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2021 DIGILAW 84 (JK)

Enviro-Sanitation J&K v. Municipal Corporation, Jammu

2021-03-16

PANKAJ MITHAL

body2021
JUDGMENT : 1. Heard Sh. Rahul Sharma, learned counsel for the petitioner and Sh. Sachin Gupta, learned counsel for the respondent. 2. The petitioner (Enviro-Sanitation J&K), a registered Voluntary Organization, has preferred this petition under Section 11(6) of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (for short 'the Act') for the appointment of an independent arbitrator for the resolution of dispute vis-a-vis the petitioner and the respondent-Municipal Corporation, Jammu. 3. The petitioner was allotted construction work of low cost toilet complex at Gumat, Jammu vide Government order dated 28.01.1999. An agreement dated 02.07.2001 was executed between the parties for the above construction work. It is alleged that the petitioner successfully completed the construction work but in respect thereof certain disputes arose between the parties regarding the amount due and payable to the petitioner for the work done. 4. The aforesaid agreement vide Clause 10 provides for the adjudication of disputes through arbitration. 5. In order to get the above disputes resolved through arbitration, the petitioner filed Arbitration Application No. 36 of 2006 under Section 11(6) of the Act for the appointment of an arbitrator. The said petition was disposed of on 06.09.2008 directing the Secretary to Government, Housing and Urban Development Department to nominate an arbitrator within four weeks for adjudicating the disputes between the parties. 6. The Secretary to Government, Housing and Urban Development Department failed to comply with the above direction and the matter was not referred to the arbitration. The petitioner was forced to initiate contempt petition No. CPAA No. 01 of 2009. The said contempt petition was dismissed as withdrawn with liberty to the petitioner to initiate fresh proceedings in terms of the Act. 7. It is in the above backdrop that the petitioner has filed the present petition under Section 11(6) of the Act in the year 2016 for seeking appointment of an arbitrator. 8. Admittedly, there is an agreement dated 02.07.2001 between the petitioner and the respondent regarding construction work of low cost toilet complex at Gumat, Jammu and that the said agreement contains an arbitration clause to resolve the disputes interse the parties in connection thereof. The petitioner had issued a legal notice dated 01.07.2005 invoking the arbitration clause and asking for the appointment of an arbitrator for adjudicating the disputes but till date despite direction of this Court, no arbitrator has been appointed. 9. The petitioner had issued a legal notice dated 01.07.2005 invoking the arbitration clause and asking for the appointment of an arbitrator for adjudicating the disputes but till date despite direction of this Court, no arbitrator has been appointed. 9. The court in the matter of appointment of an arbitrator is to ensure the existence of a written arbitration agreement between the parties and that the parties before it are also parties to it and that the court has jurisdiction in the matter. 10. In the case at hand, there is no dispute to any of the above conditions but the only objection taken from the side of the respondent vide paragraph 8 of the objections is that the present petition is barred by time. 11. The contention of learned counsel for the petitioner is that the petitioner had invoked the arbitration clause well within time and the court without any hesitation in this regard had disposed of its earlier petition with the direction to the Secretary to Government, Housing and Urban Development Department to nominate an arbitrator within four weeks. At that time, no such objection of limitation was raised and therefore, the respondent is not justified in taking objection to the limitation at this stage. The petitioner has filed the present petition without losing time after the contempt petition was dismissed as withdrawn with liberty to file fresh proceedings under the Act. The present petition has been filed with the liberty of the court and is within time from the date of the liberty so granted. 12. In defence, learned counsel for the respondent submits that the limitation has to be counted from the date of the cause of action and that the earlier orders of the court would not extend the limitation for filing this petition which ought to have been filed within three years of the cause of action or on expiry of 30 days of the notice seeking appointment of an arbitrator. 13. The law on the subject is no longer res integra in view of the decision of the larger bench of the Supreme Court in the case of M/s. Geo Miller & Co. Pvt. Ltd. V. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd., AIR 2019 SC 4244 . 14. 13. The law on the subject is no longer res integra in view of the decision of the larger bench of the Supreme Court in the case of M/s. Geo Miller & Co. Pvt. Ltd. V. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd., AIR 2019 SC 4244 . 14. In the aforesaid case, it has been categorically observed that it is well settled that by virtue of Article 137 of the First Schedule to the Limitation Act, 1963, the limitation for seeking appointment of an arbitrator is three years from the date on which the cause of action first arises. 15. The Supreme Court relying upon the cases of State of Orissa and Another v. Damodar Das, (1996) 2 SCC 216 and Grasim Industries Limited v. State of Kerala, (2018) 14 SCC 265 , held that as Limitation Act, 1963 applies to the arbitrations as it applies to the proceedings in court; the limitation for applying under Section 11(6) of the Act is three years from the date on which the cause of action or the claim which is sought to be arbitrated first arises. Thus, the limitation period for moving a petition under Section 11(6) of the Act would be three years from the date of cause of action as provided under Article 137 of the Limitation Act, 1963. 16. It is in the light of above legal position that I have to examine whether the arbitration application on the facts of this case is within time or is barred by limitation. 