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2014 DIGILAW 181 (HP)

K. K. Chhibber. v. Devinder Sharma

2014-03-10

RAJIV SHARMA

body2014
JUDGMENT Justice Rajiv Sharma, Judge (oral).This petition has been filed under sub-section (6) of section 11 of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator in terms of para 11 of partnership deed dated 11.10.1993. 2."Key facts" necessary for the adjudication of this petition are that partnership deed was executed between petitioner and respondent No.2 on 11.10.1993. Clause 11 whereof reads as under:"That any controversy or claim related to this partnership agreement or any breach in respect thereof shall be subject to arbitration under Indian Arbitration Act then in force, the decision arrived at by arbitrator shall be binding on both the parties." 3.Petitioner has served a legal notice upon respondent No.1 on 9.1.2013 for appointment of an arbitrator since dispute has arisen between the parties. The same was replied by respondent No.2 on 28.1.2013. 4Mr. Surinder Avinash Sharma, appearing on behalf of respondent No.1, has vehemently argued that though partnership deed was entered into between the parties on 11.10.1993, however, the same was not acted upon. However, it is admitted in reply that on request of the petitioner and on his assurance to contribute financially for purchase of plot and construction, his name was included by respondent No.1 in the application Annexure A-1 for allotment of industrial plot. He also contended that in the meeting held in the month of December, 1993, petitioner has withdrawn from the partnership. However, there is no tangible evidence to prove this fact. He has relied upon Annexures R-1/2 and R-1/3. He has relied upon 2009 (1) SCC 267 and 2009 (2) SCC 55 . These judgments are not applicable to the facts and circumstances of the present case since the partnership was never dissolved. 5.What emerges from the facts enumerated hereinabove is that partnership deed was entered into between the petitioner and respondent No.1 on 11.10.1993. There is no tangible evidence placed on record that partnership deed entered into between the parties on 11.10.1993 was formally dissolved. The affidavits, relied upon by respondent No.1, are not of the parties. No credence can be given to them. Petitioner has brought to the notice of respondents No.1 about the dispute, as noticed hereinabove, vide legal notice dated 9.1.2013. 6.This Court will not determine the question of limitation since disputed issues of limitation are involved in this petition. These issues would be gone into by the Arbitrator himself. No credence can be given to them. Petitioner has brought to the notice of respondents No.1 about the dispute, as noticed hereinabove, vide legal notice dated 9.1.2013. 6.This Court will not determine the question of limitation since disputed issues of limitation are involved in this petition. These issues would be gone into by the Arbitrator himself. 7.-Their Lordships of the Hon'ble Supreme Court in Lufthansa German Airlines vs Airport Authority of India, (2012) 11 SCC 554 have held that merely because contract containing arbitration clause comes to an end by efflux of time, the same would not itself put to an end arbitration clause. Their Lordships have held as under: "8. It is not disputed by the respondent that there was a valid agreement between the parties from 01.04.2004 to 31.03.2007. Merely because the contract which contained the Arbitration Clause has come to an end by the efflux of time would not itself put to an end the Arbitration Clause. The dispute seems to have prima facie arisen during the subsistence of the agreement. It, however, seems to have spilled over to subsequent years I.e. 2008-2009. The notice for arbitration was sent on 12.10.2009. The respondent has admittedly failed to appoint an Arbitrator within the stipulated period. The claim made by the applicant and the grounds taken by the respondents clearly give rise to disputes that are prima facie arbitrable. The disputes raised by the petitioner are therefore required to be referred to arbitration. Consequently, in terms of the Arbitration Clause, this Court is required to make the appointment of the sole arbitrator. 9. I have suggested to the counsel for the parties the name of Justice N.K. Sodhi, Former Chief Justice, Karnataka High Court to which the counsel for the parties have readily agreed. In exercise of my powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 read with paragraph 2 of the Appointment of the Arbitrators by the Chief Justice of India Scheme, 1996, I hereby appoint Justice N.K. Sodhi, Former Chief Justice, Karnataka High Court as the Sole Arbitrator to adjudicate the disputes on such terms and conditions as the Sole Arbitrator deems fit and proper. It is made clear that all issues raised by the petitioners and the respondents in their respective pleadings are specifically kept open. The parties shall also be at liberty to raise any further/additional issues before the Sole Arbitrator. It is made clear that all issues raised by the petitioners and the respondents in their respective pleadings are specifically kept open. The parties shall also be at liberty to raise any further/additional issues before the Sole Arbitrator. Undoubtedly, the learned Sole Arbitrator shall decide all the disputes arising between the parties without being influenced by any prima facie opinion expressed in this order, with respect to the respective claim of the parties. The Sole Arbitrator is also at liberty to fix the venue of the Arbitration at his sole discretion." 