Vibhu Bakhru JUDGMENT
Vibhu Bakhru, J.
1. The petitioner, a company incorporated under the Companies Act, 1956, has filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter the 'A&C Act'), inter alia, praying as under:-
"a) appoint any person, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case, as a Sole Arbitrator, to enter upon reference in order to adjudicate all disputes that have arisen between the Petitioner and the Respondents; and/or
b) award costs of the petition in favour of the Petitioner and against the Respondent; and
c) pass any other and further order(s) which this Hon'ble Court may deem fit and proper in the circumstances of the case in favor of the Petitioners and against the Respondent."
2. The present petition arises out of disputes that have arisen between the parties in relation to a Contract For Guarding Services dated 31.12.2013 (hereinafter 'the Contract') entered into between the parties. In terms of the Contract, the petitioner had agreed to perform the work of security/guarding services as stipulated in Schedule I and II of the Contract.
3. It is the petitioner's grievance that although it had diligently performed the services mentioned in the Contract, the respondent has failed in its obligation to make the payment for the invoices raised for the services despite several reminders.
4. Various communications were exchanged between the petitioner and respondent from the period February 2015 to December 2017. The petitioner states that it had sent several emails requesting the respondent to clear its outstanding dues. The Statement of Accounts maintained by the petitioner reflect the outstanding amount as of 13.08.2018 at ` 14,94,090/-.
5. In view of the aforesaid disputes, the petitioner issued a notice dated 24.09.2018, invoking the agreement to refer the disputes to arbitration in terms of Clause 42 of the Contract (the Arbitration Clause). It also suggested the name of an advocate, for being appointed as the Sole Arbitrator.
6. The relevant clauses of the Contract are set out below:-
"PART XI GOVERNING LAWS AND SETTLEMENT OF DISPUTE
42. Any claims, dispute and or difference (including a dispute regarding the existence, validity or termination of this Agreement) arising out of, or relating to this contract including Interpretation of its terms will be resolved through joint discussions of the authorised representatives of the parties. However, if any such claim, dispute or difference cannot resolved through such joint discussions within thirty (30} days of the date of the notice then the matter will be referred for adjudication to the arbitration of a sole arbitrator to be appointed by the parties in accordance with the issued by either party requesting such joint discussions then the parties may refer the claim, dispute or difference for adjudication by arbitration by a single arbitrator in accordance with the provisions of the Arbitration and Conciliation Act 1996 and rules made thereunder including any modifications, amendments and future enactments thereto. The venue for the arbitration will be New Delhi. The decision of the arbitrator shall be final and binding on the parties.
43. This Contract Is governed by the laws of Republic of India and, subject to clause 43, shall be subject to the exclusive jurisdiction of the courts at Delhi"
Submissions
7. Mr. Lahoti, learned counsel appearing for the respondent, has opposed this petition principally on the ground that the respondent has not received the notice invoking arbitration and therefore, the conditions of Section 21 of the A&C Act has not been complied with. He referred to the decision of Active Media v. Divisional Commercial Manager, Northern Railway: Arb. P. No. 694 of 2019, decided on 04.03.2020, in support of his contention.
8. He further contends that the present petition is time barred as the alleged notice dated 24.09.2018 invoking arbitration was beyond the period of three years from the date of the last alleged invoice dated 31.08.2015. He also referred to the decision of Geo Miller & Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd: MANU/SC/1198/2019 : (2020) 14 SCC 643, to support his contention that an arbitrator was not required to be appointed for deciding disputes that were barred by limitation.
9. Mr. Arora, learned counsel for the petitioner, countered the aforesaid submissions. He stated that provisions under Section 11(6) of the A&C Act have been duly complied with and the petitioner had issued the requisite notice invoking the Arbitration Clause at the Registered Office of the respondent and further, at the address as provided in the Contract.
10. He further submitted that the present petition is not barred by limitation. He stated that the legal notice dated 24.09.2018 was well within the period of limitation from the date of the last written communication/email dated 08.03.2016 as received from the respondent, whereby the respondent had acknowledged that the payments were outstanding.
Reasons and Conclusion
11. The petitioner has annexed a copy of the notice dated 24.09.2018 sent by the petitioner's advocate on its behalf. The said notice was addressed to the respondent at its registered office located at 'Karan Singh Farm, Khasra No. 683, near Farm No. 36 & 37, Shivji Marg, Westend Greens, Rangpuri, New Delhi-110037' as well as at its address at '803, Ansal Bhawan, 16 K.G. Marg, New Delhi -110001'.
