Madras High Court
N.Rajagopal vs Tvs Motor Company Limited on 26 August, 2022
Author: M.Sundar
Bench: M.Sundar
Arb O.P.(Com. Div.) No.210 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 26.08.2022
CORAM
THE HONOURABLE Mr.JUSTICE M.SUNDAR
Arb O.P.(Com. Div.) No.210 of 2022
N.Rajagopal
Managing Partner of MR Motor Company
No.19, Commercial Complex
DD Road, Salem. ... Petitioner
Vs
TVS Motor Company Limited
Rep by its Chairman and Managing Director
2nd Floor, No.383, 16th Main Road, 3rd Block
Koramangala
Bangalore - 560 034. ... Respondent
Arbitration Original Petition filed under Section 11(5) of the
Arbitration and Conciliation Act, 1996 praying to appoint an Arbitrator to
adjudicate the disputes between the parties arising out of the agreement dated
16.10.2003 and pass such or further orders as this Court may deem fit and
proper in the circumstances in the facts of the present case.
1/29
https://www.mhc.tn.gov.in/judis
Arb O.P.(Com. Div.) No.210 of 2022
For Petitioner : Mr.Richardson Wilson
along with Ms.J.P.Dhanyasree
and Mr.Navin Suresh
of M/s.P.Wilson Associates
For Respondent : Mr.Satish Parasaran
Senior Advocate
instructed by Mr.Vishnu Mohan
assisted by Mr.Subhang P.Nair
ORDER
This order will now dispose of the captioned matter.
2. This order has to be read in conjunction with and in continuation of proceedings made by this Court on 29.04.2022 a scanned reproduction of which is as follows :
2/29
https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 3/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 4/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 5/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022
3. Aforementioned 29.04.2022 proceedings will now become an integral part and parcel of this order. This also means that the abbreviations, short forms used in the aforementioned 29.04.2022 proceedings will continue to be used in the instant order for the sake of convenience and clarity. Contractual relationship between petitioner and respondent- company commenced nearly a decade ago, to be precise on 16.10.2003 when the respondent accepted petitioner's application to act as respondent- company's authorised spare parts stockists in Salem. Paragraph No.24 which should be referred to as 'Clause 24' for the sake of convenience serves as 'arbitration clause' and it is therefore an arbitration agreement between petitioner and respondent-company i.e., 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act as captured in earlier proceedings i.e., aforementioned 29.04.2022 proceedings.
4. In the hearing today, Mr.Richardson Wilson along with Ms.P.Dhanyasree and Mr.Navin Suresh of M/s.P.Wilson Associates [Law Firm] for the petitioner and Mr.Satish Parasaran, Senior Advocate, instructed by Mr.Vishnu Mohan, counsel on record for the respondent-company, assisted by Mr.Subhang P.Nair are before this Court.
5. Both learned counsel fairly submitted that there is no disputation or 6/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 disagreement about existence of the aforementioned arbitration agreement. Owing to the limited statutory perimeter within which a legal drill under Section 11 should perambulate i.e., statutory perimeter sketched by sub- section (6A) of Section 11, under the normal circumstances, this would have dropped the curtains on the captioned Arb.OP but learned counsel for respondent pressed into service Nortel principle. By saying Nortel principle, this Court is referring to the ratio laid by Hon'ble Supreme Court in Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 case law.
6. Nortel principle, put in simple terms is, in cases where one of the contracting parties is able to demonstrate that the arbitrable disputes i.e., lis is ex facie barred by limitation, a Section 11 Court can answer the prayer (for appointment of Arbitrator) in the negative, if it is convinced that the lis is clearly deadwood. To be noted, the term 'deadwood' is borrowed from language deployed in Nortel case law and in legal parlance it translates into the expression 'ex facie barred by limitation' which is the fulcrum of Nortel ratio. This expression 'ex facie barred by limitation' came up for consideration before this Court earlier in Radha Meditech v. Cook India 7/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 Medical Devices Pvt. Ltd., and vide order dated 01.08.2022, I took a view that 'ex facie' barred by limitation means being barred by limitation on the face of it without a need for any investigation. This was based on the 'description' (to be noted, I am consciously using the term 'description' instead of 'definition' ) of the term 'ex facie' as in standard law lexicons.
