Dayaram Bhardwaj & Anr. vs Viresh Promoters And Developers Pvt Ltd
- Court
- Delhi High Court
$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
# CNR No. DLHC010413212026
+ ARB.P. 1568/2026 & I.A.30312/2026
DAYARAM BHARDWAJ & ANR. .....Petitioners
Through: Ms. Riddhi Jad Rand Mr.
Ashutosh Kumar, Advs.
versus
VIRESH PROMOTERS AND DEVELOPERS PVT LTD
.....Respondent
Through: Mr. Uttam Dutt, Sr. Adv. with
Mr. Siddharth Mittal, Mr.
Vaibhav Tomar, Mr Abhijeet
Varshney and Ms Sonakshi
Sinha, Advs.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT(ORAL)
% 03.11.2026
1. The present petition has been filed under Section 11(6) of the
1
Arbitration and Conciliation Act, 1996 seeking appointment of a Sole
Arbitrator to adjudicate the disputes arising out of the Agreement to
2
Sell dated 07.04.2014.
2. The Petitioners entered into the aforesaid agreement with the
Respondent for purchase of Commercial Unit No.903, situated on the
th
9 Floor of the proposed Business Square project at Village
Badshahpur, Gurugram for a total sale consideration of
Rs.2,38,68,000/-. Against the aforesaid consideration, the Petitioners
admittedly paid Rs.4,82,123/-.
1
“Act” hereinafter
2
“ATS” hereinafter
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3. Ms. Riddhi Jad, learned Counsel appearing on behalf of the
Petitioners submits that the Respondent failed to deliver possession of
the unit by the stipulated date of 31.12.2017, as required under Clause
14 of the ATS. They consequently seek delivery of possession and
compensation for delayed possession, quantified at Rs.1,85,43,600/-.
4. Mr. Uttam Dutt, learned Counsel for the Respondent opposes the
petition, inter alia, on the ground that the claims sought to be referred
are ex facie barred by limitation.
5. Ms. Riddhi contends that the present petition is maintainable and
that the claims sought to be referred to arbitration are not ex facie barred
by limitation.
6. It is submitted that the Respondent does not dispute the execution
of the ATS dated 07.04.2014 or the existence of the arbitration
agreement contained in Clause 44 thereof.
7. The objection raised by the Respondent relates only to the
limitation governing the underlying claims and not to the limitation
applicable to the present petition under Section 11(6) of the Act.
8. Learned Counsel submits that the Respondent’s failure to hand
over possession by 31.12.2017 does not bring the contractual
obligations under the ATS to an end. In this regard, reliance is placed
on Clause 14 of the Agreement, which expressly provides for payment
of compensation at the rate of Rs 30/- per sq. ft. per month for the period
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of delay in handing over possession.
9. It is contended that the stipulation for monthly compensation
demonstrates that the Respondent’s liability continues for every month
during which possession remains undelivered. The Agreement has
neither been terminated nor have the Petitioners relinquished their
contractual rights.
10. It is further submitted that the Respondent continues to pursue its
disputes with the landowners under the Collaboration Agreement dated
05.04.2008. The Respondent institutes Civil Suit No. 17/2022 on
08.02.2022 against the landowners, seeking recovery of approximately
Rs.203.60 crores
11. It is further submitted that the Respondent continues to pursue its
disputes with the landowners under the Collaboration Agreement dated
05.04.2008. The Respondent institutes Civil Suit No. 17/2022 on
08.02.2022 against the landowners, seeking recovery of approximately
Rs203.60 crores
12. Learned Counsel further submits that the Petitioners become
aware of the aforesaid civil suit only in December 2025 and thereafter
seek impleadment in the proceedings. The Commercial Court, while
dismissing their application on 20.02.2026, recognises that the
Petitioners possess independent contractual rights and remedies against
the Respondent. The Petitioners thereafter withdraw their Civil
Revision Petition No. 2378/2026 on 13.03.2026.
