[Arbitration Act] Issue Of Limitation In Section 11 Petition Should Be Deferred To Arbitral Tribunal, Court May Address Only In Specific Circumstances: Delhi High Court
The Delhi High Court bench of Justice Prateek Jalan held that the court may address the issue of limitation during a petition under Section 11 of the Arbitration and Conciliation Act, 1996, but only under specific circumstances. It held that this occurs when the limitation bar is clearly evident from the petition and accompanying documents. At the preliminary stage, it held that the...
The Delhi High Court bench of Justice Prateek Jalan held that the court may address the issue of limitation during a petition under Section 11 of the Arbitration and Conciliation Act, 1996, but only under specific circumstances. It held that this occurs when the limitation bar is clearly evident from the petition and accompanying documents. At the preliminary stage, it held that the court's role is solely to establish the prima facie presence of an arbitration agreement.
Furthermore, it held that the final determination, including on limitation matters, is deferred to the arbitral tribunal, as agreed upon by the parties.
Brief Facts:
The matter pertained to an agreement which incorporated an arbitration clause (clause 13), stipulating that all disputes concerning the Agreement shall be resolved through arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996, with New Delhi designated as the place of arbitration.
Following the emergence of disputes between the parties, the Petitioner purportedly initiated arbitration proceedings via a notice. The responses were received from certain respondents, who contested the invocation on grounds of limitation. Thereafter, the Petitioner approached the Delhi High Court (“High Court”) and filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) for the appointment of a sole arbitrator.
Observations by the High Court:
The High Court noted that the Respondents raised a single objection that it was barred by limitation. The High Court held that the issue of limitation can be entertained by the Court during a petition under Section 11 of the Arbitration Act, but only in specific circumstances. It noted that the Court's purview at this juncture is to ascertain the prima facie existence of an arbitration agreement, leaving the final determination, including on matters of limitation, to the arbitral tribunal, as the designated forum chosen by the parties. In instances where doubt arises, the default course is to defer to the arbitral tribunal for conclusive resolution. (referred to Vidya Drolia v. Durga Trading Corpn. [(2021) 2 SCC 1] and BSNL vs. Nortel Networks (India) (P) Ltd. [(2021) 5 SCC 738])
The High Court referred to the documentation presented which indicated the prima facie existence of an arbitration clause within the Agreement. Notably, it noted that the Respondents neither contested the existence of the arbitration agreement nor raised any objections to its validity in their responses to the petition.
The High Court noted that there existed a degree of controversy regarding the authenticity of the invocation and the precise date of its initiation, it was appropriate to reserve these matters for final determination by the arbitral tribunal.
Consequently, the High Court referred the dispute to arbitration under the auspices of the Delhi International Arbitration Centre (DIAC) and held that it shall. be governed by the Rules of DIAC, including provisions concerning the remuneration of the appointed arbitrator. DIAC was instructed to nominate an arbitrator from its panel and said the arbitrator was requested to provide a declaration under Section 12 of the Arbitration Act before commencing the reference.
Case Title: M/S Kimaya Buildtech Llp Vs K. C. Software Pvt. Ltd & Ors.
Case Number: ARB.P. 691/2023
Advocate for the Petitioner: Mr. Mohit Nandwani, Advocate.
Advocate for the Respondent: Mr. Anshu Mahajan, Advocate for R-1, 6 & 11. Ms. Mamta Wadhwa, Advocate for R-2, 9 and 10. Mr. Arunabh Banerjee, Mr. Debashish Bhawmik, Advocates for R-4 and 12.
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