12. In addition to the above, the petitioner has also filed postal receipts evidencing that the said notice was dispatched at the given addresses on 25.09.2018 by speed post. The tracking report also indicates that the consignment (notice) was dispatched for delivery. However, the tracking report in respect of the notice sent at the respondent's address at 803, Ansal Bhawan, 16 K.G. Marg, New Delhi - 110001, was returned as unclaimed.
13. It is relevant to note that the contract expressly provided that the notices would be served to the respondent at 803, Ansal Bhawan, 16 K.G. Marg, New Delhi - 110001. Clause 51 of the Contract is relevant and is set out below:-
"51. Any notice required to be given under this Contract shall be in writing and must be sent by prepaid ordinary post or registered post or by courier to the address of the recipient, or sent by fax to the fax number of the recipient which is specified herein below (or if the recipient has notified another address or fax number, then to that address or fax number)"
14. Admittedly, the respondent had not provided any other address for service of the notice other than as mentioned in the Contract. Thus, in terms of the Contract, all notices to the respondent were required to be served at 803, Ansal Bhawan, 16 K.G. Marg, New Delhi -110001 and, there is no dispute that the petitioner had dispatched the notice dated 24.09.2018 at the said address. An attempt was made to deliver the notice to the respondent at the said address, however, the envelope was returned with the marking 'no such company in this address'.
15. The petitioner has asserted that the notice sent to the respondent at its registered office - Karan Singh Farm, Khasra No. 683, near Farm No. 36 & 37, Shivji Marg Westend Greens, Rang Puri, New Delhi -110037, was not returned.
16. The respondent has filed a reply, inter alia, claiming that the notice dated 24.09.2018 sent by the petitioner was sent at an incorrect address as 'Karan Singh Farm, Khasra No. 683, near Farm No. 36 & 37 Shivji Marg, Westend Greens, Rang Puri, New Delhi -10037' is not the registered office of the respondent. According to the respondent, the same was changed to 'Khasra No. 632, Ground Floor, Village Rangpuri, near Telco, New Delhi - 110037' and therefore, the respondent could not have received the notice dated 24.09.2018 as it was sent at the erstwhile registered office of the respondent.
17. The aforesaid contention is unmerited as Mr. Lahoti conceded during the course of the arguments that the registered office of the respondent at the material time (as of 25.09.2018) was at Karan Singh Farm, Rangpuri, Delhi -110037. The records of the Registrar of Companies also reflected the said address as the registered office of the respondent company.
18. The respondent has not produced any document to substantiate its claim that it had shifted its registered office from Karan Singh Farm, Khasra No. 683, near Farm No. 36 & 37, Shivji Marg, Westend Greens, Rang Puri, New Delhi -10037, prior to 25.09.2018. On the contrary, as noted above, Mr. Lahoti conceded that the registered office of the respondent was at the address as mentioned in the notice dated 24.09.2018, at the material time.
19. The reliance placed on behalf of the respondent on the decision of this Court in Active Media v. Divisional Commercial Manager Northern Railways (supra), is misplaced. In that case, the notice invoking arbitration had been sent to the wrong address. It is in the aforesaid context that the Court had held that the notice of invocation of arbitration was not received by the other party. Thus, the period of thirty days for the appointment of an Arbitral Tribunal had not commenced. Undoubtedly, the provisions of Section 21 of the A&C Act are also important from a standpoint of computing limitation. However, it is settled that the notice will be deemed to have been served if it is sent at the correct address and the record of an attempt to deliver exists.
20. It is relevant to refer to Section 3 of the A&C Act which reads as under:-
"3. Receipt of written communications.--
(1) Unless otherwise agreed by the parties--
(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and
(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.
(2) The communication is deemed to have been received on the day it is so delivered.
(3) This section does not apply to written communications in respect of proceedings of any judicial authority."
21. It is clear from the express language of Section 3 of the A&C Act that any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence address or mailing address. However, if none of the said places is found after making a reasonable inquiry, written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by a registered letter or by any means, which provide a record of an attempt to deliver.
22. In the present case, it is established that an attempt to deliver the notice dated 24.09.2018 was made at the petitioner's address at 803, Ansal Bhawan, 16 K.G. Marg, New Delhi -110001. This was the address at which the notices were required to be served in terms of the Contract. The postal receipts also establish that the notice was dispatched at the registered office of the respondent and the tracking report indicates that the concerned postal department had issued it for delivery. Thus, it must be accepted that an attempt to deliver, was made.
