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The Court may decline the claim to be referred to arbitration only where there isn’t even a vestige of doubt that it is ex facie time-barred: High Court of Delhi

The limitation for filing an application under Section 11 arises when there is a failure to make an appointment of the arbitrator within a period of 30 days from the issuance of the notice invoking arbitration. In other words, an application 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. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. These were stated by High Court of Delhi, consisting Justice Suresh Kumar Kait in the case of Huawei Telecommunications (India) Co. Pvt. Ltd. & Anr. vs. Wipro Limited [ARB.P. 365/2019] on 24.01.2022.

The facts of the case are that the petitioners were engaged in the business of designing, developing, manufacturing, marketing and/or sale of telecommunications related products worldwide. According to the petitioners, Bharat Sanchar Nigam Limited (BSNL) invited bids for planning, supply, installation and commissioning of IMPCS 20/30 Combo Network (Phase V) vide tender and B&CCS (Billing and Customer Care System including DR) and COTS Solution, which were part of the overall project. It was to be delivered to the BSNL as per tender specifications and requirements. For this purpose, petitioners entered into a Cooperation Agreement with the respondent. However, the respondent breached the said agreement by not following the project timeline.

The learned Counsel for the petitioners submitted that Clause 4.4 of the Agreement clearly stipulated that time is of the essence under the agreement and the respondent was obligated to follow the project time line and ensure that no delay is there in supply and implementation. It was also submitted that respondent was responsible for bearing all the expenses for repair and replacement of the supplied solution and providing the same free of charge to the petitioners during the subsistence of the warranty period. It was, therefore, submitted that respondent was in direct breach of its contractual obligation and did not rectify/resolve certain issues. Several e-mails and communications were made by the petitioners to the respondent during that one year requesting respondent to fix the issues. However, the said communication was not replied to and therefore, this petition has been filed seeking appointment of sole Arbitrator by this Court.

The learned Counsel for the respondent submitted that the disputes between the parties are not at all arbitrable and hence, the present petition deserves outright rejection. It was contended that the claims raised by the petitioners are highly time-barred, which purportedly pertain to Agreements dated 20.03.2009, according to which respondent were to provide warranty services for three years and the cause of action in the present case is not a continuous cause of action and also that the maximum period of three years under the limitation expired in December 2017 and, therefore, the present petition deserves to be rejected on the point of limitation alone. It was further submitted that even if it is assumed that the purported e-mails were exchanged between the parties, yet the e-mail was written by the respondent in the year 2016, and notice invoking arbitration by the petitioners is of the year 2019 and thereby, this petition fails on limitation.

The High Court of Delhi stated that the provisions of Section 11(4) and 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. The limitation for filing an application under Section 11 arises when there is a failure to make an appointment of the arbitrator within a period of 30 days from issuance of the notice invoking arbitration. In other words, an application 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 if there is a failure to make the appointment. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time-barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal. Pertinently, the Court held that execution of Cooperation Agreement between the parties and invocation of arbitration by virtue of notice dated 14.03.2019 is not disputed.

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Judgment reviewed by Shristi Suman.

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