About Me

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

Sunday, March 2, 2014

Arbitration & conciliation Act - Time barred claim - sec.18 of Indian Limitation Act -No appointment of arbitrator be made - contract completed in the year 1995 - correspondent till 1996 - after that No correspondence for 3 years - correspondence in 2007 never saves limitation, application for appointment of Arbitrator in the year 2011 is totally barred by limitation - High court dismissed the application - before appointment of arbitrator , the court can decided the limitation aspect whether the claim is alive or dead = Ms. Sri Matha Manikeshawri Enterprises,represented by its Proprietor R.Srinath Reddy... Applicant The General Manager, South Central Railways, Rail Nilayam, Secunderabad and others... Respondents = 2014 (Feb.Part) judis.nic.in/judis_andhra/filename=10886

Arbitration & conciliation Act - Time barred claim - sec.18 of Indian Limitation Act -No appointment of arbitrator be made - contract completed in the year 1995 - correspondent till 1996 - after that No correspondence for 3 years - correspondence in 2007 never saves limitation, application for appointment of Arbitrator in the year 2011 is totally  barred by limitation - High court dismissed the application - before appointment of arbitrator , the court can decided the limitation aspect whether the claim is alive or dead =
This is an application for appointment of an arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996 to adjudicate the disputes arising
between the parties.
In this matter, there is no dispute as to the existence, validity and legality
of the arbitration agreement.  Only dispute, as raised by the respondents, is
that the claim has become a dead one. =
whether the present application has been made within a period of
three years from the date of last refusal to refer the matter to the arbitrator.
It appears that the execution of the contractual work was completed in
the year 1995 and the claim remains alive till 27th September, 1996.  This fact
has been deduced from the statement made by the applicant in its affidavit in
reply.  From 27th September, 1996, there has been no action on the part of the
applicant, rather there has been correspondence from the respondent dated 2nd
July 2007 and this correspondence does not appear to be a letter or document
which constitutes promise to pay under Section 25 (3) of the Indian Contract
Act, 1872.  Therefore, the claim, if any, as agitated by the applicant before
me, was alive till 27th September 1999 and, as such, this application should
have been made by 27th September 1999.  However, no action was taken.  
Subsequent letters and correspondence do not make the claim alive, as the same 
cannot constitute jural relationship after the expiry of period of limitation.

"18.Effect of acknowledgment in writing:--(1) Where, before the expiration of
the prescribed period for a suit or application in respect of any property or
right, an acknowledgment of liability in respect of such property or right has
been made in writing signed by the party against whom such property or right is
claimed, or by any person through whom he derives his title or liability, a
fresh period of limitation shall be computed from time when the acknowledgment
was so signed. 
(2) Where the writing containing the acknowledgment is undated, oral evidence
may be given of the time when it was signed; but subject to the provisions of
the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall
not be received."

It will be clear that, in order to have an acknowledgment in writing, this must
be done within the period of limitation and, after the period of limitation,
there will be no effect of acknowledgment.  
This is one of the factors for existence of the patently dead claim. 
Following the aforesaid Supreme Court
judgment and without further deliberations, I can safely hold that the claim has
become a dead one and there is no need to refer a dead claim for adjudication,
for which the learned arbitrator cannot take up the task of adjudicating a
closed chapter.
 Accordingly, the Arbitration Application is dismissed.  No order as to costs.
2014 (Feb.Part) judis.nic.in/judis_andhra/filename=10886
THE HONOURABLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA              
ARBITRATION APPLICATION No.101 of 2013    

07-02-2014

Ms. Sri Matha Manikeshawri Enterprises,represented by its Proprietor R.Srinath
Reddy...  Applicant            

The General Manager, South Central Railways, Rail Nilayam, Secunderabad and
others... Respondents                          

!COUNSEL FOR APPLICANT: Ms.Keerthi Prabhakar      

COUNSEL FOR RESPONDENT NOs.1 to 3: M/s.C.V.Vinitha Reddy        

<GIST:

>HEAD NOTE:  

?CITATIONS:

1.(1988) 2 Supreme Court Cases 338
2.(2013) 7 Supreme Court Cases 562
3.(2005) 8 SCC 618
4.(2011) 3 SCC 507

HON'BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA          
ARBITRATION APPLICATION NO.101 of 2013    

