Full Text
HIGH COURT OF DELHI
Date of Decision: 4th December, 2018
RANJIT SINGH ..... Petitioner
Through: Mr. Sanjeev Kumar, Mr. H. K. Naik, Mr. Deepak Singh, Mr. Rajnish, Mr. Sanjay Kumar, Mr. Ajay Amritraj, Mr. Sudhansu Palo and Ms. Padma Choudhary, Advocates.
(M:9810261109 & 7503500238)
Through: Respondent in person.
(M:9210159946)
JUDGMENT
1. Present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act’) has been filed challenging the award dated 15th February, 2010 passed by the learned Sole Arbitrator. Vide the impugned award, the learned Sole Arbitrator has rejected the claims filed by the Petitioner/Claimant on the ground that the same are barred by limitation. The operative portion of the award reads as under:
2. In brief the case of the Petitioner is that they entered into a collaboration agreement dated 25th June, 1997 (hereinafter ‘agreement’) with the Respondent Shri Manoj Gupta. The Petitioner before this Court is Shri Ranjit Singh, who is brother of Shri Attar Singh, who was one of the parties to the collaboration agreement. As per the said agreement, the Respondent was to develop property bearing No.229 in Khasra No.378, situated at Masjid Moth Village, New Delhi, admeasuring 300 Sq. Yards. The Respondent was to construct and give to the owners five flats on the second floor and five flats on the third floor of the property along with a sum of Rs.25 lakhs. The Petitioner does not dispute the fact that the flats, as per the agreement, have been given. However, it is Petitioner’s claim that Rs.15 lakhs remained unpaid. Notice dated 12th December, 2008 was issued by the Petitioner invoking the arbitration clause in the agreement, which reads as under:
3. No reply was received to the notice invoking arbitration and, accordingly, the Petitioner preferred a petition under Section 11 of the Act being ARB.P.79/2009. The same was disposed of vide order dated 7th August, 2009 in the following terms. “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 whose decision in the matte will be final and binding in between the parties and no party will have the right to challenge such decision of the arbitrator in any court of law." Since disputes arose between the parties, the petitioner invoked the arbitration clause vide notice dated 12.12.2008. The respondent has not cared to reply to the notice, nor has filed the appearance in the present proceedings. I appoint Mr. Dinesh Dayal, District Judge (Retd.) as the sole arbitrator to adjudicate upon the disputes between the parties. The fees of the arbitrator is fixed at Rupees One Lakh to be shared equally by both the parties.”
4. After the Sole Arbitrator was appointed by this Court, the Petitioner filed its claim statement before the learned Arbitrator. The Respondent initially did not appear in the matter but at the time when the final arguments were heard on 5th February, 2010, the Respondent appeared and filed an application under Section 16 of the Arbitration and Conciliation Act, 1996, challenging the jurisdiction of the arbitrator. Respondent also submitted that he is not in a position to engage counsel or pay even half of the Arbitrator’s fee.
5. Learned Arbitrator thereafter, went into the claims and held that the claims are barred by limitation. Paragraph 19 of the award is relevant and extracted herein below:
6. It is submitted by Mr. Sanjeev Kumar, learned counsel appearing for Petitioner that the learned Arbitrator had no jurisdiction to hold that the claims are barred by limitation, inasmuch as the question whether a claim is dead or alive is to be decided only by the Court. It is submitted that the Court, while making reference, is deemed to have considered the live nature of the claim. He relies upon the judgments of the Supreme Court in SBP & Co. v. Patel Engineering Ltd. & Anr., (2005) 8 SCC 618 and National Insurance Company Limited v. Boghara Polyfab Private Limited, (2009) 1 SCC 267.
7. The Respondent on the other hand submits that the Petitioner has no locus either to be a party to the arbitration proceedings or to maintain a challenge to the award as he is not a party to the arbitration agreement or the collaboration agreement. He further submits that the learned Arbitrator had no jurisdiction to entertain the claims as the same were time barred.
8. This Court has first seen the locus of the Petitioner. It is claimed by the Petitioner that he is the brother of Shri Attar Singh, who was party no.1 in the collaboration agreement. It is submitted by learned counsel that Shri Attar Singh has passed away and even in the arbitration proceedings the Petitioner Shri Ranjit Singh was a party.
9. Since the Petitioner Shri Ranjit Singh had impleaded himself before the Arbitrator and had also filed the claim petition before the learned Arbitrator, this Court is not going behind the same.
