Calcutta High Court
M/S Manowar Mandal vs Simplex Infrastructures Limited on 8 October, 2024
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
OCD-20
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
(Commercial Division)
ORIGINAL SIDE
AP-COM/829/2024
M/S MANOWAR MANDAL
VS
SIMPLEX INFRASTRUCTURES LIMITED
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 8th October , 2024
Appearance:
Mr. Somnath Saha, Adv.
...for the petitioner
Mt. Ratul Das, Adv.
...for the respondent
The Court:- Learned counsel for the petitioner submits that the petitioner
having not received due payments for work done by the petitioner, a composite
dispute was raised and an invocation of the arbitration clause was made by the
petitioner. The respondent having not agreed to appointment of an Arbitrator,
the present application has been taken out.
Learned counsel for the petitioner takes the Court through the relevant
clauses of the work orders. Clause no. 24 of the work orders contains an
arbitration clause which provides that in the event of any difference or dispute
arising out of or in connection with the work order, the same shall be first
amicably settled by mutual dialogue, but if the parties fail to settle so, the matter
would be referred to arbitration. The learned counsel for the petitioner further
submits that the petitioner has been working as a sub-contractor under the
respondent for a particular project and running bills were raised.
It has been an ongoing project. However, from an order dated July 18,
2024, passed in a suit filed by the present respondent against the principal
employer that is the Principal Secretary, Housing Department, Government of
West Bengal, the petitioner learned that the project was sought to be foreclosed
by the present respondent and, as such, the petitioner became apprehensive as
to non-payment of its dues by the respondent, which gave rise to the cause of
action for the present invocation.
Learned counsel for the respondent seeks at the outset to use an affidavit-
in-opposition in order to controvert the pleadings made in the Section 11
application. It is submitted by learned counsel for the respondent that the claim
of the petitioner is ex facie barred by limitation. It is argued that no documents
have been furnished along with the Section 11 application to indicate as to how
the time for taking out a money claim got extended, since the last bill was raised
beyond three years from the date of filing of the Section 11 application and, as
such, is time-barred.
Learned counsel for the respondent submits that in an affidavit-in-
opposition, the respondent proposes to bring on record invoices and bank
statements as well as other relevant documents on such count to indicate that
the claim is barred by limitation.
Secondly, the respondent argues that the pre-condition of an amicable
settlement of the dispute was not met in the present case and, as such, the
present invocation of the arbitration clause is premature.
Learned counsel for the respondent also submits that there are several
judgments which go on to hold that unless the pre-arbitration formalities as per
the agreement between the parties are satisfied, there cannot be any reference to
arbitration.
However, upon hearing the learned counsel for the parties, this Court is of
the opinion that no affidavit need be directed to be filed by the respondent for
the simple reason that the scope of adjudication in an application under Section
11 of the Arbitration and Conciliation Act 1996 is extremely limited. The Court is
primarily to see and ascertain as to whether there is a valid arbitration
agreement between the parties and, at best, as to whether the claim is ex facie
barred by any law, including limitation.
The very fact that an affidavit and other documents are required to be
furnished by the respondent for the Court to adjudicate whether the claim is
time-barred goes a long way to show that the issue of limitation is debatable and
arguable and, as such, is best left for adjudication before the Arbitrator. The
Section 11 Court, with its limited charter, is not the appropriate forum to enter
into such question.
On the face of the allegations made in the Section 11 application, the
Court is to ascertain whether the claim is ex facie time barred.
In paragraph no. 10 of the application, the petitioner has stated that the
claim herein is within limitation as the bills being last R.A. bill covering the work
done during the month of August 2021 was submitted on September 1, 2021
and part payments in respect of previous R.A. bills have been received lastly on
January 28, 2022 but since January 28, 2022, no further payment has been
received by the petitioner in respect of its claims.
Even if the respondent files an affidavit-in-opposition and controverts such
contention, it would be beyond the domain of the Section 11 Court to adjudicate
on the same on merits.
That apart, the petitioner has relied on an order dated July 18, 2024 in a
suit filed by the present respondent against the principal employer, which
indicates prima facie that the petitioner therein (present respondent) proposed to
foreclose the project in terms of the contract.
According to the petitioner, the said observation in the order in question
was a stimulus for the petitioner to be apprehensive on whether it would receive
its claims.
It is also evident from the nature of the transactions between the parties
that the same contemplated continuous work by the petitioner as a sub-
contractor of the respondent and intermittent payments during such work being
done. Since the payment schedule was a continuum, keeping in view the nature
of the work, it cannot be said that the claim is ex facie barred by limitation,
having been refused prior to three years from the making of the claim for the
first time.
Such an adjudication at this stage would not only be premature but also
beyond the jurisdiction of the Section 11 Court and as such, such exercise
should not be entered into by this Court at all.
In any event, it cannot be said that the claim is ex facie "dead wood". At
best, the question of limitation is arguable.
Insofar as prior exhaustion of pre-arbitration amicable settlement is
concerned, the petitioner has pleaded in the Section 11 application that such
efforts at amicable settlement have failed.
In fact, Clause 24 of the work orders between the parties contemplates
that the disputes if arisen between the parties are to be first amicably settled by
mutual agreement.
The very fact that the respondent is opposing the reference to arbitration
and that the petitioner's composite invocation of the arbitration clause and
demand notice did not meet with any reply from the end of the respondent goes
on to show that any further relegation to amicable settlement would be a futile
exercise, unnecessarily delaying and protracting pre-litigation formalities
between the parties.
As such, such meaningless and futile exercise need not be resorted to
further. Since the dispute between the parties comes within the ambit of the
arbitration clause and the issues are otherwise arbitrable, AP-COM/829/2024 is
allowed, thereby appointing Ms. Noelle Banerjee, a member of the Bar Library
Club, as the sole arbitrator to resolve the dispute between the parties, subject to
a declaration being obtained from the said learned Arbitrator under Section 12 of
the Arbitration and Conciliation Act, 1996. The learned Arbitrator shall fix her
own remuneration within the framework of the 1996 Act and its Fourth
Schedule.
Since the prayer for affidavits has been refused, it is deemed that none of
the allegations made in the application under Section 11 are admitted by the
respondent.
Needless to say, the above observations are all of a tentative nature arrived
at only for the purpose of deciding the Section 11 application and it will be open
to the parties to argue all points available to them before the Arbitrator, upon
which the Arbitrator shall decide all issues independently in accordance with law
without being influenced in any manner by any of the observations made above.
(SABYASACHI BHATTACHARYYA, J.)
S.Bag
