Western Drugs Limited v. Karrimore Conveyor Systems Pvt. Ltd.
2023-02-10
ARUN BHANSALI
body2023
DigiLaw.ai
ORDER : 1. This application under Section 11 (4) & (6) of the Arbitration and Conciliation Act, 1996 ('the Act, 1996') has been filed by the applicant seeking appointment of sole arbitrator for resolving the dispute between the applicant and the respondents. 2. Submissions have been made that the applicant company is manufacturing medicines and as it was desirous of purchasing fully automatic machines and the respondent company was involved in manufacturing of such machines, the applicant company issued a purchase order for supplying Wet Niacin handling System, Tray Conveyor System, Inclines Screw Conveyor, Niacinamide Packing System including installation, accessories and training regarding operation & handling of machines. 3. The agreement (Annex.1) entered into between the parties contained the arbitration clause for settling the dispute relating to the purchase order/service order. 4. The purchase order was placed on 1/10/2013 and the same was acknowledged by the respondents by issuing communication dated 4/10/2013 endorsing the acceptance on the purchase order. The applicant company sent a cheque amounting to Rs.5,56,150/-towards advance payment on 14/10/2013. 5. The respondent company informed the applicant that the machines were ready, however, it is alleged that on inspection the machines were found defective and despite further inspections, the defects were not rectified and, therefore, the applicant company sought repayment of advance amount. The respondent company instead of repaying the advance, demanded a sum of Rs. 8,33,446/- as the balance payment and storage charges. 6. Thereafter, it is indicated in the application that since despite repeated persuasion, the advance amount was not refunded, the applicant sent a notice dated 15/3/2017 calling for repayment of the advance amount. As no response was received, a registered notice dated 9/6/2017 was sent proposing the appointment of Mr. M.S.Senani as sole arbitrator. However, as the respondents have neither made the payment nor accepted the appointment of arbitrator, the present application has been filed. 7. A reply to the application has been filed inter alia raising objection that the claim made by the applicant is barred by limitation. 8. Submissions have been made that as per the purchase order, the machines were to be supplied within 8-12 weeks from the date of purchase order and latest by 31/12/2013, the cause of action arose on the said date and as the notice seeking appointment of arbitrator has been issued on 15/3/2017, the claim is barred by limitation.
8. Submissions have been made that as per the purchase order, the machines were to be supplied within 8-12 weeks from the date of purchase order and latest by 31/12/2013, the cause of action arose on the said date and as the notice seeking appointment of arbitrator has been issued on 15/3/2017, the claim is barred by limitation. Further the averments made in the application have been denied and accusations have been made against the applicant. 9. A rejoinder has been filed refuting the averments pertaining to the claim being barred by limitation. 10. An additional affidavit has been filed in support of the application, wherein, an email dated 22/1/2015 has been annexed with the submissions that the respondents through the said email had indicated that the amount has been adjusted towards the advance received against the purchase order and further sought payment of sum of Rs. 10,94,280/-, which would be the relevant date for the cause of action in the present case and it cannot be said that the claim is barred by limitation. 11. Counter affidavit has been filed by the respondents inter alia reiterating that the claim is barred by limitation. 12. Learned counsel for the applicant made submissions that apparently there is an arbitration agreement between the parties and as the dispute has arisen between them, in terms of the arbitration agreement the applicant is entitled to seek appointment of arbitrator. 13. Further submissions have been made that the plea raised by the respondents in response is that the claim is barred by limitation, which issue has to be determined by the arbitrator and cannot be made subject matter of the present proceedings. It was further emphasized that even if the plea raised is examined, the same is ex facie baseless inasmuch the claim made by the applicant on the date when the notice seeking appointment of arbitrator was issued is well within limitation. 14. Reliance has been placed on Duro Felguera, S.A. vs. Gangavaram Port Ltd. : (2017) 9 SCC 729 . 15. Learned counsel for the respondents made vehement submissions that as the claim raised by the applicant is ex facie barred by limitation, this Court need not refer such time barred claim to the arbitrator and the application deserves dismissal. 16.
14. Reliance has been placed on Duro Felguera, S.A. vs. Gangavaram Port Ltd. : (2017) 9 SCC 729 . 15. Learned counsel for the respondents made vehement submissions that as the claim raised by the applicant is ex facie barred by limitation, this Court need not refer such time barred claim to the arbitrator and the application deserves dismissal. 16. Submissions were made that the Hon'ble Supreme Court has specifically laid down that this Court may refuse to make reference under Section 11 of the Act, 1996 where the claim is ex facie barred by limitation, therefore, the application deserves dismissal. 17. Reliance has been placed on Bharat Sanchar Nigam Limited & Anr. vs. Nortel Networks India Private Limited : (2021) 5 scc 738 . 18. I have considered the submissions made by learned counsel for the parties and have perused the material available on record. 19. The existence of arbitration agreement between the parties and the fact that the applicant under the said agreement had issued notice for appointment of arbitrator and the same has not been accepted by the respondents are not in dispute. 20. The only plea raised by the respondents pertains to the fact that the claim is ex facie barred by limitation and, therefore, the application be rejected. 21. Though the Hon'ble Supreme Court in the case of Duro Felguera (supra) has laid down that while deciding the application under Section 11 of the Act, 1996, the Court is required to look at the existence of arbitration agreement only and the issue regarding the claim being barred by limitation has to be determined by the arbitrator himself. However, the judgment in the case of BSNL (supra) has provided a small window, wherein, it has been held that in a rare and exceptional case where the claims are ex facie time barred and it is manifest that there is no subsisting dispute, the Court may refuse to make a reference. 22. In the present case, while the applicant with reference to email (Annex.6) dated 22/1/2015, wherein, the respondents apparently indicated adjustment of advance received against its dues, is seeking beginning of the period of limitation, the respondents, on the other hand, seek to indicate 31/12/2013, the date by which the delivery of the machines were to take place, as the date of beginning of limitation. 23.
23. From the submissions made by learned counsel for the parties, it cannot be said that the claim made by the applicant is ex facie barred by limitation to bring the case within the rare and exceptional case as provided in the judgment in the case of BSNL (supra) for the purpose of rejection of application to make the reference. 24. Consequently, the application filed by the applicant is allowed. Mr. Himanshu Rai Nagori, Retd. District Judge (Mobile No. 7742697771) is appointed as the sole arbitrator to adjudicate upon the disputes between the parties arising from the purchase order dated 1/10/2013 (Annex.1) in terms of the arbitration agreement & as per the Rajasthan Manual of Procedure for Alternative Dispute Resolution, 2009 as amended up to date. The above appointment is subject to the necessary disclosure being made under Section 12 of the Act.