PNP 1 ARBAP158-08=26.8 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. ARBITRATION APPLICATION NO.158 OF 2008 Rashad Ahmed Mujawar ..Applicant. Vs. Bharat Sanchar Nigam Limited ..Respondent. ..... Mr. S.U.Kamdar, Senior Advocate with Mr. Devverta Singh i/b Mr. Sudheer S. Phadke for the Applicant. Ms. Neeta V. Masurkar for the Respondent. ..... CORAM : DR.D.Y.CHANDRACHUD, J. 26 August 2010. P.C. : 1. This is an application under Section 11(6) of the Arbitration and Conciliation Act 1996. A tender submitted by the Applicant for the trenching and laying of underground cables in Pen Raigad area was accepted by the Respondent on 4 April 2001. A work order was issued on 22 February 2002. The Respondent by a letter dated 22 July 2004 informed the Applicant that it had decided to recover an excess payment of Rs.3,80,869/-. The Applicant was blacklisted on 25 August 2004. A process of reverification was initiated and according to the Applicant the General Manager, Raigad was required to verify the strata on some of the routes for the tendered work. On 6 April 2005 the Applicant was informed that the vigilance committee had decided to conduct a verification. According to the Applicant the committee submitted a PNP 2 ARBAP158-08=26.8 report after reverification on 23 April 2005. The Applicant by a letter dated 22 November 2007 called upon the Respondent to settle the account for the work and on 14 December 2007 called upon the General Manager to render his decision within fifteen days failing which arbitration would be invoked. The Applicant invoked arbitration in terms of Clause 47 of the general conditions of contract by a letter dated 14 January 2008 addressed to the General Manager of the Raigad Telecom District. This was followed by a letter dated 3 April 2008 addressed to the Chief General Manager of the Respondent. The Arbitration Application was instituted on 30 June 2008. 1A. On behalf of the Respondent the existence of an arbitration agreement is not disputed in the submissions which have been urged before the Court by counsel. However, the defence which has been urged is that the claim is barred by limitation. Counsel submitted that on 22 July 2004 the Respondent informed the Applicant of its decision to effect recovery of excess amounts paid and that hence, limitation must begin to run from that date. On the other hand, it is contended on behalf of the Applicant that the issue of limitation would particularly in the facts of the present case, raise a mixed question of law and fact and should appropriately be left to the arbitrator to decide. The case of the Applicant is that a reverification was PNP 3 ARBAP158-08=26.8 carried out by the Respondent and the report of the committee was submitted on 23 April 2005. According to the Applicant it invoked the arbitration clause on 14 January 2008 and in any event on 3 April 2008 by addressing a letter to the General Manager of the Respondent. Hence, according to the Applicant limitation would not begin to run until the committee had completed its reverification and had submitted a report on 23 April 2005 and the invocation was within a period of three years of that date. 2. At this stage, it may be noted that the Applicant had initially by its letter dated 14 January 2008 invoked the provisions of Clause 47 of the general conditions of contract by addressing a communication to the General Manager of the Raigad Telecom District. According to the Respondent the general conditions of contract in the present case would be governed not by Clause 47 but by Clause 48. Whereas under Clause 47 the arbitration is to be by a member of the Telecom Board under Clause 48 the concerned member of the Respondent has to act as sole arbitrator. For the purposes of these proceedings, it has been stated on behalf of counsel appearing on behalf of the Applicant that the Applicant has no objection if the arbitration takes place, as submitted on behalf of the Respondent under the provisions of Clause 48 of the general conditions of contract. That leaves the issue of PNP 4 ARBAP158-08=26.8 limitation for consideration by the Court. 3. In a judgment of the Supreme Court in National Insurance Company Limited v. Boghara Polyfab Private Limited1 the earlier judgment of the Court in SBP & Co. v. Patel Engineering Limited2 has been construed. In Patel Engineering Limited the Supreme Court identified and segregated preliminary issues that may arise for consideration in an application under Section 11 into three categories i.e. (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues he can also decide i.e. issues which he may choose to decide; and (iii) issues which should be left to the arbitration tribunal to decide. In the first category the Chief Justice or his designate will have to decide whether the application has been made before an appropriate High Court, whether there is an arbitration agreement and whether the party which has applied under Section 11 is a party to the agreement. The second category of issues which the Chief Justice or his designate may choose to decide or leave to the decision of the arbitral tribunal are whether the claim is barred by time and whether the parties have concluded the contract / transaction by recording satisfaction of their mutual rights and obligations or by receiving a final payment. The third 1 (2009) 1 SCC 267. 2 (2005) 8 SCC 618. PNP 5 ARBAP158-08=26.8 category is whether a claim falls within the arbitration clause and the merits of the claim involved in the petition. The disputes in the third category have to be left to the arbitral tribunal. 3A. The issue as to whether a claim is barred by limitation is therefore one which the Chief Justice or his designate is not bound to decide under Section 11(6) and in an appropriate case it can be left for the arbitral tribunal to determine. In a case where limitation raises a mixed question of law and fact, it is but appropriate and proper that a decision on the question of limitation should not be concluded at the stage of a proceeding under Section 11(6) but should be left for decision by the arbitral tribunal. In this case the facts have been adverted to earlier. According to the Respondent, limitation would begin to run from the date on which the Applicant was informed of the recoveries which were to be effected i.e. on 22 July 2004. On the other hand, according to the Applicant the Respondent had conducted a reverification of the claims and the report of the committee was submitted only on 23 April 2005 and that limitation would begin to run only from that date. Having regard to the perspective of the dispute it is evident that a mixed question of law and fact arises. In the circumstances, the issue of limitation is best left for decision by the arbitral tribunal in the present case and there shall be an order in those terms. PNP 6 ARBAP158-08=26.8 4. Counsel appearing on behalf of the Respondent has, apart from making submissions on the issue of limitation, stated that the Respondent is ready and willing to abide by the provisions of Clause 48 of the general conditions of contract and that the Chief General Manager of the Respondent shall act as sole arbitrator and shall adjudicate upon the disputes and differences between the parties arising out of the subject contract. There shall be an order in these terms. The Arbitration Application is accordingly disposed of. (Dr. D.Y.Chandrachud, J.)