LexELFIT ARABIA & ANR. versus CONCEPT HOTEL BARONS LIMITED & ORS.
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[2024] 7 S.C.R. 1230 : 2024 INSC 536 Elfit Arabia & Anr. v. Concept Hotel BARONS Limited & Ors. (Arbitration Petition (Civil) No. 15 of 2023) 09 July 2024 [Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala and Manoj Misra, JJ.] Issue for Consideration Whether claims of the petitioner in the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 were barred by limitation. Headnotes† Arbitration and Conciliation Act, 1996 – s.11(6) – Petition under – Claims of Petitioners, if barred by limitation – Court exercising jurisdiction u/s 11(6) may reject ex-facie non-arbitrable or dead claims – Duty of the court to protect the parties from being compelled to arbitrate when the claim is demonstrably barred by limitation: Held: Whether a claim is barred by limitation lies ordinarily within the domain of the arbitral tribunal – However, a Court exercising jurisdiction u/s 11(6) of the Act may reject ex-facie non-arbitrable or dead claims, to protect other party being drawn into protracted arbitration process that is bound to eventually fail – Court must ‘cut the deadwood’ by refraining from appointing an arbitrator when claims are ex-facie time-barred and dead, or there is no subsisting dispute – This examination does not involve a full review of contested facts but only a primary review, where contested facts speak for themselves – Such limited scrutiny is necessary as it is the duty of the court to protect the parties from being compelled to arbitrate when the claim is demonstrably barred by limitation – If courts don’t intervene within this limited compass and mechanically refer every dispute to arbitration, it may undermine the effectiveness of the arbitration process itself – On facts, the notices invoking arbitration were issued 11 years after the cause of action arose, which is well beyond the limitation period of 3 years and thus the claim which is sought to be raised is hopelessly barred by limitation. [Paras 5, 6, 8] [2024] 7 S.C.R. 1231 Elfit Arabia & Anr. v. Concept Hotel BARONS Limited & Ors. Arbitration and Conciliation Act, 1996 – s.11(6) – On dishonour of cheques given to petitioner, it instituted petition u/s.11(6) for appointment of arbitrator – In the interregnum, proceedings u/s.138 NI Act instituted against respondents – If a “continuing cause of action” – Negotiable Instruments Act, 1881 – s.138: Held: Initiation of arbitration and criminal proceedings under s.138 of NI Act are separate and independent proceedings that arise from two separate causes of action – Institution of proceedings u/s 138 does not imply “continuing cause of action” for purpose of initiating arbitration, as erroneously contended by petitioner. [Para 9] Case Law Cited Vidya Drolia v. Durga Trading Corporation [2020] 11 SCR 1001 : (2021) 2 SCC 1 – relied on. Arif Azim Co. Ltd. v. Aptech Ltd. [2024] 3 SCR 73 : (2024) 5 SCC 313; BSNL v. Nortel Networks (India) (P) Ltd. [2021] 2 SCR 644 : (2021) 5 SCC 738; NTPC Ltd. v. SPML Infra Ltd. [2023] 2 SCR 846 : (2023) 9 SCC 385 – referred to. List of Acts Arbitration and Conciliation Act, 1996; Negotiable Instruments Act, 1881. List of Keywords Arbitration; Barred by limitation, Domain of arbitral tribunal; Arbitration petition. Case Arising From CIVIL ORIGINAL JURISDICTION: Arbitration Petition (Civil) No. 15 of 2023 (Under Section 11(6) of the Arbitration and Conciliation Act 1996) With Arbitration Petition (Civil) No. 10 of 2023 Appearances for Parties Dr. Vineet Kothari, Sr. Adv., Mehul Kothari, Lzafeer Ahmad B. F., Vinay Kothari, Shubham Arun, Advs. for the Petitioners. Gaurav Aggarwal, Sr. Adv., Chritarth Palli, Ms. Harsheen M Palli, Mrs. Nina Nariman, Avishkar Singhvi, B. Shravanth Shanker, Anil 1232 [2024] 7 S.C.R. Digital Supreme Court Reports G Lalla, Ms. Prerna Robin, B Yeshwanth Raj, Naved Ahmed, Vivek Kumar Singh, Shubham Kumar, Advs. for the Respondents. Judgment / Order of the Supreme Court Order ARBITRATION PETITION (CIVIL) NO. 15 OF 2023 1 The petitioner, an entity incorporated in the United Arab Emirates, was purportedly approached by the respondents to finance a telecommunication project undertaken by Telesuprecon Nigeria Limited (TNL). Accordingly, the Memorandum of Understanding (MoU) which forms the basis of the petition under Section 11(6) of the Arbitration and Conciliation Act 19961 was executed on 1 June 2004. TNL was represented by the second respondent, who is also a director of the
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