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2017 DIGILAW 148 (CAL)

Kamal Singh Baid v. Dipendra Nath Banerjee

2017-02-07

I.P.MUKERJI

body2017
JUDGMENT : A.P. 1698 of 2015 1. This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A.P. No. 1698 of 2015). It asks the court to appoint an arbitrator, in terms of the arbitration clause contained in the agreement dated 7th August, 2001 between Dipendra Nath Banerjee the first respondent, Majestic Estate & Developers Pvt. Ltd., the second respondent and Bhikhan Chand Baid with Mrs. Sunisha Banerjee as a confirming party. 2. It is an admitted position that by the passage of time this agreement binds the parties to this application. This agreement put an end two earlier agreements dated 1st November, 1996 and 7th June, 1998. Under the agreement of 7th August, 2011 the first respondent had to pay to Bhikhan Chand Baid, described as the broker, the sum of Rs. 1,50,00,000 ( rupees one crore and fifty lacs only). 3. It had an arbitration clause which was clause-11. It is set out hereunder: “11. In the event of any dispute and/or difference of opinion toughing any clause or clauses of this Agreement then the same shall be referred to a mutually agreed Arbitrator and the proceedings shall be governed by the Arbitration and Conciliation Act, 1996.” 4. Mr. Malay Kr. Ghosh, learned senior Advocate appearing for the first respondent argues that the court should not even consider sending the matter to arbitration. The claim of the petitioners is hopelessly barred by the laws of limitation. Such bar appears on the face of the records. 5. At this point it is necessary to set out Section 21 of the said Act. It deals with the commencement of arbitral proceedings. “21. Commencement of arbitral proceedings---Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent.” 6. It is also necessary to set out Section 43 (1) (2) of the said Act. “43. Limitation---(1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it applies to proceedings in court. (2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in Section 21.” 7. “43. Limitation---(1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it applies to proceedings in court. (2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in Section 21.” 7. Now, commencement of arbitral proceedings is to be treated in the same way as filing of a plaint in a suit. Therefore, the court has to declare whether on the date of commencement of the arbitration proceedings the arbitration was barred by the laws of limitation or not. Now, under Section 21 of the said Act the arbitration commences when one party makes a request to the other that a dispute which has arisen with the other party be referred to arbitration. According to Mr. Ghosh there was no request by the petitioners till filing of this application to refer the dispute to arbitration. In fact, he submits that there was no request from either party to refer the matter to arbitration. Therefore, following the dicta of the Supreme Court in the case of SBP & Co. V. Patel Engineering Ltd. and Another reported in (2005) 8 SCC 618 , this court should adjudge that the claim of the petitioners now sought to be made is barred by the laws of limitation and should not send the parties to arbitration. 8. Let me first discuss the correspondence between the parties. On 9th February, 2004 Mr. Subhransu Ganguly, the advocate for the petitioners wrote to the advocate for the first respondent that his client claimed Rs. 150 lacs from the said respondent and that this sum was charged on the property 39, Shakespeare Sarani, Kolkata-17. Furthermore, the said respondent in collusion with one Vijaysingh Baid had disposed of a substantial portion of the said property. He asked this respondent to pay the said sum immediately. This letter was in response to the said respondent’s advocate’s letter dated 29th January, 2004 denying the said respondent’s liability of Rs. 150 lacs. In that letter it was written that “my client intends the matter to be referred to arbitration as per clause 11 of the alleged agreement dated 7th August, 2001 and my client shall abide by all the obligations that shall take place in pursuance thereof.” Earlier to that by his letter dated 14th January, 2004 Mr. 150 lacs. In that letter it was written that “my client intends the matter to be referred to arbitration as per clause 11 of the alleged agreement dated 7th August, 2001 and my client shall abide by all the obligations that shall take place in pursuance thereof.” Earlier to that by his letter dated 14th January, 2004 Mr. Ganguly for the petitioners had demanded the said sum and had expressed resentment over the respondent’s alleged dealing with the said property. 9. Now, the question which arises for consideration is whether the above sentence in the letter of the said respondent’s advocate dated 29th January, 2004 that “my client intends the matter to be referred to arbitration as per clause-11 of the alleged agreement dated 7th August, 2011” can be treated as a request for the dispute raised by the petitioners to be referred to arbitration under Section 21 of the Arbitration and Conciliation Act, 1996. If it is treated as such a request then it was notionally like a plaint being filed in a Civil Court by the petitioners on the date of receipt of the request, for the purpose of limitation. In that case, admittedly the petitioners’ claim would be within the period of limitation 10. Mr. Ghosh appearing for the respondent submits that this phrase in the letter refers to the intention of the said respondent to refer the dispute, to arbitration in future. The respondent does not convey an intention to refer the dispute to arbitration at that point of time. Next, he submits that since the petitioners had made that claim the request if any had to come from them. There was never any request from their end. Therefore, even if that particular line in the said respondent’s letter is treated as a request for arbitration, it is invalid for the petitioners’ claim, it saved limitation for the respondent. But be never made any formal claim, he argued. 11. It is very important, now, to analyse the statutory provisions. 12. First, let us take sub-Section (1) of Section 43 which states that the Limitation Act, 1963 shall apply to arbitration as it applies to proceedings in court. Let us take the proceedings in court to be a suit filed in a Civil Court. 