Limitation Period For Seeking Appointment Of Arbitrator Commences After Expiry Of 30 Days From Issuance Of Notice Invoking Arbitration: Delhi HC

The Delhi High Court has held that the Limitation period of 3 years for seeking Appointment of Arbitrator commences from the date of expiry of 30 days period, reckoned from date of issuance of the notice invoking arbitration.Holding thus, it has allowed the Petitioner, Bharat Sachar Nigam Limited (BSNL), to proceed with Arbitration against the Respondent, WIPRO Limited. Background The Petitioner and the Respondent executed Cooperation Agreements. Following expiry of warranty period mentioned therein, the Petitioner raised several issues regarding the products/services provided by the Respondent. In this regard, several emails were exchanged and the parties also met. However, Petitioner claims that the Respondents continued to fail to meet their contractual obligations. Petitioners sent Legal Notice dated 21.12.2018 to Respondent to come up with resolution plan, however, no proper response was received. Consequently, the Petitioner sent Legal Notice dated 14.3.2019 to Respondent invoking Arbitration under Clause 18 of the Agreement seeking consent for sole Appointment of Arbitrator. However, the same was not responded to. Thus, the Petitioners approached the Court with this Petition. The seat of the Arbitration During the court proceedings, Respondents raised several objections as to the maintainability of the Petition, respecting the jurisdiction of the Court, the expiry of the limitation period for the institution of Petition, the time-barred nature of claims, and objections to the merits of Petitioner's claims. The jurisdictional claim mainly rested on the issue of the "Seat" of Arbitration. It was contended that the Arbitral Clause contained in Para 18.2.1 mentioned "Place" of Arbitration as New Delhi without specifying the seat. Further, the Agreement was executed in Gurugram, the parties did not work for gain in New Delhi, the payments were not received in Delhi, and the occurrences of the breaches also did not occur in Delhi. Issues of Seat and Venue (Place) being two different things, the Place of Arbitration could not confer the status of Juridical Seat/Jurisdiction of this Court. Rejecting this submission, the Court cited BGS SGS Soma JV v. NHPC (2020), where it was held that an arbitration clause designating a place of Arbitration as the venue of all arbitration proceedings, it is to be implied as to the seat of the Arbitration. This is in contrast to a clause simply indicating one or more individual hearings at a place, but proceedings as a whole, including the arbitral award. Relying on this, this Court rejected the Petitioner's contention the Court did not have jurisdiction as seat and place are different issues. The Court affirmed its jurisdiction to hear this case on the basis that place of Arbitration in the arbitral clause as New Delhi was indicative of the seat of the Arbitration. Limitation Period The Respondent averred that the filing of the Petition ought to be rejected as the claims were time-barred. The Petition, being for the Appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, the Court cited BSNL v. Nortel Network (2021) of the Supreme Court. The Case dealt with the issue of determining the limitation period in filing a petition under Section 11. It was cited that, "It is now fairly well-settled that the Limitation for filing an application under Section 11 would arise upon the failure to make the Appointment of the arbitrator within a period of 30 days from issuance of the notice invoking Arbitration. In other words, an application under Section 11 can be filed only after a notice of Arbitration in respect of the particular claim(s)/dispute(s) to be referred to Arbitration [as contemplated by Section 21 of the Act] is made, and there is failure to make the Appointment. The period of Limitation for filing a petition seeking Appointment of an arbitrator(s) cannot be confused or conflated with the period of Limitation applicable to the substantive claims made in the underlying commercial contract. The period of Limitation for such claims is prescribed under various Articles of the Limitation Act, 1963. The Limitation for deciding the underlying substantive disputes is necessarily distinct from that of filing an application for Appointment of an arbitrator……. The effect being that the period of Limitation to file an application under Section 11 is 3 years from the date of refusal to appoint the arbitrator, or on expiry of 30 days, whichever is earlier." Applying this precedent, the Court noted that the Legal Notice invoking Arbitration was dated 14.3.2019. The period of replying to the Legal Notice expired within 30 days of this Notice, i.e., 13.4.2019. The period of Limitation starts from this date and is extended till 3 years. Since the Petition was filed on 24.5.2019, it was held that there was no delay in filing this Petition. Accordingly, the ratio that...

Limitation Period For Seeking Appointment Of Arbitrator Commences After Expiry Of 30 Days From Issuance Of Notice Invoking Arbitration: Delhi HC

Prateek Chakraverty

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