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2024 (11) TMI 339 - SC - Indian Laws


Issues Involved:
1. Appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996.
2. Whether the substantive claims of the petitioner are ex-facie time-barred.
3. Applicability of the Limitation Act, 1963 to the arbitration proceedings.
4. The existence and validity of the arbitration agreement under the Shareholders Agreement.

Detailed Analysis:

1. Appointment of an Arbitrator:

The petitioner sought the appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996, for disputes arising from a Shareholders Agreement. The arbitration clause (Clause 13.10) was acknowledged by both parties. The Supreme Court emphasized that at the Section 11 stage, the court's role is limited to examining the existence of an arbitration agreement and not delving into the merits of the disputes or the claims being time-barred. The court decided to appoint an arbitrator, considering the arbitration agreement's existence was undisputed.

2. Substantive Claims and Limitation:

The respondents argued that the claims were ex-facie time-barred, citing the petitioner's delay in invoking arbitration. The petitioner countered by asserting continuous breach and no specific cause of action date. The court reiterated the principle from Vidya Drolia & Ors v. Durga Trading Corporation, stating that the referral court should only interfere in rare cases where claims are manifestly time-barred. The court decided that the arbitral tribunal should determine the issue of limitation, as it involves factual disputes requiring detailed examination.

3. Applicability of the Limitation Act:

The court referred to Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited, emphasizing that the Limitation Act, 1963 applies to arbitration proceedings. The court clarified that the limitation period for filing a petition under Section 11(6) starts from the date of failure or refusal to comply with the arbitration notice, not from when the substantive claim arose. The court found the petitions filed by the petitioner were within the limitation period when considering the time spent in proceedings before the Bombay High Court.

4. Existence and Validity of the Arbitration Agreement:

The court noted that the arbitration agreement's existence was not disputed by either party. The court highlighted that the primary role at the Section 11 stage is to ascertain the existence of an arbitration agreement, not to resolve disputes regarding the claims' merits or their time-barred nature. The court appointed a sole arbitrator, Mr. Mayur Khandeparkar, for the disputes under the Shareholders Agreement, aligning with the tribunal constituted for related disputes under the Service Agreement.

Conclusion:

The court allowed the petitions, appointing a sole arbitrator to adjudicate the disputes, emphasizing that issues of limitation and merits should be left to the arbitral tribunal. The court also noted that if the tribunal finds the claims time-barred, it may direct the petitioner to bear the arbitration costs. All other rights and contentions were left open for the arbitrator's adjudication. Pending applications were disposed of, and the court maintained a focus on minimizing judicial interference in arbitration proceedings, preserving the arbitration agreement's integrity and the parties' intentions.

 

 

 

 

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