17 December 2021| Manish Engineering Enterprises v. Indian Farmers Fertilizer Coop. Ltd. | Appl. U/s 11 (4) No. 112 of 2004 | Suneet Kumar | Allahabad High Court

The Allahabad High Court has applied several grounds to reject an application for appointment.

The arbitration agreement did not exist because:

1. The purported agreement (work order of March 1985) filed in the court was an ex facie forged and manufactured document with interpolations writ large to the naked eye.
2. Per Vidya Drolia, standards applied to Section 8 ACA also apply to Section 11 ACA. So, like Section 8 ACA, the original arbitration agreement or duly certified copy, if available with the applicant, ought to have been filed. Here, the applicant admitted that the agreement was in its possession but never placed it on record.

The application for appointment was barred by limitation because:

1. Payments became due, and the right to apply accrued in May 1986, i.e., thirty days after submitting the final bill. Unlike in Inder Singh Rekhi (1988) 2 SCC 338, the dispute was not about the finalization of the bill but payment after the final bills were submitted.
2. Once limitation began to run, Manish’s alleged reminders to IFFCO did not stop it [citing Nortel Network 2021 SCC OnLine 207 & Geo Miller (2020) 14 SCC 643].
3. Acknowledgement of debt renews the debt and extends the period of limitation, but, on facts, there is no acknowledgement, nor does the applicant lay a foundation in the pleadings.

[Editor’s note: Article 137 Limitation Act governs the limitation period under Section 11 ACA. It is three years from the date the right to apply accrues under Section 11 ACA. For Section 11 (4) ACA and 11 (5) ACA, this date is fixed, i.e., broadly speaking, from the date the 30 days-notice period ends. For Section 11 (6) ACA, the right to apply accrues from the date the stipulated appointment procedure fails.

In para 56 (website version), the court states that the limitation period for substantive claims should not be confused with the limitation period to apply under Section 11 ACA. But this difference has not been considered rigour in its discussion, and the court has conflated two scenarios.]

The condition precedent for maintaining an application under Section 11 ACA was not met because:

1. To maintain a petition under Section 11 ACA, there must be a request by the applying party and the failure by the opposite party (to appoint or act per stipulated procedure).
2. There cannot be a ‘failure’ unless the request by the applicant-sender has been delivered to and received by the addressee. Delivery and receipt in the manner set out in Section 3 ACA are conditions to exercise jurisdiction under Section 11 ACA.
3. There is no pleading and proof that the applicant's notice of arbitration was sent or given and delivered or received by IFFCO under Section 3 ACA.

The claims are ex facie frivolous and vexatious because:

1. [Noting IFFCO’s submissions] The applicant has filed multiple cases against IFFCO, including several applications under Section 11 ACA.
2. The same communications relied upon in this application were considered in another application under Section 11, and those details have not been disclosed here.
3. It was incumbent on the applicant to file the bills submitted to IFFCO. In the absence of such basic ingredients establishing the “honesty” and “validity” of the claim, there can be no appointment of an arbitrator.

Read the decision here.