Holding

A Section 11(6) application is subject to Article 137 of the Limitation Act, 1963, with a three‑year limitation period commencing from the expiry of the 30‑day period after a valid notice invoking arbitration, and the present petition is not barred by limitation nor are the underlying claims dead.

Summary

The petitioners, an Afghan franchisee, sought appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 to resolve disputes over royalty payments and renewal of franchise agreements with the respondent. The key issues were whether the Limitation Act, 1963 applied to a Section 11(6) application, when the right to apply accrued, and whether the court could refuse reference where the underlying claims were time‑barred. The Court held that Article 137 of the Limitation Act applies to Section 11(6) petitions, with a three‑year limitation period starting from the expiry of the 30‑day period after a valid notice invoking arbitration. The notice was served on 29‑Nov‑2022, the limitation clock started on 28‑Dec‑2022, and the petition filed on 19‑Apr‑2023 fell within the period. The Court also found that the substantive claims were not ex‑facie dead, as the cause of action crystallised on 28‑Mar‑2018 and, after accounting for the COVID‑19 exclusion period, the limitation had not expired. Consequently, the petition was allowed and a sole arbitrator was appointed.

Issues considered

Whether the Limitation Act, 1963 is applicable to an application for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and if so, whether the present petition is barred by limitation.
When does the right to apply under Section 11(6) accrue?
Whether the court may refuse to make a reference under Section 11 of the Arbitration and Conciliation Act, 1996 where the claims are ex‑facie and hopelessly time‑barred.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 21, s. 43
Commercial Courts Act, 2015s. 12A
Limitation Act, 1963s. Article 137
Negotiable Instruments Act, 1881s. 138

Subjects

LimitationFranchise agreementsLimitation Act applicability to arbitration proceedingsClaims ex-facie and hopelessly time-barredPetition not barred by limitationCause of action

Judgment

[2024] 3 S.C.R. 73 : 2024 INSC 155

M/S Arif Azim Co. Ltd.
v.
M/S Aptech Ltd.
(Arbitration Petition No. 29 of 2023)
01 March 2024
[Dr. Dhananjaya Y. Chandrachud, CJI, J.B. Pardiwala*
and Manoj Misra, JJ.]

Issue for Consideration
Whether the Limitation Act, 1963 is applicable to an application for
appointment of arbitrator u/s.11(6), Arbitration and Conciliation Act,
1996; if yes, whether the present petition is barred by limitation;
when does the right to apply u/s.11(6) accrues; whether the court
may refuse to make a reference u/s.11 of the Arbitration and
Conciliation Act, 1996 where the claims are ex-facie and hopelessly
time-barred.

Headnotes
Arbitration and Conciliation Act, 1996 – s.11(6) – Limitation
Act, 1963 – Article 137 – Applicability – Three franchise
agreements entered into between parties in 2013 – As per the
agreements, the petitioner-a company based in Afghanistan,
as the franchisee, was granted a non-exclusive license, by
the respondent to establish and operate businesses under
three trade names – Proposals were invited by the Indian
Council for Cultural Relations (ICCR), for the execution of a
short-term course – Proposal of the respondent accepted –
Course executed by the petitioner at its centre in Kabul from
February to April, 2017 – Disputes arose between the parties in
relation to the renewal and payment of royalties for all the three
franchise agreements – Respondent issued recovery notice
for non-payment of royalty/renewal fees in 2018 – Petitioner
informed the respondent of its decision to not renew two
franchise agreements – In 2021, after a gap of around three
years, the petitioner again took up the issue of non-payment
of dues for the ICCR project with the respondent – Petitioner
invoked a pre-institution mediation in 2022 however, upon
failure thereof, it sent notice for invocation of arbitration to
the respondent – Respondent replied denying the claims

* Author
74 [2024] 3 S.C.R.

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stating that notwithstanding the merits, the claims were barred
by limitation – Petitioner filed petition u/s.11(6) filed for the
appointment of an arbitrator:
Held: There is no doubt as to the applicability of the Limitation
Act, 1963 to arbitration proceedings in general and that of Article
137 of the Limitation Act, 1963 to a petition u/s.11(6) in particular
– As is evident from Article 137, the limitation period for making
an application u/s.11(6) is three years from the date when the
right to apply accrues – Limitation period for filing an application
seeking appointment of arbitrator commences only after a valid
notice invoking arbitration has been issued by one of the parties
to the other party and there has been either a failure or refusal
on part of the other party to make an appointment as per the
appointment procedure agreed upon between the parties – The
request for appointment of an arbitrator was first made by the
petitioner vide notice dtd. 24.11.2022 and a time of one month from
the date of receipt of notice was given to the respondent to comply
with the said notice – Notice was delivered to the respondent on
29.11.2022 – Hence, the said period of one month from the date
of receipt came to an end on 28.12.2022 – Thus, it is only from
this day that the clock of limitation for filing the present petition
would start to tick – The present petition was filed by the petitioner
on 19.04.2023, well within the time period of 3 years provided by
Article 137 – Thus, the present petition u/s.11(6) cannot be said
to be barred by limitation – Further, the notice invoking arbitration
was received by the respondent on 29.11.2022, which is within
the three-year period from the date on which the cause of action
for the claim had arisen – Thus, it cannot be said that the claims
sought to be raised by the petitioner are ex-facie time-barred or
dead claims on the date of the commencement of arbitration –
Petition allowed, sole arbitrator appointed.[Paras 50-52, 62, 88, 92]
Arbitration and Conciliation Act, 1996 – s.11(6) – Petition
under, issue of limitation – Courts to satisfy themselves on
two aspects by employing a two-pronged test:
Held: While considering the issue of limitation in relation to a petition
u/s.11(6), the courts should satisfy themselves on two aspects by
employing a two-pronged test – first, whether the petition u/s.11(6)
is barred by limitation; and secondly, whether the claims sought
to be arbitrated are ex-facie dead claims and are thus barred by
limitation on the date of commencement of arbitration proceedings
[2024] 3 S.C.R. 75

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

– 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. [Para 89]
Arbitration and Conciliation Act, 1996 – s.11(6) – Ascertaining
the relevant point in time when the limitation period for making
a s.11(6) application would begin – Hohfeld’s analysis of jural
relations – Discussed.
Arbitration and Conciliation Act, 1996 – s.11(6) – Application
for appointment of arbitrator u/s.11(6) – Categories of issues
– “jurisdictional issues/objections”; “admissibility issues/
objections”:
Held: Issues pertaining to the power and authority of the arbitrators
to hear and decide a case are referred to as the “jurisdictional
issues/objections” – Objections to the competence of arbitrators
to adjudicate a dispute, existence/validity of arbitration agreement,
absence of consent of the parties to submit the disputes to
arbitration, dispute falling out of the scope of the arbitration
agreement are some examples of jurisdictional or maintainability
issues – The second category referred to as the “admissibility is-
sues/objections” is of those issues which are related to the nature
of the claim and include challenges to procedural requirements,
viz. a mandatory requirement for pre-reference mediation; claim or
a part thereof being barred by limitation, etc. – Although, limitation
is an admissibility issue, yet it is the duty of the courts 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. [Paras 64, 65]
Arbitration – Cause of action – When arises – Notice for
invocation of arbitration issued by the petitioner within three
years from the date of accrual of cause of action, claims not
ex-facie dead or time-barred on the date of commencement
of the arbitration proceedings:
Held: Mere failure to pay may not give rise to a cause of action
– However, once the applicant has asserted its claim and the
respondent has either denied such claim or failed to reply to it,
the cause of action will arise after such denial or failure – In the
present case, the petitioner alleged that the respondent received
the payment for the course from the ICCR on 03.10.2017 –
However, the perusal of the communication exchanged between
76 [2024] 3 S.C.R.

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the parties indicates that it was only on 28.03.2018 that the right
of the petitioner to bring a claim against the respondent could
be said to have been crystallised – Petitioner completed the
course sometime in April and a letter to this effect was issued
on 30.07.2017 by the EOI, Kabul – Allegedly, the ICCR made
payment to the respondent on 03.10.2017 – However, the right
of the petitioner to raise the claim could only be said to have
accrued after the petitioner made a positive assertion in March,
2018 which was denied by the respondent vide email dated
28.03.2018 – Another reminder through email was given by
the petitioner on 29.12.2018, however, mere giving reminders
and sending of letters would not extend the cause of action
any further from 28.03.2018 on which date the rights of the
petitioner could be said to have been crystallised – Thus, in
ordinary circumstances, the limitation period available to the
petitioner for raising a claim would have come to an end after
an expiry of three years, that is, on 27.03.2021 – However, in
March 2020, in view of deadly Covid-19 pandemic, this Court
directed the period commencing from 15.03.2020 to be excluded
for the purposes of computation of limitation – As a result, the
period from 15.03.2020 to 28.02.2022 was finally determined to
be excluded for the computation of limitation – It was provided
that the balance period of limitation as available on 15.03.2020
would become available from 01.03.2022 – The effect of the
said order of this Court in the facts of the present case is that
the balance limitation left on 15.03.2020 would become available
w.e.f. 01.03.2022 – The balance period of limitation remaining on
15.03.2020 can be calculated by computing the number of days
be-tween 15.03.2020 and 27.03.2021, which is the day when
the limitation period would have come to an end under ordinary
circumstances – The balance period thus comes to 1 year 13
days which became available to the petitioner from 01.03.2022,
thereby meaning that the limitation period available to the petitioner
for invoking arbitration proceedings would have come to an end
on 13.03.2023 – Notice for invocation of arbitration having been
issued by the petitioner within three years from the date of accrual
of cause of action, the claims cannot be said to be ex-facie dead
or time-barred on the date of commence-ment of the arbitration
proceedings. [Paras 77, 81, 82, 84 and 91]
Arbitration and Conciliation Act, 1996 – s.21 – Commencement
of arbitral proceedings:
[2024] 3 S.C.R. 77

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

Held: s.21 provides that the arbitral proceedings in relation to a
dispute commence when a notice invoking arbitration is sent by
the claimant to the other party. [Para 85]
Arbitration and Conciliation Act, 1996 – s.11(6) – Limitation Act,
1963 – Article 137 – Applicability of Article 137 to applications
u/s.11(6), a result of legislative vacuum – Parliament should
consider bringing an amendment to the Act, 1996 prescribing
a specific period of limitation:
Held: Applicability of Article 137 to applications u/s.11(6), a result
of legislative vacuum as there is no statutory prescription regarding
the time limit – Period of three years is an unduly long period
for filing an application u/s.11 of the Act, 1996 and goes against
the very spirit of the Act, 1996 which provides for expeditious
resolution of commercial disputes within a time-bound manner –
Various amendments to the Act, 1996 have been made over the
years to ensure that arbitration proceedings are conducted and
concluded expeditiously – Parliament should consider bringing
an amendment to the Act, 1996 prescribing a specific period of
limitation within which a party may move the court for making an
application for appointment of arbitrators u/s.11 of the Act, 1996.
[Para 94]
Maxims – “Vigilantibus non dormientibus jura subveniunt”
– Discussed.

Case Law Cited
M/s B and T AG v. Ministry of Defence, [2023] 7 SCR
599 : 2023 SCC OnLine SC 657 – held inapplicable.
SBP & Co. v. Patel Engineering Ltd. and Another, [2005]
Suppl. 4 SCR 688 : (2005) 8 SCC 618 – followed.
Geo Miller and Company Private Limited v. Chairman,
Rajasthan Vidyut Utpadan Nigam Limited, [2019] 11
SCR 1108 : (2020) 14 SCC 643; Bharat Sanchar Nigam
Limited & Another v. Nortel Networks India Private
Limited, [2021] 2 SCR 644 : (2021) 5 SCC 738; Utkal
Commercial Corporation v. Central Coal Fields Ltd.,
[1999] 1 SCR 166 : (1999) 2 SCC 571; Secunderabad
Cantonment Board v. B. Rama-chandraiah & Sons,
[2021] 3 SCR 68 : (2021) 5 SCC 705; Vidya Drolia and
Others v. Durga Trading Corporation, [2020] 11 SCR
78 [2024] 3 S.C.R.

