M/S ARIF AZIM CO. LTD. versus M/S APTECH LTD.
[2024] 3 S.C.R. 73, Supreme Court of India, 2024
Outcome: Case Allowed (Granted)
Segment: Issues
* Author
[2024] 3 S.C.R. 73 : 2024 INSC 155
M/S Arif Azim Co. Ltd. 
v. 
M/S Aptech Ltd.
(Arbitration Petition No. 29 of 2023)
01 March 2024
[Dr. Dhananjaya Y. Chandrachud, CJI,  J.B. Pardiwala*  
and Manoj Misra, JJ.]
Issue for Consideration
Whether the Limitation Act, 1963 is applicable to an application for 
appointment of arbitrator u/s.11(6), Arbitration and Conciliation Act, 
1996; if yes, whether the present petition is barred by limitation; 
when does the right to apply u/s.11(6) accrues; whether the court 
may refuse to make a reference u/s.11 of the Arbitration and 
Conciliation Act, 1996 where the claims are ex-facie and hopelessly 
time-barred.
Headnotes
Arbitration and Conciliation Act, 1996 – s.11(6) – Limitation 
Act, 1963 – Article 137 – Applicability – Three franchise 
agreements entered into between parties in 2013 – As per the 
agreements, the petitioner-a company based in Afghanistan, 
as the franchisee, was granted a non-exclusive license, by 
the respondent to establish and operate businesses under 
three trade names – Proposals were invited by the Indian 
Council for Cultural Relations (ICCR), for the execution of a 
short-term course – Proposal of the respondent accepted – 
Course executed by the petitioner at its centre in Kabul from 
February to April, 2017 – Disputes arose between the parties in 
relation to the renewal and payment of royalties for all the three 
franchise agreements – Respondent issued recovery notice 
for non-payment of
royalty/renewal fees in 2018 – Petitioner 
informed the respondent of its decision to not renew two 
franchise agreements – In 2021, after a gap of around three 
years, the petitioner again took up the issue of non-payment 
of dues for the ICCR project with the respondent – Petitioner 
invoked a pre-institution mediation in 2022 however, upon 
failure thereof, it sent notice for invocation of arbitration to 
the respondent – Respondent replied denying the claims
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stating that notwithstanding the merits, the claims were barred 
by limitation – Petitioner filed petition u/s.11(6) filed for the 
appointment of an arbitrator:
Held: There is no doubt as to the applicability of the Limitation 
Act, 1963 to arbitration proceedings in general and that of Article 
137 of the Limitation Act, 1963 to a petition u/s.11(6) in particular 
– As is evident from Article 137, the limitation period for making 
an application u/s.11(6) is three years from the date when the 
right to apply accrues – Limitation period for filing an application 
seeking appointment of arbitrator commences only after a valid 
notice invoking arbitration has been issued by one of the parties 
to the other party and there has been either a failure or refusal 
on part of the other party to make an appointment as per the 
appointment procedure agreed upon between the parties – The 
request for appointment of an arbitrator was first made by the 
petitioner vide notice dtd. 24.11.2022 and a time of one month from 
the date of receipt of notice was given to the respondent to comply 
with the said notice – Notice was delivered to the respondent on 
29.11.2022 – Hence, the said period of one month from the date 
of receipt came to an end on 28.12.2022 – Thus, it is only from 
this day that the clock of limitation for filing the present petition 
would start to tick – The present petition was filed by the petitioner 
on 19.04.2023,
well within the time period of 3 years provided by 
Article 137 – Thus, the present petition u/s.11(6) cannot be said 
to be barred by limitation – Further, the notice invoking arbitration 
was received by the respondent on 29.11.2022, which is within 
the three-year period from the date on which the cause of action 
for the claim had arisen – Thus, it cannot be said that the claims 
sought to be raised by the petitioner are ex-facie time-barred or 
dead claims on the date of the commencement of arbitration – 
Petition allowed, sole arbitrator appointed.[Paras 50-52, 62, 88, 92]
Arbitration and Conciliation Act, 1996 – s.11(6) – Petition 
under, issue of limitation – Courts to satisfy themselves on 
two aspects by employing a two-pronged test:
Held: While considering the issue of limitation in relation to a petition 
u/s.11(6), the courts should satisfy themselves on two aspects by 
employing a two-pronged test – first, whether the petition u/s.11(6) 
is barred by limitation; and secondly, whether the claims sought 
to be arbitrated are ex-facie dead claims and are thus barred by 
limitation on the date of commencement of arbitration proceedings
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– If either of these issues are answered against the party seeking 
referral of disputes to arbitration, the court may refuse to appoint 
an arbitral tribunal. [Para 89]
Arbitration and Conciliation Act, 1996 – s.11(6) – Ascertaining 
the relevant point in time when the limitation period for making 
a s.11(6) application would begin – Hohfeld’s analysis of jural 
relations – Discussed.
Arbitration and Conciliation Act, 1996 – s.11(6) – Application 
for appointment of arbitrator u/s.11(6) – Categories of issues 
– “jurisdictional issues/objections”; “admissibility issues/
objections”:
Held: Issues pertaining to the power and authority of the arbitrators 
to hear and decide a case are referred to as the “jurisdictional 
issues/objections” – Objections to the competence of arbitrators 
to adjudicate a dispute, existence/validity of arbitration agreement, 
absence of consent of the parties to submit the disputes to 
arbitration, dispute falling out of the scope of the arbitration 
agreement are some examples of jurisdictional or maintainability 
issues – The second category referred to as the “admissibility is-
sues/objections” is of those issues which are related to the nature 
of the claim and include challenges to procedural requirements, 
viz. a mandatory requirement for pre-reference mediation; claim or 
a part thereof being barred by limitation, etc. – Although, limitation 
is an admissibility issue, yet it is
the duty of the courts to prima-
facie examine and reject non-arbitrable or dead claims, so as to 
protect the other party from being drawn into a time-consuming 
and costly arbitration process. [Paras 64, 65]
Arbitration – Cause of action – When arises – Notice for 
invocation of arbitration issued by the petitioner within three 
years from the date of accrual of cause of action, claims not 
ex-facie dead or time-barred on the date of commencement 
of the arbitration proceedings:
Held: Mere failure to pay may not give rise to a cause of action 
– However, once the applicant has asserted its claim and the 
respondent has either denied such claim or failed to reply to it, 
the cause of action will arise after such denial or failure – In the 
present case, the petitioner alleged that the respondent received 
the payment for the course from the ICCR on 03.10.2017 – 
However, the perusal of the communication exchanged between
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the parties indicates that it was only on 28.03.2018 that the right 
of the petitioner to bring a claim against the respondent could 
be said to have been crystallised – Petitioner completed the 
course sometime in April and a letter to this effect was issued 
on 30.07.2017 by the EOI, Kabul – Allegedly, the ICCR made 
payment to the respondent on 03.10.2017 – However, the right 
of the petitioner to raise the claim could only be said to have 
accrued after the petitioner made a positive assertion in March, 
2018 which was denied by the respondent vide email dated 
28.03.2018 – Another reminder through email was given by 
the petitioner on 29.12.2018, however, mere giving reminders 
and sending of letters would not extend the cause of action 
any further from 28.03.2018 on which date the rights of the 
petitioner could be said to have been crystallised – Thus, in 
ordinary circumstances, the limitation period available to the 
petitioner for raising a claim would have come to an end after 
an expiry of three years, that is, on 27.03.2021 – However, in 
March 2020, in view of deadly Covid-19 pandemic, this Court 
directed the period commencing from 15.03.2020 to be excluded 
for the purposes of computation of limitation – As a result, the 
period from 15.03.2020 to 28.02.2022 was finally determined to 
be excluded for the computation of limitation – It was provided 
that the balance period of limitation as available on
15.03.2020 
would become available from 01.03.2022 – The effect of the 
said order of this Court in the facts of the present case is that 
the balance limitation left on 15.03.2020 would become available 
w.e.f. 01.03.2022 – The balance period of limitation remaining on 
15.03.2020 can be calculated by computing the number of days 
be-tween 15.03.2020 and 27.03.2021, which is the day when 
the limitation period would have come to an end under ordinary 
circumstances – The balance period thus comes to 1 year 13 
days which became available to the petitioner from 01.03.2022, 
thereby meaning that the limitation period available to the petitioner 
for invoking arbitration proceedings would have come to an end 
on 13.03.2023 – Notice for invocation of arbitration having been 
issued by the petitioner within three years from the date of accrual 
of cause of action, the claims cannot be said to be ex-facie dead 
or time-barred on the date of commence-ment of the arbitration 
proceedings.  [Paras 77, 81, 82, 84 and 91]
Arbitration and Conciliation Act, 1996 – s.21 – Commencement 
of arbitral proceedings:
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
Held: s.21 provides that the arbitral proceedings in relation to a 
dispute commence when a notice invoking arbitration is sent by 
the claimant to the other party. [Para 85]
Arbitration and Conciliation Act, 1996 – s.11(6) – Limitation Act, 
1963 – Article 137 – Applicability of Article 137 to applications 
u/s.11(6), a result of legislative vacuum – Parliament should 
consider bringing an amendment to the Act, 1996 prescribing 
a specific period of limitation:
Held: Applicability of Article 137 to applications u/s.11(6), a result 
of legislative vacuum as there is no statutory prescription regarding 
the time limit – Period of three years is an unduly long period 
for filing an application u/s.11 of the Act, 1996 and goes against 
the very spirit of the Act, 1996 which provides for expeditious 
resolution of commercial disputes within a time-bound manner – 
Various amendments to the Act, 1996 have been made over the 
years to ensure that arbitration proceedings are conducted and 
concluded expeditiously – Parliament should consider bringing 
an amendment to the Act, 1996 prescribing a specific period of 
limitation within which a party may move the court for making an 
application for appointment of arbitrators u/s.11 of the Act, 1996. 
[Para 94]
Maxims – “Vigilantibus non dormientibus jura subveniunt” 
– Discussed.
Case Law Cited
M/s B and T AG v. Ministry of Defence, [2023] 7 SCR 
599 : 2023 SCC OnLine SC 657
– held inapplicable.
SBP & Co. v. Patel Engineering Ltd. and Another, [2005] 
Suppl. 4 SCR 688 : (2005) 8 SCC 618 – followed.
Geo Miller and Company Private Limited v. Chairman, 
Rajasthan Vidyut Utpadan Nigam Limited, [2019] 11 
SCR 1108 : (2020) 14 SCC 643; Bharat Sanchar Nigam 
Limited & Another v. Nortel Networks India Private 
Limited, [2021] 2 SCR 644 : (2021) 5 SCC 738; Utkal 
Commercial Corporation v. Central Coal Fields Ltd., 
[1999] 1 SCR 166 : (1999) 2 SCC 571; Secunderabad 
Cantonment Board v. B. Rama-chandraiah & Sons, 
[2021] 3 SCR 68 : (2021) 5 SCC 705; Vidya Drolia and 
Others v. Durga Trading Corporation, [2020] 11 SCR
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1001 : (2021) 2 SCC 1; NTPC Ltd. v. SPML Infra Ltd,  
[2023] 2 SCR 846 : (2023) 9 SCC 385; Major (Retd.) 
Inder Singh Rekhi v. Delhi Development Authority, [1988] 
3 SCR 351 : (1988) 2 SCC 338; Prakash Corporates 
v. Dee Vee Projects Ltd., [2022] 8 SCR 889 : (2022) 
5 SCC 112; Milkfood Ltd. v. GMC Ice Cream (P) Ltd, 
[2004] 3 SCR 854 : (2004) 7 SCC 288 – relied on.
Swissbourgh Diamond Mines (Pty) Ltd. v. Kingdom of 
Lesotho: (2019) 1 SLR 263 – referred to.
Books and Periodicals Cited
International Commercial Arbitration, Wolters Kluwer, 
3rd Edition, pp. 2873-2875, Gary B. Born; O.P. Malhotra 
in The Law & Practice of Arbitration and Conciliation, 
3rd Edition, pp. 688-689; Dr. P.C. Mar-kanda in 
Law Pertaining to Arbitration and Conciliation, 9th 
Edition, LexisNexis, pp. 550-551; Mustiu and Boyd’s 
Commercial Arbitration (1982 Ed., pp. 436) – referred 
to.
List of Acts
Arbitration and Conciliation Act, 1996
List of Keywords
Limitation; Franchise agreements; Limitation Act applicability to 
arbitration proceedings; Claims ex-facie and hopelessly time-barred; 
Petition not barred by limitation; Cause of action.
Case Arising From
CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.29 of 2023
Petition under Section 11(6) of the Arbitration and Conciliation Act, 
1996
Appearances for Parties
R. Sathish, Rajesh Kumar, Mohan Das Kk, Mathen Joseph, Mrs. S. 
Geetha, Advs. for the Petitioner.
Rana Mukherjee, Sr. Adv., K.V.
Balakrishnan, K.V. Mohan, R.K. 
Raghavan, Devesh Kumar Khanduri, Ms. Oindrila Sen, Advs. for 
the Respondent.
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
Judgment / Order of the Supreme Court
Judgment
J. B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the 
following parts: - 
INDEX*
A.	
FACTUAL MATRIX ................................................................ 2
B.	
SUBMISSIONS ON BEHALF OF THE PETITIONER ........15
C.	
SUBMISSIONS ON BEHALF OF THE RESPONDENT ......18
D.	
ANALYSIS ...........................................................................21
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? ..............................22
a.	
When does the right to apply under Section 11(6) 
accrue? ................................................................27
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? ....................................36
a.	
Jurisdiction versus Admissibility ..........................37
b.	
When does the Cause of Action arise? ..............47
c.	
When is Arbitration deemed to have commenced?..54
E.	
CONCLUSION .....................................................................56
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 
* Ed Note : Pagination in index as per original judgment.
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providing training to desirous students in computer education, English 
language, information technology, etc. praying for the appointment of 
an arbitrator for the adjudication of disputes and claims arising from 
the Contract dated 21.03.2013 entered into between the petitioner 
and the respondent. 
A.	
FACTUAL MATRIX
2.	
The petitioner, M/s Arif Azim Co. Ltd., is a company based in 
Afghanistan, having its registered office at 1st Floor, Zarnigar Hotel, 
Mohammed Jan Khan Watt, Kabul, Afghanistan and is engaged in 
the business of providing training in computer education, information 
technology, English language, etc.
3.	
The respondent, M/s Aptech Limited, is a company having its 
registered office at Aptech House, A-65, MIDC Marol, Andheri (E), 
Mumbai – 400093, Maharashtra, India and is engaged in the business 
of providing training and education in information technology through 
its network in India and abroad. 
4.	
On 21.03.2013, three separate franchise agreements were entered 
into between petitioner/franchisee and the respondent/franchisor. As 
per the terms of the said agreements, the petitioner, as the franchisee, 
was granted a non-exclusive license, by the respondent to establish 
and operate businesses under the following trade names: 
I.	
Aptech English Language Academy (for short, “AELA”)
II.	
Aptech Computer Education (for short, “ACE”)
III.	
Aptech Hardware and Networking Academy (for short, “AHNA”)
5.
The dispute in the present case pertains to the agreement entered 
into between the parties for the AELA. A perusal of the recitals of 
the said agreement reveals that the respondent company has the 
expertise in imparting training in information technology and had 
developed content and established programs for training in computer-
based information. The programs developed by the respondent under 
the brand name AELA included the recurring use of trade names, 
trademarks, advertising and publicity, distinctive style and character 
of premises and furnishings, support and placement program for 
students, etc. The petitioner, desirous of establishing a centre for 
providing training in information technology in the courses conducted 
by the respondent with a view to train and educate students to enable
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
them to appear and qualify in the said courses, had approached the 
respondent as a result of which the franchise agreements for AELA, 
ACE and AHNA were entered into between the parties. 
6.	
The relevant clauses of the AELA franchise agreement are reproduced 
hereinbelow: 
“1. GRANT OF LICENSE 
1.01 The Franchisor hereby grants to the Franchisee for the 
duration of the term and upon the terms of this Agreement, 
an non-exclusive Licence (“the Licence”) to establish and 
operate in the Territory, a business under the Trade Name 
“APTECH ENGLISH LEARNING ACADEMY” in accordance 
with the PROGRAM, on the terms and conditions hereinafter 
set forth (“the Licensed Business”), from the designated 
training centre located at First Floor, Zarnigar Hotel, 
Mohammad Jan Khan Watt, Kabul, Afghanistan (hereinafter 
the center)) set up in the designated territory, unless 
revoked otherwise by the Franchisor. The Franchisor shall 
Licence to the Franchisee use of the Trade Name in the 
said territory for the purpose of running the said center. 
The Franchisee shall conduct only those courses as are 
mentioned in Schedule 2. The Franchisee shall be required 
to obtain the prior written permission of the Franchisor, if so 
directed by the Franchisor before commencing the licensed 
business from the said centre. However in respect of any 
additional training centers in the designated territory for 
carrying out the Licensed
Business, the Franchisee shall 
be required to obtain such written permissions from the 
Franchisor from time to time.
xxx

