Bombay High Court
P.N. Gawande Ginning Pressing And Oil ... vs The Maha. State Co-Operative Cotton ... on 6 January, 2026
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
MISC. CIVIL APPLICATION (ARBITRATION) No. 591/2025
P.N. Gawande Ginning, Pressing & Oil : APPLICANT
Mill Pvt. Ltd., Through its Director
Subash Gawande,
Aged about 65 years, Occ. Business,
R/o Plot No. 47, Kothari Layout,
Kachimet, Amravati Road,
Nagpur 440033
Vs.
1. The Maharashtra State Co-operative : RESPONDENTS
Cotton Grower's Marketing Federation
Ltd. Through The Managing Director,
Head Office at Cotton Complex
Building, Ajni Chowk, Wardha Road,
Nagpur-15 Administrative Office at
201, Jolly Bhavan-2, Vitthaldas
Thakerasey Marg, New Marine Lines,
Church Gate, Mumbai
2. The Zonal Manager, The Maharashtra
State Co-operative Cotton Grower's
Marketing Federation Ltd. Cotton
Complex Building, Ajni Chowk, Wardha
Road, Nagpur, Pin - 440015
Mr. A.G. Joshi with Mr. Ram D. Heda & Mr. Vaiman Chatap, Counsel
for Applicant,
Mr. M.V. Samarth, Senior Counsel a/b. Mr. A.S. Ponkshe, Counsel for
Respondent Nos.1 and 2
CORAM : NIVEDITA P. MEHTA, J.
Date of reserving the order : 22.12.2025
Date of pronouncing the order : 06-01-2026
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P.C. :
The applicant has filed the present application under Section
11(6) of the Arbitration and Conciliation Act, 1996 (In short, "the
Act of 1996"), seeking appointment of sole Arbitrator in terms of
clause 15 of the agreement dated 13.01.2020. Clause 15 of the said
agreement reads thus:
"15. In case of any dispute or difference arising out of or
in relation to this agreement the same will be referred to
arbitration of sole Arbitrator (other than an employee of
the MAHACOT) to be appointed by the Managing Director
of the MAHACOT and whose decision shall be final and
binding upon the parties hereto. The arbitration will be
governed by the provisions of the Arbitration &
Conciliation Act, 1996."
2. The facts of the case succinctly is that the applicant is the
owner of the cotton ginning and pressing factory and the respondent
No.1 is the body registered under the Maharashtra Co-operative
Societies Act, 1960 (in short, the Act of 1960). The establishment of
the respondent No.1 was to implement the Cotton Monopoly
Scheme and is involved in procurement, processing, storage and sale
of cotton under the scheme which is guided by the policies of the
State Government. The respondent No.2 is the Zonal Manager of
the respondent No.1 Society. The applicant and the respondents had
entered into the agreement dated 13.01.2020, wherein the applicant
offered the work of ginning and pressing of the cotton for the
respondents during cotton year 2019-20 on job basis. The said offer
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was accepted by the respondents on certain terms and conditions as
mentioned in the agreement.
3. The respondents vide notice dated 25.02.2021, informed the
applicant about deductions from the amount payable by the
respondents to the applicant due to the losses suffered by the
respondents. The applicant vide letter/email dated 01.03.2021
approached the respondent No.2 stating that no such loss was
incurred at the applicant's ginning factory and that the respondents
had not communicated any details regarding such alleged loss and
requested to release the payment of Rs.21,84,073/-. The applicant
vide letter dated 03.04.2021 has categorically acknowledged the
receipt of payment of Rs.10,12,993/- and requested the
respondents to release the remaining amount. The respondent No.2
vide communication dated 15.04.2021 had clearly informed the
applicant that as per the calculation, the security deposit of Rs.
10,12,993/- has been refunded.
4. The applicant has preferred the present application
contending that, in the absence of transparency and proper
documentation, the respondents unilaterally deducted amounts
legitimately payable to the applicant. The applicant reiterated its
demand on 02.06.2022; however, the same elicited no response.
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Despite repeated representations, the respondents failed to address
the grievance. Consequently, the applicant was constrained to issue
a notice dated 05.03.2025 invoking arbitration in terms of Clauses
15 and 16 of Part 'E' of the agreement dated 13.01.2020. As no
arbitrator was appointed in pursuance thereof, the present
application seeking appointment of an arbitrator has been filed by
the applicant.
5. Heard the learned Counsel Mr. A.G. Joshi for the applicant
and Mr. M.V. Samarth, learned Senior Counsel for the non-
applicants.
6. SUBMISSIONS ON BEHALF OF THE APPLICANT:
6.1. Mr. A.G. Joshi, learned Counsel appearing for the applicant,
submitted that the deductions made by the respondents were
arbitrary, illegal, and unsupported by any documentary material. It
was contended that the notices issued by the respondents were not
accompanied by any panchanama, laboratory reports, or other
evidence to establish the alleged losses.
