Arbitration Proceedings – A Case Study

Before HON’BLE SOLE ARBITRAL TRIBUNAL

PAPER MERCHANTS ASSOCAITION (REGD.)

GALI BATASHAN, CHAWRI BAZAR, DELHI-110 006

Preliminary Objections

The Respondent had raised following Preliminary Objections.

1. The said application dated 29.10.2012 seeks exclusion of time in computing the period of limitation u/s 14 of the Limitation Act, 1963. This application is not supported by an application for condonation of delay as the same should have been filed while filing the claim before this hon’ble Tribunal.

2. The Claimant has intentionally withheld the order dated 09.07.2012 passed by Hon’ble Division Bench of Delhi High Court to capriciously avoid the maintainability of claim on the ground of limitation. The Division Bench vividly and specifically granted two weeks time from the date of the order i.e. 09.07.2012 to the Claimant herein to file claims before this hon’ble Tribunal. (A relevant extract of said HC order is reproduced below in para 4)

Reply to Preliminary Objections

1. That, with reference to para 1 of the Preliminary Objections, it is submitted that the Application dated 29.10.2012 u/s 14 of the Limitation Act, 1963 filed by the Claimant for exclusion of time from 12.10.2007 to 19.07.2012 in computing the period of limitation has already been admitted and allowed by this Hon’ble Tribunal by order dated 06.12.2012, which, inter alia, reads as follows.

“I hereby admit the application of the Claimant & allow the exclusion of time in computing the period of limitation from 12.10.2007 to 19.07.2012.”

2. That, it is further submitted that there is no provision for review in the Arbitration and Conciliation Act, 1996 (‘the Act’), hence this Hon’ble Tribunal can not review its own order dated 06.12.2012. Therefore, the contentions made in para 1 do not survive for consideration by this Hon’ble Tribunal.

3. That, with reference to first part of para 2 of the Preliminary Objections, it is submitted that a true copy of order dated 09.07.2012 of the Hon’ble Division Bench of High Court of Delhi (hereinafter called as the ‘said HC order’) had been annexed with the Notice dated 19.07.2012 u/s 21 of the Act  sent to the respondents by Registered Speed Post, a copy of which was also sent to the Paper Merchants Association with a request to constitute the Arbitral Tribunal. Further, a true copy of said HC order had also been annexed with a letter dated 20.07.2012  hand-delivered to the Paper Merchants Association on the subject ’Appointment of Arbitrator’, which in turn has appointed the present Arbitrator by its letter dated 11.08.2012. As aforesaid, a true copy of said HC order has already been provided twice to the Paper Merchants Association, hence it is not necessary to provide a copy of said HC order, again and again, to the Paper Merchants Association or to the present Arbitrator, who has been appointed by the Paper Merchants Association itself.

That, with reference to second part of para 2 of the Preliminary Objections, the following detailed submissions are made from para 4 onward for kind consideration of this Hon’ble Tribunal.

4. That, it is denied that Hon’ble High Court set any ‘limitation’ for invoking the arbitration and filing claims before the arbitral tribunal, it was only a direction. A relevant extract of said HC order is reproduced below for ready reference.

“…..This appeal is accordingly disposed of with the direction to the respondent to invoke the arbitration and file claims before the arbitral tribunal within two weeks from today. The arbitral tribunal shall decide the same on its own merits. The bank guarantee shall remain alive till the publication of the award by the tribunal. In case the award is given in favour of the respondent herein, the respondent shall be entitled to invoke the bank guarantee to the extent of amount awarded.”

5. The term ‘jurisdiction’ means the authority to enforce laws or pronounce legal judgments. Admittedly, the jurisdiction of the present Arbitrator has arisen from arbitration clause printed on the Invoice/Bills raised by the claimant upon the respondents and, not at all from the said HC order. Therefore, it is submitted that this Hon’ble Tribunal is within its right to proceed with the arbitration by rejecting the contention of the Respondents regarding non-maintainability of the claim of the Claimant on the ground of so called ‘limitation’ set by the said HC order.

6. That, it is further submitted that Hon’ble High Court gave a direction to the Claimant, which merely meant ‘to invoke the arbitration within two weeks and thereafter file claims before the arbitral tribunal as per the procedure prescribed by the Paper Merchants Association’, which the Claimant has followed in its letter and spirit, as detailed below. 

Now, it would be useful to refer to some authorities to grasp the meaning of the term ‘invoke’ and ‘invocation’ as follows.

7. That, the Oxford Dictionary of English, 3rd Ed. 2010 at page 921 has defined the term “invoke” as ‘cite or appeal to (someone or something) as an authority for an action or in support of an argument.’ Further, the Black’s Law Dictionary, 9th Ed. 2009 at page 904 has defined the term “invocation” as ‘the act of enforcing or using a legal right (an invocation of the contract clause)’.

8. That, there is a clause printed on the Invoice/Bills raised by the claimant upon the respondents, which contains an arbitration clause that in case of any dispute the same shall be referred to he Paper Merchants Association (Registered) Delhi and also with regard to the late payment of bills, the  interest term is  also printed on the Invoice / Bills. The same clause reads as under:

“Sale against S.T form 1 or Tax applicable by law. In case of any dispute including non payment in respect to this bill, the same shall be referred to the Paper Merchants Association (Regd) Delhi for sole arbitration and the judgment given by the arbitrator/arbitrators appointed by the Executive Committee shall be final and binding on both the parties”.

