Kone Elevators India Private Limited v. Parth Infratech Private Limited
2025-01-03
SUDESH BANSAL
body2025
DigiLaw.ai
ORDER : 1. This is an arbitration application, which has been filed under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator to resolve the dispute arisen between the parties out of the work order dated 29.12.2014. The copy of work order dated 29.12.2014 is available on record as Annexure-2 enclosed with the arbitration application which incorporates arbitration agreement in Clause 22 and 23 ad infra:- "22. In the event of difference of dispute arising out of, under or in connection with this agreement, over the rights of obligation of parties hereto, the dispute or difference shall be referred to the Arbitration of an Arbitrator to be appointed on mutual agreement and provisions of the Arbitration and Conciliation Act 1996 shall be applicable to such Arbitration. 23. In case of any legal dispute, the jurisdiction shall be at Jaipur." 2. Heard counsel for both parties and perused the record. 3. It appears from the record that respondent-Company place a work order dated 29.12.2014 on the applicant-Company to engage its services for supply, installation, testing and commissioning of passenger elevators for the residential project of respondent viz. Shree Enclave at Niwaru Road, Jaipur and under such work order, four elevators were to be supplied by the applicant-Company. 4. Counsel for applicant contended that all four elevators have been supplied, installed and commissioned, for which invoices for total value of Rs.14,04,490/- were raised and thereagainst respondent made payment of Rs.6,02,472/- only, thus, for the balance payment of Rs.8,02,018/-, a demand notice dated 29.11.2019 was issued. This demand notice was replied by the respondent vide reply notice dated 30.12.2019 and on the ground of stating the supplied elevators as faulty material and failure to maintain the lifts, the payment of balance amount was refused. According to counsel for applicant, the last payment was made by the respondent in the month of July, 2019. Thereafter, applicant invoked the arbitration clause as contained in the work order by issuing a legal notice dated 18.03.2021 (Annexure-5) and suggested name of an Arbitrator but in the reply notice dated 05.04.2021, respondent did not agree on the name of proposed Arbitrator by the applicant, hence, thereafter, the present arbitration application has been filed on 30.01.2024 for appointment of an independent, impartial and neutral arbitrator by the Court. 5.
5. Counsel for respondent has resisted the arbitration application, fundamentally raising the issue of limitation and it has been contended by the counsel for respondent that the claim of balance amount of Rs.8,02,018/- has become barred by the limitation and has turned into a stale claim, therefore, no arbitrator is required to be appointed to adjudicate such stale claim and the arbitration application has been prayed to be dismissed. 6. Having adverted to the rival contentions of counsel for both parties and perusal of the material placed on record, this Court is of, prima facie, opinion that the issue of limitation in respect of such claim is a mixed question of fact and law in the present case, which can be gone into and decided on merits by the Arbitral Tribunal after recording evidence of both parties and after considering the entire facts and circumstances along with documents and evidence produced on record before him. 7. As far as this Court is concerned, being a referral Court, the jurisdiction under Section 11(6) is limited and confined to look into the existence of a dispute between the parties and existence of an arbitration agreement resolve/ settle the same through Arbitrator. 8. As far as filing of arbitration application is concerned, same cannot be held to be barred by limitation and on prima facie examination of the subject claim, same may also not be declared as a stale claim, since according to counsel for applicant, the last payment against the supplied material of elevators was made by the respondent in the month of July, 2019 and dispute for demand of balance amount of Rs.8,02,018/- has been raised by way of issuing a demand notice dated 29.11.2019. However, the issue of limitation is left open to be considered and decided by the Arbitral Tribunal on its own merits without being influenced by the prima facie view of this Court. 9. This Court finds support to its conclusion and view by the judgment of the Supreme Court in case of Arif Azim Company Limited Vs. Aptech Limited [ (2024) 5 SCC 313 ] and further by the recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs.
9. This Court finds support to its conclusion and view by the judgment of the Supreme Court in case of Arif Azim Company Limited Vs. Aptech Limited [ (2024) 5 SCC 313 ] and further by the recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning: [Civil Appeal No.7821/2024 arising out of SLP (C) No.3792/2024] delivered on 18th July, 2024, in respect of scope of the High Court while dealing with the arbitration application in context of Section 11(6A) of the A&C Act, 1996, it has been held and observed by Hon'ble Supreme Court in following paras as under:- "110. The scope of examination under Section 11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing. 111. The use of the term 'examination' under Section 11(6- A) as distinguished from the use of the term 'rule' under Section 16 implies that the scope of enquiry under section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the arbitral tribunal to 'rule' under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the arbitral tribunal or the court enforcing the arbitral award. 112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator shall examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall "examine the existence of a prima facie arbitration agreement and not other issues".
The relevant observations are extracted hereinbelow: "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall "examine the existence of a prima facie arbitration agreement and not other issues". These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the "other issues" also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators.[...]" (Emphasis supplied) 114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in Vidya Drolia (supra) and adopted in NTPC v. SPML (supra) that the jurisdiction of the referral court when dealing with the issue of "accord and satisfaction" under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re: Interplay (supra)." (Emphasis supplied) 10. The net outcome of above discussion is that the arbitration application deserves to be allowed and same is hereby allowed. The Arbitral Tribunal of sole Arbitrator Mr. Atul Kumar Chaterjee (Retd. District Judge); Address:- C-500, Nirman Nagar, Ajmer Road, Jaipur, Rajasthan; Phone No. 9461011122; E-mail ID:- akchatterjeerhjs@gmail.com, as a sole Arbitrator, to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996. 11. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 12.
11. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 12. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4 th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties. 13. The Registry is directed to intimate Arbitrator Mr. Atul Kumar Chaterjee (Retd. District Judge), for his approval and consent to act as Arbitrator. 14. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 15. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 30.01.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information send by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 16. The Arbitration Application stands disposed of accordingly.