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2018 (11) TMI 1867 - HC - Indian LawsSeeking appointment of an arbitrator - agreement to sell and transfer the suit property - applicant had failed to obtain the permissions as per clause 4 of the said agreement and thus the said agreement automatically stood terminated - condonation of delay in filing arbitration application - immovable property exclusively used in trade or commerce or not - jurisdiction of the Commercial Courts under Section 6 of the Commercial Courts Act, 2015 - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT - By virtue of the amendment as on 23rd October 2015, there was no persona designata available for hearing the applications under Section 11(6) of the Arbitration Act even in respect of the arbitration proceedings having commenced prior to 23rd October 2015 by virtue of notice invoking the arbitration agreement issued prior to the date of the amendment - since the proceedings under Section 11(6) of the Arbitration Act are required to be filed before the High Court, Article 137 of the Schedule to the Limitation Act, 1963 would apply to such application filed under Section 11 (6) of the Arbitration Act. Since Article 137 of the Schedule to the Limitation Act, 1963 would apply to the arbitration application under Section 11(6) of the Arbitration Act, Section 5 of the Limitation Act, 1963 would also apply to the arbitration application filed under Section 11(6) of Arbitration Act. Delhi High Court in the case of Yogesh Kumar Gupta 2007 (2) TMI 714 - DELHI HIGH COURT has held that since the Limitation Act, 1963 specifically applies to the arbitrations, Section 5 of the Limitation Act would also apply to an application/petition under Section 11(5) of the Arbitration Act. Delhi High Court has also considered the provisions of Section 14(1) and 14(2) of the Limitation Act, 1963 and held that it would be open to the applicant to file a fresh application under Section 11(5) of the Arbitration Act. The principles of law laid down by the Delhi High Court in the case of Yogesh Kumar Gupta would apply to the facts of this case. The views expressed by the Delhi High Court in the said judgment, is to be agreed upon. The limitation prescribed under Article 137 of the Schedule to the Limitation Act, 1963 which applies to an application under Section 11(6) or Section 11(9) of the Arbitration Act filed before the High Court or before the Hon'ble Supreme Court cannot be mixed up with the period of limitation applicable to the claims prescribed in various other Articles of the Schedule to the Limitation Act, 1963. Both these periods of limitation i.e. one applicable to the claims being made and another being applicable to the application under Section 11(6) or Section 11(9) of the Arbitration Act to which Article 137 of the Schedule to the Limitation Act, 1963 applies, are two different periods of limitation and cannot be made applicable to each other. Whether the applicant has made out a sufficient cause for condonation of delay of 536 days in filing this arbitration application without prejudice to the rights and contention of the applicant that there was no delay in filing this application under Section 11(6) of the Arbitration Act? - HELD THAT - The applicant was prosecuting the application under Section 9 relying upon the said agreement which is relied upon in this arbitration application for the purpose of appointment of an arbitrator in good faith and due diligence. The applicant is thus entitled to take the benefit of the principles of Section 14 of the Limitation Act, 1963 for the purpose of computing the limitation under Article 137 of the Schedule to the Limitation Act, 1963 in filing this arbitration application under Section 11(6) of the Arbitration Act. There is thus no delay in filing this arbitration application. This Court thus need not consider a separate relief in the notice of motion filed by the applicant. It is not in dispute that this Court has been assigned the matters under Section 11(6) of the Arbitration and Conciliation Act, 1996 and also the arbitration applications under the provisions of the Commercial Courts Act, 2015. However, since this Court is of the view that the terms and conditions of the agreement and the pleadings and documents clearly reflects the commercial dispute between the parties and also reflects that the property in question was used for commercial purposes, this application filed before the commercial division of this Court is maintainable. There is thus no need to grant leave to amend to convert the said commercial arbitration application into the arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996. Since there is no dispute about the existence of arbitration agreement and since the respondents did not appoint any arbitrator inspite of receipt of notices invoking arbitration agreement by the applicant, this commercial arbitration application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 is maintainable - Mr. Snehal K. Shah, a counsel of this Court is proposed to be appointed as an arbitrator on behalf of the applicant. Application disposed off.
Issues Involved:
1. Applicability of amended vs. unamended provisions of Section 11 of the Arbitration and Conciliation Act, 1996. 2. Application of Article 137 of the Limitation Act, 1963 to the arbitration application filed under Section 11(6) of the Arbitration Act. 3. Jurisdiction of the Commercial Courts under Section 6 of the Commercial Courts Act, 2015 regarding the dispute. Detailed Analysis: 1. Applicability of Amended vs. Unamended Provisions of Section 11 of the Arbitration Act: The court examined whether the unamended provisions of Section 11 of the Arbitration Act (pre-23rd October 2015) or the amended provisions (post-23rd October 2015) would apply. The notices invoking arbitration were issued on 23rd July 2013 and 5th August 2013, but the arbitration application was filed in 2018. The court held that, post-amendment, the proceedings under Sections 11(6) and 11(9) are required to be filed before the High Court or the Supreme Court, respectively, and not before the Chief Justice of that Court. The amendment eliminated the persona designata role of the Chief Justice, making the High Court the appropriate forum for such applications. 2. Application of Article 137 of the Limitation Act, 1963: The court concluded that Article 137 of the Schedule to the Limitation Act, 1963, which prescribes a three-year limitation period from when the right to apply accrues, applies to applications filed under Section 11(6) of the Arbitration Act. The court also held that Section 5 of the Limitation Act, 1963, which allows for the condonation of delay, applies to such applications. The court distinguished between the limitation period for filing claims and the period for filing an arbitration application, emphasizing that they are separate and distinct. The court found that the applicant had shown sufficient cause for condonation of delay in filing the arbitration application. The delay was attributed to the time taken in prosecuting the application under Section 9 of the Arbitration Act for interim relief, which was pending due to objections regarding the stamping and registration of the agreement. The court applied the principles of Section 14 of the Limitation Act, 1963, allowing for the exclusion of time spent in good faith and due diligence in prosecuting the earlier application. 3. Jurisdiction of the Commercial Courts: The court addressed whether the dispute fell within the jurisdiction of the Commercial Courts under Section 6 of the Commercial Courts Act, 2015. The respondent argued that the immovable property in question was not used exclusively in trade or commerce, thus not constituting a commercial dispute. The court examined the provisions of the agreement and concluded that the property was to be developed for commercial purposes, thereby falling within the definition of a "commercial dispute" under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. Consequently, the arbitration application filed before the Commercial Division of the High Court was deemed maintainable. Conclusion: The court held that the amended provisions of Section 11 of the Arbitration Act apply, and the application under Section 11(6) is subject to Article 137 of the Limitation Act, 1963. The court found that the applicant had made out a sufficient cause for condonation of delay and that the dispute constituted a commercial dispute within the jurisdiction of the Commercial Courts. The court proposed the appointment of arbitrators and directed the filing of necessary disclosures. Orders: 1. Mr. Snehal K. Shah was proposed as the arbitrator on behalf of the applicant. 2. Smt. Justice Vasanti A. Naik was proposed as the arbitrator on behalf of the respondents. 3. The proposed arbitrators were requested to file a statement of disclosure as per Section 11(8) read with Section 12(1) of the Arbitration Act. 4. The arbitrators, if appointed, were directed to appoint a Presiding Arbitrator. 5. The applicant was permitted to obtain and tender the statement of disclosure from the proposed arbitrators. 6. The fees and expenses of the arbitrators were to be borne equally by the applicant and the respondents. 7. Notice of motion No. 814 of 2018 was disposed of.
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