Rajasthan High Court - Jodhpur
M/S Monica Construction Company vs Bharat Sanchar Nigam Limited ... on 7 January, 2025
Author: Rekha Borana
Bench: Rekha Borana
[2025:RJ-JD:728]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Arbitration Application No. 38/2023
M/s Monica Construction Company, (A Proprietorship Firm)
Through Its Proprietor Shri Vinod Son Of Shri Bhagwat Swaroop
Sharma Aged 61 Years, Resident Of 4-R-18, R.c. Vyas Colony,
Bhilwara (Rajasthan).
----Petitioner
Versus
1. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Deputy General Manager, Nehru
Road, Bsnl Building, In Front Of Mahesh Public School,
Bhilwara (Rajasthan).
2. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, In Front
Of Savitri Senior Secondary School, Near Jawahar
Rangmanch, Civil Lines, Ajmer (Rajasthan).
3. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, Sardar
Patel Marg, Rajasthan Telecom Circle, Jaipur (Rajasthan)
Pin Code No.- 302008.
4. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief Managing Director, H.c.
Mathur Lane, Janpath, New Delhi- 110001.
----Respondents
Connected With
S.B. Arbitration Application No. 40/2023
M/s Monica Construction Company, (A Proprietorship Firm)
Through Its Proprietor Shri Vinod Son Of Shri Bhagwat Swaroop
Sharma Aged 61 Years, Resident Of 4-R-18, R.c. Vyas Colony,
Bhilwara (Rajasthan).
----Petitioner
Versus
1. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Deputy General Manager, Nehru
Road, Bsnl Building, In Front Of Mahesh Public School,
Bhilwara (Rajasthan).
2. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, In Front
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Of Savitri Senior Secondary School, Near Jawahar
Rangmanch, Civil Lines, Ajmer (Rajasthan).
3. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, Sardar
Patel Marg, Rajasthan Telecom Circle, Jaipur (Rajasthan)
Pin Code No.- 302008.
4. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief Managing Director, H.c.
Mathur Lane, Janpath, New Delhi- 110001.
----Respondents
S.B. Arbitration Application No. 42/2023
M/s Monica Construction Company, (A Proprietorship Firm)
Through Its Proprietor Shri Vinod Son Of Shri Bhagwat Swaroop
Sharma Aged 61 Years, Resident Of 4-R-18, R.c. Vyas Colony,
Bhilwara (Rajasthan).
----Petitioner
Versus
1. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Deputy General Manager, Nehru
Road, Bsnl Building, In Front Of Mahesh Public School,
Bhilwara (Rajasthan).
2. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, In Front
Of Savitri Senior Secondary School, Near Jawahar
Rangmanch, Civil Lines, Ajmer (Rajasthan).
3. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, Sardar
Patel Marg, Rajasthan Telecom Circle, Jaipur (Rajasthan)
Pin Code No.- 302008.
4. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief Managing Director, H.c.
Mathur Lane, Janpath, New Delhi- 110001.
----Respondents
S.B. Arbitration Application No. 43/2023
M/s Monica Construction Company, (A Proprietorship Firm)
Through Its Proprietor Shri Vinod Son Of Shri Bhagwat Swaroop
Sharma Aged 61 Years, Resident Of 4-R-18, R.c. Vyas Colony,
Bhilwara (Rajasthan).
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----Petitioner
Versus
1. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Deputy General Manager, Nehru
Road, Bsnl Building, In Front Of Mahesh Public School,
Bhilwara (Rajasthan).
2. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, In Front
Of Savitri Senior Secondary School, Near Jawahar
Rangmanch, Civil Lines, Ajmer (Rajasthan).
3. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief General Manager, Sardar
Patel Marg, Rajasthan Telecom Circle, Jaipur (Rajasthan)
Pin Code No.- 302008.
4. Bharat Sanchar Nigam Limited, (A Govt. Of India
Undertaking) Through Its Chief Managing Director, H.c.
Mathur Lane, Janpath, New Delhi- 110001.
----Respondents
For Petitioner(s) : Mr. Rishabh Shrimali
Mr. Suresh Shrimali
For Respondent(s) : Mr. Kamal Kishore Dave
Mr. Dhirendra Pondey
HON'BLE MS. JUSTICE REKHA BORANA
Order
07/01/2025
1. All the four applications being based on identical facts, are
heard and decided together.
2. The present applications under Section 11(6) of the Arbitration
and Conciliation Act, 1996 (for short 'the Act of 1996') have been
filed for appointment of an independent and impartial arbitrator
for resolution of the disputes as raised by the claimants vide the
notice dated 31.07.2021.
