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[Cites 37, Cited by 0]

Andhra Pradesh High Court - Amravati

Dr. Chaganti Sree Padmavathi vs Aditya Construction Company India Pvt ... on 29 August, 2022

Author: D. Ramesh

Bench: D. Ramesh

                                     1



              THE HON'BLE SRI JUSTICE D. RAMESH

           ARBITRATION APPLICATION NO. 20 of 2020

ORDER:

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This petition is filed by the applicants under Section 11 (6) of the Arbitration and Conciliation Act, 1996 for appointment of sole Arbitrator to enter into reference and adjudicate upon the disputes and differences between the petitioners and the respondent in respect of or arising of the development agreement cum General Power of Attorney dated 06.6.2012 including cancellation of the development agreement cum GPA dated 06.6.2012; to order all consequential reliefs including re-delivery of property which is the subject matter of the development agreement cum GPA dated 06.6.2012; awarding compensation/damages to the petitioners on account of the loss sustained by them due to the breach committed by the respondent; award interest at 18% on the amount of damages/compensation so ascertained; any other issue relating to the development agreement arise subsequent to the reference; such interim measure or measures as requested by the petitioners to the Tribunal from time to time till termination of mandate of the arbitrator; further or incidental/ancillary reliefs or directions.

2. Learned counsel for the petitioners would submit that the 1st petitioner is the mother of petitioners 2 and 3 and they are absolute owners of the land admeasuring Ac.4.50cents in Sy.No.336 part of the Rushikonda Layout vide LP No.103/1989, Madhurawada Village, Chinagadila Mandal, Visakhapatnam as per the sale deed dated 12.3.2008 executed by the Urban Development Authority, Visakhapatnam.

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3. The respondent being a builder had entered into agreement with the petitioners for development of the said land and entered into a development agreement cum General Power of Attorney on 06.6.2012 incorporating material terms and conditions. Due to the reasons best known to the respondent, it did not start any work in the property and caused breach of terms of development agreement deliberately. In order to forestall the petitioners from taking steps to cancel the development agreement, issued a notice on 26.6.2014 making false allegations and that was properly responded by the petitioners in the personal meetings. The petitioners served a notice on 20.01.2016 on the respondent calling upon it to cancel the development agreement and pay damages for breach of contract at the rate of 3 crores on tentative estimation of value of loss suffered by the petitioners at that time.

4. Learned counsel further submits that as per clause 24(viii) of the development agreement provides for resolution of dispute by arbitration and that clause reads as:

"If any dispute arises between the parties hereto during the subsistence or thereafter, in connection with or arising out of this agreement, the parties shall make best efforts to resolve the dispute amicably between themselves. In the event that all aforesaid efforts to resolve the dispute are not successful, the parties agree to resolve the dispute(s) through arbitration accordance with Arbitration and Conciliation Act, 1996 by a sole arbitrator, as appointed by the parties mutually agreed upon the place of arbitration shall be at Visakhapatnam. The proceedings shall be in the English language".

5. As there is no response from the respondent, the petitioners in their notice dated 08.02.2016 raised dispute for arbitration proposing Sri Justice Desaraju Apparao, Retd. Judge of the High Court as sole arbitrator and as the respondent did not respond, petitioners once again issued notice on 15.10.2016 raising certain issues for resolution by the arbitrator, Sri Justice D.Apparao. 3

6. In pursuance of the notice Sri Justice D.Apparao, by letter dated 20.10.2016 expressed consent to act as sole arbitrator. At that point of time, on 10.11.2016 the respondent issued a notice leveling several false, irrelevant and vexatious allegations and objected for the nomination of Sri Justice D.Apparao as arbitrator and instead proposed name of Sri Adithya Pratap Bhanjdeo, a retired District Judge as arbitrator. Sri Justice D.Apparao issued notice on 14.11.2016 confirming the first sitting of the tribunal but the proceedings could not be taken up due to the objection raised by the respondent. On 17.11.2016 the petitioners issued another notice to the respondent advising it to attend before the Arbitral Tribunal, but no purpose.

