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TMI Blog2021 (3) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... hree agreements were entered into with the respondent, M/s Ramachandraiah and Sons ["Respondent"], the first one dated 23.09.2000 and the other two dated 17.09.2001. Clause 5 of each of the aforesaid agreements, which is in identical terms, is important and reads as follows: "5. Final Bill: The Contractor shall submit his final bil of the work with full and complete measurements showing the deductions on account of part payments received and stores supplied by the Board cost of water and any other items received by him under the contract within 08 days from the date of completion and handing over the work. The contractor shall also submit alongwith his bill a no claim certificate stating that there are no claims from the cantonment board on account of the work undertaken and completed by him under the contract and that no claim thereafter shall be entertainable. The bill shall also contain a statement showing the justification of cement consumed by the Contractor." 4. The arbitration clause contained in Clause 17 of each of the aforesaid agreements reads as follows: "17. LAW Governing the Contract: The Contract shall be governed by the Indian Law. [A]ll disputes between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by 12.02.2007. Despite this being the position, the Respondent kept on writing letters at long intervals between the years 2007-2009, reiterating its claim. Finally, by a legal notice dated 30.01.2010, the Respondent specifically stated: "In order to reiterate the brief details of the Contracts, all the three works have been completed way back in 31.03.2002 and final bill was received under protest. It is also expedient to point out that arbitration proceedings have already commenced since 07.11.2006 (within intent of the Arbitration and Conciliation Act of 1996). In the event that the Hon'ble appointing authority continues to abdicate his rights to appoint an arbitrator, the only remedy left to us is to seek the appointment of an arbitrator by the Hon'ble Chief justice of High Court of Andhra Pradesh (to enforce the arbitration clause) as intended by the agreement (since the agreement envisages arbitration as the means of settlement of disputes in preclusion to a court of law)." 9. To this legal notice dated 30.01.2010, the Appellant replied on 16.02.2010, stating: "1. ... Subsequent to awarding those contracts, work orders have been issued and part of works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were awarded for a period of one year in the year 2000-2001 and since your client could not complete the works entrusted to him within the stipulated period, at his request the time was further extended up to 31.12.2002 and by that time he can only complete the work to the tune of Rs. 75 lakhs approximately and your client's request to release work order for balance amount with regard to the works in question were turn down by the Hon'ble High Court of A.P. Hence, the question of reimbursement on variation in prices as claimed by your client does not arise and he is not entitled for such claims. 6. My client further reiterates that as per clause 5 of the Agreement, final bill amounts will be released on submitting no claim certificate stating that there is no claim form the Cantonment Board on account of the works undertaken and completed by the contractor and no claim thereafter shall be entertainable. Pursuant to this Clause your client has received final bill amounts, hence there are no issues to be adjudicated by an arbitrator. As referred above in the contract entered by and between your client and my client, there is no specific clause under which your client is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of an arbitrator was received by the President of the Secunderabad Cantonment Board was 23.01.2007, as a result of which, this is the date on which the limitation period starts running under Article 137 of the Limitation Act, 1963 ["Limitation Act"] insofar as an application under Section 11(6) of the Arbitration Act is concerned. For this purpose he relied upon a judgment of the High Court of Bombay in Deepdharshan Builders Pvt. Ltd. v. Saroj, (2019) 1 AIR Bom R 249, as well as a recent judgment of this Court in Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd., (2020) 14 SCC 643. He then argued that even so far as the cause of action on merits is concerned, it arose way back on 08.09.2003, when the Respondent raised the claim with regard to the dispute for the first time. Once time begins to run, limitation cannot be extended by writing any number of subsequent letters. He also relied upon the recent judgment of this Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, stating that this case falls under paragraph 148 of the judgment, in that the claim was ex facie time barred and dead and that there was no subsisting dispute. 