Limitation for appointing an arbitrator begins only after the contractual dispute-resolution mechanism is exhausted.

The Appellant invited bids for construction of a Disaster Management and Training Centre at Rajokari, New Delhi. The Respondent’s bid was accepted for a tendered value of ₹3,73,98,625, with the work scheduled for completion within 120 days from 12 November 2014.

Although the Respondent commenced work on 12 November 2014, the work was completed on 7 March 2016, when a Completion Certificate was issued while reserving the Appellant’s right to claim delay damages.

The Respondent subsequently sought extension of time, which was granted on 9 January 2017 subject to protest. The final bill was submitted on 31 January 2018, although the contract required it to be submitted within the stipulated period following physical completion or the Final Certificate of Completion.

Under Clause 25 of the GCC, disputes were required to pass through successive stages involving the Superintendent Engineer, Chief Engineer and Dispute Redressal Committee before arbitration could be invoked.

The Respondent raised claims in 2019 and ultimately requested appointment of an arbitrator on 15 November 2019.

The Arbitral Tribunal awarded ₹1,42,06,630 in favour of the Respondent.

In proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, the Commercial Court partly set aside the award concerning Watch and Ward Expenses but upheld the remaining claims and the finding on limitation.

The Appellant challenged the decision under Section 37, with limitation being the sole surviving issue.

Whether the Respondent’s claim and invocation of arbitration were barred by limitation on the ground that limitation commenced from the date of completion of work, namely 7 March 2016, or from the date stipulated for submission of the final bill?

Whether Article 18 of the Schedule to the Limitation Act, 1963, or Article 137 thereof governed the limitation period for the Respondent’s application for appointment of an arbitrator?

Whether the contractual dispute-resolution procedure under Clause 25 of the GCC postponed the accrual of the Respondent’s right to apply for appointment of an arbitrator until completion of the prescribed pre-arbitration steps?

The Court exercised its jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996, while examining the limitation issue arising from the award and the Section 34 judgment.

Article 18 of the Schedule to the Limitation Act, 1963, ordinarily prescribes limitation for a suit relating to the price of work done, commencing when the work is done; however, the Court held that it was inapplicable where the contractual completion period was subsequently extended and the right to seek appointment of an arbitrator arose only after compliance with a multi-stage contractual dispute-resolution mechanism.

Article 137, which provides a three-year period from the date when the right to apply accrues, governed the application for appointment of an arbitrator.

Where the contract makes prior administrative or dispute-resolution steps conditions precedent to arbitration, the cause of action for seeking appointment of an arbitrator does not accrue until those steps have been completed.

The Court rejected the Appellant’s contention that limitation commenced on 7 March 2016, the date of physical completion, or on 7 April 2016, the date asserted by the Appellant under Clause 9 of the GCC.

The Respondent’s request for extension of time was approved on 9 January 2017, and the final bill was thereafter submitted on 31 January 2018; moreover, the Appellant had not prepared the final bill despite its obligation to do so if the Respondent failed to submit one.

More importantly, Clause 25 required the Respondent to pursue successive remedies before the Superintendent Engineer, Chief Engineer and DRC before requesting appointment of an arbitrator.

Since the right to apply for appointment of an arbitrator arose only after the contractual procedure had been followed, Article 18 could not be applied by treating completion of the work as the starting point.

The Court therefore applied Article 137 and held that the Respondent’s right to seek appointment of an arbitrator accrued only upon completion of the prescribed contractual stages.

The limitation period did not commence from 7 March 2016, the date of completion of the work, because the completion period had subsequently been extended and Clause 25 required compliance with a contractual pre-arbitration dispute-resolution mechanism.

Article 137, rather than Article 18, governed the limitation applicable to the application for appointment of an arbitrator.

Finding no merit in the appeal, the Court dismissed FAO (COMM) 340/2025 and closed the pending applications.