Dismissed

M/S Manish Engineering Enterprises Thru Prop. v. Indian Farmers Fertilizer Coop. Ltd. Thru M.D. and Ors.

Allahabad HC17 Dec 2021ARCO/112/2004

Case brief

AI extract

What is this about?

Application under Section 11 of the Arbitration Act, 1996 for appointment of an arbitrator, heard on remand from the Supreme Court. The court found the work order containing the arbitration clause to be an ex facie manufactured document whose original was never produced, the claim time-barred and deadwood, and the arbitration notice never proved to have been received. The application was rejected

What the court decided

AI extract

M/S Manish Engineering Enterprises Thru Prop. Vs Indian… — Arbitration | Allahabad HC (2021)

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Reserved AFR

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Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 112 of 2004

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Applicant :- M/S Manish Engineering Enterprises Thru Prop. Opposite Party :- Indian Farmers Fertilizer Coop. Ltd. Thru M.D. And Ors. Counsel for Applicant :- Vivekanand Srivastava,Dharmendra Shukla,P.K.Ganguly Counsel for Opposite Party :- Sushmita Mukherjee,Vivek Ratan Agrawal

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Hon'ble Suneet Kumar,J.

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The judgment is being structured in the following

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framework to facilitate the discussion:

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A. Remand Order

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B. Pleadings

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(i) Application under section 11;

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(ii) Further pleadings;

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(iii) Objections by respondent-IFFCO

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C. Existence of Arbitration Agreement

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D. Claim – time barred, deadwood

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(i). Limitation Act: Section 18

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E. Conditions for maintaining application under Section 11

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F. Vexatious, frivolous dishonest claim

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G. Conclusion

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Heard Sri Anil Tiwari, learned Senior Counsel assisted by Sri Santosh Kumar Tiwari and Sri Dharmendra Shukla, learned counsels for the applicant/petitioner and Sri Sunil Gupta, learned Senior Counsel assisted by Ms. Sushmita Mukherjee and Sri Sanjay Grover, learned counsels appearing for the respondent. Parties were heard at length for several days.

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A. Remand Order :

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The instant application/petition has been filed under Section 11(5) of the Arbitration and Conciliation Act, 1996¹ , invoking the jurisdiction of this Court for appointment of an arbitrator. The matter was heard pursuant to remand order dated 9 March 20212. Relevant portion of the Supreme Court order reads thus:

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“Our attention has been invited to the recent three Judge Bench decision of this Court in “ Vidya Drolia & Ors. vs. Durga Trading Corporation ”, reported in (2021) 2 SCC 1, which is directly on the point. Amongst others, it has been held that the High Court in a given case while deciding an application under Section 11(4) of the Arbitration and Conciliation Act, 1996, can undertake ‘the prima facie test’ examination to check manifest cases of nonexistent and invalid arbitration agreements and ex facie time barred and dead claims. This limited exercise is to weed out and stop barefaced and pellucid meritless, frivolous and dishonest litigation at the threshold. However, the principle ‘when in doubt, do refer’ applies. Therefore, when the contentions are arguable, when consideration in summary proceedings would be insufficient and inconclusive, when facts are contested etc., the matter/disputes should be 3 referred to the Arbitrator.

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The counsel for the respondents vehemently submitted that they have placed on record the document, namely, the arbitration agreement, which is a genuine document. However, we need not elaborate on the arguments advanced before us for the nature of the order we propose to pass as we are of the opinion that the issue and contentions require reconsideration in accordance with law keeping in mind the legal ratio in Vidya Drolia (supra). These

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1 Arbitration Act

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2 Civil Appeal No(s). 837 of 2021 (M/s Indian Farmers Fertilizer Cooperative Ltd. & others v. M/s Manish Engineering Enterprises

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contentions can be considered by the High Court in the remand proceedings.

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We accordingly set aside the impugned order and the judgment and relegate the parties to the High Court by restoring the application for appointment of the arbitrator to its original number for being considered afresh. The examination would be in terms of the ratio in Vidya Drolia (supra).

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We may not be understood to have expressed any opinion either way on any of these contentions, or as may be available to the parties in the remanded proceedings. All contentions are left open.”

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Supreme Court directed that while considering the application under Section 11 of the Arbitration Act, the Court to prima facie, examine: (i) whether the agreement exists; (ii) whether the litigation is meritless, frivolous and dishonest; (iii) whether the claim, ex facie, is time barred/deadwood, and/or, the application (Section 11) is itself barred under the Limitation Act, 1963³ .

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The instant application under Section 11(5) of the Arbitration Act was presented on 17 December 2004, the application came to be disposed of vide order dated 22 January 2019, appointing an arbitrator. The respondent, Indian Farmers Fertilizer Cooperative Ltd.4, a public sector undertaking of the government, carried the order in appeal to the Supreme Court, which was set aside and remanded.

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B. Pleadings :

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(i) Application under Section- 11

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It is pleaded that the applicant-firm came to be awarded work order No. 36/0000/1060/12463 dated 29 March 1985, for complete cleaning and painting of structures, equipments,

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Limitation Act

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4 IFFCO

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vessels and pipelines etc. in different plants of Phoolpur. The total value of the work order was at Rs.3,60,000/-. It is asserted by the applicant that the work order was executed and completed as per the terms and conditions to the satisfaction of the respondent-authorities. It is, further, pleaded that after completion of the work, the bills for the entire work was submitted with the respondent-authority but the payment was not made for the reasons best known to the IFFCO authorities. It is further pleaded that despite repeated request for payment of the bills arising from the work order and for various other work order payment was not made.

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Aggrieved, petitioner was compelled to institute a petition being Civil Misc. Writ Petition No. No. 19922 of 2001, for another work order No.43/57061/1916B1/35252, dated 1 February 1996, and not for the present work order. It is further asserted that conduct of the applicant approaching this Court invoking writ jurisdiction annoyed the IFFCO authorities, consequently, applicants were subjected to harassment and trouble causing hindrance in the contract work and payment of bills already submitted by the applicants.

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It is further pleaded that applicant was prohibited from entering the premises at Phoolpur Unit of IFFCO and was not permitted to look after the material and documents kept by the applicant in their store-cum-office within the IFFCO premises, nor was the applicant permitted to remove the material and documents from the premises. It is further pleaded that on inspection of the site on 16 May 2003, along with the arbitrator appointed in another proceeding, (M/s S.K.

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Associates), sister-firm of the applicant-firm, it is alleged that the material and documents of the applicant-firm lying in the store-cum-office within the IFFCO premises was missing/removed by the respondent-authorities. It is consequently asserted that the cause of action arose on 7 December 2001, 6 May 2003, thereafter, on 9 October 2004.

