Section 11 A & C Act| Doubts Regarding Question Of Limitation Should Be Referred By Court To Arbitral Tribunal: Delhi HC
|The Delhi High Court observed that when a court is in doubt regarding the question of limitation in a petition filed under Section 11 of the Arbitration & Conciliation Act 1996 (the Act), the correct course of action is to refer the matter to the arbitral tribunal.
The Bench allowed the appointment of a Sole Arbitrator to adjudicate disputes between the parties. The petitioner had filed an application under Section 151 of the CPC seeking condonation of 48 days of delay in re-filing the petition under Section 11 of the Act.
A Single Bench of Justice Anup Jairam Bhambhani observed, “Though counsel on both sides have relied upon certain judicial precedents in support of their respective contentions as to whether the claims are time-barred since the first invocation notice was faulty, it is observed that section 43(4) of the A&C Act expressly provides that where an arbitral award is set-aside, the period between the commencement of the arbitration and the date on which the court setaside the arbitral award, is to be excluded for computing the time prescribed by the Limitation Act, 1963 for commencement of arbitral proceedings with respect to the disputes in question.”
Advocate Shweta Kapoor represented the petitioner, while Advocate Surender Gupta appeared for the respondent.
A Facility Agreement between the parties had a clause that mandated arbitration in either Mumbai or Delhi, as elected by the lender. The respondent raised objections regarding the validity of the initial Invocation Notice which led to an ex-parte Arbitral Award being set aside by the trial court.
Following the setting aside of the first award, a fresh Invocation Notice was issued which included the outstanding claim amount and properly invoked arbitration. Despite objections from the respondent about the notice being time-barred, the court referred to Section 43(4) of the Act, noting the exclusion of time during the setting aside of the arbitral award for computing the limitation period.
The High Court stated that there was a valid arbitration agreement and that the claims did not appear ex-facie non-arbitrable. “The learned Sole Arbitrator would furnish to the parties requisite disclosures as required under section 12 of the A&C Act; and in the event there is any impediment to the appointment on that count, the parties are given liberty to file an appropriate application in this court,” the Court ordered.
The Bench stated, “It is now settled law, that if a court seized of section 11 of A&C Act proceedings is in doubt as regards the question of limitation, the correct course of action for the court is to refer the matter to arbitration, leaving it to the arbitral tribunal to delve into the details of the objection as to limitation.”
Consequently, the Court held, “All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.”
Accordingly, the High Court allowed the petition.
Cause Title: Capri Global Capital Limited v. Ms. Kiran
Appearance:
Petitioner: Advocate Shweta Kapoor
Respondent: Advocates Surender Gupta, Deepak Rana, Binod Kr. and Nagender Singh