Case Note & Summary
The dispute arose from a Share Purchase Agreement executed on 8 December 2007 between Applicant as purchaser, Respondents as seller, and Percept Limited, involving the purchase of equity shares. The agreement contained conditions subsequent in clauses 8.5 and 8.5.1, which the respondents allegedly breached, leading to arbitration initiated on 6 May 2009. A sole arbitrator appointed by the court made an award on 6 June 2013, dismissing the applicant's claim by holding the clauses illegal and unenforceable. The applicant challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, and the court set it aside on 27 March 2019, overturning the findings on illegality but not granting relief. The respondents appealed under Section 37, dismissed by the Division Bench on 2 February 2023, and then filed a Special Leave Petition, dismissed by the Supreme Court on 10 April 2023. The applicant issued a notice under Section 21 on 25 November 2025 for fresh arbitration and filed an application under Section 11(6) for constitution of an arbitral tribunal. The core legal issue was whether this application was barred by limitation. The applicant argued it was within limitation as the cause of action arose after the Supreme Court's order, and Section 43(4) excluded the period from the previous arbitration's commencement to the court order for computing limitation for claims. The respondents contended the application was barred as the cause of action accrued when the award was set aside on 27 March 2019, and the limitation period for Section 11(6) applications is three years under Article 137 of the Limitation Act, 1963. The court analyzed that the Arbitration Act does not prescribe a limitation period for Section 11(6) applications, but Article 137 applies. It held that the cause of action for filing the application arose only after the Supreme Court's dismissal on 10 April 2023, as the respondents' appeals were pending, making the application filed on 25 November 2025 within three years. The court also applied Section 43(4) to exclude the period from 6 May 2009 to 10 April 2023 for computing limitation for the claims in fresh arbitration, noting that the issue of limitation for claims could be left to the arbitral tribunal if not clear. The court distinguished the precedent relied upon by the respondents, emphasizing that the facts differed. Consequently, the court allowed the application, appointing a sole arbitrator to commence fresh arbitral proceedings.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Limitation for Application - Application filed for constitution of arbitral tribunal after award set aside - Court held that limitation period for filing Section 11(6) application is governed by Article 137 of Limitation Act, 1963, and cause of action arises when right to apply accrues, which in this case was after Supreme Court dismissed SLP on 10 April 2023, not when award was set aside on 27 March 2019, as respondents' appeals were pending - Held that application filed on 25 November 2025 is within limitation of three years from 10 April 2023 (Paras 15-20). B) Arbitration Law - Commencement of Arbitration - Section 43(4) Arbitration and Conciliation Act, 1996 - Exclusion of Time for Limitation - Fresh arbitration sought after award set aside - Court applied Section 43(4) to exclude period between commencement of previous arbitration (6 May 2009) and date of Supreme Court order (10 April 2023) for computing limitation for claims in fresh arbitration - Held that claims are not barred by limitation as exclusion applies, and issue of limitation for claims can be left to arbitral tribunal if not clear (Paras 21-22). C) Arbitration Law - Jurisdiction of Court - Section 11(6) Arbitration and Conciliation Act, 1996 - Deciding Limitation Issue - Respondent argued application barred by limitation - Court distinguished precedent B AND T AG v. Ministry of Defence, noting it pertained to 'cause of arbitration' accrual for claims, not for Section 11(6) application after award set aside - Held that court can decide limitation for Section 11(6) application if it is clear, as in this case, and referred to SBI General Insurance Company Limited v. Krish Spinning for principle that unclear limitation issues can be left to arbitral tribunal (Paras 18-20).
Premium Content
The Headnote is only available to subscribed members.
Subscribe Now to access key legal points
Issue of Consideration: Whether the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for constitution of Arbitral Tribunal for fresh arbitral proceedings after setting aside of arbitral award is barred by limitation
Premium Content
The Issue of Consideration is only available to subscribed members.
Subscribe Now to access critical case issues
Final Decision
Application allowed; court appointed a sole arbitrator to commence fresh arbitral proceedings
