M/S Kamla Construction Company vs Rajasthan Rajya ...
2023 Latest Caselaw 1641 Raj

[2023/RJJD/004996]

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Arbitration Application No. 21/2020

M/s Kamla Construction Company, Registered Partnership Firm 1-D-81, Jainarayan Vyas Colony, Tehsil And Dist. Bikaner.

----Petitioner Versus Rajasthan Rajya, District Collector, Bikaner.

----Respondent

For Petitioner(s) : Mr. Pradeep Choudhary. For Respondent(s) : Mr. Saransh Vij for Mr. Sudhir Tak, AAG.

HON'BLE MR. JUSTICE ARUN BHANSALI

Order

10/02/2023

This application under Section 10 and 11 of the Arbitration

and Conciliation Act, 1996 ('the Act') has been filed by the

applicant seeking reference of dispute between the parties to

Arbitrator.

It is inter alia indicated that the applicant was issued a work

order dated 1.1.1996 for manufacture and supply of 20 lakh first

class bricks and an agreement No.7/1995-1996 was executed in

this regard. As per the order and contract, the work was to

commence from 16.1.1996 and was to be concluded in 12 months

i.e. by 15.1.1997.

It is claimed that the applicant earnestly commenced

implementation of the work order and supplied 20 lakh bricks by

31.10.1996, however, another order dated 31.10.1996 was issued

to the applicant for supply of additional 20 lakh bricks and based

[2023/RJJD/004996] (2 of 6) [ARBAP-21/2020]

on the said quantity, it was expected that the contract would be

extended till 15.1.1998.

It is then indicated in the application that for various reasons

on account of rains etc. instead of 40 lakh bricks, the applicant

was required to manufacture 45.50 lakh bricks, however, the

applicant was not made full and final payment by the respondents

in terms of Clause-10(a) of the agreement. It is claimed that on

account of delayed payment, the applicant is entitled for interest

on the outstanding payment.

It is then indicated that in terms of Clause-19 of the

agreement, any question, difference or objection in connection

with the agreement was to be referred to a sole arbitrator to be

appointed as per the procedure prescribed, based on which, the

applicant issued a notice dated 5.3.2020, however, as the

respondents have not followed the procedure prescribed under

Clause-19, they have lost the right to appoint arbitrator and,

therefore, a sole arbitrator be appointed.

A reply to the application has been filed by the respondents

inter alia with the submissions that the petitioner did not complete

the work in the stipulated time period i.e. 31.3.1997 and there

was a delay of more than a year in execution of the work order

and, therefore, the petitioner is not entitled to any relief.

Further submissions have been made that the applicant was

lying in the state of slumber as the dispute pertains to the year

1998 and the present application has been filed in 2020 after

issuing notice. The claim made is ex-facie barred by limitation

even as per Article 137 of the Limitation Act, 1963 and, therefore,

the application deserves dismissal.

[2023/RJJD/004996] (3 of 6) [ARBAP-21/2020]

No rejoinder to the reply has been filed.

Learned counsel for the applicant made submissions that the

claim made by the applicant is genuine, wherein, the respondents

have not made payment of huge outstanding amount to the

applicant and not only this, even the final bill has not been

prepared and, therefore, the plea raised pertaining to the claim

being barred by limitation has no substance. It was emphasized

that as the final bill has not been prepared so far, it cannot be said

that the claim is barred by limitation so as to seek dismissal.

Further submissions have been made that it is well settled

that the issue pertaining to the limitation has to be considered by

the arbitrator and this Court while examining the matter under

Section 11 of the Act, cannot determine the aspect of limitation.

Reference in this regard has been made to judgments in

Duro Felguera. S.A. v. Gangavaram Port Limited: (2017) 9 SCC

729 and M/s. Jai Shiv Construction Company v. State of Rajasthan

& Ors.: S.B. Arbitration Application No.19/2019, decided on

21.7.2022.

Learned counsel for the respondent made submissions that

in case where the claim made is ex-facie time barred and it is

manifest that there is no subsisting dispute, the Court can refuse

to make the reference under Section 11 of the Act.