9. An extract of the Notice dated 19.07.2012 u/s 21 of the Act is reproduced below for ready reference.

“The said admitted dues of (Rs…………..) have remained outstanding for a substantial length of time and you have failed and neglected to pay the same to us despite your assurances to the contrary………….I am forwarding a copy of this communication to the Paper Merchants Association the named / agreed Institution to arbitrate with a request to the said  Paper Merchants Association to constitute the Arbitral Tribunal by nominating / appointing a sole Arbitrator to enter upon the reference. We shall file our complete claim petition before the Arbitral Tribunal upon directions of the said Arbitral Tribunal in accordance with law.”

The inescapable conclusion is that the Claimant had delivered his claims on 20.07.2012 itself to the Paper Merchants Association, the named / agreed Institution to arbitrate, within 11 days, which is much before the period of two weeks (i.e. 14 days), as directed by the said HC order. What remained was only to produce documentary evidence in support of his claims before the Arbitral Tribunal upon directions of the said Arbitral Tribunal in accordance with law, which could have been done only after nominating / appointing a sole Arbitrator by the Paper Merchants Association.

10. Further, it would be advantageous to note here Section 23 of the Act, an extract reproduced below for ready reference

“23. Statement of claim and defence.—(1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.

(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

(3)……..XXX.”

Therefore, it is not essential to submit along with the Statement of Claim all the documents supporting the Claim, and a reference may be added to the documents or other evidence the Claimant will submit.

WITHOUT PREJUDICE TO THE SUBMISSIONS MADE ABOVE, the following may also kindly be noted by this Hon’ble Tribunal.

11. That, the events which took place in their natural course are as follows, at a glance.

Date

Proceedings

09/07/2012

Order pronounced by Delhi High Court

16/07/2012

HC Order available online on HC website

19/07/2012

The Claimant Invoked Arbitration and sent letters of Invoking Arbitration to the Respondent and the Paper Merchants Association Delhi, with a copy of HC order dated 09.07.2012 (both letters were delivered on 20.07.2012). 

20/07/2012

Letter to the Paper Merchants Association with a copy of HC order dated 09.07.2012 and change of postal address

03/08/2012

Claim paper of Rs 1000/- issued by the Paper Merchants Association Delhi (hereinafter called ‘PMA’)

08/08/2012

Claim sent to P.M.A

09/08/2012

Claim Received by PMA for checking and inspection

11/08/2012

Arbitrator appointed by PMA

20/08/2012

Claim recd. by Arbitrator and first date for appearance given

08/09/2012

1st date to the Respondents to file defence to the Claim

 

12. From the above it is evident that the Claimant has taken all the steps within his power with due diligence, and it was impossible for him to reach the present Sole Arbitrator and file his claim petition, supported by documentary evidence, within two weeks from the said HC order. In fact, as soon as the Claimant invoked the arbitration by sending the Notice dated 19.07.2012 u/s 21 of the Act to the respondents, with a copy to the Paper Merchants Association, the arbitral proceedings stood commenced as per the provisions of the Act, which was exactly intended by the said HC order. It is quite far fetched, as alleged by the respondents, that the said HC order set any ‘limitation’ for the Claimant to file his claim petition, supported with documentary evidence, before the present Sole Arbitrator within two weeks from the date of the said HC order.  

13. That, ‘Maxims are the condensed good sense of nations-Sir J. Mackintosh’. Therefore, it would be advantageous to take a note of the following legal maxims extracted from the Black’s Law Dictionary, 9th Ed. 2009 at page 1835, and from the celebrated book in 167th year of its publication Broom’s Legal Maxims, 11th Ed. 2011 at pages 177 to 180 (copy attached).

(a) Impossibilium nulla obligatio est which means ‘There is no obligation to perform impossible things’.

(b) Impotentia excusat legem which means ‘The impossibility of doing what is required by the law excuses nonperformance or non-enforcement’.

(c) Lex non cogit ad impossibilia which means ‘The law does not compel a man to do that which he cannot possibly perform’.

All the above maxims have been relied and followed by Hon’ble Supreme Court, and also by Hon’ble Orissa High Court respectively, in following cases.

(i) Vinod Krishna Kaul vs Union of India, (1996) 1 SCC 41; AIR      1996 SC 753.

(ii) Rajesh D. Darbar vs Narsingrao Krishnaji Kulkarni, (2003) 7 SCC 219.

(iii) P.K. Palanisamy vs N. Arumugham, (2009) 9 SCC 173.

(iv) Jholei Baba Agency vs State Bank of India, AIR 2009 Ori 109.

CONCLUSION

14. The Hon’ble Sole Arbitrator accepted the arguments of the Claimant and held that the Statement of Claim was duly submitted by the Claimant within two weeks from the said HC order to the Paper Merchants Association, the named / agreed Institution to arbitrate.

Author:

Narendra Sharma,

Consultant (Business Laws)

Expert (Arbitration, Guarantee, Mortgage) 

Mobile : 9229574214/8982321310

E-mail : nkdewas@yahoo.co.in

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