7. To the utter surprise of the petitioners, the respondent filed A.O.P.No.1285/2016 before the District Judge, Visakhapatnam in which the petitioners contested the petition and the Court passed order dated 02.01.2019 dismissing the petition holding that the petitioner therein did not comply with requirements of Sec.9 of the Act. From the above it is made clear that the respondent opted to initiate proceedings under the Arbitration and Conciliation Act but did not take steps in the direction of getting sole arbitrator appointed. It has created stalemate in dispute resolution process with the object of delaying the resolution only to multiply the loss to the petitioners as they lost possession of the valuable property and realize profits thereon on account of escalated real property prices during 2012-2019. Hence the petition.

8. After notice, respondent filed counter. Apart from making certain allegations in the counter, learned counsel for the respondent mainly contended that the present application filed by the petitioners is barred by limitation and is violative of the 4 Limitation Act and it may be dismissed by the Court. The petitioners filed the present application beore the Court under Section 11 of the Arbitration and Conciliation Act, 1996, would be covered by Article 137 of the first schedule fo the Limitation Act, 1963 and the limitation would begin from the date when there is failure to appoint the arbitrator. Three years of limitation for filing this application under Article 137 of Limitation Act shall recon from 26.6.2014 when the respondent issued a notice for refund of the amount. The cause of action for raising a dispute commences from the said date and in case if the petitioners were aggrieved by the said notice, they ought to have file an application within three years from the said date i.e. 26.6.2014. It means the application ought to have filed on or before 25.6.2017. But the present application has been filed by the petitioners in the year 2020 which is more than three years beyond the normal limitation and prays to dismiss the application.

9. Learned counsel for the petitioners filed rejoinder to the counter filed by the respondent in which he mainly contended that it is raising questions of arbitrability of the dispute and the limitation to non-suit the petitioners from maintaining the application under Section 11. He further deny the said allegations and submit that the question of limitation as propounded will arise since Article 137 of Limitation Act does not attract the instant issue in view of the law laid down by three judges of Hon'ble Supreme Court in Vidya Drolia and Others v. Durga Trading Corporation 1 the issues relating to arbitrability, limitation etc., have to be decided by the arbitrator only and not the Hon'ble High 1 (2021) 2 SCC 1 5 Court under Sect.11 or the principal civil Court of original jurisdiction under Sec.8 of the Act.

10. Basing on the above said facts, learned counsel for the petitioners had relied on sub-clause 8 of clause 24 of the development agreement 06.6.2012 which reads as follows:

"Arbitration: If any dispute arises between the parties hereto during the subsistence or thereafter, in connection with or arising out of this Agreement, the parties shall make best efforts to resolve the dispute amicably between themselves. In the event that all aforesaid efforts to resolve the dispute are not successful. The parties agree to resolve the dispute(s) through arbitration accordance with Arbitration and Conciliation Act, 1996 by a sole arbitrator, as appointed by parties mutually agreed upon the place or arbitration shall be at Visakhapatnam. The proceedings shall be in the English language.

11. As per the above said clause, if any dispute arise between the parties, the parties are amicably to resolve the disputes through Arbitration in accordance with the Arbitration and Conciliation Act 1996 by sole arbitrator appointed by the parties mutually agreed. As per the above said clause of the agreement, the petitioner has issued notice on 08.02.2016 proposing three names for appointment sole arbitrator and the respondents have not responded to the said notice, the petitioners have appointed the sole arbitrator through letter dated 15.10.2016 appointing Sri Justice D.Apparao, retired Judge, High Court of Andhra Pradesh as an Arbitrator.

12. Reply to the said notice, the respondents have issued reply on 10.11.2016 disagreeing the unilateral appointment of an arbitrator and proposing to appoint retired District Judge Mr. Aditya Pratap Bhanjdeo, Visakhapatnam as sole arbitrator.

13. While things stood thus, the petitioners have filed an application under Section 9 of the Arbitration and Conciliation Act on the file of the II Additional District Judge, Visakhapatnam for a 6 direction not to cancel the registered development agreement with General Power of Attorney dated 06.6.2012 executed in respect of land an extent of Ac.4.50cents lying in Sy.No.336 (part) of Rushikonda village, Visakhapatnam. That clearly discloses that the existence of disputes between the parties. When both the parties raised coercions that there is a dispute between the parties basing on the above said development agreement though the petitioner is interested to invoke sub-clause-8 of clause 24 of the agreement dated 06.6.2012, the respondents are not inclined to cooperate. Left with no option, the petitioners have invoked the jurisdiction of this Court under Section 11(6) of the Arbitration Act for appointment of the sole arbitrator.

