Full Judgment Text
2025 INSC 1196
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
(ARISING OUT OF SLP (C) NO. 22105-22106 OF 2024)
OFFSHORE INFRASTRUCTURES
LIMITED
… APPELLANT(S)
VERSUS
M/S BHARAT PETROLEUM
CORPORATION LIMITED
…RESPONDENT(S)
J U D G M E N T
AUGUSTINE GEORGE MASIH, J.
1. Leave granted.
2. The instant Civil Appeals assail the Judgment and Order
dated 10.04.2024 passed in Review Petition No. 76 of
2024 and Judgment and Order dated 19.12.2023 passed
in Arbitration Case No. 23 of 2022 by the High Court of
Madhya Pradesh at Jabalpur (“High Court”).
3. The High Court vide Judgment and Order dated
Signature Not Verified
Digitally signed by
RADHA SHARMA
Date: 2025.10.07
17:47:24 IST
Reason:
19.12.2023 in Arbitration Case No. 23 of 2022 has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 1 of 17
refused to appoint an arbitrator and dismissed the
application filed under section 11 of the Arbitration and
Conciliation Act, 1996 (“1996 Act”) by the Appellant on
the ground that the application is time-barred. The
subsequent Review Petition No. 76 of 2024 filed by the
Appellant was also dismissed by the High Court vide
Judgment and Order dated 10.04.2024.
4. The Appellant herein is Offshore Infrastructures Limited,
a Company incorporated under the Companies Act, 1956,
having its registered office at Mulund Goregaon, Mulund
(West) Mumbai. The Respondent is Bharat Oman
Refineries Limited, which was merged to M/s Bharat
Petroleum Corporation Limited with effect from
01.07.2022, having its registered office at Bharat Bhavan
Ballard Estate, Mumbai.
5. The crux of the matter is that the Respondent had invited
tenders for execution of composite works pertaining to the
establishment of a new Modular Penex Unit along with
associated works required for the revamp and capacity
enhancement at the Bina Refinery. Upon completion of
the tendering process, the work was awarded to the
Appellant vide letter of acceptance dated 31.12.2016. As
per the terms of letter of acceptance, the work awarded to
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 2 of 17
the Appellant was to be completed within a period of five
months, i.e. 30.05.2017. However, the work could not be
completed within the stipulated time, and ultimately the
work came to be completed on 31.01.2018. The Appellant
raised the final Bill bearing RA Bill No. 7 on 20.03.2018
and thereafter a “No Claim Certificate” was issued by the
Appellant on 03.10.2018. The completion certificate was
issued on 05.02.2019. The final bill was released on
26.03.2019. The Respondent released part payment to
the Appellant on 11.06.2019 and liquidated damages of
5% was deducted on account of delay. The Appellant on
26.04.2021, issued a consolidated claim of all its
outstanding dues.
6. Subsequently, the Appellant on 14.06.2021 issued a
notice to Managing Director of the Respondent for
appointment of Arbitrator as per Clause 8.6 of General
Conditions of the Contract (“GCC”) stating that as per
Clause 8.6 of GCC, the Arbitrator named is Managing
Director of Bharat Oman Refineries Limited or an officer
of Bharat Oman Refineries Limited who may be
nominated by the Managing Director, however, in view of
the provisions of the 1996 Act (as amended by Act 3 of
2016, w.e.f. 23.10.2015), neither the Managing Director
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 3 of 17
nor an officer is entitled to act as an Arbitrator in the
matter, therefore suggest names of at least four qualified
persons unconnected with either party to be selected as
Sole Arbitrator in the matter. The Respondent refused to
entertain the claims via communication dated
02.07.2021.
7. Aggrieved by the failure of the Respondent to appoint the
Arbitrator, the Appellant has filed Arbitration Case No. 23
of 2022 under Section 11 (6) of the 1996 Act before the
High Court seeking appointment of Sole Arbitrator.
