Kidde India vs Ntpc

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 04.02.2026
Judgment pronounced on: 12.05.2026

+ CS(OS) 549/2009 & I.A. 5570/2009 (for Setting Aside majority
Award dated 09.12.2008)

KIDDE INDIA .....Plaintiff
Through: Mr. Chandan Kumar and Mr.
Vikram Sharma Advocates.

versus

NTPC .....Defendant
Through: Mr. Puneet Taneja, Senior
Advocate along with Mr.
Manmohan Singh Narula, Mr.
Amit Yadav and Mr. Anil
Kumar, Advocates.

CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR

J U D G M E N T
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Suit arises from the Arbitral Award dated
1 2
09.12.2008 passed under the Arbitration Act, 1940 by the majority
( comprising of Shri Madan Lal, Justice (Retd.) CL Chaudhary ) of 3
members Arbitral Tribunal comprising of Shri Madan Lal, Justice
(Retd.) CL Chaudhary and Justice (Retd.) MC Agarwal, whereby

1
Impugned Award
2
1940 Arb Act
Signature Not Verified
CS(OS) 549/2009 Page 1 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

certain claims made by the Plaintiff were allowed and an aggregate
amount of Rs. 1,12,36,762/- was awarded to the Plaintiff.

PREFACE:

2. After the passing of the Impugned Award, the Plaintiff filed an
Application under Section 14 read with Section 17 of the 1940 Arb
Act seeking to make the Impugned Award, the Rule of Court, which
was numbered as CS(OS) 72/2009 . In the meantime, however, the
learned Arbitral Tribunal, suo moto , filed the Impugned Award before
this Court and the same came to be registered as a separate suit, being
CS(OS) 549/2009 .
3. In view of the said development, the Plaintiff‟s suit, CS(OS)
72/2009 , was disposed of. Consequently, the present Suit, being
CS(OS) 549/2009 , continues for the purpose of making the Impugned
Award the Rule of the Court.
4. Thereafter, the Defendant filed an Application, being I.A.
5570/2009, under Section 30 and 33 of the 1940 Arb Act, in the form
of objections, seeking to set aside the Impugned Award.
5. The learned Single Judge, while adjudicating the said objections
vide Judgment dated 12.03.2019, held that the arbitration clause had
been invoked on 09.12.1989 and that it was incumbent upon the
Plaintiff to approach the appointing authority (President, Institute of
Engineers) within sixty days thereafter. Since the Plaintiff had failed
to do so, the learned Single Judge held that the claims were barred by
limitation and, consequently, dismissed the suit.
Signature Not Verified
CS(OS) 549/2009 Page 2 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

6. Aggrieved thereby, the Plaintiff preferred an Appeal before the
3
Division Bench of this Court, being FAO(OS)(COMM) 361/2019
against the Judgment dated 12.03.2021. The Division Bench, though
varying the reasoning adopted by the learned Single Judge, ultimately
dismissed the Appeal by holding that the question of limitation had to
be assessed on the basis that the Defendant received the first Notice
invoking arbitration on 10.05.1994 and not the Notice dated
09.12.1989. The Division Bench further observed that the learned
Arbitral Tribunal had erred in concluding that the claims were within
limitation, as the letter dated 09.12.1989 clearly demonstrated that
negotiations had broken down and that the Plaintiff had elected to
commence arbitral proceedings. It was further held that the non-
receipt of the said Notice would not postpone the accrual of the cause
of action and that, consequently, the claims were ex facie barred by
limitation as on 10.05.1994, being the date of actual commencement
of the arbitral proceedings.
7. Aggrieved by the said decision, the Plaintiff approached the
Hon‟ble Supreme Court by way of a Special Leave Petition (Civil),
4
which was subsequently converted into Civil Appeal No.14672/2024 .
The Apex Court, vide Order dated 18.12.2024, after briefly noticing
the factual background and the issues involved, set aside both the
Impugned Judgments of the learned Single Judge as well as the
Division Bench and restored the present Suit and objections being I.A.
5570/2009 . The Hon‟ble Supreme Court clarified that all issues,
including the issue of the bar of limitation of the claims made before

3
Kidde India Ltd. vs. National Thermal Power Corpn. Ltd.
4
Aring out of SLP(C) No. 11815/2023, titled as “ Kidde India Ltd. vs. National Thermal Power
Corpn. Ltd. ”
Signature Not Verified
CS(OS) 549/2009 Page 3 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

the learned Arbitral Tribunal, shall remain open for consideration by
the learned Single Judge. However, the issue of delay in making the
reference was held not to remain open, to the extent that the Division
Bench had held the reference not to be time-barred. The relevant
portion of the said Order reads as follows:
“ 1. Leave granted.
2. This is a case where the provisions of the Indian Arbitration Act,
1940 (for short, “the 1940 Act”) are applicable. An award was
made on 9th December, 2008 by the Arbitral Tribunal. The
objections were raised under Section 30 of the 1940 Act. The
learned Single Judge came to a conclusion that there was a delay in
making reference to the Arbitral Tribunal and on that ground, the
learned Single Judge proceeded to set aside the award.
3. An appeal was preferred by the appellant before the Division
Bench of the High Court. By the impugned judgment dated 7th
February, 2023, the appeal was dismissed. The Division Bench
held that the claim raised by the appellant before the Arbitral
Tribunal was ex facie barred by limitation. However, the Division
Bench disagreed with the finding of the learned Single Judge that
the reference to the Arbitral Tribunal was time barred.
4. After having heard the learned senior counsel appearing for the
parties, we find that the learned Single Judge, who was dealing
with the petitions under Sections 30/33 of the 1940 Act, had not
specifically answered the question whether the claim made before
the Arbitral Tribunal was barred by limitation. The learned Single
Judge proceeded on the footing that what was barred was the
reference to the Arbitral Tribunal on account of delay. This finding
was disapproved specifically by the Division Bench. After
disagreeing with the said finding, only logical course which was
open to the Division Bench was to set aside the judgment and order
of the learned Single Judge and to direct the learned Single Judge
to consider the application under Section 30 of the 1940 Act in
accordance with law. The Division Bench has dealt with the issue
of bar of limitation of the claim made before the Arbitral Tribunal,
though the issue was not decided by Section 30 Court. At the
threshold, Section 30 Court allowed the application and set aside
the award.
5. Therefore, we set aside both the impugned judgments and
restore the applications under Sections 30 and 33 of the 1940 Act
(CS (OS) No.549/2009 and IA No.5570/2009) to the file of the
learned Single Judge of the High Court of Delhi. We clarify that all
the issues including the issue of bar of limitation of the claim made
Signature Not Verified
CS(OS) 549/2009 Page 4 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

before the Arbitral Tribunal shall remain open for consideration of
the learned Single Judge. However, the issue of delay in making
reference will not remain open as to that extent, the Division
Bench is right.
6. We direct that the restored cases shall be listed before the roster
Bench of the High Court of Delhi on 15th January, 2025 in the
morning. We direct the appellant and the respondent to appear
before the learned Single Judge on that day for the purposes of
fixing a date for hearing. The learned Single Judge will give
necessary priority to the hearing of the restored cases considering
the fact that the award is of the year 2008.
7. The Appeal is partly allowed on the above terms.”
( emphasis supplied)


8. Pursuant to the matter being remanded back by the Hon‟ble
Supreme Court, the parties appeared before this Court on 04.02.2026
and advanced detailed submissions.
9. The arguments advanced on behalf of both sides were confined
exclusively to the issue as to whether the claims, as raised by the
Plaintiff, which ultimately formed the subject matter of adjudication
before the learned Arbitral Tribunal, had been instituted within the
prescribed period of limitation reckoned from the date of accrual of
the cause of action.
10. At this stage, this Court deems it appropriate to clarify that the
present adjudication is confined solely to the said issue of limitation.
While undertaking the present exercise, this Court has independently
examined the entire record of the suit, along with the pleadings,
documents, and material placed on record, uninfluenced by any
observations made in the earlier round of litigation either by the Co-
ordinate Bench or the Division Bench. The issue is, therefore, being
examined afresh on its own merits and strictly in accordance with the
pleadings on record and the legal position governing the controversy.

Signature Not Verified
CS(OS) 549/2009 Page 5 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

BRIEF FACTS:

11. The adjudication of the disputes between the parties has had a
chequered history and may broadly be divided into two segments, viz .,
first, the proceedings leading up to the passing of the Impugned
Award, and second, the proceedings that ensued after the Impugned
Award was rendered. For the purposes of adjudicating the limited
issue presently before this Court, the relevant facts have been
summarized in the subsequent paragraphs.
12. The present proceedings arise out of a contract awarded by the
5 6
Defendant to the Plaintiff for the installation of fire protection
systems at the Ramagundam Super Thermal Power Project, Stage-I.
The said contract was awarded vide Letter dated 24.03.1982 and
required the Plaintiff to carry out installation works in accordance
with the prescribed technical specifications and contractual conditions
stipulated by the Defendant.
13. The contract, as executed between the parties, contained an
Arbitration Clause which provided that any disputes or differences
arising out of or in connection with the contract, or touching upon its
interpretation, execution, or performance, would be resolved through
arbitration in accordance with the provisions of the 1940 Arb Act.
14. Pursuant to the award of the contract, the Plaintiff undertook
and executed the contractual works relating to the installation of fire
protection systems. Upon completion of the works, the fire protection
systems installed by the Plaintiff were taken over by the Defendant on
04.08.1986.

5
National Thermal Power Corporation Ltd./NTPC
6
M/s Vijay Machinery Store/Vijay Fire Protection Systems Ltd. - Now as Kidde India Ltd.
Signature Not Verified
CS(OS) 549/2009 Page 6 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

15. Thereafter, by a telex communication dated 14.10.1987, the
Defendant informed the Plaintiff that all pending bills submitted by
the Plaintiff had been processed and cleared. However, subsequently
on 23.11.1987, the Plaintiff raised certain claims asserting that it had
executed additional works beyond the scope of the original contract
for which payment had not been released by the Defendant.
16. The Defendant responded to the said claims through a detailed
communication dated 21.06.1988, whereby it rejected the claims
raised by the Plaintiff.
17. Thereafter, on 06.03.1989, the Plaintiff again raised the same
claims amounting to Rs. 74,80,122.87/- along with interest calculated
at the rate of 18% per annum for the period from 01.06.1983 to
28.02.1989. In support of its claim, the Plaintiff relied upon various
communications that had been exchanged between the parties over the
course of the contractual relationship. In the said communications, the
Plaintiff further indicated that in the event the claims were not settled
amicably, it would be constrained to invoke the arbitration clause
contained in the contract.
18. As there was no satisfactory response by the Defendant to the
said demand, the Plaintiff purportedly invoked the Arbitration Clause
through a letter dated 09.12.1989. In the said communication, the
Plaintiff reiterated its claim for Rs. 74,80,122.87/- and nominated Shri
M.M. Sharma as its arbitrator in terms of the arbitration clause
contained in the contract. The Defendant was simultaneously called
upon to appoint its nominee arbitrator in accordance with the
contractual mechanism. The Defendant, however, variably asserts that
Signature Not Verified
CS(OS) 549/2009 Page 7 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

it had never received the said letter dated 09.12.1989, which sought to
invoke arbitration.
19. The contract between the parties contained a detailed dispute
resolution mechanism under Clauses 25 and 26 of the General
Conditions of Contract. Clause 25 contemplated that disputes
involving questions of fact arising under the contract were to be
initially decided by the Engineer, subject to a right of appeal available
to the Plaintiff. The Clause further envisaged that the parties would
attempt to resolve disputes amicably prior to resorting to arbitration.
Clause 26 provided that in the event the disputes remained unresolved,
they would be referred to arbitration before a tribunal consisting of
three arbitrators, one nominated by each party and the third to be
appointed by the President of the Institution of Engineers, India. The
clause also provided that if either party failed to appoint its nominee
arbitrator within sixty days of receipt of a notice invoking arbitration,
the President of the Institution of Engineers would be empowered to
appoint the arbitrator on behalf of the defaulting party.
20. Following the alleged invocation of arbitration in the year 1989,
no further effective steps were taken for a considerable period of time.
Nearly four and a half years later, the Plaintiff issued another Notice
dated 10.05.1994 reiterating the earlier invocation of arbitration dated
09.12.1989. In the said Notice, the Plaintiff asserted that despite the
earlier invocation of arbitration and subsequent reminders, the
Defendant had failed to appoint its nominee arbitrator. Accordingly,
the Plaintiff granted the Defendant a final opportunity of fifteen days
to appoint its arbitrator, failing which the arbitrator nominated by the
Signature Not Verified
CS(OS) 549/2009 Page 8 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