xxx

xxx
3. APPOINTMENT 
Subject to the terms and conditions of this agreement the 
Franchisor appoints the franchisee as an independent 
non-exclusive partner with the right to market and train 
learners in the territory outlined in Schedule 1. 
Each party is acting as an independent contractor and 
not as an agent, partner or joint venture with the other

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party for any purpose. The franchisee shall bear all costs 
relating to the marketing and promotion of the courses as 
outlined in Schedule 2.
xxx

xxx
xxx
8. PAYMENTS AND PAYMENT PROCEDURE
8.01 In consideration of the Franchisor agreeing to 
grant the licence for the licensed business, in favour 
of the Franchisee for a period as mentioned in Clause 
2 above and for the use of the technical Know- how, 
trade marks, trade names, service marks and logos of 
the Franchisor in relation to its business of computer 
education and the association of the Franchisee with the 
reputation and goodwill of the Franchisor, the Franchisee 
agrees to pay to the Franchisor a Non refundable sum 
of US$ 30,000 (US Dollars Thirty Thousand only) as 
initial lumpsum fees.
8.02 If the Franchisee fails to pay the aforesaid lumpsum 
fees within the aforesaid period, the Franchisor shall be 
entitled to terminate this Agreement with immediate effect 
and shall have the right to forfeit the fees, if any, already 
paid by the Franchisee.
8.03 Additionally, in consideration of the License and other 
rights granted, and assistance agreed to be provided 
hereunder, the Franchisee shall pay to the Franchisor 
recurring royalty fees as under.
I.	
The recurring royalty payment shall be on the gross 
collection, to be paid as given below:

●
10% of the gross collections received in the 
1st Year.

●
10% of the gross collections received in the 
2nd year.

●
12.5% of the gross collections received in the 
3rd Year.

●
15% of the gross collections received in the 
4th year.

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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
●
17.5% of the gross collections received in the 
5th year. 
Gross collections means the total gross collections, 
which have accrued to the Franchisee (irrespective of 
whether realized or not) from the conduct of licensed 
business of Aptech in the designated territory.
Amounts payable as Recurring Franchisee Fees will 
be remitted on or before 10th of the subsequent month 
for the preceding calendar month e.g. Recurring 
Franchisee Fees for the gross collections received 
during the period 1st April to 30th April will be remitted 
on or before May 10th
Such recurring payments shall be made on monthly 
basis accompanied by the statement of course fees 
for each Course for the relevant month and also for 
the total period for which Franchisee’s financial year 
relates. The Franchisee shall use a format supplied 
by the Franchisor for such statements duly supported 
with requisite documentation.
II.	
All the payments to be made by the Franchisee to the 
Franchisor shall be by way of Telegraphic Transfer 
/ Demand Draft.
III.	
Any and all statutory tax on the payment as above 
as per local laws, any other taxes, incidental taxes, 
incremental taxes, duties or any other charges 
whether statutory or otherwise in respect of the 
payments to the Franchisor shall be borne and paid 
by the Franchisee alone during the term of this 
agreement.
IV.	
In case the payments under this agreement are 
not received by the due date the Franchisor shall 
be entitled to levy monthly compound
interest @ 
24% p.a. on such late payments notwithstanding 
the other remedies available under the laws of 
the land. 
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xxx

xxx
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12. RENEWAL 
Not less than one hundred eighty days before the expiry 
of this Agreement (whether or not it has previously 
been renewed under the provisions of this Clause) the 
Franchisee may apply to the Franchisor for renewal of 
this Agreement for further period(s). Provided that the 
Franchisee has complied fully with the terms and conditions 
of this Agreement, the Franchisor shall have option to 
renew this Agreement on the terms and conditions for 
such mutually agreed period. However in case the renewal 
documents and renewal fees are not received in time 
as stipulated by the Franchisor, the Franchisor has the 
absolute right to charge monthly compound interest @ 
24% p.a. on the late renewal fees from the due date of 
such payment, notwithstanding the right to terminate the 
renewal of this agreement.
13. FORCE MAJEURE
Neither party to this agreement shall be liable for any 
failure or delay to perform any of its obligations under 
this agreement if the performance is prevented, hindered 
or delayed by a Force Majeure Event which is beyond 
reasonable control of either party and in such a case its 
obligations shall be suspended for so long as the Force 
Majeure event continues. Each party shall promptly inform 
the other in writing of the existence of a Force Majeure Event 
and shall consult together to find a mutually acceptable 
solution. “Force Majeure Even” means any event due 
to any cause beyond reasonable
control of parties to 
this agreement viz. unavailability of any communication 
systems, breach or virus in the processes, fire, storm, 
earthquake, Flood. Explosion, Act of God, Civil commotion, 
strikes, or industrial action of any kind, riots, rebellion, 
war wreck, epidemic failure, statutory laws, regulations or 
other Government action, computer hacking, unauthorized 
access to computer data, etc.
The affected party shall promptly upon the occurrence of 
any such cause so inform the other party in writing and 
thereafter such party shall use reasonable endeavors to

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comply with the terms of this Agreement as fully and as 
promptly as possible.
xxx

xxx
xxx
17. STATUS OF AGREEMENT
17.01 Nothing in this Agreement shall constitute a 
partnership between the parties hereto or constitute the 
Franchisee an agent of the Franchisor for any purpose 
whatsoever and the Franchisee shall have no authority 
or power to bind the Franchisor or to pledge its credit.
17.02 This Agreement shall not be deemed to confer 
any right on the Franchisee and the license granted by 
this Agreement shall be personal to the Franchisee only 
and shall not be capable of being or be assigned by the 
Franchisee to any other person.
17.03 This Agreement shall in no way create a contractual 
relationship between the students and the Franchisor and 
the Franchisee shall, at all times, be wholly liable and 
responsible for any claims related to and arising out of 
the Licensed Business and the conduct of the Courses. 
The Franchisee undertakes to ensure that the students 
are made aware at the time of enrolling in the Course 
that Franchisee is entirely responsible for the conduct of 
the Courses and, that the students shall have no claim 
whatsoever against the Franchisor. 
xxx

