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TMI Blog2024 (3) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... The determination of the aforesaid question is an exercise involving both law and facts. As is evident from Article 137 of the Limitation Act, 1963, the limitation period for making an application under Section 11(6) of the Act, 1996 is three years from the date when the right to apply accrues. Thus, to determine whether the present petition is barred by limitation, it is necessary to ascertain when the right to file the present petition under Section 11(6) of the Act, 1996 accrued in favour of the petitioner. When does the right to apply under Section 11(6) accrue? - HELD THAT:- The request for appointment of an arbitrator was first made by the petitioner vide notice dated 24.11.2022 and a time of one month from the date of receipt of notice was given to the respondent to comply with the said notice. The notice was delivered to the respondent on 29.11.2022. Hence, the said period of one month from the date of receipt came to an end on 28.12.2022. Thus, it is only from this day that the clock of limitation for filing the present petition would start to tick. The present petition was filed by the petitioner on 19.04.2023, which is well within the time period of 3 years provided by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arisen. Thus, it cannot be said that the claims sought to be raised by the petitioner are ex-facie time-barred or dead claims on the date of the commencement of arbitration - from an exhaustive analysis of the position of law on the issues, while considering the issue of limitation in relation to a petition under Section 11(6) of the Act, 1996, the courts should satisfy themselves on two aspects by employing a two-pronged test first, whether the petition under Section 11(6) of the Act, 1996 is barred by limitation; and secondly, whether the claims sought to be arbitrated are ex-facie dead claims and are thus barred by limitation on the date of commencement of arbitration proceedings. If either of these issues are answered against the party seeking referral of disputes to arbitration, the court may refuse to appoint an arbitral tribunal. The present arbitration petition having been filed within a period of three years from the date when the respondent failed to comply with the notice of invocation of arbitration issued by the petitioner is not hit by limitation - The notice for invocation of arbitration having been issued by the petitioner within a period of three years from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnology, etc. praying for the appointment of an arbitrator for the adjudication of disputes and claims arising from the Contract dated 21.03.2013 entered into between the petitioner and the respondent. A. FACTUAL MATRIX 2. The petitioner, M/s Arif Azim Co. Ltd., is a company based in Afghanistan, having its registered office at 1st Floor, Zarnigar Hotel, Mohammed Jan Khan Watt, Kabul, Afghanistan and is engaged in the business of providing training in computer education, information technology, English language, etc. 3. The respondent, M/s Aptech Limited, is a company having its registered office at Aptech House, A-65, MIDC Marol, Andheri (E), Mumbai 400093, Maharashtra, India and is engaged in the business of providing training and education in information technology through its network in India and abroad. 4. On 21.03.2013, three separate franchise agreements were entered into between petitioner/franchisee and the respondent/franchisor. As per the terms of the said agreements, the petitioner, as the franchisee, was granted a non-exclusive license, by the respondent to establish and operate businesses under the following trade names: I. Aptech English Language Academy (for short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions from the Franchisor from time to time. xxx xxx xxx 3. APPOINTMENT Subject to the terms and conditions of this agreement the Franchisor appoints the franchisee as an independent non-exclusive partner with the right to market and train learners in the territory outlined in Schedule 1. Each party is acting as an independent contractor and not as an agent, partner or joint venture with the other party for any purpose. The franchisee shall bear all costs relating to the marketing and promotion of the courses as outlined in Schedule 2. xxx xxx xxx 8. PAYMENTS AND PAYMENT PROCEDURE 8.01 In consideration of the Franchisor agreeing to grant the licence for the licensed business, in favour of the Franchisee for a period as mentioned in Clause 2 above and for the use of the technical Knowhow, trade marks, trade names, service marks and logos of the Franchisor in relation to its business of computer education and the association of the Franchisee with the reputation and goodwill of the Franchisor, the Franchisee agrees to pay to the Franchisor a Non refundable sum of US$ 30,000 (US Dollars Thirty Thousand only) as initial lumpsum fees. 8.02 If the Franchisee fails to pay the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Agreement (whether or not it has previously been renewed under the provisions of this Clause) the Franchisee may apply to the Franchisor for renewal of this Agreement for further period(s). Provided that the Franchisee has complied fully with the terms and conditions of this Agreement, the Franchisor shall have option to renew this Agreement on the terms and conditions for such mutually agreed period. However in case the renewal documents and renewal fees are not received in time as stipulated by the Franchisor, the Franchisor has the absolute right to charge monthly compound interest @ 24% p.a. on the late renewal fees from the due date of such payment, notwithstanding the right to terminate the renewal of this agreement. 