MANU/DE/2611/2018

Equivalent Citation: 2018VIIAD(Delhi)106, 253(2018)DLT219

IN THE HIGH COURT OF DELHI

ARB. P. 143/2018 and IA Nos. 3336-3337/2018
Decided On: 23.07.2018
Appellants: Golden Chariot Recreations Pvt. Ltd.
Vs.
Respondent: Mukesh Panika and Ors.
Hon'ble Judges/Coram:
Vibhu Bakhru, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Mukal Talwar, Sr. Advocate, Vikram Dhokalia and S.
Dhananda
For Respondents/Defendant: Vijay Sharma
JUDGMENT
Vibhu Bakhru, J.
1. The petitioner has filed the present petition under Section 11 of the Arbitration and
Conciliation Act, 1996 (hereafter 'the Act'), inter alia, praying that an independent
arbitrator be appointed to adjudicate the disputes between the parties. The petitioner
relies on an arbitration clause as contained in the Supplementary Deed of Partnership
dated 09.07.2012.
2 . The petitioner claims to be a constituent partner of a partnership firm named
Integration 2020 Developers (hereafter 'the Firm'). It is claimed that the petitioner
owns a 50% stake in the Firm and its assets including the property bearing Municipal
No. H-5/6 to H-5/10, Municipal Ward No. 1, opposite Qutub Minar, Mehrauli, New
Delhi with adjoining land admeasuring 1038 square yards. The said property is
located opposite Qutub Minar and is popularly known as 'Qutub Colonnade' (hereafter
'the property').
3 . The petitioner claims that respondent no. 2 is a company, which holds the
remaining 50% stake in the Firm. Respondent no. 2 - M/s. Furthering Arts Private
Limited (hereafter 'FAPL') is in turn held and controlled by respondent no. 1
(hereafter 'Mukesh').
4 . The petitioner claims that on 29.11.1994, a firm was constituted by Mr. Georges
Mailhot and his wife Bina K. Ramani. The Firm (known as 'Integration 2020
Developers') purchased the property (Qutub Colonnade) by an Agreement to Sell
dated 02.03.1995 executed by the owners of the property, namely, Amar Nath and
Dewan Chand. The said owners also executed a Power of Attorney and affidavits in
favour of the Firm. It is stated that the property was duly mutated in the records of
the Municipal Corporation of Delhi in the name of the Firm.
5 . The original Partnership Deed dated 29.11.1994 was entered into between Mr.

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Georges Mailhot and Ms. Bina K. Ramani and was modified by the partners on
23.07.2005 and the Firm was duly registered with the Registrar of Firms, Government
of NCT of Delhi. On 20.05.2010, the Partnership Deed dated 29.11.1994 (as amended
on 23.07.2005) was further amended and the name of the Firm was changed from
Integration 2020 to Integration 2020 Developers ('the Firm').
6 . The petitioner claims that sometime in the month of May, 2012, Mukesh
approached the petitioner and expressed his interest to acquire the entire stake of the
partners in the Firm. It is claimed that Mukesh was interested in opening an art
club/art gallery and required the property owned by the Firm for the said purpose.
7 . The petitioner claims that they entered into a Loan Agreement with the
respondents on 04.06.2012, whereby the petitioner agreed to give a loan of ' 5 crores
to each of the respondents. It is stated that on the same date, that is, on 04.06.2012,
Mr. Georges Mailhot and Ms. Bina K. Ramani sold half of their respective shares to
the respondents. Consequently, Mukesh and FAPL were inducted as partners in the
Firm holding 25% stake each. It is claimed that, thereafter, the original partners (Mr.
Georges Mailhot and Ms. Bina K. Ramani) retired from the Firm and entered into a
Supplementary Partnership Deed.
8. Thereafter, on 11.06.2012, Mukesh offered 50% stake in the Firm to the petitioner
and the petitioner paid another sum of ' 9.5 crores to the respondents (' 5 crores on
14.06.2012 to FAPL and ' 4.5 crores on 19.06.2012 to Mukesh).
9 . It is claimed that on 20.06.2012, the respondents paid Mr. Georges Mailhot and
Ms. Bina K. Ramani a sum of ' 10 crores and they deposited the original title deeds
with the respondents. The petitioner claims that these Deeds were deposited with the
petitioner by Mukesh.
10. On 09.07.2012, the petitioner entered into a Supplementary Deed of Partnership,
whereby FAPL transferred its entire share in the Firm to the petitioner against a
receipt of ' 10 crores. Consequently, both Mukesh and the petitioner now held 50%
stake in the said company.
11. The Supplementary Partnership Deed dated 09.07.2012 includes an arbitration
clause, which is set out below:-
"13. In the event of any dispute or difference in relation to or arising out of
the present Deed, the same shall be settled through arbitration to be
conducted in accordance with the Arbitration and Conciliation Act, 1996. All
parties will jointly and mutually nominate and appoint a sole arbitrator. The
arbitration shall be conducted in accordance with the Arbitration and
Conciliation Act, 1996 and the venue of arbitration shall be New Delhi."
12. It is claimed that, thereafter, on 15.07.2013, the petitioner extended a further
loan of ' 30 lakhs to Mukesh and in turn Mukesh acknowledged that the petitioner
would have the right to sell his stake in the Firm to another party to recover the dues.
1 3 . Since certain disputes had arisen between the parties on 29.09.2014, the
petitioner filed a petition (OMP 1198/2014) under Section 9 of the Act. Thereafter,
the petitioner also issued a notice dated 14.11.2014 invoking the arbitration clause.
14. Mukesh responded to the said notice by a letter dated 22.12.2014. The petitioner
claims that the said response was handed over in Court on 05.02.2015. On the said