xxx
xxx
21. ARBITRATION AND GOVERNING LAWS
In the event of any dispute or difference arising between 
the parties hereto, including the events of termination, 
the same shall be settled through conciliation between 
the parties. In the event the parties are unable to arrive 
at a settlement, the matter will be referred to arbitration. 
The party raising the dispute shall serve a notice upon 
the other party advising that a dispute or difference has 
arisen and nominate on that notice its own arbitrator. 
The party receiving the notice shall, within 30 days after 
receiving such notice, nominate its arbitrator by advising
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the party raising the dispute and the name of the arbitrator 
appointed by the other party. The arbitrators so appointed 
shall appoint a third arbitrator. The award of the majority 
arbitrators shall be final, conclusive and binding upon the 
parties hereto. The venue of arbitration shall be MUMBAI 
and the arbitration proceedings shall be conducted in 
accordance with the UNCITRAL Model Rules. If arbitration 
process fails both the parties shall submit to the jurisdiction 
of the Mumbai courts.
22. This Agreement shall be construed in accordance with 
and governed by the Indian laws.”
7.	
Pursuant to the signing of the aforesaid agreement, proposals were 
invited by the Indian Council for Cultural Relations, Azad Bhavan, 
Indraprastha Estate, New Delhi – 110002 (for short, “the ICCR”) in 
2016 for the execution of a short-term course for training in English 
for students from Afghanistan who were selected to pursue degree 
courses in Indian Universities in the academic year 2017-18 under 
the scholarship scheme of the Government of India (for short, “the 
course”). The proposal of the respondent was accepted by the 
ICCR vide Sanction Order No. SSSAN-2017-18 dated 10.10.2016. 
The sanction order prescribed the schedule for the conduct of the 
course, submission of progress report to the Embassy of India in 
Kabul (for short, “EOI, Kabul”) etc. and also approved the training 
fees at Rs 5,000/- + service tax per student per
month. The order 
also stipulated that the payments for the course would be released to 
the respondent by the ICCR at the end of every month after getting 
an endorsement from the EOI, Kabul. 
8.	
After securing the aforesaid sanction order, the respondent vide email 
dated 17.10.2016 addressed to the petitioner Company informed 
about the sanction order and stated that the respondent would speak 
to the petitioner for the implementation of the said order once the 
expectations of the ICCR for the course were understood. 
9.	
Subsequently, a series of emails were exchanged between 
the petitioner and the respondent regarding the details of the 
course including the syllabus, learning outcomes, class schedule, 
qualifications, salary and number of trainers, etc. 
10.	 The EOI, Kabul vide email dated 24.12.2016, informed the petitioner 
that although the applications of Afghan students were already sent
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to the Indian Universities, yet the Universities had not started granting 
admissions to them and thus it was suggested by the ICCR that the 
course should begin from the last week of January/ First week of 
February, 2017. 
11.	 The course was executed by the petitioner at its centre in Kabul 
from February to April, 2017 for 440 Afghan students. The same was 
certified by the EOI, Kabul vide its letter no. KAB/327/05/2016-17 
dated 30.07.2017. 
12.	 Vide letters dated 04.08.2017 and 14.08.2017 respectively addressed 
to the EOI, Kabul, the program director for the ICCR requested for 
month-wise details/number of students who attended the course so 
as to process the payments for the course to the respondent.
13.	 Meanwhile disputes arose between the parties in relation to 
the renewal and payment of royalties for all the three franchise 
agreements entered into by the parties in March, 2013. Vide email 
dated 20.03.2018 addressed to the petitioner, the respondent issued 
a recovery notice for non-payment of royalty/renewal fees. The email 
stated that due to the non-payment of outstanding royalty, the portal 
operations for AELA and ACE would be shut by 21.03.2018 and by 
the month-end for the AHNA portal. 
14.	 The petitioner replied to the aforesaid recovery notice vide email 
dated 23.03.2018, however the contents of the same have not been 
placed on record. The respondent replied to the reply email of the
petitioner vide email dated 27.03.2018 stating that despite having 
sent the invoices for pending royalties, nothing had been received 
by the respondent. Responding to the issue of non-payment for the 
course conducted by the petitioner, the respondent stated in the 
said email that they had not received the full amount from the ICCR, 
which had officially held back 22% of the payment for deductions of 
quality. The respondent also called upon the petitioner to urgently 
address, inter-alia, the issue of renewal of the franchise agreements. 
15.	 Responding to the above referred email on the very same day, i.e., 
27.03.2018, the petitioner stated that it had hired 7 Indian and 4 
local English trainers for executing the course and since the course 
had been executed in Afghanistan, it was entitled to receive 90% of 
the payments received by the respondent from Aptech India. The 
petitioner further requested the respondent to share the details of 
the amount received from the ICCR after the 22% deduction to
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enable them to make the calculations and finalise the payment 
accordingly. 
16.	 The respondent vide an email dated 28.03.2018 replied to the above 
email of the petitioner stating that it had received only 61.5% of the 
claimed amount from the ICCR after quality and TDS deductions. 
The respondent further mentioned that it was entitled to 15% royalty 
as opposed to the 10% stated by the petitioner and that it had 
incurred some incidental expenses for the project. The respondent 
also stressed on the issue of payment of outstanding royalty and 
renewal, calling upon the petitioner to address them first. 
17.	 The petitioner replied to the above email on the same day disputing 
the percentage of royalty fee to which the respondent was entitled. 
The petitioner further stated that it had no issues regarding the 
quality deductions made by the ICCR, however it needed to know 
the exact amount disbursed by the ICCR to the respondent so that 
it could calculate its share from the same and adjust them towards 
the pending dues. 
18.	 From the email exchanges placed on record, it is clear that the 
discussions regarding the non-payment of the amount received from 
the ICCR came to a halt between the parties on 28.03.2018, however 
the discussions regarding the renewal of the agreements continued. 
Finally, on 23.04.2018, the petitioner informed the respondent of its 
decision to not renew the franchise agreements for the ACE and
AELA 
in light of the dispute regarding the payment for the course executed by 
the petitioner. However, the agreement for AHNA was renewed and the 
respondent acknowledged the same vide an email on the same day. 
19.	 After about nine months, the petitioner once again sent an email to 
the respondent on 29.12.2018, raising the issue of the non-payment 
of the dues for the ICCR project. Although the said email refers 
to some phone calls and WhatsApp communication regarding the 
payment for the course, nothing has been placed on record by the 
petitioner to that effect. Vide the said email, the petitioner once 
again requested the respondent to provide accounting details for 
the expenses incurred and payment received from the ICCR for the 
course. The petitioner also mentioned that it had incurred expenses 
amounting to $ 60,000/- on salary, lodging and food for the trainers. 
20.	 As it appears from the record, it is only after a gap of around 
three years that the petitioner again took up the issue of non-
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payment of dues for the ICCR project with the respondent, 
vide a legal notice dated 26.08.2021. Through the notice, the 
petitioner called upon the respondent to pay Rs 73,53,000/- with 
18% interest compounded monthly w.e.f. 01.11.2017 within 15 
days of the receipt of the notice. The notice further stated that in 
the event of the respondent failing to comply with the aforesaid 
demand, the petitioner would file appropriate proceedings before 
the competent courts including a suit for settlement of accounts 
for recovery and also by way of damages or otherwise for breach 
of trust and breach of contract. 
21.	 Again, after about 10 months, the petitioner invoked a pre-institution 
mediation before the Main Mediation Centre, Bombay High Court 
on 05.07.2022 in accordance with Section 12A of the Commercial 
Courts Act, 2015 making the respondent and the ICCR as party 
respondents. Notice was issued in the said mediation proceedings 
and 12.08.2022 was scheduled as the date for appearance of the 
parties. Upon failure of the parties to be present on the said date, 
24.08.2022 was fixed as the next date for appearance. However, on 
the said date, the opposite parties submitted letters refusing to go 
into mediation and thus a non-starter report dated 24.08.2022 was 
issued under Rule 3(4) of the Commercial Courts (Pre-Institution 
Mediation and Settlement) Rules, 2018. 
22.	 After the failure of mediation as
aforesaid, the petitioner sent notice 
for invocation of arbitration to the respondent on 24.11.2022. Vide the 
notice, the petitioner called upon the respondent to pay an amount of 
Rs 1,48,31,067/- inclusive of interest of Rs 82,13,367/- and nominated 
Mr V. Giri and Mr M.L. Verma, Senior Advocates practicing in this 
Court as its nominee arbitrators. 
23.	 The respondent replied to the aforesaid notice vide letter dated 
05.04.2023 denying all the claims raised by the petitioner in the notice 
dated 24.11.2022. It further stated that notwithstanding the merits, 
the claims were barred by limitation. The respondent also stated 
that the mediation proceedings initiated before the Bombay High 
Court were under Section 12A of the Commercial Courts Act, 2015 
which is a mandatory requirement before filing a commercial suit, 
and thus it was not open to the petitioner to link it to the conciliation 
as envisaged in the clause 21 of the franchise agreement for AELA 
as extracted hereinbefore.
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24.	 The present petition then came to be filed by the petitioner on 
19.04.2023 before this Court after the failure of the respondent in 
nominating an arbitrator as per the mutually agreed upon procedure 
in response to notice for invocation of arbitration. 
B.	
SUBMISSIONS ON BEHALF OF THE PETITIONER
25.	 Mr. R. Sathish, the learned counsel appearing for the petitioner 
submitted that this Court has the requisite jurisdiction to take 
necessary measures for the constitution of an arbitral tribunal under 
Section 11(6) of the Act, 1996 as the case at hand pertains to an 
“international commercial arbitration” within the meaning of Section 
2(f) of the Act, 1996. Further, clause 21 of the AELA agreement 
provides for appointment of a three-membered arbitral tribunal in 
case a dispute arises and cannot be resolved through conciliation 
between the parties. 
26.	 The counsel submitted that the petitioner, as an independent 
non-exclusive partner of the respondent, is entirely responsible 
for the conduct of the course as per clause 17.03 of the franchise 
agreement and is thus entitled to receive 90% of the payments 
received by the respondent from the ICCR after successful 
completion of the course. 
27.	 The counsel argued that as the principal contract for the course 
was signed between the ICCR and the respondent, the grant in aid 
of Rs 73,53,000/- was transferred by the ICCR to the respondent 
on 03.10.2017 after the
certificate of successful completion of the 
course was issued by the EOI, Kabul. However, since the course 
was executed in Afghanistan by the petitioner as the franchisee, it 
is entitled to received 90% of the amount received as per the AELA 
franchise agreement. 
28.	 The counsel further submitted that the respondent had neither 
informed nor disclosed the amount received from the ICCR despite 
repeated requests made by the petitioner for settlement of accounts. 
The petitioner further contended that the experience of the respondent 
with the ICCR and Government of India cannot be a ground for 
withholding of the payments by the respondent. 
29.	 The counsel argued that the cause of action first arose on 03.10.2017 
when the respondent withheld the information of receipt of Rs 
73,53,000/- from the ICCR. The cause of action further arose on
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28.03.2018 when the respondent informed that cash-flow wise it had 
received only 61.5% of the claimed amount from the ICCR and that 
it had incurred some incidental expenses for the project.
30.	 The petitioner contended that since the respondent has failed to 
disclose the amount received from ICCR till date, it has resulted in 
a continuing cause of action as the petitioner couldn’t quantify the 
total amount due along with interest as exact details of the amount 
received by the respondent from the ICCR were not disclosed. 
31.	 The counsel submitted that as the cause of action for full and final 
settlement of claims was yet to accrue, the reliance placed by the 
respondent on the decision of this Court in M/s B and T AG v. 
Ministry of Defence reported in 2023 SCC OnLine SC 657 was 
misconceived. 
32.	 The counsel submitted that a force majeure situation as per clause 
13 of the AELA agreement was created due to the coming back of 
Taliban in Afghanistan in August, 2021. It was contended by the 
petitioner that this resulted in the break-down of all communication 
channels disabling the petitioner from approaching the courts on 
time despite of doing everything in its power. 
33.	 The counsel further submitted that the petitioner is entitled to get the 
benefit of the extension of limitation period as directed by this Court 
in SMW(C) No. 03 of 2020 by which the period from 15.03.2020 to 
28.02.2022 is
liable to be excluded for the purposes of computing 
limitation. 
34.	 The counsel submitted that upon failure of the respondent in replying 
to its claims and legal notice, it had approached the Bombay High 
Court Mediation Centre under Section 12A of the Commercial Courts 
Act, 2015 and had initiated pre-reference mediation in accordance 
with the terms of the arbitration clause in the AELA agreement. It 
was further submitted that in any view of the matter, the petitioner is 
not estopped from invoking arbitration under clause 21 of the AELA 
agreement after having invoked pre-litigation mediation under the 
Commercial Courts Act, 2015. 
35.	 Finally, the counsel prayed for passing an order referring the dispute 
to arbitration with a view to adjudicate the differences between the 
parties as contemplated in clause 21 of the AELA agreement dated 
21.03.2013.
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C.	
SUBMISSIONS ON BEHALF OF THE RESPONDENT 
36.	 At the outset, Mr. Rana Mukherjee, the learned senior counsel 
appearing on behalf of the respondent submitted that the disputes 
raised by the petitioner are not arbitrable as the claims made by the 
petitioner relate to the sanction letter dated 10.10.2016 issued by the 
ICCR to the respondent which is not a part of the AELA franchise 
agreement entered into between the parties on 21.03.2013. Thus, 
in the absence of any arbitration clause in the aforesaid sanction 
order, and it being unrelated to the AELA franchise agreement, the 
petitioner cannot invoke arbitration for the adjudication of the claims.
37.	 It was further submitted by him that on the contrary, as per the 
AELA franchise agreement, it was the respondent who was entitled 
to receive royalty fee from the petitioner at the rates prescribed in 
the franchise agreement, and there was no arrangement by which 
the petitioner was entitled to a 90% payment. 
38.	 The learned Senior counsel vehemently argued that notwithstanding 
the merits of the claim, the same is hopelessly barred by limitation 
on the face of it by virtue of the applicability of Article 137 of the 
Limitation Act, 1963. The dispute, as per the legal notice dated 
26.08.2021 issued by the petitioner to the respondent, arose on 
01.11.2017 and thus the limitation period, even after considering the 
covid exclusion, had come to an end much prior to
the date when 
the notice for invocation of arbitration was issued by the petitioner on 
24.11.2022. Further, the plea of a force-majeure event due to coming 
back of Taliban in Afghanistan, as raised by the petitioner is not 
bona-fide as most of the exchanges between the parties took place 
on email and the email facility was available to the petitioner even in 
the month of August, 2021. The counsel submitted that no effective 
steps were taken by the petitioner even after the covid period came 
to an end indicating that the petitioner was not vigilant in protecting its 
rights and hence the petition was liable to be dismissed as barred by 
limitation. The counsel contended that the mere exchange of letters 
would not extend the cause of action and the period of limitation for 
the purposes of filing the arbitration petition. 
39.	 It was further submitted that the invocation of pre-litigation mediation 
proceedings before the Bombay High Court Mediation Centre by the 
petitioner was under Section 12A of the Commercial Courts Act, 2015 
which is a mandatory pre-condition before institution of a commercial
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suit under the said Act and the petitioner should not be allowed 
to change course by invoking arbitration after having previously 
submitted to the jurisdiction of the Commercial Courts Act, 2015. 
Further, the petitioner made the ICCR as a party in the mediation 
proceedings before the High Court and the ICCR also participated 
in the said proceedings. Thus, it is evident that the dispute arising 
out of the tripartite arrangement between the petitioner, respondent 
and the ICCR has no nexus with the arbitration clause of the AELA 
franchise agreement. 
40.	 An objection was raised by the learned counsel towards the identity 
of the Deponent to the affidavit in support of the present arbitration 
petition on the ground that no Power of Attorney or Letter of Authority 
could have been executed by the petitioner in favour of the Deponent 
to the Affidavit. 
41.	 One another submission made by the counsel was that the notice 
for invocation of arbitration sent by the petitioner was not a valid 
notice as per clause 21 of the franchise agreement being contrary 
to the arbitration clause which provides for appointment of three 
arbitrators, the notice mentions appointment of a sole arbitrator 
and proposes names of two arbitrators, and on this ground too, the 
petition is liable to be dismissed. 
42.	 Placing reliance on the judgment of this Court in M/s B and T AG 
(supra) the learned senior counsel submitted that
the present petition 
squarely falls within the dictum laid down in the said judgment and 
is thus hopelessly barred by limitation. 
D.	
ANALYSIS
43.	 Having heard the learned counsel appearing for the parties and 
having perused the material on record, the following two questions 
fall for our consideration: 
I.	
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? 
II.	
Whether the court may refuse to make a reference under 
Section 11 of Act, 1996 where the claims are ex-facie and 
hopelessly time-barred?
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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?
44.	 The basic premise behind the statutes providing for a limitation period 
is encapsulated by the maxim “Vigilantibus non dormientibus jura 
subveniunt” which translates to “the law assists those who are vigilant 
and not those who sleep over their rights”. The object behind having 
a prescribed limitation period is to ensure that there is certainty and 
finality to litigation and assurance to the opposite party that it will not 
be subject to an indefinite period of liability. Another object achieved 
by a fixed limitation period is to only allow those claims which are 
initiated before the deterioration of evidence takes place. The law of 
limitation does not act to extinguish the right but only bars the remedy. 
45.	 The plain reading of Section 11(6) of the Act, 1996, which provides for 
the appointment of arbitrators, indicates that no time-limit has been 
prescribed for filing an application under the said section. However, 
Section 43 of the Act, 1996 provides that the Limitation Act, 1963 
would apply to arbitrations as it applies to proceedings in court. The 
aforesaid section is reproduced hereinbelow: 
“43. Limitations.—(1) The Limitation Act, 1963 (36 of 
1963), shall
apply to arbitrations as it applies to proceedings 
in court.
(2) For the purposes of this section and the Limitation 
Act, 1963 (36 of 1963), an arbitration shall be deemed to 
have commenced on the date referred to in section 21. 
(3) Where an arbitration agreement to submit future 
disputes to arbitration provides that any claim to which 
the agreement applies shall be barred unless some step 
to commence arbitral proceedings is taken within a time 
fixed by the agreement, and a dispute arises to which 
the agreement applies, the Court, if it is of opinion that 
in the circumstances of the case undue hardship would 
otherwise be caused, and notwithstanding that the time 
so fixed has expired, may on such terms, if any, as the 
justice of the case may require, extend the time for such 
period as it thinks proper.
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(4) Where the Court orders that an arbitral award be set 
aside, the period between the commencement of the 
arbitration and the date of the order of the Court shall 
be excluded in computing the time prescribed by the 
Limitation Act, 1963 (36 of 1963), for the commencement 
of the proceedings (including arbitration) with respect to 
the dispute so submitted.”
46.	 Since none of the Articles in the Schedule to the Limitation Act, 1963 
provide a time period for filing an application under Section 11(6) of 
the Act, 1996, it would be covered by Article 137 of the Limitation 
Act, 1963 which is the residual provision and reads as under: 
Description of 
Application 
Period of 
limitation 
Time from which 
period begins to run
137. Any other application 
for which no period of 
limitation is provided 
elsewhere in this 
Division 
Three 
years 
When the right to 
apply accrues. 
47.	 In his authoritative commentary, “International Commercial Arbitration, 
Wolters Kluwer, 3rd Edition, pp. 2873-2875”, Gary B. Born has 
observed that as a general rule, limitation statutes are applicable to 
arbitration proceedings. The relevant extract is as follows: 
“Most nations impose limitation or prescription periods 
within which civil claims must be brought. Of course, 
statutes of limitation differ from country to country. As 
discussed below, statutes of limitations are virtually always 
applicable in international
arbitration proceedings, in the 
same way that they apply in national court proceedings. 
Choosing between various potentially-applicable statutes 
of limitations in international arbitration raises significant 
choice-of-law questions. 
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xxx
Conflict of laws issues also arise as to the date that the 
statute of limitations period is tolled. The issue can be 
addressed by national laws, as well as by institutional 
arbitration rules. Unfortunately, inconsistencies can arise
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between institutional rules and one or more potentially-
applicable national laws (which may also apply in a 
mandatory fashion). For counsel in a particular dispute, 
of course, the only safe course is to satisfy the shortest 
potentially-applicable limitations period.” 
(emphasis supplied) 
48.	 A seven-Judge Bench of this Court in SBP & Co. v. Patel Engineering 
Ltd. and Another reported in (2005) 8 SCC 618 held that the issue 
of limitation being one of threshold importance, it must be decided 
at the pre-reference stage, so that the other party is not dragged 
through a long-drawn arbitration, which would be expensive and 
time consuming. 
49.	 A three-Judge Bench of this Court in Geo Miller and Company 
Private Limited v. Chairman, Rajasthan Vidyut Utpadan Nigam 
Limited reported in (2020) 14 SCC 643 observed as follows: 
“14. Sections 43(1) and (3) of the 1996 Act are in pari 
materia with Sections 37(1) and (4) of the 1940 Act. It is 
well-settled that by virtue of Article 137 of the First Schedule 
to the Limitation Act, 1963 the limitation period for reference 
of a dispute to arbitration or for seeking appointment of 
an arbitrator before a court under the 1940 Act (see State 
of Orissa v. Damodar Das [(1996) 2 SCC 216] ) as well 
as the 1996 Act (see Grasim Industries Ltd. v. State of 
Kerala [ (2018) 14 SCC 265 : (2018) 4 SCC (Civ) 612] ) 
is three years from the date on which the cause of action 
or the claim
which is sought to be arbitrated first arises.
15. In Damodar Das [(1996) 2 SCC 216], this Court 
observed, relying upon Russell on Arbitration by Anthony 
Walton (19th Edn.) at pp. 4-5 and an earlier decision of a 
two-Judge Bench in Panchu Gopal Bose v. Port of Calcutta 
[(1993) 4 SCC 338], that the period of limitation for an 
application for appointment of arbitrator under Sections 
8 and 20 of the 1940 Act commences on the date on 
which the “cause of arbitration” accrued i.e. from the date 
when the claimant first acquired either a right of action or 
a right to require that an arbitration take place upon the 
dispute concerned.
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16. We also find the decision in Panchu Gopal Bose 
[(1993) 4 SCC 338] relevant for the purpose of this case. 
This was a case similar to the present set of facts, where 
the petitioner sent bills to the respondent in 1979, but 
payment was not made. After an interval of a decade, he 
sent a notice to the respondent in 1989 for reference to 
arbitration. This Court in Panchu Gopal Bose [(1993) 4 
SCC 338] observed that in mercantile references of this 
kind, it is implied that the arbitrator must decide the dispute 
according to the existing law of contract, and every defence 
which would have been open to the parties in a court of 
law, such as the plea of limitation, would be open to the 
parties for the arbitrator’s decision as well. Otherwise, as 
this Court observed : (SCC p. 344, para 8)
“8. … a claim for breach of contract containing 
a reference clause could be brought at any 
time, it might be 20 or 30 years after the cause 
of action had arisen, although the legislature 
has prescribed a limit of three years for the 
enforcement of such a claim in any application 
that might be made to the law courts.”
17. This Court further held as follows: (Panchu Gopal Bose 
case [ (1993) 4 SCC 338] , SCC pp. 345-46, paras 11-12)
“11. Therefore, the period of limitation for the commencement 
of an arbitration runs from the date on which, had there 
been no arbitration clause, the cause of action would have 
accrued.
Just as in the case of civil actions the claim is not 
to be brought after the expiration of a specified number of 
years from the date on which the cause of action accrued, 
so in the case of arbitrations, the claim is not to be put 
forward after the expiration of the specified number of 
years from the date when the claim accrued.
12. In Russell on Arbitration….
At p. 80 it is stated thus:
‘An extension of time is not automatic and it is only granted 
if “undue hardship” would otherwise be caused. Not all 
hardship, however, is “undue hardship”; it may be proper
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that hardship caused to a party by his own default should 
be borne by him, and not transferred to the other party 
by allowing a claim to be reopened after it has become 
barred.’ ”
(emphasis supplied)
50.	 Having traversed the statutory framework and case law, we are of 
the clear view that there is no doubt as to the applicability of the 
Limitation Act, 1963 to arbitration proceedings in general and that 
of Article 137 of the Limitation Act, 1963 to a petition under Section 
11(6) of the Act, 1996 in particular. Having held thus, the next question 
that falls for our determination is whether the present petition seeking 
appointment of an arbitrator is barred by limitation.
51.	 The determination of the aforesaid question is an exercise involving 
both law and facts. As is evident from Article 137 of the Limitation Act, 
1963, the limitation period for making an application under Section 
11(6) of the Act, 1996 is three years from the date when the right 
to apply accrues. Thus, to determine whether the present petition 
is barred by limitation, it is necessary to ascertain when the right to 
file the present petition under Section 11(6) of the Act, 1996 accrued 
in favour of the petitioner. 
a.	
When does the right to apply under Section 11(6) accrue? 
52.	 It has been held in a catena of decisions of this Court that the 
limitation period for making an application seeking appointment of 
arbitrator must not be
conflated or confused with the limitation period 
for raising the substantive claims which are sought to be referred 
to an arbitral tribunal. The limitation period for filing an application 
seeking appointment of arbitrator commences only after a valid 
notice invoking arbitration has been issued by one of the parties to 
the other party and there has been either a failure or refusal on part 
of the other party to make an appointment as per the appointment 
procedure agreed upon between the parties. 
53.	 O.P. Malhotra in The Law & Practice of Arbitration and Conciliation, 
3rd Edition, pp. 688-689 has summarised the position of law on the 
limitation period for a Section 11(6) petition thus: 
“There is no specific period of limitation prescribed for 
making the request under Section 11(6) to the Chief 
Justice or his designate, to take the necessary measure
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for appointing an arbitrator. Therefore, Article 137 of the 
Limitation Act, 1963, which provides the limitation period 
of three years for filing any other application for which 
no period of limitation is provided elsewhere in the third 
division of the Schedule of the Act from the day when the 
right to apply accrues. It is the residuary article in regard 
to the applications, and it can only be applied if no other 
article is applicable. It would only apply to an application 
where it is required by law to be made. It is restricted to 
applications for the exercise of the Acts and powers which 
the court is not bound to perform suo motu. Therefore, 
the period of limitation for making a request under Section 
11(6) is three years, and the limitation is to be counted 
from the date on which 30 days from the date of notice by 
one party to the other for appointing arbitrator expires. The 
question whether the claims/disputes made in reference 
to arbitration was valid is a question to be decided by 
the arbitrator, and not by the appointing authority of the 
arbitrator under Section 11(6) of the Act. The appointing 
authority is certainly required to ascertain whether the 
application under Section 11(6) of the Act was barred by 
time.” 
(emphasis supplied)
54.	 Dr. P.C. Markanda in Law Pertaining to Arbitration and Conciliation, 
9th Edition, LexisNexis, pp. 550-551 has discussed on the applicability 
of law
of limitation to a petition under Section 11(6) of the Act, 1996 
as follows: 
“For the purpose of examining the right of the petitioner 
to apply under sub section (6) for calculating the period of 
limitation, it is necessary to establish, in the first instance, 
the relevant date when the right to apply accrued in favour 
of the petitioner. It is the date on which the right to apply 
accrues that determines the starting point. The starting 
point does not coincide with the date on which the cause of 
action for filing a suit arises. Whether the claims of a party 
are barred by limitation or not is for the arbitrator to see, 
but it is the duty of the court to see whether the application 
filed in the court is within limitation or not. Limitation for 
filing application under sub-section (4) would commence