13. FORCE MAJEURE Neither party to this agreement shall be liable for any failure or delay to perform any of its obligations under this agreement if the performance is prevented, hindered or delayed by a Force Majeure Event which is beyond reasonable control of either party and in such a case its obligations shall be suspended for so long as the Force Majeure event continues. Each party shall promptly inform the other in writing of the existence of a Force Maje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he party receiving the notice shall, within 30 days after receiving such notice, nominate its arbitrator by advising the party raising the dispute and the name of the arbitrator appointed by the other party. The arbitrators so appointed shall appoint a third arbitrator. The award of the majority arbitrators shall be final, conclusive and binding upon the parties hereto. The venue of arbitration shall be MUMBAI and the arbitration proceedings shall be conducted in accordance with the UNCITRAL Model Rules. If arbitration process fails both the parties shall submit to the jurisdiction of the Mumbai courts. 22. This Agreement shall be construed in accordance with and governed by the Indian laws. 7. Pursuant to the signing of the aforesaid agreement, proposals were invited by the Indian Council for Cultural Relations, Azad Bhavan, Indraprastha Estate, New Delhi 110002 (for short, the ICCR ) in 2016 for the execution of a short-term course for training in English for students from Afghanistan who were selected to pursue degree courses in Indian Universities in the academic year 2017-18 under the scholarship scheme of the Government of India (for short, the course ). The proposal of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 and by the monthend for the AHNA portal. 14. The petitioner replied to the aforesaid recovery notice vide email dated 23.03.2018, however the contents of the same have not been placed on record. The respondent replied to the reply email of the petitioner vide email dated 27.03.2018 stating that despite having sent the invoices for pending royalties, nothing had been received by the respondent. Responding to the issue of nonpayment for the course conducted by the petitioner, the respondent stated in the said email that they had not received the full amount from the ICCR, which had officially held back 22% of the payment for deductions of quality. The respondent also called upon the petitioner to urgently address, inter-alia, the issue of renewal of the franchise agreements. 15. Responding to the above referred email on the very same day, i.e., 27.03.2018, the petitioner stated that it had hired 7 Indian and 4 local English trainers for executing the course and since the course had been executed in Afghanistan, it was entitled to receive 90% of the payments received by the respondent from Aptech India. The petitioner further requested the respondent to share the details of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter a gap of around three years that the petitioner again took up the issue of non-payment of dues for the ICCR project with the respondent, vide a legal notice dated 26.08.2021. Through the notice, the petitioner called upon the respondent to pay Rs 73,53,000/- with 18% interest compounded monthly w.e.f. 01.11.2017 within 15 days of the receipt of the notice. The notice further stated that in the event of the respondent failing to comply with the aforesaid demand, the petitioner would file appropriate proceedings before the competent courts including a suit for settlement of accounts for recovery and also by way of damages or otherwise for breach of trust and breach of contract. 21. Again, after about 10 months, the petitioner invoked a pre-institution mediation before the Main Mediation Centre, Bombay High Court on 05.07.2022 in accordance with Section 12A of the Commercial Courts Act, 2015 making the respondent and the ICCR as party respondents. Notice was issued in the said mediation proceedings and 12.08.2022 was scheduled as the date for appearance of the parties. Upon failure of the parties to be present on the said date, 24.08.2022 was fixed as the next date for appearance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent from the ICCR after successful completion of the course. 27. The counsel argued that as the principal contract for the course was signed between the ICCR and the respondent, the grant in aid of Rs 73,53,000/- was transferred by the ICCR to the respondent on 03.10.2017 after the certificate of successful completion of the course was issued by the EOI, Kabul. However, since the course was executed in Afghanistan by the petitioner as the franchisee, it is entitled to received 90% of the amount received as per the AELA franchise agreement. 28. The counsel further submitted that the respondent had neither informed nor disclosed the amount received from the ICCR despite repeated requests made by the petitioner for settlement of accounts. The petitioner further contended that the experience of the respondent with the ICCR and Government of India cannot be a ground for withholding of the payments by the respondent. 