Calcutta High Court
M/S Kanwar Enterprises Private Limited vs M/S Simplex Infrastructure Limited on 23 July, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
OCD 29
ORDER SHEET
AP-COM/534/2025
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
M/S KANWAR ENTERPRISES PRIVATE LIMITED
VS
M/S SIMPLEX INFRASTRUCTURE LIMITED
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 23rd July, 2025.
Appearance:
Mr. Aritra Roy Chowdhury, Adv.
Mr. Sudipta Nayan Ghosh, Adv.
. . .for the petitioner.
Mr. Sohom Sen, Adv.
. . .for the respondent.
The Court:
1. This is an application for appointment of an Arbitrator in terms of
Clause 25 of the work order dated October 1, 2016, duly amended on
March 1, 2018. Both the work orders contain a similar arbitration
clause. The clause provides that in the event of any dispute or
difference arising out of or in connection with this work order, the same
shall be first amicably settled by mutual dialogue. If the parties fail to
settle their difference or dispute arising out of or in connection with the
work order (including interpretation of the terms thereof), the same
shall be referred to arbitration. The Arbitration proceedings shall be
conducted by a single Arbitrator appointed by the Company Secretary of
2Simplex Infrastructures Ltd., and the award/decision of such arbitrator
shall be final and binding upon both the parties. The venue of the
arbitration shall be Kolkata.
2. According to the petitioner, disputes arose out of the said work order
when the bills raised were not paid in their entirety. By a letter dated
November 20, 2018, the petitioner claimed Rs.46.85 Lakhs from the
respondent. The payment was not made. By a notice dated July 3,
2020, the petitioner finally called upon the respondent to pay an
outstanding of Rs.49,92,946/- along with interest at the rate of 18%
and fees of Rs.11,000/- for cost of issuance of notice, within 15 days
from the date of receipt of the said legal notice and consent to deposit
the dues in accordance with law.
3. Notice was duly delivered upon the respondent. The delivery report is
annexed to the application. A notice was issued under Rule 5 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 on December 16, 2020 by the learned Advocate for the
petitioner. Thereafter, the suit was filed on March 5, 2021 before the
Commercial Court No.8, Saket, New Delhi.
4. The respondent filed an application under Section 5 read with Section 8
of the Arbitration and Conciliation Act. The said application was heard
and allowed by the learned Court and liberty was granted to the
petitioner to approach the appropriate forum in terms of Clause 25 of
the work order.
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5. Mr. Roy Chowdhury submits that this application should be allowed in
view of the fact that the mechanism provided under Clause 25 with
regard to appointment of an Arbitrator by the Company Secretary of the
respondent, was no longer good law.
6. Mr. Sen learned advocate for the respondent submits that the claim is
time barred. Being aware of the arbitration clause, with mala fide
intention. The petitioner instituted the suit before the learned
Commercial Court at Saket, New Delhi. Even when the application was
filed by the respondent for dismissal of the suit on the ground of
existence of an arbitration clause, the petitioner continued to pursue
the remedy before the Civil Court. Reference has been made to the
submissions of the petitioner before the learned court to the effect that
the petitioner had all along understood that there was no arbitration
clause. Thus, when the petitioner’s stand before the learned Civil Court
was that there was no existence of an arbitration clause and the work
order was not known to the petitioner, a contrary stand cannot be taken
before this Court, by praying for reference of the dispute to Arbitration.
Paragraphs 11, 16, 17, 18 and 19 of the order of the civil court have
been relied upon in support of the contention that the Court had come
to a specific finding that the work order was known to the petitioner and
all actions, including raising of bills, execution of the works etc., were
undertaken by the petitioner under the said work order. Thus, it
cannot be accepted that the petitioner was unaware of the work order.
It is further submitted that once the dues were claimed in 2018 for the
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first time and thereafter in 2025, the claim had already become time
barred. Even the invocation of the arbitration clause is barred by
limitation.
7. Exclusion of time under Section 14 of the Limitation Act will not be
available to the petitioner as the suit was a not bona fide proceeding
and was not instituted by the petitioner in good faith. Reference has
been made to a decision of the Kerala High Court in the matter of M/s.
National Collateral Management Service Ltd. versus Valiyaparambil
Traders passed in RFA No.469 of 2017.
