Deepak Kumar & Ors. v. Manoj Gupta

16. There is no quarrel with the proposition that while deciding an application under Section 11 of the Act, the Court has to consider whether there is an arbitration agreement between the parties, that there was a live and subsisting claim/dispute for being referred to arbitration and that the claims are arbitrable. The Hon‟ble Supreme Court in the case of National Insurance Company Ltd. vs. Boghara Polyfac Private Limited (2009) 1 SCC 267, considered the earlier judgment in the case of SBP & Co. v. Patel Engineering Ltd. & Anr. (2005) 8 SCC 618 and has carved out three categories to be considered while deciding a petition under Section 11 of the Act. The three categories set out in para 22 of the said judgment are reproduced as under:

17. The issue as to whether the claim is dead or alive, falls in „category II‟. The Hon‟ble Supreme Court while dealing with the issues in category II held that if the issues fall in the second category and are raised in any application under Section 11 of the Act, the Chief Justice/his Designate may decide them or alternatively, he may leave these issues open, with a direction to the Arbitral Tribunal to decide the same. In case, the Chief Justice/his Designate chooses to examine the issue and decides it, the Arbitral Tribunal cannot re-examine the said issue. The relevant portion of the judgment is extracted hereinunder:

18. The issue of limitation would clearly fall in category II. Thus this issue, in view of the judgment of the Apex Court in National Insurance Company (Supra) could have been either decided by the Chief Justice/his Designate or could have been left to be decided by the Arbitral Tribunal.

19. In the present case, the petition under Section 11 of the Act, was disposed of vide order dated 07.08.2009. The said order is extracted hereinunder: “I have heard learned counsel appearing for the petitioner. The respondent is absent despite service. The Collaboration Agreement between the parties contains an arbitration clause being Clause 9 which reads as follows: “That in case of any dispute between the parties in respect to the said agreement of any matter incidental thereto, the matter will be referred to a mutually appointed arbitrator ******* A perusal of the order shows that the respondent had not appeared in the matter and the question of limitation was neither raised nor decided by the said order. Since the Chief Justice had not decided the issue at that stage, it was obviously left to be decided by the Arbitral Tribunal.

20. After the sole arbitrator was appointed by this Court, the claim statement had been filed. The respondent did not appear initially, but when he did appear, he challenged the jurisdiction of the Arbitrator by filing an application under Section 16 of the Act.

21. The Arbitrator held that the limitation for filing the claims was three years under Article 113 of the Schedule to the Limitation Act, 1963 and since the claims were filed almost 10 years after the right to sue had accrued to the claimants, they were barred by limitation and not maintainable. Relevant para of the award is extracted hereinunder: “19. The limitation for filing the suit for recovery of balance amount due on contract is governed by Article 113 of the schedule to the Limitation Act, 1963. This Article provides that the limitation for filing any suit for which no period of limitation is provided elsewhere in this schedule is three years from the date when right to sue accrues. Apparently, arbitration proceedings were commenced by the claimants almost 10 years after the right to sue accrued to the claimants. Claim is thus barred by limitation and is not maintainable.”

22. The learned Single Judge has upheld the Award and dismissed the petition by relying on the judgment of the National Insurance Company (supra) holding that the Arbitral Tribunal had rightly decided the issue of limitation as there was no adjudication on this issue in the order dated 07.08.2009, by which the Arbitrator was appointed. The learned Single Judge observed that to hold that the Tribunal cannot decide the issue of limitation once the Court appoints the Arbitrator, would put shackles on the powers of the Arbitral Tribunal which the Act did not intend. In our view, the learned Single Judge is right in her observations that a reading of the order dated 07.08.2009 shows that neither the question of limitation was raised at that stage nor was it decided and therefore, it has to be presumed that it was left to be decided by the Arbitral Tribunal. Once there was no express adjudication of the issue of limitation in the order appointing the Arbitrator, the Arbitral Tribunal had the powers to decide the issue of limitation. We do not agree with the contention of the appellant that since there was no express direction by the Chief Justice at the time of appointment of the Arbitrator conferring powers on him to decide the issue of limitation, the Tribunal could not have gone into this issue. This argument runs contrary to the observations of the Apex Court in the case of National Insurance Company (Supra). Once the Chief Justice has not adjudicated on the issue of limitation, at the time of appointment of the Arbitrator, which he could have, it goes without saying that it was left to be adjudicated by the Arbitral Tribunal. There is no force even in the contention that once the dispute was referred under Section 11 to the Arbitrator, the question of jurisdiction could not have been raked up for the aforesaid reasons.

