The High Court of Calcutta, while allowing an application filed for the appointment of an Arbitrator in view of the absence of consensus between the parties, held that the outer limit of 180 days stipulated in the arbitration clause, if failed by the claimant, does not constitute a waiver or a deliberate relinquishment of the claim by the claimant. Moreover, the said outer limit of 180 days was not couched in negative language in the arbitration clause so as to make it mandatory.
Brief Facts:
A reference of the dispute was made to the General Manager of the respondent Railways. Initially, there was a delay on the part of the General Manager in deciding on the same, upon which a writ petition was preferred, in which direction was passed on to the General Manager to decide on the disputes and to pass a reasoned order. Accordingly, the General Manager (GM) took a decision on June 20, 2021. Thereafter, the petitioner issued a reminder on February 22, 2022, and invoked the arbitration clause by a notice under Section 21 of the Arbitration and Conciliation Act, 1996 dated June 22, 2022.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent submitted that the application is premature, the petitioner having not complied with Clause 63.1 of the GCC. He argued that even if the final claim was deemed to have been made by the petitioner, the invocation was made much after 180 days, which is the stipulated outer limit for making such claims; hence the respondents submitted that the application ought to be dismissed.
Observations of the court:
The court noted that the reference to arbitration in terms of the last limb of the said arbitration clause was dated June 22, 2022, which was much beyond the period of 180 days after the final decision of the General Manager. The petitioner, at different points of time, had reiterated its claims, and hence, it cannot be crystallized as to when the claim of the petitioner became “final”.
The Court observed that even if the invocation was beyond 180 days of the final claim, the position would not be such that the intention of the parties to refer disputes to arbitration would be frustrated. The outer limit of 180 days stipulated in the arbitration clause, if failed by the claimant, does not constitute a waiver or a deliberate relinquishment of the claim by the claimant. Moreover, the said outer limit of 180 days was not couched in negative language in the arbitration clause so as to make it mandatory, creating such a situation that if the same was not adhered to, the claim itself would be defeated altogether.
The Court said that no additional limitation than that provided in law can be construed or read into the arbitration clause simply because the claim, as per the arbitration clause, was to be made within 180 days. No negative sanction was provided in the contract between the parties, if the said outer limit was exceeded by the claimant, it cannot be said that the same was an absolute bar to the reference to arbitration.
The decision of the Court:
The Calcutta High Court, allowing the application, held that there is no ex-facie bar to the matter being referred to arbitration.
Case Title: The Incoda v The General Manager, Metro Railway & Anr.
Coram: Hon’ble Justice Sabyasachi Bhattacharyya
Case No.: AP/611/2022
Advocate for the Petitioner: Mr. Sanjib Kumar Mal
Advocate for the Respondent: Mr. Swatarup Banerjee
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