23. Even if it is accepted that the notice was not received by the petitioner at its registered office, it is established that an attempt to deliver was made at the address on which the notices were agreed to be delivered by the parties, in terms of the Contract.
24. In Shabnam Gulati v. M/s. Religare Finvest Pvt. Ltd., this Court had explained the effect of Section 3 of the Act as under:-
"18. Section 3(1) of the Arbitration and Conciliation Act, specifically states that a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual address or mailing address by registered letter or by any other means which provides a record of "attempt to deliver it". Therefore, unlike Sub-Rule 5 of Rule 9 of Order V of CPC requiring proof of acknowledgment or any other receipt of due delivery of the summons, or drawing of a presumption of due service only where the summons were properly addressed but the acknowledgement was lost or misled or for any other reason was not received by the Court, under the Arbitration and Conciliation Act sending of notice by registered letter or by other means at last known place of business, habitual residence or mailing address which provides the record of "attempt to deliver it".
25. In view of the above, the contention that the present petition is not maintainable for want of notice under Section 21 of the A&C Act, cannot be accepted.
26. The next aspect to be examined is whether the present petition is required to be rejected on the ground that the disputes are barred by limitation.
27. The scope of examination under Section 11 of the A&C Act, is limited and confined to examining the existence of the agreement to refer the disputes to arbitration. In Duro Felguera, SA [Duro Felguera, SA v. Gangavaram Port Ltd.:MANU/SC/1352/2017 : (2017) 9 SCC 729, the Supreme Court held as under:
"48. Section 11(6-A) added by the 2015 Amendment, reads as follows:
"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."
From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.
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59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP & Co. v. Patel Engg. Ltd., MANU/SC/1787/2005 : (2005) 8 SCC 618 and National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., MANU/SC/4056/2008 : (2009) 1 SCC 267: (2009) 1 SCC (Civ) 117. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists-- nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected."
28. In Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman: MANU/SC/1232/2019 : (2019) 8 SCC 714, the Supreme Court referred to the decisions in the case of Duro Felguera SA (supra); and Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited: MANU/SC/0511/2019 : (2019) 9 SCC 209, wherein the Supreme Court had referred to the Law Commission Report No. 246 and concluded that the High Court while considering any application under Sections 11(4) to 11(6) of the A&C Act is required to confine the examination to the existence of an agreement to refer the disputes to arbitration and leave all other issues to be decided by the arbitrator and held as under:-
"10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., MANU/SC/0465/2019 : (2019) 5 SCC 362: (2019) 2 SCC (Civ) 785], as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, SA [Duro Felguera, SA v. Gangavaram Port Ltd.:MANU/SC/1352/2017 : (2017) 9 SCC 729 -- see paras 48 & 59.
29. In Vidya Drolia v. Durga Trading Corporation: MANU/SC/0939/2020 : (2021) 2 SCC 1 the Supreme Court had observed as under:-
132. The courts at the referral stage do not perform ministerial functions. They exercise and perform judicial functions when they decide objections in terms of Sections 8 and 11 of the Arbitration Act. Section 8 prescribes the courts to refer the parties to arbitration, if the action brought is the subject of an arbitration agreement, unless it finds that prima facie no valid arbitration agreement exists. Examining the term "prima facie", in Nirmala J. Jhala v. State of Gujarat [Nirmala J. Jhala v. State of Gujarat, MANU/SC/0257/2013 : (2013) 4 SCC 301: (2013) 2 SCC (L&S) 270], this Court had noted: (SCC p. 320, para 48)
"48. '27. ... A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the case were [to be] believed. While determining whether a prima facie case had been made out or not the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.' [Ed.: As observed in Martin Burn Ltd. v. R.N. Banerjee, MANU/SC/0081/1957 : AIR 1958 SC 79, p. 85, para 27.]"
133. Prima facie case in the context of Section 8 is not to be confused with the merits of the case put up by the parties which has to be established before the Arbitral Tribunal. It is restricted to the subject-matter of the suit being prima facie arbitrable under a valid arbitration agreement. Prima facie case means that the assertions on these aspects are bona fide. When read with the principles of separation and competence-competence and Section 34 of the Arbitration Act, the referral court without getting bogged down would compel the parties to abide unless there are good and substantial reasons to the contrary.