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In paragraph (14) of the application, it is pleaded that despite repeated approach and request, applicant was not given payment of the bills in respect of the work order, hence, a notice dated 9 November 2004, was sent/dispatched on 16 November 2004, by post requesting the IFFCO-authorities to make payment, of the bills along with compound interest @ 18% per annum, and/or, to appoint an arbitrator to decide the dispute.

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It is, thereafter, pleaded that the respondent- IFFCO neither made payment nor appointed an arbitrator till filing of the instant petition (17.12.2004) even after expiry of the notice period. Hence, applicant was compelled to invoke the jurisdiction of this Court under the Arbitration Act. It is further pleaded that as per clause-17 of the work order, there is a provision for arbitration. It is further asserted that the application filed under Section 11 is well within limitation and if there is any delay, the same may be condoned. In para-19, it is unequivocally pleaded that the bills at Rs.3,60,000/- plus interest thereon, is lying pending with the IFFCO-authorities w.e.f. 29 March 1986.

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It would be apposite to reduce the dates, as pleaded by the applicant in Section-11 Application, in tabular form to comprehend the time line of the case setup by the applicant.

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TABLE – I

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Dates	Events
29.03.1985	Alleged Work Order No. 36/0000/1060 C/12463 for complete cleaning and painting of structures, equipment, vessels & pipelines of the plant in Phoolpur unit. (Value of Rs. 3,60,000/-). The Work Order had a duration of oneyear.
29.03.1986 29.04.1986 29.05.1986	Taking the above allegation at its face value, since the Work Order period ended on 29.03.1986, the bill should and would have been submitted in 30 days by 29.04.1986 & then paid in 30 days by29.05.1986.
19.05.1989	Thus, cause of action, if any, arose on 29.05.1986. The 3 years limitation started running& expired on 29.05.1989.
09.11.2004	Notice under clause 17 of the Work Order to appoint arbitrator.
17.12.2004	Petition filed under section 11 of Arbitration Act.

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(ii) Further pleadings:

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Supplementary affidavit dated 18 November 2014, came to be filed by the applicant bringing on record the correspondence with the respondent-IFFCO with regard to the payment of the work order. Letters written by the applicants are dated 29 May 1993, 26 February 1994, 20 April 1996, wherein, reference is to several work orders, including, the present work order requesting IFFCO authorities to release the pending bills. The communication dated 20 April 1996 specifically pertains to the instant work order, wherein, it has been noted that more than 10 years have lapsed, an additional work at Rs.3,51,590/- arising from the work order was executed by the applicant at behest of the IFFCO authorities but despite on having completed the work, payments presently

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standing at Rs.7,11,590/- along with compound interest @ 18%, is due and pending.

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The document dated 1 July 1998⁵ , purportedly to have been issued by IFFCO (Joint General Manager Maintenance), the subject reads, ‘submission of final bills’. It is a typed, partially legible document with interpolations by hand. The document refers to work order of the year 1983, 1984, 1985 and 1993. It appears that the document has been filed to mislead and misrepresent the Court. It is not clear whether the document pertains to the present work order.

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In the rejoinder affidavit dated 6 November 2017 filed by the applicant (to the counter affidavit filed by IFFCO to the application under Section 11), it is pleaded⁶ that the application under Section 11 of the Arbitration Act is within time and not barred by limitation. It is further pleaded that, “the crucial date for invoking the limitation is 17 April 2002 when respondent sought no claim certificate from the applicant for release of the payment. The applicant invoked the arbitration clause on 09 November 2004 and the petition was filed on 17 December 2004 and hence the claim of the applicant is well within time”.

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The purported notice dated 9 November 20047, for appointment of arbitrator with respect to the present work order (29 March 1985) reads thus:

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“Sir,

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The above work order was awarded to M/s Manish Engineering Enterprises and was completed within time whose

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Annexure -2

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Paragraph-9

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Annexure-4

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bills for payment were submitted . On the instructions of IFFCO authorities, bills were again submitted.

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Most of the relevant papers in respect of the above said work order and other work orders were lying in the storecum-office within IFFCO plant maintained by the M/s Manish Engineering Enterprises, wherein the entry of undersigned has been banned by IFFCO authorities about for the last 3-4 years .

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In compliance of IFFCO letter dt. 07.12.2001 the reply dt. 07.12.2001 i.e. on the same day was given that the bills already submitted are lying in your office for payment with a prayer to make the payment thereof with interest @ 18% per annum (Compound Interest)

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Date : 09.11.2004

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The notice was dispatched by speed post on 16 November 2004.

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On perusal of the notice, it categorically states that the firm had completed the work order within time and the bills for payment were submitted. In the subsequent paragraph it is stated that the relevant papers in respect of the work order was lying in the store-cum-office within IFFCO plant maintained by the firm, wherein, entry was banned by IFFCO authorities about 3-4 years ago. It is further stated that pursuant to and in compliance of IFFCO’s letter dated 7 December 2001, a reply was submitted by the firm on the same day that bills already submitted are lying in the office of IFFCO for payment along with compound interest @ 18% per annum. Since nothing has been done, hence, the instant notice,

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as per clause 17 of the work order, for appointment of arbitrator.

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The applicants have further referred to several letters written by the respondent authorities in response to the communications of the applicant. The letter written by the IFFCO authorities is dated 13 January 1997, wherein, it is certified that applicants carried out substantial painting work in IFFCO plant at about Rs. 20 lakh. The work and performance was found satisfactory. The letter dated 3 March 2000, is again in the same tenor certifying that the firm (applicant) had executed several civil work and painting at IFFCO. It is certified that the firm is technically and financially sound and their work is satisfactory. The next communication dated 20 March 2000, is in reference to the present work order (29.03.1985), wherein, it is stated that the firm has already informed through earlier correspondence (05.10.1999, 21.10.1998, 03.01.1997, 05.04.1996 and 29.12.1995) that it is not possible for the IFFCO to pay Rs. 3,51,519/- towards the additional work executed by the firm without amendment/modification of the work order. After modified/amended work order is issued the payment would be released.

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The next communication placed on record, alleged to have been issued by the respondent, is communication dated 30 November 2001, which is hand written on a rough note sheet. The letter has been signed by one Rashid Iqbal. The designation of the officer is not indicated and the copy of the letter is marked to Senior Manager (civil). The communication

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refers to six bills pertaining to different works undertaken and executed by the applicant firm. There is reference to the instant work order, as well as, other work orders since 1985 to 1996. The letter merely records that the work orders noted therein is in the Account department for verification. The firm was directed to contact the Senior Manager (civil) for no claim certificate etc. so that necessary action may be taken for release of payment.

