Petition U/S 11 Of Arbitration Act Cannot Be Entertained After Lapse Of 3 Yrs From Date Of Cause Of Action Arising: J&K High Court

The Jammu & Kashmir And Ladakh High Court bench of Justice Tashi Rabstan has held that the petition under section 11 of the Arbitration Act cannot be entertained after lapse of 3 years from the date of cause of action having arisen. Brief Facts The petitioner is a private limited company has filed this petition under section 11 of the Arbitration Act seeking appointment of an Arbitrator for resolving the dispute arising out of construction contract awarded by the respondents in 1992 for additional office accommodation. The petitioner avers that it has complied with all the terms of the contract and it is the respondents who failed to provide the drawings on time leading to delay in work which caused a significant loss. t was also alleged that despite completion of partial work, approved drawings for the remaining work and additional amount of Rs. 20 Lakhs were not provided. The dispute arose with regard to non payment of bills and encashment of the bank guarantee which led to the invocation of the arbitration clause by the petitioner. Despite multiple notices being served on the respondents, no response was given. Hence, this petition. It is the case of the petitioner that the petition requires to be allowed as there is a valid agreement between the parties and dispute has arisen between the parties on account of non-fulfillment of the legal obligation on the part of the respondents. It further argued that notice under Section 21 of the Act seeking appointment of an arbitrator was served upon the respondents but they failed to do so and hence the petitioner is before this court through the medium of present petition. In response, it is the case of the respondent that the present petition is barred by limitation. Observations: The court observed that while going through the pleadings, it becomes crystal clear that the notice in terms of Section 21 of the Act was served upon the respondents on 05.10.2001 and protection sought in terms of Section 9 of the Act by the petitioner was granted to him by the court of Principal District Judge, Srinagar, on 22.09.2003. It further added that limitation period starts to run from the date a request for referring the disputes to arbitration is made and for purposes of limitation, The Limitation Act, 1963 shall be applicable to arbitrations as it applies to proceedings in court. “In terms of Article 137 of the Limitation Act, 1963, the period of limitation to file an application under Section 11(6) is three years from the date of refusal to appoint the arbitrator or on expiry of thirty days from the date of notice/letter of request for appointment of an arbitrator. In the present case, the cause of action to file the petition under Section 11 of the Act, seeking appointment of arbitrator, has accrued to the petitioner after expiry of one month from the date the communication/ letter of request for appointment of arbitrator which was served upon respondents on 05.10.2001” the court said. The court also noted that the petitioner himself has pleaded in the appeal filed against the dismissal order passed in application under Section 9 of the Act, that notice was served upon the respondent-Executive Engineer on 05.10.2001, but still the petitioner slept over the matter for a long period of more than twenty two years and filed the petition at hand on 12.05.2023. Making a passing reference in the subsequent communications with regard to appointment of arbitrator does not prolong the period of limitation. In Geo Miller & Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd., 2019 the Supreme Court has held that “Negotiations may continue even for a period of ten years or twenty years after the cause of action had arisen. Mere negotiations will not postpone the “cause of action” for the purpose of limitation. The Legislature has prescribed a limit of three years for the enforcement of a claim and this statutory time period cannot be defeated on the ground that the parties were negotiating” the court observed. The court added that keeping in view the ratio laid down by the Hon‟ble Supreme Court in the aforesaid decisions, it is emphatically clear that the period of limitation to file an application under Section 11(6) seeking appointment of arbitrator is three years from the date of refusal to appoint the arbitrator or on expiry of thirty days from the date of service of notice. “In the present case the petitioner after serving the letter of request invoking arbitration clause on 05.10.2001 filed the present petition on 12.05.2023 after a lapse of more than twenty two years” the court observed. The court also observed that section 9(2) of the Arbitration Act provides that the arbitration proceeding has to be started after passing of an interim order under section 9 of the court. However, in the present case, the interim relief was granted to the petitioner on...

Petition U/S 11 Of Arbitration Act Cannot Be Entertained After Lapse Of 3 Yrs From Date Of Cause Of Action Arising: J&K High Court

Mohd Malik Chauhan

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