8. The High Court vide Judgment and Order dated
19.12.2023 dismissed the Arbitration Case No. 23 of
2022 holding that as per Schedule 26 (Periods of
Limitation) and as per Section 2(j) & 3 Part-I of Limitation
Act, 1963, the time from which the period of limitation
starts has to be taken as the date on which accounts in
writing were signed by the Appellant and also from the
date of execution of reconciliation statement of
foreclosure and settlement agreement. Since the final Bill
was raised on 20.03.2018 and further the “No Claim
Certificate” was issued on 03.10.2018, the limitation
would run from the date of issuance of “No Claim
Certificate”. Therefore, the period of three years has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 4 of 17
lapsed on 02.10.2021 and the application for
appointment of Arbitrator has been filed by the Appellant
on 14.03.2022, which is much beyond the period of
limitation.
9. The Judgment dated 19.12.2023 of the High Court was
sought to be reviewed by the Appellant by filing a Review
Petition No. 76 of 2024. The High Court on 10.04.2024
has dismissed the review petition holding that the cause
of action accrued to the Appellant at the date of issuance
of “No Claim Certificate” on 03.10.2018, and the
Appellant ought to have filed the application for
appointment of Arbitrator within three years from
03.10.2018, which was not done. The Appellant
challenged both the Judgment and Order dated
19.12.2023 and Judgment and Order dated 10.04.2024
before this Court by way of the present appeals.
10. The learned Counsel for the Appellant submits that the
application under Section 11 (6) of the 1996 Act was filed
well within the period of limitation. To substantiate his
contentions, reliance is placed upon the decision of this
Court in Arif Azim Company Limited v. Aptech
1
Limited , which held that the period for the purpose of
1
(2024) 5 SCC 313
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 5 of 17
filing application for appointment of arbitrator
commences only upon issuance of a valid notice invoking
the arbitration followed by refusal or failure of the other
party to appoint the arbitrator in accordance with agreed
procedure.
11. He further submits that even if it is assumed that the
cause of action accrued earlier on 03.10.2018, the part
payment made by the Respondent on 11.06.2019 has
extended the period of limitation under section 19 of the
Limitation Act, 1963. Relying upon In Re: Cognizance
2
for Extension of Limitation , he submits that the
limitation is covered by the COVID-19 extension Order
dated 10.01.2022 passed by this Court, which excluded
the period from 15.03.2020 to 28.02.2022 from
computation of limitation.
12. Finally, it is contended that in Perkins Eastman
3
Architects DPC and Another v. HSCC (India) Limited ,
in an equivalent arbitration clause, where the appointing
authority had failed to appoint an arbitrator till the time
of filing of Section 11 (6) application, this Court had
appointed an Arbitrator. The arbitration agreement in the
2
(2022) 3 SCC 117
3
(2020) 20 SCC 760
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 6 of 17
present case was drafted prior to the 2015 Amendment in
the 1996 Act, with the evident intent to provide for
arbitration but power of appointing arbitrator was with
the Managing Director of the Respondent, courts have
upheld arbitration agreements including similar clauses
and appointed arbitrators, despite disqualification of the
named authority.
13. Per contra, the learned Counsel for the Respondent while
supporting the Judgment and Order of the High Court
submits that the cause of action accrued to the Petitioner
on the date when final bill was raised on 20.03.2018, and
according to the Appellant amount became due on or
before 21.04.2018 i.e. 30 days from the date of
submission of bill. The Appellant ought to have invoked
arbitration within three years from 21.04.2018 by filing
an application which was not done.
14. He further contends that categorial stipulation contained
in Clause 8.6 (a) of GCC empowers the Managing Director
or his nominee alone to act as Sole Arbitrator, as
subsequent legislative changes in the 1996 Act through
amendments renders such a contractual provision otiose
and inoperative, thereby such arbitration clause ought to
be deemed to have ceased to exist. Therefore, the
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 7 of 17
arbitration mechanism itself stands effaced, disentitling
the Appellant to invoke arbitration.
15. Having heard the Counsel for the parties and upon
perusal of material on record, the issues for consideration
are:-
(i) whether the court has power to appoint an
arbitrator when the clause providing the
arbitration mechanism has become bad in law
pertaining to certain statutory amendments and
(ii) whether the application under Section 11(6) of the
Arbitration and Conciliation Act, 1996 filed by the
Appellant is within the period of limitation.
16. It is pertinent to refer to the decision of this court in
Perkins (supra) , wherein a coordinate Bench of this
Court while following the decision in TRF Limited v.