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The applicants have placed on record letter dated 17 April 2002, issued by the respondent authority, addressed to the applicant-firm. The subject refers to the present work order. The contents of the letter is in reference to the earlier communication dated 30 November 2001, issued by the civil department asking the firm to submit no claim certificate so as to enable the authorities to release the payment against the work order. The letter further communicates that the amendment to the work order has already been issued vide letter dated 23 November 2001, accordingly, the firm was requested to submit no claim certificate to the Senior Manager (civil) for necessary action to be taken thereon for release of payment.

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The additional pleadings and the communication referred therein by the applicant, for the sake of convenience, is reduced in a tabular form.

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TABLE – II

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DATES		EVENTS
29.05.1993	Three letters,	7 years after end of the period of completion of the
26.02.1994 20.04.1996	alleged Work payment.	Order, are stated to be the Applicant’s requests for

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	These letters have seen the light of day for the first time after 20 years onlyin the 2015 SupplementaryAffidavit.
13.01.1997	The letter by IFFCO recording successful completion of work by the Applicant.
21.10.1998 28.10.1998	The letters demanding payment again but not pertaining to or making reference to the present Work Order.
03.03.2000	A Certificate of Manager of IFFCO to the effect that the Applicant has completed work including painting work, written 14 years after alleged completion of the work order. The document havingno reference to thepresent Work Order.
25.03.2000	IFFCO’s alleged reply to the Applicant’s letter dated 22.02.2000 acknowledging that the Applicant has completed additional painting work to the tune of Rs. 3,51,590 payment of which would be done after extension of amendment of the Work Order. The communication is 14 years after the alleged completion
10.05.2001 09.10.2001	The letters of the Applicant regarding release of payment which are dated 15 years after the alleged completion of work.
30.11.2001	Alleged letter by IFFCO asking the Applicant to give No Claims certificate for release of outstanding payment is alleged.
7.12.2001 17.4.2002	Protest letter by Applicant seeking 18% compound interest also. IFFCO, referring to letter dated 30.11.2001 again asked for NOC. The letters are 15 years after the alleged completion.
17.12.2004	Application under Section- 11 filed before the Court.

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(iii) Objections by the respondent-IFFCO

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Respondents in response to the application filed under Section 11 and the other affidavits have categorically pleaded and setup a case that the claim is malicious, false based on non existing work order. The communications/correspondence from the period 1992 to 2002 were not filed along with original application presented in 2004. It is further pleaded that proprietor of the firm (Shri S.K. Pandey) is a person of questionable intent, who has filed series of fraudulent litigations against the respondent IFFCO and the instant litigation is one such matter which has been filed after twenty

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years of the alleged date of work order (29 March 1985). The respondents have denied of having an employee in the name ‘Rashid Iqbal’. The respondents have further denied existence of the work order and have insisted that the original arbitration agreement be placed on record by the applicant. It is further pleaded that respondents are not party to the alleged non existent agreement. The document and the correspondence is forged, manufactured with interpolations visible to naked eye.

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A preliminary objection has been raised with regard to the maintainability of the application being highly belated and prima facie suffers from delay and laches. The work order was for a period of one year for cleaning and painting. Issue of non-payment is being raised after twenty years, which according to the respondents is barred by laches, even if the work order is to be taken on face value.

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In the backdrop of the pleadings noted herein above in detail, this Court has been called upon, to return a finding on: (a) existence of the arbitration agreement; (b) whether claim is ex-facie time barred, and/or, dead claim; (c) whether the application under section 11 is meritless, frivolous and dishonest litigation; (d) whether the application under Section 11 itself is barred by limitation.

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C. Existence of Arbitration Agreement :

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The work order is dated 29 March 1985 as per the case of the applicant. The quotation no. is nil dated 27 October 1984, and discussions held on 7 January 1985. The document on face value appears to be cyclostyled/typed. The reference

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number of the work order date and the description of the applicant firm is hand written. Clause (3) of the agreement specifies that the total value of the contract as per schedule rates is at Rs. 3,60,000/-. The document further clarifies that the maximum value will not exceed Rs. 3,60,000/-. After clause 3.0/3.1, as visible to naked eye, some interpolation has been made in the work order. Between clause 3.1 and 4.0 a new clause (8) has been interpolated/inserted which mandates that the contractor shall ensure payment of minimum wages. The interpolated clause(8) is an extract of page 2 of some other document. On bare perusal of the first page of the work order the clauses therein is as follows:

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1.0 ---- Scope of Work

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1.1 ---- …..

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2.0 ---- Contractor’s Delegation

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3.0 ---- Rates & Total Work Order Value

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3.1 ---- …..

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– 2 –

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---- Interpolation i.e. cut/paste

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4.0 ---- Safety

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In between clause 3.1 and 4.0, clause (8) has been interpolated, partially effacing clause 3.2 i.e. payment of minimum wages, which is clearly visible to naked eye. An attempt has been made to efface clause 3.2 and clause (8), contained in page -2-, of another document has been superimposed.

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The next page of the work order is again marked page -2- and is with regard to terms of payment which, inter alia, provides that 100% payment shall be made against rest/final payment submitted to Manager (Finance and Accounts) within 30 days of submission of temporary verified bills. It further provides that if a bill is not submitted within 30 days after completion of work then IFFCO will not take any responsibility for measurement/sheet verification.

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Clause 6.0 ---- Effective Date

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Clause 6.1 ---- The duration of the contract shall be valid for a period of one year from the effective date. The effective date will be the date of issue of work order. However, it will be at the discretion of IFFCO to extend the validity for another one year at same terms and conditions on mutual consent.

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The last page of the work order (page-6) bears the signature of the ‘Materials Manager’, whereas, the columns for the signature and seal of the contractor ‘received and accepted’ is not sealed, stamped nor bears the signature of the applicant firm. In other words, there is no endorsement of having received and accepted the work order by the firm with its seal and signature.

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The applicant filed a counter affidavit in response to an affidavit filed by Sanjay Kudesia on behalf of IFFCO. In paragraph 6, it is stated that the respondents are guilty of denying existence of their own document (work order) and the subsequent correspondence. It is further pleaded that applicant would produce the original work order in the Court, “the applicant is in possession of the original work order which will

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be produced on the order of the Hon’ble Court”. In the subsequent paragraph (7) it is stated that the “work order dated 29 March 1985 was subsequent revise in 2001 and due to increase in following of the work and it was amended in 2001[.…] the applications filed pertaining to the work order was kept in store/office maintained in IFFCO Phoolpur Branch which was subsequently misappropriated by IFFCO, when the applicants’ entry was banned.”

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In other words the original work order, is in possession of the applicant as claimed, but was not placed on the record, nor, produced during the course of arguments.

