Dismissed

M. v. Subba Reddy v the Executive Director

Karnataka HC9 Apr 2021CMP/254/2017

Case brief

AI extract

What is this about?

In this civil miscellaneous petition, the petitioner sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The court dismissed the petition, holding it was time-barred as filed after three years from the date of the first demand for referral to arbitration in 2004.

What did the court decide?

Reference was refused and the petition was dismissed as the claim was time-barred.

M. v. Subba Reddy Vs the Executive Director — Arbitration | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 9^TH DAY OF APRIL 2021

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BEFORE

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THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

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CIVIL MISCELLANEOUS PETITION NO.254/2017

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BETWEEN:

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M V Subba Reddy, Son of M Sanjeev Reddy, Aged about 82 years, No.193, 15^th Cross, II Phase, II Stage, Mahalaxmipuram, Bengaluru-560086.

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(By Sri. V.P.Kulkarni, Advocate)

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AND:

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The Executive Director, BHEL Electronics Division, PB No.2606, Mysore Road, Bengaluru-560026. …Respondent (By Sri.T.N.Vishwanatha, Advocate)

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This Civil Miscellaneous Petition is filed under Section 11(6)of the Arbitration and Conciliation Act, 1996 praying to appoint an independent arbitrator to adjudicate upon the disputes that have arisen between the petitioner and the respondent in the execution of the work order bearing No.W.O.No.C/C/00/45/053 dated 23.11.2000 as detailed by the petitioner in his notice dated 11.07.2014 (Annexure-F) in the interest of justice and equity.

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This Civil Miscellaneous Petition coming on for Orders , this day, the Court made the following:

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ORDER

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The petitioner has filed the present petition seeking for appointment of an arbitrator to adjudicate upon the disputes that have arisen between the petitioner and the respondent in execution of the work order bearing No.W.O.No.C/C/00/045/053 dated 23.11.2000.

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The facts as made out in the petition are that petitioner was awarded work under the work order dated 23.11.2000 for construction of building for space grade solar panel project and BHEL Electronics Division, Electronic City, Bangalore. It is the assertion of the petitioner that the work was completed on 28.03.2003 as per the certificate issued by the respondent.

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Petitioner submits that General Conditions

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of Contract would be applicable to all transactions between the petitioner and the respondent and Clause-58 of the said General Conditions of Contract provides for arbitration.

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It is further submitted that in light of the disputes that have arisen relating to payments to be made to the petitioner, demand for appointment of arbitrator has been made as per the request letters dated 29.06.2012 and 11.06.2013 and in light of the untenable reply of the respondent dated 11.07.2013 and after having made subsequent demands which were in vain the petitioner finally got issued a legal notice invoking the arbitration clause on 11.07.2014.

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It is submitted that in light of absence of any response to the said legal notice, present petition

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has been filed seeking for appointment of an arbitrator.

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After the matter was heard on various occasions wherein the respondent had raised contentions specifically pointing out that the present petition was instituted in the year 2017 is barred by time as the demand even as per the say of the petitioner for appointment of arbitrator was made on 24.08.2004.

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An application under Section 5 of the

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Limitation Act has been filed by way of IA No.1/2021 seeking for condonation of delay of 385 days in filing the present petition.

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Learned counsel for the respondent has

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filed the objections to the main petition and has contended that the dispute itself cannot be entertained as the petitioner has sought to raise

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dispute after a period of 16 years and hence, legal redressal for a stale claim ought not to be permitted.

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It is further submitted that even as per the completion certificate issued by the respondent at Annexure-B on 28.03.2003 work has been completed and any dispute ought to have been raised immediately thereafter and the respondent having kept quiet by merely relying on the correspondences that have been addressed is legally untenable while it ought to be noted that the limitation itself to raise dispute had arisen in 2003, and has never been interrupted.

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It is further contended that the application under Section 5 of the Limitation Act is liable to be dismissed as the application for appointment of arbitrator has been filed in the year 2017 when in terms of Section 21 of the Arbitration Act, the time for

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appointment of an arbitrator would commence even as per the admitted and undisputed facts from 24.08.2004 when a request for appointment of Arbitrator has been made. Reliance is also placed on Section 43 of the Arbitration and Conciliation Act, 1996 to contend the starting point of limitation commencing to run in terms of Section 21 of the Act would be the date when first request for dispute being referred to arbitration is received by the respondent. Attention is drawn to the documents produced by learned counsel for the petitioner as document No.2 along with the memo dated 05.10.2020 which is dated 24.08.2004 and is a letter requesting for appointment of an arbitrator as certain disputes had arisen relating to payments.

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Learned counsel for the respondent has also relied on the observations made by the Hon’ble Apex court in the case of Bharat Sanchar Nigam

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Ltd. & Anr. v/s M/s. Nortel Networks India Pvt.

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Ltd., referred to supra and would contend that the present petition is not maintainable on two grounds namely:

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(1) The petition is filed beyond the period of 3 years from the date of demand for appointment of an arbitrator i.e., 24.08.2004.

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(2) That the cause of action for legal redressal as regards to the dispute raised by the petitioner ought to have been raised within 3 years from 28.03.2003 and accordingly the cause of action for obtaining legal redressal is also barred by limitation.