4
Energo Engineering Projects Limited categorically
held that once the Chairman and Managing Director of
the respondent therein became ineligible by the virtue of
Section 12(5) read with the Seventh Schedule of the 1996
Act (as amended by Act 3 of 2016 w.e.f. 23.10.2015), the
ineligibility also extends to power of nomination, thereby
4
(2017) 8 SCC 377
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 8 of 17
rendering any appointment made by him legally
unsustainable. Consequently, this Court appointed an
independent sole arbitrator holding that jurisdiction
under Section 11(6) of the 1996 Act is not ousted merely
because an appointment has already been made by the
respondent if such appointment is ex facie invalid or
contrary to the agreed procedure.
Voestalpine Schienen GmbH v. Delhi
17. Similarly, in
5
Metro Rail Corporation Limited this Court
underscored that the legislative intent behind the 2015
amendment of inserting Section 12(5) of the 1996 Act is
to secure neutrality of arbitrators. By virtue of its non-
obstante clause, any person whose relationship with the
parties falls within the disqualifications provided in
Seventh Schedule is rendered ineligible to act as an
arbitrator, this is notwithstanding any stipulation
provided in the arbitration clause. If any arbitration
clause runs contrary to the mandate provided in Section
12(5) of the 1996 Act, the power to appoint an
independent arbitrator is vested with the court under
section 11 of the 1996 Act, a principle consistent with
pre-amendment jurisprudence under Section 11(8) of
5
(2017) 4 SCC 665
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 9 of 17
1996 Act where courts had, even earlier, overridden
restrictive arbitration clauses to ensure the appointment
of impartial arbitrators.
18. Coming to the case in hand, the Clause 8.6 of GCC
governs the arbitration mechanism. The arbitrator
named in this Clause is Managing Director of Bharat
Oman Refineries Limited or an officer of Bharat Oman
Refineries Limited who may be nominated by the
Managing Director. Subsequent amendments in the 1996
Act, as referred above, have made such clause bad in law
and Managing Director or officer nominated by the
Managing Director become ineligible by the operation of
law to be appointed as Arbitrator.
19. The Respondent contends that once the arbitration
clause referred to in the GCC has become obsolete and
non-operative, it would render the entire arbitration
mechanism non-existent therefore the Appellant cannot
file an application for appointment of arbitrator.
20. We are not persuaded by this submission of the Counsel
for Respondent. The very existence of the arbitration
clause in the GCC referring to all disputes to arbitrator is
the core part of contract. Merely because the procedure
to appoint an arbitrator provided in the clause has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 10 of 17
become inoperative due to subsequent changes in
statutory provisions, would not mean that the core of the
contract referring the dispute for adjudication to
arbitrator would be rendered nugatory. The amendment
in the statute has been enacted with the legislative intent
to enforce neutrality of the arbitrator and bring
impartiality in arbitration proceedings by virtue of Section
12(5) of the 1996 Act. It cannot be justified to literally
interpret the clause in the contract in a manner or at the
cost of the entire arbitration mechanism itself being
abandoned. The arbitration agreement must be
interpreted in a purposive manner, but not literally so as
to enable the parties to pursue the intended dispute
redressal mechanism of contract. Therefore, it cannot be
said that non-operation of arbitration clause in GCC will
result into forgoing of entire arbitration mechanism and
rendering the Appellant disentitled for seeking
appointment of arbitrator. The Appellant is, therefore,
entitled to file application under section 11(6) of the 1996
Act for appointment of arbitrator and thereby the power
is vested with the court to appoint an arbitrator upon
filing of such application.
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 11 of 17
21. The next aspect which merits consideration is whether
the application for appointment of arbitrator filed by the
Appellant is within the period of limitation. It would be
apposite to refer to the decision in Geo Miller and
Company Private Limited v. Chairman, Rajasthan
6
Vidyut Utpadan Nigam Limited , where a three-Judge
Bench of this court while dealing with similar issue has
held that the cause of action in respect of arbitration
application arises when the final bill handed over to the
respondent becomes due, and further correspondences
between the parties subsequent to the due date of bill
would not extend the time of limitation. The relevant
portion of the judgment is reproduced herein:-
“19. Undoubtedly, a different scheme has been evolved
under the 1996 Act. However we find that the same
principles continue to apply with respect to the
applicability of the law of limitation to an application
under Section 11(6) of the 1996 Act as laid down in the
decisions dealing with judicial appointment of an
arbitrator under Sections 8 and 20 of the 1940 Act.