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13. It is submitted that the Respondent rejects the Petitioners’ claims
for possession and delay compensation for the first time vide its reply
dated 20.05.2026 to the legal notice dated 04.05.2026. The Petitioners
thereafter invoke arbitration vide notice dated 18.06.2026. It is,
therefore, contended that the cause of action crystallises upon the
Respondent’s unequivocal rejection of the Petitioners’ contractual
entitlements and that the invocation of arbitration is within limitation.
14. Learned Counsel places reliance on Samruddhi Cooperative
3
Housing Society Ltd. v. Mumbai Mahalaxmi Construction (P) Ltd. ,
4
and Lata Construction v. Dr. Rameshchandra Ramniklal Shah , to
contend that where the contractual obligation to deliver possession
remains unperformed, the cause of action may continue to subsist. It is
submitted that the present case involves not merely the continuing
consequences of a past breach, but an unperformed contractual
obligation accompanied by an express stipulation for monthly
compensation.
15. Learned Counsel further relies upon SBI General Insurance Co.
5
Ltd. v. Krish Spinning and Interplay Between Arbitration
6
Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re, ,
to submit that the scope of enquiry at the referral stage is limited and
that this Court ought not to undertake an intricate evidentiary enquiry
into the limitation of the underlying claims. It is contended that the
questions concerning the continued subsistence of the Agreement, the
3
(2022) 4 SCC 103
4
(2000) 1 SCC 586
5
(2024) 12 SCC 1
6
(2024) 6 SCC 1
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operation of Clause 14, the alleged assurances and the subsequent
conduct of the parties are matters for determination by the Arbitral
Tribunal.
16. Per Contra Mr. Uttam, submits that the substantive claims
sought to be referred to arbitration are ex facie barred by limitation. It
is submitted that the Respondent does not dispute the existence of the
ATS dated 07.04.2014 or Clause 44 thereof; however, the existence of
an arbitration agreement does not revive a substantive claim which has
already become barred by limitation.
17. Learned Counsel submits that, as per the Petitioners’ own case,
the Respondent is required to hand over possession by 31.12.2017. The
alleged breach, therefore, becomes apparent upon expiry of the
stipulated date, and the Petitioners are aware of the alleged non-delivery
of possession from that date. It is contended that the Petitioners neither
invoke arbitration nor initiate any proceedings within the applicable
period of limitation. Instead, they issue a legal notice dated 04.05.2026
and a notice invoking arbitration dated 18.06.2026, more than eight
years after the alleged breach.
18. It is further submitted that the subsequent issuance of a legal
notice or invocation of arbitration cannot create a fresh cause of action
or revive a claim which has already become time-barred. The
Respondent contends that the limitation period for the substantive
claims is distinct from the limitation applicable to the petition under
Section 11 of the Act and that a petition filed within limitation cannot,
by itself, revive stale claims.
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19. Learned Counsel submits that the Petitioners cannot characterise
the breach as a continuing cause of action merely because the
consequences of non-delivery of possession continue to subsist. It is
contended that a continuing cause of action must arise from a
continuing breach recognised by law, and the continued existence of the
consequences of an alleged past breach does not, by itself, extend
limitation. The provision for compensation under Clause 14 does not,
according to the Respondent, permit the Petitioners to indefinitely
postpone the accrual of their claims.
20. It is further submitted that the Petitioners’ reliance upon alleged
assurances and discussions between the parties is vague and
unsupported by any specific communication or contemporaneous
material. The Petitioners do not establish any legally recognised ground
for exclusion or extension of limitation.
21. The Respondent contends that mere negotiations, assurances or a
unilateral demand cannot extend limitation in the absence of an
7
acknowledgment satisfying Section 18 of the Limitation Act, 1963 .
22. Learned Counsel submits that their own reply dated 20.05.2026
does not constitute an acknowledgment of liability. The Respondent
merely offers to refund the sum of Rs 4,82,123/- received from the
Petitioners, without admitting any liability towards delay compensation
or other monetary claims. Such an offer, it is contended, does not revive
7
“Limitation Act” hereinafter
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the Petitioners’ claims.
23. It is further submitted that the Petitioners pay only Rs 4,82,123/-
against the total sale consideration of Rs 2,38,68,000/-, which,
according to the Respondent, represents approximately 2% of the total
consideration. The Petitioners do not thereafter pay or tender the
balance consideration. The Respondent, therefore, disputes the
Petitioners’ entitlement to claim substantial delay compensation
without demonstrating their readiness and willingness to perform their
own contractual obligations.
24. Learned Counsel further submits that the project does not
progress because the landowners fail to hand over vacant and peaceful
possession of the licensed land in terms of the Collaboration Agreement
dated 05.04.2008. The Respondent obtains the requisite statutory
licences and takes steps towards development but is prevented from
proceeding with construction on account of the landowners’ defaults.
The Respondent, accordingly, institutes Civil Suit No. 17/2022 on
08.02.2022 against the landowners, seeking recovery of approximately
Rs 203.60 crores.
25. It is contended that the ATS has become frustrated and incapable
of performance on account of the failure of the landowners to hand over
possession of the land. The Respondent submits that, in the event of
frustration, the Petitioners’ remedy, if any, is confined to restitution of
the amount received under Section 65 of the Indian Contract Act, 1872,
which the Respondent remains willing to refund. It is further pointed
out that 37 out of 38 similarly placed purchasers accept refunds and
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settle their claims, whereas the Petitioners alone decline the refund
arrangement.
26. Learned Counsel places reliance on Vidya Drolia v. Durga
8
Trading Corpn. , Bharat Sanchar Nigam Ltd. v. Nortel Networks
9 10
India Pvt. Ltd , M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd and State
11
of W.B. v. B.B.M. Enterprises , to submit that the referral Court is
empowered to refuse appointment where the claims are manifestly and
ex facie barred by limitation.
27. It is contended that the present case falls within the narrow
category of cases where the relevant dates emerge from the Petitioners’
own pleadings and no elaborate evidentiary enquiry is required to
determine that the claims are stale.
28. Learned Counsel further submits that the decisions in SBI
General Insurance Co. Ltd.(supra) and In Re: Interplay(supra) do not
preclude the referral Court from examining a claim which is
demonstrably dead on the basis of the admitted facts. It is contended
that the Respondent does not seek an elaborate adjudication of disputed
facts but relies upon the dates pleaded by the Petitioners themselves,
namely, the stipulated date of possession, the date of the legal notice
and the date of invocation of arbitration.
29. On the aforesaid grounds, learned Counsel submits that the
8
(2021) 2 SCC 1,
9
(2021) 5 SCC 738
10
(2024) 5 SCC 313
11
2026 SCC OnLine SC 980
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Petitioners cannot revive a stale claim by issuing a belated notice
invoking arbitration and that the present petition deserves to be
dismissed.
30. In rejoinder, Ms. Riddhi submits that the Respondent’s reliance
on B.B.M. Enterprises(Supra) ,is distinguishable. It is contended that
the said case concerns a claim which remains dormant for
approximately 21 years after completion of the work, whereas the
present case concerns an unperformed obligation to deliver possession
and an express contractual provision for monthly compensation. It is,
therefore, submitted that the claims cannot be characterised as ex facie
dead on the basis of the stipulated date of possession alone.
31. Learned Counsel also distinguishes Bharat Sanchar Nigam
Ltd .(supra), on the ground that, unlike the said case, there is no earlier
unequivocal rejection of the Petitioners’ claims before 20.05.2026. It is
further submitted that the Respondent’s dealings with similarly situated
allottees, including refund and settlement arrangements with 37 out of
38 purchasers, are relevant circumstances which require consideration
while determining the limitation objection.
32. On the aforesaid grounds, learned Counsel submits that the
claims are not manifestly barred by limitation and that the objection
raised by the Respondent involves disputed questions of fact and
contractual interpretation which are appropriately left to the Arbitral
Tribunal. The Petitioners, accordingly, seek appointment of an
independent Sole Arbitrator.
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33. I have heard the learned counsel for the parties and perused the
material placed on record.
34. The principal question which arises for consideration is whether
the claims sought to be referred to arbitration are so manifestly barred
by limitation that this Court ought to decline reference at the threshold,
or whether the objection raised by the Respondent involves disputed
questions which must necessarily be left to the Arbitral Tribunal.
35. At the outset, it is necessary to distinguish between the limitation
governing the substantive claims arising out of the Agreement. The two
operate in distinct fields and cannot be conflated.
36. Section 43(1) of the Act makes the provisions of the Limitation
Act, applicable to arbitral proceedings in the same manner as they apply
to proceedings before a Court. Further, in terms of Section 43(2) of the
Act, arbitral proceedings are deemed to have commenced on the date
referred to in Section 21, namely, the date on which the request for
referring the dispute to arbitration is received by the other party.
37. Insofar as the present petition is concerned, Article 137 of the
Schedule to the Limitation Act prescribes a period of three years for an
application for which no period of limitation is otherwise provided. In
Arif Azim Co. Ltd(supra) , the Supreme Court has held that limitation
for an application under Section 11(6) commences when a valid notice
invoking arbitration is issued and the other party fails or refuses to act
in accordance with the agreed appointment procedure.
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38. The question which nevertheless arises is whether the claims
sought to be referred to arbitration had already become ex facie barred
by limitation on the date of commencement of arbitration, and whether
this Court can decline reference on that ground.
39. Let us now look into the scope of scrutiny at the stage of Section
11 petition.
40. In Bharat Sanchar Nigam Ltd(supra) , the Supreme Court
recognised that although limitation is ordinarily an issue of
admissibility to be determined by the Arbitral Tribunal, the referral
Court is not precluded from declining a reference where the claims are
manifestly and ex facie time-barred.
41. The aforesaid principle was elaborated in Arif Azim Co. Ltd .
(supra). The Supreme Court held that, while considering limitation in
proceedings under Section 11, the Court is required to undertake a two-
fold examination: first, whether the application under Section 11 itself
is barred by limitation; and, secondly, whether the claims sought to be
arbitrated are ex facie dead claims on the date of commencement of
arbitration. The Court further observed, that it is the duty of the referral
Court to prima facie examine and reject dead claims so as to protect the
other party from being drawn into a time-consuming and costly arbitral
process.
42. The aforesaid position requires to be read with the subsequent
decision of the Supreme Court in SBI General Insurance Co. Ltd .
(supra) . In the said decision, the Supreme Court clarified that the
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referral Court must not conduct an intricate evidentiary enquiry into the
limitation of the underlying claims and that such questions are
ordinarily to be left for determination by the Arbitral Tribunal. The
clarification, however, was not intended to dilute the limited power
recognised in Arif Azim (supra) to decline reference where the claims
are demonstrably dead.
43. The position has thereafter been considered in B.B.M.
Enterprises (supra) . The Supreme Court reiterated that, where the bar
of limitation is apparent from the bare minimum pleadings and admitted
chronology, and no intricate evidentiary enquiry is required, the referral
Court is justified in declining to set the arbitral process in motion. The
Supreme Court observed that arbitration, though encouraged as an
alternative dispute resolution mechanism, cannot depart from the
fundamental principle that the law favours the diligent and not the
indolent.
44. Thus, the scope of enquiry at this stage is undoubtedly narrow.
This Court is not required to conduct a mini-trial or determine the merits
of the contractual claims. However, neither is it required to
mechanically refer every dispute to arbitration irrespective of whether
the claim itself is demonstrably barred by limitation. The enquiry must
remain confined to the contractual terms, the admitted dates and the
Petitioners’ own pleaded case here.
45. Now this Court will analysis the accrual of the cause of action
here, the ATS dated 07.04.2014 stipulated 31.12.2017 as the date by
which possession of the allotted unit was to be delivered. The
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Petitioners’ own case is that the Respondent failed to deliver possession
by the said date. The cause of action arising from such failure, therefore,
accrued upon the expiry of the stipulated date.
46. In terms of Article 54 of the Limitation Act, a suit for specific
performance, where a date is fixed for performance, must be instituted
within three years from the date so fixed. Likewise, Article 55
prescribes a period of three years for compensation for breach of
contract, commencing from the date when the contract is broken,
subject to the statutory provisions relating to successive or continuing
breaches. The mere continuation of the consequences of an earlier
breach does not, by itself, give rise to a fresh cause of action or extend
limitation indefinitely.
12
47. In Ahmadsahab Abdul Mulla (2) v. Bibijan, , the Supreme
Court has explained that, where a date is fixed for performance of the
contract, limitation under Article 54 commences from the date so fixed.
Consequently, the Petitioners cannot contend that the period of
limitation for seeking specific performance commenced only upon
issuance of the legal notice dated 04.05.2026 or upon receipt of the
Respondent’s reply dated 20.05.2026. A subsequent demand or refusal
cannot postpone the commencement of limitation where the contract
itself specifies the date for performance.
48. The law regarding the same is clear, the Supreme Court has even
recently held that under the first limb of Article 54 of the Limitation
12
(2009) 5 SCC 462
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Act , if a date is fixed for the performance of a contract, the three-year
limitation period strictly starts running from that specific date. The
same was also recently held in Usha Devi & Ors v Ram Kumar Singh
13
& Ors .
49. Article 55 of the Limitation Act, contemplates three distinct
situations for commencement of limitation: where the contract is
broken, where there are successive breaches, and where the breach is
continuing. In the first situation, limitation commences when the
contract is broken; in the second, from the occurrence of the particular
breach in respect of which compensation is claimed; and in the third,
upon cessation of the continuing breach. The mere continuation of the
consequences of an earlier breach, however, does not convert such
breach into a continuing breach. The applicability of the latter two
situations must depend upon the nature of the contractual obligation and
whether the subsequent defaults constitute independent or continuing
breaches, rather than merely successive financial consequences of the
original breach.
50. The Petitioners have sought to overcome the aforesaid position
by placing reliance upon Clause 14 of the Agreement, which provides
for compensation at the rate of Rs.30/- per sq. ft. per month in the event
of delay in delivery of possession. They contend that the Respondent’s
failure constitutes a continuing breach and that compensation
consequently accrues on a monthly basis. This contention, however,
requires the distinction between a continuing breach and the continuing
13
2024 INSC 599
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effect of a completed breach to be kept in view. The mere fact that the
financial consequences of a breach continue to accumulate does not, in
every case, result in a fresh cause of action arising from month to
month.
51. Clause 14, when read as a whole, stipulates a fixed date for
delivery of possession and provides a monthly rate as the measure for
computing compensation for delay. It further contemplates adjustment
of such compensation at the time of execution of the conveyance/sale
deed. The provision for monthly computation, therefore, cannot, by
itself, be construed as an agreement to keep the cause of action for
enforcement of the primary obligation alive indefinitely. The
Petitioners’ claim arises from the Respondent’s failure to deliver
possession by the contractually stipulated date. The continued non-
fulfilment of that obligation and the continuing financial consequences
thereof cannot, without more, be treated as successive independent
breaches for the purpose of extending limitation.
52. The decisions relied upon by the Petitioners in Samruddhi Co-
operative Housing Society Ltd(Supra) . and Lata Construction(supra) ,
do not advance their case. In Samruddhi Co-operative Housing Society
Ltd(Supra) , the continuing cause of action arose from the failure to
discharge a continuing statutory obligation to obtain an occupancy
certificate. In Lata Construction(Supra) , the subsequent agreement
and the obligations preserved thereunder were material to the
conclusion reached by the Supreme Court. The present case does not
disclose a comparable continuing statutory obligation or any
subsequent agreement extending or renewing the original obligation to
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deliver possession.
53. The subsequent correspondence dated 04.05.2026 between the
parties does not furnish a fresh starting point for limitation. An
acknowledgment under Section 18 of the Limitation Act must be made
in writing and signed by the party against whom the right is claimed,
and must be made before expiry of the prescribed period. A
communication issued after limitation has already expired cannot
revive a claim which has become barred.
