AUTHOR: Shrijeta Pratik, 1st Year law student at KPMSOL, NMIMS, Mumbai.
Citation: A.P. 318 of 2020
Date of Decision: April 07, 2021
Bench: DEBANGSU BASAK
Issue at Hand:
- Whether the issue of limitation be decided by the arbitrator?
Background of the Case:
- The petitioner has requested the designation of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. By reason of an agreement dated April 16, 2004, the petitioner is a licensee of South-Eastern Railways in regard to an immovable property. On a portion of this land, the petitioner built a shopping mall and sub-licensed a part of the built area to Pantaloon Retail (India) Limited.
- Pantaloon Retail India Limited and the petitioner had engaged into a sub-licensee arrangement. Pantaloon Retail (India) Limited was subsequently taken over. Pantaloon Retail (India) Limited was demerged on August 24, 2010 by an order of the Hon’ble High Court of Bombay. Pantaloon Retail (India) Limited had told the petitioner that Future Merchandise Limited should be subrogated in its stead as a result of the demerger ruling.
- Pantaloon Retail (India) Limited’s different legal companies and undertakings were demergers, and the respondent surfaced as Pantaloon Retail (India) Limited’s successor in equity. Pantaloon Retail (India) Limited had not paid the license payments on time. There were disagreements amongst the parties to the sub-license agreement.
- A complaint had been submitted under Section 9 of the 1996 Arbitration and Conciliation Act. The petitioner has brought the problems to arbitration under Section 21 of the Act of 1996. The disputes were assigned to arbitration by an order dated March 30, 2012. The knowledgeable Arbitrator had agreed to act as a referee.
- The petitioner had requested an intermediate award as well as an award for transfer of empty and tranquil possession. On April 8, 2013, the erudite arbitrator issued an interim award granting the petitioner khas, quiet, and vacant possession of the premises. The respondents had not objected to the intermediate award. Despite the interim award, the respondents had not given the petitioner possession of the property.
- The respondents were working and deducting tax from the licence fees paid under the Sub-licensee Agreement as a primary deduction. The respondents had unlicensed the demolished premises and were not in real physical ownership or occupation of the demised premises. The respondents have been profiting from the situation. Since June 6, 2010, the respondents have failed to pay their monthly occupation costs or licence payments.
- The parties have raised a limitation problem. On January 30, 2007, the respondents’ predecessor in interest entered into a sub-licensee arrangement with the petitioner. A preliminary decision was issued on April 8, 2013 in a previous arbitration proceeding between the parties, awarding eviction of the respondents from the demised premises.
- The parties are having disagreements over how to carry out the eviction order. The petitioner claims that the respondents have not given the petitioner possession of the leased property, while the respondents claim differently. Since November 1, 2011, the petitioner has claimed profit against the respondent.
- At this point, it is impossible to say with certainty that the entire claim for profit is prohibited by the statute of limitations. The petitioner may not be entitled to the entirety of the profit claim, especially from the date of the claim, but it cannot be claimed definitively that the petitioner is not subject to any gain at all.
- The arbitrator should evaluate whether the petitioner is entitled to the benefits of Section 14 of the Limitations Act, 1963 and whether the petitioner is entitled to such benefits under the circumstances. The parties’ dispute on the matter of limitation cannot be resolved definitively.
- In accordance with the arbitration agreement between the parties, Mr. Justice Pratap Kumar Ray (retired) has been designated as the arbitrator. The issue of limitation, as addressed by the parties, is left up for the skilled arbitrator to resolve.
- The learned arbitrator is free to set his fee, which will be split evenly between the parties, with the petitioner carrying one half and the respondents bearing the other. The parties shall bear the equal proportions of the arbitral fees and expenditures.
The parties are free to inform the competent arbitrator of this ruling.
- The parties have opposing arguments on the respondents’ transfer of possession to the petitioner. According to the respondents, the petitioner reached an agreement with the individuals in occupancy, and as a result, the respondents must be understood as having given the petitioner ownership of the demised premises.
- The petitioner claims that the respondents have yet to relinquish ownership of the seized property. All residents of the demised premises, he claims, are paying occupation expenses to the petitioner, who accepts them without objection.
- It was claimed that the arbitrator had taken note of the new agreement between the petitioner and the tenants. As a result, it was believed that the petitioner’s claim is unsustainable.