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2025 Supreme(Online)(Mad) 67314
2025:MHC:2206 In the High Court of Judicature at Madras Reserved on Delivered on :
09.9.2025 16.9.2025 Coram :
The Honourable Mr.Justice N.ANAND VENKATESH Arbitration O.P.(Com.Div.) No.319 of 2025 S.Krishnamoorthy, Sole Proprietor of Sri Ram Engineering Company, No.6, G.P.Mahal, New Sidhapudur, Coimbatore-641044. ...Petitioner Vs Engineering Projects India Ltd., 3-d, EC Chambers, 92, GN Chetty Road, T.Nagar, Chennai-17. ...Respondent PETITION under Section 11(5) of the Arbitration and Conciliation Act, 1996 praying to appoint an arbitrator to adjudicate the disputes between the parties arising out of work order No.SRO/PMD/CPT-4/ 1/46 dated 27.8.2015 for electrical works and work order No.SRO/ PMD/736/174 dated 24.2.2016 concerning the supply of a security system.
For Petitioner : Mr.S.Hasthisha Desikan for Mr.S.Adarsh For Respondent : Mr.P.J.Rishikesh
The court's role under Section 11 of the Arbitration and Conciliation Act is limited to examining the existence of an arbitration agreement, without delving into issues of limitation or accord and satisfaction.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(5) and Section 11(6A) - Petition under Section 11 for appointment of an arbitrator - Disputes arisen from two work orders for electrical works and security system - Respondent claims issues barred by limitation and accord/satisfaction of dues - Court's role confined to examining existence of arbitration agreement - Appellate procedure should not delve into merits or defenses like limitation at this stage - Arbitrator appointed. (Paras 1, 3, 19, 30)
(B) Limitation and Accord/Satisfaction - Submission that claims are non-arbitrable must await arbitration - Court established limited inquiry role under Section 11, focusing strictly on existence of arbitration agreement. (Paras 20, 29)
ORDER
This is a petition filed by the petitioner under Section 11 of the Arbitration and Conciliation Act , 1996 (hereinafter called the Act) seeking to appoint an arbitrator to adjudicate the disputes between the parties arising out of two work orders dated 27.8.2015 and 24.2.2016 respectively for the electrical works and for the supply of security system.
2. Heard the learned counsel for either side.
3. The case of the petitioner is as follows :
(i) The parties entered into two contracts for establishment of electrical works for the proposed renovation of the cruise passenger facilitation centre in the existing passenger terminal of Chennai Port Trust. The first contract pertains to an electrical work covered under the work order dated 27.8.2015 and the second contract pertains to the security system for the cruise passenger facilitation centre covered under the work order dated 24.2.2016.
(ii) The actual dispute arose when the respondent had levied on the petitioner the liquidated damages for the delay in the execution of the projects and as a consequence, they withheld some amount from the payments made to the petitioner for the bills raised. Vide letter dated 11.4.2016 and 21.7.2017, the petitioner requested the respondent to release the withheld amount towards liquidated damages. The petitioner also sought for an amicable settlement and various exchange of communications took place from 2018 onwards.
(iii) Ultimately, since there was no response from the respondent, the petitioner sent a letter dated 16.4.2021 requesting for the initiation of conciliation of disputes arising out of the contracts. On receipt of the same, the respondent sent a reply dated 28.4.2021 claiming that all the financial liabilities arising out of the contracts have been released to the petitioner and that there was no dispute to be resolved between the parties. It is under these circumstances, the above petition has been filed before this Court seeking to appoint an arbitrator to adjudicate the disputes between the parties.
4. The respondent filed a counter affidavit wherein they took the following stand :
(i) The claim made by the petitioner is hopelessly barred by limitation since the liquidated damages were adjusted from the bills during April and July 2017 and the retention monies were refunded to the petitioner on 09.9.2020. Much later, a notice of arbitration was issued on 09.4.2024, which was clearly beyond the three year limitation period.
(ii) The petitioner himself sent two letters dated 04.6.2019 and 15.6.2019 expressly certifying that he did not have any dues from the respondent as well as the Chennai Port Trust towards both the work orders except the retention monies and the security deposit bank guarantees. On 09.9.2020, the retention monies were also refunded to the petitioner. After expressing his accord and satisfaction, the petitioner was not left with any dispute to be adjudicated by an arbitrator. Accordingly, the respondent sought for dismissal of the above petition.
5. The learned counsel for the petitioner placed reliance on the following judgments of the Hon'ble Apex Court and contended that the issue of limitation and accord and satisfaction cannot be gone into in a petition filed under Section 11 (6) of the Act in view of Sub-Section (6A) of of the Act :
(a)SBI General Insurance Co.Ltd. Vs. Krish Spinning [reported in 2024 SCC OnLine SC 1754]; and
(b)In Re : Interplay between Arbitration Agreements under the Arbitration and Conciliation Act , 1996 and the Indian Stamp Act , 1899 [reported in 2024 (6) SCC 1 ].
6. Per contra, the learned counsel appearing for the respondent submitted as follows :
(i) This Court certainly cannot go into the issue of limitation if this Court finds that the claim is hopelessly barred by limitation. No useful purpose will be served in referring the matter for arbitration. In a case where a final settlement has been made by the respondent and has been accepted by the petitioner towards full and fina