23. The Arbitrator has returned a finding that the cause of action arose in 1999 since it was the contention of the claimants that the building was completed in the year 1999 and it is at that point of time when claims were entitled to receive the balance amount. The notice of appointment of the Arbitrator was given only on 12.12.2008 and since the claimants approached the Court for the first time in January, 2009, the claims were patently time barred as the same had been preferred after a lapse of ten years. The Arbitrator relied on Section 43 of the Act which provides that the Limitation Act shall apply to arbitration proceedings.

24. The contention of the appellant that the last transaction was in the year 2008, and notice was issued in 2008 and thus the claims were not time barred, cannot be accepted. The learned Arbitrator has found as a matter of fact that the cause of action had arisen in 1999 and we find no reason to disturb this finding. No fault can be found with this finding of the Arbitrator in view of Article 113 of the Schedule of the Limitation Act. Limitation is no doubt a mixed question of fact and law. The Arbitrator who is a master of both facts and law has after analyzing, taken a view, and rejected the claims. It is not open to us while sitting as an appellate court in an appeal under Section 37 of the Act to go behind the finding that the cause of action had arisen in

1997.

25. It is contended by the respondent who appears in person that late Sh. Ranjit Singh had no locus either to be a party to the arbitration proceedings or challenge the Award as he was neither a party to the arbitration agreement or to the collaboration agreement and therefore the present appellants who are his legal heirs also have no locus to file the present appeal. We find that the learned Single Judge also dealt with this issue of locus and has given a finding that Sh. Ranjit Singh was the brother of Sh. Attar Singh, who was a party to the collaboration agreement and who had collaborated even on behalf of Sh. Ranjit Singh. The learned Single Judge has also observed that Sh. Rajit Singh was a party in the arbitration proceedings as he was one of the claimants and therefore the locus could not be questioned. We find no infirmity with this finding of the learned Single Judge and hence there is no merit in this contention of the respondent.

26. In our view, the learned Single Judge has rightly dismissed the petition of the appellant upholding the award of the learned Tribunal. The scope of interference in the proceedings in an appeal filed under Section 37 of the Act is extremely limited as has been held by several judgments of the Apex Court as well as this Court. The position of law stands crystalised that findings of fact and law of the Arbitral Tribunal/Arbitrator are ordinarily not amenable to interference under Section 34 or Section 37 and can only be interfered if they are perverse or contrary to the contractual terms. The Arbitrator is the final authority on facts as well as law. The scope of judicial scrutiny by an appellate court under Section 37 of the Act is far more restricted than judicial review under Section 34 of the Act. In this regard, we refer to a paragraph of the judgment of the Hon‟ble Supreme court in the case of McDermott International Inc. vs. Burn Standard Co. Ltd. (2006) 11 SCC 181, which we quote as under:

27. In Associate Builders vs. Delhi Development Authority reported as (2015) 3 SCC 49, the Supreme Court explained the scope of intervention in an appeal under Section 37 and held as under: “It must clearly be understood that when a court is applying the “public policy” test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts In P.R. Shah, Shares and Stock Brokers (P) Ltd.. v. B.H.H. Securities (P) Ltd.: (2012) 1 SCC 594, this Court held: A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Byelaw 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at.”

28. We thus find no ground to interfere in the impugned order passed by the learned Single Judge.

29. Resultantly, the appeal is dismissed being without merits along with all pending applications. G.S.SISTANI, J JYOTI SINGH, J MARCH 18, 2019 rd