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2024 Supreme(SC) 174

D. Y. CHANDRACHUD, J. B. PARDIWALA, MANOJ MISRA
Arif Azim Co. Ltd. – Appellant
Versus
Aptech Ltd. – Respondent


Advocates appeared:
For the Petitioner(s): Mr. R. Sathish, AOR Mr. Rajesh Kumar, Adv. Mr. Mohan Das K.K., Adv. Mrs. S. Geetha, Adv.
For the Respondent(s): Mr. Rana Mukherjee, Sr. Adv. Mr. K.V. Mohan, AOR Mr. K.V. Balakrishnan, Adv. Mr. Devesh Kumar Khanduri, Adv.

Judgement Key Points

Certainly. Based on the provided legal document, here are the key points:

  1. Applicability of Limitation Act: The Limitation Act, 1963 applies to arbitration proceedings, including applications under Section 11(6) of the Arbitration and Conciliation Act, 1996. The period of limitation for such applications is three years from the date the right to apply accrues (!) (!) (!) (!) .

  2. Commencement of Limitation Period: The limitation period begins only after a valid notice invoking arbitration has been issued by one party to the other, and there has been either a failure or refusal to appoint an arbitrator as per the agreed procedure. The right to apply under Section 11(6) accrues once the notice period has expired without appointment, and the other party has failed or refused to appoint an arbitrator (!) (!) (!) .

  3. Effect of COVID-19 Pandemic: The extension of limitation periods due to extraordinary circumstances, such as the COVID-19 pandemic, has been recognized. The period from 15.03.2020 to 28.02.2022 was excluded from limitation calculations, and the remaining limitation period was extended accordingly (!) (!) (!) .

  4. Timing of Arbitration Proceedings: The commencement of arbitral proceedings is deemed to occur when a request for arbitration is received by the respondent, typically through a notice requiring arbitration. The limitation period for initiating arbitration is counted from this date (!) (!) .

  5. Limitation and Claims: The limitation period for substantive claims is distinct from that for filing an application under Section 11(6). The latter is governed by the residual period of three years, starting from the date the right to apply accrues, which is generally after the expiry of the notice period and failure to appoint an arbitrator (!) (!) (!) .

  6. Time-Barred Claims: If the application for appointment of an arbitrator is filed after the limitation period has expired, it is considered barred. However, if the application is filed within the limitation window, the arbitration can proceed, provided the claims are not clearly dead or time-barred at the outset (!) (!) (!) .

  7. Disputes and Cause of Action: The cause of action for claims related to arbitration arises when the claimant's rights are crystallized, typically upon a failure to pay or respond, and not merely upon the occurrence of the underlying event. The "breaking point" or the moment when the dispute becomes crystallized is critical in determining the accrual of the cause of action (!) (!) (!) .

  8. Admissibility of Limitation Defense: Limitation is an admissibility issue, not a jurisdictional one. Courts are expected to conduct a prima facie examination to determine whether claims are time-barred before referring disputes to arbitration. If claims are evidently time-barred, the court may refuse to proceed (!) (!) (!) .

  9. Procedure for Filing and Limitation: The application under Section 11(6) should be made after the expiry of the notice period, typically 30 days, and within the limitation period. The limitation clock starts ticking from the date the notice period ends, and the application must be filed within three years from that date (!) (!) (!) .

  10. Conclusion: The validity of an application under Section 11(6) depends on whether it was filed within the prescribed limitation period and whether the claims are not already barred by time. Proper adherence to procedural requirements, including issuance of valid notices and timely filing, is essential for the arbitration process to be initiated effectively (!) (!) (!) .

Please let me know if you need further analysis or assistance with specific aspects of this case.


JUDGMENT :

J. B. PARDIWALA, J.

For the convenience of exposition, this judgment is divided into the following parts: -

INDEX

A.

FACTUAL MATRIX

B.

SUBMISSIONS ON BEHALF OF THE PETITIONER

C.

SUBMISSIONS ON BEHALF OF THE RESPONDENT

D.

ANALYSIS

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?

a. When does the right to apply under Section 11(6) accrue?

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?

a. Jurisdiction versus Admissibility

b. When does the Cause of Action arise?

c. When is Arbitration deemed to have commenced?

E.

CONCLUSION

1. This is a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, “the Act, 1996”) filed at the instance of a company based in Kabul, Afghanistan and engaged in the business of providing training to desir

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