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
(ARISING OUT OF SLP (C) NO. 22105-22106 OF 2024)
OFFSHORE INFRASTRUCTURES
LIMITED
… APPELLANT(S)
VERSUS
M/S BHARAT PETROLEUM
CORPORATION LIMITED
…RESPONDENT(S)
J U D G M E N T
AUGUSTINE GEORGE MASIH, J.
1. Leave granted.
2. The instant Civil Appeals assail the Judgment and Order
dated 10.04.2024 passed in Review Petition No. 76 of
2024 and Judgment and Order dated 19.12.2023 passed
in Arbitration Case No. 23 of 2022 by the High Court of
Madhya Pradesh at Jabalpur (“High Court”).
3. The High Court vide Judgment and Order dated
Signature Not Verified
Digitally signed by
RADHA SHARMA
Date: 2025.10.07
17:47:24 IST
Reason:
19.12.2023 in Arbitration Case No. 23 of 2022 has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 1 of 17
refused to appoint an arbitrator and dismissed the
application filed under section 11 of the Arbitration and
Conciliation Act, 1996 (“1996 Act”) by the Appellant on
the ground that the application is time-barred. The
subsequent Review Petition No. 76 of 2024 filed by the
Appellant was also dismissed by the High Court vide
Judgment and Order dated 10.04.2024.
4. The Appellant herein is Offshore Infrastructures Limited,
a Company incorporated under the Companies Act, 1956,
having its registered office at Mulund Goregaon, Mulund
(West) Mumbai. The Respondent is Bharat Oman
Refineries Limited, which was merged to M/s Bharat
Petroleum Corporation Limited with effect from
01.07.2022, having its registered office at Bharat Bhavan
Ballard Estate, Mumbai.
5. The crux of the matter is that the Respondent had invited
tenders for execution of composite works pertaining to the
establishment of a new Modular Penex Unit along with
associated works required for the revamp and capacity
enhancement at the Bina Refinery. Upon completion of
the tendering process, the work was awarded to the
Appellant vide letter of acceptance dated 31.12.2016. As
per the terms of letter of acceptance, the work awarded to
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 2 of 17
the Appellant was to be completed within a period of five
months, i.e. 30.05.2017. However, the work could not be
completed within the stipulated time, and ultimately the
work came to be completed on 31.01.2018. The Appellant
raised the final Bill bearing RA Bill No. 7 on 20.03.2018
and thereafter a “No Claim Certificate” was issued by the
Appellant on 03.10.2018. The completion certificate was
issued on 05.02.2019. The final bill was released on
26.03.2019. The Respondent released part payment to
the Appellant on 11.06.2019 and liquidated damages of
5% was deducted on account of delay. The Appellant on
26.04.2021, issued a consolidated claim of all its
outstanding dues.
6. Subsequently, the Appellant on 14.06.2021 issued a
notice to Managing Director of the Respondent for
appointment of Arbitrator as per Clause 8.6 of General
Conditions of the Contract (“GCC”) stating that as per
Clause 8.6 of GCC, the Arbitrator named is Managing
Director of Bharat Oman Refineries Limited or an officer
of Bharat Oman Refineries Limited who may be
nominated by the Managing Director, however, in view of
the provisions of the 1996 Act (as amended by Act 3 of
2016, w.e.f. 23.10.2015), neither the Managing Director
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 3 of 17
nor an officer is entitled to act as an Arbitrator in the
matter, therefore suggest names of at least four qualified
persons unconnected with either party to be selected as
Sole Arbitrator in the matter. The Respondent refused to
entertain the claims via communication dated
02.07.2021.
7. Aggrieved by the failure of the Respondent to appoint the
Arbitrator, the Appellant has filed Arbitration Case No. 23
of 2022 under Section 11 (6) of the 1996 Act before the
High Court seeking appointment of Sole Arbitrator.