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1001 : (2021) 2 SCC 1; NTPC Ltd. v. SPML Infra Ltd,
[2023] 2 SCR 846 : (2023) 9 SCC 385; Major (Retd.)
Inder Singh Rekhi v. Delhi Development Authority, [1988]
3 SCR 351 : (1988) 2 SCC 338; Prakash Corporates
v. Dee Vee Projects Ltd., [2022] 8 SCR 889 : (2022)
5 SCC 112; Milkfood Ltd. v. GMC Ice Cream (P) Ltd,
[2004] 3 SCR 854 : (2004) 7 SCC 288 – relied on.
Swissbourgh Diamond Mines (Pty) Ltd. v. Kingdom of
Lesotho: (2019) 1 SLR 263 – referred to.

Books and Periodicals Cited
International Commercial Arbitration, Wolters Kluwer,
3rd Edition, pp. 2873-2875, Gary B. Born; O.P. Malhotra
in The Law & Practice of Arbitration and Conciliation,
3rd Edition, pp. 688-689; Dr. P.C. Mar-kanda in
Law Pertaining to Arbitration and Conciliation, 9th
Edition, LexisNexis, pp. 550-551; Mustiu and Boyd’s
Commercial Arbitration (1982 Ed., pp. 436) – referred
to.

List of Acts
Arbitration and Conciliation Act, 1996

List of Keywords
Limitation; Franchise agreements; Limitation Act applicability to
arbitration proceedings; Claims ex-facie and hopelessly time-barred;
Petition not barred by limitation; Cause of action.

Case Arising From
CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.29 of 2023
Petition under Section 11(6) of the Arbitration and Conciliation Act,
1996
Appearances for Parties
R. Sathish, Rajesh Kumar, Mohan Das Kk, Mathen Joseph, Mrs. S.
Geetha, Advs. for the Petitioner.
Rana Mukherjee, Sr. Adv., K.V. Balakrishnan, K.V. Mohan, R.K.
Raghavan, Devesh Kumar Khanduri, Ms. Oindrila Sen, Advs. for
the Respondent.
[2024] 3 S.C.R. 79

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

Judgment / Order of the Supreme Court

Judgment
J. B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts: -
INDEX*

A. FACTUAL MATRIX ................................................................ 2
B. SUBMISSIONS ON BEHALF OF THE PETITIONER ........15
C. SUBMISSIONS ON BEHALF OF THE RESPONDENT ......18
D. ANALYSIS ...........................................................................21
i. Issue No. 1: Whether the Limitation Act, 1963 is
applicable to an application for appointment of
arbitrator under Section 11(6) of the Arbitration and
Conciliation Act, 1996? If yes, whether the present
petition is barred by limitation? ..............................22
a. When does the right to apply under Section 11(6)
accrue? ................................................................27
ii. Issue No. 2: Whether the court may refuse to make
a reference under Section 11 of the Arbitration and
Conciliation Act, 1996 where the claims are ex-facie
and hopelessly time-barred? ....................................36
a. Jurisdiction versus Admissibility ..........................37
b. When does the Cause of Action arise? ..............47
c. When is Arbitration deemed to have commenced?..54
E. CONCLUSION .....................................................................56

1. This is a petition under Section 11(6) of the Arbitration and Conciliation
Act, 1996 (for short, “the Act, 1996”) filed at the instance of a
company based in Kabul, Afghanistan and engaged in the business of
* Ed Note : Pagination in index as per original judgment.
80 [2024] 3 S.C.R.

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providing training to desirous students in computer education, English
language, information technology, etc. praying for the appointment of
an arbitrator for the adjudication of disputes and claims arising from
the Contract dated 21.03.2013 entered into between the petitioner
and the respondent.
A. FACTUAL MATRIX
2. The petitioner, M/s Arif Azim Co. Ltd., is a company based in
Afghanistan, having its registered office at 1st Floor, Zarnigar Hotel,
Mohammed Jan Khan Watt, Kabul, Afghanistan and is engaged in
the business of providing training in computer education, information
technology, English language, etc.
3. The respondent, M/s Aptech Limited, is a company having its
registered office at Aptech House, A-65, MIDC Marol, Andheri (E),
Mumbai – 400093, Maharashtra, India and is engaged in the business
of providing training and education in information technology through
its network in India and abroad.
4. On 21.03.2013, three separate franchise agreements were entered
into between petitioner/franchisee and the respondent/franchisor. As
per the terms of the said agreements, the petitioner, as the franchisee,
was granted a non-exclusive license, by the respondent to establish
and operate businesses under the following trade names:
I. Aptech English Language Academy (for short, “AELA”)
II. Aptech Computer Education (for short, “ACE”)
III. Aptech Hardware and Networking Academy (for short, “AHNA”)
5. The dispute in the present case pertains to the agreement entered
into between the parties for the AELA. A perusal of the recitals of
the said agreement reveals that the respondent company has the
expertise in imparting training in information technology and had
developed content and established programs for training in computer-
based information. The programs developed by the respondent under
the brand name AELA included the recurring use of trade names,
trademarks, advertising and publicity, distinctive style and character
of premises and furnishings, support and placement program for
students, etc. The petitioner, desirous of establishing a centre for
providing training in information technology in the courses conducted
by the respondent with a view to train and educate students to enable
[2024] 3 S.C.R. 81

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

them to appear and qualify in the said courses, had approached the
respondent as a result of which the franchise agreements for AELA,
ACE and AHNA were entered into between the parties.
6. The relevant clauses of the AELA franchise agreement are reproduced
hereinbelow:
“1. GRANT OF LICENSE
1.01 The Franchisor hereby grants to the Franchisee for the
duration of the term and upon the terms of this Agreement,
an non-exclusive Licence (“the Licence”) to establish and
operate in the Territory, a business under the Trade Name
“APTECH ENGLISH LEARNING ACADEMY” in accordance
with the PROGRAM, on the terms and conditions hereinafter
set forth (“the Licensed Business”), from the designated
training centre located at First Floor, Zarnigar Hotel,
Mohammad Jan Khan Watt, Kabul, Afghanistan (hereinafter
the center)) set up in the designated territory, unless
revoked otherwise by the Franchisor. The Franchisor shall
Licence to the Franchisee use of the Trade Name in the
said territory for the purpose of running the said center.
The Franchisee shall conduct only those courses as are
mentioned in Schedule 2. The Franchisee shall be required
to obtain the prior written permission of the Franchisor, if so
directed by the Franchisor before commencing the licensed
business from the said centre. However in respect of any
additional training centers in the designated territory for
carrying out the Licensed Business, the Franchisee shall
be required to obtain such written permissions from the
Franchisor from time to time.
xxx xxx xxx
3. APPOINTMENT
Subject to the terms and conditions of this agreement the
Franchisor appoints the franchisee as an independent
non-exclusive partner with the right to market and train
learners in the territory outlined in Schedule 1.
Each party is acting as an independent contractor and
not as an agent, partner or joint venture with the other
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party for any purpose. The franchisee shall bear all costs
relating to the marketing and promotion of the courses as
outlined in Schedule 2.
xxx xxx xxx
8. PAYMENTS AND PAYMENT PROCEDURE
8.01 In consideration of the Franchisor agreeing to
grant the licence for the licensed business, in favour
of the Franchisee for a period as mentioned in Clause
2 above and for the use of the technical Know- how,
trade marks, trade names, service marks and logos of
the Franchisor in relation to its business of computer
education and the association of the Franchisee with the
reputation and goodwill of the Franchisor, the Franchisee
agrees to pay to the Franchisor a Non refundable sum
of US$ 30,000 (US Dollars Thirty Thousand only) as
initial lumpsum fees.
8.02 If the Franchisee fails to pay the aforesaid lumpsum
fees within the aforesaid period, the Franchisor shall be
entitled to terminate this Agreement with immediate effect
and shall have the right to forfeit the fees, if any, already
paid by the Franchisee.
8.03 Additionally, in consideration of the License and other
rights granted, and assistance agreed to be provided
hereunder, the Franchisee shall pay to the Franchisor
recurring royalty fees as under.
I. The recurring royalty payment shall be on the gross
collection, to be paid as given below:
● 10% of the gross collections received in the
1st Year.
● 10% of the gross collections received in the
2nd year.
● 12.5% of the gross collections received in the
3rd Year.
● 15% of the gross collections received in the
4th year.
[2024] 3 S.C.R. 83

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

● 17.5% of the gross collections received in the
5th year.
Gross collections means the total gross collections,
which have accrued to the Franchisee (irrespective of
whether realized or not) from the conduct of licensed
business of Aptech in the designated territory.
Amounts payable as Recurring Franchisee Fees will
be remitted on or before 10th of the subsequent month
for the preceding calendar month e.g. Recurring
Franchisee Fees for the gross collections received
during the period 1st April to 30th April will be remitted
on or before May 10th
Such recurring payments shall be made on monthly
basis accompanied by the statement of course fees
for each Course for the relevant month and also for
the total period for which Franchisee’s financial year
relates. The Franchisee shall use a format supplied
by the Franchisor for such statements duly supported
with requisite documentation.
II. All the payments to be made by the Franchisee to the
Franchisor shall be by way of Telegraphic Transfer
/ Demand Draft.
III. Any and all statutory tax on the payment as above
as per local laws, any other taxes, incidental taxes,
incremental taxes, duties or any other charges
whether statutory or otherwise in respect of the
payments to the Franchisor shall be borne and paid
by the Franchisee alone during the term of this
agreement.
IV. In case the payments under this agreement are
not received by the due date the Franchisor shall
be entitled to levy monthly compound interest @
24% p.a. on such late payments notwithstanding
the other remedies available under the laws of
the land.
xxx xxx xxx
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12. RENEWAL
Not less than one hundred eighty days before the expiry
of this Agreement (whether or not it has previously
been renewed under the provisions of this Clause) the
Franchisee may apply to the Franchisor for renewal of
this Agreement for further period(s). Provided that the
Franchisee has complied fully with the terms and conditions
of this Agreement, the Franchisor shall have option to
renew this Agreement on the terms and conditions for
such mutually agreed period. However in case the renewal
documents and renewal fees are not received in time
as stipulated by the Franchisor, the Franchisor has the
absolute right to charge monthly compound interest @
24% p.a. on the late renewal fees from the due date of
such payment, notwithstanding the right to terminate the
renewal of this agreement.
13. FORCE MAJEURE
Neither party to this agreement shall be liable for any
failure or delay to perform any of its obligations under
this agreement if the performance is prevented, hindered
or delayed by a Force Majeure Event which is beyond
reasonable control of either party and in such a case its
obligations shall be suspended for so long as the Force
Majeure event continues. Each party shall promptly inform
the other in writing of the existence of a Force Majeure Event
and shall consult together to find a mutually acceptable
solution. “Force Majeure Even” means any event due
to any cause beyond reasonable control of parties to
this agreement viz. unavailability of any communication
systems, breach or virus in the processes, fire, storm,
earthquake, Flood. Explosion, Act of God, Civil commotion,
strikes, or industrial action of any kind, riots, rebellion,
war wreck, epidemic failure, statutory laws, regulations or
other Government action, computer hacking, unauthorized
access to computer data, etc.
The affected party shall promptly upon the occurrence of
any such cause so inform the other party in writing and
thereafter such party shall use reasonable endeavors to
[2024] 3 S.C.R. 85

