BHARATH LAKHOTIA v. CHIEF GENERAL MANAGER, KERALA TELECOM CIRCLE, BSNL
2017-04-03
P.B.SURESH KUMAR
body2017
DigiLaw.ai
ORDER : 1. This is an arbitration request instituted invoking Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act). The petitioner is the proprietor of an industrial unit engaged in the manufacture of tapered steel tubes. He secured a purchase order from the respondent for supply of certain quantity of tapered steel tubes, through a tender process. The petitioner could not supply the material within the time stipulated in the purchase order. Consequently, a penalty of Rs. 17,75,644/- was imposed on the petitioner by the respondent and the said amount was recovered from the amounts payable to him for the supply made. According to the petitioner, the workers in his industrial unit went on an unexpected strike during the relevant time and it is on account of the said reason that the supply could not be made by him on time. It is the case of the petitioner that in the said circumstances, the respondent ought not to have imposed any penalty on him for the delayed supply made. It is stated by the petitioner that the general conditions annexed to the purchase order provide for resolution of disputes by recourse to arbitration. According to the petitioner, though he had called upon the respondent to resolve the dispute relating to the imposition of penalty by recourse to arbitration, the respondent is not acceding to the said demand. Hence this arbitration request. 2. It is seen that the arbitration request is filed with an application to condone the delay of 2624 days in filing the same. The respondent has filed a counter affidavit to C.M. Application No. 3 of 2016 filed by the petitioner for the said purpose, contending that sufficient cause has not been shown by the petitioner for condoning the long delay of 2624 days in filing the arbitration request. It is also contended by the respondent in the said counter affidavit that the claim of the petitioner is hopelessly barred by limitation and that therefore, at any rate, the arbitration request cannot be allowed. 3. Heard the learned counsel for the petitioner as also the learned counsel for the respondent. 4.
It is also contended by the respondent in the said counter affidavit that the claim of the petitioner is hopelessly barred by limitation and that therefore, at any rate, the arbitration request cannot be allowed. 3. Heard the learned counsel for the petitioner as also the learned counsel for the respondent. 4. The learned counsel for the petitioner contended that no period of limitation is prescribed for preferring an arbitration request under Section 11(6) of the Act and therefore, the question whether the petitioner has made out sufficient cause for condoning the delay in filing the arbitration request need not be considered by this Court. According to the learned counsel for the petitioner, C.M. Application No. 3 of 2016 was preferred by the petitioner by way of abundant caution. It is contended by the learned counsel for the petitioner that the only question arises for consideration in an arbitration request is whether their exists an arbitrable dispute between the parties and if this Court finds that there is an arbitrable dispute, the matter has to be referred for arbitration. As regards the plea of the respondent that the claim of the petitioner is barred by limitation, the learned counsel for the petitioner pointed out that the said plea is one to be examined by the arbitrator and not by this Court in a proceedings under Section 11(6) of the Act. 5. In SBP & Co. vs. Patel Engineering Ltd and Another, (2005) 8 SCC 618 , the Apex Court considered the scope of the proceedings under Section 11 of the Act. Paragraph 39 of the said judgment reads thus: 39. It is necessary to define what exactly the Chief Justice, approached with an application under Section 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement.
Obviously, he has to decide his own jurisdiction in the sense whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the question whether the claim was a dead one; or a long-barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal. It is clear from the said judgment of the Apex Court that the issues which are obligatory for the High Court to consider in a proceedings under Section 11 (6) of the Act are, (i) whether the party making the application has approached the appropriate High Court (ii) whether there is any arbitration agreement and (iii) whether the party who has applied under Section 11 of the Act is a party to such agreement. Among the said issues, the first issue pertains to the jurisdiction of the High Court and the last issue pertains to the locus standi of the party approaching the High Court. The second issue pertains to the arbitrability of the dispute.
Among the said issues, the first issue pertains to the jurisdiction of the High Court and the last issue pertains to the locus standi of the party approaching the High Court. The second issue pertains to the arbitrability of the dispute. If the scheme of the statute is understood in the light of the said judgment, it is evident that an arbitration request can be filed under Section 11(6) of the Act at any time when an arbitrable dispute exists between the parties. In the said view the matter, I am in agreement with the contention raised by the learned counsel for the petitioner that there is no period of limitation for preferring an arbitration request under Section 11 (6) of the Act. 6. The term arbitrability has different meanings in different contexts. When a contention is raised that the claim which resulted in the dispute is barred by limitation, the said contention raises an issue of arbitrablility, for, if the claim is barred by limitation, the question of resolving the dispute by recourse to arbitration does not arise. It is gatherable from the decision of the Apex Court in SBP & Co. case (supra) that it is on account of the said reason that the Apex Court has clarified that in appropriate cases, the question of limitation can also be considered by the Court exercising the power under Section 11(6) of the Act. It may not be possible for the High Court to decide the plea of limitation in every case, for, in some cases, such plea can be resolved only after taking evidence. In such cases, the issue relating to limitation can be relegated for decision by the Arbitrator as clarified by the Apex court in the said case. 7. Coming to the facts of the present case, it is seen that the supply of the material was made by the petitioner pursuant to the purchase order during the year 2000. The averments contained in Paragraph 10 of the arbitration request indicates that penalty was imposed on the petitioner and the same was deducted from the amounts payable to him during the year 2001. Though various demands have been made by the petitioner to the respondent for the amounts deducted by way of penalty, the respondent took a consistent stand that the petitioner is liable to pay penalty in terms of the contract.
Though various demands have been made by the petitioner to the respondent for the amounts deducted by way of penalty, the respondent took a consistent stand that the petitioner is liable to pay penalty in terms of the contract. It is seen that during the year 2005, the petitioner preferred a writ petition claiming the amounts deducted by way of penalty from his bills, before the Delhi High Court and the writ petition was dismissed on 06.12.2005 holding that the writ petition is not maintainable in the light of the arbitration clause contained in the purchase order. Annexure-K is the notice issued by the petitioner to the respondent calling upon them to resolve the dispute by recourse to arbitration. Annexure-K notice is dated 04.03.2009. The arbitration request is filed about seven years thereafter, on 01.06.2016. Section 21 of the Act provides that unless otherwise agreed by the parties, the arbitration proceedings in respect of a particular dispute would commence on the date on which a request for that dispute to be referred to the arbitration is received by the respondent. The petitioner has no case that they have requested the respondent to refer the dispute on any day prior to 04.03.2009. As noted above, the amounts due to the petitioner have been paid after deducting the penalty during 2001. Consequently, the cause of action for claiming the penalty amount arose during 2001. In the light of Article 113 of the Limitation Act, the petitioner should have instituted the proceeding within three years from the date of deduction, namely the date on which the right to sue accrued on him. Admittedly, the request for reference was made for the first time only on 04.03.2009. As such, even if it is stated that Annexure-K demand was received by the respondent on 04.03.2009, the claim raised concerning the deduction made during 2001 was barred by limitation as on that day. If the claim of the petitioner was barred by limitation on the day on which request for reference of the dispute to arbitration was made, it can be concluded that there is no arbitrable dispute between the parties. The arbitration request, in the circumstances, is without merits and the same is, accordingly, dismissed.