Kerala HC: Issue of limitation period with regard to a claim is a jurisdictional issue to be decided by the Arbitrator
![]() |
Source: Google Images |
The Kerala High Court bench comprising of J. A.K.Jayasankaran Nambiar in the case of M/S.Nortel Networks (India) Pvt. Ltd v. Bharat Sanchar Nigam Limited (BSNL), on October 13, 2020 decided on the issue of limitation with regards to a claim raised by the Petitioner.
The Petitioner
successfully acquired the tender from Respondent for planning, engineering,
supply, installation, testing and commissioning of GSM based cellular mobile
network. Pursuant to which, a purchase order was placed by the Respondent and
accordingly, the Petitioner executed the work. However, it is the claim of the
Petitioner that the Respondent had withheld an amount of Rs.99,70,93,031
towards liquidated damages and other deductions. Thereafter, the Petitioner
raised a claim which was denied by the Respondent. Subsequently, the Petitioner
invoked the Arbitration clause incorporated in the Purchase order. In response
to which, the Respondent raised the plea that the claims raised by the
Petitioner are barred by time.
Decision
The Court decided on the
following issues:
(i)
Issue
of Limitation with regard to Claim raised by a party
The Court, relying on the
Supreme Court Judgement of Uttarakhand Purv Sainik Kalyan Nigam Ltd. v.
Northern Coal Field Ltd (Read judgement here),
upheld that the issue of limitation being a mixed question of law and fact must
be considered by the Arbitrator under the Doctrine of Kompetenz-kompetenz.
Further, the issue of limitation is a jurisdictional issue which informs the
jurisdiction of the arbitrator, and therefore, must always be considered by the
Arbitrator in the proceedings before him.
(ii) Issue of Limitation with regard to maintainability
of application under Section 11
The Court observed that
the distinction between the limitation period for raising a claim against one
party and for maintaining an application under Section 11 of the Arbitration
and Conciliation Act, 1996 (“Arbitration
Act”) ceased to exist post- 2015 Amendment, and therefore, the High Courts
have a limited role of only ascertaining whether there exists a valid
Arbitration Agreement between the parties. It was also upheld that any
application under Section 11 must be made within 3 years from the expiry of 30
days of the receipt of notice regarding invocation of Arbitration agreement.
(iii) Appointment of
Arbitrator by an interested party
The Arbitration Clause
contained in the Purchase Order required the arbitration to be referred to the
Sole Arbitration of CGM, BSNL, Kerala Circle. The CGM was further empowered to
appoint an arbitration in case he was unable or unwilling to act as the
arbitrator. This was challenged by the Petitioner on the ground that the CGM is
an interested party. The Court, deciding in favour of the Petitioner, stated
that post- 2015 Amendment, it has been made clear under Section 12(5) of the
Arbitration Act that the interested parties to a dispute cannot be empowered
with the function of appointing an arbitrator.
The Court further upheld
that in cases where an interested party is entrusted with the task of
appointment, the Courts must ignore such clause and appoint a sole arbitrator.
Accordingly, the court appointed an independent sole arbitrator for
adjudicating the present dispute between the parties.
Read judgement here
Comments
Post a Comment