IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Arb. Case No. 62 of 2010 Date of decision: 15.9.2011 Punjab Agro Industries Corporation Limited …..petitioner vs. M/s GNG Exports …..respondent CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA Present: - Mr. S. S. Kathola, Advocate for the petitioner. Mr. R. Kartikay, Advocate for respondent. HEMANT GUPTA, J Present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (for short the ‘Act’) is in respect of the disputes arising out of an Agreement dated 27.5.2003 (Annexure P-3). Vide the aforesaid Agreement, the petitioner has accepted the services of the respondent for export of Indian wheat. In terms of the said Agreement between the parties, respondent facilitated the export of Indian wheat. It was on 9.12.2004 (Annexure P-7), respondent sent a cheque for Rs. 73,72,879.93 towards the full and final payment of cost of grain, repayment of finance, service charges and interest on finance taken from the petitioner. It was mentioned therein Arb. Case No. 62 of 2010 that the petitioner should accept the cheque if the amount is acceptable to the petitioner. Admittedly, the petitioner has not conveyed any information in respect of such communication before acceptance of cheque and its realization. In fact, it was on 2.6.2005, the petitioner sought reconciliation of the accounts from the respondent. It was on 23.1.2009, the petitioner unilaterally appointed an arbitrator to resolve the alleged dispute between the parties, but on an objection being raised by respondent such appointment of arbitrator was withdrawn. Thereafter, vide the Annexure P-18 dated 22.9.2009, the petitioner served a notice upon the respondent and sought appointment of arbitrator out of the names mentioned in the said communication. The respondent did not respond to the said communication. Therefore, petitioner filed the present petition for appointment of Arbitrator on 14.10.2009. In reply to the present petition, respondent raised a preliminary objection that the petition is barred by limitation as prescribed under Section 43 of the Limitation Act, 1963 (for short the ‘Act’). Learned counsel for the petitioner has relied upon a judgment of this Court reported as 2007(3)PLR589 M/s Kartar Singh & Company vs. Punjab state Electricity Board and ors decided on 30.3.2007 to contend that in terms of Section 21 of 2 Arb. Case No. 62 of 2010 the Act, the period of limitation will commence from the date of notice for appointment of Arbitrator is served. This Court in The Hisar Model Town Azad Co- operative Labour and Construction Society Limited Vs. The State of Haryana and others (Arb.Case No.37 of 2009 decided on 18.5.2011 have examined the question as to whether an application under Section 11(6) of the Act is required to be filed within the period of limitation from the date, the cause of action arises from the date of notice, to seek appointment of Arbitrator is served. The Court also considered the judgment referred by learned counsel for the petitioner. It was held to the following effect: - “In my opinion, provisions of Section 21 are in relation to arbitration without the intervention of the Court or to determine the applicability of the 1940 or the Act as required to be examined in certain cases within meaning of Section 85(2) of the Act. But, if intervention of the Court is necessitated, such petition has to be filed within the period of limitation. It has been held that the period of limitation is for all applications filed before the civil court. Since there is no specific period of limitation prescribed for such like application under Section 11 of the Act in Schedule to the Limitation Act, 1963, therefore, the residuary Article 137 would be applicable. As per Article 137, the period of limitation is three years from the date right to apply accrues. The right to apply accrues when the cause of action accrues. To constitute a cause of action, 3 Arb. Case No. 62 of 2010 firstly there has to be existence of right and secondly its infringement or threat of infringement. The cause of action denotes and determines the starting point of limitation. Such cause of action in relation to arbitration proceedings is said to be cause of arbitration as held in Panchu Gopal Bose's case (supra). The question as to when right to sue accrues depends on the facts of each case and as and when the right is asserted or denied or when the right to claim ascertained amount arises. The cause of action to seek appointment of an arbitrator does not accrue with the issue of the notice. To seek appointment of an Arbitrator, the notice is required to be served in terms of sub clause 4 of Section 11 of the Act. It is step in aid to seek appointment of an arbitrator. The right to apply for cause of arbitration will accrue prior thereto and in pursuance of such right, a notice is required to be served. Therefore, the starting period of limitation in terms of Article 137 of the Limitation Act would be prior to the serving of notice. It is from the said date, the aggrieved party has to seek intervention of the Court within three years. Since, the right to apply to the Court in terms of sub-section 6 arises only after expiry of 30 days of serving of a notice, therefore such 30 days are required to be excluded while determining the period of limitation in terms of Section 15(2) of the Limitation Act, 1963. Such interpretation is by harmonious construction of Section 21, Section 43 and Section 11 of the Act.” In view of the said claim, the cause of action, if any, arose to the petitioner when the payment was sent by the respondent on 9.12.2004. The petitioner served a notice dated 22.9.2009 (Annexure P-18) i.e., much after the expiry of four 4 Arb. Case No. 62 of 2010 years even the unilateral appointment of an Arbitrator is after 4 years in the month of January 2009. In view of the said fact, the claim of the petitioner is barred by limitation. Dismissed. (HEMANT GUPTA) JUDGE 15.9.2011 preeti 5