Calcutta High Court: In a petition seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act), a single-judge bench comprising of Moushumi Bhattacharya,* J., held that the petitioner’s claims and the present application are barred by the laws of limitation and are, therefore, not maintainable.
Brief Facts
In the instant matter, the petitioner seeks the appointment of an arbitrator by filing an application under Section 11(6) of the Act. A Memorandum of Understanding (MoU) was executed on 28-03-2011, outlining the disassociation of the parties from each other’s businesses. Disputes arose concerning the petitioner not receiving the agreed Rs. 1.50 crores and issues related to the construction of residential flats. The arbitration clause was invoked on 11-03-2014, leading to subsequent legal proceedings. The petitioner challenged the award under Section 34 of the Act, resulting in the award’s set aside on 28-09-2022.
The petitioner relied on Section 43(4), claiming exclusion of the period from 11-03-2014 to 28-09-2022. The respondent contested application’s maintainability, citing the bar of limitation. The respondent asserted that the notice under Section 21 issued on 10-07-2023, 12 years after the alleged right to sue accrued.
Moot Point
Whether the present application is barred by limitation, considering petitioner’s reliance on Section 43(4) of the Act?
Court’s Analysis
The Court referred to Article 137 of the Limitation Act, 1963 and sets the period at 3 years from the accrual of the right to apply, i.e., from 27-06-2011 to 26-06-2014. The Court stated that the petitioner’s notices from 11-03-2014 to 08-05-2023 are deemed irrelevant for the present application. The Court observed that petitioner invoked arbitration on 10-07-2023, exceeding the limitation by 4 years and 3 months. It was observed that petitioner’s argument under Section 43(4) does not save the application from being time-barred.
“…the cause of action arises when the claimant acquires the right to require arbitration. An application for appointment of an arbitrator under section 11 of the 1996 Act is governed by Article 137 of the Schedule to the Limitation Act and must be made within 3 years from the day when the right to apply first accrues.”
The Court rejected petitioner’s reliance on Sections 18 and 19 of the Act as they presume the subsistence of the limitation period. The Court observed that Section 43(4) of the Act excludes the period between arbitration commencement and award set aside from the Limitation Act. Even with the exclusion, the application remains beyond the limitation period as per Article 137.
“…the right to apply can only arise when such right is unequivocally denied by the respondent. The claim for arbitration must therefore be raised, without delay, as soon as the cause for arbitration arises similar to a civil action.”
The Court held that the question of limitation is clear and does not require the Arbitrator’s determination. The Court further opined that Arbitrators step in only when the delay is not patently obvious.
Court’s Decision
The Court dismissed the present application as not maintainable, ruling that the petitioner’s claims are barred by the laws of limitation. No costs are awarded.
[Manish Todi v. Pawan Agarwal, 2023 SCC OnLine Cal 4812, order dated 05-12-2023]
*Judgment by Justice Moushumi Bhattacharya
Advocates who appeared in this case :
Mr. Ratnanko Banerji, Sr. Adv., Mr. Sabyasachi Chowdhury, Mr. Nirmalya Dasgupta, Mr. R.L. Mitra, Ms. Priyanka Dhar, Counsel for the Petitioner
Mr. Suddhasatva Banerjee, Mr. Rittick Chowdhury, Mr. Roshan Pathak, Counsel for the Respondent
Buy Arbitration and Conciliation Act, 1996 HERE