Plaintiff would proceed to act as the sole arbitrator in accordance with
the provisions of the 1940 Arb Act.
21. The Defendant responded to the said Notice by way of a letter
dated 02.06.1994, stating that the matter concerning the appointment
of its nominee arbitrator was under consideration and that some time
was required for the said purpose.
22. However, the Defendant did not subsequently appoint any
arbitrator within the time indicated. Consequently, the Plaintiff
approached the President of the Institution of Engineers, India,
seeking the appointment of an arbitrator on behalf of the Defendant
and for the constitution of the Arbitral Tribunal in accordance with the
contractual Arbitration Clause.
23. Acting upon the request made by the Plaintiff, the President of
the Institution of Engineers, India, by a letter dated 02.06.1995,
appointed Mr. D.B. Chachad as the nominee arbitrator on behalf of the
Defendant and Brigadier D.R. Kathuria as the presiding arbitrator of
the tribunal.
24. Subsequently, the Defendant instituted Suit No. 2065A/1996
under Sections 5, 11 and 12 of the 1940 Arb Act seeking revocation or
supersession of the Arbitration Agreement. In the said proceedings,
the Defendant contended that the mandatory conditions precedent for
invoking arbitration under the General Conditions of Contract had not
been complied with. The Defendant also raised objections regarding
the validity of the appointment of Shri M.M. Sharma as the arbitrator
by the Plaintiff.
25. During the pendency of the said proceedings, the Plaintiff‟s
nominee arbitrator resigned from the learned Arbitral Tribunal. In
Signature Not Verified
CS(OS) 549/2009 Page 9 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

view of this development, the above-said Petition filed by the
Defendant was disposed of by the Court on 07.03.2003 as having
become infructuous.
26. Thereafter, the Plaintiff appointed Justice C.L. Chaudhary
(Retd.) as its nominee arbitrator. In the meantime, Brigadier D.R.
Kathuria, who was serving as the presiding arbitrator, passed away.
Consequently, the President of the Institution of Engineers appointed
Shri Madan Lal as the presiding arbitrator.
27. Subsequently, the Defendant once again challenged the
appointment of its nominee arbitrator by filing Suit No. 1448/2006 .
During the course of those proceedings, Mr. D.B. Chachad resigned as
arbitrator. Thereafter, the Defendant appointed Justice M.C. Aggarwal
(Retd.) as its nominee arbitrator.
28. As a result, the learned Arbitral Tribunal ultimately came to be
constituted with Justice C.L. Chaudhary (Retd.) as the Plaintiff‟s
nominee arbitrator, Justice M.C. Aggarwal (Retd.) as the Defendant‟s
nominee arbitrator, and Shri Madan Lal as the presiding arbitrator.
29. Thereafter, among the other things, the Defendant filed another
suit, being CS(OS) 1876/2006, under Section 33 of the 1940 Arb Act,
seeking a declaration that the mandate of the learned Arbitral Tribunal
stood terminated. During the pendency of these proceedings, the
learned Arbitral Tribunal imposed costs upon the Defendant. The
Defendant challenged the said Order before the Court. By Order dated
11.12.2006, the Court set aside the costs imposed by the learned
Arbitral Tribunal and extended the time for completion of the arbitral
proceedings by four months from 16.12.2006, while clarifying that
Signature Not Verified
CS(OS) 549/2009 Page 10 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

such extension would be without prejudice to the Defendant‟s
challenge to the jurisdiction of the learned Arbitral Tribunal.
30. Subsequently, by Order dated 18.08.2008, the Court modified
its earlier directions and permitted the learned Arbitral Tribunal to
proceed with and pronounce the Impugned Award, while reserving
liberty in favour of the Defendant to file appropriate objections to the
same if circumstances so warranted. In view of this development, the
suit filed by the Defendant under Section 33 of the 1940 Arb Act was
disposed of.
31. Thereafter, the learned Arbitral Tribunal concluded the arbitral
proceedings and delivered the Impugned Award on 09.12.2008. The
award was rendered by a majority of two arbitrators, while the third
arbitrator delivered a separate minority opinion.
32. Following the passing of the Impugned Award, the Plaintiff
instituted a suit being CS(OS) 72/2009 seeking that the Impugned
Award be made the Rule of the Court. However, the learned Arbitral
Tribunal itself filed the same suo motu, before the Court, which was
registered as a separate proceeding being CS(OS) 549/2009 . In view
of the said development, CS(OS) 72/2009 , which had earlier been filed
by the Plaintiff, was dismissed as withdrawn.
33. In the present proceedings, being CS(OS) 549/2009 , the
Defendant filed an Application, being I.A. No. 5570/2009 , under
Sections 30 and 33 of the 1940 Arb Act, seeking the setting aside of
the Impugned Award.
34. The learned Single Judge, while adjudicating the said objections
vide Judgment dated 12.03.2019, held that the Arbitration Clause had
been invoked on 09.12.1989 and that it was incumbent upon the
Signature Not Verified
CS(OS) 549/2009 Page 11 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

Plaintiff to approach the appointing authority, namely, the President of
the Institution of Engineers, within a period of sixty days thereafter.
Since the Plaintiff had failed to take such steps within the stipulated
period, the learned Single Judge held that the claims raised by the
Plaintiff were barred by limitation.
35. Aggrieved by the said findings, the Plaintiff preferred
FAO(OS)(COMM) 361/2019 , which came to be dismissed by the
Division Bench of this Court vide judgment dated 07.02.2023. The
Division Bench held that the issue of limitation had to be assessed on
the basis that the Defendant received the first Notice invoking
arbitration on 10.05.1994 and not the Notice dated 09.12.1989. The
Division Bench further observed that the learned Arbitral Tribunal had
erred in concluding that the claims were within limitation, as the letter
dated 09.12.1989 clearly demonstrated that negotiations between the
parties had broken down and that the Plaintiff had elected to
commence arbitral proceedings. It was further observed that the
alleged non-receipt of the said Notice by the Defendant would not
postpone the accrual of the cause of action. Consequently, the
Division Bench concluded that the claims were ex facie barred by
limitation as on 10.05.1994, which was treated as the date of
commencement of the arbitral proceedings.
36. Being aggrieved by the judgment of the Division Bench, the
Plaintiff approached the Hon‟ble Supreme Court by way of a Special
Leave Petition (Civil), which was subsequently converted into Civil
Appeal No.14672/2024.
37. The Hon‟ble Supreme Court, vide order dated 18.12.2024,
passed in the said Appeal, set aside both the Impugned Judgments of
Signature Not Verified
CS(OS) 549/2009 Page 12 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

the learned Single Judge as well as the Division Bench and restored
the present Suit along with the objections filed by the Defendant. The
Hon‟ble Supreme Court clarified that all issues, including the issue of
the bar of limitation of the claims made before the learned Arbitral
Tribunal, would remain open for consideration by the learned Single
Judge. However, it was clarified that the issue regarding the delay in
making the reference to arbitration would not remain open, to the
extent that the Division Bench had held that the reference itself was
not time-barred.
38. Pursuant to the said directions of the Hon‟ble Supreme Court,
the present matter has come up for fresh adjudication before this
Court.


SUBMISSIONS OF THE PARTIES:

39. In support of the objections raised to the Impugned Award, the
learned Senior Counsel appearing for the Defendant/Objector
advanced detailed submissions before this Court on 04.02.2026, which
may broadly be summarised as follows:
I. It was contended that the learned Arbitral Tribunal erred in
entertaining and adjudicating the claims raised by the Plaintiff
( Claimant before the learned Tribunal ), which were ex facie
barred by limitation.
II. It was submitted that the works under the relevant contract
stood completed and were duly taken over by the Defendant on
04.08.1986. Thereafter, the Defendant informed the Plaintiff
that all pending bills had been cleared. Notwithstanding the
same, the Plaintiff raised certain additional claims on
Signature Not Verified
CS(OS) 549/2009 Page 13 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

23.11.1987, which were categorically rejected by the Defendant
by way of a communication dated 21.06.1988. According to the
Defendant, this rejection constituted the point at which the
disputes between the parties finally crystallised, and
consequently, the limitation period of three years for invoking
arbitration commenced from that date.
III. It was further submitted that the Plaintiff reiterated the earlier
claims by way of a communication dated 06.03.1989, wherein it
allegedly asserted that arbitration proceedings would be
initiated if the claims were not settled. However, the Defendant
contended that such reiteration of claims, or any subsequent
correspondence exchanged between the parties, could not have
the effect of recommencing or extending the period of
limitation that had already begun to run from 21.06.1988. Mere
reminders or representations cannot postpone the accrual of the
cause of action.
IV. With regard to the alleged Notice invoking arbitration dated
09.12.1989, it was submitted that the said Notice was never
received by the Defendant.
V. During the arguments, the Defendant maintained a vehement
stand that the burden squarely lies upon the Plaintiff to establish
service of the said Notice.
VI. It was further contended that the Defendant has consistently
taken the position that no such Notice was ever received, and
even the learned Arbitral Tribunal recorded a finding
acknowledging that the Defendant had not received the said
Notice.
Signature Not Verified
CS(OS) 549/2009 Page 14 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

VII. In these circumstances, it was argued that since the Notice dated
09.12.1989 was never served upon the Defendant, arbitration
proceedings could not be said to have commenced at that stage
in terms of the governing statutory provisions. Consequently,
the running of the limitation period for the underlying claims
was never interrupted.
VIII. According to the Defendant, arbitration was effectively invoked
only upon the Defendant receiving a subsequent Notice dated
10.05.1994. By that time, nearly six years had elapsed from the
date on which the disputes had crystallised, which was far
beyond the prescribed period of three years. Therefore, the
reference to arbitration itself was hopelessly barred by
limitation.
IX. In support of the aforesaid submissions, reliance was placed
upon the judgments of the Hon‟ble Supreme Court, including
7
Panchu Gopal Bose v. Board of Trustees for Port of Calcutta
8
and Inder Singh Rekhi v. DDA , to contend that the limitation
period for commencement of arbitration runs from the date on
which the cause of action first accrues and cannot be
indefinitely extended by repeated representations or continued
correspondence between the parties.
X. Applying this principle to the present case, it was argued that
the cause of action arose on 21.06.1988 when the Defendant
rejected the Plaintiff‟s additional claims, whereas the Notice
invoking arbitration was admittedly received only on
10.05.1994, well beyond the prescribed period of three years.

7
(1993) 4 SCC 338
8
(1988) 2 SCC 338
Signature Not Verified
CS(OS) 549/2009 Page 15 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

Accordingly, the claims raised by the Plaintiff before the
learned Arbitral Tribunal were liable to be held as barred by
limitation.
XI. To further buttress the aforesaid submissions, the learned Senior
Counsel also relied upon certain observations contained in the
judgments rendered in the earlier rounds of litigation, in the
present case, between the parties before the learned Co-ordinate
Bench, Division Bench of this Court, as well as the Hon‟ble
Supreme Court.
40. Per Contra, while refuting the objections raised by the
Defendant to the Impugned Award, the learned counsel appearing for
the Plaintiff ( Claimant before the learned Arbitral Tribunal ) made the
following submissions before this Court on 04.02.2026:
I. At the outset, it was submitted that in view of the Order dated
18.12.2024 passed by the Hon‟ble Supreme Court, the only
contentious issue between the parties, at this stage, that survives
for consideration is whether the claims, as raised by the
Plaintiff, were within the prescribed period of three years from
the date of accrual of the cause of action. It was further
submitted that, in terms of paragraph 5 of the said Order, the
question as to whether the arbitral proceedings commenced
within the period of limitation upon issuance of the Notice
invoking arbitration does not fall for examination in the present
proceedings.
II. It was contended that the Defendant‟s objection on the ground
of limitation is wholly misconceived and contrary to the
findings recorded by the learned Arbitral Tribunal. It was
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CS(OS) 549/2009 Page 16 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

submitted that, upon a detailed examination of, inter alia , the
correspondence exchanged between the parties and admission
of the Defendant, the learned Arbitral Tribunal rightly
concluded that the disputes did not crystallise immediately upon
completion of the works. Instead, the parties continued to
engage in discussions and negotiations regarding settlement of
the Plaintiff‟s claims, and therefore, the cause of action cannot
be said to have arisen in the manner as suggested by the
Defendant.
III. It was further submitted that the Defendant had never issued
any unequivocal or final repudiation of the Plaintiff‟s claims at
the relevant time. In the absence of a clear and categorical
rejection, the cause of action cannot be said to have arisen on
the date now sought to be relied upon by the Defendant.
IV. With respect to the Notice invoking arbitration dated
09.12.1989, it was argued that the Defendant had indeed
received the said Notice, and this fact was never categorically
denied by the Defendant before the learned Arbitral Tribunal in
its statement of defence. It was also argued that the Defendant‟s
position regarding non-receipt of the said Notice had not been
consistently pleaded.
V. It was then contended that, proceeding on a demurrer, the
disputes between the parties crystallised on 21.06.1988, when
the Defendant allegedly rejected the additional claims raised by
the Plaintiff, the arbitration clause was invoked by the Plaintiff
on 09.12.1989, which was well within the prescribed period of
limitation, and therefore, the claims could not be said to be
Signature Not Verified
CS(OS) 549/2009 Page 17 of 72
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:30:53

barred by limitation.
VI. In support of the above submissions, reliance was placed upon
Section 37 of the 1940 Arb Act as well as the judgments of the
Hon‟ble Supreme Court, namely , Milkfood Ltd. v. GMC Ice
9
Cream (P) Ltd. and J.C. Budhraja v. Chairman, Orissa
10
Mining Corpn. Ltd. .
VII. It was additionally submitted that even immediately prior to the
Notice invoking arbitration dated 09.12.1989, and even
thereafter, the parties were engaged in negotiations with a view
to resolving the disputes amicably. Therefore, even assuming
for the sake of argument that the said Notice was not received
by the Defendant, the fact remains that the parties continued to
engage in discussions during the period between 1991 and
1993. In any event, it is an admitted position that the Defendant
received the subsequent Notice invoking arbitration dated
10.05.1994. Viewed from this perspective as well, the Plaintiff
contended that the claims raised before the learned Arbitral
Tribunal cannot be held to be barred by limitation.
VIII. To reinforce these submissions, the learned counsel for the
Plaintiff also relied upon certain portions of the judgments
rendered in the earlier rounds of litigation, in the present case,
before the Co-Ordinate Bench, Division Bench of this Court,
and the Hon‟ble Supreme Court.
IX. Lastly, while concluding the arguments, the learned counsel for
the Plaintiff placed vehement and considerable reliance upon
the pleadings of the Defendant contained in its objections to the

9
(2004) 7 SCC 288
10
(2008) 2 SCC 444
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Impugned Award, being IA No. 5570/2009 . Specific reference
was made to Grounds D and K of the said IA, wherein,
according to the Plaintiff, the Defendant had not expressly
denied the receipt of the Notice dated 09.12.1989.
X. On this basis, it was argued that the Defendant cannot now be
permitted to raise a contrary contention regarding the service or
non-receipt of the said Notice at this stage of the proceedings.

ANALYSIS:

41. This Court has heard the learned counsel appearing on behalf of
the parties at considerable length and has carefully perused the entire
record, including the pleadings, documents placed on record, the
arbitral proceedings and the Impugned Award, as well as the judicial
precedents relied upon by both sides.
42. The primary and determinative question that arises for
consideration in the present case is whether the claims raised by the
Plaintiff, which ultimately formed the subject matter of adjudication
before the learned Arbitral Tribunal, had been instituted within the
prescribed period of limitation reckoned from the date of accrual of
the cause of action.
43. However, in the factual backdrop of the present case, the
aforesaid issue cannot be adjudicated in isolation. Its proper
determination necessarily requires this Court to first examine certain
foundational legal principles, as well as the relevant factual aspects
emerging from the pleadings and the material placed on record.
44. Accordingly, for the sake of clarity and to facilitate a structured
adjudication of the controversy, this Court proposes to examine the
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aforesaid legal and factual issues seriatim . The same are, therefore,
analysed hereinafter under distinct and systematic heads.

A. Distinction Between Limitation Governing Substantive
Claims and Limitation for Reference of Disputes to Arbitration

45. At the outset, it is necessary to clearly delineate the distinction
between two separate and independent limitation regimes that operate
within the framework of arbitration law. The first pertains to the
limitation governing the substantive or underlying claims arising out
of the contractual relationship between the parties. While, the second
pertains to the limitation governing the reference of such disputes or
claims to the learned Arbitral Tribunal for the purpose of adjudication.
46. These two limitation regimes operate in distinct and
independent spheres, are founded upon different juridical
considerations, and serve different legal purposes. Consequently, they
cannot be conflated, merged, or treated as interchangeable concepts.
Any failure to maintain this distinction is likely to result in a
fundamental misconception regarding the true nature and scope of the
inquiry required in cases involving objections based on limitation in
arbitral proceedings.