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The plea of non-existence of arbitration agreement in an application under Section 11, if raised, is to be decided by the Court. In Velugubanti Hari babu v. Parvathini Narasimha Rao and another⁸ , Supreme Court made the following observations:

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“The High Court ought to have decided the questions itself and recorded a finding as to whether the MoU dated 27.05.2013 is a valid and genuine document or it is a forged and fabricated document and then depending upon the findings, appropriate directions, if necessary, should have been passed for disposal of the application finally. Unfortunately, it was not done.”

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In Atul Singh and others v. Sunil Kumar Singh and others9, Supreme Court held on Section 8(2) as follows:

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“There is no whisper in the petition dated 28.2.2005 that the original arbitration agreement or a duly certified copy thereof is being filed along with the application. Therefore, there was a clear non- compliance of sub-section (2) of Section 8 of 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration.”

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(2016) 14 SCC 126 para 23

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(2008) 2 SCC 602

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The applicant, admittedly, has not filed the original but photocopy of the contract/work order dated 29 March 1985 with arbitration clause 17. Keeping in view the contested nature of ‘existence’ of the agreement, it was incumbent in law on the applicant to produce the original as claimed and pleaded by them. In the absence of the original, the application under Section 11, read with Section 8, of the Arbitration Act is per se not maintainable.

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The ratio of Supreme Court in Vidya Drolia¹⁰ is that the same standard, parameters and mandate as apply to Section 8 are applicable also to Section 11 for the purposes of determining the issue of ‘existence’ and ‘genuineness’ of the arbitration agreement and deciding whether the parties should be referred to arbitration. Therefore, the Court cannot entertain any application under Section 11, unless as per the mandate of Section 8, the original arbitration agreement is accompanying it. Section 8 reads thus:

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“8. Power to refer parties to arbitration where there is an arbitration agreement

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(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to

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154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.

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154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are nonarbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably “non-arbitrable” and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested....[...]

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arbitration unless it finds that prima facie no valid arbitration agreement exists11.

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(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:

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Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court12.”

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(emphasis supplied)

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35. Applying the ‘prima facie’ test of Vidya Drolia, it follows:

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(i) In the absence of the original arbitration agreement, the application under Section 11(5) is on the face of it not maintainable and cannot be entertained.

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(ii) The question of the original not being available with the applicant does not arise. The applicant has, in its reply to IFFCO’s application for production of the original, categorically accepted and asserted on 15 November 2018 that it is in possession of the original:

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“ 6 … The applicant is in possession of the original work order which will be produced on the order of the Hon’ble Court.”13

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(emphasis supplied)

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(iii) Since the original is admittedly in the possession of the applicant and still not filed, the mandate of Section 11 read with Section 8(2) is that the Court shall draw an adverse inference against the applicant and dismiss its application summarily.

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Inserted by Act 3 of 2016 w.e.f. 23.10.2015

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Inserted by Act 3 of 2016 w.e.f. 23.10.2015

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13 Counter Affidavit-15.11.2018

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(iv) Act 3 of 2016, inserted a Proviso in Section 8(2), even in a case where the original is not available with the applicant, the applicant is required to –

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(a) make that averment on pleading in its application under Section 11 and

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(b) also file a petition ‘praying to the court to call upon the other party to produce the original’ before the Court.

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(emphasis supplied)

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(v) In the present case, rather than the applicant, it is the respondent which filed a petition (August 2018) before this Court that the applicant be directed to produce the original work order/agreement. The applicant’s reply to the same is that the original is in its possession. But the original contract has not been produced, nor, placed on record.

¶140

Having regard to the work order dated 29 March 1985, and taking it on face value, the document, ex facie, is a forged/ manufactured work order with interpolations writ large to naked eye. The applicant failed to produce the original work order. The work order which is the basis of the application filed under Section-11 of the Arbitration Act, ex facie, is a non existent and manufactured document.

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D. Ex facie – time barred, deadwood claim :

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It is submitted by the learned counsel for the respondent that the alleged claim of the applicant is ex facie time-barred, dead-wood and not maintainable. It has been filed long after the expiry of the three years limitation period. In paras 10-11 of Section-11 Application, applicant itself states:

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“10. That after…. Writ petition, the entry of the applicant within IFFCO…. Was banned and he was not permitted to

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look after his… documents… in hs store-cum-office… and… remove them from there.

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That a letter dated 5.8.2000 was handed over to the applicant written by one of the employees of IFFCO Sri S.K. Pandey, Junior Officer (Civil) and C.R. Joshi asking the applicant to remove his store from IFFCO premises…. The true copy…. Annexure No. 3...”

¶147

As per the applicant, respondent- IFFCO, admittedly, disengaged the applicant well before 5 August 2000, where was the occasion of the alleged extensions/amendments of work order (29.3.85) being granted to the applicant by subsequent alleged letters written after fifteen years. It is improbable, even taking that letters were written, as is being asserted by the applicant, that would not overcome the bar of limitation. The time commences to run as the cause occurs.

¶148

In the alleged work order dated 29 March 1985, the payment terms, therein, reads thus:

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“5.0 PAYMENT TERMS

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Subject to Clause 7 and 8, 100% payment shall be made against running/final bills submitted to Manager (Finance & Accounts) within 30 days of submission of duly verified bills. If a bill is not submitted within 30 days after completion of work, then IFFCO will not take any responsibility for measurement sheet verification.”

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(emphasis supplied)

¶152

Cause of action, if at all, would have accrued to the applicant legally is in May 1986. Under clause 5.0 Payment Terms, applicant was required to submit bill within 30 days after completion of work. The work order being valid for one year only i.e. up to 28 March 1986, the bill could have been submitted within thirty days i.e. latest by 28 April 1986. Had bill-compliance been done, the entire payment due to the

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applicant should have been made by IFFCO within further thirty days latest by 28 May 1986 and, if not so made, cause of action would have arisen and right to sue for its dues would have accrued to applicant on 29 May 1986. (See Table-I)

¶155

In paras 4 and 14 of the present application under Section 11, applicant has asserted:

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“4. That after the completion of the work, the bills for the entire job of the work order were submitted but the payments were not made on one count or the other deferring the matter for reasons best known to the IFFCO authorities.

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That in spite of repeated approaches and requests, the applicant was not given payment of his bills in respect of the work order dated 29.3.1985. Hence, vide notice dated 9.11.2004 sent on 16.11.2004 by post requested the IFFCO authorities to make the payment of the bills with interest @ 18% per annum (compound interest) or to appoint an arbitrator to decide the dispute at the earliest...”

