Citation – 2020 SCC OnLine Del 472
In the case of SSIPL Lifestyle Pvt. Ltd. v. Vama Apparels (India) Pvt. Ltd. [“SSIPL”], two suits were filed by the Plaintiffs seeking recovery of certain amounts due from the Defendants on 17th February, 2018. Summons were issued by the Court on 15 March, 2018 and on 16th March, 2018 time was given to the defendants for filing the written statement. The same was, however, not filed as insolvency proceedings were instituted against them. Later, applications were preferred by the defendants under Section 8 of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”], seeking arbitration in accordance with the arbitration clause in the agreement between the parties. It was however contended by SSIPL that the current dispute is not arbitrable as the period of limitation of filing an application under Section 8, had lapsed.
Thus, two questions were raised in this regard:
a) Whether there is a limitation period prescribed for filing an application under Section 8 of the Arbitration Act? and,
b) Whether the limitation for filing of a written statement as provided in the Civil Procedure Code, 1908 and the Commercial Courts Act, 2015 would be applicable for filling of a Section 8 Application?
The Delhi High Court emphasised on the change in the language of Section 8(1) of the Arbitration Act, post the 2015 Amendment and noted that the “first statement on the substance of the dispute” would refer to the written statement, that was supposed to be filed by the defendants. The Court stated that the use of words “not later than the date of submitting”, in the amended provision, implies that date of submitting or limitation period for filing the written statement under Civil Procedure Code, 1908 [“CPC”] or the Commercial Courts Act, 2015, would act as the limitation period for filing of an application under Section 8 of the Arbitration Act.
The Court observed that there was an inordinate delay in filing of the Section 8 Application by the defendants, even after the conclusion of insolvency proceedings. It recognised that the purpose behind the amendment in the Act was to speed up the arbitral proceedings. The Court, therefore, dismissed the application under Section 8 and observed that the defendant cannot defeat the intention behind the amendments in the CPC and the Arbitration Act “by choosing to file a Section 8 application at its own sweet will.”
The decision of the Court in the SSIPL case, therefore seeks to expedite the process of arbitration by recognising the applicability of limitation period with respect to Section 8 of the Arbitration Act. Interestingly, while the present ruling of the Delhi High Court seems to be in line with the intent behind the Amendment Act of 2015, it comes as a departure from the view expressed by the Apex Court in the case of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. Therefore, the stance of the Supreme Court, in light of the recent amendments, remains to be seen.
(By – Rishabh Chhabaria)