54. Equally, mere negotiations, correspondence or an offer to refund
the amount received cannot, in the absence of a legally cognisable
acknowledgment, extend the period of limitation.
55. The Petitioners’ reliance upon the Respondent’s proceedings
against the landowners, as well as the proceedings initiated by the
Petitioners for impleadment therein, also does not alter the aforesaid
position. The dispute between the Respondent and the landowners
under their separate Collaboration Agreement is distinct from the
contractual relationship between the Petitioners and the Respondent.
The pendency of such proceedings, or the Petitioners’ decision to await
their outcome, does not, in law, suspend the running of limitation in
respect of the Petitioners’ independent contractual remedies. The
Petitioners’ decision to await resolution of the Respondent’s dispute
with the landowners cannot operate to extend a statutory period of
limitation.
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14
56. In B & T AG v. Union of India , the Supreme Court has held that
mere correspondence, reminders or settlement discussions between
parties do not, by themselves, extend the period of limitation. The
relevant consideration is the point at which the cause of action accrued
and the dispute crystallised. A party cannot, by continuing negotiations
or issuing successive communications, revive a claim which has already
become barred by limitation. Thus, the Petitioner also cannot press the
ground that they were even engaged in talks of settlement for a long
period.
57. Further this Court is conscious that the power exercised under
Section 11 of the Act is limited and that the question of limitation
ordinarily falls within the domain of the Arbitral Tribunal. However,
the present case does not require an intricate evidentiary enquiry.
58. Thus it is clear that the contractual date for performance is
undisputed; the date of the alleged breach is ascertainable from the
Agreement itself; the claims are founded on the failure to deliver
possession by the stipulated date; and the subsequent notices and
correspondence do not disclose any legally recognised event extending
or postponing limitation.
59. The present case is, therefore, distinguishable from cases in
which the date of accrual itself depends upon disputed correspondence,
subsequent determinations, or factual circumstances requiring
evidence. The position is closer to the principle applied by the Supreme
14
(2024) 5 SCC 358
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Court in B.B.M. Enterprises (supra), where the Court declined to refer
a claim that was demonstrably stale on the basis of the admitted
chronology and where no intricate evidentiary enquiry was necessary.
60. The Court is also mindful of the clarification in SBI General
Insurance (supra). Relevant paragraphs are reproduced below:
“127. Section 11 also envisages a time-bound and expeditious
disposal of the application for appointment of arbitrator. One of
the reasons for this is also the fact that unlike Section 8, once an
application under Section 11 is filed, arbitration cannot commence
until the Arbitral Tribunal is constituted by the Referral Court.
This Court, on various occasions, has given directions to the High
Courts for expeditious disposal of pending Section 11 applications.
It has also directed the litigating parties to refrain from filing bulky
pleadings in matters pertaining to Section 11. Seen thus, if the
Referral Courts go into the details of issues pertaining to “accord
and satisfaction” and the like, then it would become rather difficult
to achieve the objective of expediency and simplification of
pleadings.
128. We are also of the view that ex facie frivolity and dishonesty
in litigation is an aspect which the Arbitral Tribunal is equally, if
not more, capable to decide upon the appreciation of the evidence
adduced by the parties. We say so because the Arbitral Tribunal
has the benefit of going through all the relevant evidence and
pleadings in much more detail than the Referral Court. If the
Referral Court is able to see the frivolity in the litigation on the
basis of bare minimum pleadings, then it would be incorrect to
doubt that the Arbitral Tribunal would not be able to arrive at the
same inference, most likely in the first few hearings itself, with the
benefit of extensive pleadings and evidentiary material.”
129. Before we close the matter, it is necessary for us to clarify the
dictum as laid in Arif Azim Co. Ltd. v. Aptech Ltd. [Arif Azim Co.
Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358 :
2024 INSC 155] , so as to streamline the position of law and prevent
the possibility of any conflict between the two decisions that may
arise in future.