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

comply with the terms of this Agreement as fully and as
promptly as possible.
xxx xxx xxx
17. STATUS OF AGREEMENT
17.01 Nothing in this Agreement shall constitute a
partnership between the parties hereto or constitute the
Franchisee an agent of the Franchisor for any purpose
whatsoever and the Franchisee shall have no authority
or power to bind the Franchisor or to pledge its credit.
17.02 This Agreement shall not be deemed to confer
any right on the Franchisee and the license granted by
this Agreement shall be personal to the Franchisee only
and shall not be capable of being or be assigned by the
Franchisee to any other person.
17.03 This Agreement shall in no way create a contractual
relationship between the students and the Franchisor and
the Franchisee shall, at all times, be wholly liable and
responsible for any claims related to and arising out of
the Licensed Business and the conduct of the Courses.
The Franchisee undertakes to ensure that the students
are made aware at the time of enrolling in the Course
that Franchisee is entirely responsible for the conduct of
the Courses and, that the students shall have no claim
whatsoever against the Franchisor.
xxx xxx xxx
21. ARBITRATION AND GOVERNING LAWS
In the event of any dispute or difference arising between
the parties hereto, including the events of termination,
the same shall be settled through conciliation between
the parties. In the event the parties are unable to arrive
at a settlement, the matter will be referred to arbitration.
The party raising the dispute shall serve a notice upon
the other party advising that a dispute or difference has
arisen and nominate on that notice its own arbitrator.
The party receiving the notice shall, within 30 days after
receiving such notice, nominate its arbitrator by advising
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the party raising the dispute and the name of the arbitrator
appointed by the other party. The arbitrators so appointed
shall appoint a third arbitrator. The award of the majority
arbitrators shall be final, conclusive and binding upon the
parties hereto. The venue of arbitration shall be MUMBAI
and the arbitration proceedings shall be conducted in
accordance with the UNCITRAL Model Rules. If arbitration
process fails both the parties shall submit to the jurisdiction
of the Mumbai courts.
22. This Agreement shall be construed in accordance with
and governed by the Indian laws.”
7. Pursuant to the signing of the aforesaid agreement, proposals were
invited by the Indian Council for Cultural Relations, Azad Bhavan,
Indraprastha Estate, New Delhi – 110002 (for short, “the ICCR”) in
2016 for the execution of a short-term course for training in English
for students from Afghanistan who were selected to pursue degree
courses in Indian Universities in the academic year 2017-18 under
the scholarship scheme of the Government of India (for short, “the
course”). The proposal of the respondent was accepted by the
ICCR vide Sanction Order No. SSSAN-2017-18 dated 10.10.2016.
The sanction order prescribed the schedule for the conduct of the
course, submission of progress report to the Embassy of India in
Kabul (for short, “EOI, Kabul”) etc. and also approved the training
fees at Rs 5,000/- + service tax per student per month. The order
also stipulated that the payments for the course would be released to
the respondent by the ICCR at the end of every month after getting
an endorsement from the EOI, Kabul.
8. After securing the aforesaid sanction order, the respondent vide email
dated 17.10.2016 addressed to the petitioner Company informed
about the sanction order and stated that the respondent would speak
to the petitioner for the implementation of the said order once the
expectations of the ICCR for the course were understood.
9. Subsequently, a series of emails were exchanged between
the petitioner and the respondent regarding the details of the
course including the syllabus, learning outcomes, class schedule,
qualifications, salary and number of trainers, etc.
10. The EOI, Kabul vide email dated 24.12.2016, informed the petitioner
that although the applications of Afghan students were already sent
[2024] 3 S.C.R. 87

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to the Indian Universities, yet the Universities had not started granting
admissions to them and thus it was suggested by the ICCR that the
course should begin from the last week of January/ First week of
February, 2017.
11. The course was executed by the petitioner at its centre in Kabul
from February to April, 2017 for 440 Afghan students. The same was
certified by the EOI, Kabul vide its letter no. KAB/327/05/2016-17
dated 30.07.2017.
12. Vide letters dated 04.08.2017 and 14.08.2017 respectively addressed
to the EOI, Kabul, the program director for the ICCR requested for
month-wise details/number of students who attended the course so
as to process the payments for the course to the respondent.
13. Meanwhile disputes arose between the parties in relation to
the renewal and payment of royalties for all the three franchise
agreements entered into by the parties in March, 2013. Vide email
dated 20.03.2018 addressed to the petitioner, the respondent issued
a recovery notice for non-payment of royalty/renewal fees. The email
stated that due to the non-payment of outstanding royalty, the portal
operations for AELA and ACE would be shut by 21.03.2018 and by
the month-end for the AHNA portal.
14. The petitioner replied to the aforesaid recovery notice vide email
dated 23.03.2018, however the contents of the same have not been
placed on record. The respondent replied to the reply email of the
petitioner vide email dated 27.03.2018 stating that despite having
sent the invoices for pending royalties, nothing had been received
by the respondent. Responding to the issue of non-payment for the
course conducted by the petitioner, the respondent stated in the
said email that they had not received the full amount from the ICCR,
which had officially held back 22% of the payment for deductions of
quality. The respondent also called upon the petitioner to urgently
address, inter-alia, the issue of renewal of the franchise agreements.
15. Responding to the above referred email on the very same day, i.e.,
27.03.2018, the petitioner stated that it had hired 7 Indian and 4
local English trainers for executing the course and since the course
had been executed in Afghanistan, it was entitled to receive 90% of
the payments received by the respondent from Aptech India. The
petitioner further requested the respondent to share the details of
the amount received from the ICCR after the 22% deduction to
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enable them to make the calculations and finalise the payment
accordingly.
16. The respondent vide an email dated 28.03.2018 replied to the above
email of the petitioner stating that it had received only 61.5% of the
claimed amount from the ICCR after quality and TDS deductions.
The respondent further mentioned that it was entitled to 15% royalty
as opposed to the 10% stated by the petitioner and that it had
incurred some incidental expenses for the project. The respondent
also stressed on the issue of payment of outstanding royalty and
renewal, calling upon the petitioner to address them first.
17. The petitioner replied to the above email on the same day disputing
the percentage of royalty fee to which the respondent was entitled.
The petitioner further stated that it had no issues regarding the
quality deductions made by the ICCR, however it needed to know
the exact amount disbursed by the ICCR to the respondent so that
it could calculate its share from the same and adjust them towards
the pending dues.
18. From the email exchanges placed on record, it is clear that the
discussions regarding the non-payment of the amount received from
the ICCR came to a halt between the parties on 28.03.2018, however
the discussions regarding the renewal of the agreements continued.
Finally, on 23.04.2018, the petitioner informed the respondent of its
decision to not renew the franchise agreements for the ACE and AELA
in light of the dispute regarding the payment for the course executed by
the petitioner. However, the agreement for AHNA was renewed and the
respondent acknowledged the same vide an email on the same day.
19. After about nine months, the petitioner once again sent an email to
the respondent on 29.12.2018, raising the issue of the non-payment
of the dues for the ICCR project. Although the said email refers
to some phone calls and WhatsApp communication regarding the
payment for the course, nothing has been placed on record by the
petitioner to that effect. Vide the said email, the petitioner once
again requested the respondent to provide accounting details for
the expenses incurred and payment received from the ICCR for the
course. The petitioner also mentioned that it had incurred expenses
amounting to $ 60,000/- on salary, lodging and food for the trainers.
20. As it appears from the record, it is only after a gap of around
three years that the petitioner again took up the issue of non-
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payment of dues for the ICCR project with the respondent,
vide a legal notice dated 26.08.2021. Through the notice, the
petitioner called upon the respondent to pay Rs 73,53,000/- with
18% interest compounded monthly w.e.f. 01.11.2017 within 15
days of the receipt of the notice. The notice further stated that in
the event of the respondent failing to comply with the aforesaid
demand, the petitioner would file appropriate proceedings before
the competent courts including a suit for settlement of accounts
for recovery and also by way of damages or otherwise for breach
of trust and breach of contract.
21. Again, after about 10 months, the petitioner invoked a pre-institution
mediation before the Main Mediation Centre, Bombay High Court
on 05.07.2022 in accordance with Section 12A of the Commercial
Courts Act, 2015 making the respondent and the ICCR as party
respondents. Notice was issued in the said mediation proceedings
and 12.08.2022 was scheduled as the date for appearance of the
parties. Upon failure of the parties to be present on the said date,
24.08.2022 was fixed as the next date for appearance. However, on
the said date, the opposite parties submitted letters refusing to go
into mediation and thus a non-starter report dated 24.08.2022 was
issued under Rule 3(4) of the Commercial Courts (Pre-Institution
Mediation and Settlement) Rules, 2018.
22. After the failure of mediation as aforesaid, the petitioner sent notice
for invocation of arbitration to the respondent on 24.11.2022. Vide the
notice, the petitioner called upon the respondent to pay an amount of
Rs 1,48,31,067/- inclusive of interest of Rs 82,13,367/- and nominated
Mr V. Giri and Mr M.L. Verma, Senior Advocates practicing in this
Court as its nominee arbitrators.
23. The respondent replied to the aforesaid notice vide letter dated
05.04.2023 denying all the claims raised by the petitioner in the notice
dated 24.11.2022. It further stated that notwithstanding the merits,
the claims were barred by limitation. The respondent also stated
that the mediation proceedings initiated before the Bombay High
Court were under Section 12A of the Commercial Courts Act, 2015
which is a mandatory requirement before filing a commercial suit,
and thus it was not open to the petitioner to link it to the conciliation
as envisaged in the clause 21 of the franchise agreement for AELA
as extracted hereinbefore.
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24. The present petition then came to be filed by the petitioner on
19.04.2023 before this Court after the failure of the respondent in
nominating an arbitrator as per the mutually agreed upon procedure
in response to notice for invocation of arbitration.
B. SUBMISSIONS ON BEHALF OF THE PETITIONER
25. Mr. R. Sathish, the learned counsel appearing for the petitioner
submitted that this Court has the requisite jurisdiction to take
necessary measures for the constitution of an arbitral tribunal under
Section 11(6) of the Act, 1996 as the case at hand pertains to an
“international commercial arbitration” within the meaning of Section
2(f) of the Act, 1996. Further, clause 21 of the AELA agreement
provides for appointment of a three-membered arbitral tribunal in
case a dispute arises and cannot be resolved through conciliation
between the parties.
26. The counsel submitted that the petitioner, as an independent
non-exclusive partner of the respondent, is entirely responsible
for the conduct of the course as per clause 17.03 of the franchise
agreement and is thus entitled to receive 90% of the payments
received by the respondent from the ICCR after successful
completion of the course.
27. The counsel argued that as the principal contract for the course
was signed between the ICCR and the respondent, the grant in aid
of Rs 73,53,000/- was transferred by the ICCR to the respondent
on 03.10.2017 after the certificate of successful completion of the
course was issued by the EOI, Kabul. However, since the course
was executed in Afghanistan by the petitioner as the franchisee, it
is entitled to received 90% of the amount received as per the AELA
franchise agreement.
28. The counsel further submitted that the respondent had neither
informed nor disclosed the amount received from the ICCR despite
repeated requests made by the petitioner for settlement of accounts.
The petitioner further contended that the experience of the respondent
with the ICCR and Government of India cannot be a ground for
withholding of the payments by the respondent.
29. The counsel argued that the cause of action first arose on 03.10.2017
when the respondent withheld the information of receipt of Rs
73,53,000/- from the ICCR. The cause of action further arose on
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28.03.2018 when the respondent informed that cash-flow wise it had
received only 61.5% of the claimed amount from the ICCR and that
it had incurred some incidental expenses for the project.
30. The petitioner contended that since the respondent has failed to
disclose the amount received from ICCR till date, it has resulted in
a continuing cause of action as the petitioner couldn’t quantify the
total amount due along with interest as exact details of the amount
received by the respondent from the ICCR were not disclosed.
31. The counsel submitted that as the cause of action for full and final
settlement of claims was yet to accrue, the reliance placed by the
respondent on the decision of this Court in M/s B and T AG v.
Ministry of Defence reported in 2023 SCC OnLine SC 657 was
misconceived.
32. The counsel submitted that a force majeure situation as per clause
13 of the AELA agreement was created due to the coming back of
Taliban in Afghanistan in August, 2021. It was contended by the
petitioner that this resulted in the break-down of all communication
channels disabling the petitioner from approaching the courts on
time despite of doing everything in its power.
33. The counsel further submitted that the petitioner is entitled to get the
benefit of the extension of limitation period as directed by this Court
in SMW(C) No. 03 of 2020 by which the period from 15.03.2020 to
28.02.2022 is liable to be excluded for the purposes of computing
limitation.
34. The counsel submitted that upon failure of the respondent in replying
to its claims and legal notice, it had approached the Bombay High
Court Mediation Centre under Section 12A of the Commercial Courts
Act, 2015 and had initiated pre-reference mediation in accordance
with the terms of the arbitration clause in the AELA agreement. It
was further submitted that in any view of the matter, the petitioner is
not estopped from invoking arbitration under clause 21 of the AELA
agreement after having invoked pre-litigation mediation under the
Commercial Courts Act, 2015.
35. Finally, the counsel prayed for passing an order referring the dispute
to arbitration with a view to adjudicate the differences between the
parties as contemplated in clause 21 of the AELA agreement dated
21.03.2013.
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C. SUBMISSIONS ON BEHALF OF THE RESPONDENT
36. At the outset, Mr. Rana Mukherjee, the learned senior counsel
appearing on behalf of the respondent submitted that the disputes
raised by the petitioner are not arbitrable as the claims made by the
petitioner relate to the sanction letter dated 10.10.2016 issued by the
ICCR to the respondent which is not a part of the AELA franchise
agreement entered into between the parties on 21.03.2013. Thus,
in the absence of any arbitration clause in the aforesaid sanction
order, and it being unrelated to the AELA franchise agreement, the
petitioner cannot invoke arbitration for the adjudication of the claims.
37. It was further submitted by him that on the contrary, as per the
AELA franchise agreement, it was the respondent who was entitled
to receive royalty fee from the petitioner at the rates prescribed in
the franchise agreement, and there was no arrangement by which
the petitioner was entitled to a 90% payment.
38. The learned Senior counsel vehemently argued that notwithstanding
the merits of the claim, the same is hopelessly barred by limitation
on the face of it by virtue of the applicability of Article 137 of the
Limitation Act, 1963. The dispute, as per the legal notice dated
26.08.2021 issued by the petitioner to the respondent, arose on
01.11.2017 and thus the limitation period, even after considering the
covid exclusion, had come to an end much prior to the date when
the notice for invocation of arbitration was issued by the petitioner on
24.11.2022. Further, the plea of a force-majeure event due to coming
back of Taliban in Afghanistan, as raised by the petitioner is not
bona-fide as most of the exchanges between the parties took place
on email and the email facility was available to the petitioner even in
the month of August, 2021. The counsel submitted that no effective
steps were taken by the petitioner even after the covid period came
to an end indicating that the petitioner was not vigilant in protecting its
rights and hence the petition was liable to be dismissed as barred by
limitation. The counsel contended that the mere exchange of letters
would not extend the cause of action and the period of limitation for
the purposes of filing the arbitration petition.
39. It was further submitted that the invocation of pre-litigation mediation
proceedings before the Bombay High Court Mediation Centre by the
petitioner was under Section 12A of the Commercial Courts Act, 2015
which is a mandatory pre-condition before institution of a commercial
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suit under the said Act and the petitioner should not be allowed
to change course by invoking arbitration after having previously
submitted to the jurisdiction of the Commercial Courts Act, 2015.
Further, the petitioner made the ICCR as a party in the mediation
proceedings before the High Court and the ICCR also participated
in the said proceedings. Thus, it is evident that the dispute arising
out of the tripartite arrangement between the petitioner, respondent
and the ICCR has no nexus with the arbitration clause of the AELA
franchise agreement.
40. An objection was raised by the learned counsel towards the identity
of the Deponent to the affidavit in support of the present arbitration
petition on the ground that no Power of Attorney or Letter of Authority
could have been executed by the petitioner in favour of the Deponent
to the Affidavit.
41. One another submission made by the counsel was that the notice
for invocation of arbitration sent by the petitioner was not a valid
notice as per clause 21 of the franchise agreement being contrary
to the arbitration clause which provides for appointment of three
arbitrators, the notice mentions appointment of a sole arbitrator
and proposes names of two arbitrators, and on this ground too, the
petition is liable to be dismissed.
42. Placing reliance on the judgment of this Court in M/s B and T AG
(supra) the learned senior counsel submitted that the present petition
squarely falls within the dictum laid down in the said judgment and
is thus hopelessly barred by limitation.
D. ANALYSIS
43. Having heard the learned counsel appearing for the parties and
having perused the material on record, the following two questions
fall 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 and Conciliation Act, 1996? If yes,
whether the present petition is barred by limitation?
II. Whether the court may refuse to make a reference under
Section 11 of Act, 1996 where the claims are ex-facie and
hopelessly time-barred?
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i. Issue No. 1: Whether the Limitation Act, 1963 is applicable
to an application for appointment of arbitrator under Section
11(6) of the Arbitration and Conciliation Act, 1996? If yes,
whether the present petition is barred by limitation?
44. The basic premise behind the statutes providing for a limitation period
is encapsulated by the maxim “Vigilantibus non dormientibus jura
subveniunt” which translates to “the law assists those who are vigilant
and not those who sleep over their rights”. The object behind having
a prescribed limitation period is to ensure that there is certainty and
finality to litigation and assurance to the opposite party that it will not
be subject to an indefinite period of liability. Another object achieved
by a fixed limitation period is to only allow those claims which are
initiated before the deterioration of evidence takes place. The law of
limitation does not act to extinguish the right but only bars the remedy.
45. The plain reading of Section 11(6) of the Act, 1996, which provides for
the appointment of arbitrators, indicates that no time-limit has been
prescribed for filing an application under the said section. However,
Section 43 of the Act, 1996 provides that the Limitation Act, 1963
would apply to arbitrations as it applies to proceedings in court. The
aforesaid section is reproduced hereinbelow:
“43. Limitations.—(1) The Limitation Act, 1963 (36 of
1963), shall apply to arbitrations as it applies to proceedings
in court.
(2) For the purposes of this section and the Limitation
Act, 1963 (36 of 1963), an arbitration shall be deemed to
have commenced on the date referred to in section 21.
(3) Where an arbitration agreement to submit future
disputes to arbitration provides that any claim to which
the agreement applies shall be barred unless some step
to commence arbitral proceedings is taken within a time
fixed by the agreement, and a dispute arises to which
the agreement applies, the Court, if it is of opinion that
in the circumstances of the case undue hardship would
otherwise be caused, and notwithstanding that the time
so fixed has expired, may on such terms, if any, as the
justice of the case may require, extend the time for such
period as it thinks proper.
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(4) Where the Court orders that an arbitral award be set
aside, the period between the commencement of the
arbitration and the date of the order of the Court shall
be excluded in computing the time prescribed by the
Limitation Act, 1963 (36 of 1963), for the commencement
of the proceedings (including arbitration) with respect to
the dispute so submitted.”
46. Since none of the Articles in the Schedule to the Limitation Act, 1963
provide a time period for filing an application under Section 11(6) of
the Act, 1996, it would be covered by Article 137 of the Limitation
Act, 1963 which is the residual provision and reads as under:

