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2014 DIGILAW 842 (ORI)

Bimla Halan, W/o. Mr. Om Prakash Halan v. Chandulal Patodia, S/o. Late Laxmichand Patodia

2014-12-05

AMITAVA ROY

body2014
JUDGMENT AMITAVA ROY, C.J. : By the instant application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short hereinafter called as ‘the Act’), the petitioner seeks appointment of independent and impartial arbitrator to adjudicate the dispute between the parties arising out of the agreements dated 21.9.1996 and 1.4.2004. 2. I have heard Mr. G.Mukherji, learned counsel for the petitioner and Mr. U.C. Behera, learned counsel for the opposite party. 3. Both the parties are residents of Cuttack in the State of Odisha and had entered into an agreement on 21.09.1996 whereby the petitioner as the owner of the premises involved let out the same to the opposite party so as to enable the latter to carry on his business in the name and style of M/s. Chirag Jewellers. This agreement was for a period of ten years w.e.f. 1.12.1996 to 30.11.2006 whereunder the opposite party was required to pay a sum of Rs. 500/- per month towards rent. The other stipulation being not of any decisive relevance are not necessary to be detailed except that clause-9 of the agreement read as hereunder:- “That in case of any disputes between the parties, the parties shall have right to appoint a single body-arbitrator whose decisions shall be final and binding to the parties and in case of civil or criminal disputes the appropriate Court at Cuttack shall have exclusively jurisdiction.” 4. In terms thereof, therefore the parties had agreed that in case of disputes between them, they have the right to appoint a sole arbitrator whose decision would be final and binding on them. 5. According to the petitioner, in course of time, while the opposite party was in possession of the premises, he being in need of financial accommodation to the tune of Rs. 5,00,000/- (Rupees Five Lakhs) for expanding his business availed the same from her (petitioner) the said amount as loan and an agreement was executed between the parties on 1.4.2004 stipulating inter alia that if the opposite party failed to repay the amount, the petitioner would be entitled to take back the peaceful possession of the premises. The petitioner has averred that the new agreement was in continuation of the earlier one, and thus no specific clause for arbitration was incorporated therein. The petitioner has averred that the new agreement was in continuation of the earlier one, and thus no specific clause for arbitration was incorporated therein. It has been alleged by the petitioner that the opposite party thereafter neither paid the rent regularly not did he repay the dues or handover the peaceful possession of the property. In spite of several such endeavours by the petitioner, as the opposite party did offer a cold shoulder, he eventually sent a notice on 28.07.2012 addressed to the opposite party narrating the relevant facts and in view of the emerging dispute under the agreement, expressed her mind to refer the same to arbitration and also did suggest the name of her arbitrator in terms of Clause-9 of the agreement dated 21.09.1996. 6. The opposite party on 8.8.2012 gave a reply to the notice contending inter alia that the term of the agreement dated 21.09.1996 had expired on 30.11.2006 and he had been in peaceful possession of the premises on the basis of the oral agreement for another period of ten years at a fixed rent and other dues. He conveyed that there was no dispute between the parties and in any case, after the termination of the agreement dated 21.9.1996, the arbitration clause was not invocable. It was mentioned in the reply that in the new agreement dated 1.4.2004 there was no arbitration clause and dispute, if any arising from the same was not arbitrable. He also denied the allegations and conveyed his disagreement with the appointment of the arbitrator named by the petitioner. It was thereafter that the petitioner by an advocate notice dated 26.8.2012 terminated the tenancy w.e.f. last date of the month of September, 2012 construing the same to be one under Section 106 of the Transfer of Property Act, 1886. In this backdrop, the instant application has been filed. 