7. In the case on hand, the bone of contention is whether the lis i.e., the arbitrable disputes that are being projected as one warranting appointment of Arbitrator are ex facie barred by limitation. To clinch this bone of contention, short facts i.e., factual matrix in a nut shell containing a chronicle of events together with dates with specificity is imperative. In this view of the matter, a short chronicle is set out and the same is as follows :
➢ that the petitioner was an authorised stockists and dealer for the respondent-company in Salem District (Tamil Nadu) from 1982; that this business relationship was on cash and carry basis; that subsequently 16.10.2003 primary contract was entered into, wherein and whereby the petitioner became stockists of authorised spare parts manufactured by respondent-company; that to put it differently, business relationship from 1982 was documented and formalised into a contract in 2003 about a decade ago; that post such documentation, a 8/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 credit policy was put in place, whereby the petitioner was permitted to avail credit facility; that besides such credit facility, incentives were given by the respondent-company to the petitioner for achieving some sale targets; that broadly stated, these credit facilities allegedly not being made available and purported non-payment of incentives together constitute the crux and gravamen of arbitrable dispute/s that have now erupted; that in 2011, petitioner has given a bank guarantee in favour of respondent-company for a sum of one crore INR; that this bank guarantee was renewed from time to time and this Court is informed that it still subsists; that in and around this period, certain differences erupted regarding credit facilities and incentives leading to petitioner sending two representations to the respondent-company [to be noted, to the Managing Director of the respondent-company] dated 05.08.2014 and 01.09.2014; that the respondent-company on 12.02.2015 appointed an Arbitrator, though the petitioner had only sent representations and made their fervent pleas with utmost deference; that the sole Arbitrator appointed by respondent-company issued two notices - dated 23.02.2015 and 23.04.2015; that these two notices are not before this Court but details about the same are being 9/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 culled out from the earlier arbitral award which was ultimately made by sole Arbitrator; that the respondent appears to have sent what is described as 'statement of defence' dated 14.10.2015 to the sole Arbitrator; that the sole Arbitrator appears to have held a sitting on 29.12.2015; that the sole Arbitrator has treated the aforementioned two representations from the petitioner i.e., representations dated 05.08.2014 and 01.09.2014 as claim statements, framed issues on the basis of 14.10.2015 defence statement of the respondent and made earlier arbitral award on 24.03.2016; that it will suffice to say that this earlier Arbitral Award was in favour of the respondent-company; that the petitioner assailed this earlier Arbitral Award by presenting (on 22.04.2016) a petition under Section 34 of A and C Act in the Curial Court i.e., The Principal District Judges Court, Krishnagiri vide Arb.O.P.No.10 of 2016; that the Curial Court of first instance dismissed the petitioner's challenge to the earlier impugned award in and by an order dated 03.04.2017; that this 03.04.2017 order of the learned District Judge was carried in an appeal to this Court by petitioner by way of C.M.A.No.2331 of 2017; that this CMA was allowed [after full contest] by a Hon'ble Single Judge of this Court in 10/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 and by an order dated 30.03.2021; that this order of Hon'ble Single Judge has attained finality; that the petitioner sought re-arbitration by resorting to McDermott principle i.e., paragraph 52 in McDermott International Inc.V. Burn Standard