29. The counsel argued that the cause of action first arose on 03.10.2017 when the respondent withheld the information of receipt of Rs 73,53,000/- from the ICCR. The cause of action further arose on 28.03.2018 when the respondent informed that cash-flow wise i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner are not arbitrable as the claims made by the petitioner relate to the sanction letter dated 10.10.2016 issued by the ICCR to the respondent which is not a part of the AELA franchise agreement entered into between the parties on 21.03.2013. Thus, in the absence of any arbitration clause in the aforesaid sanction order, and it being unrelated to the AELA franchise agreement, the petitioner cannot invoke arbitration for the adjudication of the claims. 37. It was further submitted by him that on the contrary, as per the AELA franchise agreement, it was the respondent who was entitled to receive royalty fee from the petitioner at the rates prescribed in the franchise agreement, and there was no arrangement by which the petitioner was entitled to a 90% payment. 38. The learned Senior counsel vehemently argued that notwithstanding the merits of the claim, the same is hopelessly barred by limitation on the face of it by virtue of the applicability of Article 137 of the Limitation Act, 1963. The dispute, as per the legal notice dated 26.08.2021 issued by the petitioner to the respondent, arose on 01.11.2017 and thus the limitation period, even after considering the covid exclusion, had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is liable to be dismissed. 42. Placing reliance on the judgment of this Court in M/s B and T AG (supra) the learned senior counsel submitted that the present petition squarely falls within the dictum laid down in the said judgment and is thus hopelessly barred by limitation. D. ANALYSIS 43. Having heard the learned counsel appearing for the parties and having perused the material on record, the following two questions fall for our consideration: I. Whether the Limitation Act, 1963 is applicable to an application for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996? If yes, whether the present petition is barred by limitation? II. Whether the court may refuse to make a reference under Section 11 of Act, 1996 where the claims are ex-facie and hopelessly time-barred? i. ISSUE NO. 1 : Whether the Limitation Act, 1963 is applicable to an application for appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996? If yes, whether the present petition is barred by limitation? 44. The basic premise behind the statutes providing for a limitation period is encapsulated by the maxim Vigilantibus non dormientibus jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 137 of the Limitation Act, 1963 which is the residual provision and reads as under: Description of Application Period of limitation Time from which period begins to run 137. Any other application for which no period of limitation is provided elsewhere in this Division Three years When the right to apply accrues. 47. In his authoritative commentary, International Commercial Arbitration, Wolters Kluwer, 3rd Edition, pp. 2873-2875 , Gary B. Born has observed that as a general rule, limitation statutes are applicable to arbitration proceedings. The relevant extract is as follows: Most nations impose limitation or prescription periods within which civil claims must be brought. Of course, statutes of limitation differ from country to country. As discussed below, statutes of limitations are virtually always applicable in international arbitration proceedings, in the same way that they apply in national court proceedings. Choosing between various potentially - applicable statutes of limitations in international arbitration raises significant choice-of-law questions. xxx xxx xxx Conflict of laws issues also arise as to the date that the statute of limitations period is tolled. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was not made. After an interval of a decade, he sent a notice to the respondent in 1989 for reference to arbitration. This Court in Panchu Gopal Bose [(1993) 4 SCC 338] observed that in mercantile references of this kind, it is implied that the arbitrator must decide the dispute according to the existing law of contract, and every defence which would have been open to the parties in a court of law, such as the plea of limitation, would be open to the parties for the arbitrator's decision as well. Otherwise, as this Court observed : (SCC p. 344, para 8) 8. a claim for breach of contract containing a reference clause could be brought at any time, it might be 20 or 30 years after the cause of action had arisen, although the legislature has prescribed a limit of three years for the enforcement of such a claim in any application that might be made to the law courts. 17. This Court further held as follows: (Panchu Gopal Bose case [ (1993) 4 SCC 338] , SCC pp. 345-46, paras 11-12) 11. Therefore, 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appointment procedure agreed upon between the parties. 