The Delhi High Court has held that raising grievance with an unrelated Govt Office doesn't constitute a Notice under Section 21 of the Arbitration and Conciliation Act, 1996.
The Single-Judge Bench of Justice Vibhu Bakhru was adjudicating upon a petition seeking referring of the dispute between the parties to Arbitration Tribunal and nomination of an Arbitrator.
The respondent- Rec Power Distribution had invited offers for “Mobile Application Development for progress monitoring of Projects across PAN India on Real Time Basis”. The petitioner was successful and the respondent awarded the contract for the aforesaid mobile application called “Garv” to the petitioner. The respondent issued a Work Order to which General Conditions of the Contract were applicable including an Arbitration Clause.
The petitioner averred that it had completed the work in accordance with the Work Order which was also appreciated by the respondent company and petitioner was paid the agreed consideration for the said work as well.
Later, the respondent sent an e-mail requesting for support in respect of a non-mobile application which was beyond the scope of work as agreed under Work Order. The petitioner executed the same and ₹56,58,006/- was billed on the respondent, out of which only ₹6,35,960/- was paid and thus the petitioner has claimed payment of the rest.
Learned Counsel for the Respondent opposed the present petition on two grounds:
-Non- issuance of the Notice under Section 21 of the A&C Act invoking the Arbitration Clause
-Claim sought to be raised is barred by limitation
The Court at the outset noted that the petitioner didn't send any Notice to to the respondent rather relied on two communications, e-mail and complaint lodged with the Department of Administrative Reforms and Public Grievance.
To this, the Court observed:
"None of the said two communications are addressed to the respondent. Thus, there is merit in the contention that the petitioner has not invoked the Arbitration Clause. Merely, filing of a complaint with an unrelated government office expressing one’s grievance does not constitute a notice under Section 21 of the A&C Act."
Moving on to the next ground, the Court dealt with legal question of whether the present petition can be rejected on the ground that the claims made by the petitioner are barred by limitation?
Referring to Bharat Sanchar Nigam Ltd. Vs. M/s. Nortel Networks India Pvt. Ltd., 2021 Latest Caselaw 137 SC, the Court noted that it is trite law that all contentious disputes are required to be addressed by the forum chosen by the parties – the Arbitration Tribunal. However, in cases where there is no vestige of doubt that the claims are barred by limitation, the Court would decline to appoint an arbitrator.
In the present case, there is admittedly no communication issued by the respondent acknowledging any liability for the amount as claimed by the petitioner, the Court stated.
The Learned Counsel for the petitioner has claimed that the petitioner had sent several communications seeking payment of the pending amount but the same are not on record and acknowledged by the respondent.
The limited question to be addressed is as to whether it is ex facie clear that the claim made by the petitioner is barred by limitation, the Court remarked and thus observed:
"Admittedly, there is no communication acknowledging any payments due to the petitioner. It is the petitioner’s case that the respondent had denied the payments as claimed by it and had not cleared the same since 2016. In this view of the matter, there is no scope to entertain even an iota of doubt that the petitioner’s claim is barred by limitation."
Both the grounds were accepted and the Court rejected the petition on the ground that it had not issued a notice as required under Section 21 of the A&C Act and that the petitioner’s claim for payment of work done in 2016 are ex facie barred by limitation.
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