Allahabad High Court: Cannot be Referred to Arbitration once Claim is found Ex Facie Time Barred

Allahabad High Court: Cannot be Referred to Arbitration once Claim is found Ex Facie Time Barred

The Allahabad High Court by its single judge Chief Justice Rajesh Bindal while with an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short A&C) praying for the appointment of an Arbitrator for the resolution of dispute between the parties, ruled that an ex-facie time-barred claim cannot be referred to arbitration.

In the present case- M/s R.B.T. Industries limited and another vs. Jaswant Rai and others, a tender was invited for the work-supplying, fabrication, erection and fixing of 3000 numbers. Steel channel sleepers on bridge number 11 on MGS-BSB Section under DRM Northern Railway, Lucknow, wherein applicants also participated. The rates of the applicants were found lowest as a result whereof the work was awarded to the applicants vide letter of acceptance dated 15th January, 2008.

The learned counsel- Mr. Udai Karan Saxena submitted that the original work allotted to the applicants was completed within time. However, certain additional work was assigned. In the execution thereof, there was a delay for the reason that required drawing was not handed over by the respondents, despite a repeated request made by the applicants.

Per contra, the learned counsel for the respondents- Mr. Rajnish Kumar Rai argued that that the applicants had only executed about eighty-eight per cent of the work. There was no fault on the part of the respondents, the delay was at the end of the applicants. Several extensions were granted to the applicants to complete the project. Last extension was granted on 20 November, 2010 but the project was not completed.

The primary issue raised before the High Court was- Whether the application filed by the applicant for the appointment of an Arbitrator for the resolution of dispute between the parties could be accepted or not.

The Court observed that the contract was awarded to the applicants vide letter dated 15 January, 2008 which was to be completed within a period of six months. The stand taken by the applicants was that certain additional work was assigned to be executed, which was delayed as the applicants were not furnished the drawings thereof. It is not in dispute that extensions were also granted to the applicant which last expired on 20 November, 2010.

The Court placed reliance on the decision passed by the Supreme Court in the case of Bharat Sanchar Nigam Limited and others vs. Nortel Networks India Private limited (2021), wherein it was held, "where the claims are ex facie time-barred, and it is manifest that there is no subsisting dispute, the Court may refuse to make the reference."

High Court noted that the stand of the respondents is that any delay in the completion of the project was not attributable to the respondents. It was only on the part of the applicants. Waiting for quite some time, when despite reminders dated 26 October, 2012, 12 August, 2013, and 19 August, 2013 the applicants failed to complete the project, the contract itself was terminated reserving the right of Railways to claim damages.

For the aforesaid reasons, the Court found no merits in the application and dismissed the same.