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2023 Supreme(Online)(Cal) 6478
CALCUTTA HIGH COURT
R. K. Bag, J
Prathyusha- AMR JV v. Orissa Steel Expressway Private Limited
AP 863 of 2022 | AP 370 of 2023
The acknowledgment of liability by the respondent extended the limitation period for the claimant to invoke arbitration, underlining the court's role in providing interim protection before resolution.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9, 11, and 21 - Appointment of arbitrator and interim measures - Petitioner claimed entitlement of relief under Sections 9 and 11 due to delay caused by respondent's breach of contract. The respondent opposed the appointment citing limitation. The court analyzed correspondence indicating acknowledgment of claims and events impacting the limitation period, permitting relief based on statutory exclusions applicable during the Corporate Insolvency Resolution Process (CIRP). The court emphasized the urgency under S.9 for interim protection and maintained the application for arbitration. (Paras 4, 16, 22, 32, 49)
(B) Limitation Act, 1963 - Sections 18 and 60 (6) - Acknowledgment of liability - The court concluded that acknowledgment by the respondent reset the limitation period, and the CIRP's effect on limitation is critical. It highlighted cases where negotiations around claims should not suspend the statutory period without valid reasoning. (Paras 15, 17, 19, 28)
Facts of the case:
The petitioner filed applications for appointment of an arbitrator and interim protection due to alleged delay in contract performance attributed to the respondent and claimed losses totaling Rs. 76.10 crores.
Findings of Court:
The court concluded the appointment of an arbitrator was necessary based on the existence of a dispute and acknowledgment of claims by the respondent. The interim request was justified under S.9’s provision for preserving rights before arbitration.
Issues: Court addressed whether the respondent's claim on limitation was valid and the petitioner’s right to seek interim protection under the Arbitration Act.
Ratio Decidendi: The acknowledgment by the respondent refreshed the limitation period; thus, claims were deemed within limits for arbitration application despite earlier disputes. The court held that timely intervention under S.9 is essential for the effective resolution of arbitration matters.
Result: Applications for appointment of arbitrator and interim relief granted.
| Table of Content |
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| 1. petitioner applied for arbitration appointment and interim protection under the arbitration act. (Para 1 , 2 , 3 , 4) |
| 2. petitioner claims losses due to respondent's breach of contract; respondent asserts the claim is time-barred. (Para 5 , 6 , 10 , 16) |
| 3. court assessed acknowledgment of claims and impact on limitation period. (Para 12 , 17 , 19) |
| 4. court concluded the application can proceed within the acknowledged timeline. (Para 22 , 30 , 31) |
| 5. petitioners sought interim relief to prevent withdrawal of an awarded amount. (Para 33 , 34 , 36 , 46) |
1. The petitioner has filed two applications, one for appointment of Arbitrator under S.11 of The Arbitration and Conciliation Act, 1996 and the second for interim protection under S.9 of the said Act.
2. Learned counsel appearing for the petitioner and the respondent have made their respective submissions on both the applications. The parties are the same and there are facts common to both the matters. The Court therefore proposes to deal with both the applications in this judgment.
3. AP 863 of 2022
The prayer for appointment of Arbitrator is on the basis of an EPC Contract executed between the parties on 27.7.2013 which contains an arbitration clause. The EPC Contract was entered into pursuant to a tender issued by the National Highways Authority of India (NHAI).
4. The controversy relating to the arbitration agreement between the petitioner and the respondent is briefly discussed below.
5. The NHAI issued a tender for construction of 4 Laning of Rimuli - Roxy - Rajamuda on NH - 215 in the State of Orissa under NHDP Phase - III on Build, Operate and Transfer basis. The petitioner performed the work under the contract to the extent possible. The petitioner attributes the reason for delay in performance of the contract to the respondent on account of the respondent's breach of the fundamental terms of the contract. The petitioner says it suffered loss and damage by reason of the alleged breach on the part of the respondent and claims that the respondent is hence liable to compensate the petitioner.
6. The respondent opposes the application for appointment of arbitrator on the ground that the petitioner's claim is time - barred. The respondent says that the exchange of letters between the parties does not extend the period of limitation and that the present application does not contain any specific pleading seeking exclusion of any period of limitation.
7. The petitioner on the other hand seeks to defend the application for appointment of Arbitrator on the sequence of events which took place from 15.9.2016 to 18.12.2019 and a Corporate Insolvency Resolution Process (CIRP) on and from 3.11.2021. The petitioner seeks to place emphasis on an arbitral proceeding initiated by the respondent against NHAI wherein the claims of the petitioner were included by the respondent.
8. These are the essence of the arguments urged by learned counsel appearing for the respondent and the petitioner, respectively.
9. The objection pertaining to limitation requires a few of the significant events transpiring from the letters written by one party to the other to be summarized, which is stated below.
10. The petitioner wrote to the respondent on 15.9.2016 with regard to the loss suffered by the petitioner amounting to Rs. 76.10 crores on account of the delay and other causes attributable to the respondent. The respondent replied to the petitioner on 15.11.2016 asking the petitioner to submit documents in support of its claims which the petitioner did by a letter dated 20.6.2017. The respondent informed the petitioner on 11.5.2018 that the respondent has initiated an arbitral proceeding against NHAI and had included the petitioner's claims. On 10.9.2018 the petitioner informed the respondent that the petitioner's claims are independent of the arbitration between the respondent and the NHAI but agreed to wait for 6 months.
11. On 9.5.2019, the respondent informed the petitioner that an award of Rs.3
