Case Note & Summary
The petitioner, Sicom Limited, as assignee of the rights of The Shamrao Vithal Cooperative Bank Limited under an Assignment Deed dated 31 March 2010, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 24 July 2009. The award was passed by a sole arbitrator appointed under Section 84 of the Multi State Cooperative Societies Act, 2002 (MSCS Act) in a dispute between the bank and the borrower company, Tim Tim Far East Export Trading Company Private Limited, along with its guarantors. The award directed the borrower to pay Rs.1,83,03,147/- with interest and declared the bank's dues as secured by a first charge on the plant and equipment. The petitioner contended that the claim was barred by limitation and that the arbitrator lacked jurisdiction due to pending proceedings before the BIFR and Company Court. The court examined the scope of assignment and held that the right to challenge an arbitral award is a personal right that does not pass with the assignment of the debt unless expressly assigned. Since the Assignment Deed did not specifically assign the right to challenge the award, the petitioner had no locus standi to maintain the petition. On merits, the court also found that the claim was within limitation as it was filed on the same day the loan became due, and the arbitrator had jurisdiction under Section 84 of the MSCS Act notwithstanding other proceedings. The petition was dismissed with no order as to costs.
Headnote
A) Arbitration Law - Assignment of Rights - Right to Challenge Award - Assignment Deed dated 31 March 2010 assigned the bank's rights to the petitioner - The court held that the right to challenge an arbitral award is a personal right that does not pass with assignment unless expressly assigned - The petitioner, as assignee, cannot maintain a petition under Section 34 of the Arbitration and Conciliation Act, 1996 to challenge the award (Paras 5-7).
B) Limitation - Claim under Section 84 of MSCS Act - Applicable Limitation Period - The claim was filed on 31.03.2004 for recovery of loan - The court held that the period of limitation for filing a claim under Section 84 of the Multi State Cooperative Societies Act, 2002 is governed by Article 137 of the Limitation Act, 1963, which provides a period of three years - The claim was within limitation as the loan became due on 31.03.2004 and the claim was filed on the same day (Paras 8-10).
C) Jurisdiction - Arbitrator under Section 84 of MSCS Act - Pendency of Other Proceedings - The borrower company was under liquidation and proceedings were pending before the BIFR - The court held that the arbitrator's jurisdiction under Section 84 of the MSCS Act is not ousted by the pendency of proceedings before other forums like BIFR or Company Court - The arbitrator had jurisdiction to entertain the claim (Paras 11-12).
Issue of Consideration
Whether the petitioner, as an assignee of the bank's rights, can challenge the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996; whether the claim was barred by limitation; whether the arbitrator had jurisdiction to entertain the claim.
Final Decision
The petition is dismissed. No order as to costs.
Law Points
- Assignment of rights does not automatically include right to challenge arbitral award
- Limitation for filing claim under Section 84 of MSCS Act is governed by Article 137 of Limitation Act
- 1963
- Arbitrator's jurisdiction under Section 84 of MSCS Act is not ousted by pendency of proceedings before other forums
- Section 34 of Arbitration and Conciliation Act
- 1996 provides limited grounds for challenge
Case Details
2013 LawText (BOM) (06) 58
Arbitration Petition No. 779 of 2010
Ms. Sapana Rachure i/by T.N. Tripathi & Co. for the Petitioners, Mr. D.J. Bhange i/by Halai & Co. for Respondent No. 1
The Shamrao Vithal Cooperative Bank Limited, Tim Tim Far East Export Trading Company Private Limited, Ajit Balse, Mrs. Sitatiwant Balse, Sushant Velkar, Ms. Rekha Ramdahin, Shounak Satpute, Shri R.A. Dalvi
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award passed under Section 84 of the Multi State Cooperative Societies Act, 2002.
Remedy Sought
The petitioner sought to set aside the arbitral award dated 24 July 2009.
Filing Reason
The petitioner, as assignee of the bank's rights, contended that the claim was barred by limitation and that the arbitrator lacked jurisdiction.
Previous Decisions
The sole arbitrator passed an award on 24 July 2009 directing the borrower to pay Rs.1,83,03,147/- with interest and declaring the bank's dues as secured by a first charge.
Issues
Whether the petitioner, as an assignee, has the right to challenge the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.
Whether the claim was barred by limitation.
Whether the arbitrator had jurisdiction to entertain the claim despite pending proceedings before BIFR and Company Court.
Submissions/Arguments
The petitioner argued that the claim was barred by limitation as the loan became due on 31.03.2004 and the claim was filed on the same day, but the limitation period should be computed from the date of default.
The petitioner argued that the arbitrator lacked jurisdiction because the borrower company was under liquidation and proceedings were pending before the BIFR.
The respondent bank argued that the assignment deed did not assign the right to challenge the award, and the petition was not maintainable.
The respondent bank argued that the claim was within limitation and the arbitrator had jurisdiction under Section 84 of the MSCS Act.
Ratio Decidendi
The right to challenge an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 is a personal right that does not pass with the assignment of the debt unless expressly assigned. The period of limitation for a claim under Section 84 of the Multi State Cooperative Societies Act, 2002 is governed by Article 137 of the Limitation Act, 1963, which provides three years from the date the right to apply accrues. The arbitrator's jurisdiction under Section 84 is not ousted by pendency of proceedings before other forums.
Judgment Excerpts
The right to challenge the award is a personal right and unless the same is specifically assigned, the assignee cannot maintain the petition under Section 34 of the Arbitration Act.
The period of limitation for filing a claim under Section 84 of the MSCS Act is governed by Article 137 of the Limitation Act, 1963.
The arbitrator's jurisdiction under Section 84 of the MSCS Act is not ousted by the pendency of proceedings before other forums.
Procedural History
The bank filed a claim under Section 84 of the MSCS Act before the sole arbitrator. The arbitrator passed an award on 24 July 2009. The bank assigned its rights to Sicom Limited by an Assignment Deed dated 31 March 2010. Sicom Limited filed Arbitration Petition No. 779 of 2010 under Section 34 of the Arbitration Act challenging the award. The petition was heard and dismissed on 10 June 2013.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
- Multi State Cooperative Societies Act, 2002: Section 84
- Limitation Act, 1963: Article 137