130. In Arif Azim [Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC
313 : (2024) 3 SCC (Civ) 358 : 2024 INSC 155] , while deciding an
application for appointment of arbitrator under Section 11(6) of the
1996 Act, two issues had arisen for our consideration:
130.1. (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 petition
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filed by M/s Arif Azim was barred by limitation?
130.2. (ii) Whether the Court may decline to make a reference under
Section 11 of the 1996 Act where the claims are ex facie and
hopelessly time-barred?
131. On the first issue, it was observed by us that the Limitation Act,
1963 is applicable to the applications filed under Section 11(6) of
the 1996 Act. Further, we also held that it is the duty of the Referral
Court to examine that the application under Section 11(6) of the
1996 Act is not barred by period of limitation as prescribed under
Article 137 of the Limitation Act, 1963 i.e. 3 years from the date
when the right to apply accrues in favour of the applicant. To
determine as to when the right to apply would accrue, we had
observed in para 57 of the said decision that: (Arif Azim case [Arif
Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ)
358 : 2024 INSC 155] , SCC p. 340)
“57. … the limitation period for filing a petition under Section 11(6)
of the 1996 Act 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 the part of that other party in
complying with the requirements mentioned in such notice.”
132. Insofar as the first issue is concerned, we are of the opinion
that the observations made by us in Arif Azim [Arif Azim Co. Ltd. v.
Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC (Civ) 358 : 2024
INSC 155] do not require any clarification and should be construed
as explained therein.
133. On the second issue it was observed by us in para 68 of Arif
Azim case [Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 :
(2024) 3 SCC (Civ) 358 : 2024 INSC 155] that the Referral Courts,
while exercising their powers under Section 11 of the 1996 Act, are
under a duty 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”.
134. Our findings on both the aforesaid issues have been
summarised in para 92 of the said decision thus: (Arif Azim case
[Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 : (2024) 3 SCC
(Civ) 358 : 2024 INSC 155] , SCC p. 357)
“92. 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 1996
Act, the courts should satisfy themselves on two aspects by
employing a two-pronged test — first, whether the petition under
Section 11(6) of the 1996 Act 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.”
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61. The present determination does not proceed upon an examination
of disputed evidence or a conclusive adjudication of the merits of the
parties’ contractual defences. It is based on the plain terms of the
Agreement, particularly the stipulated date of performance and the
manner in which Clause 14 provides for adjustment of compensation,
read with the Petitioners’ own computation of the claims and the dates
pleaded by them. On this material, the plea of a continuing breach does
not disclose a legally sustainable basis to keep the original claims alive
indefinitely.
62. In view of the above this Court is of the view that the mere
issuance of a legal notice in May 2026 or a notice invoking arbitration
in June 2026 cannot revive claims which had already become barred by
limitation. The limitation applicable to the substantive claims cannot be
circumvented by postponing the invocation of arbitration until a
subsequent communication is exchanged between the parties.
63. The Act is intended to provide an efficacious, expeditious and
time-bound mechanism for resolution of disputes. While arbitration is
to be encouraged, the statutory framework cannot be employed to
revive claims which have already become barred by limitation.
Permitting claims which are ex facie dead to be referred to arbitration
would defeat the very object of the Act by compelling parties to undergo
a time-consuming and costly arbitral process in respect of claims which,
on the admitted material, are no longer legally enforceable.
64. In view of the foregoing discussion, this Court finds that the
substantive claims sought to be referred to arbitration had become ex
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facie barred by limitation before commencement of the arbitral
proceedings under Section 21 of the Act.
65. The fact that the present petition under Section 11(6) has itself
been filed within the period prescribed under Article 137 of the
Limitation Act does not revive the underlying claims or entitle the
Petitioners to seek their reference.
66. Accordingly, the objection raised by the Respondent is sustained.
67. The present petition under Section 11(6) of the Arbitration and
Conciliation Act, 1996 is dismissed in its entirety, as the claims sought
to be referred to arbitration are ex facie barred by limitation.
68. The present petition is dismissed. Pending application(s), if any,
also stand disposed of. No order as to costs.
OM PRAKASH SHUKLA, J
NOVEMBER 3, 2026 /gunn
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