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date, this Court disposed of the petition (OMP 1198/2014) filed by the petitioner.
15. The petitioner states that, thereafter, in July, 2017, the petitioner learned that
Mukesh was merging the property with another property, namely, H-5/6 to H-5/10
Kalka Das Marg, Mehrauli, New Delhi and in August, 2017, a complaint in this regard
was made to the SHO, Mehrauli.
16. On 10.10.2017, the petitioner sent another notice invoking the arbitration clause
under the Supplementary Deed of Partnership dated 09.07.2012. The respondents
caused a reply sent to the aforesaid notice through their advocate on 06.11.2017. It
was asserted in the said reply that the respondents had never executed the
documents referred to by the petitioner, namely, the Supplementary Partnership Deed
dated 09.07.2012 or any irrevocable Power of Attorney dated 04.06.2012.
17. Thereafter, on 04.01.2018, the petitioner filed a petition under Section 9 of the
Act and this was followed by the present petition, which was filed on 12.02.2018.
18. The present petition was listed for the first time on 23.02.2018 and notice was
issued to the respondents. On 19.03.2018, this Court directed the respondents to file
an affidavit affirming whether the signatures on the Partnership Deed, as set up by
the petitioner were respondents' signatures or not. In compliance with the aforesaid
directions, Mukesh has filed an affidavit, inter alia, affirming that the signatures on
the Supplementary Deed of Partnership dated 09.07.2012 was that of Mukesh but the
contents of the said Deed are denied. It is claimed that the signatures were obtained
by the Managing Director of the petitioner on certain blank papers and the same have
been misused by creating certain documents and the Supplementary Partnership Deed
as set up by the petitioner is one such document.
19. The principal controversy to be addressed in the present petition is whether the
present application is barred by limitation.
20. It is relevant to note that the petitioner had filed a petition (OMP 1198/2014)
under Section 9 of the Act praying for interim measures of protection. In that
petition, the petitioner had averred that it had come to its knowledge that there is
"likelihood of sale or creation of third party rights by the respondent in his 50% stake
in the partnership firm and resultantly, the partnership property without obtaining the
consent of the petitioner". Mukesh had filed his reply to the said petition on
22.12.2014. In his reply, he had affirmed that his and Mr. Jenson Anto signatures on
the alleged Loan Agreement had been obtained fraudulently by Mr. Rishi Sehdev,
Director of the petitioner company and Mukesh had never executed the said Loan
Agreements after understanding the same. He further affirmed that there was no
Partnership Deed between the parties and, therefore, there was no right vested with
the petitioner to file the petition.
21. Prior to Mukesh filing his reply to the petition under Section 9 of the Act (OMP
1198/2014), the petitioner had issued a notice dated 14.11.2014 invoking the
arbitration clause. In the said notice, the petitioner alleged that Mukesh was
representing himself as a sole owner of the property in question and, it was further
alleged that Mukesh had raised money from various parties on the pretext of selling
his stake in the Firm without obtaining the consent of the petitioner. The petitioner
also complained that the names of the partners had not been updated on the register
of the partners.
22. Mukesh had replied to the aforesaid notice on 22.12.2014. In the said response,