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3. The facts are that the tenders for the work of "Cable laying,
construction and allied works for SDCA Kotri Bhilwara SSA" were
invited by the respondent-Bharat Sanchar Nigam Limited (BSNL)
vide NIT dated 29.08.2016. The applicant-firm submitted its
tender and after completion of the process, the work orders dated
24.10.2016 were issued in its favour. The stipulated dates for
commencement and completion of work were 24.10.2016 and
23.06.2017 respectively.
4. However, the work could not be completed within the stipulated
period and hence, the time was extended twice for a period of six
months, finally uptill 23.07.2018. However, a dispute arose
between the parties for payment of the due bills amounting to
Rs.13,85,676/-, Rs.6,27,685/-, Rs.8,20,000/- & Rs.13,05,888/-
respectively. The applicant-firm raised the bills and prayed for
payment of the same which were not adhered to.
5. As a consequence, the applicant-firm served notice dated
31.07.2021 on the respondent-BSNL while raising its claim as well
as invoking clause No.17 (Arbitration Clause) of the agreement as
executed between the parties.
6. A reply to the notice dated 31.07.2021 was served by the
respondent-BSNL vide its communication dated
06.08.2021/10.08.2021 whereby it was stated that the matters
were pending before the Vigilance Cell of the Department and
hence, the due amounts, if any, would be paid only after the
directions been issued by the said Cell.
7. The applicant again, vide communication dated 08.08.2022
prayed for release of the due amount and for appointment of
arbitrator, but of no avail.
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8. The respondent-BSNL having not acted upon the notice dated
31.07.2021, the present applications for appointment of an
independent and impartial arbitrator have been filed.
9. Learned counsel for the respondents raised a preliminary
objection regarding the present applications being time barred. He
submitted that cause of action, whatsoever, arose to the applicant
way back in the year 2018 and the present applications have been
filed in the year 2023 which are clearly time barred.
10. Responding to the above objection, learned counsel for the
applicant submits that the limitation to raise its claims definitely
was available with the applicant-firm till three years from
23.07.2018 i.e. the last date for completion of the work. Given the
benefit of the Covid-19 period as per the Hon'ble Apex Court
judgment in Suo Moto Writ Petition (Civil) No.3 of 2020;
(decided on 10.01.2022) the notice dated 31.07.2021 was
definitely within limitation and the present applications filed on
06.10.2023 are also within a period of three years from
31.07.2021.
Counsel submits that the present applications cannot therefore
be termed to be barred by limitation. In support of his submission,
counsel relied upon the judgment of this Court in the case of M.M.
Enterprises vs. Hindustan Zinc Ltd.; 2024 (2) DNJ Raj. 824
(decided on 09.04.2024).
11. Heard learned counsel for the parties and perused the
material available on record.
12. The primary issue that emerges for consideration before
this Court is whether the applications as preferred by the applicant
for appointment of arbitrator are within limitation.
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13. For proper adjudication of the said issue and to reach to a
conclusion on the same, reliance on the latest Hon'ble Apex Court
judgment in the case of Arif Azim Co. Ltd. vs. Aptech
Ltd.,2024 INSC 155 would be apt. In terms of the ratio as laid
down in the said judgment, a two-pronged test needs to be under
taken to determine firstly, whether the arbitration application
under Section 11(6) of the Act of 1996 is barred by limitation and
secondly, whether the claims sought to be arbitrated are ex-facie
dead or time barred on the date of commencement of the
arbitration proceedings.
14. Regarding the first aspect as to whether the present
arbitration applications are within the period of limitation, it is
undisputed that Article 137 of the Limitation Act governs
application under Section 11 of the Act of 1996 and Article 137 of
the Limitation Act provides as under:
Description of suit Period of Time from which
limitation period begins to
run
137 Any other application for Three years When the right to
which no period of apply accrues.
limitation is provided
elsewhere in this Division.