¶158

(emphasis supplied)

¶159

The present case is not one of any contractual term of ‘finalization’ of bills by the employer as asserted by the applicant. The process of finalization of bills is a different concept from a final bill. [See Geo Miller and Company Private Limited Versus Chairman, Rajsthan Vidyut Utpadan Nigam Limited]14

¶160

Clause 5 of the work order mentions running bills and a ‘final bill’. The final bill is the last bill submitted by the contractor. Clause 5 does not provide for any act of finalization of bills by IFFCO after the submission of bills by the contractor. It provides only for measurement sheet verification

¶161

(2020) 14 Supreme Court 643 (paras 23-24, 29)

¶162

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¶163

by IFFCO and that too before submission of bills by the contractor to Manager (Finance & Accounts). The submission of bills, including the final (last) bill, along with such verification is to be done within thirty days of completion of work.

¶164

Clause 5 provides that once the verification bills are submitted, 100% payment shall be made against the running /final bills submitted to the Manager (Finance and Accounts) within thirty days of submission of duly verified bills. Thus, even verification precedes the submission of bills and there is no process of finalization of bills but only payment of bills automatically after their submission by the contractor. 45. Applicant has categorically stated15 in the Section-11 application that “after the completion of the work, the bills for the entire job of the work order were submitted but the payments were not made….”. The case pleaded by the applicant is simply of submission of bills followed by nonpayment, not of finalization of bills pending at the end of IFFCO. Thus, there is neither any term of finalization of bills in the contract, nor even any plea of finalization of bills in the S.11 application. On the other hand, the allegations by the applicant are that it continued to send reminders to IFFCO for payment but still payment was not done by IFFCO.

¶165

It has been submitted by the learned counsel for the respondent-IFFCO, relying on Geo Miller16 that unlike a case with contractual term of ‘finalization of bills’ as in Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority17 , in

¶166

Para 4

¶167

16 . (2020) 14 SCC 643 (paras 23-24, 29)

¶168

(1988) 2 SCC 338

¶169

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¶170

a case where bills are ‘handed over’ by claimant to the respondent but respondent has failed to make payment, the right to sue accrues from “the date on which the final bills was raised”.

¶171

Hence, as per the terms of the work order/contract, the right to apply accrued to the applicant latest on 29 May 1989, and, the notice for arbitration being allegedly sent on 16 November 2004, the claim of applicant is ex facie time barred by more than fifteen years. The correspondence and communications, thereafter, is of no avail to the applicant.

¶172

(i). Limitation Act : Section 18

¶173

The learned counsel for the applicant strenuously attempted to impress upon the Court that the case of the applicant would fall under Section 18 and not under Article 137 of Limitation Act. The law requiring conditions of ‘acknowledgement’ under Section 18, including its timing and pleading, has been laid down in Reliance Asset Reconstruction Company Limited v. Hotel Poonja International Private Limited18 . Under Section 18 of the Limitation Act, the acknowledgement of liability in writing, signed by a party in respect of any right or property claimed by such party within the prescribed period of limitation to file a suit, and/or application, leads to computation of the period of limitation afresh, from the time when the acknowledgement is so signed. In the present case, both the said conditions of Section-18 are not satisfied. The provision is extracted:

¶174

Section 18, Limitation Act provides that–

¶175

2021 SCC Online 289 (para 32)

¶176

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¶177

“where, before the expiration of the prescribed period for a suit application …, an acknowledgement of liability …. has been made …., a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.”

¶178

Thus, it is only if an acknowledgement is made before the expiration of the prescribed period of limitation that limitation will start from the date of acknowledgement. For that purpose, as per Art. 137, Limitation Act, the date of commencement of limitation i.e. the date when the right to apply accrues to the plaintiff or applicant is the first necessity.

¶179

In the present case, as noted above and also admitted by the applicant in para 19 of the Section 11 application, the said date of right to apply accrued to the applicant is latest on 29 May 1986. That being so, the three years’ limitation expired on 29 May 1989. There is not even a whisper in pleadings of acknowledgement of liability by IFFCO until 29 May 1989. In fact, the first alleged letter from IFFCO to the applicant is only eight years later of the date, 13 January 1997 19 which too along with all subsequent alleged letters, are denied as nonexistent by IFFCO (See Table II). The letters even assuming were written by IFFCO, do not acknowledge the liability with regard to the work order.

¶180

In Khan Bahadur Shapoor Fredoom Mazda v. Durga Prasad Chamaria and others20, Supreme Court held :-

¶181

“6. It is thus clear that acknowledgment as prescribed by Section 19 merely renews debt;[…..]Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit

¶182

Supplementary Affidavit dated 18.11.2015 filed by the Applicant

¶183

AIR 1961 SC 1236

¶184

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¶185

the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning.[...]”

¶186

53. The ratio of Bharat Sanchar Nigam Limited and another v. M/S Nortel Network India Private Limited21 is as follows:

¶187

“Sections 5 to 20 of the Limitation Act do not exclude the time taken on account of settlement discussions. Section 9 of the Limitation Act makes it clear that: “where once the time has begun to run , no subsequent disability or inability to institute a suit or make an application stops it...As regards ‘any intervening facts which may have occurred, which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act, (unless) there is a pleaded case specifically adverting to the applicable Section , and how it extends the limitation from the date on which the cause of action originally arose, there can be no basis to save the time of limitation.”

¶188

(emphasis supplied)

¶189

Applicant has not pleaded “acknowledgement” by IFFCO or any case under Section 18. The foundation has not been laid down by the applicant in the application under Section 11. The issue of limitation is a question of fact, law and jurisdiction. The foundation has to be laid in pleadings followed by arguments. In other words, without pleadings, arguments cannot be raised, advanced or pressed. The letters and reminders by the applicant are wholly irrelevant.

¶190

The further ratio of BSNL v. Nortel (supra) is : “The period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters, or mere settlement discussions ...”. The same is the ratio in Geo Miller²² and Secunderabad Cantonment Board. v. B Ramchandriah & Sons23 .

¶191

21 . 2021 SCC online SC 207

¶192

(2020) 14 SCC 643 (para 29)

¶193

(2021) SCC online SC 219 (para 20)

¶194

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¶195

The said ratio applies directly to the facts of the present case rendering all the alleged correspondence, letters, reminders, exchanges, settlement papers, NOC demands etc. filed by the applicant wholly irrelevant and meaningless for the purposes of limitation.

¶196

The limitation prescribed under Article 137 of the Schedule to the Limitation Act, which applies to an application under Section 11(6) or Section 11(9) of the Arbitration Act filed before the High Court or before the Supreme Court cannot be mixed up with the period of limitation applicable to the claims prescribed in various other Articles of the Schedule to the Limitation Act. Both these periods of limitation i.e. one applicable to the claims being made and another being applicable to the application under Section 11(6) or Section 11(9) of the Arbitration Act to which Article 137 of the Schedule to the Limitation Act applies, are two different periods of limitation and cannot be made applicable to each other.

¶197

Applying the aforenoted proposition of law to the facts setup by the applicant in the present case, I find that the application under Section 11 was not filed within the limitation period prescribed under Article 137 of the Limitation Act. Hence, the claim of the applicant is palpably and ex facie time-barred, deadwood and non-maintainable.