8. The High Court vide Judgment and Order dated
19.12.2023 dismissed the Arbitration Case No. 23 of
2022 holding that as per Schedule 26 (Periods of
Limitation) and as per Section 2(j) & 3 Part-I of Limitation
Act, 1963, the time from which the period of limitation
starts has to be taken as the date on which accounts in
writing were signed by the Appellant and also from the
date of execution of reconciliation statement of
foreclosure and settlement agreement. Since the final Bill
was raised on 20.03.2018 and further the “No Claim
Certificate” was issued on 03.10.2018, the limitation
would run from the date of issuance of “No Claim
Certificate”. Therefore, the period of three years has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 4 of 17
lapsed on 02.10.2021 and the application for
appointment of Arbitrator has been filed by the Appellant
on 14.03.2022, which is much beyond the period of
limitation.
9. The Judgment dated 19.12.2023 of the High Court was
sought to be reviewed by the Appellant by filing a Review
Petition No. 76 of 2024. The High Court on 10.04.2024
has dismissed the review petition holding that the cause
of action accrued to the Appellant at the date of issuance
of “No Claim Certificate” on 03.10.2018, and the
Appellant ought to have filed the application for
appointment of Arbitrator within three years from
03.10.2018, which was not done. The Appellant
challenged both the Judgment and Order dated
19.12.2023 and Judgment and Order dated 10.04.2024
before this Court by way of the present appeals.
10. The learned Counsel for the Appellant submits that the
application under Section 11 (6) of the 1996 Act was filed
well within the period of limitation. To substantiate his
contentions, reliance is placed upon the decision of this
Court in Arif Azim Company Limited v. Aptech
1
Limited , which held that the period for the purpose of
1
(2024) 5 SCC 313
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 5 of 17
filing application for appointment of arbitrator
commences only upon issuance of a valid notice invoking
the arbitration followed by refusal or failure of the other
party to appoint the arbitrator in accordance with agreed
procedure.
11. He further submits that even if it is assumed that the
cause of action accrued earlier on 03.10.2018, the part
payment made by the Respondent on 11.06.2019 has
extended the period of limitation under section 19 of the
Limitation Act, 1963. Relying upon In Re: Cognizance
2
for Extension of Limitation , he submits that the
limitation is covered by the COVID-19 extension Order
dated 10.01.2022 passed by this Court, which excluded
the period from 15.03.2020 to 28.02.2022 from
computation of limitation.
12. Finally, it is contended that in Perkins Eastman
3
Architects DPC and Another v. HSCC (India) Limited ,
in an equivalent arbitration clause, where the appointing
authority had failed to appoint an arbitrator till the time
of filing of Section 11 (6) application, this Court had
appointed an Arbitrator. The arbitration agreement in the
2
(2022) 3 SCC 117
3
(2020) 20 SCC 760
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 6 of 17
present case was drafted prior to the 2015 Amendment in
the 1996 Act, with the evident intent to provide for
arbitration but power of appointing arbitrator was with
the Managing Director of the Respondent, courts have
upheld arbitration agreements including similar clauses
and appointed arbitrators, despite disqualification of the
named authority.
13. Per contra, the learned Counsel for the Respondent while
supporting the Judgment and Order of the High Court
submits that the cause of action accrued to the Petitioner
on the date when final bill was raised on 20.03.2018, and
according to the Appellant amount became due on or
before 21.04.2018 i.e. 30 days from the date of
submission of bill. The Appellant ought to have invoked
arbitration within three years from 21.04.2018 by filing
an application which was not done.
14. He further contends that categorial stipulation contained
in Clause 8.6 (a) of GCC empowers the Managing Director
or his nominee alone to act as Sole Arbitrator, as
subsequent legislative changes in the 1996 Act through
amendments renders such a contractual provision otiose
and inoperative, thereby such arbitration clause ought to
be deemed to have ceased to exist. Therefore, the
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 7 of 17
arbitration mechanism itself stands effaced, disentitling
the Appellant to invoke arbitration.
15. Having heard the Counsel for the parties and upon
perusal of material on record, the issues for consideration
are:-
(i) whether the court has power to appoint an
arbitrator when the clause providing the
arbitration mechanism has become bad in law
pertaining to certain statutory amendments and
(ii) whether the application under Section 11(6) of the
Arbitration and Conciliation Act, 1996 filed by the
Appellant is within the period of limitation.
16. It is pertinent to refer to the decision of this court in
Perkins (supra) , wherein a coordinate Bench of this
Court while following the decision in TRF Limited v.