Description of Period of Time from which
Application limitation period begins to run
137. Any other application Three When the right to
for which no period of years apply accrues.
limitation is provided
elsewhere in this
Division
47. In his authoritative commentary, “International Commercial Arbitration,
Wolters Kluwer, 3rd Edition, pp. 2873-2875”, Gary B. Born has
observed that as a general rule, limitation statutes are applicable to
arbitration proceedings. The relevant extract is as follows:
“Most nations impose limitation or prescription periods
within which civil claims must be brought. Of course,
statutes of limitation differ from country to country. As
discussed below, statutes of limitations are virtually always
applicable in international arbitration proceedings, in the
same way that they apply in national court proceedings.
Choosing between various potentially-applicable statutes
of limitations in international arbitration raises significant
choice-of-law questions.
xxx xxx xxx
Conflict of laws issues also arise as to the date that the
statute of limitations period is tolled. The issue can be
addressed by national laws, as well as by institutional
arbitration rules. Unfortunately, inconsistencies can arise
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between institutional rules and one or more potentially-
applicable national laws (which may also apply in a
mandatory fashion). For counsel in a particular dispute,
of course, the only safe course is to satisfy the shortest
potentially-applicable limitations period.”
(emphasis supplied)
48. A seven-Judge Bench of this Court in SBP & Co. v. Patel Engineering
Ltd. and Another reported in (2005) 8 SCC 618 held that the issue
of limitation being one of threshold importance, it must be decided
at the pre-reference stage, so that the other party is not dragged
through a long-drawn arbitration, which would be expensive and
time consuming.
49. A three-Judge Bench of this Court in Geo Miller and Company
Private Limited v. Chairman, Rajasthan Vidyut Utpadan Nigam
Limited reported in (2020) 14 SCC 643 observed as follows:
“14. Sections 43(1) and (3) of the 1996 Act are in pari
materia with Sections 37(1) and (4) of the 1940 Act. It is
well-settled that by virtue of Article 137 of the First Schedule
to the Limitation Act, 1963 the limitation period for reference
of a dispute to arbitration or for seeking appointment of
an arbitrator before a court under the 1940 Act (see State
of Orissa v. Damodar Das [(1996) 2 SCC 216] ) as well
as the 1996 Act (see Grasim Industries Ltd. v. State of
Kerala [ (2018) 14 SCC 265 : (2018) 4 SCC (Civ) 612] )
is three years from the date on which the cause of action
or the claim which is sought to be arbitrated first arises.
15. In Damodar Das [(1996) 2 SCC 216], this Court
observed, relying upon Russell on Arbitration by Anthony
Walton (19th Edn.) at pp. 4-5 and an earlier decision of a
two-Judge Bench in Panchu Gopal Bose v. Port of Calcutta
[(1993) 4 SCC 338], that the period of limitation for an
application for appointment of arbitrator under Sections
8 and 20 of the 1940 Act commences on the date on
which the “cause of arbitration” accrued i.e. from the date
when the claimant first acquired either a right of action or
a right to require that an arbitration take place upon the
dispute concerned.
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16. We also find the decision in Panchu Gopal Bose
[(1993) 4 SCC 338] relevant for the purpose of this case.
This was a case similar to the present set of facts, where
the petitioner sent bills to the respondent in 1979, but
payment was not made. After an interval of a decade, he
sent a notice to the respondent in 1989 for reference to
arbitration. This Court in Panchu Gopal Bose [(1993) 4
SCC 338] observed that in mercantile references of this
kind, it is implied that the arbitrator must decide the dispute
according to the existing law of contract, and every defence
which would have been open to the parties in a court of
law, such as the plea of limitation, would be open to the
parties for the arbitrator’s decision as well. Otherwise, as
this Court observed : (SCC p. 344, para 8)
“8. … a claim for breach of contract containing
a reference clause could be brought at any
time, it might be 20 or 30 years after the cause
of action had arisen, although the legislature
has prescribed a limit of three years for the
enforcement of such a claim in any application
that might be made to the law courts.”
17. This Court further held as follows: (Panchu Gopal Bose
case [ (1993) 4 SCC 338] , SCC pp. 345-46, paras 11-12)
“11. Therefore, the period of limitation for the commencement
of an arbitration runs from the date on which, had there
been no arbitration clause, the cause of action would have
accrued. Just as in the case of civil actions the claim is not
to be brought after the expiration of a specified number of
years from the date on which the cause of action accrued,
so in the case of arbitrations, the claim is not to be put
forward after the expiration of the specified number of
years from the date when the claim accrued.
12. In Russell on Arbitration….
At p. 80 it is stated thus:
‘An extension of time is not automatic and it is only granted
if “undue hardship” would otherwise be caused. Not all
hardship, however, is “undue hardship”; it may be proper
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that hardship caused to a party by his own default should
be borne by him, and not transferred to the other party
by allowing a claim to be reopened after it has become
barred.’ ”
(emphasis supplied)
50. Having traversed the statutory framework and case law, we are of
the clear view that there is no doubt as to the applicability of the
Limitation Act, 1963 to arbitration proceedings in general and that
of Article 137 of the Limitation Act, 1963 to a petition under Section
11(6) of the Act, 1996 in particular. Having held thus, the next question
that falls for our determination is whether the present petition seeking
appointment of an arbitrator is barred by limitation.
51. The determination of the aforesaid question is an exercise involving
both law and facts. As is evident from Article 137 of the Limitation Act,
1963, the limitation period for making an application under Section
11(6) of the Act, 1996 is three years from the date when the right
to apply accrues. Thus, to determine whether the present petition
is barred by limitation, it is necessary to ascertain when the right to
file the present petition under Section 11(6) of the Act, 1996 accrued
in favour of the petitioner.
a. When does the right to apply under Section 11(6) accrue?
52. It has been held in a catena of decisions of this Court that the
limitation period for making an application seeking appointment of
arbitrator must not be conflated or confused with the limitation period
for raising the substantive claims which are sought to be referred
to an arbitral tribunal. The limitation period for filing an application
seeking appointment of arbitrator commences only after a valid
notice invoking arbitration has been issued by one of the parties to
the other party and there has been either a failure or refusal on part
of the other party to make an appointment as per the appointment
procedure agreed upon between the parties.
53. O.P. Malhotra in The Law & Practice of Arbitration and Conciliation,
3rd Edition, pp. 688-689 has summarised the position of law on the
limitation period for a Section 11(6) petition thus:
“There is no specific period of limitation prescribed for
making the request under Section 11(6) to the Chief
Justice or his designate, to take the necessary measure
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for appointing an arbitrator. Therefore, Article 137 of the
Limitation Act, 1963, which provides the limitation period
of three years for filing any other application for which
no period of limitation is provided elsewhere in the third
division of the Schedule of the Act from the day when the
right to apply accrues. It is the residuary article in regard
to the applications, and it can only be applied if no other
article is applicable. It would only apply to an application
where it is required by law to be made. It is restricted to
applications for the exercise of the Acts and powers which
the court is not bound to perform suo motu. Therefore,
the period of limitation for making a request under Section
11(6) is three years, and the limitation is to be counted
from the date on which 30 days from the date of notice by
one party to the other for appointing arbitrator expires. The
question whether the claims/disputes made in reference
to arbitration was valid is a question to be decided by
the arbitrator, and not by the appointing authority of the
arbitrator under Section 11(6) of the Act. The appointing
authority is certainly required to ascertain whether the
application under Section 11(6) of the Act was barred by
time.”
(emphasis supplied)
54. Dr. P.C. Markanda in Law Pertaining to Arbitration and Conciliation,
9th Edition, LexisNexis, pp. 550-551 has discussed on the applicability
of law of limitation to a petition under Section 11(6) of the Act, 1996
as follows:
“For the purpose of examining the right of the petitioner
to apply under sub section (6) for calculating the period of
limitation, it is necessary to establish, in the first instance,
the relevant date when the right to apply accrued in favour
of the petitioner. It is the date on which the right to apply
accrues that determines the starting point. The starting
point does not coincide with the date on which the cause of
action for filing a suit arises. Whether the claims of a party
are barred by limitation or not is for the arbitrator to see,
but it is the duty of the court to see whether the application
filed in the court is within limitation or not. Limitation for
filing application under sub-section (4) would commence
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only from the expiry of 30 days from the receipt of request
mentioned in sub-section (4)(a) or (b) and the limitation
for an application under sub-section (6) would commence
from the happening of the contingencies mentioned in sub-
clauses (a) or (b) or (c) thereof. The procedure prescribed
under this section is mandatory and Art. 137, Limitation
Act providing for limitation shall apply.
xxx xxx xxx
It would be entirely wrong to mix the two aspects, namely
whether there was any valid claim and secondly the claim
to be adjudicated by the arbitrator was barred by time. As
for the second matter, it is for the arbitrator to see whether
the claim was within limitation or not and the court should
confine itself to see whether the application made to the
court is within limitation. An application made more than
three years after the accrual of cause of action is palpably
time barred and liable to be dismissed. Article 137 of the
Limitation Act makes it obligatory for claims to be filed
within 3 years of the rescission/termination of the contract.
The right of action for the department starts from the date
when the work is rescinded and not from the date when
the balance work is got completed through another agency.
If the petitioner delays invocation of arbitration clause for
months together for no justifiable cause after the period
prescribed in the arbitration agreement had elapsed, the
court would not come to the rescue of such a party seeking
appointment of arbitrator and the abnormal delay of more
than a year cannot be condoned.”
(emphasis supplied)
55. This Court in Bharat Sanchar Nigam Limited & Another v. Nortel
Networks India Private Limited reported in (2021) 5 SCC 738
held thus:
“15. It is now fairly well-settled that the limitation for filing
an application under Section 11 would arise upon the
failure to make the appointment of the arbitrator within
a period of 30 days from issuance of the notice invoking
arbitration. In other words, an application under Section 11
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can be filed only after a notice of arbitration in respect of
the particular claim(s)/dispute(s) to be referred to arbitration
[as contemplated by Section 21 of the Act] is made, and
there is failure to make the appointment.
16. The period of limitation for filing a petition seeking
appointment of an arbitrator(s) cannot be confused or
conflated with the period of limitation applicable to the
substantive claims made in the underlying commercial
contract. The period of limitation for such claims is
prescribed under various Articles of the Limitation Act,
1963. The limitation for deciding the underlying substantive
disputes is necessarily distinct from that of filing an
application for appointment of an arbitrator. This position
was recognised even under Section 20 of the Arbitration
Act, 1940. Reference may be made to the judgment of
this Court in J.C. Budhraja v. Orissa Mining Corpn. Ltd.
[(2008) 2 SCC 444 : (2008) 1 SCC (Civ) 582] wherein
it was held that Section 37(3) of the 1940 Act provides
that for the purpose of the Limitation Act, an arbitration
is deemed to have commenced when one party to the
arbitration agreement serves on the other party, a notice
requiring the appointment of an arbitrator. Para 26 of this
judgment reads as follows : (SCC p. 460)
“26. Section 37(3) of the Act provides that for
the purpose of the Limitation Act, an arbitration
is deemed to have been commenced when
one party to the arbitration agreement serves
on the other party thereto, a notice requiring
the appointment of an arbitrator. Such a notice
having been served on 4-6-1980, it has to be
seen whether the claims were in time as on that
date. If the claims were barred on 4-6-1980, it
follows that the claims had to be rejected by
the arbitrator on the ground that the claims
were barred by limitation. The said period has
nothing to do with the period of limitation for filing
a petition under Section 8(2) of the Act. Insofar
as a petition under Section 8(2) is concerned,
the cause of action would arise when the other
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party fails to comply with the notice invoking
arbitration. Therefore, the period of limitation
for filing a petition under Section 8(2) seeking
appointment of an arbitrator cannot be confused
with the period of limitation for making a claim.
The decisions of this Court in Inder Singh Rekhi
v. DDA [(1988) 2 SCC 338], Panchu Gopal
Bose v. Port of Calcutta [(1993) 4 SCC 338]
and Utkal Commercial Corpn. v. Central Coal
Fields Ltd. [(1999) 2 SCC 571] also make this
position clear.”
(emphasis supplied)
56. The other way of ascertaining the relevant point in time when the
limitation period for making a Section 11(6) application would begin
is by making use of the Hohfeld’s analysis of jural relations. It is a
settled position of law that the limitation period under Article 137 of the
Limitation Act, 1963 will commence only after the right to apply has
accrued in favour of the applicant. As per Hohfeld’s scheme of jural
relations, conferring of a right on one entity must entail the vesting of
a corresponding duty in another. When an application under Section
11(6) of the Act, 1996 is made before this Court without exhausting
