2013 (4) TMI 333 - HC - Companies Law

Section 11(6) of the Arbitration & Conciliation Act, 1996 - Appointment of arbitrator under clause 8 of the agreement - Claims & Application filed U/s 11 are time barred - Execution MOU - Regarding issue of limitation - Held that - The Constitution Bench of the Supreme Court in the case of SBP Vs. Patel Engg. 2005 (8) SCC 618 has held that the proceedings U/s 11 of the Arbitration & Conciliation Act, 1996 is not before the court - In my view as the application U/s 11 is not before the court, the provisions of the Limitation Act, 1963 are not applicable to such application filed U/s 11 - Thus there is no substance in the submission of learned counsel for the respondent that application U/s 11 having been filed in the year 2009 is barred by law of limitation. Regarding reliance placed on the MOU - Held that - Though there was reference to the said alleged MOU dated 14th July, 2003, in the said letter, the respondents unconditionally agreed to resolve all the disputes between the parties by referring the said disputes to arbitration - The respondent had agreed that the arbitrator be appointed from the Indian Council of Arbitration and had requested the applicants to suggest five names - The said letter clearly indicates that even otherwise, the parties have recorded arbitration agreement in terms of section 7(4)(a) of the Arbitration & Conciliation Act,1996 - Shri. N.N. Shrikhande is appointed as sole arbitrator -Application is disposed of.

Summary

Issues:
1. Appointment of arbitrator under section 11(6) of the Arbitration & Conciliation Act, 1996.
2. Validity of the MOU dated 14th July, 2003.
3. Limitation period for filing the application under section 11.

Analysis:

Appointment of Arbitrator:
The applicant sought the appointment of an arbitrator under section 11(6) of the Arbitration & Conciliation Act, 1996, based on a dispute arising from an agreement dated 15th October, 1997. The respondents initially agreed to resolve the disputes through arbitration, requesting the applicants to suggest names from the panel of the Indian Council of Arbitration. However, due to the lack of response from the respondents, the application was filed. The respondents argued that the application was time-barred, citing a judgment emphasizing the importance of the existence of an arbitration agreement, territorial jurisdiction, live issues for arbitration, and adherence to the limitation period. The court held that the application was timely filed within three years of the cause of action, rejecting the limitation argument.

Validity of MOU:
The respondents claimed that a Memorandum of Understanding (MOU) from 14th July, 2003, confirmed the withdrawal of all claims by the applicants. However, the applicants disputed the existence of such an MOU. The court noted that even if the MOU existed, the respondents unconditionally agreed to resolve disputes through arbitration in subsequent correspondence. This indicated the existence of an arbitration agreement under section 7(4)(a) of the Act, leading to the appointment of an arbitrator to settle the disputes.

Limitation Period for Application:
Regarding the limitation period for filing the application under section 11, the court referenced the Supreme Court's ruling that the proceedings under section 11 are not before the court, making the Limitation Act, 1963, inapplicable to such applications. The court clarified that the commencement of arbitration proceedings upon receipt of the notice invoking arbitration agreement halted the limitation period. Therefore, the application filed in 2009 was not time-barred, as the arbitration proceedings had effectively commenced earlier.

In conclusion, the court appointed an arbitrator to resolve the disputes between the parties, emphasizing the existence of an arbitration agreement despite the MOU dispute and rejecting the limitation argument regarding the application under section 11.