47. Dealing first with the former aspect, which constitutes the
central issue arising for consideration in the present adjudication, the
controversy relates to the limitation governing the substantive claims
themselves. Such claims arise out of the underlying contractual
relationship between the parties and ultimately constitute the subject
matter of adjudication before the learned Arbitral Tribunal. The
limitation applicable to these substantive claims ordinarily
commences from the date on which the cause of action accrues,
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namely , the point at which the disputes between the parties crystallise
or when there occurs a clear and unequivocal denial of the entitlement
asserted by one party, against the other. In certain situations, the
determination of the precise date of accrual may also depend upon the
terms and stipulations embodied in the contract executed between the
parties, including clauses relating to payment, certification,
finalisation of accounts, issuance of completion certificates, or
settlement of claims.
48. In the present case, it is not in dispute that the period of
limitation applicable to the Plaintiff‟s substantive claims is three
years. Accordingly, the principal issue that falls for consideration
before this Court is whether the claims raised by the Plaintiff against
the Defendant, which subsequently formed the subject matter of
adjudication before the learned Arbitral Tribunal, were invoked for
arbitration within a period of three years from the date of accrual of
the cause of action governing such claims.
49. The inquiry required to determine this aspect of limitation is
essentially two-fold. First , this Court is required to ascertain the
precise point of time at which the cause of action in respect of the
substantive disputes or claims, arising out of the contractual
relationship between the parties, came into existence or crystallised.
Secondly , this Court must examine whether the Plaintiff invoked
arbitration by serving a notice invoking arbitration in terms of Section
37(3) of the 1940 Arb Act, which provision is in pari materia with
11
Section 21 of the Arbitration and Conciliation Act, 1996 , within a
period of three years from the date of accrual of such cause of action.

11
1996 Arb Act
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50. Turning now, briefly, to the second aspect, merely for the sake
of clarification since the same does not arise for adjudication in the
present proceeding ( In view of the Hon’ble Supreme Court’s remand
order dated 18.12.2024 passed in Civil Appeal No.14672/2024 ),
pertaining to the limitation governing the reference of disputes or
claims to the learned Arbitral Tribunal, it may be observed that the
relevant cause of action for this purpose arises at a subsequent and
distinct stage.
51. Such a stage commences only after a valid notice invoking
arbitration has been issued by one party to the other party, and
thereafter, there has occurred a failure, neglect, or refusal on the part
of the opposite party to act in accordance with the agreed procedure
for appointment or constitution of the Arbitral Tribunal.
52. The limitation governing such reference to arbitration is
12
controlled by Article 137 of the Limitation Act, 1963 , which
prescribes a period of three years from the date on which the right to
apply accrues. Such right accrues when the opposite party fails,
neglects, or refuses to appoint an arbitrator in accordance with the
contractual mechanism agreed between the parties, thereby giving rise
to a cause of action for approaching the competent Court or other
appropriate forum seeking constitution of the Arbitral Tribunal and
consequential reference of the disputes to arbitration.


B. Erroneous Findings of the Learned Arbitral Tribunal
Regarding the Limitation Applicable to the Plaintiff’s Substantive
Claims


12
Limitation Act
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53. It is an undisputed position that the issue of limitation was
squarely raised before and adjudicated by the learned Arbitral
Tribunal as Issue No. 1. The majority of the learned Tribunal, upon an
elaborate consideration of the factual matrix and the legal position,
returned a finding that the claims of the Plaintiff were not barred by
limitation.
54. In this regard, the learned Arbitral Tribunal undertook an
examination of the sequence of events, including the raising of bills,
correspondence exchanged between the parties, the alleged invocation
of arbitration, and the subsequent proceedings, and thereafter
proceeded to analyse the governing principles of law relating to
accrual of cause of action and commencement of limitation. The
relevant findings and reasoning of the learned Arbitral Tribunal on
this issue have been extracted herein below in toto :
“ 1.0 Issue No. 1

"Whether Claimant's Claims are barred by limitation as
alleged by Respondent?"
1.1 For deciding this issue, following undisputed facts are
important:
i Claimant raised one bill dated 11.06.1985,
ii By their letter dated 13.05.1986 (Ex-C-156) Respondent
requested Claimant to postpone winding up of their
establishment, which was otherwise scheduled to be closed by
12.05.1986.
iii Document dated 04.08.1986 (Ex-C-273) issued by Respondent
shows that they provisionally took over the system from
Claimants that day.
iv Claimant raised another bill dated 6.3.1989 (Ex-C-216).
Claimant call it their final bill.
v Claimant invoked arbitration on 9.12-.1989 for non payment of
their bill dated 6.3.1989 (Ex-C-253).
vi In their reply dated 08.07.2005 filed by Respondent in OMP No.
16 of 2005 before Hon'ble High Court of Delhi (Annexure R-1
colly to rejoinder by Claimant), Respondent denied having
received the said letter dated 09.12.1989.
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vii In their admission / denial dated 13.01.2007, Respondent denied
receipt of "Letters Legal issued by Claimant." notices
viii Claimant's witness in paragraph no. 17 of his affidavit dated
14.2.2007 averred that Respondent did not receive letter-dated
09.12.1989. No question was put to Claimant's witness to
unsettle this position.
ix Respondent's witness no where states in his affidavit dated
10.2.2007 that letter dated 09.12.1989 was received by the
Respondent.
x After ongoing settlement process did not yield result, Claimant
invoked arbitration once again by their lawyer's notice dated
10.5.1994 (Ex-C-261), which was received by Respondent and
they replied to it by their letter dated 02.06.1994 (Ex-C-262),
stating that the issue of nominating arbitrator by them was under
active consideration.
xi First hearing in arbitration took place on 29.07.1995.
xii This arbitration was stayed by order dated 11.09.1995 passed in
suit no. 2065A of 1995 filed by Respondent before Hon'ble
Delhi High Court. This stay was vacated on 7.3.2003 when suit
was dismissed and Hon'ble Court allowed a fresh arbitral
tribunal to be constituted and the stalled arbitration to proceed.
xiii This arbitral tribunal was reconstituted and the arbitral process
started from 03.04.2004.
xiv While answering question no. 19 during his cross examination
dated 08.05.2007, Respondent's witness, inter alia, stated,
"NTPC has not prepared any final bill."

1.2 In the facts aforesaid, for establishing limitation, it needs to
establish as to when cause of action accrued.

1.2.1 As held by the Hon'ble Supreme Court in AIR 1988 SC 1007
entitled Inder Singh Rekhi v. DDA , Article 137 of the Limitation
Act, 1963 applies for the purposes of proceedings to start under
sections 8 or 20 of the Act. Article 137 reads as under:
Art. 137
Any other application for
which no period of limitation is
provided elsewhere in this
division
Three years

When the right
to apply
accrues


While deciding the issue in Inder Singh Rekhi matter, Hon'ble
Supreme Court, inter alia, held that,
"Therefore, in order to be entitled to order of reference
under Section 20, it is necessary that there should be an
arbitration agreement and secondly, difference must arise
to which this agreement applied. In this case, there is no
dispute that there was an arbitration agreement. There has
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been an assertion of claim by the appellant and silence as
well as refusal in respect of the same by respondent.
Therefore, a dispute has arisen regarding non-payment of
the alleged dues of the appellant. The question is for the
present case when did such dispute arise. The High Court
proceeded on the basis that the work was completed in
1980 and, therefore, the appellant became entitled to the
payment from that date and the cause of action under
Article 137 arose from that date. But in order to be entitled
to ask for a reference under Section 20 of the Act there
must not only be an entitlement to money but there must
be a difference or dispute must arise. It is true that on
completion of the work a right to get payment would
normally arise but where the final bills as in this case have
not been prepared as appears from the record and when the
assertion of the claim was made on February 28, 1983 and
there was nonpayment, the cause of action arose from that
date, that is to say, February 28, 1983. It is also true that a
party cannot postpone the accrual of cause of action by
writing reminders or sending reminders but where the bill
had not been finally prepared, the claim made by a
claimant is the accrual of the cause of action. A dispute
arises where there is a claim and a denial and repudiation
of the claim. The existence of dispute is essential for
appointment of an arbitrator under Section 8 or a reference
under Section 20 of the Act. See Law of Arbitration by R.
S. Bachawat, first edition, page 354. There should be
dispute and there can only be a dispute when a claim is
asserted by one party and denied by the other on whatever
grounds. Mere failure or inaction to pay does not lead to
the inference of the existence of dispute. Dispute entails a
positive element and assertion of denying, not merely
inaction to accede to a claim or request. Whether in a
particular case a dispute has arisen or not has to be found
out from the facts and circumstances of the case."

1.2.2 Earlier the same view was taken by Hon'ble Delhi High Court
also in AIR 1981 Delhi 293 entitled M/s. Oriental Building &
Furnishing Co. Ltd., New Delhi v. Union of India , where it held
that:
"9. In this connection, it is necessary to note that a
difference can arise long after some work has been done
under a contract. There can be negotiations between the
parties and all sorts of correspondence. But, it is only
when they come to the conclusion that they cannot resolve
the dispute between them, that it can be said that a
difference arises. A difference under the arbitration
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agreement is a claim made by one party which is refuted
by the other party. At that stage, it is open to the parties or
any of them to say-now let us go to arbitration to get this
difference settled. It is at this stage that it is possible to say
that a difference has arisen between them. In this sense,
Section 20 of the Arbitration Act differs from the normal
kind of claims that arise in suits. In the case of a suit, the
date on which the cause of action arises is the date from
which the limitation period starts. Under Section 20, it is
the date on which the right to apply accrues that
determines the starting point. That starting point does not
coincide with the date on which the cause of action for
filing a suit arises.
10. To take a simple illustration. If there are two parties to
a contract in which one claims a breach of contract by the
other, then the period of limitation for filing the suit starts
from the date of the breach. That is not the determining
date if the contract is subject to an arbitration Clause. If
there is an arbitration Clause, then the concerned party
will make a demand from the other party and it is only
when the demand is refuted or declined that the difference
arises. It, therefore, follows that the bar contemplated by
the Limitation Act for filing an application under Section
20 of the Arbitration Act is different from that
contemplated by the same Act for instituting a suit."

1.2.3 In S. Rajan v. State of Kerala ((1992) 3 SCC 608) it was
held by Hon'ble Supreme Court that the right to apply for
arbitration proceeding under Section 20 of the Arbitration Act,
1940 runs from the date when the dispute arises. It observed:
"11. Reading Article 137 and sub-section (1) of Section 20
together, it must be said that the right to apply accrues
when the difference arises or differences arise, as the case
may be, between the parties. It is thus a question of fact to
be determined in each case having regard to the facts of
that case."

1.2.4 Following observations of Hon'ble Delhi High Courtjare very
pertinent to this case. Hon'ble Court held in 74 (1998) DLT 241,
M/s. United Engineers and Anr. v. M/s. Ahinsa Co-Op. Group
Housing Society Ltd. that,
"12. Reverting now to the issue raised on the point of
limitation to apply under Section 20 of the Act, in view of
the decisions of the Supreme Court in The Kerala State
Electricity Board v. T.P. Kunhaliumma, AIR 1977 SC 282 ,
and followed in S. Rajan's case (supra), it cannot be
disputed that the application under Section 20 of the Act is
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governed by Article 137 of the Limitation Act, 1963 and
the period of three years stipulated therein, begins to run
from the date when the 'right to apply accrues'. The real
controversy, however, is about the date when the right to
make the present petitions accrued to the petitioners.
According to the petitioners it accrued on 21st December,
1994 on the respondent declining to refer the disputes to
an Arbitrator in terms of Clause 6 of the agreement and,
thus, the present petitions filed in October, 1995 are well
within time. On the other hand the stand of the respondent
is that it accrued on 30th September, 1989 when the
petitioners submitted their final bill to the Architects for
settlement and in any event on 27th December, 1990 when
the Architects issued the 'full and final certificate' for
payment in terms whereof, no payment was made, the
present petitions filed on 16th October, 1995 are barred by
time. It would appear that Clause 2 of the Articles of
agreement between the parties provides for payment by
the respondent and in case of dispute about the amount
due as payable, Clause 6 of the agreement provides for
settlement by the Architects. Admittedly, as noticed
above, the disputes did arise and it was referred by the
contractors to the Architects, who, after notice to the
respondent, decided the matter and communicated to the
parties about their making and issuing 'full and final
certificate' on 27th December, 1990. Basing its claim
thereon, the petitioners by their letter dated 13th
December, 1994 called upon the respondent to refer the
question of non-payment in terms of the Architect's
certificate for adjudication by arbitration. The respondent
disputed and denied its liability to pay under the said
certificate for the first time in its reply dated 27th
December, 1994, giving rise to cause of action to apply
under Section 20 of the Act. It was on this date that the
right to apply accrued in favour of the petitioners. The
application filed on 16th October, 1995 cannot be, thus,
said to be barred by time.
13. The contention of Mr. Rana, learned Counsel for the
respondent, however, is that the certificate having been
issued by the Architects on 27th December, 1990, the
cause of action to apply arose then only, is meritless. It is
only on demand to appoint an Arbitrator and its denial that
cause of action to apply under Section 20 of the Act
accrues and not when the payment became due. It was also
submitted for the respondent that the claims themselves
are barred by time and, therefore, there is no point in
referring the claims for arbitration. Be that as it may, in a
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matter referable to arbitration it is not for this Court to
comment on it. The question whether the claims are barred
by time falls within the domain of Arbitrator and is not to
be decided by the Court before making reference. Thus the
present application, filed within three years of respondents
reply dated 21st December, 1994, are well within time."