15. From a plain reading of the aforesaid provision, it can be
inferred that for an application under Section 11 of the Act of
1996, the limitation period would commence from the time when
the right to apply accrues. While interpreting 'right to apply' under
Article 137 of the Limitation Act, the Hon'ble Apex Court in the
Arif Azim's case (Supra) observed as under:
"56. The other way of ascertaining the relevant
point in time when the limitation period for
making a Section11(6) application would begin is
by making use of the Hohfeld's analysis of jural
relations. It is a settled position of law that the
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limitation period Under Article 137 of the
Limitation Act, 1963 will commence only after the
right to apply has accrued in favour of the
applicant. As per Hohfeld's scheme of jural
relations, conferring of a right on one entity must
entail the vesting of a corresponding duty in
another. When an application under Section
11(6)of the Act, 1996 is made before this Court
without exhausting the mechanism prescribed
under the said Sub-section, including that of
invoking arbitration by issuance of a formal
notice to the other party, this Court is not duty
bound to appoint an arbitrator and can reject the
application for being premature and non-
compliant with the statutory mandate. However,
once the procedure laid down under Section
11(6) of the Act, 1996 is exhausted by the
applicant and the application passes all other
tests of limited judicial scrutiny as have been
evolved by this Court over the years, this Court
becomes duty-bound to appoint an arbitrator and
refer the matter to an arbitral tribunal. Thus, the
"right to apply" of the Applicant can be said to
have as its jural correlative the "duty to
appoint"of this Court only after all the steps
required to be completed before instituting a
Section 11(6) application have been duly
completed. Thus, the limitation period for
filing a petition Under Section 11(6) of the
Act,1996 can only commence once a valid
notice invoking arbitration has been sent by
the applicant to the other party, and there
has been a failure or refusal on part of that
other party in complying with the
requirements mentioned in such notice."
16. The Hon'ble Supreme Court, while dilating on the issue of
limitation qua arbitration application in the case of Bharat
Sanchar Nigam Ltd. (supra) held as under:
"11. It is now fairly well-settled that the limitation for
filing an application Under Section 11 would arise upon
the failure to make the appointment of the arbitrator
within a period of 30 days' from issuance of the notice
invoking arbitration. In other words, an application
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Under Section 11 can be filed only after a notice of
arbitration in respect of the particular
claim(s)/dispute(s) to be referred to arbitration [as
contemplated by Section 21 of the Act] is made, and
there is failure to make the appointment.
12. The period of limitation for filing a petition seeking
appointment of an arbitrator/s cannot be confused or
conflated with the period of limitation applicable to the
substantive claims made in the underlying commercial
contract. The period of limitation for such claims is
prescribed under various Articles of the Limitation
Act,1963. The limitation for deciding the underlying
substantive disputes is necessarily distinct from that of
filing an application for appointment of an arbitrator.
This position was recognized even Under Section 20 of
the Arbitration Act 1940. Reference may be made to
the judgment of this Court in C. Budhraja v.
Chairman,Orissa Mining Corporation Ltd., (2008) 2
SCC 444wherein it was held that Section 37(3) of the
1940 Act provides that for the purpose of the
Limitation Act, an arbitration is deemed to have
commenced when one party to the arbitration
agreement serves on the other party, a notice
requiring the appointment of an arbitrator. Paragraph
26 of this judgment reads as follows:
26. Section 37(3) of the Act provides that for the
purpose of the Limitation Act, an arbitration is deemed
to have been commenced when one party to the
arbitration agreement serves on the other party
thereto, a notice requiring the appointment of an
arbitrator. Such a notice having been served on 4-6-
1980, it has to be seen whether the claims were in
time as on that date. If the claims were barred on 4-6-
1980, it follows that the claims had to be rejected by
the arbitrator on the ground that the claims were
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barred by limitation. The said period has nothing to do
with the period of limitation for filing a petition Under
Section 8(2) of the Act. Insofar as a petition Under
Section 8(2) is concerned, the cause of action would
arise when the other party fails to comply with the
notice invoking arbitration. Therefore, the period of
limitation for filing a petition Under Section 8(2)
seeking appointment of an arbitrator cannot be
confused with the period of limitation for making a
claim. The decisions of this Court in Major (Retd.)
InderSingh Rekhi v. DDA [(1988) 2 SCC 338], Panchu
Gopal Bose v. Board of Trustees for Port of Calcutta
[(1993) 4 SCC 338] and Utkal Commercial
Corporation. v. Central Coal Fields Ltd. [(1999) 2 SCC
571] also make this position clear.
....................................
18. Applying the aforesaid law to the facts of the
present case, we find that the application Under
Section 11 was filed within the limitation period
prescribed Under Article137 of the Limitation Act.
Nortel issued the notice of arbitration vide letter dated
29.04.2020, which was rejected by BSNL vide its reply
dated 09.06.2020. The application Under Section 11
was filed before the High Court on 24.07.2020 i.e.
within the period of 3 years of rejection of the request
for appointment of the arbitrator."
17. Applying the above ratio to the present case, the first
demand notice whereby the arbitration clause was also invoked by
the contractor was of 31.07.2021. The reply to the said notice was
given by the respondent-BSNL vide communication dated
06.08.2021. Even if the date of reply of notice by the respondent
is ignored and it is assumed that the cause for arbitration arose on
31.07.2021 i.e. the date when the notice invoking arbitration
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clause was issued, the limitation of three years from the said date
would expire on 30.07.2024. The present application having been
filed on 06.10.2023 is therefore clearly within limitation.
