TaxTMI 
TaxTMI 
2024 (11) TMI 538
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....be referred to Arbitration, and the arbitration proceedings shall be conducted as per the provisions of Arbitration and Conciliation Act, 1996. Each of the party shall select one arbitrator and the two designated arbitrators shall select a third arbitrator, the decision of the Arbitration shall be final and binding upon both the parties to this MOU. The place of Arbitration shall be at New Delhi and the cost of arbitration shall be borne equally by both the parties." 2. It is contended by the petitioner that it had approached the respondent no. 1 for its monetary remuneration in terms of the aforesaid MoU dated 14.06.2019, however, despite several requests to the respondent, the requisite payment was not made. It is submitted that to discharge its liability, the respondent furnished certain post-dated cheques which were also dishonoured. 3. The petitioner has initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter 'the NI Act') which are stated to be pending. With a view to resolve the disputes, the petitioner also sought to avail pre-litigation meditation as contemplated under the Commercial Courts Act, 2015 (hereinafter 'the CC Act') which w....
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....tatute does not attach to a claim for which there is as yet no right of action and does not run against a right for which there is no corresponding remedy or for which judgment cannot be obtained. Consequently the true test to determine when a cause of action has accrued is to ascertain the time when plaintiff could first have maintained his action to a successful result. ...." (Emphasis supplied) 54. "Cause of action" means the whole bundle of material facts, which it is necessary for the plaintiff to prove in order to entitle him to succeed in the suit. In delivering the judgment of the Board in Mussummat Chand Kour and Another v. Partab Singh and Others, reported in ILR (1889) 16 Cal 98, Lord Watson observed: "Now the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff it refers entirely to the grounds set forth in the plaint as the cause of action, or in other words to the media upon which the plaintiff asks the court to arrive at a conclusion in his favour." (Emphasis supplied) 55. Cause of action becomes important for the purposes of calculating ....
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....d must be made within 3 years from the date when the right to apply first accrues. There is no right to apply until there is a clear and unequivocal denial of that right by the respondent. It must, therefore, be clear that the claim for arbitration must be raised as soon as the cause for arbitration arises as in the case of cause of action arisen in a civil action." (Emphasis supplied) 8. It is also noticed that prior to invoking arbitration, the petitioner also made an attempt to amicably resolve the matter, however to no avail. 9. In the circumstances, in the facts of the present case, it cannot be said that the claims sought to be raised by the petitioner are ex-facie barred by the limitation so as to preclude any reference to arbitration. In any event, as held in SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532, at the reference stage, all that is required to be examined is whether there exists an arbitration agreement. All other aspects touching upon the merits or maintainability of the claim/s are required to be dealt with by a duly constituted Arbitral Tribunal. In SBI General Insurance Co. Ltd., it has been observed as under :- "113. Referring to the St....
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....l at the stage of Section 11 petition also does not mean that the referral courts forego any scope of judicial review of the adjudication done by the arbitral tribunal. The Act, 1996 clearly vests the national courts with the power of subsequent review by which the award passed by an arbitrator may be subjected to challenge by any of the parties to the arbitration. xxx xxx xxx 125. We are also of the view that ex-facie frivolity and dishonesty in litigation is an aspect which the arbitral tribunal is equally, if not more, capable to decide upon the appreciation of the evidence adduced by the parties. We say so because the arbitral tribunal has the benefit of going through all the relevant evidence and pleadings in much more detail than the referral court. If the referral court is able to see the frivolity in the litigation on the basis of bare minimum pleadings, then it would be incorrect to doubt that the arbitral tribunal would not be able to arrive at the same inference, most likely in the first few hearings itself, with the benefit of extensive pleadings and evidentiary material." 10. Likewise, the fact that there are proceedings pending under Section 138 of the NI Act as ....