2008 (1) TMI 956 - HC - Companies Law

Issues Involved:
1. Review/recall of the order dated 22.9.2006.
2. Appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
3. Validity and authenticity of the letters dated 1.7.1998 and 30.11.2001.
4. Limitation period for the monetary claims.
5. Maintainability of the review application under the scheme of the Arbitration and Conciliation Act, 1996.

Issue-wise Detailed Analysis:

1. Review/Recall of the Order Dated 22.9.2006:
The applicant-Engineering Company sought to review/recall the order dated 22.9.2006, which had recalled the earlier order dated 19.5.2006 appointing an arbitrator. The main ground was that an arbitrator had already been appointed and had started functioning. However, the respondents contended that the arbitrator had not started functioning and that the order dated 19.5.2006 was passed without affording them an opportunity to be heard. The court examined the maintainability of the review application under the provisions of the Arbitration and Conciliation Act, 1996, and concluded that the review application was not maintainable as it sought a substantive review rather than a procedural one.

2. Appointment of an Arbitrator Under Section 11 of the Arbitration and Conciliation Act, 1996:
The original application sought the appointment of an arbitrator to decide the monetary claims against the respondents. The initial order dated 24.2.2006 refused the appointment of an arbitrator, stating that the claim appeared to be made for creating litigation and was delayed by nearly 20 years. This order was reviewed and recalled on 19.5.2006, appointing a retired judge as the arbitrator. However, the order dated 22.9.2006 recalled this appointment, emphasizing that the claims were time-barred and the appointment of an arbitrator was not justified.

3. Validity and Authenticity of the Letters Dated 1.7.1998 and 30.11.2001:
The applicant relied on two letters dated 1.7.1998 and 30.11.2001 to save the limitation period for their claims. The respondents disputed the authenticity of these letters, particularly the letter dated 30.11.2001, alleging it was forged. The court noted that the letter dated 1.7.1998 required the applicant to submit final bills by 8.7.1998, and the letter dated 30.11.2001 was allegedly written by an individual who was not employed by the respondents at that time. The court found numerous interpolations in the letter dated 10.7.1998 and held that even if these letters were genuine, the claims were still time-barred.

4. Limitation Period for the Monetary Claims:
The claims were based on work orders dating back to 1984, 1985, 1988, 1991, and 1993. The court observed that the last claim was due from 30.5.1996, and even if the letter dated 10.7.1998 saved the limitation period, the claims should have been filed by 10.7.2001. The main application for the appointment of an arbitrator was filed on 24.5.2002, making the claims time-barred. The court emphasized that the limitation period for arbitration runs from the date the cause of action would have accrued if there were no arbitration clause.

5. Maintainability of the Review Application Under the Scheme of the Arbitration and Conciliation Act, 1996:
The court examined the maintainability of the review application under the Act and reiterated that the power of review is not inherent and must be conferred by law either specifically or by necessary implication. The court distinguished between procedural review and review on merits, stating that a procedural review is permissible to correct procedural defects, but a substantive review is not allowed unless expressly provided. The court concluded that the review application sought a substantive review, which was not permissible under the scheme of the Act.

Conclusion:
The court dismissed the present application for recall, holding that the review application was not maintainable as it sought a substantive review rather than a procedural one. The claims were found to be time-barred, and the appointment of an arbitrator was not justified. The court emphasized the finality of the decision to appoint an arbitrator and the limited scope for review under the Arbitration and Conciliation Act, 1996.

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