ORDER:
This is an application for appointment of an arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996 to adjudicate the disputes arising
between the parties.
In this matter, there is no dispute as to the existence, validity and legality
of the arbitration agreement.  Only dispute, as raised by the respondents, is
that the claim has become a dead one. 
Learned Counsel for the applicant submits that for the purpose of entertaining
this application the period of limitation is to be reckoned from the date of
refusal to refer the dispute.  According to him, after making several demands
and requests, the refusal came only on 20th January 2009 stating that the
dispute is not required to be referred to the arbitrator under the arbitration
mechanism as the claim has become barred.  He says that the period of limitation
under the provisions of Article 137 of the Limitation Act, 1963 will be computed
from 20th January 2009, and this application has been made perfectly within the
time as above.  He further argues that the question of limitation with regard to
the merit of the case should not be looked into at this stage on this
application.  Besides, he says, number of documents having been exchanged  
between the parties and it will appear therefrom that that there has been lawful
acknowledgment of debts and the applicant in support of his contention submits
that the Courts will not look into the question of limitation with regard to the
merit of the claim and it is the domain of the learned arbitrator.  He relied on
the decision of the Hon'ble Supreme Court in the case of Major (Retd) Inder
Singh Rekhi Vs. Delhi Development Authority1 and also the decision in the case
of Schlumberger Asia Services Limited Vs. Oil and Natural Gas Corporation
Limited2.
Learned Counsel for the respondents, on the other hand, showing the statement in
the affidavit in reply itself, contends that the execution of the contractual
work was completed in 1995 and since then there has been correspondence till
1996 and last correspondence took place on 27th September, 1996 and thereafter 
there was no correspondence in order to save the period of limitation.  
On 2nd
July, 2007, there has been correspondence and this correspondence was made after 
the expiry of the period of limitation and by that time, the claim itself has
become time barred.
He contends that if the Court finds that the claim is
patently barred by limitation for which no effort is required to find out, the
matter shall not be referred to the arbitrator for the learned arbitrator has to
decide live claim, not a dead one and, therefore, this application should be
rejected.
I have heard the learned Counsel for the parties.  The first question to be
decided is whether the present application has been made within a period of
three years from the date of last refusal to refer the matter to the arbitrator.
It appears that the application has been made in 2011 and the respondent replied
the letter by which the claim of arbitration was refuted on 20th January, 2009.
Hence, the application has been made within the period of limitation under
Article 137 of the Limitation Act, 1963 as has been ruled by the judgment of the
Supreme Court in the case of Inder Singh Rekhi.
 In this case, the claim has
been rejected in 2009 contending that the claim has become barred.
Now, coming to the next question whether I should decide the question of
limitation on the merits of the case while entertaining this application.   The
Constitution Bench of the Supreme Court in the case of SBP & Company Vs. Patel  
Engineering3 held that "the Chief Justice or the designated Judge can also
decide whether the claim was a dead one or a long-barred claim." However, the
observations made in the decision of the Constitution Bench were explained by
the Supreme Court in Indian Oil Corporation Ltd Vs. SPS Engineering Limited4
that the Chief Justice or the designated Judge can also decide whether the claim
was a dead one or a long-barred claim.  Meaning thereby, it is not imperative
for the Chief Justice or his designate to decide the questions at the threshold
and it can be left to be decided by the Arbitral Tribunal.  The observations of
the Supreme Court in the case of SBP and Company also make it clear as follows: 
"When it is said that the Chief Justice or his designate may choose to decide
whether the claim is a dead claim, it is implied that he will do so only when
the claim is evidently and patently a long time-barred claim and there is no
need for any detailed consideration of evidence."

Thus, it is clear that, in a fit case, the Chief Justice or his designate can
decide whether the claim is a dead one or not before passing the order of
reference.  While bearing in mind this legal principle, I examine the matter on
hand.  It appears that the execution of the contractual work was completed in
the year 1995 and the claim remains alive till 27th September, 1996.  This fact
has been deduced from the statement made by the applicant in its affidavit in
reply.  From 27th September, 1996, there has been no action on the part of the
applicant, rather there has been correspondence from the respondent dated 2nd
July 2007 and this correspondence does not appear to be a letter or document
which constitutes promise to pay under Section 25 (3) of the Indian Contract
Act, 1872.  Therefore, the claim, if any, as agitated by the applicant before
me, was alive till 27th September 1999 and, as such, this application should
have been made by 27th September 1999.  However, no action was taken.  
Subsequent letters and correspondence do not make the claim alive, as the same 
cannot constitute jural relationship after the expiry of period of limitation.
In this context, I quote Section 18 of the Limitation Act, 1963 as under:
"18.Effect of acknowledgment in writing:--(1) Where, before the expiration of
the prescribed period for a suit or application in respect of any property or
right, an acknowledgment of liability in respect of such property or right has
been made in writing signed by the party against whom such property or right is
claimed, or by any person through whom he derives his title or liability, a
fresh period of limitation shall be computed from time when the acknowledgment
was so signed. 
(2) Where the writing containing the acknowledgment is undated, oral evidence
may be given of the time when it was signed; but subject to the provisions of
the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall
not be received."

It will be clear that, in order to have an acknowledgment in writing, this must
be done within the period of limitation and, after the period of limitation,
there will be no effect of acknowledgment.  This is one of the factors for
existence of the patently dead claim. Following the aforesaid Supreme Court
judgment and without further deliberations, I can safely hold that the claim has
become a dead one and there is no need to refer a dead claim for adjudication,
for which the learned arbitrator cannot take up the task of adjudicating a
closed chapter.
 Accordingly, the Arbitration Application is dismissed.  No order as to costs.
 __________________  
K.J. SENGUPTA, CJ  
07-02-2014

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.