Good evening.

This is counsel number 020R, appearing on behalf of the respondent, Dynamo

Today, the counsel shall take 8 minutes of the court time to establish

1) the scope of enquiry of this Hon’ble court under section 11 of the arbitration and
conciliation 1996,
2) followed by the fact there is an absence of any arbitration agreement between the parties
3) And that the petitioned filed by the petitioner is bared by time of limitation
4) Rule 7 is not unconstitutional (Art. 19 & 220)
5) Rule 7 is not ultra vires to advocate act, 1961.

The Counsel would like move to the first argument, that

The court has requisite scope of enquiry under section 11 of the arbitration and
conciliation act, 1996.

Your honour, Section 11 of the arbitration and conciliation act empowers the court to appoint an
arbitrator if the parties fail to mutually appoint the same. But, the power of the court under this
particular section has been subjected to various interpretations and criticisms. The scope under
this particular section has been largely been changed post enactment of Arbitration and
Conciliation (amendment) act 2015. The legislation has limited the power of the court to
examine the existence of an arbitration agreement. But, the court In the case of M/s. Duro
Felguera, S.A v. M/s. Gangavaram Port Limited and Mayavati Trading Pvt. Ltd. v. Pradyuat
Deb Barman had held that the power of the court under Section 11 is only limited to examining
the existence of an arbitration clause and nothing more But the same was overruled in the case
of United India Insurance Co. Ltd. v. Hyundai Engineering and Construction Co. Ltd in 2018,
where the court had denied to appoint an arbitrator because the pre-requisite of the arbitration
agreement were not met.

But, Vidya Drolia and Ors. v. Durga Trading Corporation had a divergent view regarding the
same, which was in consonance with the judgments in Mayavati and M/s Duro.

But the latest case which is the precedent as of now is Garware Wall Ropes Ltd. v. Coastal
Marine Constructions and Engineering Ltd, where the apex court has clearly laid down the
examining the existence of an arbitration agreement also includes examining its validity in law.

Therefore, in the present case, this Hon’ble Court has adequate power under section 11 to
examine the validity of the arbitration agreement, if any, with respect to the time bar of limitation
period.

The Counsel would like to move to its second argument that

Your Honour, in the present case, though there exists a clause in the agreement between Bechara
Limited, Dynamo Limited and Just Chips Limited, but the same wasn’t between Bechara and
Dynamo.

Your Honour, Arbitration is based on the consensus of the parties to have their disputes settled
by arbitration which is essential for the validity of an arbitration agreement. Thus, a binding
arbitration agreement requires the consensus of both the parties. But, your honour, in the present
case, the First Party as written in the agreement refers to Bechara and Dynamo, while the Second
Party refers to Just chips limited. Therefore, the agreement, which includes the arbitration clause,
was signed with consensus with respect to Party One and Party Two and not in sense of an intra
party liability. Therefore, there was no consensus ad idem between the parties, in this sense,

Further, Your Honour, the counsel would like to establish the fact that the Petitioner wasn’t a
party to the arbitration agreement.

Your Honour, Only a Party under the definition of Section 2(1)(h) has the Locus Standi to
invoke the arbitration agreement and a non-party has no rights to do the same. 1 Section 2(1)(h)
clearly states that only a party to the arbitration agreement can invoke the same. Further, the
Apex court in the case of Chloro Controls v. Severn Trent Water Purification had tried to
expand the meaning of “party” by incorporating the Doctrine of Group of Companies.

The doctrine of Group of Companies requires the non-signatory party and the signatory party to
be of the same group.2 The doctrine also requires that the non-signatory party should be a
subsidiary of the signatory or vice-versa.3 The same is not being met in the present case as the
petitioner is not a subsidiary of Dynamo Ltd. or vice-versa. Therefore, the petitioner is not a
party to the arbitration clause present in the agreement.

Therefore, as the petitioner is not a party to the arbitration agreement and there was not active
intention of Dynamo Ltd. to form an arbitration agreement with the same. Thus, there is not valid
arbitration agreement between the parties.

The Counsel would like to move to its third argument, that

The petition filed under Section 11 of the Arbitration act is bared by time of limitation

Your Honour, Section 43(1) of the Arbitration and Conciliation Act, 1996 clearly provides that
all arbitration proceedings under the act are subject to Limitation Act, 1963. Further, Article 137
of the Limitation Act stipulates a time bar of three years from the date when the right to sue
accrues. Further, the court in the case of Union of India v. Prahalad Moharana had held that it
1
Picasso Digital Media Pvt. Ltd. v. Mr. Arun Srivastava,
2
Chloro Controls v. Severn Trent Water Purification, 2013.
3
Malhotra, p. 212, pp.3.
is essential for an invocation of an arbitration clause that subject to Article 137 of the Limitation
Act, arbitration must be initiated within the prescribed period of three years from the date on
which the other party rescinded or terminated the contract.

Relying on the dictum of the above cited judgments, it is evident from the facts that the
limitation period began on 31.01.2015, the day on which the contract between the parties
expired. The limitation period therefore extends till 31.01.2018.

In addition to this, Section 43(2) of the Arbitration Act states that for the purposes of this section,
the arbitral proceedings shall deemed to be commence as states under Section 21 of the Act.
Section 21 then provides that the arbitral proceeding is deemed to begin when the other party
receives the request to refer the dispute to arbitration.

Therefore, in the present case, a notice to refer the dispute to arbitration was sent by Bechara on
01.02.2019, which is beyond the limitation period of three years, is bared by time. Thus, the
petition under section 11 of the Act, is liable to be dismissed.

In addition to the above contention, a divergent view also exists that if an arbitrator is to be
appointed to by someone other than the a party to the arbitral proceeding then the arbitration
proceeding shall deemed to commence when notice in writing is given to that other person
requesting him to make the appointment.4 The same is also not being met in the present case as
the proceeding in court for appointment of an arbitrator under Section 11 of the Act was filed on
10.03.2019, which is well beyond the prescribed period of three years under Article 137 of the
Limitation Act.

Further, Your Honour, Section 43(3) of the Act empowers the court to extend the time for filling
application which has been barred by the limitation period under Section 43(1) if ‘undue
hardship’ would be caused to the party.

Further, the exemption of “Undue Hardship” granted by Section 43(3) of the Act is subject to
certain guidelines, as laid down in the case.5 The court is to consider whether the delay was due
to the fault of the claimant; the degree of such fault and if the claimant was mislead by the other
party. Considering the above determinants, the petitioner is at fault of initiating the arbitral
proceeding beyond the limitation period the degree of which is higher because of the fact that the
petitioner had active knowledge of the same.

Further, Section 5 of the Limitation Act provides that the Court may extent the period of
limitation for the aggrieved party if sufficient cause if shown by it for the delay. But, In the case
of Ajit Singh v. Karnail Singh, the Hon’ble court has specifically denied to condone delay of

4
Russell On Arbitration, 23rd ed. (2007), pp. 189-190, para 5-021.
5
Moscow V/O Exportkhleb v. Helmville Ltd. ‘The Jocelyne’, 1977 2 Lloyd’s Rep 121, 129.
four days as liberal construction cannot be stretched to mean that a party can approach the court
at any time of its leisure, totally ignoring the rigors provided in the limitation act.6

Therefore, the fact that the dispute arose on the day the agreement was terminated and the same
has been attempted to be resolved by well-wishers of the parties shows that Bechara Limited has
active knowledge of the arbitration clause and voluntarily sat on it till the expiry of limitation
period. Thus, the exemption should not be granted to the petitioner in the present case.