Case Note & Summary
The appellant, M/s. Jethmal Mulji Thakkar, a brokerage firm, entered into an agreement with the respondent, Maharashtra State Cooperative Marketing Federation Ltd., on 12 January 2000 for sale of goods. The appellant claimed brokerage on sales effected, and disputes arose regarding payment. The matter was referred to arbitration, and the sole arbitrator passed an award on 20 June 2005 directing the respondent to pay Rs. 27,07,883 as brokerage under clause 13 of the agreement. The respondent challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court. The learned Single Judge set aside the award on the ground that the claim was barred by limitation, holding that the cause of action accrued on 18 February 2000 and the reference was made on 27 August 2003, beyond the three-year period. The appellant appealed under Section 37 of the Act. The Division Bench examined the factual background, noting that the agreement was executed on 12 January 2000, and the appellant had raised invoices and received part payments. The arbitrator had considered the evidence and found that the claim was not barred by limitation, relying on the continuous course of dealing and acknowledgments of liability by the respondent. The Division Bench held that the arbitrator's view was plausible and not patently illegal, and the Single Judge exceeded the limited scope of interference under Section 34. The appeal was allowed, the order of the Single Judge was set aside, and the arbitral award was restored. The Court directed the respondent to pay the awarded amount with interest as per the award.
Headnote
A) Arbitration Law - Limitation - Section 34, Section 37 of Arbitration and Conciliation Act, 1996 - Setting aside of award on limitation - The appellant challenged the order setting aside the arbitral award on the ground that the claim was barred by limitation. The Division Bench held that the arbitrator's finding on limitation was plausible and based on material, including continuous dealings and acknowledgments, and thus not patently illegal. The Court restored the award, emphasizing the limited scope of interference under Section 34. (Paras 1-10) B) Arbitration Law - Acknowledgment of Liability - Section 18 of Limitation Act, 1963 - The Court noted that the respondent's letters and payments constituted acknowledgments of liability, extending the limitation period. The arbitrator's conclusion that the claim was within time was reasonable and not perverse. (Paras 3-9)
Issue of Consideration
Whether the arbitral award was barred by limitation and whether the learned Single Judge erred in setting aside the award under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of limitation.
Final Decision
The appeal is allowed. The impugned order dated 07/03/2006 passed by the learned Single Judge in Arbitration Petition No.368 of 2005 is set aside. The arbitral award dated 20/06/2005 is restored. The respondent is directed to pay the awarded amount with interest as per the award.
Law Points
- Limitation for arbitration claims
- Section 34 of Arbitration and Conciliation Act
- 1996
- Section 37 of Arbitration and Conciliation Act
- Scope of interference with arbitral award
- Continuous course of dealing
- Acknowledgment of liability
