1. Heard Sri V.K. Mishra and Sri Shashi Kant Dubey, learned counsel for the petitioner and Sri R.B. Singhal, learned Assistant Solicitor General of India assisted by Sri Sanjay Om and Sri Rajnish Kumar Rai, learned counsel for the respondents.
2. Petitioner has been awarded a contract for the supply of certain materials by the Ordinance Equipment Factory at Kanpur and an agreement in this regard was executed between the parties on 4.7.2002. The said agreement vide Clause 24 provides for the settlement of all disputes arising between the parties and touching to the contract by the sole Arbitrator to be appointed by the Director General, Ordinance Factories, Government of India.
3. The petitioner in the petition pleads that in respect of the supply made by it under the aforesaid contract, it had submitted bills in 2003 but no payment was made to it. The petitioner vide notice dated 9.4.2013 demanded reference of the dispute to the Arbitral Tribunal. In the supplementary affidavit filed by the petitioner, it has been stated that the contract was completed by the petitioner on 3.6.2003. The details of the outstanding bills were submitted on 13.6.2003 but the payment was not made. Thereafter the petitioner sent reminders from 12.4.2004 to 10.12.2005 but to no avail. Accordingly, the petitioner vide notice dated 3.2.2006, invoked the arbitration clause and requested the respondents to nominate an Arbitrator. It is stated that thereafter repeated reminders for appointment of Arbitrator were sent from 3.2.2006 till 7.10.2012 and the last being dated 9.4.2013 but neither the claim was settled nor the dispute was referred to arbitration.
4. The respondents are resisting the petition on a preliminary objection that the petition which has been filed on 2.7.2013, seeking appointment of an Arbitrator is ex-facie barred by limitation.
5. In response to the above objection raised from the side of the respondents, the contention of counsel for the petitioner is that the petitioner was awarded a separate contract for the supply of goods by the Gun Carriage Factory, Jabalpur. In connection with the said supply some enquiry was conducted by the C.B.I. On account of that enquiry, on the directions of the General Manager, Gun Carriage Factory, Jabalpur, the payment of the petitioner in respect of the above contract was also stopped. The dispute in respect to the contract of supply with the Gun Carriage Factory, Jabalpur was referred to the Arbitral Tribunal and an award was made on 8.11.2008 but the payment under the said award too has also not been made to it. The petitioner has been asked to wait for the completion of the C.B.I. enquiry.
6. Secondly, in view of letter dated 1.12.2011, which has been filed as Annexure-3 to the counter affidavit, the petition seeking appointment of Arbitrator is well within time and is not barred by limitation.
7. There is no dispute to the fact that the agreement from which the dispute arises is of the year 2002. The supply under the contract was completed by the petitioner on 3.6.2003 and all bills were submitted by 13.6.2003. The petitioner had invoked the arbitration clause for the first time on 3.2.2006 as averred in the supplementary affidavit, though in the petition the date of invoking the arbitration clause has been mentioned as 9.4.2013.
8. The time limit for filing a petition for appointment of an Arbitrator under Section 11 of the Act has not been provided either under the Act or under the Limitation Act specifically. The request to the Chief Justice or his designate by way of application would fall within the definition of "application" contained in Section 2 (b) of the Limitation Act, 1963. Therefore, the Article 137 of the Limitation Act comes into play and the limitation for seeking appointment of an Arbitrator under Section 11 would be three years from the date when the right to apply accrues.
9. Article 137 of the Limitation Act, reads as under:-
Description of application Period of Limitation Time from which the period begins to run 137 Any other application for which no period of limitation is provided elsewhere in this division Three years When the right to apply accrues.
10. In the instant case from the pleadings of the petition, the cause of action to seek appointment of an Arbitrator arose for the first time on 3.6.2003 on the completion of the contract, again on 13.6.2003 when the bills were submitted by the petitioner. Thereafter, when the petitioner invoked the arbitration clause on 3.2.2006. The limitation or delay and latches in seeking the relief has to be considered with reference to the date when the cause of action originally accrued and not from any subsequent date. The cause of action for reference to arbitration is not a recurring cause of action and at least repeated reminders would not extend the limitation. Therefore, the subsequent invocation of the arbitration clause on 9.4.2013 by the petitioner would not make the petition under Section 11 of the Act to be within time.
11. In A.P.S.R.T.C. And others Vs. G. Srinivas Reddy and others, AIR 2006 SC 1465, 294, the Supreme Court illustrated that a claim, which is stale, time barred or untenable if put forth after too long time by way of representation, the Court before directing for its consideration must ensure as to whether the claim is alive, stale or dead. A similar view was expressed by the Supreme Court in Union of India and others Vs. M.K. Sarkar (2010) 2 SCC 59. It was observed that the Court before directing claim to be considered should examine the status of claim as to if it is alive or long dead.
12. The reliance placed by the petitioner on the letter of Additional General Manager issued on behalf of General Manager Gun Carriage Factory, Jabalpur dated 1.12.2011 for the purposes of limitation is misconceived. The said letter is in connection with the payment due to the petitioner under the arbitral award relating to the dispute in connection with the contract of Jabalpur. It has nothing to do with the payment claimed by the petitioner in respect to the contract in question. Therefore, the petitioner gets no benefit out of the said letter and the limitation for filing the petition under Section 11 would not be counted from the date of the said letter.
13. Learned counsel for the petitioner has submitted that the question as to whether the claim is within time or is barred by limitation is a matter which ought to be left for decision of the Arbitral Tribunal. In support he has placed reliance upon the decision of Hon'ble the Supreme Court in the case of M/s Group Chimique Tunisien Sa Vs. M/s Southern Petrochemicals Industries Corpn. Ltd., AIR 2006 (SC) 2422. In this case, His Lordship of Hon'ble the Supreme Court in view of Section 16 & 17 of the Act held that the question of limitation in the event of any acknowledgement made by other side is to be examined by the Arbitral Tribunal.
14. It is undoubtedly open for the Arbitral Tribunal to decide the issue of limitation on the basis of evidence adduced but when on the admitted pleadings before this Court, the claim is patently stale and is barred by limitation, there is no purpose in referring the dispute to arbitration and leaving the said issue to be decided by the Arbitral Tribunal.
15. The observations of the Apex Court in SBP and Company Vs. Patel Engineering Limited and another (2005) 8 SCC 618 as explained and clarified in Indian Oil Corporation Limited Vs. SPS Engineering Limited (2011) 3 SCC 507 makes it clear that the Chief Justice or his designate is competent to decide if the claim sought to be resolved by arbitration is stale or dead or is long time barred though it is not imperative upon him to enter into the said exercise. It can be left to be decided by the Arbitral Tribunal if it appears to be slightly overtime. However, where the claim is evidently and patently dead or long time barred and does not involve entry into disputed questions of fact or evidence, the Court may refuse it to refer to arbitration. Thus, it is only in case where there is a genuine dispute regarding limitation and the claim is slightly beyond time that the matter should be left to be adjudicated by the Arbitral Tribunal but not where the claim is apparently barred by limitation as per the pleadings of the parties.
16. In the instant case, the cause of action for seeking reference of dispute to the arbitral tribunal arose latest on 3.2.2006 when the first notice invoking the arbitration agreement was given whereas this petition has been filed on 2.7.2013 which is evidently barred by time. It seeks to raise and revive a stale dispute regarding settlement of bills of the year 2003.
17. In view of above, the petition is dismissed as barred by limitation.
Order Date :- 15.4.2014 Kpy