14. To support his contention learned counsel for the petitioner has relied on the judgment of the Hon'ble Supreme reported in between Vidya Drolia vs Durga Trading Corporation2 in Special Leave Petition (Civil) Nos.5605-5606 of 2019 wherein it is held that:

93. Section 43(1) of the Arbitration Act states that the Limitation Act, 1963 shall apply to arbitrations as it applies to court proceedings. Sub-section (2) states that for the purposes of the Arbitration Act and Limitation Act, arbitration shall be deemed to have commenced on the date referred to in Section
21. Limitation law is procedural and normally disputes, being factual, would be for the arbitrator to decide guided by the facts found and the law applicable. The court at the referral stage can interfere only when it is manifest that the claims are ex facie time barred and dead, or there is no subsisting dispute. All other cases should be referred to the arbitral tribunal for decision on merits. Similar would be the position in case of disputed „no claim certificate‟ or defence on the plea of novation and „accord and satisfaction‟. As observed in Premium Nafta Products Ltd., it is not to be expected that commercial men while entering transactions inter se would knowingly create a system which would require that the court should first decide whether the contract should be rectified or avoided or rescinded, as the case may be, and then if the contract is held to be valid, it would require the arbitrator to resolve the issues that have arisen.
2 Civil Appeal No.2402 of 2019 7

Accordingly, we hold that the expression „existence of an arbitration agreement‟ in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment. In cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the arbitral tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non- arbitrability.

Discussion under the heading „Who decides Arbitrability?‟ can be crystallized as under:

(a) Ratio of the decision in Patel Engineering Ltd.

on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23.10.2015) and even post the amendments vide Act 33 of 2019 (with effect from 09.08.2019), is no longer applicable.

(b) Scope of judicial review and jurisdiction of the court under Section 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.

(c) The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-competence, is that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-clause (i) of Section 34(2)(b) of the Arbitration Act.

(d) Rarely as a demurrer the court may interfere at the Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non- existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably „non-arbitrable‟ and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the arbitral tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism.

15. As per observations of the above said paragraphs, the Court clearly indicated that while dealing with Section 11(6)(a) of the application, the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect the existence of an arbitration agreement. What are the factors for deciding as to 8 whether there is an arbitration agreement is the next question. The resolution to that is simple it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.

16. Further according to the above, the Apex Court has observed that in cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the arbitral tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability. Hence in the instant case, the existence of dispute is not in dispute and as per sub-clause 8 of clause 24 of the agreement, the arbitration clause is provided. In view of the same, the petitioner has made initially efforts by issuing notice on 08.02.2016 for non-response on behalf of the respondents. Left with no option, the petitioners have issued notice again on 15.10.2016 by appointing sole arbitrator. When the same was reviewed by the respondents, the present application is filed. Hence it is in accordance with the provisions of the Act and requested for appointment of sole arbitrator to decide the issues.

17. Learned senior counsel Sri C.Raghu appearing on behalf of the respondent has contended that the petition is not maintainable as per the law laid down by the Hon'ble Apex Court. In fact, the petitioner has to file an application for appointment of arbitrator under Section 11(6) of the Arbitration Act should be within three years. If the three years is taken into consideration from the date of first notice i.e. 08.02.2016 he has to file an application for appointment of arbitrator before 07.02.2019 or the 2nd notice dated 15.10.2016 which was reply by the respondents on 10.11.2016. At 9 any rate he should have to file an application, on or before 09.11.2019. But the petitioners have filed the present application on 23.7.2020 which is beyond the limitation. Hence the petition is not maintainable.

18. To support his contention, learned senior counsel has mainly relied on the ratio decided by the Hon'ble Apex Court in between Bharat Sanchar Nigam Limited vs M/S Nortel Networks India Pvt. Limited 3 wherein the Hon'ble Apex Court has raised a question that:

To decide the issue of limitation for filing an application under Section 11, we must first examine whether the Arbitration Act, 1996 prescribes any period for the same.
Section 11 does not prescribe any time period for filing an application under sub-section (6) for appointment of an arbitrator. Since there is no provision in the 1996 Act specifying the period of limitation for filing an application under Section 11, one would have to take recourse to the Limitation Act, 1963, as per Section 43 of the Arbitration Act, which provides that the Limitation Act shall apply to arbitrations, as it applies to proceedings in Court.
It is now fairly well-settled that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days‟ from issuance of the notice invoking arbitration. In other words, an application under Section 11 can be filed only after a notice of arbitration in respect of the particular claim(s) / dispute(s) to 3 (2008) 7 SCC 169. be referred to arbitration [as contemplated by Section 21 of the Act] is made, and there is failure to make the appointment.