8. Considered the rival submissions made by the parties. It is not in doubt
that the work order dated October 1, 2016, which was duly amended on
March 1, 2018, contains Arbitration Clauses. The petitioner had raised
disputes with regard to non-payment of the entire dues for the first time
in November, 2018. It appears that sometime in June, 2018, last
payment was received from the respondent. Undoubtedly, the petitioner
had approached the respondent under several legal provisions, claiming
the dues, but the respondent did not take any step towards settlement.
Thus, even if there is a provision for amicable settlement in Clause 25,
the said provision cannot be made mandatory at a belated stage. Any
further direction to settle the matter will be an empty formality.
9. The next question is whether this application should be rejected at this
stage by the referral Court on the ground that, the demand which first
arose in November 2018 cannot be referred to arbitration in July 2025,
as the claim has become time barred. Section 14 of the Limitation Act
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provides for exclusion of time consumed in a prior litigation, while
computing the period of limitation to initiate any subsequent suit or
proceeding, if the earlier suit or proceeding had been initiated in good
faith before a Civil Court. The expression “Civil Court” has been
elaborated by judicial pronouncements to mean proceedings before any
tribunal or a Writ Court or under the SARFAESI Act. All prior
proceedings of such nature will fall within the ambit of Section 14.
10. It is an admitted position that the suit was filed within the period of
limitation, before the Civil Court in 2021. The proceeding was disposed
of upon allowing the application filed by the respondent under Section 8
read with Section 5 of the Arbitration and Conciliation Act. The
argument of the respondent that, Section 14 of the Limitation Act will
not apply as the petitioner was not proceeding before the Civil Court in
good faith must not be adjudicated by this referral court. It is a matter
of evidence. The attending circumstances which led the petitioner to
approach the civil court, must be weighed in evidence.
11. Moreover, the stand of the petitioner in the suit was that the
arbitration clause in the work order was not known to it and the said
clause was an unilateral insertion, without the consent and
participation of the petitioner. The work order did not contain any
signature of the petitioner. Such contentions of the petitioner was
rejected by the learned Judge and the petitioner was granted liberty to
approach the appropriate forum in terms of Clause 25 of the work
order. Whether such finding will indicate mala fide on the part of the
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petitioner, is also a matter to be adjudicated by the arbitrator. The
applicability of the decision cited by the respondent will be relevant at
the stage of adjudication of the issue of limitation by the learned
Arbitrator. Whether Section 14 of the limitation Act should be applied in
the case in hand, should not be decided by the referral court.
12. The referral Court is only required to satisfy itself about the existence
of an arbitration clause. At best, the referral Court can weed out
frivolous non-arbitrable claims which are ex-facie deadwood. In my
prima facie view, the series of events as narrated hereinabove and the
fact that the parties were litigating on the self-same claim in a suit, do
not justify rejection of the prayer for reference to arbitration on the
ground of limitation, inter alia, holding the claim to be time barred. All
issues are left open, to be raised and decided by the learned Arbitrator.
The scope of interference of a referral court is limited. The invocation
was done within a few months from disposal of the suit and this
application has also been filed within time.
13. Reference is made to the decision of the Hon’ble Apex Court in
Aslam Ismail Khan Deshmukh vs ASAP Fluids Private Limited and
Another reported in (2025) 1 SCC 502. The relevant part is quoted
below:-
“50. As evident from the aforesaid discussion and especially in light
of the observations made in Krish Spg. [SBI General Insurance Co.
Ltd. v. Krish Spg., (2024) 12 SCC 1 : 2024 SCC OnLine SC 1754] ,
this Court cannot conduct an intricate evidentiary enquiry into the
question of when the cause of action can be said to have arisen
between the parties and whether the claim raised by the petitioner is
time-barred. This has to be strictly left for the determination by the
Arbitral Tribunal. All other submissions made by the parties
7regarding the entitlement of the petitioner to 4,00,000 and 2,00,010
equity shares in Respondent 1 company are concerned with the
merits of the dispute which squarely falls within the domain of the
Arbitral Tribunal.
