Arbitral Tribunal Decides Whether A Claim Is Barred By Lapse Of Time Or Not, Not The Parties: Telangana HC
The Telangana High Court held that whether a claim is barred by lapse of time is a matter which is decided by an Arbitral Tribunal at the time of making an order under Section 20 of the Arbitration and Conciliation Act, 1996 (the Act).
The applicant had entered into a Concession Agreement with the statutory body for a highway project. The agreement had an arbitration clause inserted into it subsequent to an amendment. Facing delays due to the delay in handing over the land by the statutory body, the project witnessed even more delays.
This led to the arbitration proceedings initiated by the applicant seeking the appointment of a nominee Arbitrator.
A Single Bench of Justice C.V. Bhaskar Reddy observed, “Once the applicant has asserted its claim and the respondents fails to respond to such claim, such failure will be treated as a denial of the applicant's claim giving rise to a dispute. Whether the applicant’s claim is barred by lapse of time is a matter which requires to be decided by the Arbitral Tribunal at the time of making an order under Section 20 of the Arbitration and Conciliation Act, 1996.”
Advocate S. Ram Babu represented the petitioner, while Advocate Y. Rama Rao appeared for the respondents.
The applicant invoked the arbitration clause and nominated an arbitrator. They requested the statutory body to appoint their nominee arbitrator within 15 days to expedite the constitution of the Arbitral Tribunal.
The statutory body refused to do so and argued that the agreement was barred by limitation and that the applicant failed to follow the pre-mandated dispute resolution mechanism outlined in the agreement.
The Court noted that “There is no provision in the Arbitration and Conciliation Act, 1996 specifying the period of limitation for filing an application under Section 11 of the Act and therefore, one would have to take recourse to the Limitation Act, 1963.”
Since none of the Articles in Schedule to the Limitation Act provide a time period for filing an application for appointment of an arbitrator, it would be covered by the residual provision under Article 137 of the Limitation Act which provides that the period of limitation is three years for any other application for which no period of limitation is provided elsewhere in the division.
Therefore, the Court held that the limitation period of three years for filing an arbitration application would commence from the date when the cause of action arose. The Court further appointed a nominee Arbitrator on behalf of respondents under Section 11(6) of the Act.
Accordingly, the High Court disposed of the arbitration application.
Cause Title: East Hyderabad Expressway Limited v. The Hyderabad Metropolitan Development Authority & Anr.
Appearance:
Applicant: Advocate S. Ram Babu
Respondents: Advocate Y. Rama Rao