The period of limitation for filing a petition seeking appointment of an arbitrator/s cannot be confused or conflated with the period of limitation applicable to the substantive claims made in the underlying commercial contract. The period of limitation for such claims is prescribed under various Articles of the Limitation Act, 1963. The limitation for deciding the underlying substantive disputes is necessarily distinct from that of filing an application for appointment of an arbitrator. This position was recognized even under Section 20 of the Arbitration Act 1940. Reference may be made to the judgment of this Court in C. Budhraja v. Chairman, Orissa Mining Corporation Ltd.4 wherein it was held that Section 37(3) of the 1940 Act provides that for the purpose of the Limitation Act, an arbitration is deemed to have commenced when one party to the arbitration agreement serves on the other party, a notice requiring the appointment of an arbitrator. Paragraph 26 of this judgment reads as follows :

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Civil Appeal No.843-844 of 2021 10 Section 37(3) of the Act provides that for the purpose of the Limitation Act, an arbitration is deemed to have been commenced when one party to the arbitration agreement serves on the other party thereto, a notice requiring the appointment of an arbitrator. Such a notice having been served on 4-6-1980, it has to be seen whether the claims were in time as on that date. If the claims were barred on 4-6-1980, it follows that the claims had to be rejected by the arbitrator on the ground that the claims were barred by limitation. The said period has nothing to do with the period of limitation for filing a petition under Section 8(2) of the Act. Insofar as a petition under Section 8(2) is concerned, the cause of action would arise when the other party fails to comply with the notice invoking arbitration. Therefore, the period of limitation for filing a petition under Section 8(2) seeking appointment of an arbitrator cannot be confused with the period of limitation for making a claim. The decisions of this Court in Major (Retd.) Inder Singh Rekhi v. DDA [(1988) 2 SCC 338] , Panchu Gopal Bose v. Board of Trustees for Port of Calcutta [(1993) 4 SCC 338] and Utkal Commercial Corpn. v. Central Coal Fields Ltd.
Sections 43(1) and (3) of the 1996 Act are in pari materia with Sections 37(1) and (4) of the 1940 Act. It is well-settled that by virtue of Article 137 of the First Schedule to the Limitation Act, 1963 the limitation period for reference of a dispute to arbitration or for seeking appointment of an arbitrator before a court under the 1940 Act (see State of Orissa v. Damodar Das [State of Orissa v. Damodar Das, (1996) 2 SCC 216] ) as well as the 1996 Act (see Grasim Industries Ltd. v. State of Kerala [Grasim Industries Ltd. v. State of Kerala, (2018) 14 SCC 265 : (2018) 4 SCC (Civ) 612] ) is three years from the date on which the cause of action or the claim which is sought to be arbitrated first arises."
Applying the aforesaid law to the facts of the present case, we find that the application under Section 11 was filed within the limitation period prescribed under Article 137 of the Limitation Act. Nortel issued the notice of arbitration vide letter dated 29.04.2020, which was rejected by BSNL vide its reply dated 09.06.2020. The application under Section 11 was filed before the High Court on 24.07.2020 i.e. within the period of 3 years of rejection of the request for appointment of the arbitrator.

In a recent judgment delivered by a three-judge bench in Vidya Drolia v.Durga Trading Corporation19, on the scope of power under Sections 8 and 11, it has been held that the Court must undertake a primary first review to weed out "manifestly ex facie non-existent and invalid arbitration agreements, or non-arbitrable disputes." The prima facie review at the reference stage is to cut the deadwood, where dismissal is bare faced and pellucid, and when on the facts and law, the litigation must stop at the first stage. Only when the Court is certain that no valid arbitration agreement exists, or that the subject matter is not arbitrable, that reference may be refused. In paragraph 144, the Court observed that the judgment in Mayavati Trading had rightly held that the judgment in Patel Engineering had been legislatively overruled.