11. It is very important, now, to analyse the statutory provisions. 12. First, let us take sub-Section (1) of Section 43 which states that the Limitation Act, 1963 shall apply to arbitration as it applies to proceedings in court. Let us take the proceedings in court to be a suit filed in a Civil Court. If the point of limitation is raised, one has to examine whether on the date of filing of the suit, i.e. the commencement thereof, the plaintiff’s claim was barred by limitation. Coming to sub-Section (2) of Section 43 it says that an arbitration shall be deemed to have commenced on the date referred to in Section 21. Turning to Section 21 the arbitral proceedings in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent. The reference to the respondent in the section is very important. The request has to be made by the claimant in relation to a particular dispute to the defendant/respondent with a request for referring it to arbitration. 13. The scheme of the Limitation Act, 1963 is such that a period of limitation is prescribed for a party to make his claim. It is always in relation to the claimant or plaintiff. If, for example the other party has a cross claim against the plaintiff arising out of the same cause of action, he cannot say that just because the plaintiff had instituted a suit within the period of limitation he can institute a cross suit or make a counter claim beyond that period applicable to him, taking advantage of the plaintiff’s claim within the period of limitation. The defendant has to file a cross suit or make a counter claim within the period of limitation. Making a claim and resisting a claim are two different matters. Therefore, even if we take the letter of the advocate on record for the said respondent dated 29th January, 2004 as a request to the petitioner for reference of the dispute between them to arbitration, it saved limitation for the said respondent to make a claim. Say for example if he started an arbitration claiming a declaration that the petitioners were not entitled to Rs. 1.50 crores, his claim for declaration would be within time. Suppose also that the claim was supported by a prayer for injunction. Say for example if he started an arbitration claiming a declaration that the petitioners were not entitled to Rs. 1.50 crores, his claim for declaration would be within time. Suppose also that the claim was supported by a prayer for injunction. The claim of the said respondent would be within the period of limitation. But if in that suit the petitioners made a counter-claim for Rs. 1.50 crores they would have to show that they had made a request for the claim to be referred to arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, within the period of limitation. The said respondent did not make a claim ever. The petitioners did not ask for any reference till filing this Section 11 application. 14. In my view, the assertion made by the said respondent that he intends the matter to be referred to arbitration clearly signifies a positive intention on his part for reference of the dispute to arbitration. That is of no consequence because he had not followed up his request with a claim and as I have said earlier, the petitioners could not ride on his shoulder to save limitation. 15. In SBP & Co. V. Patel Engineering Ltd. and Another reported in (2005) 8 SCC 618 the Supreme Court laid down in very bold terms that the court deciding a Section 11 application could decide whether there was a valid arbitration agreement in terms of Section 7 of the said Act. The Chief Justice or his delegate could decide whether the claim was live or a dead one or in other words whether it was barred by the laws of limitation. 16. Since I come to the clear conclusion that on the face of it the claim of the petitioners cannot stand on the ground of limitation, I do not see any reason to refer their dispute to arbitration. This Section 11 application is accordingly dismissed, by declaring the alleged claim of the petitioners as dead by passage of time. A.P. 1697 of 2015 17. It appears that way back in 2004 the petitioners made an application in this court under Section 9 of the Arbitration and Conciliation Act, 1996 for some protective orders (AP 94 of 2004). On 30th March, 2004 an interim order was made which was confirmed on 26th July, 2004. A.P. 1697 of 2015 17. It appears that way back in 2004 the petitioners made an application in this court under Section 9 of the Arbitration and Conciliation Act, 1996 for some protective orders (AP 94 of 2004). On 30th March, 2004 an interim order was made which was confirmed on 26th July, 2004. The effect of the orders was that the property in question, 39, Shakespeare Sarani, Kolkata-17 could not be transferred or encumbered. On 23rd September, 2015 both these orders were vacated by this court on the ground that the arbitration reference had not been started. In the absence of an arbitration reference the interim orders could not continue for an indefinite period of time. However, for a period of three months from the date of the order i.e. upto 23rd December, 2015 the first respondent would have to notify the petitioners about any intended transfer of the subject property by a 14 days’ clear notice. 18. The petitioners did try to commence arbitral proceedings after passing of the said order by issuance of a notice under Section 21 of the said Act. They also made the present application under Section 9 of the said Act (A.P. 1697 of 2015), claiming the self-same reliefs. By an order made on 21st December, 2015 the said respondent was permitted to dispose of the said property by setting apart a sum of Rs. 1.5 crores of the sale proceeds for payment of the petitioners’ claim. The orders dated 30th March, 2005 and 26th July, 2004 and the interim order passed in the latest application dated 23rd September, 2015 were vacated. 19. I was told in court that the said respondent has not been able to find a buyer for the said property as yet. 20. By virtue of the dismissal of the above application under Section 11 of the Arbitration and Conciliation Act, 1996 nothing remains of the petitioners’ claim. It is held to be dead. In those circumstances, all the interim orders passed in the present application (A.P. 1697 of 2015) are hereby vacated. This application A.P. 1697 of 2015 is hereby dismissed. 21. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.