7. The opposite party in his counter affidavit has admitted the execution of the agreement dated 21.09.1996 as well as the arbitration clause incorporated therein. He has admitted as well the agreement dated 1.4.2004 between the parties whereunder he had agreed to pay the arrear rent from April, 2002 to 30.06.2004 along with the interest on the hand loan availed by him. According to him, the rent along with interest was quantified at Rs. 8,53,500/- which he was agreeable to pay. He has admitted as well the agreement dated 1.4.2004 between the parties whereunder he had agreed to pay the arrear rent from April, 2002 to 30.06.2004 along with the interest on the hand loan availed by him. According to him, the rent along with interest was quantified at Rs. 8,53,500/- which he was agreeable to pay. He admitted as well that in terms of the agreement dated 1.4.2004 on his failure to pay this amount, he was liable to vacate the premises and handover the vacant possession thereof on 1.7.2004. He however claimed that he had been paying the monthly rent as agreed to by the parties and pleaded further that even if the dispute had arisen on 30.6.2004, the claim is barred by law of limitation for arbitration. His categorical stand is that the application under Section 11 of the Act is barred by time as the cause of action, if any, had arisen on 30.6.2004, the notice for arbitration had been given on 28.7.2012. He contended as well that the agreement dated 1.4.2004 had superseded the one dated 21.09.1996 and in absence of an arbitration clause in the latter, the application under Section 11 of the Act was not maintainable on that count as well. In any case, according to him, the agreement dated 21.9.1996 having expired on 30.11.2006, the application under Section 11 of the Act following notice dated 28.7.2012 after six years, is barred by limitation. Along with the counter affidavit, the opposite party also appended a copy of the reply dated 25.9.2012 responding to the notice under Section 106 of the Transfer of Property Act, 1886. 8. Mr. Mukherji has urged that as the dispute had arisen out of the agreements dated 21.09.1996 and 1.4.2004, the plea of absence of arbitration clause is misconceived. While maintaining that expiry of an agreement containing an arbitration clause per se does not nihilate the arbitration agreement between the parties, learned counsel has insisted that in view of the persistent failure on the part of the opposite party to discharge his obligation under the agreements, there is a continuing cause of action and thus the bar of limitation is not attracted and therefore, it is a fit case for appointment of an arbitrator by this Court and reference of the subsisting dispute to him as agreed upon. To endorse his contention. Mr. To endorse his contention. Mr. Mukherji has placed reliance on the decision of the Hon’ble Apex Court in Booz Allen and Hamilton v. SBI Home Finance Ltd. & anr. (Civil Appeal No. 5440 of 2002 decided on 15.4.2011) and of the Calcutta High Court in Smt. Anannya Chowdhury & anr. Vs. Ranjit Kr. Bose & anr., (C.O. No. 2440 of 2009 decided on 16.4.2010). 9. On the other hand, Mr. U.C. Behera has argued that as with the expiry of the agreement dated 21.9.1996 on 30.11.2006, the arbitration clause has been rendered non est in the absence of any such clause in the agreement dated 1.4.2004, the instant application is wholly misconceived. While denying the allegations leveled against the opposite party, learned counsel argued that even assuming that the agreement dated 1.4.2004 was in continuation of the one dated 21.9.1996 and that even after 30.11.2006 it was permissible to refer a dispute if subsisting to arbitration, as no steps having been taken in that regard till 28.7.2012, the instant application is barred under Article 137 of the Limitation Act, 1963 and is liable to be dismissed in limine on that count. 10. To reinforce these pleas, Mr. Behera has placed reliance on the decision of the Delhi High Court in M/s. Pandit Munshi Ram and Associates (Pvt.) Ltd v. Delhi Development Authority and another, AIR 2001 Delhi 82 and Rajesh Kumar Garg v. MCD and another (A.A. No. 23 OF 2007 decided on 14.3.2008), 2008 (2) ARBLR 107 (Delhi). 11. I have considered the pleaded facts, the documents on record and have assayed the competing arguments. As the demur on the bar of limitation if sustained would be of determinative consequence, it is considered appropriate to dwell thereon at the threshold. 12. A perusal of the text of both the agreements i.e. 21.9.1996 and 1.4.2004 between the same parties would demonstrate in clear terms that the latter was in continuation of the former. The plea of want of arbitration clause in the agreement dated 1.4.2004 is thus of no consequence. 13. 