6.2. It was further submitted that the deductions were effected in
violation of the principles of natural justice, without granting the
applicant any opportunity of hearing or inspection. According to the
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learned Counsel, the communication regarding recovery was issued
nearly two years after the cotton season 2019-20, whereas any
laboratory testing or trial reports ought to have been promptly
disclosed to the applicant.
6.3. The learned Counsel further submitted that the applicant, by
letter dated 26.04.2021, specifically sought lot-wise details and
laboratory test reports relating to the deductions, but no such
information was furnished. Despite repeated requests, the
respondents failed to supply laboratory reports or permit inspection
of samples, thereby depriving the applicant of an opportunity to
verify or challenge the deductions.
6.4. Learned Counsel appearing for the applicant argues that the
respondents, without disclosing any basis or maintaining proper
records, effected unilateral deductions from the amounts due to the
applicant. It is urged that the applicant raised objections and
renewed its claim on 02.06.2022, but the respondents remained
unresponsive. Despite several follow-ups, no clarification or
resolution was forthcoming. Learned Counsel submits that, left with
no alternative, the applicant issued a notice dated 05.03.2025
invoking the arbitration mechanism provided under Clauses 15 and
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16 of Part 'E' of the agreement dated 13.01.2020. As the
respondents failed to act upon the said notice, the applicant has
approached this Court seeking appointment of an arbitrator.
6.5. Learned Counsel for the applicant placed reliance on the
following decisions to contend that the scope of jurisdiction under
Section 11 of the Act is confined to examining the existence of an
arbitration agreement and that issues such as limitation fall within
the domain of the arbitral tribunal:
(i) M/s. B AND T AG v. Ministry of Defence, (2024) 5 SCC
358;
(ii) M/s. Arif Azim Co. Ltd. v. Aptech Ltd., Arbitration Petition
No. 29 of 2023;
(iii) M/s. Andhra Pradesh Power Generation Corporation Ltd. v.
M/s. TECPRO Systems Ltd. & Ors., SLP (C) No. 8998 of
2023.
7. SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
7.1. Per contra, Mr. M.V. Samarth, learned Senior Counsel
appearing for the respondents, submitted that the present
application is barred by limitation. It was contended that the cause
of action arose on 15.04.2021, when deductions were
communicated and payment of Rs.10,12,993/- was made as full and
final settlement.
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7.2. Learned Senior Counsel submitted that the applicant invoked
arbitration only on 05.03.2025, i.e., after a lapse of more than three
years and eleven months, which is beyond the period of limitation
prescribed under Article 137 of the Limitation Act, 1963. According
to him, the claim is ex facie time-barred and amounts to a dead
claim.
7.3. It was further submitted that subsequent correspondence or
negotiations do not extend or postpone the limitation period.
Reliance was placed on the judgments of the Hon'ble Supreme Court
in B & T AG v. Ministry of Defence, (2024) 5 SCC 358, and
Secunderabad Cantonment Board v. B. Ramachandraiah & Sons,
(2021) 5 SCC 705, to contend that Article 137 applies to arbitration
proceedings and that mere exchange of letters or reminders does not
save limitation.
CONSIDERATION, REASONS AND FINDINGS
8. I have heard the learned Counsel for the applicant and
learned Senior Counsel for the respondents at length and have
carefully perused the material placed on record.
9. At the outset, it is required to be noted that the existence of
the arbitration agreement contained in Clause 15 of the agreement
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dated 13.01.2020 is not in dispute. The said clause clearly provides
for reference of disputes arising out of or in relation to the
agreement to arbitration. Thus, the foundational requirement for
exercise of jurisdiction under Section 11(6) of the Act of 1996
stands satisfied.
10. The principal objection raised by the respondents is with
regard to limitation, contending that the claim sought to be referred
to arbitration is barred under Article 137 of the Limitation Act,
1963, as the cause of action allegedly arose on 15.04.2021 and the
notice invoking arbitration was issued on 05.03.2025.
11. The scope of examination by a referral court under Section 11
of the Act of 1996 is no longer res-integra. Post the insertion of
Section 11(6A) and the authoritative pronouncements of the
Hon'ble Supreme Court, the jurisdiction of the Court at this stage is
confined to a prima facie examination of the existence of an
arbitration agreement, leaving all contentious and disputed issues to
be decided by the arbitral tribunal.
12. In M/s. B & T AG v. Ministry of Defence, (2024) 5 SCC 358,
the Hon'ble Supreme Court has categorically held that the referral
court should not enter into a detailed examination of disputed
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questions of fact or law, including limitation, unless the claim is ex
facie and manifestly time-barred, leaving no room for doubt.
13. The Hon'ble Supreme Court has further reiterated the
principle of kompetenz-kompetenz, embodied in Section 16 of the
Act of 1996, which mandates that the arbitral tribunal is competent
to rule on its own jurisdiction, including objections with respect to
limitation, accord and satisfaction, or the existence of a concluded
contract.
