SECUNDERABAD CANTONMENT BOARDversusM/S B. RAMACHANDRAIAH & SONS

68                       [2021]
              SUPREME COURT     3 S.C.R. 68
                             REPORTS                       [2021] 3 S.C.R.


A             SECUNDERABAD CANTONMENT BOARD
                                       v.
                  M/S B. RAMACHANDRAIAH & SONS
                     (Civil Appeal Nos. 900-902 of 2021)
B
                               MARCH 15, 2021
                 [R. F. NARIMAN AND B. R. GAVAI, JJ.]
            Arbitration and Conciliation Act, 1996 – s.11 – Limitation
     Act, 1963 – s. 9 and Art.137 – Appellant floated a notice inviting
C    tender for a term of annual contract – Three agreements were entered
     into with the respondent – Agreements had arbitration clause – Work
     orders were issued – Thereafter, final contract certificates were
     issued by the appellant and final payment was received by the
     respondent of the works in question – Respondent then started
     making demands for reimbursement on account of variation in prices
D    of material, labour and fuel – By letter dated 07.11.2006, respondent
     requested for appointment of arbitrator – Respondent issued another
     letter dated 13.01.2007 and stated that it had no option but to rescind
     contract and have an arbitrator appointed within 30 days – It is
     not disputed that 30 day period was over by 12.02.2007, however,
E    respondent kept on writing letters in 2007-2009, reiterating its claim
     – Finally, respondent issued a legal notice dated 30.01.2010 and
     ‘clarification notice’ dated 20.03.2010 – Appellant by letter dated
     10.11.2010, rejected the claim of reimbursement and stated that
     they have made final payments towards the work order – On
     06.11.2013, the respondent filed applications u/s.11 of the Act –
F    The Single Judge of the High Court allowed the application and an
     arbitrator was appointed – On appeal, held: It is clear that demand
     for arbitration was made by letter dated 07.11.2006 – Thereafter,
     another letter dated 13.01.2007 informed the appellant that
     appointment would have to be made within 30 days – The time begin
G    to run on and from 12.02.2007 – Once the time started running,
     any final rejection by the appellant (letter dated 10.11.2010) would
     not give any fresh start to a limitation period which was already
     running, following the mandate of s. 9 of the Limitation Act – This
     being the case, the High Court was clearly in error in stating that
     since applications were filed on 06.11.2013, they were within the
H
                                       68
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                             69
            RAMACHANDRAIAH & SONS

limitation period of three years starting from 10.11.2010 – Even         A
otherwise, the claim of the respondent was also ex facie time barred
– Thus, judgment of the High Court is set aside.
      Allowing the appeals, the Court
       HELD: 1. Limitation is not a jurisdictional issue but is an
admissibility issue. So far as the applicability of Article 137 of the   B
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
07.11.2006. This demand was reiterated by a letter dated
13.01.2007, which letter itself informed the Appellant that              C
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 12.02.2007. The Appellant’s laconic
letter dated 23.01.2007, which stated that the matter was under
consideration, was within the 30-day period. On and from
12.02.2007, when no arbitrator was appointed, the cause of action        D
for appointment of an arbitrator accrued to the Respondent and
time began running from that day. Obviously, once time 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        E
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 06.11.2013, 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        F
have been appointed by the High Court. [Paras 19, 20][83-A; 85-
G-H; 86-A-D]
      2. Even otherwise, the claim made by the Respondent was
also ex facie time barred. It is undisputed that final payments
were received latest by the end of March 2003 by the Respondent.         G
That apart, even assuming that a demand could have been made
on account of price variation, such demand was made on
08.09.2003. Repeated letters were written thereafter by the
Respondent, culminating in a legal notice dated 30.01.2010. Vide
the reply dated 16.02.2010 to legal notice, it was made clear that       H
70            SUPREME COURT REPORTS                         [2021] 3 S.C.R.


