2022 (4) TMI 1032 - SC - Indian Laws

Maintainability of Arbitration application - time limitation - Entitlement for additional amount for the excess quantity of work done - Section 11(6) of Arbitration and Conciliation Act, 1996 - HELD THAT - It is required to be noted that in the present case, work order was issued on 7.4.1982 and the work/excess work was completed in the year 1986. Even as per the statement of claim, the amount due and payable was under work order dated 7.4.1982, which was executed up to 11.05.1986 and work order dated 15.01.1984 which was executed up to 26.8.1985. Therefore, right to claim the amount, due and payable, if any, can be said to have accrued in the year 1985/1986. Thereafter, the correspondences under the RTI Act had taken from the year 2012 onwards. Thereafter, for the first time, the appellant served a legal notice upon the General Manager, South Eastern Railway on 22.10.2018 requesting either to release the amount which was overdue or to refer the dispute to the arbitrator under clauses 63 64 of GCC under the 1996 Act. The aforesaid legal notice is thereafter followed by three to four letters/communications and thereafter the appellant herein filed the present application under Section 11(6) of the 1996 Act before the High Court in the year 2019. Merely because for the claim/alleged dues of 1985/1986, the legal notice calling upon the respondent to pay the amount due and payable or to refer the dispute to the arbitrator is made after a period of approximately thirty-two years, the appellant cannot be permitted to say that the cause of action to file the application under Section 11(6) of the 1996 Act had accrued in the year 2018/2019. In the present case, the legal notice has been served and the arbitration clause is invoked and request to appoint the arbitrator was made after a period of approximately thirty-two years from the date of completion of work. Therefore, the appellant, who served the legal notice invoking the arbitration clause and requesting for appointment of an arbitrator after a period of approximately thirty-two years, cannot contend that still his application under Section 11(6) of the 1996 Act be considered as the limitation would start from the date of serving the legal notice and after completion of 30 days from the date of service of the legal notice and invoking arbitration clause. The High Court has not committed any error in dismissing the application under Section 11(6) of the 1996 Act on the ground that it is hopelessly barred by limitation and is a stale claim - Petition dismissed.

Summary

Issues:
1. Dismissal of arbitration petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 by the Calcutta High Court on the ground of limitation.

Analysis:
1. The appellant claimed additional payment for excess work done beyond the schedule quantity under work orders issued in 1982 and executed in 1986. Despite multiple requests and legal notices, the amount due was not paid. The appellant sought arbitration under clauses 63 & 64 of General Conditions of Contract (GCC) in 2018 and filed an Arbitration Petition in 2019, which was dismissed by the High Court as time-barred.

2. The appellant argued that the limitation period for filing the application under Section 11(6) of the 1996 Act started after completion of 30 days from serving the legal notice invoking the arbitration clause. Citing the decision in Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited, it was contended that Article 137 of the Limitation Act applies, providing a three-year limitation period from the date the right to apply accrues.

3. The Supreme Court noted that the work was completed in 1986, and the legal notice was served only in 2018, after approximately thirty-two years. The Court emphasized that the delay in invoking arbitration after such a long period cannot reset the limitation period. The Court rejected the appellant's argument that the limitation period starts after serving the legal notice and completion of 30 days, as the delay in initiating arbitration was substantial.

4. The Court distinguished the case from Bharat Sanchar Nigam Limited, stating that the circumstances were different, and that decision did not address situations where arbitration was invoked after a significant delay. The Court upheld the High Court's decision to dismiss the application under Section 11(6) of the 1996 Act as time-barred and a stale claim.

5. Consequently, the Supreme Court found no error in the High Court's decision and dismissed the appeal, stating that the appellant's claim was hopelessly barred by limitation. The Court ruled that the appeal had no merit and ordered no costs to be paid.

This detailed analysis provides a comprehensive overview of the legal judgment, focusing on the dismissal of the arbitration petition on the grounds of limitation and the Supreme Court's reasoning for upholding the High Court's decision.