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only from the expiry of 30 days from the receipt of request 
mentioned in sub-section (4)(a) or (b) and the limitation 
for an application under sub-section (6) would commence 
from the happening of the contingencies mentioned in sub-
clauses (a) or (b) or (c) thereof. The procedure prescribed 
under this section is mandatory and Art. 137, Limitation 
Act providing for limitation shall apply.
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xxx
xxx
It would be entirely wrong to mix the two aspects, namely 
whether there was any valid claim and secondly the claim 
to be adjudicated by the arbitrator was barred by time. As 
for the second matter, it is for the arbitrator to see whether 
the claim was within limitation or not and the court should 
confine itself to see whether the application made to the 
court is within limitation. An application made more than 
three years after the accrual of cause of action is palpably 
time barred and liable to be dismissed. Article 137 of the 
Limitation Act makes it obligatory for claims to be filed 
within 3 years of the rescission/termination of the contract. 
The right of action for the department starts from the date 
when the work is rescinded and not from the date when 
the balance work is got completed through another agency.
If the petitioner delays invocation of arbitration clause for 
months together for no justifiable cause after the period 
prescribed in the arbitration agreement had elapsed, the 
court would not come to the rescue of such a party seeking 
appointment of arbitrator and the abnormal delay of more 
than a year cannot be condoned.” 
(emphasis supplied)
55.	 This Court in Bharat Sanchar Nigam Limited & Another v. Nortel 
Networks India Private Limited reported in (2021) 5 SCC 738 
held thus: 
“15. It is now fairly well-settled that the limitation for filing 
an application under Section 11 would arise upon the 
failure to make the appointment of the
arbitrator within 
a period of 30 days from issuance of the notice invoking 
arbitration. In other words, an application under Section 11
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can be filed only after a notice of arbitration in respect of 
the particular claim(s)/dispute(s) to be referred to arbitration 
[as contemplated by Section 21 of the Act] is made, and 
there is failure to make the appointment.
16. The period of limitation for filing a petition seeking 
appointment of an arbitrator(s) cannot be confused or 
conflated with the period of limitation applicable to the 
substantive claims made in the underlying commercial 
contract. The period of limitation for such claims is 
prescribed under various Articles of the Limitation Act, 
1963. The limitation for deciding the underlying substantive 
disputes is necessarily distinct from that of filing an 
application for appointment of an arbitrator. This position 
was recognised even under Section 20 of the Arbitration 
Act, 1940. Reference may be made to the judgment of 
this Court in J.C. Budhraja v. Orissa Mining Corpn. Ltd. 
[(2008) 2 SCC 444 : (2008) 1 SCC (Civ) 582] wherein 
it was held that Section 37(3) of the 1940 Act provides 
that for the purpose of the Limitation Act, an arbitration 
is deemed to have commenced when one party to the 
arbitration agreement serves on the other party, a notice 
requiring the appointment of an arbitrator. Para 26 of this 
judgment reads as follows : (SCC p. 460)
“26. Section 37(3) of the Act provides that for 
the purpose of the Limitation Act, an arbitration 
is deemed to have been commenced
when 
one party to the arbitration agreement serves 
on the other party thereto, a notice requiring 
the appointment of an arbitrator. Such a notice 
having been served on 4-6-1980, it has to be 
seen whether the claims were in time as on that 
date. If the claims were barred on 4-6-1980, it 
follows that the claims had to be rejected by 
the arbitrator on the ground that the claims 
were barred by limitation. The said period has 
nothing to do with the period of limitation for filing 
a petition under Section 8(2) of the Act. Insofar 
as a petition under Section 8(2) is concerned, 
the cause of action would arise when the other
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party fails to comply with the notice invoking 
arbitration. Therefore, the period of limitation 
for filing a petition under Section 8(2) seeking 
appointment of an arbitrator cannot be confused 
with the period of limitation for making a claim. 
The decisions of this Court in Inder Singh Rekhi 
v. DDA [(1988) 2 SCC 338], Panchu Gopal 
Bose v. Port of Calcutta [(1993) 4 SCC 338] 
and Utkal Commercial Corpn. v. Central Coal 
Fields Ltd. [(1999) 2 SCC 571] also make this 
position clear.”
(emphasis supplied)
56.	 The other way of ascertaining the relevant point in time when the 
limitation period for making a Section 11(6) application would begin 
is by making use of the Hohfeld’s analysis of jural relations. It is a 
settled position of law that the limitation period under Article 137 of the 
Limitation Act, 1963 will commence only after the right to apply has 
accrued in favour of the applicant. As per Hohfeld’s scheme of jural 
relations, conferring of a right on one entity must entail the vesting of 
a corresponding duty in another. When an application under Section 
11(6) of the Act, 1996 is made before this Court without exhausting 
the mechanism prescribed under the said sub-section, including that 
of invoking arbitration by issuance of a formal notice to the other 
party, this Court is not duty bound to appoint an arbitrator and can 
reject the application for being premature and non-compliant with the 
statutory
mandate. However, once the procedure laid down under 
Section 11(6) of the Act, 1996 is exhausted by the applicant and 
the application passes all other tests of limited judicial scrutiny as 
have been evolved by this Court over the years, this Court becomes 
duty-bound to appoint an arbitrator and refer the matter to an arbitral 
tribunal. Thus, the “right to apply” of the Applicant can be said to have 
as its jural corelative the “duty to appoint” of this Court only after all 
the steps required to be completed before instituting a Section 11(6) 
application have been duly completed. Thus, the limitation period 
for filing a petition under Section 11(6) of the Act, 1996 can only 
commence once a valid notice invoking arbitration has been sent 
by the applicant to the other party, and there has been a failure or 
refusal on part of that other party in complying with the requirements 
mentioned in such notice.
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57.	 This Court in Utkal Commercial Corporation v. Central Coal 
Fields Ltd. reported in (1999) 2 SCC 571 while determining a similar 
question in relation to the Arbitration Act, 1940 held thus: 
“6. Therefore, the time for the purposes of limitation begins 
to run from the date when the right to make an application 
under Section 8 accrues. Section 8 of the Arbitration Act, 
which is relevant for our present purposes, is reproduced 
below:
“8. Power of court to appoint arbitrator or umpire.—(1) 
In any of the following cases—
(a) where an arbitration agreement provides that 
the reference shall be to one or more arbitrators 
to be appointed by consent of the parties, and all 
the parties do not, after differences have arisen, 
concur in the appointment or appointments; or
(b)-(c)***
any party may serve the other parties or the arbitrators, 
as the case may be, with a written notice to concur in 
the appointment or appointments or in supplying the 
vacancy.
(2) If the appointment is not made within fifteen clear 
days after service of the said notice, the court may, on 
the application of the party who gave the notice and after 
giving the other parties an opportunity of being heard, 
appoint an arbitrator or arbitrators or umpire, as the case 
may be, who shall have like power to act in the reference 
and to make an award as if he or they had been appointed 
by consent of all parties.”
7. Therefore, under
Section 8, before an application can 
be made to the court under that section, the following 
requirements should be satisfied:
(1) The arbitration agreement should provide for 
appointment of arbitrator/s by consent.
(2) Parties do not concur in the appointment of an 
arbitrator.
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(3) One party serves notice on the other party to 
concur in the appointment.
(4) No appointment is made within 15 days of the 
service of the notice.
8. Thereupon the court may, on the application of the party 
who gave the notice and after giving the other party an 
opportunity of being heard, appoint an arbitrator.
9. In view of the express language of Section 8, it is quite 
clear that unless a party who desires to apply has resorted 
to the process set out in Section 8, and has failed to secure 
the concurrence of the other party to the appointment of 
an arbitrator within the prescribed period, the court will 
not intervene under Section 8. The right to apply under 
Section 8, therefore, would accrue when, within 15 clear 
days of the notice, the other parties do not concur in the 
appointment of an arbitrator.”
(emphasis supplied)
58.	 In Secunderabad Cantonment Board v. B. Ramachandraiah & 
Sons reported in (2021) 5 SCC 705, this Court while determining 
the issue of limitation in relation to a Section 11(6) petition under 
the Act, 1996 held thus: 
“19. Applying the aforesaid judgments to the facts of 
this case, so far as the applicability of Article 137 of the 
Limitation Act to the applications under Section 11 of the 
Arbitration Act is concerned, it is clear that the demand 
for arbitration in the present case was made by the 
letter dated 7-11-2006. This demand was reiterated by 
a letter dated 13-1-2007,
which letter itself informed the 
appellant that appointment of an arbitrator would have 
to be made within 30 days. At the very latest, therefore, 
on the facts of this case, time began to run on and from 
12-2-2007. The appellant’s laconic letter dated 23-1-2007, 
which stated that the matter was under consideration, 
was within the 30-day period. On and from 12-2-2007, 
when no arbitrator was appointed, the cause of action for 
appointment of an arbitrator accrued to the respondent and 
time began running from that day. Obviously, once time
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has started running, any final rejection by the appellant by 
its letter dated 10-11-2010 would not give any fresh start 
to a limitation period which has already begun running, 
following the mandate of Section 9 of the Limitation Act. 
This being the case, the High Court was clearly in error 
in stating that since the applications under Section 11 
of the Arbitration Act were filed on 6-11-2013, they were 
within the limitation period of three years starting from 
10-11-2020. On this count, the applications under Section 
11 of the Arbitration Act, themselves being hopelessly 
time-barred, no arbitrator could have been appointed by 
the High Court.”
(emphasis supplied)
59.	 Similarly, in Bharat Sanchar Nigam Limited (supra), this Court after 
applying the settled position of law held as follows: 
“22. Applying the aforesaid law to the facts of the present 
case, we find that the application under Section 11 was 
filed within the limitation period prescribed under Article 
137 of the Limitation Act. Nortel issued the notice of 
arbitration vide letter dated 29-4-2020, which was rejected 
by BSNL vide its reply dated 9-6-2020. The application 
under Section 11 was filed before the High Court on 24-
7-2020 i.e. within the period of 3 years of rejection of the 
request for appointment of the arbitrator.”
(emphasis supplied)
60.	 It’s time now to apply the dicta laid down in the aforesaid judgments 
to the facts of
the present case. The notice for invocation of arbitration 
was issued by the petitioner to the respondent on 24.11.2022, 
proposing the names of two learned arbitrators and calling upon 
the respondent to either release the allegedly withheld payment or 
nominate an arbitrator from their side within a period of 30 days from 
the date of receipt of the notice. As per the record, the notice was 
delivered to the respondent on 29.11.2022. The relevant extracts 
from the said notice are extracted hereinbelow: 
“14. Thus disputes arose between the parties, one 
incorporated in a country other than India in relation to the 
Franchise Agreement dt. 21.3.2013, which would attract
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Section 2(1)(f)(ii) of the A&C Act. Since every effort to 
resolve it amicably failed, our client is invoking Sec 11(6) 
read with Section 11(12)(a) of A & C Act before Hon’ble 
Supreme Court of India to seek appointment of a sole 
arbitrator in case M/s Aptech Ltd. is not heeding AACL 
request in this behalf.
15. Without prejudice to your rights, our client suggests the 
name of 2 persons, namely Sri. V. Giri, Sri. M L Verma, 
Senior advocates practicing in the Hon’ble Supreme Court 
subject to consent, or any Hon’ble former judges for enter 
into reference with consent of parties to decide all the 
disputes arising out of the Franchise Agreement dated 
21.3.2013, between the parties, within the period as per 
Section 29A of the Act.
16. In case of failure on your part to return the illegally 
withheld money or if the above request for appointment 
of a sole Arbitrator from the panel suggested or any other 
name suggested from your side within 30 days of from 
the receipt of this notice, our clients will be constrained 
to file appropriate legal proceedings as stated in Para 
14 of this notice for which M/s Aptech Ltd. will be fully 
responsible for all costs, risks, responsibilities, expenses 
and consequences thereof. Please note. Copy Retained.” 
61.	 The respondent replied to the said notice on 05.04.2023. The relevant 
parts from the aforesaid reply are extracted hereinbelow: 
“5. My clients submit that the notice
addressed by you 
on behalf of your clients is defective, unjustified, without 
any basis, documents, material and is contradictory and 
inconsistent with the stand taken by your clients in the 
mediation proceedings filed before the Hon’ble High Court.
6. My client states that your clients have misinterpreted the 
clause of the Arbitration under the Franchise Agreement 
dated 21.3.2013 i.e., the conciliation/mediation process and 
are linking the same to the proceedings of mediation filed 
before the Hon’ble Bombay High Court. My client states 
that the mediation proceedings filed before the Hon’ble 
Bombay High Court was filed under section 2(1)(c) of
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the Commercial Court Act which is mandatory provision 
before instituting the Commercial Suit. Therefore, my 
clients therefore state that the invocation of arbitration 
clause under the Franchise Agreement dated 21.3.2013 
and your notice dated 24.11.2022 is illegal, invalid, non-
est and unjustified and is liable to be withdrawn forthwith.
7. My clients state that in view of the aforesaid position, 
there is no cause of action for referring any dispute to the 
Arbitration and your notice is defective, illegal and invalid. 
Therefore, there is no question of my clients consenting to 
the invocation of the arbitration clause and/or appointment 
of an Arbitrator.
8. My clients state that despite having conveyed the above 
should your client insists in initiating any legal proceedings, 
the same shall be defended entirely at your client’s risk 
as to costs and consequences. My clients reiterate that 
nothing contained in your notice and not specifically dealt 
with herein shall in any manner be treated as an admission 
due to non traverse and in fact shall be treated as denial.”
62.	 A perusal of the above shows that the request for appointment of an 
arbitrator was first made by the petitioner vide notice dated 24.11.2022 
and a time of one month from the date of receipt of notice was given 
to the respondent to comply with the said notice. The notice was 
delivered to the respondent on 29.11.2022. Hence, the
said period of 
one month from the date of receipt came to an end on 28.12.2022. 
Thus, it is only from this day that the clock of limitation for filing the 
present petition would start to tick. The present petition was filed by 
the petitioner on 19.04.2023, which is well within the time period of 
3 years provided by Article 137 of the Limitation Act, 1963. Thus, 
the present petition under Section 11(6) of the Act, 1996 cannot be 
said to be barred by limitation. 
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?
63.	 As discussed above, the present petition filed by the petitioner is 
not barred by limitation. Thus, the next question that falls for our
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consideration is whether the claims sought to be arbitrated by the 
petitioner are ex-facie barred by limitation, and if so, whether the 
court may refuse to refer them to arbitration? 
a.	
Jurisdiction versus Admissibility
64.	 There are two categories of issues that may be raised against an 
application for appointment of arbitrator under Section 11(6) of the 
Act, 1996. The first category is of the issues pertaining to the power 
and authority of the arbitrators to hear and decide a case and are 
referred to as the “jurisdictional issues/objections”. Objections to 
the competence of arbitrators to adjudicate a dispute, existence/
validity of arbitration agreement, absence of consent of the parties 
to submit the disputes to arbitration, dispute falling out of the scope 
of the arbitration agreement are some examples of jurisdictional or 
maintainability issues. 
65.	 The second category is of those issues which are related to the nature 
of the claim and include challenges to procedural requirements, viz. 
a mandatory requirement for pre-reference mediation; claim or a part 
thereof being barred by limitation, etc. This category is referred to 
as the “admissibility issues/objections”. 
66.	 This Court in Bharat Sanchar Nigam Limited (supra), explained 
the difference between the aforesaid two category of objections and 
held that the issue of limitation is essentially an admissibility issue 
and is not a challenge to the
jurisdiction of the arbitrator to decide 
the claim. While placing reliance on decision of the Singapore Court 
of Appeal in Swissbourgh Diamond Mines (Pty) Ltd. v. Kingdom 
of Lesotho reported in (2019) 1 SLR 263, this Court explained the 
“tribunal v. claim” test thus: 
“43. Applying the “tribunal v. claim” test, a plea of statutory 
time bar goes towards admissibility as it attacks the claim. 
It makes no difference whether the applicable statute of 
limitations is classified as substantive (extinguishing the 
claim) or procedural (barring the remedy) in the private 
international law sense.
44. The issue of limitation which concerns the “admissibility” 
of the claim, must be decided by the Arbitral Tribunal either 
as a preliminary issue, or at the final stage after evidence 
is led by the parties.”
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67.	 Although, limitation is an admissibility issue, yet it is the duty of the 
courts to prima-facie examine and reject non-arbitrable or dead 
claims, so as to protect the other party from being drawn into a 
time-consuming and costly arbitration process.
68.	 In Mustiu and Boyd’s Commercial Arbitration (1982 Ed., pp. 436) 
under the heading “Hopeless Claims” in Chapter 31 it is stated 
thus in relation to the jurisdiction of an arbitral tribunal adjudicating 
commercial disputes:
“Two situations must be distinguished. The first, which is 
very rare, exists when the claimant not only appreciates, 
but will if pressed be prepared to acknowledge, that his 
claim is ill-founded in law. In effect, he asserts that his 
claim has commercial and moral merit; that if the law gives 
him no remedy, there is a defect in the law; and that a 
commercial arbitrator ought to award him something in 
recognition of the true merits. 
Here, we believe that there is undoubtedly jurisdiction to 
interfere by way of injunction to prevent the respondent 
from being harassed by a claim which can never lead to 
valid award, for example in cases where claim is brought in 
respect of the alleged arbitration agreement which does not 
really exist, or which has ceased to exist. So also where the 
dispute lies outside the scope of the arbitration agreement. 
By parity of reasoning, the Court should be prepared to 
intervene where the
claimant and the respondent are at 
one as to the absence of legal merits, so that it can be 
said that there is no real dispute. 
The respondent might also seek to protect himself by 
recourse to the arbitrator. He cannot ask the arbitrator 
to rule that there is no dispute, since this would be a 
matter affecting his own jurisdiction. An alternative would 
be to invite the arbitrator summarily to dismiss the claim. 
It would appear safer, however, to leave the matter to 
the court.” 
69.	 The scope of this primary examination has been carefully laid down 
by a three-Judge Bench of this Court in Vidya Drolia and Others v. 
Durga Trading Corporation reported in (2021) 2 SCC 1 as follows:
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“148. Section 43(1) of the Arbitration Act states that the 
Limitation Act, 1963 shall apply to arbitrations as it applies 
to court proceedings. Sub-Section (2) states that for the 
purposes of the Arbitration Act and Limitation Act, arbitration 
shall be deemed to have commenced on the date referred 
to in Section 21. Limitation law is procedural and normally 
disputes, being factual, would be for the arbitrator to 
decide guided by the facts found and the law applicable. 
The court at the referral stage can interfere only when it 
is manifest that the claims are ex facie time-barred and 
dead, or there is no subsisting dispute. All other cases 
should be referred to the Arbitral Tribunal for decision on 
merits. Similar would be the position in case of disputed 
“no-claim certificate” or defence on the plea of novation 
and “accord and satisfaction”. As observed in Premium 
Nafta Products Ltd. [Fili Shipping Co. Ltd. v. Premium 
Nafta Products Ltd., 2007 UKHL 40 : 2007 Bus LR 1719 
(HL)], it is not to be expected that commercial men while 
entering transactions inter se would knowingly create a 
system which would require that the court should first 
decide whether the contract should be rectified or avoided 
or rescinded, as the case may be, and then if the contract 
is held to be valid, it would require the arbitrator to resolve 
the issues that have arisen.
xxx