14. In reply, Shri Nithin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se v. Port of Calcutta, (1993) 4 SCC 338] , that the period of limitation for an application for appointment of arbitrator under Sections 8 and 20 of the 1940 Act commences on the date on which the "cause of arbitration" accrued i.e. from the date when the claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned. xxx xxx xxx "21. Applying the aforementioned principles to the present case, we find ourselves in agreement with the finding of the High Court that the appellant's cause of action in respect of Arbitration Applications Nos. 25/2003 and 27/2003, relating to the work orders dated 7-10-1979 and 4-4-1980 arose on 8-2-1983, which is when the final bill handed over to the respondent became due. Mere correspondence of the appellant by way of writing letters/reminders to the respondent subsequent to this date would not extend the time of limitation. Hence the maximum period during which this Court could have allowed the appellant's application for appointment of an arbitrator is 3 years from the date on which cause of action arose i.e. 8-2-1986. Similarly, with respect to Arbitration Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong period to refer the dispute to arbitration merely on account of the respondent's failure to settle their claim and because they were writing representations and reminders to the respondent in the meanwhile." 16. The recent judgment of this Court in Bharat Sanchar Nigam Ltd. & Anr. v. M/s Nortel Networks India Pvt. Ltd., delivered on 10.03.2021 in Civil Appeal Nos. 843-844 of 2021 has also considered the entire law on the subject. The first paragraph of the said judgment reads as follows: "1. The present Appeals raise two important issues for our consideration : (i) the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 ("the 1996 Act"); and (ii) whether the Court may refuse to make the reference under Section 11 where the claims are ex facie time-barred?" 17. Insofar as the first issue is concerned, after examining Article 137 of the Limitation Act, this Court held: "11. It is now fairly well-settled that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days' from issuance of the notice invoking arbitration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Panchu Gopal Bose v. Board of Trustees for Port of Calcutta [(1993) 4 SCC 338] and Utkal Commercial Corpn. v. Central Coal Fields Ltd. [(1999) 2 SCC 571] also make this position clear."" 18. Insofar as the second issue is concerned, this Court went into the position prior to the Arbitration and Conciliation (Amendment) Act, 2015 ["2015 Amendment"] together with the change made by the introduction of Section 11(6A) by the 2015 Amendment, stating: "24. Sub-section (6A) came up for consideration in the case of Duro Felguera SA v. Gangavaram Port Ltd. [(2017) 9 SCC 729], wherein this Court held that the legislative policy was to minimize judicial intervention at the appointment stage. In an application under Section 11, the Court should only look into the existence of the arbitration agreement, before making the reference. Post the 2015 amendments, all that the courts are required to examine is whether an arbitration agreement is in existence -nothing more, nothing less. "48. Section 11(6-A) added by the 2015 Amendment, reads as follows: "11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under subsection (4) or sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v Sainik Kalyan Nigam v. Northern Coal Field Limited [(2020) 2 SCC 455] this Court took note of the recommendations of the Law Commission in its 246th Report, the relevant extract of which reads as : "7.6. The Law Commission in the 246th Report [Amendments to the Arbitration and Conciliation Act, 1996, Report No. 246, Law Commission of India (August 2014), p. 20.] recommended that: "33. ... the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. Insofar as the nature of intervention is concerned, it is recommended that in the event the court/judicial authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the case may be. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Amendments to Section 8 vide Act 3 of 2016 have not been omitted. Section 11 covers the situation where the parties approach a court for appointment of an arbitrator. Mayavati Trading (P) Ltd., in our humble opinion, rightly holds that Patel Engg. Ltd. has been legislatively overruled and hence would not apply even post omission of sub-section (6-A) to Section 11 of the Arbitration Act. Mayavati Trading (P) Ltd. has elaborated upon the object and purposes and history of the amendment to Section 11, with reference to sub-section (6-A) to elucidate that the section, as originally enacted, was facsimile with Article 11 of the Uncitral Model of law of arbitration on which the Arbitration Act was drafted and enacted." (emphasis supplied) While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the Courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere "only" when it is "manifest" that the claims are ex facie time barred and dead, or there is no sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism." (emphasis supplied) In paragraph 244.4 it was concluded that: "244.4. The court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above i.e. " when in doubt, do refer "." 37. The upshot of the judgment in Vidya Drolia is affirmation of the position of law expounded in Duro Felguera and Mayavati Trading, which continue to hold the field. It must be understood clearly that Vidya Drolia has not resurrected the pre-amendment position on the scope of power as held in SBP & Co. v. Patel Engineering (supra). It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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