Co. Ltd., and Ors. reported in (2006) 11 SCC 181); that in the interregnum, the petitioner issued a notice to respondent-company i.e., notice dated 07.02.2018, putting the respondent on notice of possible action under 'Insolvency and Bankruptcy Code, 2016' ['IBC' for the sake of brevity and convenience] more particularly, a notice under Section 8 of IBC; that this 07.02.2018 notice shall be referred to as 'IBC notice' for convenience; that this IBC notice met with a reply from the respondent and the petitioner made another fervent plea on 06.11.2019; that these facts in the interregnum i.e., between the order of Curial Court of first instance and the order of Honble Single Judge of this Court i.e., between 03.04.2017 and 30.03.2021 has been mentioned only for completion of facts; that reverting to re-arbitration sought by the petitioner on McDermott principle, it is to be noted that the petitioner sent notice dated 06.01.2022 and this notice was received by the respondent-company, though the date of receipt is not available with 11/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 exactitude and specificity; that this 06.01.2022 notice for all practical purposes is notice within the meaning of Section 21 of A and C Act and there is no disputation or disagreement between the parties on this;
that the respondent sent a reply dated 08.02.2011 unilaterally nominating a former Hon'ble Member of the Bench of this Court as sole Arbitrator and referring to the nominated person (for adjudicating) the arbitrable disputes; that the petitioner in 06.01.2022 notice had only referred to Clause 24 of primary contract and the petitioner was apparently expecting the respondent to suggest a name and seek concurrence of the petitioner; that while nominating/ unilaterally appointing sole Arbitrator vide 08.02.2022 reply, the respondent-company had made it clear that the limitation issue will be raised as a preliminary issue before sole Arbitrator; that under such circumstances, the petitioner on 21.04.2022 presented the captioned Arb.OP. in this Court; that what unfurled in the first listing of captioned Arb.O.P.(Com.Div.)No.210 of 2022 as captured in the proceedings made on that day has already been extracted and reproduced supra; that post notice being issued, pleadings were complete and captioned Arb.OP was heard out as there was contest 12/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 primarily on the Nortel principle as alluded to supra.
8. This Section 11 Court, having set out the factual matrix and a chronicle of events, now proceeds to discuss the points, counter points raised by either side in this legal tussle and this Court proceeds to set out its discussion and also give its dispositive reasoning on each of the points one after the other infra.
9. The petitioner contended that it is entitled to re-arbitration in the light of McDermott principle i.e., paragraph 52 of McDermott case law which has already been delineated supra. There is no serious disputation on the proposition that re-arbitration is a sequitur when an award is set aside by a Section 34 Court or in an appeal qua the Curial Court at first instance. The resistance is on the pleas that lis is deadwood and no dispute has been raised. Therefore, this concludes the re-arbitration aspect of the matter and takes this Court to other arguments. The next argument turns on the scope of a Section 11 legal drill. In support of petitioner's contention that a Section 11 legal drill should perambulate within the statutory perimeter sketched by sub-section (6A) thereat, on the petitioner's side, Vidya Drolia case i.e., Vidya Drolia & Ors. Vs. Durga Trading Corporation reported in (2020) SCC OnLine SC 1018, Nortel case i.e., Bharat Sanchar Nigam Limited 13/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 and Secunderabad Cantonment Board case i.e., Secunderabad Cantonment Board v. B.Ramachandraiah & Sons reported in (2021) 5 SCC 705 were pressed into service.
10. This was resisted by the respondent by placing reliance on Nortel principle itself . Learned counsel for respondent contended that Nortel principle makes it clear that there will be no reference and a Section 11 prayer will stand dismissed if the lis is ex facie barred by limitation. Learned senior counsel for respondent contended that the case on hand is one where lis is ex facie barred by limitation. This is the crux and gravamen of the matter on hand. Learned senior counsel for respondent drew the attention of this Court to Section 21 notice dated 06.01.2022 and submitted that it talks about a letter dated 10.10.2011 by which Bank Guarantee for Rs.100 lakhs was requisitioned in the financial year 2010-2011. It was also contended that as regards credit limits and incentives, a tabulation therein shows that there are claims pertaining to the year 2010-2011 to 2014-2015. It was further contended that this by itself would show that the lis is ex facie barred by limitation. It was contended that the case may not fall under breach within the meaning of Article 55 to Schedule of 'The Limitation Act, 1963 (36 of 14/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 1963)' [hereinafter 'Limitation Act' for the sake of convenience and clarity] and it would be safe to apply Article 137 of the Limitation Act, which means the period of limitation is three years from the date on which the right to apply accrues. To be noted, the question is to whether the lis that is being projected in Arb.OP on hand is ex facie barred by limitation and this is being tested by applying Article 137 [to be noted, the contestants before this Court made it clear that if there is a reference, they may refer to Article 55 of Limitation Act also, as the question of whether it is a breach/continuing breach will also have to be gone into]. In response to this contention, learned counsel for petitioner submitted that it cannot be gainsaid that the lis is ex facie barred by limitation even on an extreme demurrer i.e., on a worst case scenario. To support this, learned counsel for petitioner submitted that 31.03.2015 being the end of the financial year 2014-2015, this can be taken as the reckoning date. If this is taken as the reckoning date, the three year period elapses only 30.03.2018. Be that as it may, Arbitrator was appointed by respondent by communication dated 12.02.2015; the sole Arbitrator has treated two representations from the petitioner dated 05.08.2014 and 01.09.2014 as claim statements, framed issues on the basis of 14.10.2015 defence statement of the respondent and made an award i.e., earlier arbitral 15/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 award on 24.03.2016. This was assailed in the Curial Court of first instance unsuccessfully. The Curial Court of first instance dismissed the Arb.O.P.No.10 of 2016 filed by the petitioner in and by an order dated 03.04.2017; that this dismissal order was challenged in an appeal before this Court and this Court allowed the appeal on 30.03.2021. Therefore, the period upto 30.03.2021 needs to be excluded. In this regard, it was pointed out that the appointment of Arbitrator by the respondent on 12.02.2015 was even prior to 31.03.2015. It was also submitted that exclusion of period is by operation of sub-section (4) of Section 43 of A and C Act which makes it clear that when an arbitral award is set aside, the period between commencement of arbitration and the date of order of the Court shall be excluded in computing the time prescribed by the Limitation Act for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted. There is absolutely no difficulty in accepting this argument owing to the language in which sub-section (4) of Section 43 is couched. This leaves this Court with the pointed submission made by the learned senior counsel for respondent that the arbitrable disputes that are now being sought to be raised pertains to financial years 2010-2011 to 2014- 2015.
16/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022
11. A careful perusal of Section 21 notice [to be noted, 06.01.2022 trigger notice from the petitioner, qua re-arbitration is referred to as '21 notice' for the sake of convenience] makes it clear that the arbitrable disputes raised would pertain to incentives and credit facilities for the financial years 2010-2011 to 2014-2015. On an ex facie exercise i.e., on exercise dehors any investigation or enquiry / on the face of it, at the highest only a part of the claim may be time barred. This means that the question as to whether it is a continuing cause of action and as to what part of the claim is barred by limitation are clearly a mixed questions of fact and law. Mixed questions of fact and law require investigation, examination and enquiry inter alia by appreciation of oral and documentary evidence. In this regard, this Court is clear in its mind that in Nortel case law, the facts were straight, neat and clean. This is captured in paragraph 4 of Nortel case law. Nortel is a case where cause of action for invoking arbitration arose on 04.08.2014 when the claim made by Nortel was rejected by making deductions from the final bill but Nortel slept over its alleged rights for 5½ years before issuing notice of arbitration on 29.04.2020. Therefore, Nortel was a case where the company i.e., one of the contracting parties did not take action from 04.08.2014 to 29.04.2020, this period / factum remained undisputed and was clear as 17/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 daylight in Nortel. In this regard, this Court reminds itself of the celebrated Padma Sundara Rao case rendered by a Constitution Bench of Hon'ble Supreme Court i.e., Padma Sundara Rao Vs. State of Tamil Nadu reported in (2002) 3 SCC 533, relevant paragraph in Padma Sundara Rao case law is paragraph No.9 and the same reads as follows :