the mechanism prescribed under the said sub-section, including that
of invoking arbitration by issuance of a formal notice to the other
party, this Court is not duty bound to appoint an arbitrator and can
reject the application for being premature and non-compliant with the
statutory mandate. However, once the procedure laid down under
Section 11(6) of the Act, 1996 is exhausted by the applicant and
the application passes all other tests of limited judicial scrutiny as
have been evolved by this Court over the years, this Court becomes
duty-bound to appoint an arbitrator and refer the matter to an arbitral
tribunal. Thus, the “right to apply” of the Applicant can be said to have
as its jural corelative the “duty to appoint” of this Court only after all
the steps required to be completed before instituting a Section 11(6)
application have been duly completed. Thus, 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.
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57. This Court in Utkal Commercial Corporation v. Central Coal
Fields Ltd. reported in (1999) 2 SCC 571 while determining a similar
question in relation to the Arbitration Act, 1940 held thus:
“6. Therefore, the time for the purposes of limitation begins
to run from the date when the right to make an application
under Section 8 accrues. Section 8 of the Arbitration Act,
which is relevant for our present purposes, is reproduced
below:
“8. Power of court to appoint arbitrator or umpire.—(1)
In any of the following cases—
(a) where an arbitration agreement provides that
the reference shall be to one or more arbitrators
to be appointed by consent of the parties, and all
the parties do not, after differences have arisen,
concur in the appointment or appointments; or
(b)-(c)***
any party may serve the other parties or the arbitrators,
as the case may be, with a written notice to concur in
the appointment or appointments or in supplying the
vacancy.
(2) If the appointment is not made within fifteen clear
days after service of the said notice, the court may, on
the application of the party who gave the notice and after
giving the other parties an opportunity of being heard,
appoint an arbitrator or arbitrators or umpire, as the case
may be, who shall have like power to act in the reference
and to make an award as if he or they had been appointed
by consent of all parties.”
7. Therefore, under Section 8, before an application can
be made to the court under that section, the following
requirements should be satisfied:
(1) The arbitration agreement should provide for
appointment of arbitrator/s by consent.
(2) Parties do not concur in the appointment of an
arbitrator.
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(3) One party serves notice on the other party to
concur in the appointment.
(4) No appointment is made within 15 days of the
service of the notice.
8. Thereupon the court may, on the application of the party
who gave the notice and after giving the other party an
opportunity of being heard, appoint an arbitrator.
9. In view of the express language of Section 8, it is quite
clear that unless a party who desires to apply has resorted
to the process set out in Section 8, and has failed to secure
the concurrence of the other party to the appointment of
an arbitrator within the prescribed period, the court will
not intervene under Section 8. The right to apply under
Section 8, therefore, would accrue when, within 15 clear
days of the notice, the other parties do not concur in the
appointment of an arbitrator.”
(emphasis supplied)
58. In Secunderabad Cantonment Board v. B. Ramachandraiah &
Sons reported in (2021) 5 SCC 705, this Court while determining
the issue of limitation in relation to a Section 11(6) petition under
the Act, 1996 held thus:
“19. Applying the aforesaid judgments to the facts of
this case, so far as the applicability of Article 137 of the
Limitation Act to the applications under Section 11 of the
Arbitration Act is concerned, it is clear that the demand
for arbitration in the present case was made by the
letter dated 7-11-2006. This demand was reiterated by
a letter dated 13-1-2007, which letter itself informed the
appellant that appointment of an arbitrator would have
to be made within 30 days. At the very latest, therefore,
on the facts of this case, time began to run on and from
12-2-2007. The appellant’s laconic letter dated 23-1-2007,
which stated that the matter was under consideration,
was within the 30-day period. On and from 12-2-2007,
when no arbitrator was appointed, the cause of action for
appointment of an arbitrator accrued to the respondent and
time began running from that day. Obviously, once time
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has started running, any final rejection by the appellant by
its letter dated 10-11-2010 would not give any fresh start
to a limitation period which has already begun running,
following the mandate of Section 9 of the Limitation Act.
This being the case, the High Court was clearly in error
in stating that since the applications under Section 11
of the Arbitration Act were filed on 6-11-2013, they were
within the limitation period of three years starting from
10-11-2020. On this count, the applications under Section
11 of the Arbitration Act, themselves being hopelessly
time-barred, no arbitrator could have been appointed by
the High Court.”
(emphasis supplied)
59. Similarly, in Bharat Sanchar Nigam Limited (supra), this Court after
applying the settled position of law held as follows:
“22. Applying the aforesaid law to the facts of the present
case, we find that the application under Section 11 was
filed within the limitation period prescribed under Article
137 of the Limitation Act. Nortel issued the notice of
arbitration vide letter dated 29-4-2020, which was rejected
by BSNL vide its reply dated 9-6-2020. The application
under Section 11 was filed before the High Court on 24-
7-2020 i.e. within the period of 3 years of rejection of the
request for appointment of the arbitrator.”
(emphasis supplied)
60. It’s time now to apply the dicta laid down in the aforesaid judgments
to the facts of the present case. The notice for invocation of arbitration
was issued by the petitioner to the respondent on 24.11.2022,
proposing the names of two learned arbitrators and calling upon
the respondent to either release the allegedly withheld payment or
nominate an arbitrator from their side within a period of 30 days from
the date of receipt of the notice. As per the record, the notice was
delivered to the respondent on 29.11.2022. The relevant extracts
from the said notice are extracted hereinbelow:
“14. Thus disputes arose between the parties, one
incorporated in a country other than India in relation to the
Franchise Agreement dt. 21.3.2013, which would attract
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Section 2(1)(f)(ii) of the A&C Act. Since every effort to
resolve it amicably failed, our client is invoking Sec 11(6)
read with Section 11(12)(a) of A & C Act before Hon’ble
Supreme Court of India to seek appointment of a sole
arbitrator in case M/s Aptech Ltd. is not heeding AACL
request in this behalf.
15. Without prejudice to your rights, our client suggests the
name of 2 persons, namely Sri. V. Giri, Sri. M L Verma,
Senior advocates practicing in the Hon’ble Supreme Court
subject to consent, or any Hon’ble former judges for enter
into reference with consent of parties to decide all the
disputes arising out of the Franchise Agreement dated
21.3.2013, between the parties, within the period as per
Section 29A of the Act.
16. In case of failure on your part to return the illegally
withheld money or if the above request for appointment
of a sole Arbitrator from the panel suggested or any other
name suggested from your side within 30 days of from
the receipt of this notice, our clients will be constrained
to file appropriate legal proceedings as stated in Para
14 of this notice for which M/s Aptech Ltd. will be fully
responsible for all costs, risks, responsibilities, expenses
and consequences thereof. Please note. Copy Retained.”
61. The respondent replied to the said notice on 05.04.2023. The relevant
parts from the aforesaid reply are extracted hereinbelow:
“5. My clients submit that the notice addressed by you
on behalf of your clients is defective, unjustified, without
any basis, documents, material and is contradictory and
inconsistent with the stand taken by your clients in the
mediation proceedings filed before the Hon’ble High Court.
6. My client states that your clients have misinterpreted the
clause of the Arbitration under the Franchise Agreement
dated 21.3.2013 i.e., the conciliation/mediation process and
are linking the same to the proceedings of mediation filed
before the Hon’ble Bombay High Court. My client states
that the mediation proceedings filed before the Hon’ble
Bombay High Court was filed under section 2(1)(c) of
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the Commercial Court Act which is mandatory provision
before instituting the Commercial Suit. Therefore, my
clients therefore state that the invocation of arbitration
clause under the Franchise Agreement dated 21.3.2013
and your notice dated 24.11.2022 is illegal, invalid, non-
est and unjustified and is liable to be withdrawn forthwith.
7. My clients state that in view of the aforesaid position,
there is no cause of action for referring any dispute to the
Arbitration and your notice is defective, illegal and invalid.
Therefore, there is no question of my clients consenting to
the invocation of the arbitration clause and/or appointment
of an Arbitrator.
8. My clients state that despite having conveyed the above
should your client insists in initiating any legal proceedings,
the same shall be defended entirely at your client’s risk
as to costs and consequences. My clients reiterate that
nothing contained in your notice and not specifically dealt
with herein shall in any manner be treated as an admission
due to non traverse and in fact shall be treated as denial.”
62. A perusal of the above shows that the request for appointment of an
arbitrator was first made by the petitioner vide notice dated 24.11.2022
and a time of one month from the date of receipt of notice was given
to the respondent to comply with the said notice. The notice was
delivered to the respondent on 29.11.2022. Hence, the said period of
one month from the date of receipt came to an end on 28.12.2022.
Thus, it is only from this day that the clock of limitation for filing the
present petition would start to tick. The present petition was filed by
the petitioner on 19.04.2023, which is well within the time period of
3 years provided by Article 137 of the Limitation Act, 1963. Thus,
the present petition under Section 11(6) of the Act, 1996 cannot be
said to be barred by limitation.
ii. Issue No. 2: Whether the court may refuse to make
a reference under Section 11 of the Arbitration and
Conciliation Act, 1996 where the claims are ex-facie and
hopelessly time-barred?
63. As discussed above, the present petition filed by the petitioner is
not barred by limitation. Thus, the next question that falls for our
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consideration is whether the claims sought to be arbitrated by the
petitioner are ex-facie barred by limitation, and if so, whether the
court may refuse to refer them to arbitration?
a. Jurisdiction versus Admissibility
64. There are two categories of issues that may be raised against an
application for appointment of arbitrator under Section 11(6) of the
Act, 1996. The first category is of the issues pertaining to the power
and authority of the arbitrators to hear and decide a case and are
referred to as the “jurisdictional issues/objections”. Objections to
the competence of arbitrators to adjudicate a dispute, existence/
validity of arbitration agreement, absence of consent of the parties
to submit the disputes to arbitration, dispute falling out of the scope
of the arbitration agreement are some examples of jurisdictional or
maintainability issues.
65. The second category is of those issues which are related to the nature
of the claim and include challenges to procedural requirements, viz.
a mandatory requirement for pre-reference mediation; claim or a part
thereof being barred by limitation, etc. This category is referred to
as the “admissibility issues/objections”.
66. This Court in Bharat Sanchar Nigam Limited (supra), explained
the difference between the aforesaid two category of objections and
held that the issue of limitation is essentially an admissibility issue
and is not a challenge to the jurisdiction of the arbitrator to decide
the claim. While placing reliance on decision of the Singapore Court
of Appeal in Swissbourgh Diamond Mines (Pty) Ltd. v. Kingdom
of Lesotho reported in (2019) 1 SLR 263, this Court explained the
“tribunal v. claim” test thus:
“43. Applying the “tribunal v. claim” test, a plea of statutory
time bar goes towards admissibility as it attacks the claim.
It makes no difference whether the applicable statute of
limitations is classified as substantive (extinguishing the
claim) or procedural (barring the remedy) in the private
international law sense.
44. The issue of limitation which concerns the “admissibility”
of the claim, must be decided by the Arbitral Tribunal either
as a preliminary issue, or at the final stage after evidence
is led by the parties.”
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67. Although, limitation is an admissibility issue, yet it is the duty of the
courts 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.
68. In Mustiu and Boyd’s Commercial Arbitration (1982 Ed., pp. 436)
under the heading “Hopeless Claims” in Chapter 31 it is stated
thus in relation to the jurisdiction of an arbitral tribunal adjudicating
commercial disputes:
“Two situations must be distinguished. The first, which is
very rare, exists when the claimant not only appreciates,
but will if pressed be prepared to acknowledge, that his
claim is ill-founded in law. In effect, he asserts that his
claim has commercial and moral merit; that if the law gives
him no remedy, there is a defect in the law; and that a
commercial arbitrator ought to award him something in
recognition of the true merits.
Here, we believe that there is undoubtedly jurisdiction to
interfere by way of injunction to prevent the respondent
from being harassed by a claim which can never lead to
valid award, for example in cases where claim is brought in
respect of the alleged arbitration agreement which does not
really exist, or which has ceased to exist. So also where the
dispute lies outside the scope of the arbitration agreement.
By parity of reasoning, the Court should be prepared to
intervene where the claimant and the respondent are at
one as to the absence of legal merits, so that it can be
said that there is no real dispute.
The respondent might also seek to protect himself by
recourse to the arbitrator. He cannot ask the arbitrator
to rule that there is no dispute, since this would be a
matter affecting his own jurisdiction. An alternative would
be to invite the arbitrator summarily to dismiss the claim.
It would appear safer, however, to leave the matter to
the court.”