4
Energo Engineering Projects Limited categorically
held that once the Chairman and Managing Director of
the respondent therein became ineligible by the virtue of
Section 12(5) read with the Seventh Schedule of the 1996
Act (as amended by Act 3 of 2016 w.e.f. 23.10.2015), the
ineligibility also extends to power of nomination, thereby
4
(2017) 8 SCC 377
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 8 of 17
rendering any appointment made by him legally
unsustainable. Consequently, this Court appointed an
independent sole arbitrator holding that jurisdiction
under Section 11(6) of the 1996 Act is not ousted merely
because an appointment has already been made by the
respondent if such appointment is ex facie invalid or
contrary to the agreed procedure.
Voestalpine Schienen GmbH v. Delhi
17. Similarly, in
5
Metro Rail Corporation Limited this Court
underscored that the legislative intent behind the 2015
amendment of inserting Section 12(5) of the 1996 Act is
to secure neutrality of arbitrators. By virtue of its non-
obstante clause, any person whose relationship with the
parties falls within the disqualifications provided in
Seventh Schedule is rendered ineligible to act as an
arbitrator, this is notwithstanding any stipulation
provided in the arbitration clause. If any arbitration
clause runs contrary to the mandate provided in Section
12(5) of the 1996 Act, the power to appoint an
independent arbitrator is vested with the court under
section 11 of the 1996 Act, a principle consistent with
pre-amendment jurisprudence under Section 11(8) of
5
(2017) 4 SCC 665
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 9 of 17
1996 Act where courts had, even earlier, overridden
restrictive arbitration clauses to ensure the appointment
of impartial arbitrators.
18. Coming to the case in hand, the Clause 8.6 of GCC
governs the arbitration mechanism. The arbitrator
named in this Clause is Managing Director of Bharat
Oman Refineries Limited or an officer of Bharat Oman
Refineries Limited who may be nominated by the
Managing Director. Subsequent amendments in the 1996
Act, as referred above, have made such clause bad in law
and Managing Director or officer nominated by the
Managing Director become ineligible by the operation of
law to be appointed as Arbitrator.
19. The Respondent contends that once the arbitration
clause referred to in the GCC has become obsolete and
non-operative, it would render the entire arbitration
mechanism non-existent therefore the Appellant cannot
file an application for appointment of arbitrator.
20. We are not persuaded by this submission of the Counsel
for Respondent. The very existence of the arbitration
clause in the GCC referring to all disputes to arbitrator is
the core part of contract. Merely because the procedure
to appoint an arbitrator provided in the clause has
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 10 of 17
become inoperative due to subsequent changes in
statutory provisions, would not mean that the core of the
contract referring the dispute for adjudication to
arbitrator would be rendered nugatory. The amendment
in the statute has been enacted with the legislative intent
to enforce neutrality of the arbitrator and bring
impartiality in arbitration proceedings by virtue of Section
12(5) of the 1996 Act. It cannot be justified to literally
interpret the clause in the contract in a manner or at the
cost of the entire arbitration mechanism itself being
abandoned. The arbitration agreement must be
interpreted in a purposive manner, but not literally so as
to enable the parties to pursue the intended dispute
redressal mechanism of contract. Therefore, it cannot be
said that non-operation of arbitration clause in GCC will
result into forgoing of entire arbitration mechanism and
rendering the Appellant disentitled for seeking
appointment of arbitrator. The Appellant is, therefore,
entitled to file application under section 11(6) of the 1996
Act for appointment of arbitrator and thereby the power
is vested with the court to appoint an arbitrator upon
filing of such application.
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 11 of 17
21. The next aspect which merits consideration is whether
the application for appointment of arbitrator filed by the
Appellant is within the period of limitation. It would be
apposite to refer to the decision in Geo Miller and
Company Private Limited v. Chairman, Rajasthan
6
Vidyut Utpadan Nigam Limited , where a three-Judge
Bench of this court while dealing with similar issue has
held that the cause of action in respect of arbitration
application arises when the final bill handed over to the
respondent becomes due, and further correspondences
between the parties subsequent to the due date of bill
would not extend the time of limitation. The relevant
portion of the judgment is reproduced herein:-
“19. Undoubtedly, a different scheme has been evolved
under the 1996 Act. However we find that the same
principles continue to apply with respect to the
applicability of the law of limitation to an application
under Section 11(6) of the 1996 Act as laid down in the
decisions dealing with judicial appointment of an
arbitrator under Sections 8 and 20 of the 1940 Act.
