Supreme Court dismisses plea for appointing arbitrator for dues in a 32-year-old work order

New Delhi: The Supreme Court on Thursday dismissed a plea for appointment of an arbitrator in connection with dues related to a 32-year-old work order.

A bench of Justices M.R. Shah and B.V. Nagarathna said: "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 32 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."

The bench noted that in the present case, the legal notice was served, the arbitration clause was invoked and a request to appoint the arbitrator was made after a period of 32 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 32 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," it added.

The appellant Vishram Varu & Co. moved the top court challenging Calcutta High Court order passed in March 2021, dismissing its application under Section 11(6) of the Arbitration and Conciliation Act, 1996. The appellant was issued a work order by South Eastern Railways in 1982, and it was executed in 1986. The appellant claimed that it executed an excess quantity of work beyond the scheduled quantity of work to be done, therefore, he was entitled to the additional amount for the excess quantity of work done.

Many correspondences were sent by appellant, however, the amount due and payable with respect to the excess quantity of work done was not paid. The appellant sent a legal notice on July 31, 2019 under the arbitration clause and sought appointment of an arbitrator by the office of the General Manager. However, the arbitrator was not appointed. The appellant filed the present arbitration petition before the high court under Section 11(6) of the 1996 Act and prayed to appoint the arbitrator to resolve the dispute between the parties. As per appellant's statement of claim, the total amount due and payable was Rs 1,19,46,297.

The appellant's counsel submitted that the high court had materially erred in dismissing the arbitration petition under Section 11(6) of the 1996 Act on the ground of limitation. It was submitted that from the date of issuing the legal notice invoking the arbitration clause and after waiting for 30 days and thereafter when the application under Section 11(6) of the 1996 Act was made, the same cannot be said to be barred by limitation.

Dismissing the appeal, the top court said: "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. We are in complete agreement with the view taken by the High Court."