18. Regarding the second aspect as to whether the claims
sought to be referred to arbitration are ex facie dead or time
barred on the date of commencement of the arbitration
proceedings, the first consideration would be the date of
commencement of the arbitral proceedings. As per Section 20 of
the Act of 1996, the arbitration proceedings commence from the
date of receipt of notice invoking arbitration clause. In the present
matter, the notice invoking arbitration clause is of 31.07.2021. As
the date of receipt of the said notice is not decipherable from the
record, this Court would proceed with the date of notice i.e.
31.07.2021 itself, to be the date of commencement of the arbitral
proceedings in terms of Section 20 of the Act of 1996.
The Hon'ble Apex Court in the case of Bharat Sanchar Nigam
Limited (Supra) while dealing with a matter wherein the claims
were barred by limitation on the day when notice for arbitration
was invoked, observed as under:
"48. Applying the law to the facts of the present
case, it is clear that this is a case where the
claims are ex facie time-barred by over 5½
years, since Nortel did not take any action
whatsoever after the rejection of its claim by
BSNL on 4-8-2014. The notice of arbitration was
invoked on 29-4-2020.There is not even an
averment either in the notice of arbitration, or
the petition filed Under Section 11, or before this
Court, of any intervening facts which may have
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occurred, which would extend the period of
limitation falling within Sections 5 to 20 of the
Limitation Act. Unless, there is a pleaded case
specifically adverting to the applicable section,
and how it extends the limitation from the date
on which the cause of action originally arose,
there can be no basis to save the time of
limitation.
49. The present case is a case of deadwood/
no subsisting dispute since the cause of
action arose on 4-8-2014, when the claims
made by Nortel were rejected by BSNL. The
Respondent has not stated any event which
would extend the period of limitation, which
commenced as per Article 55 of the Schedule of
the Limitation Act (which provides the limitation
for cases pertaining to breach of contract)
immediately after the rejection of the final bill by
making deductions.
............................................................
52. In the present case, the notice invoking
arbitration was issued 5½ years after rejection of
the claims on 4-8-2014. Consequently, the notice
invoking arbitration is ex facie time-barred, and
the disputes between the parties cannot be
referred to arbitration in the facts of this case."
19. Applying the above ratio to the present case, the issue
would be whether the claims as raised by the petitioner were dead
or time barred on 31.07.2021. Admittedly the time for completion
of work was extended uptill 23.07.2018. Computing the period of
three years from the said date, the dispute/claim, if any, could
have been raised by the contractor till 22.07.2021. Applying
period of exclusion of 715 days (15.03.2020 to 28.02.2022) as
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directed by the Hon'ble Apex Court in Suo Moto (supra), the
claims were definitely alive on 31.07.2021 i.e. the date on which
the notice invoking arbitration clause was issued. Hence, it cannot
be said that the claims sought to be raised by the applicant were
ex facie time barred or dead claims on the date of commencement
of arbitration.
20. In an overall conclusion, this Court is of the opinion that the
present applications filed on 06.10.2013 are within limitation in
terms of both the aspects pertaining to the issue of limitation qua
an application under Section 11(6) of the Act of 1996 as well as
raising of the claims.
21. Clause 17 of the agreement as entered into between the
parties provides as under:-
"ARBITRATION:
17.1. In the event of any question, dispute or
difference arising under this agreement or in
connection there-with except as to matter the decision
of which is specifically provided under this agreement,
the same shall be referred to ole arbitration of the
Chief General Manager, Jaipur Rajasthan or in case his
designation is changed or his office is abolished then in
such case to the sole arbitration of the officer for the
time being entrusted whether in addition to the
functions of the Chief General Manager Jaipur
Rajasthan or by whatever designation such officers
may be called (hereinafter referred to as the said
officer) and if the Chief General Manager Jaipur
Rajasthan or the said officer is unable or unwilling to
act as such to the sole arbitration or some other
person appointed by the Chief General Manager, of the
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said officer. The agreement to appoint an arbitrator
will be in accordance with the Arbitration and
Conciliation Act 1996. There will be no objection to any
such appointment that the arbitrator is BSNL Servant
or that he has deal with the matter to which the
agreement relates or that in the course of his duties as
BSNL Servant he has expressed views on all or any of
the matter under dispute. The award of the arbitrator
shall be final and binding on the parties. In the event
of such arbitrator to whom the matter is originally
referred, being transferred or vacating his office or
being unable to act for any reasons whatsoever such
Chief General Manager or the said officer shall appoint
another person to act as arbitrator in accordance with
terms of the agreement and the person so appointed
shall be entitle to proceed from the stage at which it
was left out by his predecessors.
