The limitation period for seeking the appointment of an arbitrator begins only after a valid notice invoking arbitration is issued, and failure to appoint forfeits the right to do so.

JUDGMENT :

Dhiraj Singh Thakur, C.J.

This is an application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 , for appointment of a sole Arbitrator for adjudicating the disputes arising out of and in connection with the Work Contract, dated 05.08.2016, entered into between the parties.

2. Briefly stated, the material facts are as under:

The applicant claims to be a company engaged in the construction and infrastructure development activities. The respondent, Andhra Pradesh State Fiber Net Limited, had floated a rate contract tender for inviting eligible service providers for commissioning and maintenance of last mile optical fiber connectivity to Government Offices in the districts of Anantapur and Kadapa in the State of Andhra Pradesh.

3. The applicant was allotted the work and contract agreement came to be signed between the two parties on 05.08.2016. Various work orders were issued to the applicant from time to time for a total value of Rs.12,26,63,520/-. The applicant claims that even when work orders were executed, payment was not made to the applicant to the tune of Rs.2,82,60,159/-. Several reminders are also stated to have been sent, which did not elicit any response from the respondent.

4. Finally, it is stated that, instead of making payments, the respondent terminated the contract vide its order, dated 02.01.2019, which was communicated vide communication, dated 09.01.2019. The applicant claims that, on several occasions, the representatives of both the parties tried to resolve the issues, however, despite efforts, the amount due to the applicant was not released which finally led the applicant to invoke the arbitration clause by virtue of its letter, dated 17.10.2022.

Clause 25 of the agreement envisaged resolution of disputes through the mechanism of arbitration and envisaged as follows:

“25. Arbitration Clause:-

1. Except as otherwise provided elsewhere in the contract, if any dispute, difference, question or disagreement arises between the parties hereto or their respective representatives or assignees, at any time in connection with construction, meaning, operation, effect, interpretation or out of the contract or breach thereof, the same shall be decided by Sole Arbitrator to be appointed by the Managing Director of APSFL.

2. If the Arbitrator so appointed dies, resigns, incapacitated or withdraws for any reason from the proceedings, another Arbitrator shall be appointed by the Managing Director of APSFL. The Arbitrator so appointed shall proceed with the reference from the stage, where his predecessor had left if both parties consent for the same, otherwise, he shall proceed de novo.........”

5. The applicant’s case is that, despite service of notice, the respondent did not appoint a sole arbitrator. It is also urged that the procedure for appointment of arbitrator as mentioned in the Clause 25 of the agreement is otherwise contrary to the ratio of the judgment of the Apex Court rendered in the case of Perkins Eastman Architects DPC v. HSCC (India) Ltd.,(2020) 20 SCC 760 as also the judgment of the Constitution Bench in the case of Central Organisation for Railway Electrification Vs. ECI SPIC SMO MCML (JV), 2024 SCC OnLine SC 3219 and, hence, prays for the appointment of an independent sole arbitrator.

6. While the respondent does not dispute the existence of the arbitration clause in the agreement, yet, the only objection raised is with regard to limitation. It is stated that the cause of action, if at all, had accrued to the applicant in the year, 2019, when the agreement was terminated, whereas the present arbitration application had filed in the year, 2023.

7. It is stated that, as per Article 137 of the Limitation Act, 1963 , the Arbitration Application had to be filed within three years from the date when the right to apply accrues. It was, thus, stated that the right to apply for appointment of an arbitrator accrued to the applicant in 2019 and, therefore, having been filed beyond the three