Paragraph 144 reads as:

"144. As observed earlier, Patel Engg. Ltd. explains and holds that Sections 8 and 11 are complementary in nature as both relate to reference to arbitration. Section 8 applies when judicial proceeding is pending and an application is filed for stay of judicial proceeding and for reference to arbitration. Amendments to Section 8 vide Act 3 of 2016 have not been omitted. Section 11 covers the situation where the parties approach a court for appointment of an 11 arbitrator. Mayavati Trading (P) Ltd., in our humble opinion, rightly holds that Patel Engg. Ltd. has been legislatively overruled and hence would not apply even post omission of sub-section (6-A) to Section 11 of the Arbitration Act. Mayavati Trading (P) Ltd. has elaborated upon the object and purposes and history of the amendment to Section 11, with reference to sub-section (6-A) to elucidate that the section, as originally enacted, was facsimile with Article 11 of the Uncitral Model of law of arbitration on which the Arbitration Act was drafted and enacted." (emphasis supplied) While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the Courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere "only" when it is "manifest" that the claims are ex facie time barred and dead, or there is no subsisting dispute. Paragraph 148 of the judgment reads as follows:

19 (2021) 2 SCC 1.

"148. Section 43(1) of the Arbitration Act states that the Limitation Act, 1963 shall apply to arbitrations as it applies to court proceedings. Sub-section (2) states that for the purposes of the Arbitration Act and Limitation Act, arbitration shall be deemed to have commenced on the date referred to in Section 21. Limitation law is procedural and normally disputes, being factual, would be for the arbitrator to decide guided by the facts found and the law applicable. The court at the referral stage can interfere only when it is manifest that the claims are ex facie time-barred and dead, or there is no subsisting dispute. All other cases should be referred to the Arbitral Tribunal for decision on merits. Similar would be the position in case of disputed "no-claim certificate" or defence on the plea of novation and "accord and satisfaction". As observed in Premium Nafta Products Ltd. [Fili Shipping Co. Ltd. v. Premium Nafta Products Ltd., 2007 UKHL 40 : 2007 Bus LR 1719 (HL)] , it is not to be expected that commercial men while entering transactions inter se would knowingly create a system which would require that the court should first decide whether the contract should be rectified or avoided or rescinded, as the case may be, and then if the contract is held to be valid, it would require the arbitrator to resolve the issues that have arisen The present case is a case of deadwood / no subsisting dispute since the cause of action arose on 04.08.2014, 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.
In the present case, the notice invoking arbitration was issued 5 ½ years after rejection of the claims on 04.08.2014. 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.
40.Conclusion Accordingly, we hold that:
(i) The period of limitation for filing an application under Section 11 would be governed by Article 137 of the First Schedule of 12 the Limitation Act, 1963. The period of limitation will begin to run from the date when there is failure to appoint the arbitrator;

It has been suggested that the Parliament may consider amending Section 11 of the 1996 Act to provide a period of limitation for filing an 20 S.S.Rathore v. State of Madhya Pradesh (1989) 4 SCC 582. Union of India & Ors. v. Har Dayal (2010) 1 SCC

394. CLP India Private Limited v. Gujarat Urja Vikas Nigam Limited & Anr. (2020) 5 SCC 185. 21 Section 21 of the Arbitration and Conciliation Act, 1996. application under this provision, which is in consonance with the object of expeditious disposal of arbitration proceedings;

(ii) In rare and exceptional cases, where the claims are ex facie time barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference. In another judgment of the Hon'ble Apex Court reported in between Secunderabad Cantonment Board vs. M/S B.Ramachandraiah & Sons 4 wherein the Hon'ble Apex Court held that:

Shri P.S. Narasimha, learned Senior Advocate appearing on behalf of the Appellant, submitted that the date on which the request made for the appointment of an arbitrator was received by the President of the Secunderabad Cantonment Board was 23.01.2007, as a result of which, this is the date on which the limitation period starts running under Article 137 of the Limitation Act, 1963 ["Limitation Act"] insofar as an application under Section 11(6) of the Arbitration Act is concerned. For this purpose he relied upon a judgment of the High Court of Bombay in Deepdharshan Builders Pvt. Ltd. v. Saroj, (2019) 1 AIR Bom R 249, as well as a recent judgment of this Court in Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd., (2020) 14 SCC 643. He then argued that even so far as the cause of action on merits is concerned, it arose way back on 08.09.2003, when the Respondent raised the claim with regard to the dispute for the first time. Once time begins to run, limitation cannot be extended by writing any number of subsequent letters. He also relied upon the recent judgment of this Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, stating that this case falls under paragraph 148 of the judgment, in that the claim was ex facie time barred and dead and that there was no subsisting dispute.