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It is contended that the Apex Court has recorded findings namely on these two aspects which applies on all fours to the present petition.

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Learned counsel for the petitioner on the other hand would submit that the application for

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condonation of delay would be maintainable and relies on the observations of the Hon’ble Apex Court in the case of Bharat Sanchar Nigam Ltd. & Anr. v/s M/s. Nortel Networks India Pvt. Ltd., in Civil Appeal Nos.843-844 of 2021 .

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It is further contended that in light of the series of correspondence between the parties, delay in filing the present petition ought to be condoned.

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Learned counsel for the petitioner points out to the various correspondences addressed to the respondent including the letters dated 29.06.2012, 11.06.2013 and 21.12.2013.

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Heard both sides.

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It needs to be noted that the admitted facts would point out that the 1^st demand was made on 24.08.2004 as per document No.2 produced

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alongwith memo for production of documents filed by learned counsel for the petitioner. In light of Section 21 of the Arbitration Act proceedings are deemed to commence on the date of which request for reference of dispute to arbitration is received by the respondent. Section 43(2) of the Act provides that an arbitration shall be deemed to have commenced on the date referred to under Section 21 of the Act.

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While taking note of the observations of the Hon’ble Apex Court in the case of Bharat Sanchar Nigam Ltd. & Anr. v/s M/s. Nortel Networks India Pvt. Ltd., referred to supra Apex Court has concluded at paragraph 40 as follows:

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40. Conclusion

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Accordingly, we hold that:

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(i) The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963. The period of

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limitation will begin to run from the date when there is failure to appoint the arbitrator:

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It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings;

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(ii) In rare and exceptions cases, where the claims are ex facie time barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference.

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This would make it clear that the period of limitation for filing an application under Section 11 of the Act would be governed by Article 137 of the First Schedule of the Limitation Act. Undisputed facts as asserted by the petitioner and remains uncontroverted by the respondent is that the 1^st demand was made

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on 24.08.2004 which document is produced by the petitioner himself.

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The Apex Court while discussing the point of limitation has also referred to Section 9 of the Limitation Act which provides that once limitation has begun to run no subsequent disability or inability to institute a suit or make an application stops such running of time. Accordingly, it would be deemed that period of limitation would have commenced as on 24.08.2004, petition is filed on 01.09.2017. Without entering into the question of maintainability of Section 5 of the Limitation Act, even if the application IA No.1/2021 is taken note of period of limitation sought to be condoned is 385 days. The petitioner has asserted that the period of delay is to be taken note of from the date of 11.07.2013 when according to the petitioner respondent has rejected claim for reference.

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The respondent has however contended that the completion certificate has been issued in the year 2003 as per the document relied upon by the petitioner enclosed at Annexure-B from which date period of limitation would commence.

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If according to the petitioner admittedly demand was made in the year 2004 and in terms of Section 21 time has began to run, petitioner ought not to have waited for 13 years for instituting proceedings for appointment of an arbitrator. The fact that the respondent has rejected the prayer for reference as per the communication dated 11.07.2013 would not have the effect of enlarging the time of limitation which has begun to run from the date of demand for appointment of an arbitrator was made at the first instance, viz., 24.08.2004. Accordingly, the petition is filed belatedly beyond the period of three years from when the right to sue accrued in terms of Article 137

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of the Limitation Act. The explanation made even in the affidavit seeking condonation of delay by taking 11.07.2013 as a starting point is also clearly unacceptable as the only reason that is made out was the exchange of correspondence between the petitioner and the respondent.

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In fact the Apex Court in the case of Bharat Sanchar Nigam Ltd. referred to supra has specifically considered the precise defense as raised by the petitioner herein at paragraph 39 of its order where it says that the period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters or mere settlement discussions. In the present case, the contention of the respondent that there was exchange of correspondence would not take away the fact that demand for appointment of Arbitrator for the first time was made in the year 2004 and the petitioner has kept quiet till 2017 for filing of

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the petition and by no stretch of imagination, the starting point of limitation could be extended for such a long period of time on the ground of mere exchange of correspondence.

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On the second aspect, it is pointed out that ex-facie the cause of action to seek for legal redressal as regards to the dispute has also been extinguished in light of inordinate delay as contended by the learned counsel for the respondent. It is contended that the claim of the petitioner on the basis of there being dispute regarding non payment should have been made within three years from the date of issuance of completion certificate. As regards the cause of action to assert claim, the present proceedings are ex-facie 'time barred' considering the accrual of cause of action from the date of issuance of Completion Certificate in 2003. On that ground also there is absolutely no warrant to extend any

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discretionary concession and relegate that aspect to be considered by the arbitrator. Clearly no steps having been taken within 3 years from the date of issuance of completion certificate accordingly, the remedy as regards dispute relating to non payment is also extinguished on the lapse of 3 years from 28.03.2003.

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Accordingly, no grounds are made out for reference and petition is dismissed .

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Sd/JUDGE

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NS

M. v. Subba Reddy v the Executive Director

Case brief

What is this about?

What did the court decide?

M. v. Subba Reddy v the Executive Director

Case brief

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