1.2.5 Weight of authority is clearly in favour of the view that it is
only if there is repudiation of a claim, there is a dispute in respect
thereof. This is reflected in stand taken by various High Courts, as
are reflected in the following judgments:
a) AIR 1973 MP 261 Dillip Construction Co. v. Hindustan Steel
Limited
b) AIR 1985 Orissa 182: Secretary to Government of Orissa,
Irrigation Department and Others v. Raghunath Mohapatra
c) AIR 1985 Delhi 358: Shah Construction Co. Ltd. Bombay v.
Municipal Corporation of Delhi

1.2.6 Hon'ble Delhi High Court further affirmed this principle in
Radical Builders Vs. Pharmaceutical Employees Co-bp. Group
Housing Society Ltd. reported as 137 (2007) DL T 709, where it
held, inter alia, that,
" 23. From a reading of the principles laid down in the
afore noticed judicial pronouncements it is clear that
refusal to pay the final bill constitutes a new cause of
action and the starting point of limitation for the payment
will arise from the date of default in payment of such bills.
It is also extremely well settled that it is only upon refusal
to make payment of the bill that cause of action for
invoking the arbitration clause would arise. In the instant
case, the petitioner sought reference of the matter and
appointment of the Arbitrators also by its notice dated
15th June, 1994 which was also not acceded to by the
respondent. "

1.2.7 Confirming the above position in law, Hon'ble Supreme
Court in the case of Hari Shankar Singhania Vs. Gaur Hari
Singhania , (2006) 4 SCC 658, inter alia, held that,
"24. Where a settlement with or without conciliation is not
possible, then comes the stage of adjudication -by way of
arbitration. Article 137, as construed in this sense, then as
long as parties are in dialogue and even the differences
would have surfaced it cannot be asserted that a limitation
under Article 137 has commenced. Such an interpretation
will compel the parties to resort to litigation/arbitration
even where there is serious hope of the parties themselves
resolving the issues. The learned Judges of the High
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Court, in our view, have erred in dismissing the appellants
appeal and affirming the findings of the learned Single
Judge to the effect that the application made by the
appellants under Section 20 of the Act, 1940 asking for
reference was beyond time under Article 137 of the
Limitation Act. The learned Judges ought to have allowed
the appeal and quashed and set aside the impugned order
passed by the learned Single. Judge and ought to have
restored and allowed arbitration suit filed by the
appellants. As already noticed, the correspondence
between the parties, in fact, bears out that every attempt
was being made to comply with and carry out the
reciprocal obligations spelt out in the agreement between
the parties. As rightly pointed out by learned counsel for
the appellant that the learned Judges of the Division Bench
have erred in coming to the conclusion that the
distribution of immovable properties in specie as provided
in the Deed of Dissolution dated 26.03.1987 and a
Supplementary Agreement dated 20.03.1987 could not be
done before 31.05.1987 due to some differences. There is
absolutely no material on record on the basis of which the
learned Judges could have come to such a conclusion.
None of the correspondence referred to by the learned
Judges spells out the existence of any disputes as a result
of which the properties could not be distributed prior to
31.05.1987."
"32. It cannot be said that merely because nominees were
appointed for working out an arrangement, which could
not ultimately be arrived at, a dispute or difference arose
way back in February 1988. In fact, even immediately
after this, the correspondence exchanged between the
parties reveals a forthcoming attitude and amiable efforts
made towards implementing the deed of dissolution."
"37. Therefore, we observe that the right to apply under
section 20 of the Arbitration Act, 1940 accrued to the
appellants only on the date of the last correspondence
between the parties and the period of limitation
commences from the date of the last communication
between the parties. Therefore, the finding of the High
Court that the application under section 20 of the
Arbitration Act, 1940, is beyond the period of limitation is
erroneous."

1.2.8 This position was further affirmed by the Hon'ble Supreme
Court in Punjab State and others Vs. Dina Nath, 2007 (5) SCC
28 , where it inter alia, held that,
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"Accepting the principles laid down in S. Rajan ((1992) 3
SCC 608) this Court in Hari Shankar Singhania v. Gaur
Hari Singhania ((2006) 4 SCC 658) again reiterated the
principle that an application under Section 20 of the Act
for filing the arbitration agreement in court and for
reference of the dispute to arbitration in accordance
therewith is required to be filed within a period of three
years when the right to apply accrues and that the said
right accrues when difference or dispute arises between
the parties to the arbitration agreement."

1.3 One more issue is very important for the purpose of the
adjudication of this issue. This relates to the notice dated
09.12.1989 issued by the Claimants, seeking inter alia, the
appointment of the arbitrator by the Respondent. Section 37. (3) of
the Arbitration Act, 1940 reads as under:
"(3) For the purpose of this section and of the Indian
Limitation Act, 1908, an arbitration shall be deemed to be
commenced when one party to the arbitration agreement
serves on the other parties thereto a notice requiring the
appointment of an arbitrator, or where the arbitration
agreement provides that the reference shall be to a person
named or designated in the agreement, requiring that the
difference be submitted to the person so named or
designated. (9 of 1908)."

1.3.1 Admittedly, even as per their admission /denial, as set out
hereinabove, Respondent have denied receipt of letter / notice dated
9.12.1989. Admittedly, when they did not receive the said letter /
notice, arbitration did not commence.

1.4 Having set out the 'accepted position' in law, we need to apply
the same to the facts of the case.

1.4.1 In their defence statement, Respondents have devoted three
pages on the issue of limitation. They have set out that,
a) Initial claim was made by letter dated 11.06.1985,
b) Claimant demanded payment by letter dated 6.3.1989,
c) By letter dated 9.12.1989, Claimant invoked arbitration,
d) On 10.5.1994 Claimant issued legal notice seeking appointment
of arbitrator, to which Respondent replied.
e) Claims were filed in 2003-2004, i.e. after 19 years when the first
claim was made upon the Respondent.

1.4.2 Respondent do not give any date or refer to any document, by
which they had disputed either the 11.6.1985 or 6.3.1989 bill.

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1.4.3 Claimant has set out in detail their version on limitation in the
statement of claim as well as in rejoinder. For the period post
9.12.1989 upto 10.5.1994 they say that they were constantly
negotiating with the Respondent as they never said that they would
not pay the amount due. They say that this is what they had stated
before the Hon'ble Delhi High Court in Suit no. 2065A of 1995. In
this regard they have filed along with their rejoinder a copy of the
affidavit along with documents filed in the said suit which is
marked as " Annexure R-2 colly " This affidavit was filed by the
same person who has filed affidavit in these proceedings. At
paragraph no. 19 of his affidavit dated 14.2.2007 filed in these
proceeding, the same deponent reiterates the said version. That not
a single question was put to the said deponent during his cross-
examination to unsettle the said version. That even when arbitration
was invoked on 10.5.1994, by their reply dated 2.6.1994,
Respondent did not deny arbitrability of claims as having become
barred by limitation. They conveyed that issue of appointment of
arbitrator was under consideration. As recorded in order dated
7.3.2003 passed in Suit No. 2065A of 1995 (reproduced in
rejoinder), Respondents themselves pointed out to the Hon'ble
Court that the suit had become infructuous and the same be
dismissed. The suit was accordingly dismissed in terms of the said
order.

1.5 What emerges from out of the above discussion is that system
was provisionally taken over by the Respondent on 4.8.1986. That
bill dated 6.3.1989 was raised within three years of the same. That
letter dated 9.12.1989 seeking appointment of arbitrator was not
received by the Respondent, hence it was no invocation. That no
repudiation of the said bill was made by the Respondent. Parties
were under negotiations for settling the said bill/s. That by their
reply dated 2.6.1994, Respondent did not deny arbitrability of
claims due to limitation. That arbitration started in 1995 was stalled
because of stay order dated. 11.9.1995 passed in suit no. 2065A of
1995 filed by Respondent. This got vacated only on 7.3.2003. Upon
Respondent having pointed out that its suit had become
infructuous, the said suit was dismissed. By virtue of the said order
passed in the suit, the once stalled arbitration started once again. As
recorded in answer to question no. 19 of respondent witness cross-
examination held on 08.05.2007, Respondent had not prepared its
final bill as against the bill/s of the Claimant even till that date.

1.6 Facts when placed in the legal perspective, prove that claim is
not barred by limitation. Claimant validly raised their claim within
three years of the provisional take over of the system. That
thereafter there was no denial of the claim. Cause of action for
seeking arbitration accrued to them when negotiations failed. That
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arbitration started from 1995 itself. It is continuation of the same
arbitration with mandate from the Hon'ble High Court as set out in
order dated 7.3.2003 passed in Suit no. 2065A of 1995.

1.7 This issue is hence decided in favour of the Claimant and
against the Respondent. ”

55. A plain reading of the aforesaid extracted portion of the
Impugned Award indicates that the learned Arbitral Tribunal, in the
first instance, identified and recorded certain foundational facts
emerging from the arbitral record. Thereafter, it correctly noted that,
for the purposes of determining limitation, it was necessary to
ascertain the point at which the cause of action had accrued. The
learned Arbitral Tribunal further acknowledged that the applicable
limitation period was three years and proceeded to examine the issue
in light of several judicial precedents, as well as Section 37(3) of the
1940 Arb Act.
56. The learned Arbitral Tribunal also took note of the defence of
the Defendant, particularly its stand that it had not received the
Plaintiff‟s Notice dated 09.12.1989 invoking arbitration. It then
considered the pleadings and evidence led by the Plaintiff, including
the assertion that the Defendant had not unequivocally denied the
Plaintiff‟s claims and that negotiations between the parties had
continued over a period of time.
57. Upon an overall appreciation of the material on record, the
learned Arbitral Tribunal summarised its factual findings, most
notably, that the system had been provisionally taken over on
04.08.1986; that the bill dated 06.03.1989 was raised within three
years thereof; that the Notice dated 09.12.1989 was not received by
the Defendant; that there was no express repudiation of the said bill;
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that the parties were engaged in negotiations; and that the arbitral
proceedings, though initiated in 1995, were stayed and later revived
pursuant to Orders of this Court.
58. On the basis of the aforesaid factual and legal analysis, the
learned Arbitral Tribunal, in Paragraphs Nos. 1.6 and 1.7 of the
Impugned Award concluded that the claims were not barred by
limitation. The learned Arbitral Tribunal held that the Plaintiff had
validly raised its claims within three years of the provisional takeover
of the system; that there was no denial of the claims by the Defendant;
that the cause of action for invoking arbitration arose upon failure of
negotiations; and that the arbitral proceedings, having commenced in
1995 and subsequently revived, constituted a continuation of the same
proceedings. Accordingly, the issue of limitation was decided in
favour of the Plaintiff and against the Defendant.
59. However, this court finds that even upon a prima facie
examination of the reasoning adopted by the learned Arbitral Tribunal,
it becomes apparent that the ultimate conclusion is fundamentally
flawed. The learned Arbitral Tribunal‟s finding is primarily predicated
on the absence of an express denial by the Defendant, the continuation
of negotiations between the parties, and the fact that arbitral
proceedings were initiated in 1994-95. It also places reliance on the
alleged admission in cross-examination by the official of the
Defendant that the Defendant had not prepared a final bill even till the
date of the cross-examination. On this basis, the learned Arbitral
Tribunal concluded that the claims could not be said to be time-barred.
60. In the considered opinion of this Court, the aforesaid reasoning
of the learned Tribunal is unsustainable in law. The mere non-
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finalisation of a bill by one party, the issuance of communications, or
the existence of alleged negotiations between the parties do not, by
themselves, operate to extend or postpone the period of limitation.
The learned Arbitral Tribunal itself records that the Plaintiff had
issued a Notice dated 09.12.1989 invoking arbitration, albeit the same
was not received by the Defendant. The very issuance of such a
Notice clearly indicates that disputes had arisen between the parties at
that stage. It is incongruous to suggest, on the one hand, that no
dispute had arisen or that there was no denial, and on the other hand,
to acknowledge that the Plaintiff found it necessary to invoke
arbitration. In the absence of any cogent material to the contrary, the
learned Arbitral Tribunal‟s inference in this regard is manifestly
erroneous.

C. Distinction Between the Crystallisation of a Dispute and the
Commencement of Arbitral Proceedings by serving a notice
invoking arbitration

61. It is imperative to reiterate and emphasise the clear distinction
between the existence or crystallisation of a dispute on the one hand,
and the formal commencement of arbitral proceedings on the other.
62. While the service of a notice invoking arbitration may be a
statutory requirement for the commencement of arbitral proceedings
in terms of Section 37(3) of the 1940 Arb Act, the same is not a sine
qua non for establishing that a dispute had already arisen between the
parties. The existence of a dispute is a matter to be discerned from the
conduct of the parties, the nature of the claims raised, and the
surrounding circumstances, and does not hinge upon any formal
service or receipt of a notice invoking arbitration.
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63. In the present case, the factual matrix unmistakably
demonstrates that disputes had crystallised between the parties, if not
at an earlier stage, then certainly by the time the Plaintiff issued the
Notice dated 09.12.1989, invoking arbitration. The very issuance of
such a Notice is indicative of the Plaintiff‟s assertion of claims and the
existence of differences requiring adjudication. In this backdrop, the
conclusion drawn by the learned Arbitral Tribunal that no crystallised
dispute existed between the parties is ex facie erroneous and cannot be
sustained in law.
64. It is well settled, through a consistent line of judgments of the
Hon‟ble Supreme Court, that in situations where parties are engaged
in prolonged negotiations and no definite or easily identifiable point
of accrual of cause of action emerges, the concept of a “ breaking
point ” assumes determinative significance. Such a breaking point
refers to the stage at which negotiations between the parties fail, the
possibility of amicable resolution is exhausted, and the dispute
becomes irreconcilable. It is this stage which can legitimately be
treated as the point of accrual of cause of action for the purposes of
initiating legal or arbitral proceedings.
65. In the present case, the Defendant has contended that, by virtue
of the communication dated 21.06.1988, the Plaintiff‟s additional
claims stood rejected and, consequently, the cause of action must be
deemed to have accrued on that date. The Plaintiff, however, asserts
that notwithstanding the said communication, the parties continued to
engage in negotiations over a considerable period, and therefore, the
limitation period cannot be computed from 21.06.1988 or from any
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proximate date thereafter, as the disputes had not crystallised at that
stage.
66. Even assuming, arguendo , in favour of the Plaintiff, that the
parties were engaged in continued negotiations, it is evident from the
factual matrix that such negotiations did not, and in law could not,
indefinitely defer the crystallisation of disputes or postpone the
accrual of the cause of action.
67. In the present circumstances, it cannot be said that the disputes
remained inchoate or incapable of crystallisation beyond a certain
point in time. On the contrary, the issuance of the Notice dated
09.12.1989 by the Plaintiff invoking arbitration clearly evidences the
existence of a definitive “ breaking point ”, i.e., the stage at which the
Plaintiff abandoned the possibility of amicable resolution and elected
to seek adjudication of its claims. Thus, at the very least, the disputes
must be held to have crystallised, and the cause of action to have
accrued, by the date of the said Notice.
68. The Hon‟ble Supreme Court has, in a catena of decisions,
13
including B & T AG v. Union of India , unequivocally reaffirmed
the principle that where prolonged negotiations render it difficult to
precisely ascertain the point at which a dispute arises, the breakdown
of such negotiations, i.e., the “ breaking point ”, constitutes the
determinative moment for the purposes of limitation.
69. The Apex Court in the said decision further held that the mere
existence of continued correspondence, exchanges, or negotiations
between the parties does not operate to indefinitely postpone the
commencement of limitation. Rather, the cause of action must be

