India: Delhi High Court holds that limitation period for filing application for appointment of arbitrator under Section 11 cannot be extended by issuing a second/fresh notice invoking arbitration*

Last Updated: 14 August 2018
Article by Surjendu Sankar Das and Avlokita Rajvi

Brief Facts

The Petitioner in the matter relied on an arbitration clause as contained in the Supplementary Deed of Partnership dated 9 July 2012. Since certain disputes had arisen between the parties on 29 September 2014, the Petitioner had filed a petition being OMP No. 1198 of 2014 under Section 9 ("Section 9 Petition") of the Arbitration and Conciliation Act, 1996 ("Act"). Thereafter, the Petitioner also issued a notice dated 14 November 2014 ("First Notice") invoking the arbitration clause. Mukesh Panika ("Respondent") responded to the First Notice by a letter dated 22 December 2014 ("Reply to First Notice").

The Petitioner claimed that the said response was handed over in Court on 5 February 2015. On the said date, this Court disposed of the Section 9 Petition. On 10 October 2017, the Petitioner sent another notice invoking the arbitration clause under the subject agreement ("Second Notice"). The respondents sent a reply to the aforesaid notice on 6 November 2017, wherein it was asserted that the respondents had never executed the documents referred to by the Petitioner, including the subject agreement.

On 4 January 2018, the Petitioner filed another petition under Section 9 of the Act. Thereafter, the Petitioner filed the petition dated 12 February 2018 under Section 11 of the Act, praying for appointment of arbitrator ("Section 11 Petition").

Issue

Whether the Section 11 Petition dated 12 February 2018, which is admittedly beyond the period of three years from the First Notice, is barred by limitation?

Judgment

The Court noted the dates of First Notice, Reply to First Notice, as well as Petitioner' claim that the Reply to First Notice was received by it in Court for the first time on 5 February 2015, on which date, the Court disposed of the Section 9 Petition.

The Court observed that the right to sue had arisen in favour of the Petitioner earlier in 2014 and, in any event, with the Petitioner invoking the arbitration clause by the First Notice. However, the Petitioner did not take any steps for constitution of the arbitral tribunal. The Petitioner made a similar allegation in the Second Notice to the effect that Respondent is attempting to dilute the assets of the subject firm being the immovable properties in question.

The Petitioner argued that since it had received the Reply to First Notice on 5 February 2015, the cause of action had arisen on the said date. Since the Petitioner had issued the Second Notice on 10 October 2017, i.e., within a period of three years from that date, therefore, Section 11 Petition was not barred by limitation.

The Court then noted that Section 43(1) of the Act mandates that the Limitation Act, 1963 ("Limitation Act") would apply to arbitration as it applies to the proceedings in Court.

The Court then referred to the observations in Prasar Bharti v. Maa Communication[1], wherein it was held that:

"6. The position under the 1996 Act in Section 11 is akin to that under Section 8 and not to that under Section 20 of the 1940 Act. In fact, the procedure as prescribed under Section 20 of the 1940 Act has been totally done away with in the 1996 Act. Under the 1996 Act, a party to an arbitration agreement cannot straightaway approach the court for appointment of the arbitrator, as a party to an arbitration agreement was entitled to under Section 20 of the old Act. Under Section 11 of the new Act, even if there is no named arbitrator, the party is not entitled to approach the court straightaway and is required to first issue notice to the other party proposing the names of the arbitrators and is to approach the court only upon the failure of consensus within 30 days of such notice. The procedure prescribed in Section 11 is mandatory. Thus, the question of a party preferring an application under Section 11(4) or under Section 11(6) to the Chief Justice or his designate does not arise unless the procedure of giving a notice is followed and without such procedure being followed and failure thereof, there would be no cause of action for the petition under Section 11(4) or 11(6) of the Act. Thus, the limitation for filing an application under Section 11(4) or 11(6) of the Act cannot but accrue only upon the failure of the procedure prescribed and can possibly have nothing to do with the limitation for preferring the claim. The Supreme Court in J.C. Budhraja v. Chairman, Orissa Mining Corporation Ltd. (2008) 2 SCC 444, relied by the counsel for the Petitioner, has clearly held that the period of limitation for filing a petition under Section 8(2) of the 1940 Act seeking appointment of an arbitrator cannot be confused with the period of limitation for making the claim."

Prasar Bharti (supra) had consequently held that the limitation for filing an application under Section 11(4) would commence running only from the expiry of 30 days from the receipt of request mentioned in Section 11(4)(a) or (b) and the limitation for an application under Section 11(6) would commence running from the happening of contingencies mentioned in sub-clause (a) or (b) or (c) thereof.

In light of the above, the Court noted that the Petitioner had raised a dispute and had accordingly, invoked the arbitration clause and the respondents had denied the existence of arbitration agreement between the parties. The Court observed that disputes between parties were therefore crystallized at the stage of Reply to First Notice. It was open for the Petitioner to file an application for appointment of an arbitrator at that stage. However, the Section 11 Petition has been filed more than three years after this Court had disposed of the Section 9 Petition. In view of the above, the Court held that the Section 11 Petition was barred under the provisions of Limitation Act[2] as it was required to be filed within a period of 3 years from the expiry of 30 days of First Notice.

Analysis

The Court has reiterated the limitation period for filing an application for appointment of an arbitrator. Further, more notably, the Court rejected the Petitioner's contention that the Reply to First Notice gave a fresh cause of action to issue a fresh notice invoking the arbitration, and held that there was no requirement for the Petitioner to issue a fresh notice of arbitration for resolution of the said disputes. The effect of the judgment is that a party cannot seek to extend its limitation period for the purpose of Section 11 by issuing a second/fresh notice invoking arbitration agitating the very same claims.

It is pertinent to note that Prasar Bharti (supra) had held that limitation for filing an application under Section 11(14) or 11(16) of the Act cannot but accrue only upon failure of the procedure envisaged therein respectively and can possibly have nothing to do with the limitation for preferring the claim. Notably, Prasar Bharti also clarified that even if a petition under Section 11 is found to be in time, it may still be dismissed if claims sought to be resuscitated are still found to be long dead ones.


*Authored by Surjendu Sankar Das, Partner and Avlokita Rajvi, Associate; Golden Chariot Recreations Pvt. Ltd. v. Mukesh Panika & Anr., Arb. P. No. 143 of 2018 and I.A. No. 3336-3337 of 2018, Delhi High Court, SCC OnLine Del 10050, judgment dated 23 July 2018.
Quorum: Vibhu Bakhru J.

[1] 2010 (115) DRJ 438 (DB).

[2] Article 137 of Schedule to the Limitation Act.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions