Madras High Court
Union Of India Rep. By The Controller Of ... vs Amco Traders on 3 October, 2019
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
O.P.No.548 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 03.10.2019
CORAM
THE HONOURABLE Mr.JUSTICE SENTHILKUMAR RAMAMOORTHY
O.P.No.548 of 2019
Union of India rep. by the Controller of Stores,
Southern Railway
Office of the Controller of stores,
Ayanavaram,
Chennai-600 023 ..Petitioner
Vs
AMCO Traders,
by its Proprietor,
No.12, Bonfied Lane,
Kolkata-700 001. .. Respondent
Original Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 praying to set aside and revise the Impugned
Award dated 28.04.2017 on the file of the Arbitrator and grant such
other or further orders that may deem fit just and proper and render
justice.
For Petitioner : Dr.S.R.Sundaram
For Respondent : Mr.K.Balaji
ORDER
This petition is filed to set aside the arbitral award dated 28.04.2017 (the Award).
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2. I heard the learned counsel for the petitioner and the learned counsel for the respondent.
3. The dispute lies within a narrow compass. The respondent supplied and transported materials for the petitioner under three Purchase Orders, as per the details set out in the purchase orders, namely 1] P.O. No.61/94/1502/1/60412/dated 12.10.1994, [ii] P.O.No.61/94/3213/60433 dated 26.10.1994 and [iii] P.O.No.61/94/3229/1/60664 dated 11.11.1994. It is the admitted position that the materials were supplied from time to time in 1994 and delivered on 24.01.1995 and 28.02.1995. The petitioner also made payments towards the cost of the materials that were supplied. Therefore, the dispute is confined to the non-payment of freight charges and interest thereon.
4. The learned counsel for the petitioner submitted that the claims are barred by limitation. In this connection, he pointed out that the purchase orders were admittedly issued in the year 1994 and the supplies were made admittedly in the year 1995. In these facts and 2/10 http://www.judis.nic.in O.P.No.548 of 2019 circumstances, he submitted that the arbitration proceedings that were initiated in May 2014 are clearly barred by limitation. According to the learned counsel for the petitioner, the Award is liable to be set aside on this ground because it is a patent illegality that goes to the root of the matter.
5. In reply, the learned counsel for the respondent submitted that the petitioner did not plead that the claims are barred by limitation before the Arbitral Tribunal. In specific, he submitted that the petitioner did not file the counter statement dated 31.10.2016, which is in the typed set of papers filed by the petitioner before the Arbitral Tribunal. Instead, only the counter statement dated 21.09.2015 was filed. He further pointed out that in the said counter statement, there is a vague pleading that the claim has been made after the lapse of almost 20 years with ulterior motives and not on any realistic grounds and that the claim is not fit for admission and should be dismissed. However, he submitted that no specific details were provided as to why the claim was barred by limitation. He, thereafter, referred to various communications in the typed set of papers filed by 3/10 http://www.judis.nic.in O.P.No.548 of 2019 the respondent in order to establish that the respondent followed up on the payment of freight charges on an on-going basis by sending various communications to the petitioner. He also pointed out that the petitioner, in its replies, pointed out that the relevant records are not traceable and that, therefore, the request for amendment of the mode of dispatch could not be processed. On receipt of such communication, the learned counsel submitted that the respondent continued to correspond with the petitioner, in this regard, and that the last of such communications was sent on 26.06.2008. He also pointed out that the learned Arbitrator considered all the documents and held on merits that the respondent clearly established that it is entitled to road transport charges. In order to substantiate his submission, the learned counsel referred to and relied upon the following judgments, which are set out along with the context and principle:
[1] Vimal G. Jain vs Vertex Financial Services Pvt. Ltd., 2007 (5) BCR 478, wherein, at paragraphs 8 and 9, the Division Bench of Bombay High Court held that a plea that the arbitral Tribunal does not have jurisdiction should be taken not later than the date of filing of the statement of defence. It was further held that limitation is a mixed 4/10 http://www.judis.nic.in O.P.No.548 of 2019 question of law and fact. Once it is clear that the point regarding the bar of limitation was never raised before the Arbitrator, it is deemed to have been waived and the question of entertaining such point in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act) cannot arise.
[2] M/s.Shree Ram Mills Ltd vs. M/s.Utility Premises (P) Ltd [2007) 4 SCC 599 (the Shree Ram Mills Case), wherein at paragraph-30, the Hon'ble Supreme Court held that as long as the dispute remains as a live issue, the clock of limitation does not start ticking.
[3] M/s.Narayan Prasad Lihia vs. Nikunj Kumar Lihia and Others [(2002) 3 SCC 572, wherein the Hon'ble Supreme Court held that if the plea of jurisdiction is not taken in time, there would be a deemed waiver under Section 4 of the Arbitration Act.
6.The records were examined and the oral submissions of both sides were considered carefully.
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7.The question that arises for consideration is whether the claims of the respondent are barred by limitation and, therefore, the award is liable to be set aside on the ground of patent illegality or violation of public policy.
8.The records disclose that the purchase orders were issued in the year 1994 and that the goods concerned were delivered in the year 1995. Therefore, ordinarily the period of limitation in respect of the claim for freight charges would commence from the date when the invoices claiming the freight charges became payable or from the date of delivery of the goods concerned. In this case, the learned counsel for the respondent submitted that the correspondence was carried on between the parties in respect of the payment of freight charges up to 26.06.2008 and that, therefore, the dispute remained a live dispute as per the judgment of the Hon'ble Supreme Court in the case of M/s.Shree Ram Mills case. Even if the said contention is accepted at face value, the limitation clock would start ticking from 26.06.2008 because admittedly there is no correspondence beyond that date. If the period of limitation is calculated from 26.06.2008, it would still be a maximum of three years from such date whether such limitation period 6/10 http://www.judis.nic.in O.P.No.548 of 2019 is calculated with reference to Article 18, Article 55 or Article 137 of the Limitation Act, 1963 (the Limitation Act). In this case, it is the admitted position as per the statement of the claim, at paragraph-20 thereof, that the respondent / claimant invoked the arbitration clause on 15th May, 2014. It is pertinent to note that the date of receipt of such communication is the date of commencement of arbitral proceedings as per Section 21 of the Arbitration Act. In other words, it is the date when the limitation clock stops. Even if the limitation period is calculated from the date of last communication from the respondent, i.e., 26.06.2008, and, if such limitation period is calculated up to the date of commencement of arbitration, namely, 15.05.2014, it is evident that the claims are barred by limitation. In this regard, the other contention of the learned counsel for the respondent is that the plea of limitation was not raised with particulars by the petitioner in the counter statement dated 21.09.2015. On perusal of the said counter statement, it appears that a plea has been made that “the claim has been made after the lapse of almost twenty years with ulterior motives and not on any realistic grounds. Hence, the claim is not fit for admission and may be dismissed.” 7/10 http://www.judis.nic.in O.P.No.548 of 2019
9. It is the settled position that the question of limitation is required to be considered by the Court or Arbitral Tribunal, even if the plea is not specifically raised as per Section 3 of the Limitation Act.
10. In my view, the plea made in the counter statement dated 21.09.2015 is sufficient for the purpose of considering and deciding the plea of limitation especially in the light of the documents on record which show that the purchase orders were of the year 1994, delivery was made in 1995 and the last communication is dated 26.06.2008. Therefore, the legal aspect of limitation should have been examined and decided by the Arbitral Tribunal.
11. The next question that arises is whether the Award is liable to to be set aside on this account. The learned arbitrator has not discussed the question of limitation or given a finding thereon in the Award. The Award, however, references documents relating to the supply of goods and some of the communications that were exchanged between the parties. The list of documents submitted by the claimant has been 8/10 http://www.judis.nic.in O.P.No.548 of 2019 set out in the Award both at pages 27 and 36 of the typed set of papers filed by the petitioner and the said list of documents evidence that the last letter is dated 26.06.2008. Therefore, it is in evident from the face of the award that it is in disregard of the law of limitation, which is made applicable to arbitration proceedings by virtue of Section 43 of the Arbitration Act. In view of the fact that this illegality is discernible on the face of the Award, it constitutes a patent illegality and warrants interference by this Court. Accordingly, the arbitral award dated 28.04.2017 is liable to be and is hereby set aside.
12.In the result, this original petition is allowed.
03.10.2019 kal 9/10 http://www.judis.nic.in O.P.No.548 of 2019 SENTHILKUMAR RAMAMOORTHY, J kal O.P.No.548 of 2019 03.10.2019 10/10 http://www.judis.nic.in