Case Note & Summary
The dispute arose out of a renovation contract between Mahavir Prasad Jangid (appellant/contractor) and ECGC Limited (respondent). The appellant completed the work and received a completion certificate on 29 June 2001. The final bill was submitted on 22 January 2001. The respondent made part payments on 6 June 2001 and 12 September 2001. Due to non-payment of the balance, the appellant invoked the arbitration agreement on 2 September 2003. Negotiations followed, and the last part payment was made on 15 October 2004. A further notice was issued on 1 August 2005. The appellant filed a Section 11 petition on 12 December 2005, and an arbitrator was appointed on 19 August 2006. The arbitrator passed an award on 4 December 2010 granting eight claims. The respondent challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The Single Judge set aside the award solely on the ground of limitation. The appellant appealed under Section 37. The Division Bench held that the arbitration was invoked on 2 September 2003, within three years from the last part payment on 12 September 2001. Additionally, the part payment on 15 October 2004 and negotiations constituted acknowledgment of debt under Section 18 of the Limitation Act, 1963, extending limitation. The court allowed the appeal, set aside the Single Judge's order, and restored the arbitral award.
Headnote
A) Arbitration Law - Limitation - Section 21 of Arbitration and Conciliation Act, 1996 read with Section 18 of Limitation Act, 1963 - Invocation of Arbitration - The court considered whether the appellant's claims were barred by limitation. The appellant invoked arbitration on 2 September 2003, within three years from the last part payment on 12 September 2001. Further negotiations and part payment on 15 October 2004 constituted acknowledgment of debt under Section 18 of the Limitation Act, 1963, extending the limitation period. The court held that the claims were not barred by limitation and set aside the Single Judge's order. (Paras 2-8) B) Arbitration Law - Section 34 of Arbitration and Conciliation Act, 1996 - Setting Aside Award - The Single Judge set aside the arbitral award solely on the ground of limitation. The Division Bench held that the Single Judge erred in not considering the effect of part payments and acknowledgments, which extended limitation. The appeal was allowed, and the award was restored. (Paras 5-8)
Issue of Consideration
Whether the claims of the appellant (contractor) were barred by limitation when the arbitration was invoked within three years from the date of last part payment and acknowledgment of debt.
Final Decision
The appeal is allowed. The impugned judgment of the learned Single Judge dated 7 July 2011 is set aside. The arbitral award dated 4 December 2010 is restored.
Law Points
- Limitation for arbitration claims
- Section 21 of Arbitration and Conciliation Act
- 1996
- Section 18 of Limitation Act
- 1963
- acknowledgment of debt
- part payment extending limitation