17.2 The arbitrator may from time to time with the
consent of parties enlarge the time for making and
publishing the award, Subject to aforesaid Indian
Arbitration and Conciliation Act 1996 and the Rules
made there under, any modification thereof for the
time being in force shall be deemed to apply to the
arbitration proceeding under this clause.
17.3 The venue of the arbitration proceeding shall
be the Office of the Chief General Manager, Jaipur
Rajasthan or such other Places as the arbitrator may
decide. The following procedure shall be followed:
17.3.1. In case parties are unable to reach a
settlement by themselves, the dispute should be
submitted or arbitration in accordance with contract
agreement.
17.3.2 There should not be a joint submission with
the contractor to the sole Arbitrator.
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17.3.3 Each party should submit its own claim
severally and may oppose the claim put forward by the
other party.
17.3.4 The onus of establishing his claims will be left to
the contractor.
17.3.5 Once a claim has been included in the
submission by the contractor, a reiteration or
modification thereof will be opposed.
17.3.6 The "point of defence" will bases on actual
conditions of the contract.
17.3.7 Claims in the nature of ex-gratia payments shall
not be entertained by the Arbitrator as these are not
contractual.
17.3.8 The question whether these conditions are
equitable shall not receive any consideration in the
preparation of "points of defence".
17.3.9 If the contractor includes such claims in his
submission, the fact that they are not contractual will
be prominently placed before the Arbitrator.
17.3.10 All the disputes if any will referred to
arbitration will be governed by 1996 arbitration Act
and will not be challenged in any court of Law.
17.3.11 Any Disputes arising out of the tender/bid
document/evaluation of bids/issue of APO shall be
subject to jurisdiction of the competent court at the
place from where the NIT/tender has been issued.
17.3.12 Where a contractor has not agreed to
arbitration, the dispute/claims arising out of the
Contract/PO entered with his shall be subject to the
jurisdiction of the competent court at the place where
Contract/PO has been issued.
The award of the sole Arbitrator shall be final and
binding on all the parties to the dispute."
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22. It is clear or record that a notice in terms of clause 17 of
the agreement has been served on the respondent-BSNL and the
department has not acted upon it within a period of 30 days of
service as required in terms of Act of 1996. Sole arbitrator
therefore deserves to be appointed by this Court for resolving the
disputes as have arisen between the parties as raised vide notice
dated 31.07.2021 and reminder notice dated 08.08.2022.
23. In terms of Section 12 of the Act of 1996, the Chief General
Manager of the respondent-BSNL cannot be appointed as an
Arbitrator and an independent and impartial arbitrator is to be
appointed by the Court.
24. As per clause 17.3 of the agreement, the venue of
arbitration proceedings has been decided between the parties to
be the Office of the Chief General Manager, Jaipur (Raj.) or such
other places as the Arbitrator may decide.
25. As clause 17.3 of the agreement itself prescribes that the
venue of arbitration can be any other place as the Arbitrator
decides, this Court is not bound by the Clause of venue of
arbitration to be at Jaipur (Raj).
26. In view of the above facts and observations, the present
arbitration applications under Section 11(6) of the Act of 1996 are
therefore, allowed. Hon'ble Mr. Justice Gopal Krishan Vyas,
Former Judge, Rajasthan High Court, R/o Sector No.17E, House
No.317, Chopasani Housing Board, Jodhpur is appointed as the
sole arbitrator to adjudicate upon the disputes as raised vide
communication/notice dated 31.07.2021 and reminder notice
dated 08.08.2022.
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27. The arbitration fee and the costs shall be in accordance with
the Fourth Schedule to the Act of 1996. The above appointment
shall be subject to the necessary disclosure being made by the
arbitrator in terms of Section 12 of the Act of 1996.
28. The intimation of the appointment as aforesaid be given by
the Registry to Hon'ble Mr. Justice Gopal Krishan Vyas, Former
Judge, Rajasthan High Court, R/o Sector No.17E, House No.317,
Chopasani Housing Board, Jodhpur (Mobile No.9829027317). The
parties would also be at liberty to intimate Hon'ble Mr. Justice
Gopal Krishan Vyas and to call upon appropriate date for
necessary directions.
29. Pending applications, if any, also stand disposed of.
(REKHA BORANA),J
185-188-Kashish/Abhishek/-
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