¶198

E. Conditions for maintaining Application under Section 11 :

¶199

It is urged by the learned counsel that the respondent that the application under Section 11 of the Arbitration Act is ex facie without jurisdiction and non-maintainable. The pre-

¶200

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¶201

conditions mandated under Section 11(5) and (6), read with Sections 3, 21 and 43 (2) are not satisfied.

¶202

It is urged that the present application is governed by Section 11 (6), read with, Section 11(5). Section 11(5) provides for a case where, though the parties have provided for arbitration by a sole arbitrator, they have not ‘agreed on a procedure for appointing the arbitrator’, whereas, Section 11(6) provides for a case where the parties have agreed to a procedure for appointment of the arbitrator. The present case would fall under Section 11(6), assuming that the alleged Contract/Work Order/Arbitration Agreement, dated 29 March 1985, existed, the parties had agreed on a procedure for appointment of the arbitrator as follows:

¶203

“17.0 ARBITRATION

¶204

If at any time, any question, dispute or difference shall arise between the owner and contractor under or in connection with the contract, either party shall as soon as reasonably practicable give to the other, notice in writing of the existence of such question, dispute or difference specifying its nature and the point of issue and the same shall be referred for arbitration to General Manager of Phulpur Unit who shall appoint an officer of IFFCO as Arbitrator and the decision of the arbitrator shall be binding on both the parties.”

¶205

(emphasis supplied)

¶206

Limitation period of thirty days is read in Section 11(6) by judicial interpretation derived from Section 11(4) and (5). as held by the Supreme Court in Datar Switchgears Limited v. Tata Finance Ltd. and another24 :

¶207

So far as cases falling under Section 11(6) are concerned – such as the one before us – no time limit

¶208

24 . (2000) 8 SCC 151

¶209

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¶210

has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient …”

¶211

On reading the present application as falling under Section 11(6), read with Section 11(5), the ‘ giving of notice to the other’ party under the arbitration clause and, more importantly, the ‘ receipt of request by one party from the other party’ under Section 11 is a jurisdictional condition which needs to be satisfied before any demand for appointment can be said to have been made by one party to the other party, and upon failure to appoint arbitrator by the other party, a request for appointment of arbitrator is made to the court.

¶212

In the present case, the said condition is not satisfied since there is no averment, pleading and proof that the notice in writing dated 9 November 2004, sent (or given ) by the applicant was delivered to and received by the General Manager of Phulpur Unit of IFFCO by fulfilment of the various mandatory factual requirements of Section 3 of the Arbitration Act. It is submitted by the learned counsel for the respondentIFFCO that the present application, hence, is ex facie misconceived, pre-mature, without jurisdiction and nonmaintainable.

¶213

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¶214

63. Section 3 of the Arbitration Act reads as follows:

¶215

“3. Receipt of written communications – (1) Unless otherwise agreed by the parties, –

¶216

(a) any written communications is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and

¶217

(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee’s last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.

¶218

(2) The communication is deemed to have been received on the day it is so delivered.

¶219

(3) This section does not apply to written communications in respect of proceedings of any judicial authority.”

¶220

(emphasis supplied)

¶221

Section 3, thus provides a fiction of ‘receipt’ and a special mode of service for purposes of the Arbitration Act, distinct from other general enactments (e.g. Section 27 General Clauses Act, 1897, Order 5, Rule 9 of Code of Civil Procedure, 1973, Section 114 (f) Indian Evidence Act, 1872). It requires that any written communication (notice, request etc.) can be deemed to have been received only if it is delivered to the addressee in the manner prescribed in Section 3(1)(a), and, on failing that prescribed manner, in the alternative, in the manner prescribed in Section 3(1) (b).

¶222

The first and primary method is stipulated in Section 3(1) (a) and it requires the sender to deliver the communication to

¶223

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¶224

the addressee actually or personally or at his place of business etc. i.e. there has to be an actual delivery and only if that is so, there is deemed receipt.

¶225

The secondary method prescribed in Section 3(1)(b) by registered letter etc. is not a direct option and cannot be resorted to straight away. It can be resorted to only in the alternative if the said primary method has actually not worked because the sender has actually not been able to find the place of business etc. of the addressee. For establishing that the primary method has not worked, various factual ingredients in Section 3(1) (b) need to be satisfied by the sender. The sender has to discharge the burden of specifically pleading and proving that he could not ‘find’ that is to say, he has not been able to actually, physically and geographically locate the other party personally or his place of business etc. even after making reasonable enquiry.

¶226

Further, the sender, even, when he resorts to the method in Section 3(1) (b), he has the further burden to plead and prove that he sent the communication by a ‘registered letter or by any other means which provides a record of the attempt to deliver it.’ Even a plain registered letter (without AD – Acknowledgement Due), speed post or courier is not enough so long as the record of the attempt to deliver it e.g. the record of Acknowledgement of Delivery (Acknowledgement Card) or of ‘attempt’ such as ‘refusal to receive’, ‘not found’, not ‘available’ etc. given by the postman or courier service is not adverted to and produced by the sender is his pleading on affidavit.

¶227

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¶228

The interpretation of Section 3 is in line with the decision of this Court rendered in Goldbrush Sales & Services Limited v. Managing Director, U.P. State Road Transport Corporation and another 25. The relevant paragraphs is as follows:

¶229

“7. It is the contention that [….] mere sending of intimation about appointment of Arbitrator is not sufficient. Such intimation, assuming that it was sent though not admitting it, is required to be delivered. Unless it is delivered, it can not be treated as having been communicated, theretofore, his submission was that prior to filing of the application under Section 11 there was no communication by the competent Authority which was the M.D., U.P.S.R.T.C. of his decision appointing Shri Niranjan Kumar as Arbitrator. Accordingly, once the application under Section 11 had been filed no such appointment could have been made and the matter was purely within the domain of this Court to do so. …

¶230

It was his contention that once that applicant has repeatedly denied on oath the receipt and delivery of the alleged communication [..…] the presumption under Section 114 of the Evidence Act as also Section 27 of the General Clauses Act stood rebutted and the onus shifted upon the opposite parties to prove such receipt/delivery of the communication referred hereinabove upon the applicant and as they had failed to do so, therefore, this Court should proceed to appoint an Arbitrator. ...

