Calcutta High Court
Rohitash Kumar Kothari vs Simplex Infrastructure Limited on 20 March, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
OCD-10
AP-COM/477/2024
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL DIVISON
ROHITASH KUMAR KOTHARI
VS
SIMPLEX INFRASTRUCTURE LIMITED
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date : 20th March, 2025.
Appearance:
Mr. Ratul Das, Adv.
Mr. Sunit Biswas, Adv.
Mr. Rajashree Bhowmick, Adv.
. . .for the petitioner.
Mr. Abhishek Banerjee, Adv.
Mr. Sitikantha Mitra, Adv.
. . .for the respondent.
The Court:
1. This is an application under Section 11 of the Arbitration and
Conciliation Act, 1996, hereinafter referred to as the said Act. The
petitioner carries on business as a proprietor of Chandigarh Trade Link.
The petitioner is engaged in the business of manufacturing,
distributing, and providing service for construction of chemical
products. The petitioner claims to be a wholesale supplier of
construction, chemicals and tools of Sika, BASF, Fosroc Pidilite, STP,
Delta and Fischer etc. The respondent is a well-known construction
company. The respondent is engaged in civil and structural
construction work, throughout India. The petitioner and the
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respondent entered into an agreement for supply of chemicals and
materials for such construction work of the respondent. Accordingly, a
purchase order was issued by the respondent to the petitioner. Two
invoices followed the purchase order. The dispute arose in respect of
alleged non-payment of the balance due, amounting to Rs.3,86,057/-.
The total bill raised by the petitioner was approximately Rs.8,86,057/-.
Part payment thereof was made on August 10, 2018, to the tune of five
lakhs. The petitioner invoked arbitration by a notice dated November
15, 2023, as the remaining portion was unpaid. According to the
petitioner, clause 23 of the purchase order contained an arbitration
clause. The clause provided as follows:
"In the event of any difference or dispute arising out of or
in connection with this order, the same should be first
amicable settled by mutual dialogue. If the parties fail to
settle the difference or disputes arising out of or in connection
with the order (including interpretation of the terms thereof),
the same shall be referred to Arbitration. The arbitration
proceedings shall be conducted by a sole Arbitrator
appointed by Company secretary of Simplex Infra. Ltd. and
awards/decision of such Arbitrator shall be final and binding
upon both the parties. The Venue of the Arbitration
proceedings shall be Kolkata. . ."
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2. The petitioner contends that an application under Section 11 of the said
Act being AP No.844 of 2022, was also filed before this Court. The
pendency of the matter before the Hon'ble Court should be taken into
consideration. The period during which the application was pending
before this Court, should be exempted in computing the period of
limitation in filing the application, upon granting the benefit under
Section 14 of the Limitation Act, 1963.
3. Mr. Banerjee, learned advocate for the respondent, relies on the
affidavit- in-opposition and submits that this Court should not entertain
the application as the petitioner had given up the claim in respect of the
purchase order and invoices which are part of the present dispute.
Reference is made to the order dated January 4, 2024. A learned Court
recorded that the learned counsel appearing for the petitioner had given
up the claim in respect of the purchase order relating to the
construction work at Telengana. Admittedly, this proceeding arises out
of the purchase order and the invoices in respect of the construction
work at Telengana.
4. However, this Court finds that the Hon'ble Court had granted liberty to
the petitioner to invoke arbitration in respect of the remaining purchase
order. Thus, the contention of Mr. Banerjee that the claims have been
entirely given up, does not appear to be correct. The Hon'ble Court was
of the view that the notice invoking arbitration did not cover the
purchase order of Telengana and a consolidated reference could not be
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made. Accordingly, liberty was given to proceed according to law, in
respect of the said purchase order. Thus, the petitioner has approached
this Court by filing an application under Section 11 of the said Act.
5. The question is whether such liberty can be construed as condonation
of the delay caused by the petitioner in respect of the work order at
Telengana. In my opinion, when the liberty was given to the petitioner
to proceed under the law, it meant that the liberty would be subject to
the rigours of law, which includes the laws of limitation, jurisdiction of
the referral Court etc. Although, the jurisdiction of the Court is not in
dispute, in view of the arbitration clause, but this Court finds that the
invocation of the arbitration clause by the petitioner, in respect of the
purchase order and invoices arising out of the construction work at
Telengana was made in November 15, 2023. Thus, Mr. Das's
contention that the invocation and filing of the application were in
exercise of the liberty granted by the Hon'ble Court, is not correct. The
contention that the notice invoking arbitration and the application for
reference should be held to be within time, upon excluding the period
which was consumed in disposing of AP/844/2022, is also not
accepted. The invocation of the arbitration clause by issuing a notice
under Section 21 of the said Act was on November 15, 2023. The
invocation was already time barred. The period of limitation to invoke
arbitration is within three years from the date when the cause of action
arose or the right to refer arose. In my opinion, the cause of action to
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invoke arbitration arose after part payment was made within the period
of limitation i.e. on and from August 10, 2018. The records do not
reveal that in respect of the construction work at Telengana, any further
communication or assurance was made by the respondent, thereby
acknowledging the remaining claim. Even if the exclusion of time
during the covid pandemic is allowed, the invocation is time barred.