53. O.P. Malhotra in The Law Practice of Arbitration and Conciliation, 3rd Edition, pp. 688-689 has summarised the position of law on the limitation period for a Section 11(6) petition thus: There is no specific period of limitation prescribed for making the request under Section 11(6) to the Chief Justice or his designate, to take the necessary measure for appointing an arbitrator. Therefore, Article 137 of the Limitation Act, 1963, which provides the limitation period of three years for filing any other application for which no period of limitation is provided elsewhere in the third division of the Schedule of the Act from the day when the right to apply accrues. It is the residuary article in regard to the applications, and it can only be applied if no other article is applicable. It would only apply to an application where it is required by law to be made. It is restricted to applications for the exercise of the Acts and powers which the court is not bound to perform suo motu. Therefore, the period of limitation for making a request under Section 11(6) is three years, and the limitation is to be counted from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory for claims to be filed within 3 years of the rescission/termination of the contract. The right of action for the department starts from the date when the work is rescinded and not from the date when the balance work is got completed through another agency. If the petitioner delays invocation of arbitration clause for months together for no justifiable cause after the period prescribed in the arbitration agreement had elapsed, the court would not come to the rescue of such a party seeking appointment of arbitrator and the abnormal delay of more than a year cannot be condoned. (emphasis supplied) 55. This Court in Bharat Sanchar Nigam Limited Another v. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 held thus: 15. It is now fairly well-settled that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days from issuance of the notice invoking arbitration. In other words, an application under Section 11 can be filed only after a notice of arbitration in respect of the particular claim(s)/dispute(s) to be referred to arbitration [as contemplated by Section 21 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the relevant point in time when the limitation period for making a Section 11(6) application would begin is by making use of the Hohfeld s analysis of jural relations. It is a settled position of law that the limitation period under Article 137 of the Limitation Act, 1963 will commence only after the right to apply has accrued in favour of the applicant. As per Hohfeld s scheme of jural relations, conferring of a right on one entity must entail the vesting of a corresponding duty in another. When an application under Section 11(6) of the Act, 1996 is made before this Court without exhausting the mechanism prescribed under the said sub-section, including that of invoking arbitration by issuance of a formal notice to the other party, this Court is not duty bound to appoint an arbitrator and can reject the application for being premature and non-compliant with the statutory mandate. However, once the procedure laid down under Section 11(6) of the Act, 1996 is exhausted by the applicant and the application passes all other tests of limited judicial scrutiny as have been evolved by this Court over the years, this Court becomes duty-bound to appoint an arbitrator and refer the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service of the notice. 8. Thereupon the court may, on the application of the party who gave the notice and after giving the other party an opportunity of being heard, appoint an arbitrator. 9. In view of the express language of Section 8, it is quite clear that unless a party who desires to apply has resorted to the process set out in Section 8, and has failed to secure the concurrence of the other party to the appointment of an arbitrator within the prescribed period, the court will not intervene under Section 8. The right to apply under Section 8, therefore, would accrue when, within 15 clear days of the notice, the other parties do not concur in the appointment of an arbitrator. ( emphasis supplied ) 58. In Secunderabad Cantonment Board v. B. Ramachandraiah Sons reported in (2021) 5 SCC 705, this Court while determining the issue of limitation in relation to a Section 11(6) petition under the Act, 1996 held thus : 19. Applying the aforesaid judgments to the facts of this case, so far as the applicability of Article 137 of the Limitation Act to the applications under Section 11 of the Arbitration Act is concerned, it is clear that the demand for arbitration in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the notice. As per the record, the notice was delivered to the respondent on 29.11.2022. The relevant extracts from the said notice are extracted hereinbelow: 14. Thus disputes arose between the parties, one incorporated in a country other than India in relation to the Franchise Agreement dt. 21.3.2013, which would attract Section 2(1)(f)(ii) of the A C Act. Since every effort to resolve it amicably failed, our client is invoking Sec 11(6) read with Section 11(12)(a) of A C Act before Hon'ble Supreme Court of India to seek appointment of a sole arbitrator in case M/s Aptech Ltd. is not heeding AACL request in this behalf. 15. Without prejudice to your rights, our client suggests the name of 2 persons, namely Sri. V. Giri, Sri. M L Verma, Senior advocates practicing in the Hon'ble Supreme Court subject to consent, or any Hon'ble former judges for enter into reference with consent of parties to decide all the disputes arising out of the Franchise Agreement dated 21.3.2013, between the parties, within the period as per Section 29A of the Act. 16. In case of failure on your part to return the illegally withheld money or if the above request for appointment of a sole Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner vide notice dated 24.11.2022 and a time of one month from the date of receipt of notice was given to the respondent to comply with the said notice. The notice was delivered to the respondent on 29.11.2022. Hence, the said period of one month from the date of receipt came to an end on 28.12.2022. Thus, it is only from this day that the clock of limitation for filing the present petition would start to tick. The present petition was filed by the petitioner on 19.04.2023, which is well within the time period of 3 years provided by Article 137 of the Limitation Act, 1963. Thus, the present petition under Section 11(6) of the Act, 1996 cannot be said to be barred by limitation. ii. ISSUE NO. 2 : Whether the court may refuse to make a reference under Section 11 of the Arbitration and Conciliation Act, 1996 where the claims are ex-facie and hopelessly time-barred? 