Rupali Ramesh Desai v. M/s. Padmavati Housing Corporation & Ors.

1. The Application being Commercial Arbitration Application (L) NO. 7901 of 2024 has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“the Act”), seeking appointment of an arbitrator in May 5, 2025 connection with disputes and differences that are said to have arisen between the parties under an Agreement dated October 10, 2019 (“Agreement”). The arbitration agreement is contained in Clause 19 (found at Page 60 of the Application). In the interest of brevity, the arbitration agreement is not being extracted here. Suffice it to say that this matter falls within the jurisdiction of this Court.

2. It is apparent from the record that the arbitration agreement was invoked by Applicant on October 16, 2023.

3. Learned Counsel for the parties are at loggerheads about two facets of the matter. First, whether they can at all arbitrate on the premise that the claims are hopelessly by limitation, and second, whether a third party could at all be a party to the arbitration proceedings.

4. Learned Senior Counsel on behalf of the Respondents submits that the question of whether a claim that is barred by limitation can at all be referred to arbitration by a Section 11 Court, is still an open issue. He would submit that the Supreme Court, in the case of Elfit Arabia & Anr. Versus Concept Hotel Barons Limited & Ors.[1] (Elfit Arabia) at paragraphs 5 to 8, has stated that a Court may reject an ex facie non-arbitrable dead wood 2024 SCC Online SC 1739 claim, in order to protect the other party from being drawn into protracted arbitration.

5. Having heard Learned Counsel for the parties, in my opinion, no useful purpose would be served keeping this matter pending on the docket of this Court any further, since, in my opinion, the dispute is eminently required to be referred to arbitration, leaving all questions open, including the facet of limitation raised by Learned Senior Counsel on behalf of the Respondents. In my opinion, the law declared by the Supreme Court in the Interplay Judgement[2] is explicit in its terms, by ruling that the Section 11 Court must confine its examination to the existence of an arbitration agreement and nothing more. Once, it is evident that an arbitration agreement is in existence, it is in the domain of the arbitral Tribunal to examine mixed questions of fact and law, on which a claim of a dispute being barred by limitation is based. Whether a default is a continuing default, and whether the parties’ conduct in the interregnum would warrant examination of evidence to see whether limitation is at all attracted, are questions that fall in the domain of the Arbitral Tribunal.

6. Having heard the parties, I am satisfied that this is not a case where purely on an ex facie basis, the Applicants/Petitioners should be non-suited In Re: Interplay Between Arbitration Agreements Under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899 – (2024) 6 SCC 1 at the hands of a Section 11 Court by holding that the claims are barred by limitation. Necessarily, one ought to leave that question to the Arbitral Tribunal to determine. That apart, in a series of decisions, including in SBI General[3] and in Patel[4], the Supreme Court has explicitly stated that the evidentiary enquiry in such a situation would lie in the domain of the Arbitral Tribunal.

7. Learned Senior Counsel would submit that the ratio of Elfit Arabia was not noticed by the bench that declared the law in SBI General Insurance. I do not see that this enables prising open a crack to let the Section 11 Court delve into these matters and open an enquiry into whether the claim is dead wood. Elfit Arabia was a short order passed on the facts of that case on July 9, 2024 by a bench of three judges of the Supreme Court. SBI General is a detailed judgement passed by the very same three-judge bench, again on the facts of that case on July 18, 2024. Be that as it may, a Seven-Judge Bench having spoken elaborately in the Interplay Judgement, I do not think it is necessary to continue to let the interstices of these issue be dealt with by the Section 11 Court. Dealing with this situation, in Patel[5], the Supreme Court has sought to clarify the position, by setting out the position in law, in Paragraph 65, to clarify that the Section 11 Court must be confine itself to examining the SBI General Insurance Co. Ltd. v. Krish Spinning – 2024 SCC OnLine SC 1754 Ajay Madhusudan Patel v. Jyotrindra S. Patel – 2024 SCC OnLine SC 2597 Ajay Madhusudan Patel v. Jyotrindra S. Patel – 2024 SCC OnLine SC 2597 existence of the arbitration agreement. In these circumstances, I do not think it necessary to hold up this Application any further by embarking upon an enquiry as to whether the claim is truly barred by limitation. That is left to the Arbitral Tribunal, and the Respondent is free to agitate that issue before the Arbitral Tribunal

8. Commercial Arbitration Petition (L) No. 7789 of 2024 (“Section 9 Petition”) stands converted into an Application under Section 17 of the Act for consideration by the Arbitral Tribunal. Given the sheer efflux of time since it was filed, the parties would be at liberty to amend, modify and mould the contents of the application to bring the latest factual matrix on record when the Arbitral Tribunal is seized of the proceeding.

9. In these circumstances, no useful purpose would be served keeping these proceedings pending any further. The Section 11 Application is finally disposed of in the following terms: A] Justice (Retd.) S.J. Kathawalla, a former judge of this Court, is hereby appointed as the Sole Arbitrator (Email Id: skathawalla@gmail.com) to adjudicate upon the disputes and differences between the parties arising out of and in connection with the Agreement referred to above; B] A copy of this Order will be communicated to the Learned Sole Arbitrator by the Advocates for the Applicants within a period of one week from the date on which this order is uploaded on the website of this Court. The Applicants shall provide the contact and communication particulars of the parties to the Arbitral Tribunal along with a copy of this Order; C] The Learned Sole Arbitrator is requested to forward the statutory Statement of Disclosure under Section 11(8) read with Section 12(1) of the Act to the parties within a period of two weeks from receipt of a copy of this Order; D] The parties shall appear before the Learned Sole Arbitrator on such date and at such place as indicated, to obtain appropriate directions with regard to conduct of the arbitration including fixing a schedule for pleadings, examination of witnesses, if any, schedule of hearings etc. At such meeting, the parties shall provide a valid and functional email address along with mobile and landline numbers of the respective Advocates of the parties to the Arbitral Tribunal. Communications to such email addresses shall constitute valid service of correspondence in connection with the arbitration; E] All arbitral costs and fees of the Arbitral Tribunal shall be borne by the parties equally in the first instance, and shall be subject to any final Award that may be passed by the Tribunal in relation to costs.

10. Needless to say, nothing contained in this order is an expression of an opinion on merits of the matter or the relative strength of the parties. All issues on merits are expressly kept open to be agitated before the Arbitral Tribunal appointed hereby.

11. As regards, Interim Application (L.) No. 10103 of 2025, Learned Counsel for the Applicants submits that it is necessary to add the proposed Respondents to the Section 11 Application because they are transferees of interests in the very same agreement which forms subject matter of arbitration, and according to him, he would be able to demonstrate that one of such transferees is even related to the Respondents. This too is a facet that eminently makes it feasible for the Applicant to invoke the principles laid down in Cox and Kings Ltd. Vs Sap India Pvt. Ltd.[6] and convince the Arbitral Tribunal that these parties are to be parties to the arbitration proceedings. In these circumstances, Interim Application (L) No. 10103 of 2025 is allowed.

12. With the aforesaid directions, all the proceedings and the connected interim applications are hereby finally disposed of.

13. All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website. [ SOMASEKHAR SUNDARESAN, J.]