12. A perusal of the text of both the agreements i.e. 21.9.1996 and 1.4.2004 between the same parties would demonstrate in clear terms that the latter was in continuation of the former. The plea of want of arbitration clause in the agreement dated 1.4.2004 is thus of no consequence. 13. Noticeably however, except an averment made in the petition that in the face of non-payment of rent and other violations of the stipulations in the agreements and non-vocation of the premises, the petitioner did approach the opposite party time and again and that the latter used to assure her to repay the debts, no other material has been brought on record to demonstrate any initiative on the part of the petitioner to invoke the arbitration agreement prior to the notice dated 28.07.2012. in other words, the alleged persistent failure on the part of the opposite party to abide by the terms of the agreement notwithstanding, which according to the petitioner gave rise to disputes as contemplated by the parties, referable to arbitration, no step to that effect was taken by her before 28.7.2012. In this context, the date of expiry of the first agreement i.e. 30.11.2006 assumes formidable significance. As would be evident from the agreement dated 1.4.2004, the opposite party had undertaken to vacate the premises on 1.7.2004 in case of his failure to repay the loan amount and other dues by 30.06.2004. on this count as well, 1.7.2004 is a date of considerable relevance vis-à-vis the plea of bar of limitation raised by the opposite party referring to Article 137 of the Limitation Act, 1963. 14. The Hon’ble Apex Court in Major (Retd.) Inder Singh Rekhi v. Delhi Develpoment Authority, AIR 1988 SC 1007 had with due reliance on the ratio in Kerala State Electricity Board, Trivandrum vs. T.P. Kunhaliumma, AIR 1977 SC 282 propounded that the provision of Article 137 of the Limitation Act, 1963 applies to an application for appointment of an arbitrator under Section 20 of the Arbitration Act, 1940, which is substantially in pari materia with Section 11 of the Act. 15. In Hari Shankar Singhania & ors v. Gaur Hari Singhania & ors. AIR 2006 SC 2488 , their Lordships held that as long as the parties are in dialogue it cannot be asserted that the period of limitation under Article 137 had commenced to run. 16. 15. In Hari Shankar Singhania & ors v. Gaur Hari Singhania & ors. AIR 2006 SC 2488 , their Lordships held that as long as the parties are in dialogue it cannot be asserted that the period of limitation under Article 137 had commenced to run. 16. Article 137 of the Limitation Act thus occupying the centre stage and is extracted hereunder below: Description of Period of Limitation Time from which period begins to run 137. Any other application for which no period of limitation is provided elsewhere in this division. Three  years When the right to apply accrues. 17. It would be apparent from the above extract that the time from which period would begin to rum in this Article in the present context would be when the right to apply for arbitration accrues. 18. That the provisions of the Limitation Act, 1963 are applicable to arbitration as those apply to the proceedings in Court is patent from Section 43 of Act. True it is, that the question of limitation ought to be decided on the facts of a given case constituting the cause of action, it cannot be gainsaid that the disputes between the parties herein as projected encompass as well a money claim. The parties had computed the dues to be Rs. 8,53,500/- as referred to in agreement dated 1.4.2004 payable by the opposite party under various heads, by 30.06.2004. To reiterate, the request for arbitration was first conveyed by the notice dated 28.07.2012 followed by one dated 26.8.2012 terminating the tenancy. 19. The plea raised on behalf of the petitioner that the facts of the case disclose continuing cause of action rendering the period of limitation under Article 137 of the Limitation Act inapplicable, thus does not commend for acceptance. It was clearly after a lapse of 6/8 years, that the request for arbitration was made by the petitioner vide notice dated 28.7.2012 for the first time. There is no material on record to suggest to the contrary. 20. On a cumulative consideration of the above aspects I am thus of the view that the instant application under Section 11 of the Act filed on 28.09.2012 is unduly delayed and barred by limitation. The authorities cited on behalf of the petitioner, in view of this determination do not warrant dilation. 21. The petition thus fails and is dismissed. Petition dismissed.