6. The petitioner invoked the arbitration clause on November 15, 2023, in
respect of the balance amount payable against the invoices arising out
of the construction at Telengana. Instead of filing a separate application
under Section 11 of the said Act, the petitioner had clubbed the claim
arising out of the construction of work at Telengana, in the application
filed before this Court, seeking a consolidated reference with regard to
the disputes arising out of the work orders in respect of construction at
Srinagar and Telengana. The learned Court was of the view that the
claims could not be consolidated and the petitioner withdrew the claim
in respect of the said construction work at Telengana. The learned
Court granted liberty to proceed in accordance with law.
7. The invocation with regard to the dispute arising out of the Telengana
construction, was not made pursuant to the liberty granted by the
Court. The invocation had already been made. The claim was clubbed
in my view, in order to circumvent the fact that the invocation was
already barred by limitation. In any event, as I have already discussed
hereinabove, liberty granted by a court does not mean that such liberty
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could be exercised in ignorance of or in violation to the statutory
requirement. It is well settled that the period of limitation to invoke
arbitration is three years from the date of accrual of the cause of action.
8. In the decision of Arif Azeem Co. Ltd. vs Aptech Ltd. reported in
(2004) 5 SCC 313, the Hon'ble Apex Court held as follows:-
72. In Bharat Sanchar Nigam Limited (supra), this Court while
observing that although the arbitration petition was not barred by
limitation, yet the cause of action for the underlying claims having
arisen much earlier, the claims were clearly barred by limitation on
the day notice for arbitration was invoked. Relevant paragraphs are
extracted herein below:
"48. Applying the law to the facts of the present case, it is clear
that this is a case where the claims are ex facie time-barred by
over 5½ years, since Nortel did not take any action whatsoever
after the rejection of its claim by BSNL on 4-8-2014. The notice
of arbitration was invoked on 29-4-2020. There is not even an
averment either in the notice of arbitration, or the petition filed
under Section 11, or before this Court, of any intervening facts
which may have occurred, which would extend the period of
limitation falling within Sections 5 to 20 of the Limitation Act.
Unless, there is a pleaded case specifically adverting to the
applicable section, and how it extends the limitation from the
date on which the cause of action originally arose, there can be
no basis to save the time of limitation.
49. The present case is a case of deadwood/no subsisting
dispute since the cause of action arose on 4-8-2014, when the
claims made by Nortel were rejected by BSNL. The respondent
has not stated any event which would extend the period of
limitation, which commenced as per Article 55 of the Schedule
of the Limitation Act (which provides the limitation for cases
pertaining to breach of contract) immediately after the rejection
of the final bill by making deductions.
50. In the notice invoking arbitration dated 29-4-2020, it has
been averred that:
"Various communications have been exchanged between the
petitioner and the respondents ever since and a dispute has
arisen between the petitioner and the respondents, regarding
non-payment of the amounts due under the tender document."
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51. The period of limitation for issuing notice of arbitration
would not get extended by mere exchange of letters, [S.S.
Rathore v. State of M.P., (1989) 4 SCC 582 : 1990 SCC (L&S)
50; Union of India v. Har Dayal, (2010) 1 SCC 394; CLP (India)
(P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., (2020) 5 SCC 185] or
mere settlement discussions, where a final bill is rejected by
making deductions or otherwise. Sections 5 to 20 of the
Limitation Act do not exclude the time taken on account of
settlement discussions.
Section 9 of the Limitation Act makes it clear that:"where once
the time has begun to run, no subsequent disability or
inability to institute a suit or make an application stops it."
There must be a clear notice invoking arbitration setting out
the "particular dispute" [ Section 21 of the Arbitration and
Conciliation Act, 1996.] (including claims/amounts) which
must be received by the other party within a period of 3 years
from the rejection of a final bill, failing which, the time bar
would prevail.
52. In the present case, the notice invoking arbitration was
issued 5½ years after rejection of the claims on 4-8-2014.
Consequently, the notice invoking arbitration is ex facie time-
barred, and the disputes between the parties cannot be
referred to arbitration in the facts of this case." (emphasis
supplied)
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87. Similarly, in Bharat Sanchar Nigam Limited (supra), it was held by this Court thus:
"51. The period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters, [S.S. Rathore v. State of M.P., (1989) 4 SCC 582 : 1990 SCC (L&S) 50; Union of India v. Har Dayal, (2010) 1 SCC 394; CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., (2020) 5 SCC 185] or mere settlement discussions, where a final bill is rejected by making deductions or otherwise. Sections 5 to 20 of the Limitation Act do not exclude the time taken on account of settlement discussions. Section 9 of the Limitation Act makes it clear that: "where once the time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it." There must be a clear notice invoking arbitration setting out the "particular dispute" [ Section 21 of the Arbitration and Conciliation Act, 1996.] (including claims/amounts) which must be received by the other party 8 within a period of 3 years from the rejection of a final bill, failing which, the time bar would prevail." (emphasis supplied)
9. Thus, this application fails.
10. AP-COM 477 of 2024 is, accordingly, disposed of.
(SHAMPA SARKAR, J.) sp/