No Prior Request Under Section 21 Needed For Section 11 Arbitration Applications: Calcutta High Court

The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that an application under Section 11(5) of the Arbitration and Conciliation Act, 1996, does not require a prior request for reference to arbitration under Section 21. The bench held that invalidity of an arbitral proceeding due to the absence of prior notice under Section 21 and a unilateral appointment of an arbitrator is distinct from a situation under Section 11(5), where prior notice is necessary only for the appointment of an arbitrator, not for the initiation of the proceeding itself. Brief Facts: The matter pertained to an application under Section 11 of the Arbitration and Conciliation Act, 1996 filed by Kakali Khasnobis (Petitioner) which was challenged by Reeta Paul And Anr (Respondents) on two primary grounds. The first challenge was based on the contention that the application was barred by limitation. The Respondents argued that the Petitioner previously filed an application under Section 9 of the Arbitration Act on July 26, 2021 and an interim order was passed on July 27, 2021. However, that application was ultimately dismissed on July 6, 2024 due to the Petitioner's failure to take effective steps for the appointment of an arbitrator. The Respondents argued that the application under Section 11, which was filed on July 16, 2024, was thus time-barred and should be dismissed. The second ground of challenge pertained to the alleged non-compliance with the mandatory provisions of Section 11(5) and Section 21 of the Arbitration Act. The Respondents argued that the Petitioner did not issue a prior notice requesting the appointment of an arbitrator, as required by these sections. In support of this contention, the Respondents relied on several judgments, including the Delhi High Court's decision in Alupro Building Systems Pvt. Ltd. vs. Ozone Overseas Pvt. Ltd. and decisions of coordinate benches of the Calcutta High Court in Sri Arun Kumar Bhunia vs. Badal Midya and West Bengal Power Development Corporation Limited vs. Sical Mining Limited. In response, the Petitioner contended that the application was not time-barred stating the Covid-19 relaxations granted by the Supreme Court which extended the limitation period during the pandemic. The Petitioner argued that these relaxations applied to the period between March 15, 2020 and February 28, 2022 and thus the application filed on July 16, 2024 was within the permissible time frame. The Petitioner further argued that any non-compliance with the provisions of Section 9 regarding not referring the matter to arbitration would only affect the Section 9 application and not the application under Section 11. Regarding the second objection, the Petitioner argued that there was sufficient compliance with Section 11(5) of the Arbitration Act. The Petitioner invoked the arbitration clause through a letter dated July 20, 2021 and received a reply from the Respondents on August 16, 2021. The Petitioner argued that this exchange of correspondence constituted adequate compliance with the requirements of Section 11(5) and Section 21 of the Arbitration Act. The Petitioner further contended that although the letter dated July 20, 2021 was addressed to the appointed arbitrator copies were also sent to the Respondents which should be considered as meeting the statutory notice requirements. In support of its argument, the Petitioner cited judgments including the Delhi High Court's decision in De Lage Landen Financial Services India Pvt. Ltd. vs. Parhit Diagnostic Private Limited and Others and a coordinate bench's decision of the Calcutta High Court in Universal Consortium of Engineers Pvt. Ltd. vs. Kanak Mitra and Another. Observations by the High Court: In addressing the first issue of limitation, the High Court noted that the Petitioner filed an application under Section 9 of the Arbitration Act on July 26, 2021 which could be construed as the date when the cause of action for referring the dispute to arbitration first arose. Subsequently, the Petitioner filed an application under Section 11 of the Arbitration Act on July 16, 2024 which was just shy of the three-year limitation period. Based on this timeline, the High Court held that the application was not time-barred. The High Court held that in the absence of any specific provision the residual provision under Article 137 of the Limitation Act applies to applications under Section 11. Since the three-year period was not lapsed, the High Court found that the application was filed within the permissible period. Regarding the second issue, the High Court referred to the judgment of the Delhi High Court in the case of De Lage Landen. The High Court observed that the facts and circumstances of that case were distinguishable from the present one. In De Lage Landen, the arbitration clause granted the petitioner-lender complete discretion in appointing...

No Prior Request Under Section 21 Needed For Section 11 Arbitration Applications: Calcutta High Court

Rajesh Kumar

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