Arbitration Act | Court Should Refrain From Delving Into Hyper-Technical Aspects Of Arbitration Agreement At Section 11(6) Stage: Delhi High Court

Brief Facts:

The Petitioner entered into two Barter Agreements for advertisement space. According to the first agreement, the Respondent agreed to provide property equivalent to the value of the advertising space. The Petitioner published advertisements worth Rs. 69,93,821/- between July 2012 and March 2013. Similarly, under the second agreement, advertisements worth Rs. 1,51,84,500/- were published between July 2013 and December 2015.

The Petitioner contended that disputes arose as the Respondent failed to fulfill obligations outlined in the agreements. The Petitioner initiated arbitration through a notice, which the Respondent countered by claiming the Petitioner's demand was time-barred under the agreements' thirty-day limitation period for seeking legal recourse after non-compliance. Moreover, the Respondent contested the validity of the Petitioner's arbitrator nominee. The Respondent further argued that the Petitioner's claim was time-barred, with limitations expiring in 2017 and 2018 for the respective agreements. The Petitioner approached the Delhi High Court (“High Court”) and filed an application under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), seeking the appointment of a sole arbitrator to resolve disputes between the parties.

In response, the Petitioner rebutted the Respondent's time-barred claim by asserting that discussions between the parties persisted beyond the limitation periods and disputes arose only after the Respondent contested the amount claimed. The Petitioner argued that the court's role, in referring the matter to arbitration, does not extend to determining issues of limitation/.

Observations by the High Court:

The High Court noted that under Section 11 of the Arbitration Act the courts' role is limited to determining the existence of an arbitration agreement and arbitrable disputes between the parties. It held that the claims which are patently barred by limitation should not be referred to arbitration, as doing so would be futile and against the parties' interests. However, it held that limitation of a claim is a mixed question of fact and law which needs to decided by the arbitral tribunal.

The High Court referred to the case of Bharat Sanchar Nigam Ltd. & Anr. v. M/S Nortel Networks India Pvt. Ltd. (2021) 2 SCR 644, and held that there is a distinction between jurisdictional and admissibility issues concerning limitation. It held that issues regarding the existence, scope, and validity of the arbitration agreement are jurisdictional and the matters of limitation primarily concern the admissibility of the claim fall within the arbitral tribunal's purview.

Consequently, the High Court held that the matter should be referred to arbitration and appointed Mr. S. P. Garg, a former judge of the Delhi High Court, as the Sole Arbitrator.

Case Title: T.V. Today Network Ltd Vs Home And Soul Pvt. Ltd.

Citation: 2024 LiveLaw (Del) 443

Case Number: ARB.P. 657/2023, I.A. 12180/2023

Advocate for the Petitioner: Mr. Sharukh Ejaz, Mr. Nilotpal Bansal, Mr. Farheen Penwale, Advs.

Advocate for the Respondent: Mr. Alok K. Aggarwal, Ms. Anushka Sharma, Mr. Raj Duggal, Advs

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