'9.Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board [(1972) 2 WLR 537 :
1972 AC 877 (HL) [Sub nom British Railways Board v. Herrington, (1972) 1 All ER 749 (HL)]] . Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.' Therefore, Nortel was made in the facts setting of that case where no further investigation/examination was necessary. In this regard, as already delineated supra, this Court examined this aspect of the matter in Radha Meditech v. Cook India Medical Devices Pvt. Ltd., and the relevant paragraph which deals with description of the term 'ex facie' is paragraph 18 18/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 and the same reads as follows:
'18. Before proceeding further, this Court would like to set out its understanding of the expression 'ex facie barred by limitation'. This expression would necessarily mean a plea where no investigation is required. 'Ex facie' necessarily means no investigation is required. Ex facie as per Black's Law Dictionary (Tenth Edition) is 'On the face of it; evidently; apparently. [The phrase typically referred to a defect appearing from the document itself, without further enquiry]. This takes this Court to Clause 9.5 of the second agreement and the same reads as follows :
'9.5 COOK may, at its sole option, but without obligation, repurchase (or cause DEALER to sell to COOK's designee in the Territory) any or all Products owned by, or in the possession or control of, DEALER as of the date of expiration or termination; and/or acquired by DEALER after termination or expiration for the invoice price paid by DEALER, less twenty-five percent (25%) for inspection and restocking expenses. DEALER shall pay all shipping fees, insurance costs and expenses related to transporting the Products to the destination specified by COOK; and' The argument that repurchase of sold items by COOK without obligation is at the option of COOK and therefore cannot be the reckoning date becomes debatable and reasonably arguable i.e., as COOK in its counter affidavit, more particularly in paragraph No.3.6 has averred that RADHA instead of returning the unsold products immediately 19/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 (inspite of continuous requests) continued to hold the unsold inventory and ultimately has gone on to say that the returned inventory was assessed in accordance with COOK's policy and were found to be in unsaleable condition as it was dirty, damaged and/or expired. Paragraph No.3.6 of the counter affidavit reads as follows :
'3.6. Upon termination of the 2015 Agreement, Petitioner was required to return Respondent's products immediately in exchange for credit for the outstanding balance due. Conversely, instead of returning the products, as also mandated by the 2015 Agreement, Petitioner continually requested the Respondent to reappoint it as a distributor. The Respondent did not reinstate the Petitioner as a distributor and demanded the Petitioner return the unsold inventory products as per the Clause 9.4(b) of the 2015 Agreement. To Respondent's discontent, Petitioner continued to hold Respondent's unsold inventory illegally for over a year and belatedly returned it on 27 October 2017. The returned inventory was assessed in accordance with Respondent's returns policy and was found in unsaleable condition as it was dirty, damaged and expired. Respondent informed the Petitioner about the poor condition of the inventory and Petitioner acknowledged the same via email on 20 November 2017. Per Respondent's return policy, the unsaleable stock was returned to the Petitioner, and it was concluded that no reimbursement could be issued to the Petitioner for the damaged inventory.' Therefore, in the above context, it appears that COOK has taken back the products, assessed the same and has come to the conclusion that the 20/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 returned products were in poor condition. This is disputed by RADHA and this is also a dispute which turns on facts. As regards Articles 137 and 55 of Limitation Act, it is not a case of when right to apply first accrues or when the contract is first broken as it includes continuing breach too. The contention of learned counsel for RADHA that the aforementioned Clause 9.5 of the second agreement is a post termination obligation and that whether this post termination obligation was performed or breached is clearly a mixed question of fact and law.
This question in turn will decide the reckoning date for limitation. In this regard Articles 137 and/or 55 of Limitation Act do not talk about 'first accrued' or 'first breached' as in some other Articles of Limitation Act. Therefore, this Court is unable to persuade itself to believe that this is a case where the dispute is 'ex facie barred by limitation'. Some investigation is required to decide whether it is barred by limitation. In this regard, before moving on to NCC case law, this Court deems it appropriate to refer to Nortel principle. In Nortel, the facts were straight, neat and clean. This is captured in Paragraph No.4 of Nortel case law i.e., Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738, wherein it is clear that cause of action for invoking arbitration arose on 04.08.2014 when the claim made by Nortel was rejected by making deductions from the final bill but Nortel slept over its alleged rights for 5½ years before issuing notice of arbitration on 29.04.2020. This was the case where Nortel did not take action from 04.08.2014 till 29.04.2020 and this factum is clear as daylight unlike the case on hand.'
12. In this regard, this Court also respectfully reminds itself of Vidya Drolia case i.e., Vidya Drolia & Ors. Vs. Durga Trading Corporation 21/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 reported in (2020) SCC OnLine SC 1018, wherein Hon'ble Supreme Court has made it clear that a Section 11 Court will refer when in doubt. In other words, 'when in doubt, do refer' principle was put in place in Vidya Drolia case law. In Nortel itself vide paragraph No.53.2, Hon'ble Supreme Court has made it clear as part of conclusion, that refusing reference will be only in rare and exceptional cases where the claims are ex facie time barred and it is manifest that there is no subsisting dispute. This is articulated in paragraph No.53.2, which reads as follows :
Paragraph 53.2:
53.2.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.
Likewise in paragraph No.44 of Nortel case law, Hon'ble Supreme Court has clarified that the issue of limitation which concerns 'admissibility' of the claim must be decided either as a preliminary issue, or at the final stage after evidence is led by the parties. In this case the considered view of this Court is that the clincher is respondent company's reply to Section 21 notice from the petitioner i.e., reply notice dated 08.02.2022, wherein in paragraph 7, the respondent had made it clear that the claim being stale and barred by 22/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 limitation, will be raised as preliminary issues. As in the considered view of this Court, this is a clincher in this cliff hanger of a matter and as regards the stated position of the respondent-company, this Court deems it appropriate to reproduce and extract paragraph 7 of the reply notice dated 08.02.2022 and the same is as follows :
7. Our client denies all other averments made in the notice under reply in toto and reserves its right to contest the same on merits, if need be, and is not traversing in to each and every averment made in the notice under reply for the present. Our client also reserves its right to raise all the aforementioned preliminary issues before the aforesaid Ld. Sole Arbitrator, including the issue of non-existence of a dispute and even assuming there is a "dispute", that the claims are stale in nature being barred by law of limitation.
Our client shall also hold your client liable for the costs of arbitration.' [underlining made by this Court] Therefore, it is clear that in response to Section 21 notice from the petitioner, the respondent-company has sent a reply nominating a former Hon'ble Member of this Bench as sole Arbitrator. Taking the stand that the lis is stale and barred by limitation but making it clear that this limitation will be raised as a preliminary issue before the Hon'ble Arbitrator. This clearly is a 23/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 clincher.