A    such demands had been rejected. Even taking 16.02.2010 as the
     starting point for limitation on merits, a period of three years
     having elapsed by February 2013, the claim made on merits is
     also hopelessly time barred. For all these reasons, the appeals
     are allowed and the impugned judgment of the High Court dated
     20.08.2019 is set aside. [Paras 21, 22][86-E-F]
B
           Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan
           Nigam Ltd., (2020) 14 SCC 643 : [2019] 11 SCR 1108;
           Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC
           1; Bharat Sanchar Nigam Ltd. & Anr. v. M/s Nortel
           Networks India Pvt. Ltd. 2021 (4) SCALE 11 – relied
C          on.
           Deepdharshan Builders Pvt. Ltd. v. Saroj, (2019) 1 AIR
           Bom R 249 – referred to.
                             Case Law Reference
D    [2019] 11 SCR 1108               relied on                  Para 13
     (2021) 2 SCC 1                   relied on                  Para 16
     2021 (4) SCALE 11                relied on                  Para 19
           CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 900-
E    902 of 2021.
            From the Judgment and Order dated 20.08.2019 of the High Court
     for the State of Telangana at Hyderabad in Arbitration Application Nos.
     154 of 2013, 155 of 2013 and 156 of 2013.
           P.S. Narasimha, Sr. Adv., M/s. Veritas Legis, for the Appellant.
F
           Nithin Pavuluri, Nitin Chowdary, Gp. Capt. Karan Singh Bhati,
     Jaideep Singh, Ms.Chitrangda Rastravara, Manvendra Singh Rathore,
     Dashrath Singh, Advs. for the Respondents.
           The Judgment of the Court was delivered by
G          R. F. NARIMAN, J.
           1. Leave granted.
           2. These appeals arise out of applications under Section 11 of the
     Arbitration and Conciliation Act, 1996 [“Arbitration Act”]. On
     02.09.2000, the appellant before us, Secunderabad Cantonment Board
H
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                    71
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

[“Appellant”], floated a notice inviting tender [“N.I.T.”] for an annual        A
term contract for:
      1.     Repairs to Main Roads (Resurfacing with Centralised with
             Hot Mix Plant and Paver);
      2.     Repairs to Main Roads (Widening of Roads with Centralised
             Hot Mix Plant and Paver);                                          B

      3.     Repairs to Internal Roads (Resurfacing with Hot Mix Paver
             and Plant).
       3. Pursuant to the aforesaid N.I.T., three agreements were entered
into with the respondent, M/s Ramachandraiah and Sons                           C
[“Respondent”], the first one dated 23.09.2000 and the other two dated
17.09.2001. Clause 5 of each of the aforesaid agreements, which is in
identical terms, is important and reads as follows:
      “5. Final Bill: The Contractor shall submit his final bil of the
      work with full and complete measurements showing the deductions           D
      on account of part payments received and stores supplied by the
      Board cost of water and any other items received by him under
      the contract within 08 days from the date of completion and
      handing over the work. The contractor shall also submit alongwith
      his bill a no claim certificate stating that there are no claims from
      the cantonment board on account of the work undertaken and                E
      completed by him under the contract and that no claim thereafter
      shall be entertainable. The bill shall also contain a statement showing
      the justification of cement consumed by the Contractor.”
      4. The arbitration clause contained in Clause 17 of each of the
aforesaid agreements reads as follows:                                          F
      “17.LAW Governing the Contract: The Contract shall be
      governed by the Indian Law. [A]ll disputes between the parties to
      this contract or being out of relating to the contract other than
      those for which the decision of the accepting officer is final and
      conclusive shall after the written notice given by either party to        G
      the other be referred to the sole arbitrator as appointed by the
      [P]resident Cantonment Board [S]ecunderabad. The award of
      the Arbitrator shall be final, conclusive and binding on both parties
      to the contract”
                                                                                H
72             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A            5. Work orders were issued with respect to the aforesaid works.
     The Appellant argued that the Respondent had failed to complete the
     work within the stipulated period, but vide its meeting dated 05.10.2002,
     it resolved to grant an extension of time upto 31.12.2002 on an undertaking
     from the Respondent that the Appellant would be at liberty to impose
     penalty as provided in the contracts and as decided by the Appellant in
B
     case balance works were not completed by 31.12.2002. On 30.10.2002,
     the Respondent submitted the required undertaking.
            6. It is not disputed that vide the final contract certificates issued
     by the Appellant on 18.02.2003 and 26.03.2003, final payment was
     received by the Respondent in respect of the works in question. After a
C    hiatus of about six months, the Respondent then started making demands
     towards reimbursement on account of variation in prices of material,
     labour and fuel. These demands were made vide letters dated 08.09.2003,
     24.07.2004 and 12.10.2004.
            7. After a silence of over two years, the Respondent then issued
D    a letter dated 07.11.2006 by which the Respondent requested for the
     appointment of an arbitrator in respect of the claim of reimbursement on
     account of price variation in all the three contracts. It was specifically
     stated that necessary steps should be taken by the Appellant within 15
     days of receipt of the letter. Receiving no reply from the Appellant, the
E    Respondent issued yet another letter dated 13.01.2007, in which it spoke
     of a fundamental breach of contractual obligations and then stated that it
     had no option but to rescind the contracts and have an arbitrator appointed
     within 30 days, in conformity with the arbitration clause provided in the
     contracts.

F            8. To this letter, a laconic reply was received from the Appellant
     on 23.01.2007, stating that the matter referred to in their letter was under
     consideration. It is not disputed that the 30-day period, spoken of in the
     letter dated 13.01.2007, was over by 12.02.2007. Despite this being the
     position, the Respondent kept on writing letters at long intervals between
     the years 2007-2009, reiterating its claim. Finally, by a legal notice dated
G    30.01.2010, the Respondent specifically stated:
           “In order to reiterate the brief details of the Contracts, all the
           three works have been completed way back in 31.03.2002 and
           final bill was received under protest.

H
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                   73
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

            It is also expedient to point out that arbitration proceedings     A
      have already commenced since 07.11.2006 (within intent of the
      Arbitration and Conciliation Act of 1996).
             In the event that the Hon’ble appointing authority continues
      to abdicate his rights to appoint an arbitrator, the only remedy left
      to us is to seek the appointment of an arbitrator by the Hon’ble         B
      Chief justice of High Court of Andhra Pradesh (to enforce the
      arbitration clause) as intended by the agreement (since the
      agreement envisages arbitration as the means of settlement of
      disputes in preclusion to a court of law).”
      9. To this legal notice dated 30.01.2010, the Appellant replied on       C
16.02.2010, stating:
      “1. … Subsequent to awarding those contracts, work orders have
      been issued and part of works were executed by your client within
      the stipulated time and the bills for the works executed were
      cleared on submission of final bills way back in the year 2002-          D
      2003 and your client has received the payments by adhering to
      Clause 5 of the Contract entered by and between your client and
      my client. Since the final payments were made for the works
      executed the copies requested by you may not be available as 8
      years time has been elapsed after conclusion of the contract.
                                                                               E
      2. Subsequent to conclusion of the contract and after receipt of
      final payments, your client has started addressing letters as referred
      in your notice culminating into the present notice under reply and
      seeking additional claim towards reimbursement on variation in
      prices, though there is no such clause in the agreement entered
      for execution of above referred works to claim amounts on                F
      variation of prices. Moreover the contract period is one year from
      the date of awarding contract and the contract periods were came
      to an end by 2001 and 2002 respectively. Whereas your client has
      got issued final notice under reply on 30.01.2010 and insisting
      appointment of an Arbitrator though no dispute is subsisting             G
      between your client and my client and moreover your client’s
      claim is barred under law of limitation.”
      “4. In the above said background the contention in your notice
      under reply that your client is insisting for the appointment of an
      Arbitrator for adjudication of the dispute and that appointing
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74             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A          authority has not appointed the arbitrator and that arbitration
           proceedings have already commenced since 07.11.2006 and that
           in the event the Hon’ble Appointing authority continues to abdicate
           his right to appoint an arbitrator you client is left with no option
           except to seek appointment of Arbitrator by the Hon’ble Chief
           Justice of High Court of A.P. is highly objectionable and untenable
B
           and your client has no legal right to raise the dispute after concluding
           the contract way back in the year 2002. The claim of your client
           to appoint an Arbitrator cannot be acceded to as there is no arbitral
           issues are subsisting between your client and my client and
           furthermore the claim raised by your client is hopelessly barred
C          under law of limitation and it is incorrect to state that your has
           received the payments under protest.
           5. My Client further reiterates that the above referred three
           contracts were awarded for a period of one year in the year 2000-
           2001 and since your client could not complete the works entrusted
D          to him within the stipulated period, at his request the time was
           further extended up to 31.12.2002 and by that time he can only
           complete the work to the tune of Rs.75 lakhs approximately and
           your client’s request to release work order for balance amount
           with regard to the works in question were turn down by the Hon’ble
           High Court of A.P. Hence, the question of reimbursement on
E          variation in prices as claimed by your client does not arise and he
           is not entitled for such claims.
           6. My client further reiterates that as per clause 5 of the
           Agreement, final bill amounts will be released on submitting no
           claim certificate stating that there is no claim form the Cantonment
F          Board on account of the works undertaken and completed by the
           contractor and no claim thereafter shall be entertainable. Pursuant
           to this Clause your client has received final bill amounts, hence
           there are no issues to be adjudicated by an arbitrator. As referred
           above in the contract entered by and between your client and my
G          client, there is no specific clause under which your client is entitled
           for reimbursement on variation of prices. Hence the same cannot
           be made an issue to be adjudicated by an arbitrator.”
           10. By way of rejoinder to the aforesaid reply notice, the
     Respondent issued what it called a “clarification notice” on 20.03.2010,
H    followed by three letters dated 30.09.2010, reiterating the earlier requests
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                   75
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