69. The scope of this primary examination has been carefully laid down
by a three-Judge Bench of this Court in Vidya Drolia and Others v.
Durga Trading Corporation reported in (2021) 2 SCC 1 as follows:
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“148. Section 43(1) of the Arbitration Act states that the
Limitation Act, 1963 shall apply to arbitrations as it applies
to court proceedings. Sub-Section (2) states that for the
purposes of the Arbitration Act and Limitation Act, arbitration
shall be deemed to have commenced on the date referred
to in Section 21. Limitation law is procedural and normally
disputes, being factual, would be for the arbitrator to
decide guided by the facts found and the law applicable.
The court at the referral stage can interfere only when it
is manifest that the claims are ex facie time-barred and
dead, or there is no subsisting dispute. All other cases
should be referred to the Arbitral Tribunal for decision on
merits. Similar would be the position in case of disputed
“no-claim certificate” or defence on the plea of novation
and “accord and satisfaction”. As observed in Premium
Nafta Products Ltd. [Fili Shipping Co. Ltd. v. Premium
Nafta Products Ltd., 2007 UKHL 40 : 2007 Bus LR 1719
(HL)], it is not to be expected that commercial men while
entering transactions inter se would knowingly create a
system which would require that the court should first
decide whether the contract should be rectified or avoided
or rescinded, as the case may be, and then if the contract
is held to be valid, it would require the arbitrator to resolve
the issues that have arisen.
xxx xxx xxx
154.4. Rarely as a demurrer the court may inerfere at
Section 8 or 11 stage when it is manifestly and ex facie
certain that the arbitration agreement is non-existent, invalid
or the disputes are non-arbitrable, though the nature and
facet of non-arbitrability would, to some extent, determine
the level and nature of judicial scrutiny. The restricted
and limited review is to check and protect parties from
being forced to arbitrate when the matter is demonstrably
“non-arbitrable” and to cut off the deadwood. The court by
default would refer the matter when contentions relating to
non-arbitrability are plainly arguable; when consideration
in summary proceedings would be insufficient and
inconclusive; when facts are contested; when the party
opposing arbitration adopts delaying tactics or impairs
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conduct of arbitration proceedings. This is not the stage
for the court to enter into a mini trial or elaborate review
so as to usurp the jurisdiction of the Arbitral Tribunal but
to affirm and uphold integrity and efficacy of arbitration as
an alternative dispute resolution mechanism.”
(emphasis supplied)
70. The aforesaid decision in Vidya Drolia (supra) was relied upon and
reaffirmed in another decision of this Court in NTPC Ltd. v. SPML
Infra Ltd. reported in (2023) 9 SCC 385 wherein the “Eye of the
Needle” test was explained as follows:
“Eye of the needle
25. The abovereferred precedents crystallise the position
of law that the pre-referral jurisdiction of the Courts under
Section 11(6) of the Act is very narrow and inheres two
inquiries. The primary inquiry is about the existence
and the validity of an arbitration agreement, which also
includes an inquiry as to the parties to the agreement
and the applicant’s privity to the said agreement. These
are matters which require a thorough examination by the
Referral Court. The secondary inquiry that may arise at the
reference stage itself is with respect to the non-arbitrability
of the dispute.
26. As a general rule and a principle, the Arbitral Tribunal
is the preferred first authority to determine and decide all
questions of non-arbitrability. As an exception to the rule,
and rarely as a demurrer, the Referral Court may reject
claims which are manifestly and ex facie non-arbitrable
[Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para
154.4: (2021) 1 SCC (Civ) 549]. Explaining this position,
flowing from the principles laid down in Vidya Drolia [Vidya
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021)
1 SCC (Civ) 549], this Court in a subsequent decision in
Nortel Networks [BSNL v. Nortel Networks (India) (P) Ltd.,
(2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] held [BSNL
v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738,
para 45.1 : (2021) 3 SCC (Civ) 352] : (Nortel Networks
case [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5
SCC 738 : (2021) 3 SCC (Civ) 352], SCC p. 764, para 45)
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“45. … 45.1. … While exercising jurisdiction
under Section 11 as the judicial forum, the Court
may exercise the prima facie test to screen and
knockdown ex facie meritless, frivolous, and
dishonest litigation. Limited jurisdiction of the Courts
would ensure expeditious and efficient disposal at
the referral stage. At the referral stage, the Court
can interfere “only” when it is “manifest” that the
claims are ex facie time-barred and dead, or there
is no subsisting dispute.”
27. The standard of scrutiny to examine the non-arbitrability
of a claim is only prima facie. Referral Courts must not
undertake a full review of the contested facts; they must
only be confined to a primary first review [Vidya Drolia v.
Durga Trading Corpn., (2021) 2 SCC 1, para 134 : (2021)
1 SCC (Civ) 549] and let facts speak for themselves. This
also requires the Courts to examine whether the assertion
on arbitrability is bona fide or not. [Vidya Drolia v. Durga
Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ)
549] The prima facie scrutiny of the facts must lead to a
clear conclusion that there is not even a vestige of doubt
that the claim is non-arbitrable. [BSNL v. Nortel Networks
(India) (P) Ltd., (2021) 5 SCC 738, para 47 : (2021) 3 SCC
(Civ) 352] On the other hand, even if there is the slightest
doubt, the rule is to refer the dispute to arbitration [Vidya
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para
154.4 : (2021) 1 SCC (Civ) 549] .
28. The limited scrutiny, through the eye of the needle, is
necessary and compelling. It is intertwined with the duty of
the Referral Court to protect the parties from being forced
to arbitrate when the matter is demonstrably non-arbitrable
[Ibid.]. It has been termed as a legitimate interference by
Courts to refuse reference in order to prevent wastage
of public and private resources [Vidya Drolia v. Durga
Trading Corpn., (2021) 2 SCC 1, para 139 : (2021) 1
SCC (Civ) 549]. Further, as noted in Vidya Drolia [Vidya
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021)
1 SCC (Civ) 549], if this duty within the limited compass
is not exercised, and the Court becomes too reluctant to
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intervene, it may undermine the effectiveness of both,
arbitration and the Court [Vidya Drolia v. Durga Trading
Corpn., (2021) 2 SCC 1, para 139 : (2021) 1 SCC (Civ)
549]. Therefore, this Court or a High Court, as the case
may be, while exercising jurisdiction under Section 11(6)
of the Act, is not expected to act mechanically merely
to deliver a purported dispute raised by an applicant at
the doors of the chosen arbitrator, as explained in DLF
Home Developers Ltd. v. Rajapura Homes (P) Ltd. [DLF
Home Developers Ltd. v. Rajapura Homes (P) Ltd., (2021)
16 SCC 743, paras 22, 26 : 2021 SCC OnLine SC 781,
paras 18, 20]”
(emphasis supplied)
71. In Geo Miller (supra) where the cause of action for bringing the
claim arose in 1983, this Court refused to appoint an arbitrator as
the application seeking appointment of arbitrator was filed much later
in 2003, that is after a delay of almost twenty years. The relevant
part of the said judgment is extracted hereinbelow:
“21. Applying the aforementioned principles to the present
case, we find ourselves in agreement with the finding of the
High Court that the appellant’s cause of action in respect of
Arbitration Applications Nos. 25/2003 and 27/2003, relating
to the work orders dated 7-10-1979 and 4-4-1980 arose
on 8-2-1983, which is when the final bill handed over to
the respondent became due. Mere correspondence of
the appellant by way of writing letters/reminders to the
respondent subsequent to this date would not extend the
time of limitation. Hence the maximum period during which
this Court could have allowed the appellant’s application
for appointment of an arbitrator is 3 years from the date
on which cause of action arose i.e. 8-2-1986. Similarly,
with respect to Arbitration Application No. 28/2003 relating
to the work order dated 3-5-1985, the respondent has
stated that final bill was handed over and became due on
10-8-1989. This has not been disputed by the appellant.
Hence the limitation period ended on 10-8-1992. Since
the appellant served notice for appointment of arbitrator
in 2002, and requested the appointment of an arbitrator
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before a court only by the end of 2003, his claim is clearly
barred by limitation.”
(emphasis supplied)
72. In Bharat Sanchar Nigam Limited (supra), this Court while
observing that although the arbitration petition was not barred by
limitation, yet the cause of action for the underlying claims having
arisen much earlier, the claims were clearly barred by limitation on
the day notice for arbitration was invoked. Relevant paragraphs are
extracted hereinbelow:
“48. Applying the law to the facts of the present case, it
is clear that this is a case where the claims are ex facie
time-barred by over 5½ years, since Nortel did not take
any action whatsoever after the rejection of its claim by
BSNL on 4-8-2014. The notice of arbitration was invoked
on 29-4-2020. There is not even an averment either in the
notice of arbitration, or the petition filed under Section 11, or
before this Court, of any intervening facts which may have
occurred, which would extend the period of limitation falling
within Sections 5 to 20 of the Limitation Act. Unless, there
is a pleaded case specifically adverting to the applicable
section, and how it extends the limitation from the date
on which the cause of action originally arose, there can
be no basis to save the time of limitation.
49. The present case is a case of deadwood/no subsisting
dispute since the cause of action arose on 4-8-2014, when
the claims made by Nortel were rejected by BSNL. The
respondent has not stated any event which would extend
the period of limitation, which commenced as per Article
55 of the Schedule of the Limitation Act (which provides
the limitation for cases pertaining to breach of contract)
immediately after the rejection of the final bill by making
deductions.
50. In the notice invoking arbitration dated 29-4-2020, it
has been averred that:
“Various communications have been exchanged
between the petitioner and the respondents ever
since and a dispute has arisen between the petitioner
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and the respondents, regarding non-payment of the
amounts due under the tender document.”
51. The period of limitation for issuing notice of arbitration
would not get extended by mere exchange of letters, [S.S.
Rathore v. State of M.P., (1989) 4 SCC 582 : 1990 SCC
(L&S) 50; Union of India v. Har Dayal, (2010) 1 SCC 394;
CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam Ltd.,
(2020) 5 SCC 185] or mere settlement discussions, where
a final bill is rejected by making deductions or otherwise.
Sections 5 to 20 of the Limitation Act do not exclude the
time taken on account of settlement discussions. Section
9 of the Limitation Act makes it clear that:“where once the
time has begun to run, no subsequent disability or inability
to institute a suit or make an application stops it.” There
must be a clear notice invoking arbitration setting out the
“particular dispute” [ Section 21 of the Arbitration and
Conciliation Act, 1996.] (including claims/amounts) which
must be received by the other party within a period of 3
years from the rejection of a final bill, failing which, the
time bar would prevail.
52. In the present case, the notice invoking arbitration was
issued 5½ years after rejection of the claims on 4-8-2014.
Consequently, the notice invoking arbitration is ex facie
time-barred, and the disputes between the parties cannot
be referred to arbitration in the facts of this case.”
(emphasis supplied)
73. This Court, in M/s B and T AG (supra), to which two of us, the Chief
Justice, Dr. D.Y. Chandrachud and Justice J.B. Pardiwala, were
members of the Bench, had the occasion to ascertain in the facts
of the said case whether an application for appointment of arbitrator
under Section 11(6) of the Act, 1996 was barred by limitation. The
facts of the said case were that disputes had arisen between the
parties in relation to the alleged wrongful encashment of warranty
bond by the respondent therein vide its letter dated 16.02.2016. Even
after the amount got credited in the bank account of the respondent,
the parties continued to engage in bilateral discussions. It was the
case of the petitioner therein that the ‘breaking point’ was reached
sometime in September, 2019 and not in 2016 as negotiations had
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continued to take place between the parties. This Court rejected the
contention of the petitioner and held that the encashment of bank
guarantee was a positive action on part of the respondent which had
crystallised the right of the petitioner to seek reference of the dispute
to arbitration and mere writing of letters would not extend the cause
of action. It was held that the notice for invoking arbitration having
been issued almost six years after the cause of action for raising the
claims had arisen, the claims were ex-facie dead and time-barred
and hence dismissed the application. Relevant extracts from the
judgment are as follows:
“65. On a conspectus of all the aforesaid decisions what
is discernible is that there is a fine distinction between the
plea that the claims raised are barred by limitation and the
plea that the application for appointment of an arbitrator
is barred by limitation.
xxx xxx xxx
76. At the cost of repetition, we state that when the bank
guarantee came to be encashed in the year 2016 and
the requisite amount stood transferred to the Government
account that was the end of the matter. This “Breaking
Point” should be treated as the date at which the cause
of action arose for the purpose of limitation.
77. Negotiations may continue even for a period of ten
years or twenty years after the cause of action had arisen.
Mere negotiations will not postpone the “cause of action” for
the purpose of limitation. The Legislature has prescribed a
limit of three years for the enforcement of a claim and this
statutory time period cannot be defeated on the ground
that the parties were negotiating.
xxx xxx xxx
80. The case on hand is clearly and undoubtedly, one of
a hopelessly barred claim, as the petitioner by its conduct
slept over its right for more than five years. Statutory
arbitrations stand apart.”
(emphasis supplied)
74. The learned senior counsel appearing for the respondent has strongly
relied on the judgment in M/s B and T AG (supra) to argue that
[2024] 3 S.C.R. 117

