Party Nominating Arbitrator In Response To Notice U/S 21 Of Arbitration Act Is Prohibited From Raising Plea Of Limitation In Petition U/S 11: Madras HC
Mohd Malik Chauhan
25 March 2025 11:50 AM
The Madras High Court bench of Justice Abdul Quddhose has held that once a party nominates an arbitrator in response to a notice issued under Section 21 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), it cannot later argue in a petition under Section 11 of the Act that the claim for which the notice was issued is time-barred.
Brief Facts:
The petition has been filed under section 11 of the Arbitration Act seeking the appointment of an Arbitrator.
A dispute has been raised by the petitioner against the respondent, which arises out of the water supply agreement dated 25.07.2013 and another agreement dated 01.10.2014.
As per the agreement dated 25.07.2013, has to supply desalinized water to the respondent. According to the petitioner, the respondent has committed a breach of the contract. According to the petitioner, certain sums of money are due and payable by the respondent arising out of the terms and conditions of the agreement dated 25.07.2013, which contains an arbitration clause.
Contentions:
The Respondent submitted that the claim of the petitioner is hopelessly barred by law of limitation, since the contract dated 25.07.2013 got expired on 31.12.2015 itself, but, arbitration was initiated by the petitioner only in the year 2024.
It was also argued that the Arbitration invocation notice dated 10.09.2024 issued by the petitioner, prior to the filing of this petition under Section 11 of the Act, does not pertain to the contract dated 25.07.2013, but, it pertains to other contracts only including the contract dated 01.10.2014.
Per contra, the Petitioner while disputing the contention of the Respondent submitted that the reference made in the arbitration invocation notice dated 10.09.2024, which refers to the contract dated 25.07.2013 as well.
Observations:
The court observed that while deciding a petition filed under Section 11 of the Arbitration Act, the law is now well settled that the referral court will have to look only into the prima-facie existence of the arbitration clause and once the court is satisfied that there exists an arbitration clause, necessarily, the court will have to refer the dispute to arbitration.
It said that in the present case, there exists an arbitration clause in the contract dated 25.07.2013, out of which, the petitioner has raised a dispute against the respondent.
The court observed that the Respondent, having appointed an Arbitrator in response to the Petitioner's notice under Section 21 of the Arbitration Act, cannot now argue that the Petitioner's claim is time-barred.
The court held that the notice sent by the petitioner on 10 September 2024 referenced the contract dated 25 July 2013, which is the subject matter of the dispute. Therefore, the petitioner satisfied the requirements of Section 21 of the Arbitration Act, which is sufficient for deciding the petition under Section 11 of the Arbitration Act.
It further added that in the present case, the petitioner invoked arbitration in accordance with the arbitration clause by issuing the arbitral referral notice to the respondent on 10.09.2024. Therefore, the 3 years' limitation period commences only from 10.09.2024 for the purpose of filing this petition under Section 11 of the Arbitration Act.
The court concluded that admittedly, this petition has been filed within the 3 years' period from 10.09.2024, being the date of the arbitration invocation notice issued by the petitioner. Therefore, it was held that this petition is filed within the period of limitation, and is in accordance with the decision relied upon by the learned counsel for the petitioner in SBI General Insurance Co. Ltd. Vs. Krish Spinning (2024).
Accordingly, the present petition was allowed and the Arbitrator was appointed.
Case Title: South Ganga Waters Technologies (P) Ltd., Rep. By its Authorized Signatory Mr.Vijay Ramesh, Chennai vs Vedanta Limited
Citation: 2025 LiveLaw (Mad) 118
Case No: Arb.OP.(comdiv) No.19 of 2025
Judgment Date: 26/02/2025
For Petitioner : Mr.Anirudh Krishnan
For Respondent : Mr.Rahul Balaji