application is filed under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act, 1996’) for appointment of a presiding arbitrator to hear and adjudicate the claims between the Applicant and the Respondent herein.
2. Heard Mr. B. Chandrasen Reddy learned Senior Counsel representing Mr. Pasham Mohit learned counsel for the Applicant and Mr. Avinash Desai learned counsel appearing for the Respondent.
3. Facts of the Case
i) In the year 2007, the National Highways Authority of India (NHAI) invited proposals for construction of a four-lane access controlled expressway program for Pondicherry. Nagarjuna Construction Company Limited (NCC) which is the Respondent herein and IL&FS Engineering and Construction Company Limited formed a consortium to submit a bid in the proposed project of NHAI on 06.02.2007.
ii) On 05.03.2007, the NHAI awarded the project to the said consortium. For the execution of the project, a Special Purpose Vehicle named Pondicherry Tindivanam Tollway Private Limited (PTTPL) was incorporated by the Respondent and IL&FS. Since, IL&FS was facing financial constraints which affected the EPC works, the Respondent terminated the contract and on 13.08.2009 awarded it to Terra Infra Development Limited which is the Applicant herein.
iii) According to the EPC Sub-Contract Agreement dated 13.08.2009, a contract price of Rs. 165,59,56.902 /- was agreed upon and the works were to be executed on “as is where is basis” and on “back-to-back basis”. According to the said agreement dated 13.08.2009, the works were to be completed by 10.07.2010. However, the work was delayed and the project was completed on 12.12.2011.
iv) The Applicant raised claims relating to the project works by sending a letter dated 05.02.2013 to PTTPL and a letter dated 06.02.2013 to the Respondent herein. In both the letters the Applicant claimed that it was entitled for a final claim amount of Rs. 96,92,20,221/-.
v) On 18.05.2013, the Respondent replied to the letter dated 06.02.2013 addressed by the Applicant. In the said letter, the Respondent disputed the claim amount of the Applicant. It stated referring to Clause 13, Clause 16 and Clause 33 of the Agreement dated 13.08.2009 that the Applicant is only entitled to compensation if the Respondent gets any compensation from PTTPL. The Respondent will only get compensation if the same is received by PTTPL from NHAI. Therefore, unless NHAI pays PTTPL, the Applicant cannot claim any compensation. In the said reply dated 18.05.2013, the Respondent also stated that if at all the Applicant is entitled for any compensation, the same will be restricted to 60% of the total project value. The Respondent also alleged breach of contract in its reply.
vi) The Applicant issued various letters dated 29.07.2013, 20.03.2015, 29.08.2016 seeking release of its claim money. An email was addressed on 24.07.2019 by the Applicant regarding release of amount. To the said email, a reply dated 21.10.2019 was sent by the Respondent which again reiterated that the Applicant is only entitled to 60% of the claim amount. In the said reply, the Respondent informed about the initiation of arbitration by PTTPL against NHAI. It also stated that the claims of the Applicant were also forwarded to PTTPL.
vii) Subsequently, the Applicant replied to the letter dated 21.10.2019 and denied the contentions of the Respondent. Further, letters were issued by the Applicant on various dates to release the money and resolve the disputes. Ultimately, on 26.10.2020, the Applicant sent a letter to the Respondent invoking Clause 29 of the Agreement which included mutual negotiation before invoking arbitration.
viii) On 02.01.2021, the Applicant sent a notice to the Respondent invoking arbitration to resolve the disputes. On 02.03.2021, the Applicant appointed one Mr. Harish Balwani as their nominee arbitrator. On 03.04.2021, the Respondent appointed one Mr. Vipin Sharma as their nominee arbitrator. In
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 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.
The limitation period for filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is governed by Article 137 of the Limitation Act, and the claims must be alive at the....
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.
Arbitration requests must be filed within three years of the cause of action; failure to act in time bars subsequent petitions.
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....
The main legal point established in the judgment is that the limitation period for filing an application seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation A....
An application for arbitration is barred by limitation if filed beyond the three-year period stipulated, starting from the date the cause of action arose as determined by prior communications.
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