¶231

11.[…...] although this application has remained pending before the Court for almost 7 years, the fact of matter is that such sending of the letters would at best raise a presumption about the fact that the same were sent, but, as per the provision contained in Section 3(2) of the Act, 1996 this is not sufficient in respect of matters pertaining to Arbitration and such communication has to be “delivered”. Even otherwise, the presumption referred hereinabove in terms of Section 114-III(f) of the

¶232

25 . 2019 SCC Online AII 5833

¶233

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Indian Evidence Act or in terms of Section 27 of the General Clause Act is rebuttable and once the applicant has stated on oath by way of an affidavit that it had never received any such letter dated 06.08.2012 or the decision of the M.D., U.P.S.R.T.C. dated 13.07.2012, then, the onus shifted upon the opposite party no. 1 to prove by evidence that in fact it was served and delivered. It was incumbent upon the opposite party no. 1 to produce the postman or ask for his summoning as he would be the best person to testify as to whether the aforesaid letters/orders were served upon the applicant or not or produce a certificate of service issued by the postal department. None of these has been done . … In this view of the matter, it can not be said that there is any proof of delivery or service of the decision of the M.D., U.P.S.R.T.C. dated 13.07.2012 upon the applicant. … The opposite party no. 1 has not been able to prove such service/delivery of his decision upon the applicant. … there is nothing to establish that the order of the M.D. U.P.S.R.T.C. dated 13.07.2012 had been actually served/delivered on the applicant, which is a necessary pre pre requisite specially in terms of Section 3(2) of the Act, 1996. … In this case also the onus shifted upon the opposite party no. 1 who has not been able to discharge it.

¶235

The term “delivered” is distinct from the word “dispatch”. Delivered means to bring and handover something to the addressee.”

¶236

(emphasis supplied)

¶237

The working and operation of Sections 11, 21 and 43(2) of the Arbitration Act depends on Section 3. Section 11(5) of the Act provides:

¶238

“...if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from another party to so agree, the appointment shall be made, upon request of a party, by the Chief Justice ...”

¶239

(emphasis supplied)

¶240

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¶241

Section 11(6) also requires that if the appointing party has ‘failed’ to act as required within 30 days of the receipt of request, the appointment shall be made upon request by the Chief Justice. (See: Datar Switchgears)

¶242

Section 21 reads as follows:

¶243

“21. Commencement of arbitral proceedings. – Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”

¶244

Finally, Section 43 provides the rule of limitation as follows:

¶245

“43. Limitations. – (1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it applies to proceedings in court. (2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in Section 21.”

¶246

(emphasis supplied)

¶247

The effect of Section 11 read with Sections 3, 21 and 43(2) is two-fold:

¶248

(i) It cannot be said under Section 11(5) and (6) that a party has ‘failed’ to appoint an arbitrator unless the request (notice) by the sender has been delivered to and has been received by the addressee. Such delivery and receipt of request is a jurisdictional fact to be satisfied before any application for appointment of arbitrator can be entertained by the court. If there is no receipt of request, there can be no application under Section 11. The onus to prove the receipt of request by the addressee is on the sender. The addressee has a period of 30 days to make the appointment. If he fails to appoint in spite of receipt of notice and expiry of thiery days, then alone the jurisdiction of the court under Section 11 can be invoked by the sender. The thirty day prescription under Section 11(6) read with (5) necessitates the clear establishment by the sender of the date of “receipt of request” by the addressee.

¶249

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¶250

(ii) So also, the limitation period for ascertaining whether the substantive claim of the sender is time-barred or not under the Limitation Act, necessitated the clear establishment by the sender of the date of “receipt of request” by the addressee under Section 43(2), read with, Section 21.

¶251

In the present case, in paras 14 and 16 of the present application under Section 11, the applicant has made merely the following allegation/assertion:

¶252

“ 14. That in spite of repeated approaches and requests, the applicant was not given payment of his bills in respect of the work order dated 29.3.1985. Hence, vide notice dated 9.11.2004 sent on 16.11.2004 by post requested the IFFCO authorities to make the payment of the bills with interest @ 18% per annum (compound interest) or to appoint an arbitrator to decide the dispute at the earliest….

¶253

That under clause 17 of the Work Order …, applicant rightly served a notice on the opposite parties vide notice dated 9.11.2004 for referring the dispute to the arbitrator by appointing an arbitrator which has not been done by the opposite parties in mala fide manner”.

¶254

(emphasis supplied)

¶255

The respondent IFFCO in its counter affidavit²⁶ , denied the allegation made in the above noted paras 14 and 16. However, the applicant has not made any averment, nor, furnished any proof as to how, when and whether the notice was actually given or delivered to and received by the respondent-IFFCO.

¶256

Thus, as per the above averments of the applicant, the notice dated 9 November 2004 was merely “sent … by post” on 16 November 2004., not given to, delivered to and received by the respondent. There is no averment satisfying the

¶257

para -25

¶258

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¶259

requirements and conditions of Section 3(1) (a) and (b) and no pleading that the notice/request was ‘received’ by IFFCO. The applicant has particularly failed to plead and prove in terms of Section 3(1) (b) that –

¶260

(i) it could not find the addressee, IFCCO, and its place of business etc. so as to be able to deliver the request personally to the competent IFFCO official;

¶261

(ii) it took steps for making ‘reasonable enquiry’ for finding but could not find the above place of business etc. of IFFCO and the steps thereto are enlisted;

¶262

(iii) it, therefore, sent the notice (request) to IFFCO by registered/speed-post AD;

¶263

(iv) to the knowledge of the sender-applicant, the notice (request) was kept in side the envelope which was posted by means of registered/speed-post AD etc. to the application and the proof thereof (true copies).

¶264

(v) the registered/speed-post AD etc. post bore specific registration particulars and number which are as follows “...”.

¶265

(vi) the original ‘record of delivery’ with proof i.e. Acknowledgement of Receipt/Attempt to Deliver (Refusal to Receive, Not Found, Not Available etc.) is also being produced as Annexure “...”.

¶266

(vii) Thus, there has been a delivery of and receipt of the request by IFFCO on the date “...”.

¶267

In the absence of any pleadings and proof of the mode, manner and date of ‘giving’ or ‘delivery’ and ‘receipt’ of notice (request) to the respondent, the jurisdictional pre-

¶268

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¶269

condition of Section 11 read with Section 3 and 21 of the Arbitration Act and arbitration clause (17) of the work order is not satisfied.

¶270

Accordingly, the present application for appointment of arbitrator, as well as, prospective claim(s) of the applicant are ex facie without jurisdiction, time-barred, beyond limitation period and not maintainable.

¶271

F. Ex facie vexatious, frivolous claim :

¶272

It is submitted by the counsel for the respondent that the present case is an ex facie vexatious, merit less, frivolous and dishonest litigation and an invalid claim.

¶273

Admittedly, in 2001, the applicant filed Writ Petition No. 19922 of 2001, in respect of another work order and claim against IFFCO. This Court disposed it off directing it to file a representation before IFFCO27. The applicant has nowhere stated it acted seriously and filed representation nor filed any copy thereof.

