Annual Arbitration Review 2018

Golden Chariot Recreations v Mukesh Panika & Anr.

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 Judgment: Golden Chariot Recreations v Mukesh Panika & Anr.

 

Citation: 2018 SCC OnLine Del 10050

 

Court: Delhi High Court

 

Coram: Vibhu Bakhru.

 

Date: July 23, 2018

 

Overview: Delhi HC held that limitation period for filing application for appointment of arbitrator under Section 11 cannot be extended by issuing a second/fresh notice invoking arbitration.

 

Issue: Whether the Section 11 Petition dated 12 February 2018, which is admittedly beyond the period of three years from the First Notice, is barred by limitation?

 

Factual Background:

Golden Chariot (“Petitioner”) in the matter relied on an arbitration clause as contained in the Supplementary Deed of Partnership dated 9 July 2012. Since certain disputes had arisen between the parties on 29 September 2014, the Petitioner had filed a Section 9 application. Thereafter, the Petitioner also issued a notice dated 14 November 2014 (“First Notice”) invoking the arbitration clause. Mukesh Panika (“Respondent”) responded to the First Notice by a letter dated 22 December 2014. (“Reply to First Notice”).

 

The Petitioner claimed that the said response was handed over in Court on 5 February 2015. On the said date, this Court disposed of the Section 9 Petition. On 10 October 2017, the Petitioner sent another notice invoking the arbitration clause under the subject agreement (“Second Notice”). The respondents sent a reply to the aforesaid notice on 6 November 2017, wherein it was asserted that the respondents had never executed the documents referred to by the Petitioner, including the subject agreement.

 

On 4 January 2018, the Petitioner filed another petition under Section 9 of the Act. Thereafter, the Petitioner filed the petition dated 12 February 2018 under Section 11 of the Act, praying for the appointment of an arbitrator (“Section 11 Petition”).

 

Analysis:

 

The Court found that the right to sue had accrued in favour of the Petitioner in 2014 and, in any event, with the Petitioner invoking the arbitration clause by the First Notice. However, the Petitioner did not take any steps for constitution of the arbitral tribunal. The Petitioner made a similar allegation in the Second Notice to the effect that Respondent is attempting to dilute the assets of the subject firm being the immovable properties in question.

 

The Petitioner argued that since it had received the Reply to First Notice on 5 February 2015, the cause of action had arisen on the said date. Since the Petitioner had issued the Second Notice on 10 October 2017, i.e., within a period of three years from that date, therefore, Section 11 Petition was not barred by limitation.

 

The Court then noted that Section 43(1) of the Act mandates that the Limitation Act, 1963 (“Limitation Act”) would apply to arbitration as it applies to the proceedings in Court.

 

The Court then referred to the observations in Prasar Bharti v. Maa Communication[1]where it had held that the limitation for filing an application under Section 11(4) would commence running only from the expiry of 30 days from the receipt of request mentioned in Section 11(4) (a) or (b) and the limitation for an application under Section 11(6) would commence running from the happening of contingencies mentioned in sub-clause (a) or (b) or (c) thereof.

 

Conclusion:

Court noted that the Petitioner had raised a dispute and had accordingly, invoked the arbitration clause and the respondents had denied the existence of arbitration agreement between the parties. The Court observed that disputes between parties were therefore crystallized at the stage of Reply to First Notice. It was open for the Petitioner to file an application for appointment of an arbitrator at that stage. However, the Section 11 Petition has been filed more than three years after this Court had disposed of the Section 9 Petition. In view of the above, the Court held that the Section 11 Petition was barred under the provisions of Limitation Actas it was required to be filed within a period of 3 years from the expiry of 30 days of First Notice.

[1]2010 (115) DRJ 438 (DB).

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