Section 11 Petition Can Be Filed Only After Failure Of Parties To Appoint Arbitrator Within 30 Days Of Notice, Limitation Act Applies: Delhi High Court

Brief Facts:

The dispute pertained to an agreement between Information TV Private Limited (“Petitioner”) and Jitendra Dahyabhai Patel (“Respondent”) regarding the operation of a television channel named 'India News Gujarat' and the investment of approximately Rs. 14 crores by the Respondent into a newly incorporated company. In response to the disputes arising from the MoU, the Petitioner invoked Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) before the Delhi High Court (“High Court”) and obtained an order on 6th April 2021, restraining the Respondent from interfering with the Petitioner's operations or claiming any rights under the MoU. Thereafter, the Petitioner approached the High Court and filed an application under Section 11(6) of the Arbitration Act seeking the appointment of an arbitrator in terms of Clause 6 in Sept 2023.

The Respondent, however, contended that the Petitioner's delay in invoking arbitration was barred under Section 9(2) of the Arbitration Act. It further argued that despite expressing willingness to discuss the appointment of a sole arbitrator, the Petitioner failed to make progress within the time limit prescribed by Section 9(2) of the Arbitration Act. Conversely, the Petitioner asserted that it initiated arbitration proceedings within the stipulated time frame, issuing a notice invoking arbitration under Section 21 on 17th March 2021. Additionally, the Petitioner contended that no response was received from the Respondent regarding the suggested arbitrator names.

Observations by the High Court:

The High Court referred to the decision of the Supreme Court in Sundaram Finance Ltd. v. Abdul Samad [AIR 2018 SC 965] and noted that by filing an application under Section 9, a party implicitly acknowledges the existence of a final and binding arbitration agreement and the presence of a dispute that falls under the jurisdiction of the Arbitral Tribunal. It held that there are two pivotal components essential for the commencement of arbitral proceedings: firstly, the clear intention to resolve disputes through arbitration, and secondly, the adoption of effective measures to initiate such proceedings.

The High Court noted that since none of the articles in the Schedule to the Limitation Act, 1963 provide a specific period for applying for the appointment of an arbitrator under Section 11, such petitions are covered by the residual provision, Article 137 of the Limitation Act, 1963. The limitation for filing a petition under Section 11 arises upon the failure to appoint an arbitrator within 30 days from the issuance of the notice invoking arbitration. It held that a petition under Section 11 can only be filed after a notice of arbitration has been issued and there has been a failure to make the appointment of an arbitrator within the stipulated time frame.

The High Court held that the notice invoking arbitration was sent by the Petitioner on 15th March 2021, and the Respondent replied on 4th April 2021. Subsequently, a petition under Section 9 was filed on 21st November 2020, which was disposed of on 6th April 2021. The petition under Section 11(6) was filed on 25th September 2023. Given the timeline, it held that the petition was filed within three years of the notice invoking arbitration and the date of failure to appoint an arbitrator, thereby falling within the limitation period.

Consequently, the High Court allowed the petition and appointed Mr Sandeep Mahapatra as an arbitrator for the dispute.

Case Title: Information TV Private Limited vs Jitendra Dahyabhai Patel

Citation: 2024 LiveLaw (Del) 154

Case Number: ARB.P. 1143/2023

Advocate for the Petitioner: Siddharth Bambha, and Ms. Sucharu Garg

Advocate for the Respondent: Mr Aditya Ajaykumar Choksi and Mr Arpit Gupta

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