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

the facts of the present case are squarely covered by the dicta laid
down in the said judgment. However, we are of the view that the
said judgment is of no avail to the respondent.
75. The respondent, relying upon the legal notice dated 26.08.2021
issued by the petitioner, submitted that the cause of action arose on
01.11.2017. The relevant part of the said notice is extracted here:
“10. Our client is entitled to receive 90% of the amount
certified by the Embassy in Kabul. While reserving our rights
without prejudice and subject to settlement of accounts
illegally withheld, this notice is issued calling upon you to
pay Rs. 73,53,000/- with interest compounded monthly
@18% w.e.f. 1st November 2017 within 15 days of from the
receipt of this notice, under intimation to us, failing which
our client has given instructions to file appropriate legal
proceedings before competent courts in India including
a suit for settlement of accounts for recovery of money
and also by way of damages or otherwise for, breach of
trust, breach of contract. In default, Aptech will be fully
responsible for all costs, risks, responsibilities, expenses
and consequences thereof.”
76. From the email communications placed on record, it appears that
due to the pre-existing disputes between the parties in relation to
the franchise agreements, the respondent sent a demand notice to
the petitioner seeking payment of royalty and renewal fees from the
petitioner. It appears that in reply to the said notice dated 23.03.2018,
the petitioner raised the issue of payment of dues relating to the
ICCR project. Some more emails were exchanged between the
parties on the issue however it can be seen that vide email dated
28.03.2018, the respondent clearly showed unwillingness to continue
further discussions regarding payments related to the ICCR project.
Thus, it can be said that the rights of the petitioner to bring a claim
against the respondent were crystallised on 28.03.2018 and hence
the cause of action for invocation of arbitration can also said to
have arisen on this date. This position has also been admitted in
the Written Submission dated 05.02.2024 wherein the petitioner has
submitted as follows:
“4. The limitation for claiming the due amount would expire
on 27.03.2021….”
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b. When does the Cause of Action arise?
77. We are not impressed with the submission canvassed on behalf of
the respondent that the cause of action for raising the claims arose
on 01.11.2017 and thus the limitation period for invoking arbitration
should commence from the said date. The petitioner has alleged that
the respondent received the payment for the course from the ICCR on
03.10.2017. However, the perusal of the communication exchanged
between the parties indicates that it is only on 28.03.2018 that the
right of the petitioner to bring a claim against the respondent could
be said to have been crystallised. The position of law is settled that
mere failure to pay may not give rise to a cause of action. However,
once the applicant has asserted its claim and the respondent has
either denied such claim or failed to reply to it, the cause of action
will arise after such denial or failure.
78. In M/s B and T AG (supra) three principles of law came to be
enunciated by this Court regarding the manner in which the point in
time when the cause of action arose may be determined. First, that
the right to receive the payment ordinarily begins upon completion
of the work. Secondly, a dispute arises only when there is a claim by
one side and its denial/repudiation by the other and thirdly, the accrual
of cause of action cannot be indefinitely postponed by repeatedly
writing letters or sending reminders. It was further emphasised by
this Court that it was important to find out the “breaking point” at
which any reasonable party would have abandoned the efforts at
arriving at a settlement and contemplated referral of the dispute to
arbitration. Such breaking point would then become the date on which
the cause of action could be said to have commenced.
79. This Court in Major (Retd.) Inder Singh Rekhi v. Delhi Development
Authority reported in (1988) 2 SCC 338 held as follows:
“4. Therefore, in order to be entitled to order of reference
under Section 20, it is necessary that there should be an
arbitration agreement and secondly, difference must arise
to which this agreement applied. In this case, there is no
dispute that there was an arbitration agreement. There has
been an assertion of claim by the appellant and silence
as well as refusal in respect of the same by respondent.
Therefore, a dispute has arisen regarding non-payment
of the alleged dues of the appellant. The question is for
[2024] 3 S.C.R. 119

