A notice seeking arbitration issued 22 years after the completion of work is time-barred, underscoring the need for timely claims in arbitration proceedings.

ORDER :

1. The neat question arising in the above case is as to whether a notice seeking commencement of arbitration, issued on 02.06.2022, could set in motion the process of resolution of a dispute regarding a work completed as early as on 30.07.2000. The High Court dealing with the application under Section 11 found from the agreement that there is an ambiguity in Clause 7 which requires the final bill to be submitted by the contractor within one month from the date fixed for completion of work dehors which the Engineer-in-Charge is competent to issue a certificate of measurement and the total amount payable for the work, which shall be final and binding on all parties. Since no such certificate was issued by the Engineer concerned and the communication of 04.01.2001 produced as Annexure P9, speaks only of a part payment, the dispute would not be beyond the scope of Section 11 of the Arbitration and Conciliation Act, 1996¹[For brevity, ‘1996 Act’]. The objection as to limitation was found to be effaced insofar as the final measurement with the total amounts payable having not been determined by the Engineer-in-Charge.

2. Sri Kunal Chatterji, learned counsel appearing for the State, the appellant, would rely on Vishram Varu and Company v. Union of India, (2023) 12 SCC 588. While Sri Sudhanshu Choudhari, learned Senior Counsel appearing for the respondent relied on Arif Azim Company Limited v. Aptech Limited, (2024) 5 SCC 313 and Aslam Ismail Khan Deshmukh v. ASAP Fluids Private Limited and Another, (2025) 1 SCC 502.

3. Vishram Varu and Company, (supra) was a case in which the work undertaken was completed in the year 1985-86 when the claim for money accrued. Correspondences were initiated from the year 2012 under the RTI Act and eventually a legal notice seeking arbitration was issued on 22.10.2018. It was held that since the claim arose in the year 1985-86, the mere issuance of a notice in 2018 cannot enable the party to contend that the cause of action arose in the year 2018, after expiry of 32 years.

4. Arif Azim Company Limited3 considered both the question of limitation with respect to the claim for recovery of money and the limitation provided for filing an application under Section 11(6). It was categorically found after referring to a host of precedents of this Court that the Limitation Act, 1963 is applicable to arbitration proceedings in general and Article 137 of that Act applies to a petition under Section 11(6) of the 1996 Act in particular. Insofar as the substantive claim in that case was concerned, it was found that the right to bring a claim arose on 28.03.2018, the claim being one of recovery of money. The period of limitation of three years ended on 27.03.2021; within the period in which limitation was suspended by this Court by reason only of the Covid-19 pandemic. The limitation having commenced from 01.03.2022 again as per the orders of this Court, the balance period available from the date of suspension, extended the expiry of limitation to 13.03.2023. The notice seeking arbitration under Section 21 was issued on 24.11.2022, bringing the initiation of the proceeding within the limitation of three years. Insofar as the limitation for making an application under Section 11(6), this Court found applicable Article 137, which also provides for a period of three years, the commencement of which was on expiry of 30 days from the date of receipt of the notice for initiation of arbitration. Notice issued on 24.11.2022 was delivered on 29.11.2022, thus, the limitation having commenced from 28.12.2022. The application under Section 11(6) was filed on 19