¶274

It is urged that the Police Report dated 20 April 2010²⁸ is again eloquent testimony of the false, frivolous and dishonest nature of the civil litigations and criminal complaints filed by applicant against the Chairman of IFFCO. The foundation of the complaint rests upon the facts, document and correspondence relied by the applicant in the instant application.

¶275

On 09 January 2013, in Udai Shankar Awasthi Versus State of Uttar Pradesh 29, Supreme Court rejected the theory of IFFCO stealing applicant’s documents from his store-cum-

¶276

See para 7 of Section 11 Application

¶277

Supplementary Affidavit dated 18.11.2015, para 34

¶278

(2013) 2 SCC 435

¶279

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¶280

godown, quashed criminal complaints against IFFCO officials as an ‘abuse of process of court’, and recorded that applicant had himself misbehaved with the arbitrator, stood in front of his house, shouted slogans, abused and beat up IFFCO officials, and filed criminal cases to terrorise them as witnesses and extract payments in grossly delayed arbitrations.

¶281

It is urged that the present application under Section 11 is only a tip of an iceberg and scandal. The applicant and its brother concern (SK Associates) have adopted against IFFCO, since 2000 a stratagem of filing numerous unscrupulous, vexatious and dishonest writ petitions, arbitration application and criminal cases for unjust enrichment. The game-plan and modus operandi is to use writ petition, Section 11 jurisdiction of High Court and the criminal processes to make money from arbitrations against non existing agreement and manufactured documents, a complete abuse of the process of law.

¶282

It is submitted that several Section 11 applications filed by applicant and his brother have been rejected due to gross time-barred claims and non-existent documents: Manish Engg. Versus Managing Director IFFCO30; S.K. Associates Versus G.M. North Central Railway and others³¹ ; obstruction to arbitration forcing arbitrators to recuse etc.

¶283

The various arbitration and criminal cases (some decided as above) all form part of a well-planned design of arbitration mafia unleashed against IFFCO. The communications (01.07.1998 and 30.11.2001) have been relied upon by the applicant in the earlier application under section 11 (Civil Misc. Arbitration No. 41 of

¶284

(2006) SCC Online All 1188

¶285

2015 SCC OnLine All 3992

¶286

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¶287

2002). The stand of IFFCO was that both the communications are forged and manufactured documents. This Court rejected the plea of the applicant based on the aforenoted communications. Aggrieved, applicant carried the order in appeal before the Supreme Court. The Court declined to interfere and dismissed the Special Leave Petition³² .

¶288

The applicant in the instant application under Section 11 has placed reliance on the same communications to save the limitation. But, the applicant has not disclosed that the orders passed by this Court in the previous litigation had rejected the stand of the applicant. The order came to be affirmed by the Supreme Court, which is binding between the parties. The order was also not placed on record during the course of argument. It was pointed out by respondent-IFFCO.

¶289

That apart in the present case, assuming that there existed the agreement/work order dated 29 March 1985. For constituting an honest and valid claim under the alleged work order, it was incumbent on the applicant to give specific dates and details and file copies of the bills submitted by it to IFFCO. In the absence of such a basic ingredient establishing the ‘honesty’ and ‘validity’ of the claim, there can be no appointment of arbitrator. In its application under Section 11(5) filed in 2004, the applicant has neither given any specific date and detail nor has it filled copy of any bill submitted to IFFCO. It has merely made a vague and bald allegation in that regard in para 4 as follows:

¶290

“4. That after the completion of the work, the bills for the entire job of the work order were submitted but the payments

¶291

Decided on 02.02.2016 (M/S Manish Engineering Enterprises Versus Managing Director, Indian Farmers Fertilizers Cooperative Limited and another), arising out of order dated 25.01.2008 in Civil Misc. Application No. 270647 of 2006 in CMAA NO. 41 of 2002

¶292

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¶293

were not made on one count or the other deferring the matter for reasons best known to the IFFCO authorities.”

¶294

Apart from the above allegation in para 4, from paras 5 to 13, the applicant has made no averment as regards the dues under the alleged work order. In para 14 also (noted earlier), it has only mentioned notice for invocation of arbitration which itself has never been received by the respondent and has been denied by them.

¶295

The claim for payment sought to be made by the applicant on such an empty and non-existent basis, namely, non-existent bills not even filed with its application under Section 11(5) will give rise to an ‘ex facie, meritless, frivolous and dishonest litigation’. It is ‘deadwood’ not permissible in view of the law laid down in Vidya Drolia case.

¶296

The further ex facie meritless, frivolous and dishonest nature of the case is manifest also from the fact that the alleged amount for which the applicant wants an arbitrator to be appointed became due, at the very best, in May 1987, whereas, the notice invoking arbitration prior to the present application under Section 11(5) is alleged to have been sent by post only as late as on 16 November 2004 i.e. 18 years after the completion of work in 1986, under the work order dated 29 March 1985.

¶297

In the application under Section 11(5), there is no mention of any document whatsoever between 1985 and 2004 even purporting to pertain to the alleged dues. Only 11 years after the filing of the present application under Section 11 in 2004, the applicant, for the first time, by means of a

¶298

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¶299

supplementary affidavit dated (18.11.2015), tried to introduce on the record, several documents which are altogether denied by the respondent and are, in any case, wholly irrelevant in reviving the claim of the applicant from its ‘deadwood’ status.

¶300

Thus, the alleged claim of the applicant is an out and out ‘deadwood’ claim which is ex facie meritless, frivolous and dishonest.

¶301

Conclusions:

¶302

For the reasons indicated above, I have come to the conclusion that:

¶303

(i) The work order/arbitration agreement (29 March 1985) is a non existent and ex facie manufactured document;

¶304

(ii) The claim set up by the applicant is highly time barred and ex facie deadwood;

¶305

(iii) The application under Section 11 of the Arbitration Act is grossly barred by limitation;

¶306

(iv) The claim of the applicant is ex facie vexatious, meritless, frivolous and dishonest;

¶307

(v) The application under Section 11 is without jurisdiction and not maintainable;

¶308

(vi) The respondent-IFFCO is entitled to cost assessed at Rs. 11 lakhs to be paid by the applicant within one month from date.

¶309

The application under Section 11 of the Arbitration Act, accordingly, stands rejected.

¶310

Dated: 17.12.2021 Mukesh/Shashi/Kamlesh

¶311

(Suneet Kumar, J.)

¶312

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M/S Manish Engineering Enterprises Thru Prop. v. Indian Farmers Fertilizer Coop. Ltd. Thru M.D. and Ors.

Case brief

What is this about?

What the court decided

M/S Manish Engineering Enterprises Thru Prop. v. Indian Farmers Fertilizer Coop. Ltd. Thru M.D. and Ors.

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

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