13
(2024) 5 SCC 358
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reckoned from the stage at which a clear breaking point is reached,
signifying that the dispute has crystallised and the parties‟ positions
have become irreconcilably opposed. The relevant portion of B & T
AG ( supra ) reads as follows:
“ 63. Mookerjee, J. in Dwijendra Narain Roy v. Joges Chandra
De , 1923 SCC OnLine Cal 214 , has explained the true test to
determine when a cause of action could be said to have accrued
observing as under : (SCC OnLine Cal para 10)
“ 10 . … The substance of the matter is that time runs when
the cause of action accrues and a cause of action accrues
when there is in existence a person who can sue and
another who can be sued, and when all the facts have
happened which are material to be proved to entitle the
plaintiff to succeed Coburn v. Colledge , (1897) 1 QB 702
(CA) ; Gelmini v. Moriggia , (1913) 2 KB 549 . The cause
of action arises when and only when the aggrieved party
has the right to apply to the proper tribunals for relief:
Whalley v. Whalley , (1816) 1 Mer 436: 35 ER 734 . The
statute does not attach to a claim for which there is as yet
no right of action and does not run against a right for
which there is no corresponding remedy or for which
judgment cannot be obtained. Consequently the true test to
determine when a cause of action has accrued is to
ascertain the time when plaintiff could first have
maintained his action to a successful result .”
(emphasis supplied)
64. “Cause of action” means the whole bundle of material facts,
which it is necessary for the plaintiff to prove in order to entitle
him to succeed in the suit. In delivering the judgment of the Board
in Chand Kour v. Partab Singh , 1888 SCC OnLine PC 14 Lord
Watson observed: (SCC OnLine PC)
“… Now the cause of action has no relation whatever to
the defence which may be set up by the defendant, nor
does it depend upon the character of the relief prayed for
by the plaintiff. It refers entirely to the grounds set forth in
the plaint as the cause of action, or, in other words, to
the [ Ed. : The matter between two asterisks has been
emphasised in original.] media [ Ed. : The matter between
two asterisks has been emphasised in original.] upon
which the plaintiff asks the court to arrive at a conclusion
in his favour .”
(emphasis supplied)
65. Cause of action becomes important for the purposes of
calculating the limitation period for bringing an action. It is
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imperative that a party realises when a cause of action arises. If a
party simply delays sending a notice seeking reference under the
1996 Act because they are unclear of when the cause of action
arose, the claim can become time-barred even before the party
realises the same.
66. Russell on Arbitration by Anthony Walton (19th Edn.) at pp. 4-
5 states that the period of limitation for commencing an arbitration
runs from the date on which the “cause of arbitration” accrued, that
is to say, 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. The period of limitation for the
commencement of an arbitration runs from the date on which, had
there been no arbitration clause, the cause of action would have
accrued:
“Just as in the case of actions the claim is not to be
brought after the expiration of a specified number of years
from the date on which the cause of action accrued, so in
the case of arbitrations, the claim is not to be put forward
after the expiration of the specified number of years from
the date when the claim accrued.”
Even if the arbitration clause contains a provision that no cause
of action shall accrue in respect of any matter agreed to be referred
to until an award is made, time still runs from the normal date
when the cause of action would have accrued if there had been no
arbitration clause.
67. In Law of Arbitration by Justice Bachawat at p. 549,
commenting on Section 37, it is stated that subject to the 1963 Act,
every arbitration must be commenced within the prescribed period.
Just as in the case of actions the claim is not to be brought after the
expiration of a specified number of years from the date when the
cause of action accrues, so in the case of arbitrations the claim is
not to be put forward after the expiration of a specified number of
years from the date when the claim accrues. For the purpose of
Section 37(1) “action” and “cause of arbitration” should be
construed as arbitration and cause of arbitration. The cause of
arbitration arises when the claimant becomes entitled to raise the
question, that is, when the claimant acquires the right to require
arbitration. An application under Section 11 of the 1996 Act is
governed by Article 137 of the Schedule to the 1963 Act and must
be made within 3 years from the date when the right to apply first
accrues. There is no right to apply until there is a clear and
unequivocal denial of that right by the respondent. It must,
therefore, be clear that the claim for arbitration must be raised as
soon as the cause for arbitration arises as in the case of cause of
action arisen in a civil action.
68. Whether any particular facts constitute a cause of action has to
be determined with reference to the facts of each case and with
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reference to, the substance, rather than the form of the action. If an
infringement of a right happens at a particular time, the whole
cause of action will be said to have arisen then and there. In such a
case, it is not open to a party to sit tight and not to file an
application for settlement of dispute of his right, which had been
infringed, within the time provided by the Limitation Act, and,
allow his right to be extinguished by lapse of time, and thereafter,
to wait for another cause of action and then file an application
under Section 11 of the 1996 Act for establishment of his right
which was not then alive, and, which had been long extinguished
because, in such a case, such an application would mean an
application for revival of a right, which had long been extinguished
under the 1963 Act and is, therefore, dead for all purposes. Such
proceedings would not be maintainable and would obviously be
met by the plea of limitation under Article 137 of the 1963 Act.

72. At the cost of repetition, we state that when the bank guarantee
came to be encashed in the year 2016 and the requisite amount
stood transferred to the Government account that was the end of
the matter. This “Breaking Point” should be treated as the date at
which the cause of action arose for the purpose of limitation.”
(emphasis supplied)


70. This position has been further elucidated by a three-Judge
Bench of the Hon‟ble Supreme Court in Arif Azim Co. Ltd. v. Aptech
14
Ltd. , wherein the Court has drawn a clear distinction between the
limitation period for invoking arbitration and that applicable to the
underlying substantive claims.
71. In the said decision, it has been authoritatively held that the
cause of action for initiating proceedings arises only when a claim is
asserted by one party and is either expressly denied or constructively
refused by the other. The Apex Court has further clarified that mere
inaction or failure to make payment does not, in itself, give rise to a
dispute; however, once such an assertion is met with denial or non-
response, the dispute stands crystallised and the cause of action

14
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accrues. The relevant portion of Arif Azim ( supra ) is reproduced
below for ready reference:
“ ( a ) When does the right to apply under Section 11(6) accrue?
53. It has been held in a catena of decisions of this Court that the
limitation period for making an application seeking appointment of
arbitrator must not be conflated or confused with the limitation
period for raising the substantive claims which are sought to be
referred to an Arbitral Tribunal. The limitation period for filing an
application seeking appointment of arbitrator commences only
after a valid notice invoking arbitration has been issued by one of
the parties to the other party and there has been either a failure or
refusal on the part of the other party to make an appointment as per
the appointment procedure agreed upon between the parties.
*
( b ) When does the cause of action arise?
79. We are not impressed with the submission canvassed on behalf
of the respondent that the cause of action for raising the claims
arose on 1-11-2017 and thus the limitation period for invoking
arbitration should commence from the said date. The petitioner has
alleged that the respondent received the payment for the course
from ICCR on 3-10-2017. However, the perusal of the
communication exchanged between the parties indicates that it is
only on 28-3-2018 that the right of the petitioner to bring a claim
against the respondent could be said to have been crystallised. The
position of law is settled that mere failure to pay may not give rise
to a cause of action. However, once the applicant has asserted its
claim and the respondent has either denied such claim or failed to
reply to it, the cause of action will arise after such denial or failure.
80. In B & T AG v. Union of India , (2024) 5 SCC 358 , three
principles of law came to be enunciated by this Court regarding the
manner in which the point in time when the cause of action arose
may be determined. First, that the right to receive the payment
ordinarily begins upon completion of the work. Secondly, a dispute
arises only when there is a claim by one side and its
denial/repudiation by the other and thirdly, the accrual of cause of
action cannot be indefinitely postponed by repeatedly writing
letters or sending reminders. It was further emphasised by this
Court that it was important to find out the “ breaking point ” at
which any reasonable party would have abandoned the efforts at
arriving at a settlement and contemplated referral of the dispute to
arbitration. Such breaking point would then become the date on
which the cause of action could be said to have commenced.
81. This Court in Inder Singh Rekhi v. DDA , (1988) 2 SCC 338 ,
held as follows: (SCC p. 340, para 4)
“ 4 . Therefore, in order to be entitled to order of reference
under Section 20, it is necessary that there should be an
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arbitration agreement and secondly, difference must arise
to which this agreement applied . In this case, there is no
dispute that there was an arbitration agreement. There has
been an assertion of claim by the appellant and silence as
well as refusal in respect of the same by the respondent.
Therefore, a dispute has arisen regarding non-payment of
the alleged dues of the appellant. The question is for the
present case when did such dispute arise. The High Court
proceeded on the basis that the work was completed in
1980 and, therefore, the appellant became entitled to the
payment from that date and the cause of action under
Article 137 arose from that date. But in order to be
entitled to ask for a reference under Section 20 of the Act
there must not only be an entitlement to money but there
must be a difference or dispute must arise. It is true that
on completion of the work a right to get payment would
normally arise but where the final bills as in this case
have not been prepared as appears from the record and
when the assertion of the claim was made on 28-2-1983
and there was non-payment, the cause of action arose
from that date, that is to say, 28-2-1983. It is also true that
a party cannot postpone the accrual of cause of action by
writing reminders or sending reminders but where the bill
had not been finally prepared, the claim made by a
claimant is the accrual of the cause of action. A dispute
arises where there is a claim and a denial and repudiation
of the claim. The existence of dispute is essential for
appointment of an arbitrator under Section 8 or a
reference under Section 20 of the Act . See Law of
Arbitration by R.S. Bachawat, Ist Edn. p. 354. There
should be dispute and there can only be a dispute when a
claim is asserted by one party and denied by the other on
whatever grounds. Mere failure or inaction to pay does
not lead to the inference of the existence of dispute.
Dispute entails a positive element and assertion of
denying, not merely inaction to accede to a claim or a
request . Whether in a particular case a dispute has arisen
or not has to be found out from the facts and
circumstances of the case.”
(emphasis supplied)
82. In Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan
Nigam Ltd. , (2020) 14 SCC 643 , this Court held thus: (SCC p.
652, paras 28-29)
“ 28 . Having perused through the relevant precedents, we
agree that on a certain set of facts and circumstances, the
period during which the parties were bona fide
negotiating towards an amicable settlement may be
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excluded for the purpose of computing the period of
limitation for reference to arbitration under the 1996 Act.
However, in such cases the entire negotiation history
between the parties must be specifically pleaded and
placed on the record. The Court upon careful
consideration of such history must find out what was the
“breaking point” at which any reasonable party would
have abandoned efforts at arriving at a settlement and
contemplated referral of the dispute for arbitration. This
“breaking point” would then be treated as the date on
which the cause of action arises, for the purpose of
limitation. The threshold for determining when such a
point arises will be lower in the case of commercial
disputes, where the party's primary interest is in securing
the payment due to them , than in family disputes where it
may be said that the parties have a greater stake in settling
the dispute amicably, and therefore delaying formal
adjudication of the claim.
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.”
(emphasis supplied)
*
( c ) When is arbitration deemed to have commenced?
88. Section 21 of the 1996 Act provides that the arbitral
proceedings in relation to a dispute commence when a notice
invoking arbitration is sent by the claimant to the other party:
“ 21. Commencement of arbitral proceedings . - Unless
otherwise agreed by the parties, the arbitral proceedings in
respect of a particular dispute commence on the date on
which a request for that dispute to be referred to
arbitration is received by the respondent.”
89. In Milkfood Ltd. v. GMC Ice Cream (P) Ltd. , (2004) 7 SCC
288 , it was observed thus: (SCC pp. 301-302 & 307, paras 26-27,
29 & 49)
“ 26 . The commencement of an arbitration proceeding for
the purpose of applicability of the provisions of the Indian
Limitation Act is of great significance. Even Section 43(1)
of the 1996 Act provides that the Limitation Act, 1963
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shall apply to the arbitration as it applies to proceedings in
court. Sub-section (2) thereof provides that for the purpose
of the said section and the Limitation Act, 1963, an
arbitration shall be deemed to have commenced on the
date referred to in Section 21.
27 . Article 21 of the Model Law which was modelled on
Article 3 of the U NCITRAL Arbitration Rules had been
adopted for the purpose of drafting Section 21 of the 1996
Act. Section 3 of the 1996 Act provides for as to when a
request can be said to have been received by the
respondent. Thus, whether for the purpose of applying the
provisions of Chapter II of the 1940 Act or for the purpose
of Section 21 of the 1996 Act, what is necessary is to
issue/serve a request/notice to the respondent indicating
that the claimant seeks arbitration of the dispute.
*
29 . For the purpose of the Limitation Act an arbitration is
deemed to have commenced when one party to the
arbitration agreement serves on the other a notice
requiring the appointment of an arbitrator . This indeed is
relatable to the other purposes also, as, for example, see
Section 29(2) of the (English) Arbitration Act, 1950.
*
49 . Section 21 of the 1996 Act, as noticed hereinbefore,
provides as to when the arbitral proceedings would be
deemed to have commenced. Section 21 although may be
construed to be laying down a provision for the purpose of
the said Act but the same must be given its full effect
having regard to the fact that the repeal and saving clause
is also contained therein. Section 21 of the Act must,
therefore, be construed having regard to Section 85(2)(a)
of the 1996 Act. Once it is so construed, indisputably the
service of notice and/or issuance of request for
appointment of an arbitrator in terms of the arbitration
agreement must be held to be determinative of the
commencement of the arbitral proceeding .”
(emphasis supplied)
90. Similarly, in BSNL v. Nortel Networks (India) (P) Ltd. , (2021)
5 SCC 738 , it was held by this Court thus: (SCC p. 766, para 51)
“ 51 . The period of limitation for issuing notice of
arbitration would not get extended by mere exchange of
letters, [ S.S. Rathore v. State of M.P. , (1989) 4 SCC
582; Union of India v. Har Dayal , (2010) 1 SCC
394; CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam
Ltd. , (2020) 5 SCC 185 ] or mere settlement discussions,
where a final bill is rejected by making deductions or
otherwise. Sections 5 to 20 of the Limitation Act do not
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exclude the time taken on account of settlement
discussions. Section 9 of the Limitation Act makes it clear
that: „where once the time has begun to run, no subsequent
disability or inability to institute a suit or make an
application stops it‟. There must be a clear notice invoking
arbitration setting out the “particular dispute” [Section
21 of the Arbitration and Conciliation Act,
1996.] (including claims/amounts) which must be received
by the other party within a period of 3 years from the
rejection of a final bill, failing which, the time bar would
prevail .”
….”
(emphasis supplied)

72. Importantly, the Hon‟ble Supreme Court in Arif Azim ( supra )
has reiterated that the accrual of a cause of action cannot be
indefinitely postponed by repeated correspondence, representations, or
ongoing negotiations. The Apex Court emphasised the necessity of
identifying the “ breaking point ”, the stage at which any reasonable
party would have ceased efforts at amicable settlement. Such a
“ breaking point” alone constitutes the starting point of limitation.
Consequently, once this stage is reached, whether by an express
rejection, a clear failure to respond, or any conduct demonstrating
irreconcilable differences, the limitation period begins to run, and any
subsequent exchanges between the parties cannot arrest or extend it,
unless the same is in consonance with the statutory requirements.
73. In the facts of the present case, at the cost of repetition, it can
safely be concluded that if a definitive “ breaking point ” had not arisen
prior thereto, it most certainly occurred, at the latest, on the date when
the Notice invoking arbitration dated 08.12.1989 was issued by the
Plaintiff.
74. This conclusion holds irrespective of the question whether the
said Notice was ultimately received by the Defendant, inasmuch as the
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act of issuing the Notice itself unequivocally evidences that the
Plaintiff had, by that stage, abandoned the possibility of amicable
resolution and elected to seek adjudication of its claims, thereby
signifying crystallisation of the disputes between the parties.

