T. S. Kisan & Company Private Limited v. Union of India
2021-02-19
P.T.ASHA
body2021
DigiLaw.ai
ORDER : P.T. Asha, J. 1. The issue in a nutshell that has been placed for the consideration of this Court under the caption "For Maintainability" is as follows: "On an Award being set aside and proceedings with regard to the same subject matter is sought to be revived whether the same has to be commenced with a fresh notice as contemplated under Section 21 of the Arbitration and Conciliation Act, 1996, or whether it can be initiated on the basis of the Section 21 notice which was the trigger point for the earlier arbitral proceedings". 2. In order to analyze the above, a few provisions of the Arbitration and Conciliation Act, 1996, which for the sake of brevity is referred to as the 1996 Act, have to be looked into. Given below are the extract of these provisions: "Section 11(4)-If the appointment procedure in sub-section (3) applies and--(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by 1 [the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court]; Section 11(5)-Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by 1 [the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court]. Section 21-Commencement of arbitral proceedings.--Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.
Section 21-Commencement of arbitral proceedings.--Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Section 43(4)-Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted." 3. The Act contemplates that all arbitral proceedings in respect of a dispute shall commence on the date when one party calls upon the other to refer their disputes to arbitration. When such a request is received and the other party remains silent or fails to agree/appoint an arbitrator then Section 11(4) and Section 11(5) provides the procedure for appointing an Arbitrator. A reading of these two provisions would therefore imply that there should be first a request which has then not been complied with. A similar power can be traced in Section 8(2) of the Arbitration Act, 1940, hereinafter for the sake of ease of reference be referred to as the 1940 Act. 4. Section 43 makes provision for the application of the Limitation Act, 1963, to Arbitral proceedings. Sub Section (4) of the said provision provides that where an arbitral Award is set aside and a party initiates fresh proceedings including arbitral proceedings in respect of the same dispute the period between the commencement of the arbitration and the date of the order stands excluded. 5. This provision is in parti materia to Section 37(5) of the 1940 Act with a small difference in as much as under the 1940 Act Section 37(5) not only refers to a situation where the Award is set aside but also when after the commencement of arbitration the arbitration Agreement ceases to have effect with reference to the difference referred. The 1940 Act refers to "dispute" as "difference". 6.
The 1940 Act refers to "dispute" as "difference". 6. The issue now before us is whether the Petition under Section 11 of the 1996 Act can be proceeded with on the basis of the Section 21 notice which was the commencement of the earlier arbitral proceedings or whether the party invoking Section 11 should precede the petition with a fresh notice under Section 21. 7. A reading of Section 21 indicates that unless otherwise agreed by parties arbitral proceedings in respect of a particular dispute would commence from the date on which the request for having this dispute referred to arbitration is received by the respondent. 8. Section 11(4), 11(5) and 11(6) would come into play only when the respondent fails to Act on this notice contemplated under Section 21. A reading of these provisions therefore indicates that in order to invoke the provisions of Section 11(4), 11(5) and 11(6) there must be a request from one party to which the other party either disagrees or fails to respond. Section 11(4) relates to a case where in an arbitration Agreement consisting of three arbitrators, the petitioner names his Arbitrator and calls upon the other to appoint his arbitrator and the respondent fails to do so. Section 11(5) contemplates a situation where in an Arbitration Agreement consisting of a sole Arbitrator, the petitioner names an Arbitrator and the respondent either disagrees or fails to respond. Section 11(6) would arise in cases where parties having agreed to a procedure for appointing an arbitrator or arbitrators fail to act as required by this procedure. Though the provision of Section 11(6) does not expressly use the term request for arbitration however by implication a request and its rejection can be inferred. 9. There is no quarrel on the fact that when an Arbitral Award has been set aside and the subject matter of the dispute remains unresolved it is open to the aggrieved party to initiate fresh proceedings which could also include initiation of arbitral proceedings afresh. In such a situation, the period taken for the earlier arbitral proceedings from the date of its commencement to the date of order stands excluded. The proceedings that is commenced denovo should lie in respect of the very same dispute.
In such a situation, the period taken for the earlier arbitral proceedings from the date of its commencement to the date of order stands excluded. The proceedings that is commenced denovo should lie in respect of the very same dispute. Therefore, a fresh notice reiterating the subject matter of the earlier dispute will not give rise to a fresh cause of action but is only a continuation of the very same dispute. The request contemplated under Section 11(4) and (5) is only for appointing the Arbitrator as the earlier dispute remains unresolved. Therefore, the petition filed without a fresh notice is not maintainable. The papers may be returned to the petitioner so as to enable them to file a fresh petition after complying with the provisions of Section 11(4) and 11(5) as stated supra.