HC Admits Plea for Appointment of Arbitrator as Applicant-Co. Raised Dispute Within Limitation Period

Case Details: Triveni Constructions v. Military Engineer Services - [2024] 158 taxmann.com 427 (Telangana)

Judiciary and Counsel Details

• • C.V. Bhaskar Reddy, J.

Facts of the Case

In the instant case, the respondent executed a contract in favour of the applicant company for the replacement of existing AC sheets with Galvalume sheets inside its factory area.

The Applicant soon after the settlement of the Final Bill, had raised a dispute that bid amount was excluding GST @ 12% and labour welfare cess @ 1% and it was expressly agreed between parties that GST and labour welfare cess were to be charged over and above bid amounts.

However, respondents deducted said statutory taxes from his quoted rates. Therefore, the applicant requested the respondent to repay the tax amount deducted with interest. The respondent had failed to respond to such a claim.

Thus, arbitration was invoked and an instant application, under section 11(6) of the Arbitration and Conciliation Act, 1996 was filed by an applicant seeking the appointment of a sole Arbitrator to adjudicate claims and disputes between parties.

It was a case of the respondent that since the applicant accepted final bill without any reservation and as the final bill was processed and paid to the applicant, no claims whatsoever were maintainable and the application filed under Section 11(6) was liable to be dismissed as barred by limitation.

It was noted that since there was no provision in the Arbitration and Conciliation Act, of 1996 specifying period of limitation for applying Section 11, one would have to take recourse to the Limitation Act, 1963.

It was also noted that none of the Articles in Schedule to Limitation Act, 1963 provide a time period for filing an application for appointment of arbitrator under Section 11, and thus, it would be covered by residual provision under Article 137 of Limitation Act which provides that period of limitation is three years for any other application for which no period of limitation is provided elsewhere in division.

The time limit starts from the period when the right to apply accrues. Admittedly, in instant case, Final Bill of the applicant had been settled on 06.09.2022 and even before expiry of three three-year limitation period prescribed under Article 137 of the Limitation Act, 1963, the applicant had raised a dispute and sought reference to the Arbitrator.

High Court Held

The High Court observed that the dispute sought for reference to the arbitrator was not barred by limitation. It was held that the claim was barred by lapse of time was a matter which required to be decided by Arbitrator at the time of making an order under Section 20 of the Arbitration and Conciliation Act, 1996. Accordingly, instant application for the appointment of an arbitrator was to be allowed.