D. Shifting and Self-Serving Positions Adopted by Both Parties
at Different Stages of the Proceedings, Resulting in Inconsistencies

75. At this stage, a crucial and definite determinative issue arises
for consideration. The learned Arbitral Tribunal has returned a
finding, on the basis of the material before it, that the letter dated
08.12.1989 invoking arbitration was not delivered to the Defendant,
and consequently, arbitral proceedings in terms of Section 37(3) of the
1940 Arb Act could not be said to have commenced on that date.
76. However, during the course of arguments before this Court on
04.02.2026, both parties addressed elaborate and vehement
submissions on the question of service of the said Notice.
77. On that day, before this Court, the Plaintiff sought to contend
that the Notice dated 08.12.1989 had, in fact, been duly served upon
the Defendant, and therefore, arbitral proceedings must be deemed to
have commenced at that stage; consequently, since such invocation
was within three years from the accrual of cause of action, even if
reckoned from 1987 or 1988, as asserted by the Defendant, the claims
would fall within limitation.
78. Conversely, the Defendant contended that the said Notice was
never received, and therefore, arbitration did not commence until
10.05.1994, when a subsequent Notice invoking arbitration was
admittedly served to the Defendant and replied to on 02.06.1994. On
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this premise, it was urged that the invocation of arbitration occurred
well beyond the prescribed period of limitation. In this backdrop, the
issue as to whether the letter dated 08.12.1989 was, in fact, delivered
to the Defendant assumes pivotal significance.
79. It is pertinent to note that while adjudicating Issue No. 1
pertaining to limitation, the learned Arbitral Tribunal recorded a
finding that the letter dated 08.12.1989 had not been delivered to the
Defendant. Notwithstanding this finding, the learned Arbitral
Tribunal, on an independent line of reasoning, ultimately concluded
that the claims were within limitation.
80. Before proceeding further on this aspect, this Court considers it
appropriate to examine the pleadings of the parties in the present
proceedings, particularly in relation to the issue of service of the
Plaintiff‟s Notice dated 09.12.1989.
81. In this regard, it is necessary to first advert to the objections
filed by the Defendant, being IA No. 5570/2009 , under Sections 30
and 33 of the 1940 Arb Act, wherein the Defendant has challenged the
Impugned Award in the present proceeding.
82. A perusal of the relevant averments made in the above-said IA
reveals that the Defendant, while setting out its case, proceeded on the
footing that the Plaintiff had invoked arbitration vide letter dated
09.12.1989 and further structured its objections around the
consequences flowing from such invocation, including the alleged
failure of the Plaintiff to take steps for the constitution of the learned
Arbitral Tribunal within the prescribed time. For ready reference, the
relevant portion of the said IA is reproduced hereunder:
“ 5. That the brief facts leading to the filing of the present
application are as under:
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*
iv. Since the Claimant's claims were not conceded to by the
respondent NTPC, the Claimant vide its letter dated 09.12.1989
(Exh.C-253) invoked arbitration and appointed Mr. M.M. Sharma,
as its nominee arbitrator and requested the Respondent to nominate
its nominee arbitrator within 15 days of the receipt of the said letter
in terms of clauses 25.0 and 26.0 of the General Conditions of
Contract and the provisions of Indian Arbitration Act, 1940.
However, no appointment of Arbitrator was made by NTPC. Copy
of letter dated 9.12.1989 is annexed herewith as ANNEXURE-R-6.

v. As per clause 26.6.1.1 of GCC, in case either of the parties failed
to appoint its arbitrator within 60 days after receipt of a notice from
the other party invoking the arbitration clause, the President of
Institute of Engineer, India, had the power to appoint the arbitrator
at the request of the other party. However, the Claimant/contractor
also did not take any further step in this regard and failed to
approach the Institute of Engineer for appointment of Arbitrators
and constitution of the Arbitral Tribunal.

vi. That the right of the claimant to seek appointment of nominee
arbitrator of respondent arose on 9.02.1990 and finally expired on
9.02.2993 and thus not only the claimant's right to get the arbitral
tribunal got extinguished by lapse of time and the claims in itself
also became stale. The claimant almost five years after the
invocation of the Arbitration Clause, issued a Legal Notice dated
10.05.1994 (Exh C-261) to the Respondent requiring the
Respondent to appoint its nominee Arbitrator, Copy of the legal
notice dated 10.05.1994 is annexed herewith as ANNEUXURE-R-
7. The said Notice was replied to by the Respondent vide its letter
dated 02.06.1994 (Exh C-262) thereby intimating the Respondent
that the issue is under consideration and the Claimant shall be
communicated about the same in due course. Copy of the reply
letter dated 2.06.1994 is annexed herewith as ANNEXURE-R-8. In
fact during this entire period from 9.12.1990 to 10.05.1994 there is
no material placed on record or any communication to establish
that the parties were negotiating or intending to arrive at any
amicable settlement with regards to the claims of the claimant apart
from bald statement of the claimant that they were constantly
negotiating with the respondent.

vii. Finally on 24.11.1994, the Claimant approached the President,
Institution of Engineers, Calcutta, in terms of Clause 26 of the
Agreement, requesting him to appoint two arbitrators i.e., one for
the NTPC and the third as nominee of the President, Institution of
Engineers India to act as the umpire. The said President vide letter
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dated 2.6.95 appointed one Sri D.B.Chachad as arbitrator on behalf
of NTPC.
*
GROUNDS
*
D. Because the Majority Arbitrators erred in law in not
appreciating that the onus to prove that the claims as well as the
appointment of arbitrator is well within the prescribed time is upon
the claimant. It has come on record that the respondent having
taken over the project on 4.08.1986 and further the respondent
having repudiated the claims vide letter dated 21.06.1988, the
disputes and differences between the parties had arisen and the
cause of action for invocation of arbitration had arisen and started
to run and in these circumstances, the claimant reiterated its claim
vide its letter dated 6.03.1989 which were not conceded and hence
the claimant invoked arbitration vide letter dated 9.12.1989. The
cause of action for appointment of tribunal had started to run on the
expiry of 60 days ie. on 9.02.1990 and could not have been
postponed in any circumstance when according to the claimant
respondent did not appoint their nominee arbitrator. It is further
submitted that there cannot be waiver of notice dated 9.12.1989 or
postponement of date of accrual of cause of action on account of
respondent's alleged denial as to its receipt even though the said
finding of Majority Arbitrators that the letter dated 9.12.1989
seeking the appointment of arbitrator was not received by the
respondents is perverse and is extraneous to the evidences available
on record and hence the same is liable to be set aside.

E. Because the Ld. Majority Arbitrators have failed to appreciate
that the Arbitration Clause as contained in the agreement between
the parties was invoked by the claimant on 9.12.1989. However, no
nominee arbitrator was appointed by the respondent and as such the
claimant got a right to approach the institute of Engineers for such
appointment on the expiry of 60 days from the receipt of the notice
of invocation. The claimant chose to sleep over its rights and did
not pursue the matter any further for over four and half years
thereby the right of the claimant seeking the appointment of
arbitrator became time barred

F. Because the Majority Arbitrators has failed to appreciate that on
10.5.1994 when the claimant once again sought to invoke the
arbitration clause as contained in the agreement between the parties
the claims had already become time barred by virtue of laps of over
five years from the date of accrual of cause of action in favour of
the claimant.

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G. Because the cause for arbitration had already accrued before
09.12.89 and the cause for making an application to the President,
Institution of Engineers, India, accrued on the expiry of sixty days
from 9.12.89 i.e., on 06.02.90. The period of limitation for such an
application is three years (Art. 137 of Limitation Act) and the
claimant allowed it to expire. The one sided volley of letters was
thus of no avail. As observed by the Hon'ble Supreme Court in
Major Inder Singh Vs. DDA, 1988 (2) Arb. Law Reporter 270, a
party cannot postpone the accrual of cause of action by writing
reminders or sending reminders. And above all the period of
limitation for approaching the President having begun to run on
06.02.90 nothing could stop it from running.

J. Because the majority arbitrator mis-conducted themselves and
the proceedings by not appreciating that the correspondence
between the parties and especially the letter dated 21.06.1988 of the
respondent show that differences/disputes as regards the claims of
the contractor had already arisen which fact is further substantiated
by the letter of invocation of arbitration dated 9.12.1989.

K. Because the Learned Majority Arbitrator failed to appreciate
that the cause of action for invoking arbitration and for
appointment of arbitrators is different and is governed by different
articles of the Schedule to the Limitation Act. For invoking
arbitration, the same is governed by Article 18 i.e. when the work
is done which is 4.08.1987 in the present case and for appointment
of arbitrator, the same is governed by Article 137 Le. when the
right to apply accrues which in the present case is 6.02.1990 (on the
expiry of 60 days from the date of invocation of arbitration). Thus,
the contractor failed to establish that any steps were taken to
constitute arbitral tribunal till 10.05.1994, on which date it sought
to refer stale claims to a tribunal which had no jurisdiction and
sanctity as their appointment in itself had become barred by time.
However, the minority award of Justice .M.C. Agarwal (Retd.) was
completely right in holding the claims as well as appointment being
barred by time.
....."
(emphasis supplied)

83. Significantly, a bare reading of the averments made via said
objections indicates that the Defendant did not, in clear or categorical
terms, deny receipt of the letter dated 09.12.1989. On the contrary,
several averments appear to proceed on the implicit premise that such
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Notice had been issued and had triggered the subsequent sequence of
events.
84. Indeed, the Defendant went to the extent of assailing the finding
of the learned Arbitral Tribunal that the said Notice had not been
received, thereby adopting a stance which is not entirely consistent
with its present contentions, which were made by the Defendant
before this Court during the hearing on 04.02.2026, that the Plaintiff‟s
Notice dated 08.12.1989 was never delivered to the Defendant.
85. This incongruity demonstrates that the position now canvassed
by the Defendant, during oral arguments, is not in consonance with its
pleadings on record.

86. It is equally necessary to examine the stand taken by the
Plaintiff, particularly in its Reply to the said IA No. 5570/2009 .
87. The Plaintiff, in its pleadings filed in response to IA No.
5570/2009 , while controverting the averments made by the Defendant
therein, repeatedly asserted that, even according to the Defendant‟s
own case, the letter dated 09.12.1989 had never been received.
88. The Plaintiff, in fact, repeatedly relied upon the aforesaid
position and went to the extent of asserting that the contractual
mechanism for appointment of arbitrators, which presupposed receipt
of the Notice invoking arbitration, had itself never been triggered. For
ready reference, the relevant portion of the said IA is reproduced
hereunder:
“ B. Parawise reply
*
5.(iv) Save and except to admit only what are matters of record,
contents of rest of paragraph no. 5 (iv) of the Objections, which are
not matters of record and which refer to documents which were not
before the Ld. Arbitral tribunal, are denied. Defendant is put to
strict proof of its averments. In order to avoid duplication of
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narration already made, Applicant seeks liberty to refer to and reply
upon its pleadings, documents, evidence, arbitral proceedings and
findings made on facts and law in the arbitral award given by the
majority.
It is submitted that as per Defendant's own version, it did not
receive that letter-dated 9.12.1989.

5.(v) Save and except to admit only what are matters of record,
contents of rest of paragraph no. 5 (v) of the Objections, which are
not matters of record and which refer to documents which were not
before the Ld. Arbitral tribunal, are denied. Defendant is put to
strict proof of its averments. In order to avoid duplication of
narration already made, Applicant seeks liberty to refer to and reply
upon its pleadings, documents, evidence, arbitral proceedings and
findings made on facts and law in the arbitral award given by the
majority.
It is submitted that as per Defendant's own version, it did not
receive that letter-dated 9.12.1989, hence clause 26.6.1.1 of the
GCC did come into play. It presupposes receipt of such notice. It
reads as under:
"26.6.1.1 The arbitration shall be conducted by three
arbitrators, one each to be nominated by the Contractor
and the owner and the third to be named by the President
of the Institution of Engineers, India, if either of the
parties fails to appoint its arbitrator within sixty (60) days
after receipt of a notice from the other party invoking the
arbitration clause, the President of the Institution of
Engineer, India, shall have the power at the request of
either of the parties, to appoint the arbitrator. A certified
copy of the said President making such an appointment
shall be furnished to both the parties."
In view of the requirement of the said sub clause, all the alleged
averments of the Defendant in the instant paragraph are de horse
their own document on record.