xxx
xxx
154.4. Rarely as a demurrer the court may inerfere at 
Section 8 or 11 stage when it is manifestly and ex facie 
certain that the arbitration agreement is non-existent, invalid 
or the disputes are non-arbitrable, though the nature and 
facet of non-arbitrability would, to some extent, determine 
the level and nature of judicial scrutiny. The restricted 
and limited review is to check and protect parties from 
being forced to arbitrate when the matter is demonstrably 
“non-arbitrable” and to cut off the deadwood. The court by 
default would refer the matter when contentions relating to 
non-arbitrability are plainly arguable; when consideration 
in summary proceedings would be insufficient and 
inconclusive; when facts are contested; when the party 
opposing arbitration adopts delaying tactics or impairs
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conduct of arbitration proceedings. This is not the stage 
for the court to enter into a mini trial or elaborate review 
so as to usurp the jurisdiction of the Arbitral Tribunal but 
to affirm and uphold integrity and efficacy of arbitration as 
an alternative dispute resolution mechanism.” 
(emphasis supplied) 
70.	 The aforesaid decision in Vidya Drolia (supra) was relied upon and 
reaffirmed in another decision of this Court in NTPC Ltd. v. SPML 
Infra Ltd. reported in (2023) 9 SCC 385 wherein the “Eye of the 
Needle” test was explained as follows: 
“Eye of the needle
25. The abovereferred precedents crystallise the position 
of law that the pre-referral jurisdiction of the Courts under 
Section 11(6) of the Act is very narrow and inheres two 
inquiries. The primary inquiry is about the existence 
and the validity of an arbitration agreement, which also 
includes an inquiry as to the parties to the agreement 
and the applicant’s privity to the said agreement. These 
are matters which require a thorough examination by the 
Referral Court. The secondary inquiry that may arise at the 
reference stage itself is with respect to the non-arbitrability 
of the dispute.
26. As a general rule and a principle, the Arbitral Tribunal 
is the preferred first authority to determine and decide all 
questions of non-arbitrability. As an exception to the rule, 
and rarely as a demurrer, the Referral Court may reject 
claims
which are manifestly and ex facie non-arbitrable 
[Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 
154.4: (2021) 1 SCC (Civ) 549]. Explaining this position, 
flowing from the principles laid down in Vidya Drolia [Vidya 
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 
1 SCC (Civ) 549], this Court in a subsequent decision in 
Nortel Networks [BSNL v. Nortel Networks (India) (P) Ltd., 
(2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] held [BSNL 
v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738, 
para 45.1 : (2021) 3 SCC (Civ) 352] : (Nortel Networks 
case [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 
SCC 738 : (2021) 3 SCC (Civ) 352], SCC p. 764, para 45)
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“45. … 45.1. … While exercising jurisdiction 
under Section 11 as the judicial forum, the Court 
may exercise the prima facie test to screen and 
knockdown ex facie meritless, frivolous, and 
dishonest litigation. Limited jurisdiction of the Courts 
would ensure expeditious and efficient disposal at 
the referral stage. At the referral stage, the Court 
can interfere “only” when it is “manifest” that the 
claims are ex facie time-barred and dead, or there 
is no subsisting dispute.”
27. The standard of scrutiny to examine the non-arbitrability 
of a claim is only prima facie. Referral Courts must not 
undertake a full review of the contested facts; they must 
only be confined to a primary first review [Vidya Drolia v. 
Durga Trading Corpn., (2021) 2 SCC 1, para 134 : (2021) 
1 SCC (Civ) 549] and let facts speak for themselves. This 
also requires the Courts to examine whether the assertion 
on arbitrability is bona fide or not. [Vidya Drolia v. Durga 
Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 
549] The prima facie scrutiny of the facts must lead to a 
clear conclusion that there is not even a vestige of doubt 
that the claim is non-arbitrable. [BSNL v. Nortel Networks 
(India) (P) Ltd., (2021) 5 SCC 738, para 47 : (2021) 3 SCC 
(Civ) 352] On the other hand, even if there is the slightest 
doubt, the rule is to refer the dispute to arbitration [Vidya 
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 
154.4 :
(2021) 1 SCC (Civ) 549] .
28. The limited scrutiny, through the eye of the needle, is 
necessary and compelling. It is intertwined with the duty of 
the Referral Court to protect the parties from being forced 
to arbitrate when the matter is demonstrably non-arbitrable 
[Ibid.]. It has been termed as a legitimate interference by 
Courts to refuse reference in order to prevent wastage 
of public and private resources [Vidya Drolia v. Durga 
Trading Corpn., (2021) 2 SCC 1, para 139 : (2021) 1 
SCC (Civ) 549]. Further, as noted in Vidya Drolia [Vidya 
Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 
1 SCC (Civ) 549], if this duty within the limited compass 
is not exercised, and the Court becomes too reluctant to
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intervene, it may undermine the effectiveness of both, 
arbitration and the Court [Vidya Drolia v. Durga Trading 
Corpn., (2021) 2 SCC 1, para 139 : (2021) 1 SCC (Civ) 
549]. Therefore, this Court or a High Court, as the case 
may be, while exercising jurisdiction under Section 11(6) 
of the Act, is not expected to act mechanically merely 
to deliver a purported dispute raised by an applicant at 
the doors of the chosen arbitrator, as explained in DLF 
Home Developers Ltd. v. Rajapura Homes (P) Ltd. [DLF 
Home Developers Ltd. v. Rajapura Homes (P) Ltd., (2021) 
16 SCC 743, paras 22, 26 : 2021 SCC OnLine SC 781, 
paras 18, 20]” 
(emphasis supplied)
71.	 In Geo Miller (supra) where the cause of action for bringing the 
claim arose in 1983, this Court refused to appoint an arbitrator as 
the application seeking appointment of arbitrator was filed much later 
in 2003, that is after a delay of almost twenty years. The relevant 
part of the said judgment is extracted hereinbelow: 
“21. Applying the aforementioned principles to the present 
case, we find ourselves in agreement with the finding of the 
High Court that the appellant’s cause of action in respect of 
Arbitration Applications Nos. 25/2003 and 27/2003, relating 
to the work orders dated 7-10-1979 and 4-4-1980 arose 
on 8-2-1983, which is when the final bill handed over to 
the respondent became due. Mere correspondence of 
the appellant by way of writing
letters/reminders to the 
respondent subsequent to this date would not extend the 
time of limitation. Hence the maximum period during which 
this Court could have allowed the appellant’s application 
for appointment of an arbitrator is 3 years from the date 
on which cause of action arose i.e. 8-2-1986. Similarly, 
with respect to Arbitration Application No. 28/2003 relating 
to the work order dated 3-5-1985, the respondent has 
stated that final bill was handed over and became due on 
10-8-1989. This has not been disputed by the appellant. 
Hence the limitation period ended on 10-8-1992. Since 
the appellant served notice for appointment of arbitrator 
in 2002, and requested the appointment of an arbitrator
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before a court only by the end of 2003, his claim is clearly 
barred by limitation.” 
(emphasis supplied)
72.	 In Bharat Sanchar Nigam Limited (supra), this Court while 
observing that although the arbitration petition was not barred by 
limitation, yet the cause of action for the underlying claims having 
arisen much earlier, the claims were clearly barred by limitation on 
the day notice for arbitration was invoked. Relevant paragraphs are 
extracted hereinbelow: 
“48. Applying the law to the facts of the present case, it 
is clear that this is a case where the claims are ex facie 
time-barred by over 5½ years, since Nortel did not take 
any action whatsoever after the rejection of its claim by 
BSNL on 4-8-2014. The notice of arbitration was invoked 
on 29-4-2020. There is not even an averment either in the 
notice of arbitration, or the petition filed under Section 11, or 
before this Court, of any intervening facts which may have 
occurred, which would extend the period of limitation falling 
within Sections 5 to 20 of the Limitation Act. Unless, there 
is a pleaded case specifically adverting to the applicable 
section, and how it extends the limitation from the date 
on which the cause of action originally arose, there can 
be no basis to save the time of limitation.
49. The present case is a case of deadwood/no subsisting 
dispute since the cause of action arose on 4-8-2014, when 
the claims made by Nortel were
rejected by BSNL. The 
respondent has not stated any event which would extend 
the period of limitation, which commenced as per Article 
55 of the Schedule of the Limitation Act (which provides 
the limitation for cases pertaining to breach of contract) 
immediately after the rejection of the final bill by making 
deductions.
50. In the notice invoking arbitration dated 29-4-2020, it 
has been averred that:
“Various communications have been exchanged 
between the petitioner and the respondents ever 
since and a dispute has arisen between the petitioner
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and the respondents, regarding non-payment of the 
amounts due under the tender document.”
51. The period of limitation for issuing notice of arbitration 
would not get extended by mere exchange of letters, [S.S. 
Rathore v. State of M.P., (1989) 4 SCC 582 : 1990 SCC 
(L&S) 50; Union of India v. Har Dayal, (2010) 1 SCC 394; 
CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., 
(2020) 5 SCC 185] or mere settlement discussions, where 
a final bill is rejected by making deductions or otherwise. 
Sections 5 to 20 of the Limitation Act do not exclude the 
time taken on account of settlement discussions. Section 
9 of the Limitation Act makes it clear that:“where once the 
time has begun to run, no subsequent disability or inability 
to institute a suit or make an application stops it.” There 
must be a clear notice invoking arbitration setting out the 
“particular dispute” [ Section 21 of the Arbitration and 
Conciliation Act, 1996.] (including claims/amounts) which 
must be received by the other party within a period of 3 
years from the rejection of a final bill, failing which, the 
time bar would prevail.
52. In the present case, the notice invoking arbitration was 
issued 5½ years after rejection of the claims on 4-8-2014. 
Consequently, the notice invoking arbitration is ex facie 
time-barred, and the disputes between the parties cannot 
be referred to arbitration in the facts of this case.”
(emphasis
supplied)
73.	 This Court, in M/s B and T AG (supra), to which two of us, the Chief 
Justice, Dr. D.Y. Chandrachud and Justice J.B. Pardiwala, were 
members of the Bench, had the occasion to ascertain in the facts 
of the said case whether an application for appointment of arbitrator 
under Section 11(6) of the Act, 1996 was barred by limitation. The 
facts of the said case were that disputes had arisen between the 
parties in relation to the alleged wrongful encashment of warranty 
bond by the respondent therein vide its letter dated 16.02.2016. Even 
after the amount got credited in the bank account of the respondent, 
the parties continued to engage in bilateral discussions. It was the 
case of the petitioner therein that the ‘breaking point’ was reached 
sometime in September, 2019 and not in 2016 as negotiations had
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continued to take place between the parties. This Court rejected the 
contention of the petitioner and held that the encashment of bank 
guarantee was a positive action on part of the respondent which had 
crystallised the right of the petitioner to seek reference of the dispute 
to arbitration and mere writing of letters would not extend the cause 
of action. It was held that the notice for invoking arbitration having 
been issued almost six years after the cause of action for raising the 
claims had arisen, the claims were ex-facie dead and time-barred 
and hence dismissed the application. Relevant extracts from the 
judgment are as follows: 
“65. On a conspectus of all the aforesaid decisions what 
is discernible is that there is a fine distinction between the 
plea that the claims raised are barred by limitation and the 
plea that the application for appointment of an arbitrator 
is barred by limitation.
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76. At the cost of repetition, we state that when the bank 
guarantee came to be encashed in the year 2016 and 
the requisite amount stood transferred to the Government 
account that was the end of the matter. This “Breaking 
Point” should be treated as the date at which the cause 
of action arose for the purpose of limitation.
77. Negotiations may continue even for a period of ten 
years or twenty years after the cause of action had arisen. 
Mere negotiations will not postpone the “cause of action” for 
the purpose of limitation. The Legislature has prescribed a 
limit of three years for the enforcement of a claim and this 
statutory time period cannot be defeated on the ground 
that the parties were negotiating.
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80. The case on hand is clearly and undoubtedly, one of 
a hopelessly barred claim, as the petitioner by its conduct 
slept over its right for more than five years. Statutory 
arbitrations stand apart.”
(emphasis supplied)
74.	 The learned senior counsel appearing for the respondent has strongly 
relied on the judgment in M/s B and T AG (supra) to argue that
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
the facts of the present case are squarely covered by the dicta laid 
down in the said judgment. However, we are of the view that the 
said judgment is of no avail to the respondent. 
75.	 The respondent, relying upon the legal notice dated 26.08.2021 
issued by the petitioner, submitted that the cause of action arose on 
01.11.2017. The relevant part of the said notice is extracted here: 
“10. Our client is entitled to receive 90% of the amount 
certified by the Embassy in Kabul. While reserving our rights 
without prejudice and subject to settlement of accounts 
illegally withheld, this notice is issued calling upon you to 
pay Rs. 73,53,000/- with interest compounded monthly 
@18% w.e.f. 1st November 2017 within 15 days of from the 
receipt of this notice, under intimation to us, failing which 
our client has given instructions to file appropriate legal 
proceedings before competent courts in India including 
a suit for settlement of accounts for recovery of money 
