Filing A Complaint With An Unrelated Government Office Does Not Constitute A Notice Under Section 21 Of The A&C Act, 1996: Delhi High Court

The Single Bench of Justice Vibhu Bakhru held that though it is a trite law that all contentious disputes are to be addressed by the Arbitration Tribunal, however in cases where there was no doubt that the claims raised were barred by limitation, the Court would decline to appoint an arbitrator.

The respondent Rec Power Distribution Co. Ltd invited offers for development of a mobile application called "Garv". The petitioner Glocaledge Consultants Pvt Ltd was successful and the respondent awarded the contract to the petitioner. The respondent issued a Work Order to the petitioner to develop the mobile application.

Thereafter, the petitioner Glocaledge Consultants filed a petition before the Delhi High Court for appointment of an arbitrator and for reference of a dispute to Arbitration. The petitioner averred in the petition that the respondent Rec Power Distribution had not cleared the payments of the petitioner for the extra services provided by it in 2006 beyond the original scope of work under the Work Order.

The Counsel for the respondent Rec Power Distribution opposed the petition on the ground that the petitioner had not issued notice under Section 21 of the Arbitration and Conciliation Act, 1996 (A&C Act) invoking the Arbitration Clause to the respondent. The Counsel averred that the claim sought to be raised by the petitioner was also barred by limitation.

Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

The High Court noted that the two communications relied upon by the petitioner included a complaint lodged with the Department of Administrative Reforms and Public Grievance. The petitioner addressed the complaint to the Prime Minister's Office (PMO) requesting for release of the pending payments and for appointment of an arbitrator.

The Court observed that none of the two communications relied by the petitioner were addressed to the respondent.

The Court ruled that merely filing a complaint with an unrelated government office expressing one's grievance does not constitute a notice under Section 21 of the A&C Act.

The High Court held that under Section 21 of the A&C Act the arbitral proceedings would commence when a notice under Section 21 is received by the other party. Since, none of the communications relied upon by the petitioner were addressed to the respondent, the respondent could not be said to have received the same at the material time.

The Court added though it is a trite law that all contentious disputes are required to be addressed by the Arbitration Tribunal, however in cases where there was no vestige of doubt that the claims raised were barred by limitation, the Court would decline to appoint an arbitrator.

The Court ruled that the limited question to be addressed by it was whether it was ex facie clear that the claim made by the petitioner was barred by limitation. The Court noted that there was no communication acknowledging any payments due to the petitioner by the respondent, and that the petitioner had claimed that the respondent had denied the payments claimed by it and had not cleared the same since 2016. Therefore, the Court held that there was no scope to entertain even an iota of doubt that the petitioner's claim was barred by limitation.

The Court held that the petitioner had not issued a notice under Section 21 of the A&C Act and the petitioner's claim for payment of work done in 2016 was ex facie barred by limitation.

Therefore, the Court dismissed the petitioner Glocaledge Consultants's petition.

Case Title: Glocaledge Consultants Pvt Ltd versus Rec Power Distribution Company Limited

Citation: 2022 LiveLaw (Del) 285

Dated: 21.02.2022 (Delhi High Court)

Counsel for the Petitioner: Mr. Gaurav Prakash Pathak

Counsel for the Respondent: Mr. Anand Varma and Ms. Adyasha Nanda

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