Reliance has been placed on judgment in Bharat Sanchar

Nigam Limited & Anr. v. Nortel Networks India Private Limited:

(2021) 5 SCC 738.

I have considered the submissions made by learned counsel

for the parties and have perused the material available on record.

[2023/RJJD/004996] (4 of 6) [ARBAP-21/2020]

From a bare perusal of the application it is apparent that the

applicant has himself claimed that the work pursuant to the work

order was completed by the applicant on 18.7.1998. For the

period subsequent to the year 1998, in para-5 of the application,

the applicant has made reference that grand-father and Uncle of

the applicant died in the year 2002 and 2010, respectively, the

office of the respondent being 400 kms off Bikaner, the applicant

could not contact the said office and under Clause-10(a) of the

agreement, it was the duty of the respondents to have make the

payment.

It was thereafter claimed that in the year 2015 applicant's

father / partner suffered paralysis, who was looking after the work

and on account of which, his memory became weak and he could

not indicate about the record of the klin and thereafter when

under Right to Information Act record was received in the year

2019, the applicant became aware of the outstanding from the

respondents and, therefore, the application was being made after

issuing of notice seeking appointment of arbitrator and failure of

the respondent to respond to the said notice.

From the above, it is ex-facie clear that between the year

1998 and 2020 i.e. the period when the work under the

agreement ended and the notice under Section 11 of the Act was

issued, there is no activity and/or attempt on part of the applicant

to seek payment of the alleged outstanding and whereafter for the

first time on issuing notice under Section 11 of the Act, besides

raising various claims, appointment of arbitrator has been sought.

The plea raised that as the final bill was not prepared by the

respondents, the cause of action did not arise cannot be

[2023/RJJD/004996] (5 of 6) [ARBAP-21/2020]

countenanced in the peculiar circumstances of the case, wherein,

for over 22 years, the applicant has chosen to remain silent

and/or did not seek enforcement of its alleged dues from the

respondent.

It is not in dispute that the limitation for the purpose of

money claim based on non-payment of amount under the

agreement is 3 years and in the present case, by no stretch of

imagination it can be said that the claim sought to be raised by

the applicant in the year 2020, is within limitation.

The very fact that the applicant in para-5 of the application

as well as in the notice, has made reference to certain deaths in

the family and the illness of the partner, necessarily leads to the

conclusion that the applicant himself being aware of the huge

delay somehow wants to explain the same, which aspect is of no

consequence insofar as the claim getting barred by limitation is

concerned.

It is true that Hon'ble Supreme Court in the case of Duro

Felguera. S.A. (supra) inter alia laid down that in an application

under Section 11 of the Act, the Court should only look into the

existence of the arbitration agreement before making the

reference, nothing more, nothing less. However, in the case of

Bharat Sanchar Nigam Ltd. (supra), Hon'ble Supreme Court after

inter alia referring to judgment in the case of Duro Felguera. S.A.

(supra), created a window inter alia holding that 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.

[2023/RJJD/004996] (6 of 6) [ARBAP-21/2020]

In view thereof, as the applicant has admittedly sought

reference of the dispute after 22 years, the claim is ex-facie

barred by limitation and there apparently was no subsisting

dispute between the parties.

So far as the judgment in the case of Jai Shiv Construction

Company (supra) is concerned, in the said case, the respondent

State wrote a letter to the applicant that for the balance payment,

the information was being sought from the earlier disputes and

that the pending bills would be cleared soon, based on which, the

Court came to the conclusion that the matter was pending

consideration at the hands of respondent and the dispute was not

resolved and, therefore, appointed the arbitrator.

Qua the said judgment, in SLP (Civil) Diary No.34268/2022,

Hon'ble Supreme Court on 14.12.2022, clarified that the question

of claim being barred by limitation can also effectively adjudicated

by the learned arbitrator.

No such letter and/or action on part of the respondent is

available in the present case so as to indicate that the dispute has

not been resolved/the same is subsisting, as such the said

judgment has no application to the facts of the present case.

In view of the above discussion, as the claims of the

applicant are ex-facie time barred and there is no subsisting

dispute, the application is liable to be dismissed and the same is,

therefore, dismissed.

(ARUN BHANSALI),J 7-Sumit/-

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