5. (vi) Save and except to admit only what are matters of record,
contents of rest of. paragraph no. 5 (vi) of the Objections, which
are not matters of record and which refer to documents which were
not before the Ld. Arbitral tribunal, are denied. Defendant is put to
strict proof of its averments. In order to avoid duplication of
narration already made, Applicant seeks liberty to refer to and reply
upon its pleadings, documents, evidence, arbitral proceedings and
findings made on facts and law in the arbitral award given by the
majority.
In order to avoid duplication, Applicant craves liberty to refer to
reply made hereinabove to paragraph no. 5(v). It is additionally
submitted that no limitation as alleged started from any alleged date
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as has been suggested. It is denied that parties were not negotiating
or there are no material placed on record in this regard. Applicant
has filed copy of detailed affidavit supported by documents along
with its rejoinder. This affidavit was filed by the Applicant in the
suit no. 2065A of 1995. The said version was again reiterated in
these proceedings by the same person who was negotiating the said
payments by way of his affidavit in evidence. No question was put
to him to unsettle his version. Even Defendant's letter dated
2.6.1994 issued in response to letter-dated 10.5.1994, which
invoked arbitration, did not record their instant stand. They did not
object to the said invocation and agreed to appoint their nominee.
Further, rather than filing suit under section 33 of the Act, they
chose to file suit no. 2065A of 1995 only under section 5, 11 and
12.
*
D, E, F, G.
Contents of Ground D, E, F, G of the Objection are denied. The
alleged version set out in the instant objection was not even spelt
out by the Defendant in its reply to the statement of claim. As is
stated in their reply to statement of claim, Defendant state that
Applicant raised first bill on 11.6.1985 and thereafter on 6.3.1989.
Going beyond that, as is recorded in the cross examination of
defendant's witness dated 8.5.2007 that even on that date Defendant
had not prepared their final bill as against the final bill of the
Applicant. Without prejudice, in any case, bill dated 6.3.1989 was
within three years of 4.8.1986, when defendant took over the
system from the Applicant. Still even otherwise, bills dated
11.6.1986 and 6.3.1989 were identical and dealt with, inter alia,
admitted extra items consumed and price variation thereon. It is
denied that any alleged cause of action started to run from
9.12.1989 or that arbitration was invoked on that date as alleged or
at all. Clear findings of facts have been given in the Award by the
Majority where Ld. Arbitrators record that Defendant stated before
Hon'ble High Court in OPM No. 16 of 2005 that they had not
received the communication dated 9.12.1989. That in their
admission / denial before the arbitral tribunal, they denied having
received this letter. Unless Defendant first withdraws its pleading
and document supported by affidavit, it is wrong to suggest that the
findings of the Ld. Arbitrator are wrong or perverse. In terms of the
referred to clause, time to appoint arbitral tribunal would run only
when such letter has first been received by the other party and such
party refused or omitted to act. Here such party did not receive in
the first place. It is denied that any finding of facts is de horse the
evidence on record. It is denied, therefore, that as on 10.5.1994,
claims had become time barred as alleged or at all. It is denied that
Major Inder Singh Rekhi judgment at all helps Defendant to put
across the alleged point. This very judgment says that when other
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party did not finalize the bill, how can it say that cause of action
had arisen. In this case, Defendant's witness admits that even till
date of his cross-examination in the arbitral proceedings, Defendant
had not prepared their final bill based on the their own
measurement. Defendant is put to strict proof of all its alleged
averments.
*
K. Contents of Ground K of the Objection are denied. It is denied
that Article 18 of schedule to the Limitation Act applies either to
the facts of the case or in the manner Defendant seeking it to.
Defendant is put to strict proof thereof. Without prejudice, it was
never a case of defendant before the arbitral tribunal, which it is
seeking to project now. Admitted facts of the case is that Defendant
took over the system on 4.8.1986, final bill by Applicant was raised
on 6.3.1989, this bill was never disputed, Defendant are on record
to state that letter dated 9.12.1989 was not received by them,
arbitration was invoked on 10.5.1994 to which Defendant
responded by their letter dated 2.6.1994 stating that they were in
the process of nominating their arbitrator, as on 8.5.2007 during
cross examination Defendant witness admits that Defendant had till
date not prepared any final bill. Without prejudice, while
discussing issue no. 1 dealing with limitation, Ld. Arbitrators have
devoted as many as 14 pages. Save and except to make some vague
proposition, Defendants have not been able to point out where such
analysis of fact or law was wrong.
......"
(emphasis supplied)

89. A careful reading of the Plaintiff‟s reply to IA No. 5570/2009
thus reveals that the Plaintiff itself had, in its pleadings, unequivocally
endorsed the position that the Defendant had not received the Notice
dated 09.12.1989. This stand of the Plaintiff has not been confined to
a single pleading but exists at numerous places.
90. Although written submissions do not strictly constitute
pleadings, it is nonetheless relevant to note that even in its Written
Submissions filed prior to the Judgment dated 12.03.2019 passed by
the learned Coordinate Bench in the present case, in the earlier round
of the adjudication, the Plaintiff reiterated the same position, namely ,
that the Defendant had not received the said Notice.
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91. It is also pertinent to note that substantially similar pleadings
had been adopted by the parties in CS(OS) No. 72/2009 , which was
filed challenging the same Impugned Award and ultimately came to
be disposed of on technical grounds. It is pertinent to note that the
entire record of CS(OS) No. 72/2009 already forms part of the present
proceedings.
92. As noted hereinabove in relation to the inconsistent stands
adopted by the Defendant, it is evident that the position taken by the
Plaintiff in its pleadings also stands in stark contrast to the
submissions advanced on behalf of the Plaintiff during the course of
arguments before this Court on 04.02.2026. During the hearing, a
vehement attempt was made by the Plaintiff to contend that the Notice
dated 09.12.1989 had, in fact, been duly served upon the Defendant.
93. Such a volte-face is clearly inconsistent with the Plaintiff‟s own
pleadings forming part of the record.
94. The cumulative effect of the above analyses is that both parties
have, at different stages of the proceedings, taken inconsistent and
mutually contradictory positions on the question of receipt of the
Notice dated 09.12.1989. While their written Pleadings indicate one
position, their oral submissions before this Court on 04.02.2026
reflect a diametrically opposite stance. Such conduct, whereby parties
approbate and reprobate to suit their immediate convenience, cannot
be countenanced.
95. The underlying reason for such shifting and self-serving stands
adopted by the parties is also apparent from the record.
96. After the learned Arbitral Tribunal held that the substantive
claims advanced by the Plaintiff were within the prescribed period of
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limitation, the Defendant, while filing its objections by way of IA No.
5570/2009 before this Court, chose to structure its challenge primarily
around the issue of delay in the reference of disputes/claims to
arbitration. For the purposes of advancing such a contention, it was
strategically advantageous for the Defendant not to seriously and
categorically dispute either the issuance or the service of the Notice
dated 09.12.1989 by the Plaintiff upon the Defendant.
Correspondingly, the Plaintiff, while responding to the said
objections, adopted a position substantially aligned with that stance.
97. However, the position materially changed once the dispute
travelled to the Hon‟ble Supreme Court after the decisions rendered
by the learned Coordinate Bench and the Division Bench.
98. The Hon‟ble Supreme Court, vide Order dated 18.12.2024,
remanded the matter to this Court while leaving all issues concerning
the dispute open for consideration, except the issue relating to the
delay in the reference of disputes to arbitration.
99. Consequent thereto, both parties altered their respective stands
concerning the service of the Plaintiff‟s Notice dated 09.12.1989.
100. After the remand by the Hon‟ble Supreme Court, since this
Court was no longer required to adjudicate upon the aspect of delay in
the reference of disputes, the controversy concerning limitation
assumed significance from an entirely different perspective, namely ,
whether the substantive claims themselves were barred by limitation.
101. In that backdrop, asserting due service of the Notice dated
09.12.1989 became advantageous to the Plaintiff, whereas disputing
such service became beneficial to the Defendant. The Defendant, on
the basis of alleged non-service of the said Notice, sought to contend
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that the arbitral proceedings had not been validly invoked within the
prescribed limitation period and, consequently, the substantive claims
themselves were barred by limitation. On the other hand, the Plaintiff
opposed the said contention by asserting that the Notice dated
09.12.1989 had in fact been duly served upon the Defendant and,
therefore, the arbitration proceedings stood invoked within three years
from the accrual of disputes in terms of Section 37(3) of the 1940 Arb
Act, thereby keeping the substantive claims within limitation.
102. It is in these circumstances that both parties chose to take a
complete volte-face from the pleadings previously filed by them in the
present case and advanced submissions before this Court, on
04.02.2026, that were materially inconsistent with their earlier stands
already forming part of the record.

E. Nature of the Pleadings in the Defendant’s Objections and
the Plaintiff’s Response Thereto Being Contrary to the Principles
of Pleadings Mandated in Law

103. Besides the inconsistencies between the Pleadings of the parties
and the oral submissions advanced before this Court on 04.02.2026,
this Court also finds that the Pleadings contained in the Defendant‟s
objections to the Impugned Award and the Plaintiff‟s response thereto
do not conform to the settled principles governing pleadings under
law.
104. The manner in which the Pleadings have been made by both
parties, particularly in relation to material and foundational facts,
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reflects a lack of precision, clarity, and consistency as mandated under
15
the Code of Civil Procedure, 1908 .
105. It is a settled principle of law that the rules relating to pleadings,
as embodied in the CPC, are equally applicable to applications and
proceedings of a civil nature, unless expressly excluded either by
statute or by necessary implication.
106. It is necessary to note here that the principles governing
pleadings, especially for the proceedings of the present nature, are not
mere procedural formalities, but are intended to ensure certainty,
fairness, and clarity in adjudication by requiring parties to clearly
disclose the factual basis of their claims and defences.

107. Consequently, the principles contained in Orders VI to VIII of
the CPC would govern the pleadings advanced by the Defendant
while objecting to the Impugned Award in IA No. 5570/2009 , as well
as the Plaintiff‟s Reply filed in response thereto.
108. The Pleadings of both parties were, therefore, required to
clearly and specifically disclose the material facts relied upon by
them, particularly in relation to disputed foundational issues having a
direct bearing on limitation, maintainability, and the validity of the
arbitral proceedings. Equally, any denial to the averments of the
opposite party was required to be specific and unambiguous, and not
vague, evasive, or capable of multiple interpretations.
109. The relevant provisions of Orders VI to VIII of the CPC
governing the principles of pleadings, which are applicable in the facts
and circumstances of the present case, are extracted herein below for
ready reference:

15
CPC
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“…..
ORDER VI
Pleadings generally

2. Pleading to state material facts and not evidence. - (1) Every
pleading shall contain, and contain only, a statement in a concise
form of the material facts on which the party pleading relies for his
claim or defence, as the case may be, but not the evidence by which
they are to be proved.
(2) Every pleading shall, when necessary, be divided into
paragraphs, numbered consecutively, each allegation being, so far
as is convenient, contained in a separate paragraph.
(3) Dates, sums and numbers shall be expressed in a pleading in
figures as well as in words.

7. Departure. - No pleading shall, except by way of amendment,
raise any new ground of claim or contain any allegation of fact
inconsistent with the previous pleadings of the party pleading the
same.

ORDER VII
Plaint

1. Particulars to be contained in plaint. - The plaint shall contain
the following particulars: -
(a) the name of the Court in which the suit is brought;
(b) the name, description and place of residence of the plaintiff;
(c) the name, description and place of residence of the defendant, so
far as they can be ascertained;
(d) where the plaintiff or the defendant is a minor or a person of
unsound mind, a statement to that effect;
(e) the facts constituting the cause of action and when it arose;
(f) the facts showing that the Court has jurisdiction;
(g) the relief which the plaintiff claims;
(h) where the plaintiff has allowed a set-off or relinquished a
portion of his claim, the amount so allowed, or relinquished; and
(i) a statement of the value of the subject-matter of the suit for the
purposes of jurisdiction and of court-fees, so far as the case admits.

8. Relief founded on separate grounds.- Where the plaintiff seeks
relief in respect of several distinct claims or causes of action
founded upon separate and distinct grounds, they shall be stated as
far as may be separately and distinctly.


ORDER VIII
Written statement, set-off and counter-claim
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3. Denial to be specific. - It shall not be sufficient for a defendant
in his written statement to deny generally the grounds alleged by
the plaintiff, but the defendant must deal specifically with each
allegation of fact of which he does not admit the truth, except
damages.

4. Evasive-denial. - Where a defendant denies an allegation of fact
in the plaint, he must not do so evasively, but answer the point of
substance. Thus, if it is alleged that he received a certain sum of
money, it shall not be sufficient to deny that he received that
particular amount, but he must deny that he received that sum or
any part thereof, or else set out how much he received. And if an
allegation is made with diverse circumstances, it shall not be
sufficient to deny it along with those circumstances.

5. Specific denial. – (1) Every allegation of fact in the plaint, if not
denied specifically or by necessary implication, or stated to be not
admitted in the pleading of the defendant, shall be taken to be
admitted except as against a person under disability:
Provided that the Court may in its discretion require any fact so
admitted to be proved otherwise than by such admission.
(2) Where the defendant has not filed a pleading, it shall be lawful
for the court to pronounce judgment on the basis of the facts
contained in the plaint, except as against a person under a disability,
but the Court may, in its discretion, require any such fact to be
proved.
(3) In exercising its discretion under the proviso to sub-rule (1) or
under sub-rule (2), the Court shall have due regard to the fact
whether the defendant could have, or has, engaged a pleader.
(4) Whenever a judgment is pronounced under this rule, a decree
shall be drawn up in accordance with such judgment and such
decree shall bear the date on which the judgment was pronounced.”
(emphasis supplied)

110. As extracted in the preceding head of this judgment, a bare
perusal of the Pleadings contained in the said IA and the Reply filed
thereto makes it ex facie evident that the averments made by the
parties do not strictly conform to the mandate of the CPC concerning
pleadings. The Pleadings, read as a whole, reveal ambiguity and
inconsistency on material factual issues which were required to be
specifically and unequivocally pleaded.
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111. This becomes particularly apparent in relation to the most
crucial disputed question of fact arising in the present case, namely ,
the issue concerning the alleged service of the Plaintiff‟s Notice dated
09.12.1989, purportedly invoking arbitration in terms of Section 37(3)
of the 1940 Arb Act. The said issue constitutes a foundational fact
having a direct bearing on the question whether the arbitral
proceedings were validly invoked within the prescribed period of
limitation.
112. However, the pleadings of the parties on the aforesaid factual
issue, instead of containing clear, categorical, and specific assertions
or denials, disclose vague and equivocal averments. The parties have
not dealt with the said issue concerning the issuance and service of the
Notice dated 09.12.1989 with the degree of precision mandated under
the CPC.
113. Such Pleadings clearly fall short of the standards contemplated
under the law governing pleadings, which requires certainty,
specificity, consistency, and clarity in relation to material factual
assertions, particularly where such facts have a direct bearing on
issues relating to limitation, maintainability, and jurisdiction.

F. Alteration of Averments in Pleadings Must Be Strictly in
Accordance with Law

114. As noted hereinabove, the pleadings advanced by the
Defendant, while assailing the Impugned Award in IA No. 5570/2009 ,
as also the Pleadings contained in the Plaintiff‟s Reply filed in
response thereto, are found to be materially at variance with the
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submissions subsequently advanced on behalf of the respective parties
during the course of oral hearing before this Court.
115. It is trite principle of law that parties are bound by their
pleadings and cannot travel beyond the scope thereof. The purpose of
pleadings is to delineate with precision the case set up by each party
so as to afford the opposite side a fair opportunity of meeting the
same. Consequently, no party can be permitted to introduce, at the
stage of oral arguments, a factual contention or legal foundation
inconsistent with, contrary to, or beyond the case originally pleaded.
In the event of any inconsistency between oral submissions and the
written pleadings on record, the pleadings must necessarily prevail,
since the adjudicatory process is required to proceed on the basis of
the case formally pleaded before the Court and not on shifting or
fluctuating stands adopted during the course of arguments.
116. It is equally well settled that although a party may, in an
appropriate case, alter, modify, or clarify its stand, such alteration can
only be effected in the manner recognised by law, namely , through a
duly permitted amendment of pleadings. Order VI Rule 7 of the CPC
expressly prohibits a party from departing from its earlier pleadings or
introducing inconsistent allegations except by way of amendment. The
said provision reads as follows:
“ 7. Departure. - No pleading shall, except by way of amendment,
raise any new ground of claim or contain any allegation of fact
inconsistent with the previous pleadings of the party pleading the
same.”