10. Coming to the question of limitation and whether the learned Arbitrator can decide the same, the observations of the Supreme Court in Patel Engineering case (supra) are that the Chief Justice, under 11(6) usually pronounces on the jurisdiction of the Arbitrator, whether there is an arbitration agreement and whether there is a live and subsisting dispute. Once the learned Arbitrator is appointed, the Arbitral Tribunal has to decide the disputes on merits. The observations in Patel Engineering case (supra) are relevant and set out herein below:
11. The judgment in Patel Engineering case (supra) has been subsequently considered in National Insurance case (supra) wherein the Supreme Court has categorised the various issues, which the Court has to rule upon in a section 11 petition. The three categories are set out in paragraph 22 of the said judgment and extracted herein below:
12. The question, as to whether the claim is dead or alive, falls in category no.2. In respect of this, the observation of the Supreme Court is as under: “23. It is clear from the scheme of the Act as explained by this Court in SBP & Co., that in regard to issues falling under the second category, if raised in any application under Section 11 of the Act, the Chief Justice/his designate may decide them, if necessary, by taking evidence. Alternatively, he may leave those issues open with a direction to the Arbitral Tribunal to decide the same. If the Chief Justice or his Designate chooses to examine the issue and decides it, the Arbitral Tribunal cannot re-examine the same issue. The Chief Justice/his designate will, in choosing whether he will decide such issue or leave it to the Arbitral Tribunal, be guided by the object of the Act (that is expediting the arbitration process with minimum judicial intervention). Where allegations of forgery/fabrication are made in regard to the document recording discharge of contract by full and final settlement, it would be appropriate if the Chief Justice/his designate decides the issue.”
13. A perusal of the above observations of the Supreme Court shows that insofar the issues falling under the second category are concerned, the Chief Justice has the option to either decide the same in the section 11 petition or leave the issue open with a direction to the Tribunal to decide the same. The Supreme Court has clearly observed that the issue in respect of the dead or live nature of the claim would require evidence to be taken and hence the Chief Justice has the option to direct the Arbitrator to decide.
14. The issue of limitation clearly does not fall in category no.1. Coming to the facts of the present case, it is seen that in the order appointing the Arbitrator, the Respondent had not entered appearance. This is clear from the reading of the order dated 7th August, 2009. The said order records that the Respondent was absent despite service. The question of limitation, obviously at that stage, was not raised and was also not considered by the Court. Under such circumstances, could the learned Arbitrator have considered the question of limitation and rejected the claims or is it to be presumed that the Chief Justice had, in fact, considered and rejected the objection as to limitation.
15. Limitation can be decided as a preliminary issue without going into merits, depending upon the facts and circumstances of a particular case. However, on most occasions, limitation is also a mixed issue of fact and law, which requires adducing of evidence by the parties. Clearly in the order dated 7th August, 2009 the question of limitation was neither raised nor considered. Limitation being an issue, which falls in category no.2 as per National Insurance case (supra), the Chief Justice has the option of deciding it in the section 11 petition or leaving the issue to be decided by the Arbitral Tribunal. Since no question of limitation was raised at that stage, it has to be presumed that the said issue was left to be decided by the Arbitral Tribunal. It cannot be said, contrary to the express reading of the order dated 7th August, 2009, that the issue of limitation was decided by the Court at the time of appointing the Arbitrator.
16. Arbitrators and Arbitral Tribunals, have to decide the issue of limitation in different fact situations. There could be a situation where objection as to limitation may be raised in respect of some claims and not others. To hold that the Arbitral Tribunal cannot decide the issue of limitation, once a Court appoints the Arbitrator, would put shackles on the powers of the Arbitral Tribunal which the Act clearly does not intend.
17. Learned counsel for the Petitioner further submits that since there were no express directions by the Chief Justice at the time of appointment of the learned Arbitrator conferring the power on the Arbitral Tribunal to decide the issue of limitation, the Tribunal could not have gone into the limitation issue. This contention, though appealing at first blush, would completely denude the powers of Arbitrators to a great extent, especially in cases like the present one where the learned Arbitrator was appointed without any contest. Thus, it cannot be held that the learned Arbitrator did not have the power to adjudicate on limitation. The learned Arbitrator had arrived at a decision that the agreement dated back to 1997 and the first notice for arbitration was itself given in 2008. More than 10 years having passed, no fault can be found in the findings of the learned Arbitrator that the claims are barred by limitation.
18. OMP is, accordingly, dismissed with no orders as to the costs.
PRATHIBA M. SINGH JUDGE DECEMBER 04, 2018