2022 (9) TMI 1467 - HC - Indian Laws

Seeking appointment of an arbitrator - adjudication upon the disputes related to the sale implementation and installation by the petitioner of certain hardware and multi-media system accessories along with software for the purpose of setting-up 24 Smart Learn Classes at several schools run by the respondents - time limitation. HELD THAT - The petitioner s claim against the respondents as raised in invocation notice dated 28.07.2021 is only one viz. for payment of arrears of licence fee/other dues amounting to Rs. 29, 28, 100/- which is founded upon the termination of the contract by the petitioner vide notice dated 04.01.2017. To be sure the petitioner s invocation notice does not contain any reference to any claim for recovery of hardware supposedly lying with the respondents upto the year 2019 - Regardless of any correspondence exchanged between the parties thereafter it is clear that the petitioner s cause of action first arose when the respondents failed to pay the monies due under the contract in addition to damages as claimed by the petitioner vide its notice dated 04.01.2017. The claim in money is the only claim that was raised in invocation notice dated 28.07.2021; and the argument that the petitioner was also entitled to get back the hardware and other equipments lying with the respondents is to be considered only to be rejected since reply dated 31.08.2021 issued by the respondents records that such hardware was picked-up by the petitioner which the petitioner does not dispute. Even more importantly the law is clear that an invocation notice must set-out clearly the claims that a party wants referred to arbitration; and in the present case no claim for recovery of hardware was at all contained in invocation notice dated 28.07.2021. The period of limitation applicable to the petitioner s claim is as follows having terminated the contract with the respondents vide notice dated 04.01.2017 and the respondents having failed to pay the amounts claimed to be due the petitioner ought to have issued the notice invoking arbitration within 03 years of that date viz. by or before 03.01.2020. However the petitioner issued the notice invoking arbitration only on 28.07.2021 which was evidently beyond the limitation prescribed in law. The limitation bars a legal remedy and not a legal right the legal policy being to ensure that legal remedies are not available endlessly but only up-to a certain point in time. Needless to add however that if the respondents are conceding the petitioner s claim itself and are ready and willing to pay-up such payment would not be illegal and there could not be any legal impediment in doing so. A party may concede a claim at any time; but cannot concede availability of a legal remedy beyond the prescribed period of limitation. This court is of the opinion that the petitioner s claim against the respondent is ex-facie time barred and is accordingly deadwood ; and does not require to be referred to arbitration - Petition dismissed.

Summary

Issues Involved:
1. Appointment of an arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996.
2. Whether the claims made by the petitioner are time-barred.

Issue-Wise Detailed Analysis:

1. Appointment of an Arbitrator:
The petitioner sought the appointment of an arbitrator to adjudicate disputes arising from the Agreement dated 02.05.2014, which involved the sale, implementation, and installation of hardware and multimedia system accessories for setting up Smart Learn Classes at the respondent's schools. The petitioner invoked arbitration via notice dated 28.07.2021. The respondents, however, contended that the claims were ex-facie time-barred. The arbitration clause in the Agreement stipulated that disputes should be referred to arbitration, with New Delhi courts having exclusive jurisdiction.

2. Time-Barred Claims:
The respondents argued that the petitioner's claims were time-barred as the disputes arose from agreements dated between 2014 and 2016, and the arbitration was invoked only in 2021. The petitioner terminated the agreements by a legal notice dated 04.01.2017 and sent reminder notices on 24.03.2017 and 22.08.2017. The petition under Section 11 of the A&C Act was filed on 19/21.01.2022, beyond the 3-year limitation period for recovery of monetary dues.

The respondents emphasized that the petitioner's invocation notice dated 28.07.2021 did not include any claim for recovery of hardware, which was allegedly removed by the petitioner in 2019. The petitioner relied on Article 137 of the Limitation Act, 1963, arguing that the claims were within the limitation period. However, the court noted that the claims for payment of arrears amounting to Rs. 29,28,100 were based on the termination notice dated 04.01.2017.

Legal Precedents and Arguments:
The petitioner cited decisions from Co-ordinate Benches of the court, including Huawei Telecommunications (India) Co. Pvt. Ltd. & Anr. vs. WIPRO Ltd. and GAIL (India) Ltd. vs. Rathi Steel and Power Ltd. The respondents relied on the Supreme Court's decision in BSNL & Anr. vs. Nortel Networks India Pvt. Ltd., which clarified that limitation periods are not extended by mere exchanges of letters or settlement discussions.

Court's Observations:
The court observed that the petitioner's cause of action arose when the respondents failed to pay the dues under the contract, with the termination notice dated 04.01.2017 marking the start of the limitation period. The invocation notice dated 28.07.2021 was beyond the 3-year limitation period prescribed under Article 137 of the Limitation Act, 1963. The court also noted that the Supreme Court's order in Suo Motu Writ Petition (Civil) No. 03/2020 did not save the limitation period as it ran out on 03.01.2020.

Conclusion:
The court concluded that the petitioner's claims were ex-facie time-barred and did not require referral to arbitration. The petition was dismissed, and other pending applications were disposed of.

Judgment:
The petition for the appointment of an arbitrator was dismissed as the claims were time-barred, and no arbitration was warranted.