and also by way of damages or otherwise for, breach of 
trust, breach of contract. In default, Aptech will be fully 
responsible for all costs, risks, responsibilities, expenses 
and consequences thereof.” 
76.	 From the email communications placed on record, it appears that 
due to the pre-existing disputes between the parties in relation to 
the franchise agreements, the respondent sent a demand notice to 
the petitioner seeking payment of
royalty and renewal fees from the 
petitioner. It appears that in reply to the said notice dated 23.03.2018, 
the petitioner raised the issue of payment of dues relating to the 
ICCR project. Some more emails were exchanged between the 
parties on the issue however it can be seen that vide email dated 
28.03.2018, the respondent clearly showed unwillingness to continue 
further discussions regarding payments related to the ICCR project. 
Thus, it can be said that the rights of the petitioner to bring a claim 
against the respondent were crystallised on 28.03.2018 and hence 
the cause of action for invocation of arbitration can also said to 
have arisen on this date. This position has also been admitted in 
the Written Submission dated 05.02.2024 wherein the petitioner has 
submitted as follows: 
“4. The limitation for claiming the due amount would expire 
on 27.03.2021….”
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b.	
When does the Cause of Action arise? 
77.	 We are not impressed with the submission canvassed on behalf of 
the respondent that the cause of action for raising the claims arose 
on 01.11.2017 and thus the limitation period for invoking arbitration 
should commence from the said date. The petitioner has alleged that 
the respondent received the payment for the course from the ICCR on 
03.10.2017. However, the perusal of the communication exchanged 
between the parties indicates that it is only on 28.03.2018 that the 
right of the petitioner to bring a claim against the respondent could 
be said to have been crystallised. The position of law is settled that 
mere failure to pay may not give rise to a cause of action. However, 
once the applicant has asserted its claim and the respondent has 
either denied such claim or failed to reply to it, the cause of action 
will arise after such denial or failure. 
78.	 In M/s B and T AG (supra) three principles of law came to be 
enunciated by this Court regarding the manner in which the point in 
time when the cause of action arose may be determined. First, that 
the right to receive the payment ordinarily begins upon completion 
of the work. Secondly, a dispute arises only when there is a claim by 
one side and its denial/repudiation by the other and thirdly, the accrual 
of cause of action cannot be indefinitely postponed by repeatedly 
writing letters or sending reminders. It was
further emphasised by 
this Court that it was important to find out the “breaking point” at 
which any reasonable party would have abandoned the efforts at 
arriving at a settlement and contemplated referral of the dispute to 
arbitration. Such breaking point would then become the date on which 
the cause of action could be said to have commenced. 
79.	 This Court in Major (Retd.) Inder Singh Rekhi v. Delhi Development 
Authority reported in (1988) 2 SCC 338 held as follows: 
“4. Therefore, in order to be entitled to order of reference 
under Section 20, it is necessary that there should be an 
arbitration agreement and secondly, difference must arise 
to which this agreement applied. In this case, there is no 
dispute that there was an arbitration agreement. There has 
been an assertion of claim by the appellant and silence 
as well as refusal in respect of the same by respondent. 
Therefore, a dispute has arisen regarding non-payment 
of the alleged dues of the appellant. The question is for
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
the present case when did such dispute arise. The High 
Court proceeded on the basis that the work was completed 
in 1980 and therefore, the appellant became entitled 
to the payment from that date and the cause of action 
under Article 137 arose from that date. But in order to be 
entitled to ask for a reference under Section 20 of the Act 
there must not only be an entitlement to money but there 
must be a difference or dispute must arise. It is true that 
on completion of the work a right to get payment would 
normally arise but where the final bills as in this case 
have not been prepared as appears from the record and 
when the assertion of the claim was made on February 
28, 1983 and there was non-payment, the cause of action 
arose from that date, that is to say, February 28, 1983. It 
is also true that a party cannot postpone the accrual of 
cause of action by writing reminders or sending reminders 
but where the bill had not been finally prepared, the claim 
made by a claimant is the accrual of the cause of action. 
A dispute arises where there is a claim and a denial 
and repudiation of the claim. The existence of dispute is 
essential for appointment of an arbitrator under Section 
8 or a reference under Section 20 of the Act. See Law of 
Arbitration by R.S. Bachawat, first edition, page 354. There 
should be dispute and there can only be a dispute when a 
claim is asserted by one party and denied by
the other on 
whatever grounds. Mere failure or inaction to pay does not 
lead to the inference of the existence of dispute. Dispute 
entails a positive element and assertion of denying, not 
merely inaction to accede to a claim or a request. Whether 
in a particular case a dispute has arisen or not has to be 
found out from the facts and circumstances of the case.”
(emphasis supplied)
80.	 In Geo Miller (supra), this Court held thus: 
“28. Having perused through the relevant precedents, we 
agree that on a certain set of facts and circumstances, the 
period during which the parties were bona fide negotiating 
towards an amicable settlement may be excluded for the 
purpose of computing the period of limitation for reference
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to arbitration under the 1996 Act. However, in such cases 
the entire negotiation history between the parties must be 
specifically pleaded and placed on the record. The Court 
upon careful consideration of such history must find out 
what was the “breaking point” at which any reasonable 
party would have abandoned efforts at arriving at a 
settlement and contemplated referral of the dispute for 
arbitration. This “breaking point” would then be treated 
as the date on which the cause of action arises, for the 
purpose of limitation. The threshold for determining when 
such a point arises will be lower in the case of commercial 
disputes, where the party’s primary interest is in securing 
the payment due to them, than in family disputes where 
it may be said that the parties have a greater stake in 
settling the dispute amicably, and therefore delaying formal 
adjudication of the claim.
29. Moreover, in a commercial dispute, while mere failure 
to pay may not give rise to a cause of action, once the 
applicant has asserted their claim and the respondent fails 
to respond to such claim, such failure will be treated as a 
denial of the applicant’s claim giving rise to a dispute, and 
therefore the cause of action for reference to arbitration. It 
does not lie to the applicant to plead that it waited for an 
unreasonably long period to refer the dispute to arbitration 
merely on account of the respondent’s failure to settle
their 
claim and because they were writing representations and 
reminders to the respondent in the meanwhile.”
(emphasis supplied)
81.	 The petitioner completed the course sometime in April and a letter to this 
effect was issued on 30.07.2017 by the EOI, Kabul. Allegedly, the ICCR 
made payment to the respondent on 03.10.2017. However, the right 
of the petitioner to raise the claim could only be said to have accrued 
after the petitioner made a positive assertion in March, 2018 which 
was denied by the respondent vide email dated 28.03.2018. Another 
reminder through email was given by the petitioner on 29.12.2018, 
however, mere giving reminders and sending of letters would not 
extend the cause of action any further from 28.03.2018 on which date 
the rights of the petitioner could be said to have been crystallised.
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
82.	 Thus, in ordinary circumstances, the limitation period available 
to the petitioner for raising a claim would have come to an end 
after an expiry of three years, that is, on 27.03.2021. However, 
in March 2020, the entire world was taken under the grip of the 
deadly Covid-19 pandemic bringing everyday life and commercial 
activity to a complete halt across the globe. Taking cognisance 
of this unfortunate turn of events, this Court vide order dated 
23.03.2020 passed in Suo Motu Civil Writ Petition No. 03/2020 
directed the period commencing from 15.03.2020 to be excluded 
for the purposes of computation of limitation. The said extension of 
limitation was extended from time to time by this Court in view of 
the continuing pandemic. As a result, the period from 15.03.2020 
to 28.02.2022 was finally determined to be excluded for the 
computation of limitation. It was provided that the balance period 
of limitation as available on 15.03.2020 would become available 
from 01.03.2022. Operative part of the order dated 10.01.2022 is 
extracted hereinbelow: 
“5. Taking into consideration the arguments advanced by 
learned counsel and the impact of the surge of the virus 
on public health and adversities faced by litigants in the 
prevailing conditions, we deem it appropriate to dispose 
of the M.A. No. 21 of 2022 with the following directions: 
I.	
The order dated 23.03.2020 is restored and in 
continuation of
the subsequent orders dated 
08.03.2021, 27.04.2021 and 23.09.2021, it is directed 
that the period from 15.03.2020 till 28.02.2022 shall 
stand excluded for the purposes of limitation as may 
be prescribed under any general or special laws in 
respect of all judicial or quasi judicial proceedings. 
II.	
Consequently, the balance period of limitation 
remaining as on 03.10.2021, if any, shall become 
available with effect from 01.03.2022. 
III.	
In cases where the limitation would have expired 
during the period between 15.03.2020 till 28.02.2022, 
notwithstanding the actual balance period of limitation 
remaining, all persons shall have a limitation period 
of 90 days from 01.03.2022. In the event the actual 
balance period of limitation remaining, with effect
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from 01.03.2022 is greater than 90 days, that longer 
period shall apply.
IV.	
It is further clarified that the period from 15.03.2020 till 
28.02.2022 shall also stand excluded in computing the 
periods prescribed under Sections 23 (4) and 29A of 
the Arbitration and Conciliation Act, 1996, Section 12A 
of the Commercial Courts Act, 2015 and provisos (b) 
and (c) of Section 138 of the Negotiable Instruments 
Act, 1881 and any other laws, which prescribe 
period(s) of limitation for instituting proceedings, outer 
limits (within which the court or tribunal can condone 
delay) and termination of proceedings.” 
83.	 The operation and effect of the aforesaid order was considered and 
explained by a two-Judge Bench of this Court in Prakash Corporates 
v. Dee Vee Projects Ltd., reported in (2022) 5 SCC 112 as follows:
“28. As regards the operation and effect of the orders 
passed by this Court in SMWP No. 3 of 2020, noticeable 
it is that even though in the initial order dated 23-3-2020 
[Cognizance for Extension of Limitation, In re, (2020) 19 
SCC 10 : (2021) 3 SCC (Cri) 801], this Court provided that 
the period of limitation in all the proceedings, irrespective 
of that prescribed under general or special laws, whether 
condonable or not, shall stand extended w.e.f. 15-3-2020 
but, while concluding the matter on 23-9-2021 [Cognizance 
for Extension of Limitation, In re, (2021) 18 SCC 250 : 2021 
SCC OnLine SC 947], this Court
specifically provided for 
exclusion of the period from 15-3-2020 till 2-10-2021. A 
look at the scheme of the Limitation Act, 1963 makes it 
clear that while extension of prescribed period in relation 
to an appeal or certain applications has been envisaged 
under Section 5, the exclusion of time has been provided 
in the provisions like Sections 12 to 15 thereof. When 
a particular period is to be excluded in relation to any 
suit or proceeding, essentially the reason is that such 
a period is accepted by law to be the one not referable 
to any indolence on the part of the litigant, but being 
relatable to either the force of circumstances or other 
requirements of law (like that of mandatory two months’
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
notice for a suit against the Government [Vide Section 15 
of the Limitation Act, 1963.]). The excluded period, as a 
necessary consequence, results in enlargement of time, 
over and above the period prescribed.”
(emphasis supplied)
84.	 The effect of the above-referred order of this Court in the facts of 
the present case is that the balance limitation left on 15.03.2020 
would become available w.e.f. 01.03.2022. The balance period of 
limitation remaining on 15.03.2020 can be calculated by computing 
the number of days between 15.03.2020 and 27.03.2021, which 
is the day when the limitation period would have come to an end 
under ordinary circumstances. The balance period thus comes to 1 
year 13 days. This period of 1 year 13 days becomes available to 
the petitioner from 01.03.2022, thereby meaning that the limitation 
period available to the petitioner for invoking arbitration proceedings 
would have come to an end on 13.03.2023. 
c.	
When is Arbitration deemed to have commenced? 
85.	 Section 21 of the Act, 1996 provides that the arbitral proceedings in 
relation to a dispute commence when a notice invoking arbitration 
is sent by the claimant to the other party. 
“21. Commencement of arbitral proceedings.—Unless 
otherwise agreed by the parties, the arbitral proceedings 
in respect of a particular dispute commence on the date on 
which a request for that dispute to be referred to arbitration 
is received
by the respondent.”
86.	 In Milkfood Ltd. v. GMC Ice Cream (P) Ltd. reported in (2004) 7 
SCC 288, it was observed thus: 
“26. The commencement of an arbitration proceeding for 
the purpose of applicability of the provisions of the Indian 
Limitation Act is of great significance. Even Section 43(1) 
of the 1996 Act provides that the Limitation Act, 1963 shall 
apply to the arbitration as it applies to proceedings in court. 
Sub-section (2) thereof provides that for the purpose of the 
said section and the Limitation Act, 1963, an arbitration 
shall be deemed to have commenced on the date referred 
to in Section 21.