117. The object underlying the aforesaid provision is to ensure
certainty, consistency, and fairness in the adjudicatory process.
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118. In the present case, admittedly, neither party has sought any
amendment of its Pleadings in conformity with the mandate of Order
VI Rule 7 of the CPC. In the absence thereof, the parties cannot be
permitted to rely upon factual assertions that are inconsistent with
their original Pleadings. Accordingly, both parties remain bound by
the Pleadings as filed before this Court, and the disputes arising herein
are liable to be examined strictly within the confines thereof.
119. At this stage, it is also pertinent to note that the nature and
extent of judicial scrutiny exercisable by a Court under the 1940 Arb
Act is materially wider than the limited supervisory jurisdiction
contemplated under the 1996 Arb Act. Proceedings arising out of
awards rendered under the 1940 Arb Act are not circumscribed by the
narrow grounds of interference now embodied under Section 34 of the
1996 Arb Act.
120. Rather, under the scheme of the 1940 Arb Act, read conjointly
with the applicable provisions of the CPC, the Court possesses
comparatively broader authority to independently scrutinise the
findings and conclusions recorded by the learned Arbitral Tribunal,
including the legality and sustainability of the award on facts and law.
Consequently, while examining the present matter arising under the
1940 Arb Act, this Court is fully empowered to assess the rival
pleadings, scrutinise the findings returned by the learned Arbitral
Tribunal, and determine the issues arising herein on the basis of the
material properly forming part of the record in accordance with law.

G. Determination of Limitation in Respect of the Plaintiff’s
Substantive Claims Solely on the Basis of the Pleadings Before
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This Court, Irrespective of Any Inconsistent Positions Adopted by
the Parties

121. At this stage, the only substantive and determinative issue that
survives for consideration on merits is whether the substantive claims
raised by the Plaintiff before the learned Arbitral Tribunal were within
the prescribed period of limitation.

122. Since the findings returned by the learned Arbitral Tribunal on
this issue are found to be erroneous and legally unsustainable, this
Court is duty-bound to independently examine and determine the
same, strictly on the basis of the Pleadings of the parties, the material
and evidence available on record, and the settled principles of law
governing limitation under the 1940 Arb Act, read with the provisions
of the Limitation Act.
123. Upon a careful, comprehensive, and holistic consideration of
the factual matrix emerging from the Pleadings filed by the parties
before this Court, the scrutiny undertaken in the preceding portions of
the present judgment, and the documents and evidence forming part of
the record, the following material aspects emerge with sufficient
clarity:

(i). The present adjudication is confined solely to the question of
limitation in respect of the Plaintiff‟s substantive claims, which
formed the subject matter of adjudication before the learned
Arbitral Tribunal.
(ii). The conclusion returned by the learned Arbitral Tribunal that
the Plaintiff‟s substantive claims were within the prescribed
period of limitation is, upon judicial scrutiny, found to be
legally unsustainable and erroneous. Consequently, this Court is
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required to independently re-examine the issue in light of the
Pleadings before this Court and the governing legal principles
applicable thereto.
(iii). The scope of examination exercisable by this Court in
proceedings arising under the 1940 Arb Act, read with the CPC,
is comparatively wider and more substantive than the limited
supervisory jurisdiction contemplated under the 1996 Arb Act.
Accordingly, this Court is competent to independently
scrutinize the findings recorded by the learned Tribunal,
particularly where such findings pertain to limitation and
jurisdictional legality.

(iv). The parties remain bound by their pleadings and cannot be
permitted to travel beyond the same except in accordance with
the law. Any departure from the original pleadings could only
be effected through amendment in the manner known to the
law. In the event of inconsistency between oral submissions and
written pleadings, the pleadings on record must prevail.
(v). It is a settled principle of law that once a claimant asserts its
claims and the opposite party either expressly repudiates the
same or fails to respond within a reasonable period, the cause of
action accrues at that stage. Such accrual cannot be postponed
indefinitely merely because the claimant continues issuing
reminders or exchanging correspondence. In determining the
limitation in arbitration matters, the Court is required to identify
the “ breaking point ”, namely , the stage at which a reasonable
party would cease to expect amicable resolution and would
reasonably contemplate initiation of arbitral proceedings. Such
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a “ breaking point” constitutes the point from which the
limitation begins to run.
(vi). Had the Plaintiff succeeded in establishing due service of its
Notice dated 09.12.1989 upon the Defendant, the said Notice
would have constituted a valid invocation of arbitration within
the meaning of Section 37(3) of the 1940 Arb Act, and the issue
of limitation may not have arisen in the present form. However,
since the factum of service of the said Notice has itself become
the central and determinative controversy in the present
proceedings, the same necessarily falls for adjudication strictly
in accordance with law and the evidentiary material on record.

(vii). Since the finding of the learned Arbitral Tribunal on limitation
has been found to be erroneous, and the present proceedings
arise in the context of making the Impugned Award the Rule of
the Court, the burden squarely rests upon the Plaintiff, being the
beneficiary under the Impugned Award, to satisfy this Court
that the substantive claims raised before the learned Arbitral
Tribunal were within the prescribed period of limitation
reckoned from the accrual of cause of action.
(viii). Upon scrutiny of the Pleadings, particularly the Reply filed by
the Plaintiff to IA No. 5570/2009 , this Court finds that the
Plaintiff has failed to place cogent and affirmative material
establishing service of the Notice dated 09.12.1989 upon the
Defendant. Rather than furnishing specific particulars and
positive evidence demonstrating due service, the Pleadings
proceed on vague and generalized assertions. Significantly,
there is even no categorical and unequivocal denial in respect of
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the service of the said Notice. Therefore, having regard to the
mandate of Order VIII Rules 3, 4, and 5(1) of the CPC, the
absence of specific and necessary denial assumes legal
significance and supports the inference that the Plaintiff has
failed to establish lawful service of the Notice dated 09.12.1989
upon the Defendant. As a necessary corollary, the said Notice
cannot be treated as having validly invoked arbitration under
Section 37(3) of the 1940 Arb Act.
(ix). It is equally well settled that the initial burden squarely rested
upon the Plaintiff to independently establish, on the strength of
its own Pleadings, evidence, and material placed before this
Court, that the substantive claims raised before the learned
Arbitral Tribunal were within the prescribed period of
limitation. The Plaintiff cannot discharge such burden merely
by relying upon any alleged weaknesses, omissions,
inconsistencies, or deficiencies in the Defendant‟s case.
(x). In the considered opinion of this Court, the Plaintiff has
miserably failed to discharge the burden cast upon it in law with
respect to establishing valid service of the Notice dated
09.12.1989 upon the Defendant.
(xi). Proceeding, therefore, on a demurrer and adopting the best
possible view in favour of the Plaintiff, it becomes evident that,
if not earlier, the disputes between the parties had
unquestionably crystallized by the time the Plaintiff issued the
Notice dated 09.12.1989 seeking the invocation of arbitration.
For the limited purpose of determining the stage at which the
disputes had crystallized and the “ breaking point ” had arisen
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between the parties, it is not necessary that the said Notice must
also have been duly served upon the Defendant. The very
issuance of such Notice by the Plaintiff itself unequivocally
demonstrates that, by that stage, the disputes had attained
finality from the Plaintiff‟s own perspective and that the
possibility of amicable settlement was no longer reasonably
contemplated.
(xii). It is an undisputed fact that the Plaintiff thereafter issued a fresh
Notice dated 10.05.1994, invoking arbitration. Unlike the
earlier Notice, the said Notice dated 10.05.1994 was admittedly
received by the Defendant, who also responded thereto vide
Reply dated 02.06.1994.
(xiii). Consequently, it stands established that the arbitral proceedings,
in the eyes of law, can only be said to have been validly
invoked upon and from the exchange of correspondence
culminating in the Defendant‟s acknowledged receipt of the
Plaintiff‟s Notice dated 10.05.1994 invoking arbitration,
followed by the Defendant‟s Reply thereto dated 02.06.1994. It
is only at this stage that the statutory requirement contemplated
under Section 37(3) of the 1940 Arb Act can be said to have
been duly satisfied.
(xiv). In this backdrop, once the cause of action is taken to have
arisen, at the latest, on 09.12.1989, being the identified
“ breaking point ”, and the valid invocation of arbitration
occurred only in May-June 1994 within the meaning of Section
37(3) of the 1940 Arb Act, there exists an intervening gap of
more than four and a half years. Such a delay is clearly beyond
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the prescribed period of limitation of three years. Consequently,
the substantive claims raised by the Plaintiff before the learned
Arbitral Tribunal were ex facie barred by limitation.
124. The last residual question which comes for consideration of this
Court is whether there exists any material on record capable of legally
extending, suspending, or postponing the aforesaid “ breaking point ”
identified as 09.12.1989.
125. Upon careful consideration of the submissions advanced on
behalf of the Plaintiff, this Court finds that no such legally sustainable
material has been brought to its notice by either of the parties.
126. This Court has, nevertheless, independently undertaken a
comprehensive scrutiny of the entire record, including the arbitral
proceedings and the contemporaneous correspondence exchanged
between the parties during the relevant period. However, such
examination does not disclose the existence of any document,
acknowledgment, admission, or legally recognizable circumstance
during the period between 09.12.1989 and 10.05.1994 which could
operate to extend, suspend, or save limitation within the meaning of
the Limitation Act.
127. It is well settled that extension of limitation is not a matter of
inference or equitable consideration but must strictly satisfy the
statutory requirements contemplated under law. The Limitation Act
recognizes only specific circumstances for extension or renewal of
limitation, such as a clear and unambiguous acknowledgment of
liability in writing within the meaning of Section 18 of the Limitation
Act or any other circumstance expressly recognized by statute. Mere
exchange of correspondence, unilateral communications, repeated
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reminders, or vague assertions lacking acknowledgment of liability
cannot be elevated to the status of a legally valid acknowledgment so
as to arrest or renew the running of limitation.
128. In the present case, although there are certain communications
during the intervening period, a closer scrutiny thereof reveals that
such communications are omnibus and generalized in nature and do
not contain any acknowledgment of subsisting liability on the part of
the Defendant.
129. In the absence of any legally sustainable ground for exclusion,
suspension, or extension of time, the period of limitation necessarily
falls to be computed in the ordinary course from the identified
“breaking point ”, namely , 09.12.1989. Consequently, the Plaintiff
cannot derive any benefit from the aforesaid communications, and the
substantive claims raised before the learned Arbitral Tribunal remain
hopelessly barred by limitation.

DECISION:
130. In view of the foregoing discussion and the detailed analysis
undertaken by this Court on the issue of limitation concerning the
Plaintiff‟s substantive claims, which remained the sole issue pressed
and contested by the parties after the Order dated 18.12.2024 passed
by the Hon‟ble Supreme Court, this Court arrives at a definitive and
considered conclusion that the substantive claims preferred by the
Plaintiff before the learned Arbitral Tribunal were ex facie barred by
limitation.
131. As elaborately discussed hereinabove, the disputes between the
parties had crystallized, and the cause of action had arisen, at the
latest, on 09.12.1989, which has been identified as the relevant
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“ breaking point ” for the purposes of computation of limitation.
However, the arbitral proceedings, in the eyes of the law and within
the meaning of Section 37(3) of the 1940 Arb Act, can only be said to
have been validly invoked in May-June 1994. The intervening period
of more than four and a half years is clearly beyond the statutorily
prescribed period of limitation of three years. Further, the Plaintiff has
failed to establish any legally sustainable ground for extension,
exclusion, suspension, or saving of limitation under the provisions of
the Limitation Act. Consequently, the findings returned by the learned
Arbitral Tribunal holding the Plaintiff‟s claims to be within limitation
are legally untenable.

132. In the aforesaid circumstances, the Impugned Award cannot be
sustained in the eyes of the law and is accordingly set aside. The
present suit, being CS(OS) 549/2009 , stands dismissed accordingly.
133. Before parting with the present matter, this Court deems it
necessary to take cognizance of the manner in which the parties have
conducted themselves throughout the course of the present litigation.
134. The record reveals that the dispute has traversed multiple
forums over a prolonged period of time, commencing before the
learned Single Judge, thereafter proceeding before the Division
Bench, subsequently reaching the Hon‟ble Supreme Court, and
ultimately returning to this Court for adjudication pursuant to the
remand Order passed by the Hon‟ble Supreme Court. Such prolonged
litigation, though not entirely uncommon in complex commercial and
arbitral disputes, nevertheless casts a corresponding obligation upon
the parties to maintain fairness, consistency, precision, and candour in
their pleadings and submissions before every judicial forum.
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135. In the present case, this Court cannot overlook that both parties
have adopted shifting and mutually inconsistent stands, particularly on
a foundational factual issue, namely , the receipt and service of the
Plaintiff‟s Notice dated 09.12.1989. On 04.02.2026, pursuant to the
directions issued by the Hon‟ble Supreme Court, this Court accorded
priority to the present matter and heard the parties extensively and at
considerable length.
136. However, while formulating the present judgment upon a
detailed scrutiny of the entire record, which is considerably old,
voluminous, and bulky in nature, this Court finds that the written
Pleadings and the oral submissions advanced on behalf of both parties
are not only inconsistent inter se but also materially deviate from their
earlier positions reflected on record. Such conduct, in the considered
opinion of this Court, has unnecessarily complicated and prolonged
the adjudicatory process and has resulted in avoidable consumption of
judicial time and resources, particularly in a system already burdened
with substantial pendency of cases.
137. This Court is further of the considered view that had both
parties acted with greater fairness and adhered strictly to the settled
principles governing pleadings under law, and had the submissions
advanced before the learned Coordinate Bench, the Division Bench
and the Hon‟ble Supreme Court remained confined to and consistent
with the averments contained in such Pleadings, there may not have
arisen any necessity for a second round of adjudication of the present
matter before this Court pursuant to the remand order of the Hon‟ble
Supreme Court.
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138. In these circumstances, this Court is of the considered and
inescapable opinion that both parties must bear the consequences of
their conduct in the present proceedings. Accordingly, costs are
imposed upon both the Plaintiff and the Defendant, quantified at
Rs. 2,50,000/- (Rupees Two Lakhs and Fifty Thousand only) each .
139. The said amounts shall be deposited by the respective parties
within a period of four (04) weeks from the date of the present
judgment with the Delhi High Court Legal Services Committee .
140. In the event of failure on the part of either of the parties to
comply with the aforesaid directions within the stipulated period, the
Registry of this Court is directed to list the present matter before this
Court upon expiry of the said period for passing appropriate orders in
accordance with law.
141. The present Suit, along with the objections preferred by the
Defendant, stands disposed of in the aforesaid terms.


HARISH VAIDYANATHAN SHANKAR, J.
MAY 12, 2026/sm/sg

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