for the appointment of an arbitrator. This was rejected by the Appellant       A
vide a letter dated 10.11.2010, which letter informed the Respondent
that the President of the Secunderabad Cantonment Board had rejected
the application for appointment of an arbitrator as all payments were
made and nothing remained pending.
       11. After a three-year long hiatus, the Respondent then filed           B
applications under Section 11 of the Arbitration Act on 06.11.2013. Vide
the impugned judgment dated 20.08.2019, a learned Single Judge of the
High Court for the State of Telangana held that the Section 11 applications
were within time as they were filed within three years from the letter
dated 10.11.2010 rejecting the request to appoint an arbitrator. The learned
Single Judge also went on to record:                                           C

      “39. Proceedings dt. 07.11.2003 filed by the respondent of a Board
      Meeting of the respondent no doubt show payment of Rs.
      14,06,580/- in addition to Rs. 14,84,000/- but this payment is not
      on account of claim under Clause 2.2.46 for reimbursement on
      variation in prices claimed by the applicant. It is a payment            D
      sanctioned for actual quantities of the various items of work which
      had increased, and so the same cannot be prima-facie construed
      as a payment towards the claim of the applicant under Clause
      2.2.46.”
      “42. The prolonged silence of the respondent from 08.09.2003             E
      onwards regarding claims made by the applicant under Clause
      2.2.46 without any emphatic rejection of the same, prima facie
      show that there appears to be a live issue In that regard between
      the parties.”
      12. As a result, the Section 11 applications were allowed and Shri       F
Y.V. Ramakrishna (Retired District Judge) was appointed as arbitrator
to adjudicate the disputes between the parties arising out of the three
agreements. The question of the bar of limitation of the claims made
was left open to be considered and decided by the arbitrator.
       13. Shri P.S. Narasimha, learned Senior Advocate appearing on           G
behalf of the Appellant, submitted that the date on which the request
made for the appointment of an arbitrator was received by the President
of the Secunderabad Cantonment Board was 23.01.2007, as a result of
which, this is the date on which the limitation period starts running under
Article 137 of the Limitation Act, 1963 [“Limitation Act”] insofar as
                                                                               H
76             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A    an application under Section 11(6) of the Arbitration Act is concerned.
     For this purpose he relied upon a judgment of the High Court of Bombay
     in Deepdharshan Builders Pvt. Ltd. v. Saroj, (2019) 1 AIR Bom
     R 249,as well as a recent judgment of this Court in Geo Miller & Co.
     (P) Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd., (2020) 14 SCC
     643.He then argued that even so far as the cause of action on merits is
B
     concerned, it arose way back on 08.09.2003, when the Respondent raised
     the claim with regard to the dispute for the first time. Once time begins
     to run, limitation cannot be extended by writing any number of subsequent
     letters. He also relied upon the recent judgment of this Court in Vidya
     Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, stating that this
C    case falls under paragraph 148 of the judgment, in that the claim was ex
     facie time barred and dead and that there was no subsisting dispute.
            14. In reply, Shri Nithin Chowdary Pavuluri, learned counsel
     appearing for the Respondent, argued that the request for appointment
     of an arbitrator was rejected by the Appellant for the first time on
D    10.11.2010, and thus, 10.11.2010 would be the date on which the cause
     of action would arise. He pressed the point that the rejection of the
     request to appoint an arbitrator constituted a failure to perform the
     function entrusted to the President of the Secunderabad Cantonment
     Board under Clause 2.2.52 of the General Conditions of Contract
     [“GCC”], and thus the cause of action under Section 11(6)(c) of the
E    Arbitration Act first arose on 10.11.2010. Till such rejection, the claim
     would have to be deemed to have been pending and thus, the Respondent’s
     claim was alive at the time of filing the applications under Section 11 of
     the Arbitration Act. Further, though he pressed the point that the final bill
     was received under protest since the price variation bill submitted with
F    the final bill had not been cleared by the Appellant, he produced no such
     document evidencing the same. In addition, he sought to distinguish, on
     facts, the judgments of this Court in Geo Miller & Co. (P) Ltd. v.
     Rajasthan Vidyut Utpadan Nigam Ltd., (2020) 14 SCC 643 and
     Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 from the
     appeals before us, by arguing that the GCC between the Appellant and
G    the Respondent specifically provided for a procedure to appoint an
     arbitrator and that the Appellant was responsible for delaying and sitting
     on the Respondent’s request. Thus, he supported the impugned judgment
     of the High Court by which the Section 11 applications were allowed.
            15. Having heard learned counsel appearing for both parties, it is
H    first necessary to refer to the recent judgment of this Court in Geo
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                   77
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd.,                  A
(2020) 14 SCC 643, which extracts passages from all the earlier relevant
judgments, and then lays down as to when time begins to run for the
purpose of filing an application under Section 11 of the Arbitration Act.
This Court, after referring to the relevant statutory provisions, held:
      “15. In Damodar Das [State of Orissa v. Damodar Das, (1996)              B
      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 [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        C
      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.
        xxx xxx xxx                                                            D

      “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            E
      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          F
      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.        G
      Since the appellant served notice for appointment of arbitrator in
      2002, and requested the appointment of an arbitrator before a
      court only by the end of 2003, his claim is clearly barred by
      limitation.
        xxx xxx xxx                                                            H
78            SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A          23. Turning to the other decisions, it is true that in Inder Singh
           Rekhi [Inder Singh Rekhi v. DDA, (1988) 2 SCC 338], this Court
           observed that the existence of a dispute is essential for appointment
           of an arbitrator. A dispute arises when a claim is asserted by one
           party and denied by the other. The term “dispute” entails a positive
           element and mere inaction to pay does not lead to the inference
B
           that dispute exists. In that case, since the respondent failed to
           finalise the bills due to the applicant, this Court held that cause of
           action would be treated as arising not from the date on which the
           payment became due, but on the date when the applicant first
           wrote to the respondent requesting finalisation of the bills.
C          However, the Court also expressly observed that “a party cannot
           postpone the accrual of cause of action by writing reminders
           or sending reminders”.
           24. In the present case, the appellant has not disputed the High
           Court’s finding that the appellant itself had handed over the final
D          bill to the respondent on 8-2-1983. Hence, the holding in Inder
           Singh Rekhi [Inder Singh Rekhi v. DDA, (1988) 2 SCC 338]
           will not apply, as in that case, the applicant’s claim was delayed
           on account of the respondent’s failure to finalise the bills. Therefore
           the right to apply in the present case accrued from the date on
           which the final bill was raised (see Union of India v. Momin
E          Construction Co. [Union of India v. Momin Construction Co.,
           (1997) 9 SCC 97] ).
            xxx xxx xxx
           29. Moreover, in a commercial dispute, while mere failure to pay
F          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
G          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.”
           16. The recent judgment of this Court in Bharat Sanchar Nigam
     Ltd. & Anr. v. M/s Nortel Networks India Pvt. Ltd., delivered on
H    10.03.2021 in Civil Appeal Nos. 843-844 of 2021 has also considered
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                   79
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

