2007 (2) TMI 714 - HC - Indian Laws

Court grants arbitration petition based on acknowledgment of liability, extends limitation period.

The court found in favor of the petitioner in the arbitration case. It determined that a 'live claim' for arbitration existed based on the parties' ... - Issues Involved:1. Existence of a 'live claim' for arbitration.2. Applicability of the Limitation Act, 1963.3. Necessity of a fresh notice for arbitration after December 2002.4. Commencement of arbitral proceedings.5. Applicability of Section 5 of the Limitation Act to the arbitration petition.Summary:1. Existence of a 'live claim' for arbitration:The court examined whether a 'live claim' existed at the time of filing the arbitration application. The petitioner argued that the cause of action arose in December 2002, based on the last communication between the parties. The court agreed, noting that both parties had acknowledged their obligations to render accounts, thus extending the limitation period.2. Applicability of the Limitation Act, 1963:The court referred to Section 18 of the Limitation Act, which allows for a fresh period of limitation upon acknowledgment of liability. The court found that the correspondence between the parties from October to December 2002 constituted such acknowledgment, thereby extending the limitation period for filing the arbitration application.3. Necessity of a fresh notice for arbitration after December 2002:The court held that it was unnecessary for the petitioner to issue a fresh notice for arbitration after December 2002. The respondent's lack of response to the initial notice and subsequent reminders indicated an intention not to mutually appoint an arbitrator. Requiring a fresh notice would only cause unnecessary delays.4. Commencement of arbitral proceedings:The court noted that arbitral proceedings commence when a request for arbitration is received by the respondent, as per Section 21 of the Act. The petitioner's notice dated 10-04-2002 initiated the arbitral proceedings, and the application under Section 11(5) of the Act was filed within the extended limitation period.5. Applicability of Section 5 of the Limitation Act to the arbitration petition:The court concluded that Section 5 of the Limitation Act, which allows for the extension of the prescribed period for filing an application if sufficient cause is shown, applies to petitions under Section 11(5) of the Act. Given the ongoing communications and negotiations between the parties until December 2002, the petitioner had sufficient cause for not filing the application earlier.Conclusion:The court allowed the arbitration application, appointing Mr. K. C. Lohia, retired District Judge, Delhi, as the sole arbitrator. The parties were directed to file their respective claims and replies within specified timelines, and the arbitrator was instructed to conclude the arbitration within six months.