17. It is well settled that a dispute arises when the claim is asserted by one party to the contract and is denied by the other party. Admittedly, in the present case, a dispute had arisen between the parties to the contract in the year 2005 and that the petitioner had invoked arbitration clause vide Notice dated 01.07.2005. It is not the case of any party that the said invocation of the arbitration clause was time barred, rather, on the other hand, the petition on its basis filed under Section 11(6) of the Act was disposed of on 06.09.2008 directing the Secretary to Government, Houses and Urban Development Department to nominate an arbitrator treating it to be one within time. Therefore, it cannot be said that the petitioner had not invoked the arbitration clause within the time prescribed or had not filed the petition under Section 11(6) of the Act within limitation. 18. In Hari Shanker Singhania and Others v. Gaur Hari Singhania and Others, (2006) 4 SCC 658 , the dispute was regarding the division of assets amongst the partners of a dissolved partnership firm. It was referred to arbitration and documents were placed on record to establish that the parties were trying to sort out the matter amicably. In the above circumstances, the court observed that the stage of adjudication by way of arbitration arises when the amicable settlement becomes impossible. Thus the court held that the limitation period would not run so long as the parties were negotiating for settlement. 19. Similarly, in Shree Ram Mills Ltd. V. Utility Premises (P) Ltd., (2007) 4 SCC 599 , the Supreme Court, looking to the entire history of negotiation between the parties brought on record, concluded that the claim would not be barred by limitation as it was a continuing cause of action between the parties. 20. The Supreme Court in Geo Mills and Co. Pvt. Ltd., (supra) considering the above two cases, observed that the court upon consideration of the case history must find out as to what was the 'breaking point' on which any reasonable party would have abandoned efforts at arriving at a settlement so as to contemplate reference of the disputes to arbitration but it would not lie upon the party to plead that it waited for an unreasonable long period to refer the dispute only for want of negotiations. The party cannot postpone the accrual of the cause of action by writing or sending reminders. 21. In nutshell, history of the case is crucial for determining the 'breaking point' for construing whether the claim is within time or is barred by limitation. 22. At the cost of repetition, the petitioner had invoked the arbitration clause within time and had even applied for appointment of an arbitrator within limitation prescribed. The present petition is a mere sequel to the invocation of the arbitration clause by the petitioner in the year 2005; filing of an earlier petition which was disposed of on 06.09.2008; and on the contempt petition being dismissed with liberty to apply under the Act. The present petition is a mere sequel to the invocation of the arbitration clause by the petitioner in the year 2005; filing of an earlier petition which was disposed of on 06.09.2008; and on the contempt petition being dismissed with liberty to apply under the Act. The petitioner accepted the said order as it was more interested in the adjudication of the disputes other than in punishing the officers. 23. This shows that the petitioner had been sincerely pursuing the other remedies such as that of contempt as despite the order of the High Court dated 06.09.2008, the disputes were not referred to the arbitrator. It was only on the dismissal of the contempt petition with liberty to the petitioner to apply again under the Act that the petitioner has filed the present petition. 24. In the above facts and circumstances, it cannot be said that the petitioner is negligent or has deliberately delayed the filing of the present petition for the appointment of the arbitrator rather he had approached the court well within time but had been tossed away from one authority to another for no fault of its. 25. In view of the aforesaid facts and circumstances, the 'breaking point' for the petitioner to move the court again under Section 11(6) of the Act is 05.10.2015 on which date the contempt petition was dismissed with liberty to the petitioner to initiate proceedings under the Act. It is not that the petitioner had remained quite from 2008 to 2015. It was vigorously pursuing for the appointment of the arbitrator in terms of the order of the High Court but with no fruitful result. 26. It is trite to mention that all issues including the issue of limitation in relation to the disputes arising between the parties to the contract are to be left for decision by the arbitrator. It is only in very limited category of cases, where the claim is ex facie barred by time or that the dispute is not arbitral that the court may decline to make the reference otherwise all such issues have to be left for decision by the Arbitral Tribunal. Ordinarily, the rule is to refer the disputes to arbitration without encroaching upon the domain of the Arbitral Tribunal on the issues which are required to be determined by it. 27. Ordinarily, the rule is to refer the disputes to arbitration without encroaching upon the domain of the Arbitral Tribunal on the issues which are required to be determined by it. 27. Thus in the facts and circumstances of the case, I am of the opinion that it is not a case where the petition filed under Section 11(6) of the Act is inherently barred by time. The limitation for it would be determined after excluding the period the petitioner bonafidely on legal advice spent time upon the other legal remedies and since its earlier petition to the same effect was within time, the present one cannot be termed as beyond time. 28. In over all facts and circumstances of the case, the disputes as raised by the petitioner are liable to be referred to the sole arbitrator and I appoint Sh. Justice Sunil Hali, a former Judge of the high Court R/o H. No. 18, Manorama Vihar, Bohri, Jammu, as an independent arbitrator, who shall proceed in the matter in accordance with the provisions of the Act to make an award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties. 29. The petition is disposed of.