the entire law on the subject. The first paragraph of the said judgment        A
reads as follows:
      “1. The present Appeals raise two important issues for our
      consideration : (i) the period of limitation for filing an application
      under Section 11 of the Arbitration and Conciliation Act, 1996
      (“the 1996 Act”); and (ii) whether the Court may refuse to make          B
      the reference under Section 11 where the claims are ex facie
      time-barred?”
      17. Insofar as the first issue is concerned, after examining Article
137 of the Limitation Act, this Court held:
      “11. It is now fairly well-settled that the limitation for filing an     C
      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 can be filed only after a notice of
      arbitration in respect of the particular claim(s) / dispute(s) to be     D
      referred to arbitration [as contemplated by Section 21 of the Act]
      is made, and there is failure to make the appointment.
      12. 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           E
      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 recognized even
      under Section 20 of the Arbitration Act 1940. Reference may be           F
      made to the judgment of this Court in C. Budhraja v. Chairman,
      Orissa Mining Corporation Ltd. [(2008) 2 SCC 444] 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               G
      serves on the other party, a notice requiring the appointment of an
      arbitrator. Paragraph 26 of this judgment reads as follows :
      “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
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80             SUPREME COURT REPORTS                            [2021] 3 S.C.R.


A          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
B          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 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
C          cannot be confused with the period of limitation for making a
           claim. The decisions of this Court in Major (Retd.) Inder Singh
           Rekhi v. DDA [(1988) 2 SCC 338] , Panchu Gopal Bose v. Board
           of Trustees for 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.””
D          18. Insofar as the second issue is concerned, this Court went into
     the position prior to the Arbitration and Conciliation (Amendment) Act,
     2015 [“2015 Amendment”] together with the change made by the
     introduction of Section 11(6A) by the 2015 Amendment, stating:
           “24. Sub-section (6A) came up for consideration in the case of
E          Duro Felguera SA v. Gangavaram Port Ltd.[(2017) 9 SCC
           729], wherein this Court held that the legislative policy was to
           minimize judicial intervention at the appointment stage. In an
           application under Section 11, the Court should only look into the
           existence of the arbitration agreement, before making the
           reference. Post the 2015 amendments, all that the courts are
F          required to examine is whether an arbitration agreement is in
           existence —nothing more, nothing less.
               “48. Section 11(6-A) added by the 2015 Amendment, reads as
               follows:
                   “11. (6-A) The Supreme Court or, as the case may be, the
G                  High Court, while considering any application under sub-
                   section (4) or sub-section (5) or sub-section (6), shall,
                   notwithstanding any judgment, decree or order of any
                   court, confine to the examination of the existence of an
                   arbitration agreement.”
                                                            (emphasis supplied)
H
SECUNDERABAD CANTONMENT BOARD v. M/S B.                                  81
 RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

   From a reading of Section 11(6-A), the intention of the               A
   legislature is crystal clear i.e. the court should and need only
   look into one aspect—the existence of an arbitration agreement.
   What are the factors for deciding as to whether there is an
   arbitration agreement is the next question. The resolution to
   that is simple—it needs to be seen if the agreement contains a
                                                                         B
   clause which provides for arbitration pertaining to the disputes
   which have arisen between the parties to the agreement.
   …
   59. The scope of the power under Section 11(6) of the 1996
   Act was considerably wide in view of the decisions in SBP             C
   and Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618]
   and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara
   Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117]
   . This position continued till the amendment brought about in
   2015. After the amendment, all that the courts need to see is
   whether an arbitration agreement exists—nothing more,                 D
   nothing less. The legislative policy and purpose is essentially to
   minimise the Court’s intervention at the stage of appointing the
   arbitrator and this intention as incorporated in Section 11(6-A)
   ought to be respected.”
25. In Mayavati Trading Company Private Ltd. v. Pradyut                  E
Dev Burman[(2019) 8 SCC 714], a three-judge bench held that
the scope of power of the Court under Section 11 (6A) had to be
construed in the narrow sense. In paragraph 10, it was opined as
under :
   “10. This being the position, it is clear that the law prior to the   F
   2015 Amendment that has been laid down by this Court, which
   would have included going into whether accord and satisfaction
   has taken place, has now been legislatively overruled. This
   being the position, it is difficult to agree with the reasoning
   contained in the aforesaid judgment [United India Insurance           G
   Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 :
   (2019) 2 SCC (Civ) 785] , as Section 11(6-A) is confined to
   the examination of the existence of an arbitration agreement
   and is to be understood in the narrow sense as has been laid
   down in the judgment in Duro Felguera, SA [Duro Felguera,
   SA v. Gangavaram Port Ltd., (2017) 9 SCC 729”                         H
82      SUPREME COURT REPORTS                             [2021] 3 S.C.R.