8.Their Lordships of the Hon'ble Supreme Court in State of Goa vs Praveen Enterprises, (2012) 12 SCC 581 have held that Chief Justice or his designate will not ordinarily consider issue of limitation. Their Lordships have held as under: "34. The difference between a dead/stale claim and a mere time barred claim was explained by this Court in Indian Oil Corporation Ltd. v. M/s SPS Engineering Ltd. [2011 (2) SCALE 291 ] thus : -"When it is said that the Chief Justice or his designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time barred claim and there is no need for any detailed consideration of evidence. We may elucidate by an illustration: If the contractor makes a claim a decade or so after completion of the work without referring to any acknowledgement of a liability or other factors that kept the claim alive in law, and the claim is patently long time barred, the Chief Justice or his designate will examine whether the claim is a dead claim (that is, a long time barred claim). On the other hand, if the contractor makes a claim for payment, beyond three years of completing of the work but say within five years of completion of work, and alleges that the final bill was drawn up and payments were made within three years before the claim, the court will not enter into a disputed question whether the claim was barred by limitation or not. The court will leave the matter to the decision of the Tribunal. The court will leave the matter to the decision of the Tribunal. If the distinction between apparent and obvious dead claims, and claims involving disputed issues of limitation is not kept in view, the Chief Justice or his designate will end up deciding the question of limitation in all applications under Section 11 of the Act." 29. The issue of limitation is not an issue that has to be decided in an application under section 11 of the Act. SBP & Co. and Boghara Polyfab held that the Chief Justice or his designate will not examine issues relating to limitation, but may consider in appropriate cases, whether the application was in regard to a claim which on the face of it was so hopelessly barred by time, that it is already a dead/stale claim which did not deserve to be resurrected and referred to arbitration. The said decisions do not support the respondent's contention that the details of all claims should be set out in the application under section 11 of the Act and that details of all counter claims should be set out in the statement of objections, and that a claim or a counter claim which is not referred to or set out in the pleadings in the proceedings under section 11 of the Act, cannot be entertained or decided by the arbitral tribunal." 9.Their Lordships of the Hon'ble Supreme Court in Schlumberger Asia Services Limited vs Oil and Natural Gas Corporation Limited, (2013) 7 SCC 562 have held that when delay in making petition is not apparent but based on disputed facts, court will not enter into said disputed question but leave it to be decided by Arbitral Tribunal. Their Lordships have held as under: "23. In any event, learned senior counsel submitted that this Court in the case of Indian Oil Corporation Ltd. Vs. SPS Engineering Ltd. (2011) 3 SCC 507 has considered and explained the observations made by the Constitution Bench in SBP & Company's case (supra). It is submitted that on the question of limitation, this Court had categorically held that the matter will be left to the decision of the Tribunal to decide whether the claim made is barred by limitation or not. 24. I have considered the submissions made by the learned counsel for the parties. It is submitted that on the question of limitation, this Court had categorically held that the matter will be left to the decision of the Tribunal to decide whether the claim made is barred by limitation or not. 24. I have considered the submissions made by the learned counsel for the parties. A bare perusal of the observations made by this Court in paragraph 39 of the judgment in SBP & Co. (supra) makes it clear that the Chief Justice or the designated Judge can also decide whether the claim was dead one or a long-barred claim. But it is not imperative for the Chief Justice or his designate to decide the questions at the threshold. It can be left to be decided by the Arbitral Tribunal. 