Read Judgment: Vishram Varu & Co v. Union of India, represented by the General Manager, South Eastern Railway, Kolkata 

Tulip Kanth

New Delhi, April 22, 2022: While dismissing an appeal wherein the arbitration clause was invoked after a period of thirty-two years, the Supreme Court has affirmed that the Calcutta High Court had not committed any error in dismissing the application under Section 11(6) of the Arbitration & Conciliation Act,1996 on the ground that it was hopelessly barred by limitation.

The Division Bench of Justice M.R. Shah and Justice B.V. Nagarathna was of the opinion that the appellant could not 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 as the legal notice calling upon the respondent to refer the dispute to the arbitrator was made after a period of approximately thirty-two years.

In this case, the appellant was issued a work order in the year 1982 which was executed in the year 1986.The appellant claimed the additional amount for the excess quantity of work done saying that he executed excess quantity of work beyond the schedule quantity of work to be done. It was also the appellant’s case that a lot of correspondence was made by the appellant, however, the amount due and payable with respect to the excess quantity of work done was not paid. 

The appellant through a letter requested the General Manager of South Eastern Railway to release the amount due or refer the dispute to the arbitrator under clauses 63 & 64 of General Conditions of Contract (GCC), however, no action was taken on the said letter. Thereafter repeated requests for the same were made to the General Manager either to pay the amount which was overdue or refer the dispute to the arbitrator. According to the appellant, he had also sent the Statement of Claim which was payable to him as per the work order issued by the railway authorities, which was executed up to May 11,1986 and the work order dated January 15, 1984, which was executed up to August 26, 1985. In the appellant’s opinion, the total amount due and payable was Rs. 1,19,46,297.

Thereafter, the appellant sent a legal notice on July 31,2019 invoking the arbitration clause and seeking appointment of an arbitrator. However, the arbitrator was not appointed and then, the appellant filed the present Arbitration Petition before the Calcutta High Court under Section 11(6) of the 1996 Act and prayed to appoint the arbitrator to resolve the dispute between the parties. By the impugned order, the High Court had dismissed the said application on the ground that the arbitration petition in 2019 was hopelessly barred by limitation.Hence, the original applicant filed the present appeal.

Taking into consideration the factual aspect of the case, the Division Bench held that right to claim the amount, due and payable, if any, could be said to have accrued in the year 1985/1986. Thereafter, the correspondences under the RTI Act had taken from the year 2012 onwards and for the first time, the appellant served a legal notice upon the General Manager on October 22, 2018 requesting either to release the amount which was overdue or to refer the dispute to the arbitrator under clauses 63 & 64 of GCC under the 1996 Act. The aforesaid legal notice was followed by three to four letters/communications and thereafter the appellant herein filed the present application before the High Court in the year 2019.

It was the Apex Court’s opinion that the appellant could not 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 as the claim alleged dues dues of 1985/1986 and he legal notice calling upon the respondent to pay the amount due and payable or to refer the dispute to the arbitrator was made after a period of approximately thirty-two years.

The Division Bench asserted, “Therefore, the appellant, who served the legal notice invoking the arbitration clause and requesting for appointment of an arbitrator after a period of approximately thirty-two 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.”

The appellant had placed heavy reliance on the judgment of this Court in Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited, and submitted that  none of the Articles in the Schedule to the Limitation Act, 1963 provides a time period for filing an application under Section 11(6) of the 1996 Act and therefore it would be covered by the residual provision of Article 137 of the Limitation Act which provides the period of limitation of three years from the date when the right to apply accrues.

The Bench rejected this contention by mentioning that the decision of this Court in Bharat Sanchar Nigam’s Case (Supra) would not be applicable to the facts of the case on hand. In the aforesaid decision, the Court was not dealing with such a situation where the legal notice was issued and served and the arbitration clause was invoked after a period of thirty-two years. In the aforesaid decision, this Court has not stated and/or observed and/or held that despite the fact that the legal notice invoking the arbitration clause and/or request for referring the dispute to the arbitrator is made after 20/30 years, still the application under Section 11(6) of the 1996 Act can be entertained, added the Top Court.

Thus, dismissing the appeal, the Bench upheld the High Court’s view that the application under Section 11(6) was hopelessly barred by limitation and was a stale claim.

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