Chief Justice or his designate can decide whether claim is a dead one or not before passing order of reference.

This is an application for appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to adjudicate the disputes arising between the parties.

In this matter, there is no dispute as to the existence, validity and legality of the arbitration agreement. Only dispute, as raised by the respondents, is that the claim has become a dead one.

Learned Counsel for the applicant submits that for the purpose of entertaining this application the period of limitation is to be reckoned from the date of refusal to refer the dispute. According to him, after making several demands and requests, the refusal came only on 20th January 2009 stating that the dispute is not required to be referred to the arbitrator under the arbitration mechanism as the claim has become barred. He says that the period of limitation under the provisions of Article 137 of the Limitation Act, 1963 will be computed from 20th January 2009, and this application has been made perfectly within the time as above. He further argues that the question of limitation with regard to the merit of the case should not be looked into at this stage on this application. Besides, he says, number of documents having been exchanged between the parties and it will appear therefrom that that there has been lawful acknowledgment of debts and the applicant in support of his contention submits that the Courts will not look into the question of limitation with regard to the merit of the claim and it is the domain of the learned arbitrator. He relied on the decision of the Hon'ble Supreme Court in the case of Major (Retd) Inder Singh Rekhi Vs. Delhi Development Authority (1988) 2 Supreme Court Cases 338) and also the decision in the case of Schlumberger Asia Services Limited Vs. Oil and Natural Gas Corporation Limited (2013) 7 Supreme Court Cases 562).

Learned Counsel for the respondents, on the other hand, showing the statement in the affidavit in reply itself, contends that the execution of the contractual work was completed in 1995 and since then there has been correspondence till 1996 and last correspondence took place on 27th September, 1996 and thereafter there was no correspondence in order to save the period of limitation. On 2nd July, 2007, there has been correspondence and this correspondence was made after the expiry of the period of limitation and by that time, the claim itself has become time barred. He contends that if the Court finds that the claim is patently barred by limitation for which no effort is required to find out, the matter shall not be referred to the arbitrator for the learned arbitrator has to decide live claim, not a dead one and, therefore, this application should be rejected.

I have heard the learned Counsel for the parties. The first question to be decided is whether the present application has been made within a period of three years from the date of last refusal to refer the matter to the arbitrator. It appears that the application has been made in 2011 and the respondent replied the letter by which the claim of arbitration was refuted on 20th January, 2009. Hence, the application has been made within the period of limitation under Article 137 of the Limitation Act, 1963 as has been ruled by the judgment of the Supreme Court in the case of Inder Singh Rekhi. In this case, the claim has been rejected in 2009 contending that the claim has become barred.

Now, coming to the next question whether I should decide the question of limitation on the merits of the case while entertaining this application. The Constitution Bench of the Supreme Court in the case of SBP & Company Vs. Patel Engineering (2005) 8 SCC 618) held that "the Chief Justice or the designated Judge can also decide whether the claim was a dead one or a long-barred claim." However, the observations made in the decision of the Constitution Bench were explained by the Supreme Court in Indian Oil Corporation Ltd Vs. SPS Engineering Limited (2011) 3 SCC 507) that t