TMI Blog2013 (1) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... he claimant's claim against the Respondent even on the basis of principle of quantum meruit is also barred by law of limitation since admittedly the expenditure incurred by the Claimant on preproject activities were incurred prior to 18th April 2001. 20. The points for determination are answered accordingly. 3 The basic case as per the award is as under: The Claimant is a body corporate registered under the Companies Act, 1956 and has its registered office at 8th Floor, Jeevan Bharati, TowerII, 124, Indira Chowk, Connaught Place, New Delhi110 001 and a branch office at Mumbai. The Claimant is engaged interalia in the business of exploration and production of oil and natural gas. The Respondent is a company registered under the Companies Act, 1956 and has its office at Reliance Energy Centre, Santacruz (E), Mumbai 400 055. The Respondent is engaged interalia in the business of generation, transmission, distribution and trading of power. In this arbitral reference, the Claimant has claimed the sum of ₹ 4.3043 Crores along with interest thereon at the rate of 18% per annum from 26 December 2001. According to the Claimant, the said amount was the expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of limitation. There is no serious challenge so far as the observations made with regard to the meritsclaims as recorded by the learned Arbitral Tribunal. 6 In the present case, while appointing the Arbitrator, this Court had kept the question open, including availability of Arbitration clause and the limitation point, to be raised by the parties before the learned Arbitral Tribunal. The issues were accordingly raised, framed and proceeded. 7 The relevant averments at para 12 of the claim Petition is as under: 12. The claimant states that no part of its claim is barred by the Law of Limitation. The contract/ MOU was terminated on 20th of December 2002 and the Claimant addressed a letter dated 17th of June, 2005 stating that it would be invoking the arbitration clause. In any event, even the letters dated 8th July, 2005 and 15th July, 2005 invoke the arbitration clause. That being so, the claims are within the period of limitation. and thereby prayed that, (a) That the Respondent be ordered to pay to the Claimant ₹ 4.3043 crores, being the amount incurred by the Claimant on the project activities for supplying Gas and Associated condensate to the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent of BSES. Accordingly, I would request BSES to immediately reimburse the expenditure already incurred by ONGC on the project in line with the provisions of MOU. If BSES subsequently decides to receive gas for their power plant, the same would need to be renegotiated subject to availability at that time. 12 The important paragraph of Petitioner's letter dated 20 December 2002 is as under: In view of above, we are advising the Ministry of Petroleum and Natural Gas to cancel the said allocation of gas. The expenses already incurred by ONGC on the project with the consent of BSES, as informed vide letter dated 26.12.2001, may be reimbursed to ONGC as per clause 13.1 of the MOU and MOU dated 07.10.1999 deemed terminated. 13 The learned senior counsel appearing for the Petitioner has read and referred the last portion of paragraph 16 which is as under: It is a reminder by the Claimant to the Respondent for reimbursement of the expenditure incurred as stated in the Claimant's said letter dated 26.12.2001 as per Clause 13.1 of the MOU and it further records deemed termination of the said MOU. The 'deemed termination' refers to the termination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its infringement, or at least a clear and unequivocal threat to infringe that right, by the defendant against whom the suit is instituted. 33. The legal position may be briefly stated thus: The right to sue under Art. 120 of the Limitation Act accrues when the defendant has clearly and unequivocally threatened to infringe the right asserted by the plaintiff in the suit. Every threat by a party to such a right however ineffective and innocuous it may be, cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit. Whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said right. (Mst. Rukhmabai Vs. Lala Laxminarayan and Ors.) AIR 1960 SC 335 (c) 25 ..As long as parties are in dialogue and even the differences would have surfaced it cannot be asserted that a limitation under Article 137 has commenced. Such an interpretation will compel the parties to resort to litigation/arbitration even where there is serious hope of the parties themselves resolving the issues. ... ...As already noticed, the correspondence between the parties, in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nduct as per the Arbitration Act. (K.P. Poulose Vs. State of Kerala Anr.) (1975) 2 SCC 236 16 The learned senior counsel appearing for the Respondent has relied on Steel Authority of India Limited Vs. J.C. Budharaja, Government and Mining Contractor 1993(3) Arb. LR 335 (S.C.) and thereby contended that the facts and circumstances of each case required to be considered and to decide that the claim is barred by limitation or not. The award so passed, based upon the material available on record, is within the framework of law and the record. There is no perversity and/or any misconduct as alleged. In this case the Apex Court has considered Article 137 of the Limitation Act. 25. For deciding this controversy, we would first refer to the decision of this Court in State of Orissa and anothers Vs. Damodar Das, JT 1995(9) SC 419= 1996(1) Arb. LR. 221 (SC), wherein this Court held that Section 3 of the Limitation Act, 1963, enjoys the Court to consider the question of limitation whether it is pleaded or not. The Court in paragraph 5 held as under: Russell on Arbitration by Anthony Walton (19th Edn.) at pp.45 states that the period of limitation for commencing an arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, even if it is accepted that there were negotiations between the parties after the issuance of notice dated 22-8-1997 by the petitioner with a request that the dispute be referred to arbitration, it would not save the period of limitation in favour of the petitioner as such negotiations and acknowledgment of part of the claim by the respondents cannot enable the petitioner to refer his claim to arbitration. It is well settled law that any agreement or negotiation entered between the parties after accrual of the cause of action to refer the matter to arbitration, does not have the effect of suspending the cause of action so as to arrest the running of limitation. Steel Authority of India Vs. J.C. Budharaja, Government and Mining Contractor, AIR 1999 SC 3275. Therefore, in my opinion, the application filed by the petitioner for appointment of Arbitrator for referring the disputes between the parties, is barred by limitation and is dismissed with costs which is quantified at ₹ 3,000/. 18 Therefore, issue here is whether negotiations after issuance of first letter of termination of the contract in the year 2001 are sufficient to extend the period of limitation of 3 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 and raised the claim of ₹ 4.4 crores with interest even from the date of first termination notice itself. The intention was very clear. 20 The situation in Mst. Rukhmabai and Hari Shankar Singhania (Supra) was totally different. Those were the cases of family settlement and though agreed, other side failed to comply with the same and as discussion for negotiations were going on. 21 The concept right to accrue the cause of action means that the Plaintiffs must file suit/claim within prescribed period from the date of cause of action where the Defendant denied and even after discussions, there remained no further negotiations and/or discussions. The Defendant makes the situation clear and denied the rights of the Plaintiff, thereby unequivocal threatened to infringe the rights ascertained by the Plaintiff in the Suit. All it depends on facts and circumstances of the case as expressed even by the Supreme Court in the above cases. In the present case, as recorded, the Plaintiff itself, admittedly knowing fully the position of law and the facts in clear terms, terminated the contract and demanded the money. There was no question of demanding the money unless the contra ..... 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