Submission of a complaint to an unrelated government office does not constitute notice under Section 21 of the A&C Act 1996: Delhi High Court

the Delhi High Court ruled that the mere filing of a complaint with an independent government office expressing a grievance does not constitute notice under section 21 of the Arbitration and Conciliation Act 1996.

The single bench of Justice Vibhu Bakhru held that although it is a rule of law that all contentious disputes must be dealt with by the arbitral tribunal, however, in cases where there was no doubt that the claims raised were statute-barred, the Court would decline to appoint a referee.

Respondent Rec Power Distribution Co. Ltd solicited bids for the development of a mobile application called “Garv”. The petitioner Glocaledge Consultants Pvt Ltd was successful and the respondent awarded the contract to the petitioner. The Respondent issued a work order to the Applicant to develop the mobile application.

Subsequently, the petitioner Glocaledge Consultants filed a petition in the Delhi High Court for the appointment of an arbitrator and for the referral of a dispute to arbitration. The petitioner claimed in the petition that the respondent Rec Power Distribution failed to authorize the petitioner’s payments for additional services he provided in 2006 beyond the original scope of work under the order of work.

Counsel for the respondent Rec Power Distribution opposed the application on the ground that the applicant had failed to give notice under section 21 of the Arbitration and Conciliation Act 1996 ( A&C Act) invoking the arbitration clause to the respondent. Counsel asserted that the claim the petitioner sought to raise was also statute-barred.

Section 21 of the Arbitration and Conciliation Act 1996 provides that, unless the parties otherwise agree, arbitral proceedings in respect of a particular dispute shall commence on the date on which a request to refer that dispute to arbitration is received by the defendant.

The High Court noted that the two submissions on which the petitioner relied included a complaint lodged with the Department of Administrative Reforms and Public Grievances. The petitioner took the complaint to the Prime Minister’s Office (PMO) requesting the release of the pending payments and the appointment of an arbitrator.

The Court observed that neither of the two communications invoked by the applicant was addressed to the respondent.

The Court ruled that the mere fact of filing a complaint with an independent government office expressing one’s grievance does not constitute notice under Section 21 of the A&C Act.

The High Court held that under Section 21 of the A&C Act, the arbitral proceedings would commence when notice under Section 21 is received by the other party. Since none of the communications on which the Applicant relies were addressed to the Respondent, it cannot be said that the Respondent received them at the material time.

The Court added although it is a well-established law that all contentious disputes must be dealt with by the Arbitration Tribunal, but in cases where there was no doubt that the claims raised were statute-barred, the Court would refuse to appoint an arbitrator. .

The Court held that the narrow question it had to address was whether it was ex face clear that the claim made by the applicant was time-barred. The Court noted that there was no communication acknowledging the payments owed to the Claimant by the Respondent, and that the Claimant had asserted that the Respondent had denied the payments claimed by him and had not cleared them since 2016. Therefore , the Court held that there was no possibility of entertaining even an iota of doubt that the petitioner’s claim was time-barred.

The Court held that the claimant had failed to issue an opinion under section 21 of the A&C Act and that the claimant’s claim for payment for work carried out in 2016 was ex face prohibited by limitation.

Consequently, the Court dismissed the request of the petitioner Glocaledge Consultants.

Case Title: Glocaledge Consultants Pvt Ltd v Rec Power Distribution Company Limit

Quote: 2022 LiveLaw (Deleted) 285

Dated: 21.02.2022 (Delhi High Court)

Counsel for the Applicant: Mr. Gaurav Prakash Pathak

Counsel for the Respondent: Mr. Anand Varma and Ms. Adyasha Nanda

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