14. In Arif Azim Co. Ltd. v. Aptech Ltd., Arbitration Petition No.
29 of 2023, the Hon'ble Supreme Court held that the court at the
Section 11 stage cannot undertake a mini-trial or evaluate the merits
of rival claims and defences. Similarly, in M/s. Andhra Pradesh
Power Generation Corporation Ltd. v. M/s. TECPRO Systems Ltd.
& Ors., SLP (C) No. 8998 of 2023, it was held that limitation is a
mixed question of law and fact, ordinarily requiring evidence, and
therefore cannot be conclusively decided at the threshold.
15. In the present case, the applicant has specifically disputed the
finality of the alleged settlement communicated by the respondents
on 15.04.2021. The applicant has asserted that deductions were
effected unilaterally, without furnishing laboratory reports,
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panchanamas, or lot-wise details, and without affording an
opportunity to inspect samples or contest the alleged losses.
16. The applicant has further contended that repeated
representations seeking documents and clarification were ignored,
and that denial of such material vitiates the respondents' claim of
full and final settlement. Whether the communication dated
15.04.2021 constitutes a concluded settlement, whether the cause of
action crystallised on that date, and whether the claim is barred by
limitation are all matters which require adjudication on facts and
evidence.
17. The objection raised by the respondents, therefore, does not
fall within the narrow category of cases where the claim can be said
to be hopelessly barred on the face of the record. The limitation
issue raised herein is neither pure nor undisputed, but is intertwined
with factual controversies which cannot be resolved in proceedings
under Section 11 of the Act of 1996.
18. Though reliance has been placed by the respondents on
Secunderabad Cantonment Board v. B. Ramachandraiah & Sons,
(2021) 5 SCC 705, the said decision does not dilute the settled
principle that adjudication of limitation, where facts are disputed,
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lies within the province of the arbitral tribunal and not the referral
court.
19. It is pertinent to focus on the timeline in the present matter. It
is the case of the applicant that, on several occasions, the applicant
requested respondent No. 2 to supply the laboratory test reports by
way of letters and emails dated 27th April 2021, 5th May 2021, 17th
May 2021, 24th June 2021, and 2nd June 2022. The notice invoking
the arbitration clause was issued on 5th March 2025, i.e., prima facie
within time. It is apparent that from the last communication dated
2nd June 2022, the notice invoking the arbitration clause was issued
within three years, as prescribed under the law of limitation.
20. Therefore, the contention of the respondents that payment
was made to the applicant in the month of April 2021 and,
therefore, the claim raised for reference to arbitration in the present
application is beyond the period of limitation, cannot be accepted, at
least prima facie. It is not at all the case of the respondents that
suddenly, after April 2021, the applicant woke up from deep
slumber and filed the present proceedings.
21. It is not in dispute that a mere exchange of letters or
communications does not extend the period of limitation. However,
in the present context, the authority cited by the respondents in
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And T AG (supra) would not come to their rescue, as the facts of
that case were totally different. In the present case, the applicant
had been continuously raising disputes with respect to the
laboratory test reports and was consistently demanding the same. As
the said reports were not provided even after the last
communication dated June 2022, the applicant issued a notice
invoking the arbitration clause within a period of three years
thereafter.
22. So also, the authority cited in B. Ramchandraya and Sons
(supra) deals with the issue of whether an application for
appointment of an arbitrator is time-barred or not. In the present
case, the notice invoking the arbitration clause was issued on 5 th
March 2025, and the present application for appointment of an
arbitrator was filed on 14th August 2025, that is to say, within a
period of one year from the date of issuance of the notice invoking
the arbitration clause. Therefore, at least at the reference stage, it
cannot be said that the claim is absolutely barred by limitation.
23. In view of the settled legal position and the binding
precedents of the Hon'ble Supreme Court, this Court is of the
considered opinion that the objection relating to limitation does not
warrant rejection of the present application at the threshold.
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24. Once the existence of an arbitration agreement is established
and the disputes raised are arbitrable in nature, this Court is obliged
to refer the parties to arbitration, leaving all issues on merits,
including limitation, accord and satisfaction, and validity of
deductions, to be decided by the arbitral tribunal.
CONCLUSION:
25. For the reasons aforesaid, this Court holds that; here exists a
valid arbitration agreement between the parties; the disputes raised
fall within the scope of the arbitration clause; the objection
regarding limitation involves disputed questions of fact and law and
cannot be conclusively determined at this stage and this Court find it
fit to appoint an arbitrator for resolution of disputes raised by the
applicant. The application, therefore, deserves to be allowed. Hence,
I proceed to pass following order.
ORDER
The application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is allowed.
List the matter for further consideration on 12-01-2026.
(NIVEDITA P. MEHTA, J.) MP Deshpande Signed by: Mr. M.P. Deshpande Designation: PA To Honourable Judge Date: 06/01/2026 17:28:27