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

the present case when did such dispute arise. The High
Court proceeded on the basis that the work was completed
in 1980 and therefore, the appellant became entitled
to the payment from that date and the cause of action
under Article 137 arose from that date. But in order to be
entitled to ask for a reference under Section 20 of the Act
there must not only be an entitlement to money but there
must be a difference or dispute must arise. It is true that
on completion of the work a right to get payment would
normally arise but where the final bills as in this case
have not been prepared as appears from the record and
when the assertion of the claim was made on February
28, 1983 and there was non-payment, the cause of action
arose from that date, that is to say, February 28, 1983. It
is also true that a party cannot postpone the accrual of
cause of action by writing reminders or sending reminders
but where the bill had not been finally prepared, the claim
made by a claimant is the accrual of the cause of action.
A dispute arises where there is a claim and a denial
and repudiation of the claim. The existence of dispute is
essential for appointment of an arbitrator under Section
8 or a reference under Section 20 of the Act. See Law of
Arbitration by R.S. Bachawat, first edition, page 354. There
should be dispute and there can only be a dispute when a
claim is asserted by one party and denied by the other on
whatever grounds. Mere failure or inaction to pay does not
lead to the inference of the existence of dispute. Dispute
entails a positive element and assertion of denying, not
merely inaction to accede to a claim or a request. Whether
in a particular case a dispute has arisen or not has to be
found out from the facts and circumstances of the case.”
(emphasis supplied)
80. In Geo Miller (supra), this Court held thus:
“28. Having perused through the relevant precedents, we
agree that on a certain set of facts and circumstances, the
period during which the parties were bona fide negotiating
towards an amicable settlement may be excluded for the
purpose of computing the period of limitation for reference
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to arbitration under the 1996 Act. However, in such cases
the entire negotiation history between the parties must be
specifically pleaded and placed on the record. The Court
upon careful consideration of such history must find out
what was the “breaking point” at which any reasonable
party would have abandoned efforts at arriving at a
settlement and contemplated referral of the dispute for
arbitration. This “breaking point” would then be treated
as the date on which the cause of action arises, for the
purpose of limitation. The threshold for determining when
such a point arises will be lower in the case of commercial
disputes, where the party’s primary interest is in securing
the payment due to them, than in family disputes where
it may be said that the parties have a greater stake in
settling the dispute amicably, and therefore delaying formal
adjudication of the claim.
29. Moreover, in a commercial dispute, while mere failure
to pay may not give rise to a cause of action, once the
applicant has asserted their claim and the respondent fails
to respond to such claim, such failure will be treated as a
denial of the applicant’s claim giving rise to a dispute, and
therefore the cause of action for reference to arbitration. It
does not lie to the applicant to plead that it waited for an
unreasonably long period to refer the dispute to arbitration
merely on account of the respondent’s failure to settle their
claim and because they were writing representations and
reminders to the respondent in the meanwhile.”
(emphasis supplied)
81. The petitioner completed the course sometime in April and a letter to this
effect was issued on 30.07.2017 by the EOI, Kabul. Allegedly, the ICCR
made payment to the respondent on 03.10.2017. However, the right
of the petitioner to raise the claim could only be said to have accrued
after the petitioner made a positive assertion in March, 2018 which
was denied by the respondent vide email dated 28.03.2018. Another
reminder through email was given by the petitioner on 29.12.2018,
however, mere giving reminders and sending of letters would not
extend the cause of action any further from 28.03.2018 on which date
the rights of the petitioner could be said to have been crystallised.
[2024] 3 S.C.R. 121

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

82. Thus, in ordinary circumstances, the limitation period available
to the petitioner for raising a claim would have come to an end
after an expiry of three years, that is, on 27.03.2021. However,
in March 2020, the entire world was taken under the grip of the
deadly Covid-19 pandemic bringing everyday life and commercial
activity to a complete halt across the globe. Taking cognisance
of this unfortunate turn of events, this Court vide order dated
23.03.2020 passed in Suo Motu Civil Writ Petition No. 03/2020
directed the period commencing from 15.03.2020 to be excluded
for the purposes of computation of limitation. The said extension of
limitation was extended from time to time by this Court in view of
the continuing pandemic. As a result, the period from 15.03.2020
to 28.02.2022 was finally determined to be excluded for the
computation of limitation. It was provided that the balance period
of limitation as available on 15.03.2020 would become available
from 01.03.2022. Operative part of the order dated 10.01.2022 is
extracted hereinbelow:
“5. Taking into consideration the arguments advanced by
learned counsel and the impact of the surge of the virus
on public health and adversities faced by litigants in the
prevailing conditions, we deem it appropriate to dispose
of the M.A. No. 21 of 2022 with the following directions:
I. The order dated 23.03.2020 is restored and in
continuation of the subsequent orders dated
08.03.2021, 27.04.2021 and 23.09.2021, it is directed
that the period from 15.03.2020 till 28.02.2022 shall
stand excluded for the purposes of limitation as may
be prescribed under any general or special laws in
respect of all judicial or quasi judicial proceedings.
II. Consequently, the balance period of limitation
remaining as on 03.10.2021, if any, shall become
available with effect from 01.03.2022.
III. In cases where the limitation would have expired
during the period between 15.03.2020 till 28.02.2022,
notwithstanding the actual balance period of limitation
remaining, all persons shall have a limitation period
of 90 days from 01.03.2022. In the event the actual
balance period of limitation remaining, with effect
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from 01.03.2022 is greater than 90 days, that longer
period shall apply.
IV. It is further clarified that the period from 15.03.2020 till
28.02.2022 shall also stand excluded in computing the
periods prescribed under Sections 23 (4) and 29A of
the Arbitration and Conciliation Act, 1996, Section 12A
of the Commercial Courts Act, 2015 and provisos (b)
and (c) of Section 138 of the Negotiable Instruments
Act, 1881 and any other laws, which prescribe
period(s) of limitation for instituting proceedings, outer
limits (within which the court or tribunal can condone
delay) and termination of proceedings.”
83. The operation and effect of the aforesaid order was considered and
explained by a two-Judge Bench of this Court in Prakash Corporates
v. Dee Vee Projects Ltd., reported in (2022) 5 SCC 112 as follows:
“28. As regards the operation and effect of the orders
passed by this Court in SMWP No. 3 of 2020, noticeable
it is that even though in the initial order dated 23-3-2020
[Cognizance for Extension of Limitation, In re, (2020) 19
SCC 10 : (2021) 3 SCC (Cri) 801], this Court provided that
the period of limitation in all the proceedings, irrespective
of that prescribed under general or special laws, whether
condonable or not, shall stand extended w.e.f. 15-3-2020
but, while concluding the matter on 23-9-2021 [Cognizance
for Extension of Limitation, In re, (2021) 18 SCC 250 : 2021
SCC OnLine SC 947], this Court specifically provided for
exclusion of the period from 15-3-2020 till 2-10-2021. A
look at the scheme of the Limitation Act, 1963 makes it
clear that while extension of prescribed period in relation
to an appeal or certain applications has been envisaged
under Section 5, the exclusion of time has been provided
in the provisions like Sections 12 to 15 thereof. When
a particular period is to be excluded in relation to any
suit or proceeding, essentially the reason is that such
a period is accepted by law to be the one not referable
to any indolence on the part of the litigant, but being
relatable to either the force of circumstances or other
requirements of law (like that of mandatory two months’
[2024] 3 S.C.R. 123

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

notice for a suit against the Government [Vide Section 15
of the Limitation Act, 1963.]). The excluded period, as a
necessary consequence, results in enlargement of time,
over and above the period prescribed.”
(emphasis supplied)
84. The effect of the above-referred order of this Court in the facts of
the present case is that the balance limitation left on 15.03.2020
would become available w.e.f. 01.03.2022. The balance period of
limitation remaining on 15.03.2020 can be calculated by computing
the number of days between 15.03.2020 and 27.03.2021, which
is the day when the limitation period would have come to an end
under ordinary circumstances. The balance period thus comes to 1
year 13 days. This period of 1 year 13 days becomes available to
the petitioner from 01.03.2022, thereby meaning that the limitation
period available to the petitioner for invoking arbitration proceedings
would have come to an end on 13.03.2023.
c. When is Arbitration deemed to have commenced?
85. Section 21 of the Act, 1996 provides that the arbitral proceedings in
relation to a dispute commence when a notice invoking arbitration
is sent by the claimant to the other party.
“21. Commencement of arbitral proceedings.—Unless
otherwise agreed by the parties, the arbitral proceedings
in respect of a particular dispute commence on the date on
which a request for that dispute to be referred to arbitration
is received by the respondent.”
86. In Milkfood Ltd. v. GMC Ice Cream (P) Ltd. reported in (2004) 7
SCC 288, it was observed thus:
“26. The commencement of an arbitration proceeding for
the purpose of applicability of the provisions of the Indian
Limitation Act is of great significance. Even Section 43(1)
of the 1996 Act provides that the Limitation Act, 1963 shall
apply to the arbitration as it applies to proceedings in court.
Sub-section (2) thereof provides that for the purpose of the
said section and the Limitation Act, 1963, an arbitration
shall be deemed to have commenced on the date referred
to in Section 21.
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27. Article 21 of the Model Law which was modelled on
Article 3 of the UNCITRAL Arbitration Rules had been
adopted for the purpose of drafting Section 21 of the
1996 Act. Section 3 of the 1996 Act provides for as to
when a request can be said to have been received by the
respondent. Thus, whether for the purpose of applying the
provisions of Chapter II of the 1940 Act or for the purpose
of Section 21 of the 1996 Act, what is necessary is to
issue/serve a request/notice to the respondent indicating
that the claimant seeks arbitration of the dispute.
xxx xxx xxx
29. For the purpose of the Limitation Act an arbitration
is deemed to have commenced when one party to the
arbitration agreement serves on the other a notice requiring
the appointment of an arbitrator. This indeed is relatable
to the other purposes also, as, for example, see Section
29(2) of (English) Arbitration Act, 1950.
xxx xxx xxx
49. Section 21 of the 1996 Act, as noticed hereinbefore,
provides as to when the arbitral proceedings would be
deemed to have commenced. Section 21 although may be
construed to be laying down a provision for the purpose
of the said Act but the same must be given its full effect
having regard to the fact that the repeal and saving clause
is also contained therein. Section 21 of the Act must,
therefore, be construed having regard to Section 85(2)(a)
of the 1996 Act. Once it is so construed, indisputably the
service of notice and/or issuance of request for appointment
of an arbitrator in terms of the arbitration agreement must
be held to be determinative of the commencement of the
arbitral proceeding.”
(emphasis supplied)
87. Similarly, in Bharat Sanchar Nigam Limited (supra), it was held
by this Court thus:
“51. The period of limitation for issuing notice of
arbitration would not get extended by mere exchange
[2024] 3 S.C.R. 125

M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.

of letters, [S.S. Rathore v. State of M.P., (1989) 4 SCC
582 : 1990 SCC (L&S) 50; Union of India v. Har Dayal,
(2010) 1 SCC 394; CLP (India) (P) Ltd. v. Gujarat
Urja Vikas Nigam Ltd., (2020) 5 SCC 185] or mere
settlement discussions, where a final bill is rejected by
making deductions or otherwise. Sections 5 to 20 of the
Limitation Act do not exclude the time taken on account
of settlement discussions. Section 9 of the Limitation
Act makes it clear that:“where once the time has begun
to run, no subsequent disability or inability to institute a
suit or make an application stops it.” There must be a
clear notice invoking arbitration setting out the “particular
dispute” [ Section 21 of the Arbitration and Conciliation
Act, 1996.] (including claims/amounts) which must be
received by the other party within a period of 3 years
from the rejection of a final bill, failing which, the time
bar would prevail.”
(emphasis supplied)
88. In the present case, the notice invoking arbitration was received by
the respondent on 29.11.2022, which is within the three-year period
from the date on which the cause of action for the claim had arisen.
Thus, it cannot be said that the claims sought to be raised by the
petitioner are ex-facie time-barred or dead claims on the date of the
commencement of arbitration.
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 dead 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.
E. CONCLUSION
90. The present arbitration petition having been filed within a period
of three years from the date when the respondent failed to comply
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with the notice of invocation of arbitration issued by the petitioner
is not hit by limitation.
91. The notice for invocation of arbitration having been issued by the
petitioner within a period of three years from the date of accrual of
cause of action, the claims cannot be said to be ex-facie dead or time-
barred on the date of commencement of the arbitration proceedings.
92. In view of the aforesaid, the present petition is allowed. We appoint
Shri Justice Sanjay Kishan Kaul, Former Judge of the Supreme
Court of India, to act as the sole arbitrator. The fees of the arbitrator
including other modalities shall be fixed in consultation with the parties.
93. All other rights and contentions are kept open for the parties to raise
before the Arbitrator.
94. Before we part with the matter, we would like to mention that this
Court while dealing with similar issues in many other matters has
observed that the applicability of Section 137 to applications under
Section 11(6) of the Act, 1996 is a result of legislative vacuum as
there is no statutory prescription regarding the time limit. We would
again like to reiterate that the period of three years is an unduly
long period for filing an application under Section 11 of the Act, 1996
and goes against the very spirit of the Act, 1996 which provides for
expeditious resolution of commercial disputes within a time-bound
manner. Various amendments to the Act, 1996 have been made over
the years so as to ensure that arbitration proceedings are conducted
and concluded expeditiously. We are of the considered opinion that
the Parliament should consider bringing an amendment to the Act,
1996 prescribing a specific period of limitation within which a party
may move the court for making an application for appointment of
arbitrators under Section 11 of the Act, 1996. The Petition stands
disposed of in the aforesaid terms.
95. Pending application(s), if any, shall stand disposed of.

Headnotes prepared by: Divya Pandey Result of the case:
Petition allowed.