Moreover, in a commercial dispute, while mere failure to pay may not give rise to a cause of action, once the applicant has asserted their claim and the respondent fails to respond to such claim, such failure will be treated as a denial of the applicant's claim giving rise to a dispute, and therefore the cause of action for reference to arbitration. It does not lie to the applicant to plead that it waited for an unreasonably long period to refer the dispute to arbitration merely on account of the respondent's failure to settle their 4 2021 (5) SCC 705 13 claim and because they were writing representations and reminders to the respondent in the meanwhile."

The upshot of the judgment in Vidya Drolia is affirmation of the position of law expounded in Duro Felguera and Mayavati Trading, which continue to hold the field. It must be understood clearly that Vidya Drolia has not resurrected the pre-amendment position on the scope of power as held in SBP & Co. v. Patel Engineering (supra) Applying the aforesaid judgments to the facts of this case, so far as the applicability of Article 137 of the Limitation Act to the applications under Section 11 of the Arbitration Act is concerned, it is clear that the demand for arbitration in the present case was made by the letter dated 07.11.2006. This demand was reiterated by a letter dated 13.01.2007, which letter itself informed the Appellant that appointment of an arbitrator would have to be made within 30 days. At the very latest, therefore, on the facts of this case, time began to run on and from 12.02.2007. The Appellant‟s laconic letter dated 23.01.2007, which stated that the matter was under consideration, was within the 30- day period. On and from 12.02.2007, when no arbitrator was appointed, the cause of action for appointment of an arbitrator accrued to the Respondent and time began running from that day. Obviously, once time has started running, any final rejection by the Appellant by its letter dated 10.11.2010 would not give any fresh start to a limitation period which has already begun running, following the mandate of Section 9 of the Limitation Act. This being the case, the High Court was clearly in error in stating that since the applications under Section 11 of the Arbitration Act were filed on 06.11.2013, they were within the limitation period of three years starting from 10.11.2020. On this count, the applications under Section 11 of the Arbitration Act, themselves being hopelessly time barred, no arbitrator could have been appointed by the High Court.

19. Considering the above ratio decided in both the judgments, learned senior counsel has submitted that though there is no time fixed in the Arbitration Act, but Article 137 of the Limitation Act is applicable to the applications under Section 11 of the Arbitration Act as held by the Apex Court and finally the date of notice has to be taken into consideration for counting three years for appointment of arbitrator under Section 11(6) of the Act.

20. In the instant case the first notice was issued by the petitioners on 08.02.2016 even if the notice dated 15.10.2016 and reply dated 10.11.2016 of the respondents are taken into consideration, the present application has not been filed within three (3) years as held by the Apex Court. In the said 14 circumstances, the application is barred by limitation and hence requested to dismiss the application without going into the merits of the case.

21. Considering the submissions made by both the counsel and on perusal of the record and observations of the Hon'ble Apex Court, this Court is not inclined to go into the merits of the case. Considering the objections raised by the learned senior counsel appearing on behalf of the respondents, as held by the Hon'ble Apex court that Article 137 of the Limitation Act is applicable to the applications filed under Section 11 of the Arbitration Act and as held that the date of notice has to be taken into consideration for counting the limitation of three years. Considering the same, even assuming that the second notice and reply is taken into consideration i.e. 10.11.2016 and 30 days period is included as per Section 11(6) of the Arbitration Act that should be on or before 09.12.2019.

22. In the instant case, the present application has filed beyond 09.12.2019 i.e. filed on 23.7.2020. Hence the same is dismissed on the ground of latches.

Miscellaneous applications pending, if any in the Arbitration Application, shall also stand closed.

___________________ JUSTICE D.RAMESH Date: 29.8.2022 RD 15 THE HON'BLE SRI JUSTICE D.RAMESH ARBITRATION APPLICATION NO.20 of 2020 Dated 29.8.2022 RD