M/S. Src Company Infra PVT LTD vs. The Union Of INDIA

Facts

M/s. SRC Company Infra Pvt. Ltd. (Petitioner) filed a Civil Miscellaneous Petition under Section 11(5)(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The disputes arose from an agreement dated 19.02.2015, bearing number CAO/CN/BNC/73932/A/31/IV/2016, and Clause 64 thereof. The Petitioner's claims purportedly arose between 2017 and March 2020. The Respondents, South Western Railways and its officials, objected, arguing that the claims were time-barred as they were raised in July 2017, exceeding the three-year limitation period.

Held

The Court held that it could not conclude at this stage that the Petitioner's claim was wholly time-barred or a "dead wood." The Court found that numerous issues required consideration and evidence from both parties. Therefore, the dispute was deemed suitable for adjudication by an arbitrator. The Court was satisfied that the Petitioner had fulfilled the requirements under Section 11 of the Arbitration and Conciliation Act, 1996. Consequently, the Court allowed the petition and appointed Justice Shri. Subhash B Adi, Former Judge of the High Court of Karnataka, as the sole arbitrator. All contentions between the parties were left open for adjudication in the arbitration proceedings.

Key Issues

1. Whether the Petitioner's claims, arising from disputes related to tax components and the subsequent GST regime, are time-barred, considering they were allegedly raised in July 2017, thereby turning on the limitation period for arbitration claims. Petitioner's arguments: The Petitioner contended that the claims pertained to tax components and the complexities arising from the transition to the GST regime. They argued that they were unaware of certain tax payment issues until they became known, at which point they obtained a Chartered Accountant's certificate and raised the claim. Therefore, it could not be definitively determined at this stage whether the claim was time-barred. They also noted that the claims extended until March 2020. Respondents' arguments: The Respondents argued that the Petitioner's claims were time-barred, citing that the claim arose in July 2017 and the claim petition should have been filed within three years from that date.