25. The observations made in SBP & Co. (supra) were explained by this Court in Indian Oil Co. Ltd. (supra), which are as under: "14. To find out whether a claim is barred by res judicata, or whether a claim is "mala fide", it will be necessary to examine the facts and relevant documents. What is to be decided in an application under Section 11 of the Act is whether there is an arbitration agreement between the parties. The Chief Justice or his designate is not expected to go into the merits of the claim or examine the tenability of the claim, in an application under Section 11 of the Act. The Chief Justice or his designate may however choose to decide whether the claim is a dead (long-barred) claim or whether the parties have, by recording satisfaction, exhausted all rights, obligations and remedies under the contract, so that neither the contract nor the arbitration agreement survived. When it is said that the Chief Justice or his designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time-barred claim and there is no need for any detailed consideration of evidence. When it is said that the Chief Justice or his designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time-barred claim and there is no need for any detailed consideration of evidence. We may elucidate by an illustration: if the contractor makes a claim a decade or so after completion of the work without referring to any acknowledgment of a liability or other factors that kept the claim alive in law, and the claim is patently long time-barred, the Chief Justice or his designate will examine whether the claim is a dead claim (that is, a long time- barred claim). On the other hand, if the contractor makes a claim for payment, beyond three years of completing of the work but say within five years of completion of work, and alleges that the final bill was drawn up and payments were made within three years before the claim, the Court will not enter into a disputed question whether the claim was barred by limitation or not. The Court will leave the matter to the decision of the Tribunal. If the distinction between apparent and obvious dead claims, and claims involving disputed issues of limitation is not kept in view, the Chief Justice or his designate will end up deciding the question of limitation in all applications under Section 11 of the Act. These observations make it clear that it is optional for the Chief Justice or his designate to decide whether the claim is dead (long-barred). It is also made clear by this Court that the Chief Justice or his designate would do so only when the claim is evidently and patently a long time-barred claim. The claim could be said to be patently long time-barred, if the contractor makes it a decade or so after completion of the work without referring to any acknowledgment of a liability or other factors that kept the claim alive in law. On the other hand, if the contractor makes a claim, which is slightly beyond the period of three years of completing the work say within five years of completion, the Court will not enter into disputed questions of fact as to whether the claim was barred by limitation or not. On the other hand, if the contractor makes a claim, which is slightly beyond the period of three years of completing the work say within five years of completion, the Court will not enter into disputed questions of fact as to whether the claim was barred by limitation or not. The judgment further makes it clear that there is no need for any detailed consideration of evidence. 26. In the present case, there is a dispute as to whether the repeated notices sent by the petitioner to the respondents were ever received. There are further disputes (even if the notices were received by ONGC) as to whether they were actually received in the correct section of ONGC. These are matters of evidence which are normally best left to be decided by the Arbitral Tribunal." 10.Accordingly, I am satisfied that all the requirements of the Arbitration and Conciliation Act, 1996 have been fulfilled by the petitioner and the Arbitrator is required to be appointed to resolve all the disputes which have arisen between the parties. 11.All the issues raised by the petitioner and respondents in their respective pleadings are kept open. They would be at liberty to raise any additional issues before the Arbitrator. 12.Accordingly, Hon'ble Mr. Justice Kuldeep Kanwar (Retd.), is appointed as Arbitrator and Mr. Adarsh Sharma, Advocate will assist the Arbitrator. The Arbitrator is requested to enter into reference within a period of two weeks from the date of receipt of the copy of the order. Thereafter, the petitioner is directed to file claim petition within a period of three weeks. Reply be filed by the respondent(s) within a further period of three weeks. The pleadings, including, rejoinder and counter-claim, shall also be completed by the parties within a period of eight weeks after entering into reference by the Arbitrator. It shall be open to the Arbitrator to determine his own procedure with the consent of the parties. It shall also be open to the Arbitrator to fix his fee alongwith the fee of Mr. Adarsh Sharma. The award shall be made strictly as per the provisions of the Arbitration and Conciliation Act, 1996 within six months. Needless to add that the Arbitrator shall pass a speaking order. The Registry of this Court is directed to immediately inform Hon'ble Mr. Justice Kuldeep Kanwar (Retd.) and Mr. Adarsh Sharma. The award shall be made strictly as per the provisions of the Arbitration and Conciliation Act, 1996 within six months. Needless to add that the Arbitrator shall pass a speaking order. The Registry of this Court is directed to immediately inform Hon'ble Mr. Justice Kuldeep Kanwar (Retd.) and Mr. Adarsh Sharma, Advocate about the passing of the order by sending a copy of this order to them. 13.In view of this, the petition stands disposed of. Pending application(s), if any, also stands disposed of. No costs.