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he had asserted that the Supplementary Partnership Deed dated 09.07.2014, which
was relied upon by the petitioner was "forged document" and there was no
Partnership Deed as alleged at any point of time.
23. The petitioner claims that the said reply was received by it in Court for the first
time on 05.02.2015.
24. On the said date (that is, 05.02.2015), this Court disposed of the petitioner's
petition under Section 9 of the Act (OMP 1198/2014). In its order, this Court noted
that the petitioner had already invoked the arbitration clause and Mukesh had already
given his statement that there was no question of selling his share in the Firm. The
petition was disposed of by directing that the said statement would continue during
the pendency of the arbitral proceedings.
25. It is apparent from the above that the right to sue had arisen in favour of the
petitioner earlier in 2014 and in any event with the petitioner invoking the arbitration
clause by its notice dated 14.11.2014.
26. However, the petitioner did not take any steps for constitution of the Arbitral
Tribunal. Mukesh had denied the existence of any arbitration agreement, as on
22.12.2014, in the reply filed to OMP 1198/2014. In any event, the petitioner had
received the said reply to its notice by 05.02.2015. However, the petitioner did not
take any steps for constitution of the Arbitral Tribunal. The petitioner once again sent
a notice on 10.10.2017 invoking the arbitration clause. It is relevant to note that in
its notice, the petitioner made a similar allegation to the effect that Mukesh is
attempting to dilute the assets of the Firm-the immovable properties in question.
27. The present petition was filed on 12.02.2018, which is admittedly beyond the
period of three years from the first notice dated 14.11.2014.
28. Mr. Talwar, learned Senior Counsel appearing for the petitioner contended that
since the petitioner had received the response to the first notice on 05.02.2015
(response dated 22.12.2014), the cause of action had arisen on that date. The
petitioner had issued the notice invoking the arbitration within a period of three years
on 10.10.2017 from that date and, therefore, the present petition was not barred by
limitation.
2 9 . The aforesaid contention is unpersuasive. Section 43(1) of the Act expressly
mandates that the Limitation Act, 1963 would apply to arbitration as it applies to the
proceedings in Court.
30. In Prasar Bharti v. Maa Communication: MANU/DE/0394/2010 : AIR 2011 (Delhi)
26, a Division Bench of this Court has observed as under:-
"5. We find that the limitation for filing a petition under Section 8 of the
1940 Act has been the subject matter in Utkal Commercial Corporation v.
Central Coal Fields Ltd. MANU/SC/0028/1999 : AIR 1999 SC 801 where it
was held that in a case under Section 8 (2) of the 1940 Act, Article 137 of
the Limitation Act, providing limitation of three years, applies and the time
for the purpose of limitation begins to run from the date when the right to
make an application under Section 8 accrues i.e. upon the failure of the other
party to concur in the appointment of the arbitrator within 15 days inspite of
notice. It was held by the Supreme Court that in order to be entitled to ask
for a reference there must be a notice contemplated under Section 8 and no

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 compliance thereof.
6 . The position under the 1996 Act in Section 11 is akin to that under
Section 8 and not to that under Section 20 of the 1940 Act. In fact, the
procedure as prescribed under Section 20 of the 1940 Act has been totally
done away with in the 1996 Act. Under the 1996 Act, a party to an arbitration
agreement cannot straightaway approach the court for appointment of the
arbitrator, as a party to an arbitration agreement was entitled to under
Section 20 of the old Act. Under Section 11 of the new Act, even if there is
no named arbitrator, the party is not entitled to approach the court
straightaway and is required to first issue notice to the other party proposing
the names of the arbitrators and is to approach the court only upon the
failure of consensus within 30 days of such notice. The procedure prescribed
in Section 11 is mandatory. Thus, the question of a party preferring an
application under Section 11(4) or under Section 11(6) to the Chief Justice
or his designate does not arise unless the procedure of giving a notice is
followed and without such procedure being followed and failure thereof,
there would be no cause of action for the petition under Section 11(4) or
11(6) of the Act. Thus, the limitation for filing an application under Section
11(4) or 11(6) of the Act cannot but accrue only upon the failure of the
procedure prescribed and can possibly have nothing to do with the limitation
for preferring the claim. The Supreme Court in J.C. Budhraja Vs. Chairman,
Orissa Mining Corporation Ltd. MANU/SC/0602/2008 : (2008) 2 SCC 444,
relied by the counsel for the petitioner, has clearly held that the period of
limitation for filing a petition under Section 8(2) of the 1940 Act seeking
appointment of an arbitrator cannot be confused with the period of limitation
for making the claim.
7. We therefore find that the limitation for filing an application under Section
11(4) would commence running only from the expiry of 30 days from the
receipt of request mentioned in Section 11(4)(a) or (b) and the limitation for
an application under Section 11(6) would commence running from the
happening of the contingencies mentioned in sub-clause (a) or (b) or (c)
thereof."
31. In view of the above, the petitioner was required to file the present application
within a period of three years from the expiry of 30 days of its notice dated
14.11.2014. The contention that the response to the said notice gave a fresh cause of
action to issue a fresh notice invoking the arbitration is wholly unmerited. The
petitioner had raised a dispute and had accordingly, invoked the arbitration clause.
The respondents had unequivocally denied that the parties had entered into a
Partnership Deed or that any arbitration agreement existed between the parties.
Disputes were crystallized at that stage. There was no requirement for the petitioner
to issue a fresh notice for resolution of the said disputes. It was open for the
petitioner to file an application for appointment of an arbitrator at that stage.
However, the present application has been filed more than three years after this Court
had disposed of the petitioner's petition under Section 9 of the Act. In view of the
above, the present application is barred under the provisions of Limitation Act, 1963.
3 2 . The petition is, accordingly, dismissed. All the pending applications are also
disposed of.
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