Case Note & Summary
The appellant, Vishram Varu & Co., was issued work orders in 1982 and 1984 by the South Eastern Railway, and the work was completed by 1986. The appellant claimed that it had executed excess quantity of work beyond the scheduled quantity and was entitled to additional payment. Despite several correspondences, the amount was not paid. In 2018, the appellant sent a legal notice invoking the arbitration clause under the General Conditions of Contract and requested appointment of an arbitrator. After no action was taken, the appellant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Calcutta High Court in 2019, seeking appointment of an arbitrator. The High Court dismissed the application on the ground that it was hopelessly barred by limitation. The appellant appealed to the Supreme Court. The Supreme Court upheld the High Court's decision, holding that the right to claim the amount accrued in 1985/1986 when the work was completed. The legal notice invoking arbitration was served after 32 years, and the application under Section 11(6) was filed in 2019, which was clearly barred by limitation under Article 137 of the Limitation Act, 1963. The Court distinguished the precedent in Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited, noting that it did not apply to cases where the arbitration clause was invoked after such an inordinate delay. The appeal was dismissed with no order as to costs.
Headnote
A) Arbitration - Limitation - Section 11(6) Arbitration and Conciliation Act, 1996 - Article 137 Limitation Act, 1963 - The right to apply under Section 11(6) accrues when the right to claim the amount arises, not when the arbitration clause is invoked. Where work was completed in 1985/1986 and legal notice invoking arbitration was served in 2018, the application under Section 11(6) filed in 2019 is hopelessly barred by limitation as the claim is stale. (Paras 4-6) B) Arbitration - Limitation - Invocation of arbitration clause - The mere service of a legal notice invoking arbitration after a long delay (32 years) does not revive the right to apply under Section 11(6) of the 1996 Act. The limitation period under Article 137 of the Limitation Act, 1963 begins from the date when the right to apply accrues, i.e., when the amount becomes due. (Paras 4-6) C) Precedent - Distinguishing - Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited, (2021) 5 SCC 738 - The decision that limitation for Section 11(6) application is three years from accrual of right to apply does not apply where the arbitration clause was invoked after an inordinate delay of 32 years. (Para 5)
Issue of Consideration
Whether an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, filed in 2019 for a dispute arising from work completed in 1985/1986, is barred by limitation.
Final Decision
The Supreme Court dismissed the appeal, upholding the High Court's order that the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was hopelessly barred by limitation. No order as to costs.
Law Points
- Limitation for Section 11(6) application
- Stale claim
- Accrual of right to apply
- Article 137 Limitation Act
- 1963