63. As discussed above, the present petition filed by the petitioner is not barred by limitation. Thus, the next question that falls for our consideration is whether the claims sought to be arbitrated by the petitioner are ex-facie barred by limitation, and if so, whether the court may refuse to refer them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims in Chapter 31 it is stated thus in relation to the jurisdiction of an arbitral tribunal adjudicating commercial disputes: Two situations must be distinguished. The first, which is very rare, exists when the claimant not only appreciates, but will if pressed be prepared to acknowledge, that his claim is ill-founded in law. In effect, he asserts that his claim has commercial and moral merit; that if the law gives him no remedy, there is a defect in the law; and that a commercial arbitrator ought to award him something in recognition of the true merits. Here, we believe that there is undoubtedly jurisdiction to interfere by way of injunction to prevent the respondent from being harassed by a claim which can never lead to valid award, for example in cases where claim is brought in respect of the alleged arbitration agreement which does not really exist, or which has ceased to exist. So also where the dispute lies outside the scope of the arbitration agreement. By parity of reasoning, the Court should be prepared to intervene where the claimant and the respondent are at one as to the absence of legal merits, so that it can be said that there is no real dispute. The respondent migh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism. ( emphasis supplied ) 70. The aforesaid decision in Vidya Drolia (supra) was relied upon and reaffirmed in another decision of this Court in NTPC Ltd. v. SPML Infra Ltd. reported in (2023) 9 SCC 385 wherein the Eye of the Needle test was explained as follows: Eye of the needle 25. The abovereferred precedents crystallise the position of law that the pre-referral jurisdiction of the Courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 47 : (2021) 3 SCC (Civ) 352] On the other hand, even if there is the slightest doubt, the rule is to refer the dispute to arbitration [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 154.4 : (2021) 1 SCC (Civ) 549] . 28. The limited scrutiny, through the eye of the needle, is necessary and compelling. It is intertwined with the duty of the Referral Court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable [Ibid.]. It has been termed as a legitimate interference by Courts to refuse reference in order to prevent wastage of public and private resources [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 139 : (2021) 1 SCC (Civ) 549]. Further, as noted in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549], if this duty within the limited compass is not exercised, and the Court becomes too reluctant to intervene, it may undermine the effectiveness of both, arbitration and the Court [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 139 : (2021) 1 SCC (Civ) 549]. Therefore, this Court or a High Court, as the case may be, while exercising jurisdiction under Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the claims are ex facie time-barred by over 5 years, since Nortel did not take any action whatsoever after the rejection of its claim by BSNL on 4-8-2014. The notice of arbitration was invoked on 29-4-2020. There is not even an averment either in the notice of arbitration, or the petition filed under Section 11, or before this Court, of any intervening facts which may have occurred, which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act. Unless, there is a pleaded case specifically adverting to the applicable section, and how it extends the limitation from the date on which the cause of action originally arose, there can be no basis to save the time of limitation. 49. The present case is a case of deadwood/no subsisting dispute since the cause of action arose on 4-8-2014, when the claims made by Nortel were rejected by BSNL. The respondent has not stated any event which would extend the period of limitation, which commenced as per Article 55 of the Schedule of the Limitation Act (which provides the limitation for cases pertaining to breach of contract) immediately after the rejection of the final bill by making deductions. 50. In the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not in 2016 as negotiations had continued to take place between the parties. This Court rejected the contention of the petitioner and held that the encashment of bank guarantee was a positive action on part of the respondent which had crystallised the right of the petitioner to seek reference of the dispute to arbitration and mere writing of letters would not extend the cause of action. It was held that the notice for invoking arbitration having been issued almost six years after the cause of action for raising the claims had arisen, the claims were ex-facie dead and time-barred and hence dismissed the application. Relevant extracts from the judgment are as follows: 65. On a conspectus of all the aforesaid decisions what is discernible is that there is a fine distinction between the plea that the claims raised are barred by limitation and the plea that the application for appointment of an arbitrator is barred by limitation. xxx xxx xxx 76. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the ICCR project. Some more emails were exchanged between the parties on the issue however it can be seen that vide email dated 28.03.2018, the respondent clearly showed unwillingness to continue further discussions regarding payments related to the ICCR project. Thus, it can be said that the rights of the petitioner to bring a claim against the respondent were crystallised on 28.03.2018 and hence the cause of action for invocation of arbitration can also said to have arisen on this date. This position has also been admitted in the Written Submission dated 05.02.2024 wherein the petitioner has submitted as follows: 4. The limitation for claiming the due amount would expire on 27.03.2021 . b. When does the Cause of Action arise ? 77. We are not impressed with the submission canvassed on behalf of the respondent that the cause of action for raising the claims arose on 01.11.2017 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 the ICCR on 03.10.2017. However, the perusal of the communication exchanged between the parties indicates that it is only on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 non-payment, 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 a request. Whether in a particular case a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e email dated 28.03.2018. Another reminder through email was given by the petitioner on 29.12.2018, however, mere giving reminders and sending of letters would not extend the cause of action any further from 28.03.2018 on which date the rights of the petitioner could be said to have been crystallised. 82. Thus, in ordinary circumstances, the limitation period available to the petitioner for raising a claim would have come to an end after an expiry of three years, that is, on 27.03.2021. However, in March 2020, the entire world was taken under the grip of the deadly Covid-19 pandemic bringing everyday life and commercial activity to a complete halt across the globe. Taking cognisance of this unfortunate turn of events, this Court vide order dated 23.03.2020 passed in Suo Motu Civil Writ Petition No. 03/2020 directed the period commencing from 15.03.2020 to be excluded for the purposes of computation of limitation. The said extension of limitation was extended from time to time by this Court in view of the continuing pandemic. As a result, the period from 15.03.2020 to 28.02.2022 was finally determined to be excluded for the computation of limitation. It was provided that the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings, irrespective of that prescribed under general or special laws, whether condonable or not, shall stand extended w.e.f. 15-3-2020 but, while concluding the matter on 23-9-2021 [Cognizance for Extension of Limitation, In re, (2021) 18 SCC 250 : 2021 SCC OnLine SC 947], this Court specifically provided for exclusion of the period from 15-3-2020 till 2-10-2021. A look at the scheme of the Limitation Act, 1963 makes it clear that while extension of prescribed period in relation to an appeal or certain applications has been envisaged under Section 5, the exclusion of time has been provided in the provisions like Sections 12 to 15 thereof. When a particular period is to be excluded in relation to any suit or proceeding, essentially the reason is that such a period is accepted by law to be the one not referable to any indolence on the part of the litigant, but being relatable to either the force of circumstances or other requirements of law (like that of mandatory two months' notice for a suit against the Government [Vide Section 15 of the Limitation Act, 1963.]). The excluded period, as a necessary consequence, results in enlargement of time, over and above the period prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose 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 (English) Arbitration Act, 1950. xxx xxx xxx 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 ) 87. Similarly, in Bharat Sanchar Nigam Limited (supra), it was held by this Court thus: 51. The period of limitation for issuing notice of arbitrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of three years from the date of accrual of cause of action, the claims cannot be said to be ex-facie dead or time-barred on the date of commencement of the arbitration proceedings. 92. In view of the aforesaid, the present petition is allowed. We appoint Shri Justice Sanjay Kishan Kaul, Former Judge of the Supreme Court of India, to act as the sole arbitrator. The fees of the arbitrator including other modalities shall be fixed in consultation with the parties. 93. All other rights and contentions are kept open for the parties to raise before the Arbitrator. 94. Before we part with the matter, we would like to mention that this Court while dealing with similar issues in many other matters has observed that the applicability of Section 137 to applications under Section 11(6) of the Act, 1996 is a result of legislative vacuum as there is no statutory prescription regarding the time limit. We would again like to reiterate that the period of three years is an unduly long period for filing an application under Section 11 of the Act, 1996 and goes against the very spirit of the Act, 1996 which provides for expeditious resolution of commercial disputes within a time-bound manner. Vari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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