| 20. Our finding is supported by the decision of a three- | |
| Judge Bench of this Court in Grasim Industries | |
| Ltd. v. State of Kerala [(2018) 14 SCC 265 : (2018) 4 | |
| SCC (Civ) 612]. In Grasim Industries, similar to the | |
| present case, the arbitration agreement provided for | |
| reference to be made under the 1940 Act. However the | |
| appellant raised their claim in 2002, attracting the | |
| application of the 1996 Act. This Court was therefore |
6
(2020) 14 SCC 643
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 12 of 17
faced with the issue of whether an application for
appointment of an arbitrator under the 1996 Act would
be barred by limitation in respect of the appellant's
claim. This Court found that, in view of Section 28 of the
Contract Act, 1872, the parties in the arbitration
agreement could not stipulate a restricted period for
raising a claim. However, the limitation period for
invocation of arbitration would be three years from the
date of the cause of action under Article 137 of the
Limitation Act, 1963. However in the facts of that case,
this Court found that certain claims had arisen within
the three-year limitation period and hence, could be
allowed.
21. Applying the aforementioned principles to the
present case, we find ourselves in agreement with the
finding of the High Court that the appellant's cause of
action in respect of Arbitration Applications Nos.
25/2003 and 27/2003, relating to the work orders
dated 7-10-1979 and 4-4-1980 arose on 8-2-1983,
which is when the final bill handed over to the
respondent became due. Mere correspondence of the
appellant by way of writing letters/reminders to the
respondent subsequent to this date would not extend
the time of limitation. Hence the maximum period during
which this Court could have allowed the appellant's
application for appointment of an arbitrator is 3 years
from the date on which cause of action arose i.e. 8-2-
1986. Similarly, with respect to Arbitration Application
No. 28/2003 relating to the work order dated 3-5-1985,
the respondent has stated that final bill was handed
over and became due on 10-8-1989. This has not been
disputed by the appellant. Hence the limitation period
ended on 10-8-1992. Since the appellant served notice
for appointment of arbitrator in 2002, and requested the
appointment of an arbitrator before a court only by the
end of 2003, his claim is clearly barred by limitation.
*
24. In the present case, the appellant has not disputed
the High Court's finding that the appellant itself had
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 13 of 17
| handed over the final bill to the respondent on 8-2-1983. | |
|---|---|
| Hence, the holding in 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 Construction Co. [(1997) 9 SCC 97] ). | |
| *** *** *** | |
| 29. Moreover, in a commercial dispute, while mere | |
| failure to pay may not give rise to a cause of action, once | |
| the applicant has asserted their claim and the | |
| respondent fails to respond to such claim, such failure | |
| will be treated as a denial of the applicant's claim giving | |
| rise to a dispute, and therefore the cause of action for | |
| reference to arbitration. It does not lie to the applicant to | |
| plead that it waited for an unreasonably long period to | |
| refer the dispute to arbitration merely on account of the | |
| respondent's failure to settle their claim and because | |
| they were writing representations and reminders to the | |
| respondent in the meanwhile.” | |
Appellant on 20.03.2018 and the amount became due on
21.04.2018 i.e. 30 days from the date of submission of
bill, as submitted by the Appellant. The period of
limitation to file an application under section 11 (6) 1996
Act would start from 21.04.2018 and an application for
appointment of arbitration ought to be filed within three
years from such date i.e. on or before 21.04.2021.
However, the Appellant has filed the Arbitration Case No.
23 of 2022 before the High Court on 15.03.2022 which is
beyond the period of three years.