134. Prima facie examination is not full review but a primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non-arbitrable disputes. The prima facie review at the reference stage is to cut the deadwood and trim off the side branches in straightforward cases where dismissal is barefaced and pellucid and when on the facts and law the litigation must stop at the first stage. Only when the court is certain that no valid arbitration agreement exists or the disputes/subject-matter are not arbitrable, the application under Section 8 would be rejected. At this stage, the court should not get lost in thickets and decide debatable questions of facts. Referral proceedings are preliminary and summary and not a mini trial. This necessarily reflects on the nature of the jurisdiction exercised by the court and in this context, the observations of B.N. Srikrishna, J. of "plainly arguable" case in Shin-Etsu Chemical Co. Ltd. [Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., MANU/SC/0488/2005 : (2005) 7 SCC 234] are of importance and relevance. Similar views are expressed by this Court in Vimal Kishor Shah [Vimal Kishor Shah v. Jayesh Dinesh Shah, MANU/SC/0913/2016 : (2016) 8 SCC 788: (2016) 4 SCC (Civ) 303] wherein the test applied at the pre-arbitration stage was whether there is a "good arguable case" for the existence of an arbitration agreement.
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140. Accordingly, when it appears that prima facie review would be inconclusive, or on consideration inadequate as it requires detailed examination, the matter should be left for final determination by the Arbitral Tribunal selected by the parties by consent. The underlying rationale being not to delay or defer and to discourage parties from using referral proceeding as a ruse to delay and obstruct. In such cases a full review by the courts at this stage would encroach on the jurisdiction of the Arbitral Tribunal and violate the legislative scheme allocating jurisdiction between the courts and the Arbitral Tribunal. Centralisation of litigation with the Arbitral Tribunal as the primary and first adjudicator is beneficent as it helps in quicker and efficient resolution of disputes.
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147. We would proceed to elaborate and give further reasons:
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147.5. Sections 8 and 11 of the Arbitration Act are complementary provisions as was held in Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd., MANU/SC/1787/2005 : (2005) 8 SCC 618] The object and purpose behind the two provisions is identical to compel and force parties to abide by their contractual understanding. This being so, the two provisions should be read as laying down similar standard and not as laying down different and separate parameters. Section 11 does not prescribe any standard of judicial review by the court for determining whether an arbitration agreement is in existence. Section 8 states that the judicial review at the stage of reference is prima facie and not final. Prima facie standard equally applies when the power of judicial review is exercised by the court under Section 11 of the Arbitration Act. Therefore, we can read the mandate of valid arbitration agreement in Section 8 into mandate of Section 11, that is, "existence of an arbitration agreement".
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147.7. Exercise of the limited prima facie review does not in any way interfere with the principle of competence and separation as to obstruct arbitration proceedings but ensures that vexatious and frivolous matters get over at the initial stage.
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147.11. The interpretation appropriately balances the allocation of the decision-making authority between the court at the referral stage and the arbitrators' primary jurisdiction to decide disputes on merits. The court as the judicial forum of the first instance can exercise prima facie test jurisdiction to screen and knock down ex facie meritless, frivolous and dishonest litigation. Limited jurisdiction of the courts ensures expeditious, alacritous and efficient disposal when required at the referral stage."
30. Thus, this Court is not required to enter into any adjudicatory exercise to decide whether the disputes are barred by limitation. However, in cases where it is, ex-facie apparent and is established that the disputes are either not arbitrable or barred by limitation, this Court would not appoint an arbitrator as that would be an exercise in futility.
31. The petitioner had contended that there were extensive communications between the parties in respect of the payments due and outstanding. The petitioner has also shared an email dated 08.03.2016 whereby the respondent had stated that it had full intention of paying the dues to the petitioner but had requested certain details to ascertain the same. The respondent had further explained that the respondent was unable to pay the amount due to the petitioner, in one trench and 'in one go' due to its financial condition. In view of the above, this Court is unable to accept that the petitioner's claims are ex-facie barred by limitation and, the present petition is liable to be rejected.
32. Bearing the principles as noted above, this Court is of the view that the contention advanced on behalf of the respondent that the claims made by the petitioner are barred by limitation, is a contentious one and does not fall within the standards of examination under Section 11 of the A&C Act.
33. In view of the above, this Court considers it apposite to allow the present petition. Accordingly, Ms. Mini Pushkarna, Advocate is proposed to be appointed as the Sole Arbitrator to adjudicate the disputes between the parties falling within the scope of the Arbitration Clause, as set out above.
34. The parties are at liberty to approach the learned Arbitrator for securing her consent and the necessary disclosure under Section 12(1) of the A&C Act. Let the same be furnished to this Court before the next date of hearing.
35. List on 08.09.2021.
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