Madras High Court

M/S.Chandan Housing vs M/S.Rt Renewable India Energy ... on 8 December, 2021

                                                                        Arb.O.P (Comm.Div.) No.188 of 2021

                                      IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                        Dated: 08.12.2021

                                                              Coram:

                       THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY

                                               Arb.O.P.(Comm. Div.) No.188 of 2021

                     M/s.Chandan Housing
                     Represented by its Partner Mr.L.Udhay Metha
                                                                                          .. Petitioner

                                                               Vs.

                     M/s.RT Renewable India Energy Private Limited
                     Flat No.6J, Century Plaza,
                     560-562, Anna Salai,
                     Teynampet, Chennai – 600 018.
                                                                                       .. Respondent


                                  Original Petition (O.P) filed under Section 11 of the Arbitration and
                     Conciliation Act, 1996 praying to appoint a Sole Arbitrator as per Clause 19.9
                     of the Agreement dated 25.05.2015 for the purpose of adjudication of the
                     dispute that arose between the petitioner and the respondent in respect to
                     recover the payment of legally enforceable debt from the respondent, under
                     Section 11 of the Arbitration and Conciliation Act, 1996.




                                             For petitioner : Mr.Pranav K.R.E

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https://www.mhc.tn.gov.in/judis
                                                                         Arb.O.P (Comm.Div.) No.188 of 2021


                                              For respondent : Ms.M.Subathra
                                                                For Mr.A.K.Mylsamy


                                                              ORDER

The petitioner seeks appointment of a Sole Arbitrator as per Clause 19.9

of the Memorandum of Agreement dated 25.05.2015 (the “Agreement”). The

petitioner and respondent entered into the Agreement. In terms thereof,

obligations were imposed on the petitioner, who is described as the Developer

in the Agreement. The consideration for the petitioner is specified in Clause 5 of

the Agreement r/w Schedule-3 thereto.

2.It appears that an Addendum to the Agreement was executed on

10.07.2015. The Agreement contains an arbitration clause in Clause 19.9

thereof. Clause 19.9 is set out below:-

“19.9. DISPUTE RESOLUTION

(a) All disputes, differences and/or claims, which may at any time arise between the parties hereto or any

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person claiming under them in respect of this agreement whether during its subsistence and thereafter shall be settled by Arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof and shall be referred to a Sole Arbitrator nominated by the CEO/Managing Director/President of the Employer. The award of the sole arbitrator shall be final and binding on all the parties to this agreement and enforceable according to the laws in India.

(b) It is a term of this agreement that in the event of such an Arbitrator to whom the matter is originally referred de facto / de jure being unable to act for any reason, the CEO/Managing Director/President of the Employer shall appoint another person to act as Arbitrator. The substituted arbitrator shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.

(c) The venue of the arbitration shall be Chennai.

The language of the arbitration proceedings shall be English.”

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3.After issuing a demand notice dated 06.07.2021 demanding payment of

a sum of about Rs.1,89,00,000/- (Rupees One Crore Eighty Nine Lakhs), the

petitioner invoked the arbitration clause by notice dated 19.07.2021. The

present petition is filed on account of the alleged failure of the respondent to

initiate action as called for under such notice.

4.Learned counsel for the petitioner contends that the petition is liable to

be allowed in view of the existence of an arbitration clause covering the dispute

between the parties.

5.Learned counsel for the respondent, on the contrary, submits that the

petition is liable to be dismissed for at least three reasons. The first reason cited

by the respondent is that the claims of the petitioner are ex facie barred by

limitation. In support of this contention, the respondent points that the last

payment made under the agreement was on 19.10.2016. The respondent relies

upon the judgment of the Hon'ble Supreme Court in Bharat Sanchar Nigam

Limited. and another v. M/s.Nortel Networks India Pvt. Ltd, AIR 2021 SCC

2849 (Bharat Sanchar Nigam Limited). In particular, the respondent relies

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upon paragraphs 36, 38, 39 and 40 of the said judgment. The next contention

of the respondent is that the Addendum which is relied upon by the petitioner is

forged. By comparing the said Addendum with the Addendum filed in the typed

set of papers filed by the respondent, the differences between the two Addenda

are pointed out. The last contention of the respondent is that there is no

outstanding invoice and, therefore, the present petition is liable to be dismissed.

6.In response to such submissions, learned counsel for the petitioner

points that the contract was admittedly performed in November 2017 when a

payment was admittedly made to the petitioner. The petitioner further submits

that notwithstanding the fact that the Agreement indicates that it would expire

on 29.02.2016, the parties continued to perform their respective obligations

thereunder even after such date. It is further submitted that even if the limitation

clock is run from November 2016 the petitioner would be within the period of

limitation, if the petitioner is extended the benefit of the orders passed by the

Hon'ble Supreme Court in suo motu proceedings with regard to the extension of

the limitation period in the wake of the Covid-19 pandemic.

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7.The scope of a proceeding under Section 11 of the Arbitration and

Conciliation Act, 1996 is extremely limited after such provision was amended.

The principal consideration in such proceeding is whether there is an arbitration

agreement between the parties to the petition under Section 11 and whether the

dispute between such parties is covered by such arbitration agreement.

8.Learned counsel for the respondent, however, relied upon the judgment

in Bharat Sanchar Nigam Ltd. In paragraph 36 of the said judgment, the

Hon'ble Supreme Court referred to the judgment in Vidya Drolia v. Durga

Trading Corporation, (2021) 2 SCC 1 and extracted paragraph 144 thereof,

which, in relevant part, as under:-

“144. .... At the referral stage, the Court can

interfere “only” when it is “manifest” that the claims are

ex facie time barred and dead, or there is no subsisting

dispute.”

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9.On such basis, at paragraph 40, the Hon'ble Supreme Court held, in

relevant part, as under:-

“40.(ii).In rare and exceptional cases, where the

claims are ex facie time-barred, and it is manifest that

there is no subsisting dispute, the Court may refuse to

make the reference.”

10.Thus, it should be examined whether the dispute in the present case is

manifestly time barred. The petitioner contends that the admitted position is

that a payment was made in November 2017 by relying upon paragraph 18 of

the counter statement of the respondent. The petitioner also relies upon the

extension of the limitation period pursuant to the orders of the Hon'ble Supreme

Court. Upon consideration thereof, it cannot be concluded that the claims are ex

facie barred by limitation. It is needless to say, however, that it is open to the

respondent to raise the plea of limitation before the arbitral tribunal.

11.The other contentions of the respondent regarding the alleged forgery

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of the Addendum and that there is no outstanding invoice are issues that are not

of much relevance in a proceeding under Section 11 of the Arbitration Act.

Once again, these are issues that should be raised in the arbitral proceedings.

12.For reasons set out above, this original petition is liable to be allowed.

Accordingly, Arb.O.P.No.188 of 2021 is allowed by appointing Mr.Justice

K.Kannan, retired judge of this Court as the Sole Arbitrator. The Sole

Arbitrator is directed to enter upon reference and adjudicate the dispute

between the parties in accordance with law. It is open to the Sole Arbitrator to

fix his fees and expenses in connection with such arbitral proceedings.

08.12.2021

Internet: Yes/No Index: Yes/No smv

SENTHILKUMAR RAMAMOORTHY, J.

smv

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