2018 (11) TMI 1867 - HC - Indian Laws

Court clarifies amended arbitration rules, sets time limit, requires High Court filings

Deepdharshan Builders Pvt. Ltd. Versus Saroj and Ors.

Deepdharshan Builders Pvt. Ltd. Versus Saroj and Ors. - TMI Issues Involved:1. Applicability of amended vs. unamended provisions of Section 11 of the Arbitration and Conciliation Act, 1996.2. Application of Article 137 of the Limitation Act, 1963 to the arbitration application filed under Section 11(6) of the Arbitration Act.3. Jurisdiction of the Commercial Courts under Section 6 of the Commercial Courts Act, 2015 regarding the dispute.Detailed Analysis:1. Applicability of Amended vs. Unamended Provisions of Section 11 of the Arbitration Act:The court examined whether the unamended provisions of Section 11 of the Arbitration Act (pre-23rd October 2015) or the amended provisions (post-23rd October 2015) would apply. The notices invoking arbitration were issued on 23rd July 2013 and 5th August 2013, but the arbitration application was filed in 2018. The court held that, post-amendment, the proceedings under Sections 11(6) and 11(9) are required to be filed before the High Court or the Supreme Court, respectively, and not before the Chief Justice of that Court. The amendment eliminated the persona designata role of the Chief Justice, making the High Court the appropriate forum for such applications.2. Application of Article 137 of the Limitation Act, 1963:The court concluded that Article 137 of the Schedule to the Limitation Act, 1963, which prescribes a three-year limitation period from when the right to apply accrues, applies to applications filed under Section 11(6) of the Arbitration Act. The court also held that Section 5 of the Limitation Act, 1963, which allows for the condonation of delay, applies to such applications. The court distinguished between the limitation period for filing claims and the period for filing an arbitration application, emphasizing that they are separate and distinct.The court found that the applicant had shown sufficient cause for condonation of delay in filing the arbitration application. The delay was attributed to the time taken in prosecuting the application under Section 9 of the Arbitration Act for interim relief, which was pending due to objections regarding the stamping and registration of the agreement. The court applied the principles of Section 14 of the Limitation Act, 1963, allowing for the exclusion of time spent in good faith and due diligence in prosecuting the earlier application.3. Jurisdiction of the Commercial Courts:The court addressed whether the dispute fell within the jurisdiction of the Commercial Courts under Section 6 of the Commercial Courts Act, 2015. The respondent argued that the immovable property in question was not used exclusively in trade or commerce, thus not constituting a commercial dispute. The court examined the provisions of the agreement and concluded that the property was to be developed for commercial purposes, thereby falling within the definition of a 'commercial dispute' under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. Consequently, the arbitration application filed before the Commercial Division of the High Court was deemed maintainable.Conclusion:The court held that the amended provisions of Section 11 of the Arbitration Act apply, and the application under Section 11(6) is subject to Article 137 of the Limitation Act, 1963. The court found that the applicant had made out a sufficient cause for condonation of delay and that the dispute constituted a commercial dispute within the jurisdiction of the Commercial Courts. The court proposed the appointment of arbitrators and directed the filing of necessary disclosures.Orders:1. Mr. Snehal K. Shah was proposed as the arbitrator on behalf of the applicant.2. Smt. Justice Vasanti A. Naik was proposed as the arbitrator on behalf of the respondents.3. The proposed arbitrators were requested to file a statement of disclosure as per Section 11(8) read with Section 12(1) of the Arbitration Act.4. The arbitrators, if appointed, were directed to appoint a Presiding Arbitrator.5. The applicant was permitted to obtain and tender the statement of disclosure from the proposed arbitrators.6. The fees and expenses of the arbitrators were to be borne equally by the applicant and the respondents.7. Notice of motion No. 814 of 2018 was disposed of.