Renewable Energy Systems Limited Vs. Bharat Sanchar Nigam Limited - (High Court of Delhi) (16 Nov 2021)

Statute of limitation extinguishes recourse to the remedy and not the debt

MANU/DE/3083/2021

Arbitration

The Petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 ('A&C Act') challenging the Arbitral Award. In terms of the impugned award, the claims made by the Petitioner were rejected as barred by limitation. The Petitioner claims that, the said view is ex facie erroneous and the impugned award is vitiated by patent illegality on the face of the record. The principal controversy involved in the present case is whether the claims made by the Petitioner were barred by limitation.

The Lease Agreement was essentially in the nature of a financing lease. The Petitioner had agreed to supply the SPPS at an agreed invoice value. The QLRs were based on the said invoice value and also linked with the SBI prime lending rate. In terms of Clause 12.8 of the Lease Agreement, it was agreed that the Respondent would pay a transfer sale price at the rate of 1% of the invoice value.

The Lease Agreement was for a fixed term of five years and it was agreed that the QLRs would be paid within seven days at the end of each quarter. In this view, it is indisputable that, any failure on the part of the Respondent to pay the QLRs would give rise to a cause of action at the end of seven days from the end of each quarter. Insofar as the Petitioner's claim for the transfer sale price is concerned, the cause of action for recovering the same arose at the end of the term of the lease. Thus, ex facie, the claims made by the Petitioner are barred by limitation.

The Petitioner's claim is for a quantified amount, which according to the Petitioner was due and payable during the term of the Lease Agreement and latest, by the end of the Lease Agreement. The Petitioner had also claimed interest for the said period. The contention that since the amounts remained outstanding, the Petitioner's cause of action continued is, plainly, unsustainable. The fact that a debt has remained outstanding, does not extend the period of limitation. It is established that the statute of limitation extinguishes recourse to the remedy and not the debt.

The contention that the Petitioner had repeatedly sent reminders to the Respondent for making the said payment would not in any manner extend the period of limitation. The claims made by the Petitioner are, ex facie, barred by limitation. Further, the Petitioner has not placed on record any document issued by the Respondent within the period of limitation, acknowledging the debt claimed by the Petitioner. Petition dismissed.

Tags : DEBT LIMITATION EXTENSION