A    26. In Uttarakhand Purv Sainik Kalyan Nigam v. Northern
     Coal Field Limited [(2020) 2 SCC 455] this Court took note of
     the recommendations of the Law Commission in its 246th Report,
     the relevant extract of which reads as :
        “7.6. The Law Commission in the 246th Report [Amendments
B       to the Arbitration and Conciliation Act, 1996, Report No. 246,
        Law Commission of India (August 2014), p. 20.] recommended
        that:
            “33. … the Commission has recommended amendments to
            Sections 8 and 11 of the Arbitration and Conciliation Act,
C           1996. The scope of the judicial intervention is only restricted
            to situations where the court/judicial authority finds that the
            arbitration agreement does not exist or is null and void.
            Insofar as the nature of intervention is concerned, it is
            recommended that in the event the court/judicial authority
            is prima facie satisfied against the argument challenging
D           the arbitration agreement, it shall appoint the arbitrator and/
            or refer the parties to arbitration, as the case may be. The
            amendment envisages that the judicial authority shall not
            refer the parties to arbitration only if it finds that there does
            not exist an arbitration agreement or that it is null and void.
E           If the judicial authority is of the opinion that prima facie the
            arbitration agreement exists, then it shall refer the dispute
            to arbitration, and leave the existence of the arbitration
            agreement to be finally determined by the Arbitral Tribunal.”
     In view of the legislative mandate contained in the amended
F    Section 11(6A), the Court is now required only to examine the
     existence of the arbitration agreement. All other preliminary or
     threshold issues are left to be decided by the arbitrator under
     Section 16, which enshrines the kompetenz-komptenz principle.
     The doctrine of kompetenz-komptenz implies that the arbitral
     tribunal is empowered, and has the competence to rule on its own
G    jurisdiction, including determination of all jurisdictional issues. This
     was intended to minimise judicial intervention at the pre-reference
     stage, so that the arbitral process is not thwarted at the threshold
     when a preliminary objection is raised by the parties.”
                                                     (emphasis in original)
H
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                    83
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

       19. This Court went on to hold that limitation is not a jurisdictional   A
issue but is an admissibility issue. It then referred to a recent judgment
of this Court in Vidya Drolia v. Durga Trading Corporation, (2021)
2 SCC 1, and stated as follows:
      “36. In a recent judgment delivered by a three-judge bench in
      Vidya Drolia v. Durga Trading Corporation[(2021) 2 SCC                    B
      1], on the scope of power under Sections 8 and 11, it has been
      held that the Court must undertake a primary first review to weed
      out “manifestly ex facie non-existent and invalid arbitration
      agreements, or non-arbitrable disputes.” The prima facie review
      at the reference stage is to cut the deadwood, where dismissal is
      bare faced and pellucid, and when on the facts and law, the litigation    C
      must stop at the first stage. Only when the Court is certain that no
      valid arbitration agreement exists, or that the subject matter is not
      arbitrable, that reference may be refused.
           In paragraph 144, the Court observed that the judgment in
      Mayavati Trading had rightly held that the judgment in Patel              D
      Engineering had been legislatively overruled.
          Paragraph 144 reads as :
          “144. As observed earlier, Patel Engg. Ltd. explains and holds
          that Sections 8 and 11 are complementary in nature as both            E
          relate to reference to arbitration. Section 8 applies when judicial
          proceeding is pending and an application is filed for stay of
          judicial proceeding and for reference to arbitration.
          Amendments to Section 8 vide Act 3 of 2016 have not been
          omitted. Section 11 covers the situation where the parties
          approach a court for appointment of an arbitrator. Mayavati           F
          Trading (P) Ltd., in our humble opinion, rightly holds that Patel
          Engg. Ltd. has been legislatively overruled and hence would
          not apply even post omission of sub-section (6-A) to Section
          11 of the Arbitration Act. Mayavati Trading (P) Ltd. has
          elaborated upon the object and purposes and history of the            G
          amendment to Section 11, with reference to sub-section (6-A)
          to elucidate that the section, as originally enacted, was facsimile
          with Article 11 of the Uncitral Model of law of arbitration on
          which the Arbitration Act was drafted and enacted.”
                                                       (emphasis supplied)
                                                                                H
84      SUPREME COURT REPORTS                           [2021] 3 S.C.R.