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 14 of 17
23. In normal course of action, the application filed by the
Appellant would have been hit by the statutory bar of
three years, however, it is essential to refer to Order dated
10.01.2022 of this Court in In Re: Cognizance for
Extension of Limitation (supra) ,
where a three-Judge
Bench of this Court has held that in view of COVID-19
pandemic period from 15.03.2020 till 28.02.2022 shall
stand excluded for the purpose of limitation as may be
prescribed under any general or special laws in respect of
all judicial or quasi-judicial proceedings. The relevant
portion of which reads thus:-
| “5. Taking into consideration the arguments advanced | ||||
|---|---|---|---|---|
| by the learned counsel and the impact of the surge of | ||||
| the virus on public health and adversities faced by | ||||
| litigants in the prevailing conditions, we deem it | ||||
| appropriate to dispose of MA No. 21 of 2022 with the | ||||
| following directions: | ||||
| 5.1. The order dated 23-3-2020 is restored and in<br>continuation of the subsequent orders dated 8-3-<br>2021, 27-4-2021 and 23-9-2021 , it is directed that<br>the period from 15-3-2020 till 28-2-2022 shall stand<br>excluded for the purposes of limitation as may be<br>prescribed under any general or special laws in<br>respect of all judicial or quasi-judicial proceedings.<br>5.2. Consequently, the balance period of limitation<br>remaining as on 3-10-2021, if any, shall become<br>available with effect from 1-3-2022. | 5.1. The order dated 23-3-2020 is restored and in | |||
| continuation of the subsequent orders dated 8-3- | ||||
| 2021, 27-4-2021 and 23-9-2021 , it is directed that | ||||
| the period from 15-3-2020 till 28-2-2022 shall stand | ||||
| excluded for the purposes of limitation as may be | ||||
| prescribed under any general or special laws in | ||||
| respect of all judicial or quasi-judicial proceedings. | ||||
| 5.2. Consequently, the balance period of limitation | ||||
| remaining as on 3-10-2021, if any, shall become | ||||
| available with effect from 1-3-2022. | ||||
| 5.3. In cases where the limitation would have expired | ||||
| during the period between 15-3-2020 till 28-2-2022, |
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 15 of 17
| notwithstanding the actual balance period of<br>limitation remaining, all persons shall have a<br>limitation period of 90 days from 1-3-2022. In the<br>event the actual balance period of limitation<br>remaining, with effect from 1-3-2022 is greater than<br>90 days, that longer period shall apply.<br>5.4. It is further clarified that the period from 15-3-<br>2020 till 28-2-2022 shall also stand excluded in<br>computing the periods prescribed under Sections<br>23(4) and 29-A of the Arbitration and Conciliation Act,<br>1996, Section 12-A of the Commercial Courts Act,<br>2015 and provisos (b) and (c) of Section 138 of the<br>Negotiable Instruments Act, 1881 and any other<br>laws, which prescribe period(s) of limitation for<br>instituting proceedings, outer limits (within which the<br>court or tribunal can condone delay) and termination<br>of proceedings.” | notwithstanding the actual balance period of | ||
|---|---|---|---|
| limitation remaining, all persons shall have a | |||
| limitation period of 90 days from 1-3-2022. In the | |||
| event the actual balance period of limitation | |||
| remaining, with effect from 1-3-2022 is greater than | |||
| 90 days, that longer period shall apply. | |||
considering the hardship faced by the people during
COVID-19. It would be unjust and detrimental to not
consider this while deciding upon the period of limitation
in the present case. Therefore, the benefit of the period
from 15.03.2020 to 28.02.2022 must be given to the
Appellant and this period need to be excluded while
counting the period of limitation for filing application for
appointment of arbitrator. Once, this period is excluded,
it can be concluded that the Appellant’s application for
appointment of arbitrator under section 11 (6) of the 1996
Act before the High Court was moved within the period of
limitation. It is held accordingly.
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 16 of 17
25. In view of the aforesaid, the Judgment and Order dated
10.04.2024 passed in Review Petition No. 76 of 2024 and
Judgment and Order dated 19.12.2023 passed in
Arbitration Case No. 23 of 2022 by the High Court cannot
sustain and are, therefore, set aside.
26. Consequently, we direct that the matter shall stand
referred to the Delhi International Arbitration Centre,
which shall proceed to appoint an arbitrator, who shall
decide the matter in accordance with law and rules, as
applicable.
27. The present appeals are allowed in the above terms.
28. There shall be no order as to costs.
29. Pending application(s), if any, shall be disposed of.
….…...……….……………………..J.
[ DIPANKAR DATTA ]
.……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]
NEW DELHI;
OCTOBER 07, 2025.
Civil Appeal @ SLP (C) Nos.22105-22106/2024 Page 17 of 17