51. It is now well-settled law that, at the stage of Section 11
application, the referral Courts need only to examine whether the
arbitration agreement exists — nothing more, nothing less. This
approach upholds the intention of the parties, at the time of entering
into the agreement, to refer all disputes arising between themselves
to arbitration. However, some parties might take undue advantage of
such a limited scope of judicial interference of the referral Courts
and force other parties to the agreement into participating in a time-
consuming and costly arbitration process. This is especially possible
in instances, including but not limited to, where the claimant
canvasses either ex facie time-barred claims or claims which have
been discharged through “accord and satisfaction”, or cases where
the impleadment of a non-signatory to the arbitration agreement is
sought, etc.
52. In order to balance such a limited scope of judicial interference
with the interests of the parties who might be constrained to
participate in the arbitration proceedings, the Arbitral Tribunal may
direct that the costs of the arbitration shall be borne by the party
which the Tribunal ultimately finds to have abused the process of
law and caused unnecessary harassment to the other party to the
arbitration.”
14. In the matter of SBI General Insurance Co. Ltd. vs Krish
Spinning reported in 2024 SCC Online SC 1754, the Hon’ble Apex
Court held as follows:-
“126. Before, we close the matter, it is necessary for us to clarify
the dictum as laid in Arif Azim Co. Ltd. v. Aptech Ltd. reported
in 2024 INSC 155, so as to streamline the position of law and
prevent the possibility of any conflict between the two decisions
that may arise in future.
127. In Arif Azim (supra), while deciding an application for
appointment of arbitrator under Section 11(6) of the Act, 1996, two
issues had arisen for our consideration:
i. Whether the Limitation Act, 1963 is applicable to an application
for appointment of arbitrator under Section 11(6) of the Arbitration
8and Conciliation Act, 1996? If yes, whether the petition filed by
M/s Arif Azim was barred by limitation?
ii. Whether the court may decline to make a reference under
Section 11 of Act, 1996 where the claims are ex-facie and
hopelessly time-barred?
128. On the first issue, it was observed by us that the Limitation
Act, 1963 is applicable to the applications filed under Section 11(6)
of the Act, 1996. Further, we also held that it is the duty of the
referral court to examine that the application under Section 11(6)
of the Act, 1996 is not barred by period of limitation as prescribed
under Article 137 of the Limitation Act, 1963, i.e., 3 years from the
date when the right to apply accrues in favour of the applicant. To
determine as to when the right to apply would accrue, we had
observed in paragraph 56 of the said decision that “the limitation
period for filing a petition under Section 11(6) of the Act, 1996 can
only commence once a valid notice invoking arbitration has been
sent by the applicant to the other party, and there has been a
failure or refusal on part of that other party in complying with the
requirements mentioned in such notice.”
129. Insofar as the first issue is concerned, we are of the opinion
that the observations made by us in Arif Azim (supra) do not
require any clarification and should be construed as explained
therein.
130. On the second issue it was observed by us in paragraph 67
that the referral courts, while exercising their powers under
Section 11 of the Act, 1996, are under a duty to “prima-facie
examine and reject non-arbitrable or dead claims, so as to protect
the other party from being drawn into a time-consuming and
costly arbitration process.”
131. Our findings on both the aforesaid issues have been
summarised in paragraph 89 of the said decision thus:–
“89. Thus, from an exhaustive analysis of the position of law on
the issues, we are of the view that while considering the issue of
limitation in relation to a petition under Section 11(6) of the Act,
1996, the courts should satisfy themselves on two aspects by
employing a two-pronged test – first, whether the petition under
Section 11(6) of the Act, 1996 is barred by limitation; and
secondly, whether the claims sought to be arbitrated are ex-facie
9dead claims and are thus barred by limitation on the date of
commencement of arbitration proceedings. If either of these issues
are answered against the party seeking referral of disputes to
arbitration, the court may refuse to appoint an arbitral tribunal.”
15. Under such circumstances, the Court appoints Mr. Shuvasish
Sengupta, (Mob. No. 9830855276), as the Arbitrator, to arbitrate upon
the dispute between the parties. This appointment is subject to
compliance of Section 12 of the Arbitration and Conciliation Act, 1996.
16. The learned Arbitrator shall fix his own remuneration as per the
Schedule of the Arbitration and Conciliation Act.
17. All points including point of limitation are left open to be decided by
the learned Arbitrator.
18. AP-COM 534 of 2025 is, accordingly, disposed of.
(SHAMPA SARKAR, J.)
SP/