A    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
B
     are ex facie time barred and dead, or there is no subsisting dispute.
        Paragraph 148 of the judgment reads as follows :
        “148. Section 43(1) of the Arbitration Act states that the
        Limitation Act, 1963 shall apply to arbitrations as it applies to
C       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
D       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
E       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
F       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.”
        In paragraph 154.4, it has been concluded that:
G
        “154.4. Rarely as a demurrer the court may interfere 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
H
     SECUNDERABAD CANTONMENT BOARD v. M/S B.                                   85
      RAMACHANDRAIAH & SONS [R.F. NARIMAN, J.]

         of judicial scrutiny. The restricted and limited review is to check   A
         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         B
         the party opposing arbitration adopts delaying tactics or impairs
         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        C
         dispute resolution mechanism.”
                                                      (emphasis supplied)
             In paragraph 244.4 it was concluded that:
             “244.4. The court should refer a matter if the validity of
                                                                               D
             the arbitration agreement cannot be determined on a prima
             facie basis, as laid down above i.e. “when in doubt, do
             refer”.”
      37. The upshot of the judgment in Vidya Drolia is affirmation of
      the position of law expounded in Duro Felguera and Mayavati
      Trading, which continue to hold the field. It must be understood         E
      clearly that Vidya Drolia has not resurrected the pre-amendment
      position on the scope of power as held in SBP & Co. v. Patel
      Engineering (supra).
             It is only in the very limited category of cases, where there
      is not even a vestige of doubt that the claim is ex facie time-          F
      barred, or that the dispute is non-arbitrable, that the court may
      decline to make the reference. However, if there is even the
      slightest doubt, the rule is to refer the disputes to arbitration,
      otherwise it would encroach upon what is essentially a matter to
      be determined by the tribunal.”                                          G
                                                    (emphasis in original)
       20. 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          H
86                SUPREME COURT REPORTS                         [2021] 3 S.C.R.


A    the letter dated 07.11.2006. This demand was reiterated by a letter dated
     13.01.2007, 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
     12.02.2007. The Appellant’s laconic letter dated 23.01.2007, which stated
     that the matter was under consideration, was within the 30-day period.
B
     On and from 12.02.2007, 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 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
C    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 06.11.2013, 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
D
     could have been appointed by the High Court.
            21. Even otherwise, the claim made by the Respondent was also
     ex facie time barred. It is undisputed that final payments were received
     latest by the end of March 2003 by the Respondent. That apart, even
     assuming that a demand could have been made on account of price
E    variation, such demand was made on 08.09.2003. Repeated letters were
     written thereafter by the Respondent, culminating in a legal notice dated
     30.01.2010. Vide the reply notice dated 16.02.2010, it was made clear
     that such demands had been rejected. Even taking 16.02.2010 as the
     starting point for limitation on merits, a period of three years having
F    elapsed by February 2013, the claim made on merits is also hopelessly
     time barred.
          22. For all these reasons, the appeals are allowed and the impugned
     judgment of the High Court dated 20.08.2019 is set aside.

G    Ankit Gyan                                                    Appeals allowed.




H