13. The narrative thus far takes this Court to the next point raised by the learned senior counsel for respondent. This point turns on their being no dispute. It was pointed out that the dispute pertains to credit facilities and incentives. To be noted this has already been alluded to and delineated supra as crux and gravamen of arbitrable disputes that is being projected as between the parties. It was pointed out that this was not projected in the challenge to the earlier arbitral award. A careful perusal of the order of this Hon'ble Court in the appeal where the earlier arbitral award was dislodged, makes it clear that it says that the appellant (petitioner before this court) had not requested for constitution of Arbitral Tribunal and it does mention about absence of dispute. This again is a matter that turns on appreciation of documentary evidence and may be even oral evidence if it comes to that. The fact remains that post 31.03.2015, petitioner's hands were tied till 30.03.2021 and this period would certainly stand excluded in the light of sub-section (4) of Section 43. Pending an award that the petitioner was slapped with and the challenge of the petitioner to the same in the Curial Court of the first instance and in the appellate Court, it cannot be gainsaid that the petitioner should have triggered the arbitration clause. The 24/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 petitioner has resorted to re-arbitration after the award has been set aside. If this period is excluded by applying sub-section (4) of Section 43, that would clearly mean even on a demurrer that it cannot be gainsaid that the trigger is ex facie barred by limitation. Whether it is barred by limitation turns on mixed questions of fact and law, therefore it is made clear that this question is left open for the Hon'ble Arbitral Tribunal [to be constituted infra in this order to go at ]. In other words , it is made clear that questions (a) as to whether the lis is barred by limitation in part of wholly and (b) as to whether the earlier arbitral proceedings were such that it would now be open to the petitioner to raise these issue of incentives and credit limits without being hit by limitation are left open. In the light of Section 43(4) of A and C Act these questions are left open to be decided by the Arbitral Tribunal, the rights and contentions of both sides are preserved for this purpose. In other words, for the purpose of specificity, it is clarified that when both sides raise these issues on the basis of their stated positions, Arbitral Tribunal will go into these limitation aspects untrammelled / uninfluenced by this order notwithstanding this being a judicial order as the discussion and dispositive reasoning in this order is for the limited purpose of settling the legal tussle that was raised in a drill under Section 11. It was an intense legal tussle, 25/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 though it was a simple drill under Section 11 of A and C Act. Nonetheless as the legal tussle unfurled before this Court and as the arguments were advanced by both sides, it has become inevitable to deal with the same, discuss and give dispositive reasoning.
14. This Court now proceeds to drop the curtains on the captioned matter by appointing an Arbitrator. In this regard, it is made clear that the question turning on Perkins principle [Perkins Eastman Architects DPC & Another v. HSCC (India) Ltd., reported in 2019 SCC OnLine SC 1517], may not apply to this case owing to nomination (unilateral though) of a former Hon'ble Member of the Bench of this Court. However this Court solely owing to the manner in which the section 21 notice dated 06.01.2022 and reply dated 08.02.2022 had been exchanged between the parties comes to the conclusion that there is a failure of procedure within the meaning of Section 11(6) of A and C Act. In other words, Perkins principle is not being applied qua case on hand and the appointment is made only owing to failure of agreed procedure i.e., sub-section (6) of Section 11 of A and C Act, is owing to the manner in which section 21 notice dated 06.01.2022 and reply dated 08.02.2022 have been exchanged between the parties as already alluded to supra. After all the respondent should have suggested a name and 26/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 sought concurrence of petitioner.
15. In the light of narrative thus far, Hon'ble Mr.Justice V.Parthiban (Retd.,), a former Judge of this Court, residing at No.5069, Z-Block, 12th Street, Anna Nagar (West), Chennai – 600 040 [Ph: 26280804, 26214850, Mob: 9444094401] is appointed as sole Arbitrator. Hon'ble Arbitrator is requested to enter upon reference qua primary contract dated 16.10.2003 between the petitioner and the respondent, adjudicate upon the arbitrable disputes that have arisen between the parties by holding sittings in the 'Madras High Court Arbitration Centre under the aegis of this Court' (MHCAC) and render an award by adopting the Madras High Court Arbitration Proceedings Rules 2017 and Hon'ble Arbitrator's fee shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017.
16. Captioned Arb.OP is disposed of in aforesaid manner. There shall be no order as to costs.
ds 26.08.2022 Note: Registry is directed to communicate a copy of this order forthwith to 27/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022
1.The Hon'ble Justice V.Parthiban (Retd.,), Former Judge of Madras High Court No.5069, Z Block, 12th Street, Anna Nagar (West), Chennai – 600 040.
[Ph: 26280804, 26214850, Mob: 9444094401].
2.The Director Tamil Nadu Mediation and Conciliation Centre cum – Ex Officio Member Madras High Court Arbitration Centre Madras High Court, Chennai – 600 104.
28/29 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.210 of 2022 M.SUNDAR. J., ds Arb O.P.(Com. Div.) No.210 of 2022 26.08.2022 29/29 https://www.mhc.tn.gov.in/judis