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27. Article 21 of the Model Law which was modelled on 
Article 3 of the UNCITRAL Arbitration Rules had been 
adopted for the purpose of drafting Section 21 of the 
1996 Act. Section 3 of the 1996 Act provides for as to 
when a request can be said to have been received by the 
respondent. Thus, whether for the purpose of applying the 
provisions of Chapter II of the 1940 Act or for the purpose 
of Section 21 of the 1996 Act, what is necessary is to 
issue/serve a request/notice to the respondent indicating 
that the claimant seeks arbitration of the dispute.
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29. For the purpose of the Limitation Act an arbitration 
is deemed to have commenced when one party to the 
arbitration agreement serves on the other a notice requiring 
the appointment of an arbitrator. This indeed is relatable 
to the other purposes also, as, for example, see Section 
29(2) of (English) Arbitration Act, 1950.
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49. Section 21 of the 1996 Act, as noticed hereinbefore, 
provides as to when the arbitral proceedings would be 
deemed to have commenced. Section 21 although may be 
construed to be laying down a provision for the purpose 
of the said Act but the same must be given its full effect 
having regard to the fact that the repeal and saving clause 
is also contained therein. Section 21 of the Act must, 
therefore, be construed having regard to Section 85(2)(a) 
of the 1996 Act. Once it is so construed, indisputably the 
service of notice and/or issuance of request for appointment 
of an arbitrator in terms of the arbitration agreement must 
be held to be determinative of the commencement of the 
arbitral proceeding.” 
(emphasis supplied)
87.	 Similarly, in Bharat Sanchar Nigam Limited (supra), it was held 
by this Court thus: 
“51. The period of limitation for issuing notice of 
arbitration would not get extended by mere exchange
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M/S Arif Azim Co. Ltd. v. M/S Aptech Ltd.
of letters, [S.S. Rathore v. State of M.P., (1989) 4 SCC 
582 : 1990 SCC (L&S) 50; Union of India v. Har Dayal, 
(2010) 1 SCC 394; CLP (India) (P) Ltd. v. Gujarat 
Urja Vikas Nigam Ltd., (2020) 5 SCC 185] or mere 
settlement discussions, where a final bill is rejected by 
making deductions or otherwise. Sections 5 to 20 of the 
Limitation Act do not exclude the time taken on account 
of settlement discussions. Section 9 of the Limitation 
Act makes it clear that:“where once the time has begun 
to run, no subsequent disability or inability to institute a 
suit or make an application stops it.” There must be a 
clear notice invoking arbitration setting out the “particular 
dispute” [ Section 21 of the Arbitration and Conciliation 
Act, 1996.] (including claims/amounts) which must be 
received by the other party within a period of 3 years 
from the rejection of a final bill, failing which, the time 
bar would prevail.”
(emphasis supplied)
88.	 In the present case, the notice invoking arbitration was received by 
the respondent on 29.11.2022, which is within the three-year period 
from the date on which the cause of action for the claim had arisen. 
Thus, it cannot be said that the claims sought to be raised by the 
petitioner are ex-facie time-barred or dead claims on the date of the 
commencement of arbitration. 
89.	 Thus, from an exhaustive analysis of the position of law on the issues, 
we are of the view that
while considering the issue of limitation in 
relation to a petition under Section 11(6) of the Act, 1996, the courts 
should satisfy themselves on two aspects by employing a two-pronged 
test – first, whether the petition under Section 11(6) of the Act, 1996 
is barred by limitation; and secondly, whether the claims sought to be 
arbitrated are ex-facie dead claims and are thus barred by limitation 
on the date of commencement of arbitration proceedings. If either 
of these issues are answered against the party seeking referral of 
disputes to arbitration, the court may refuse to appoint an arbitral 
tribunal. 
E.	
CONCLUSION
90.	 The present arbitration petition having been filed within a period 
of three years from the date when the respondent failed to comply
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with the notice of invocation of arbitration issued by the petitioner 
is not hit by limitation. 
91.	 The notice for invocation of arbitration having been issued by the 
petitioner within a period of three years from the date of accrual of 
cause of action, the claims cannot be said to be ex-facie dead or time-
barred on the date of commencement of the arbitration proceedings. 
92.	 In view of the aforesaid, the present petition is allowed. We appoint 
Shri Justice Sanjay Kishan Kaul, Former Judge of the Supreme 
Court of India, to act as the sole arbitrator. The fees of the arbitrator 
including other modalities shall be fixed in consultation with the parties.
93.	 All other rights and contentions are kept open for the parties to raise 
before the Arbitrator. 
94.	 Before we part with the matter, we would like to mention that this 
Court while dealing with similar issues in many other matters has 
observed that the applicability of Section 137 to applications under 
Section 11(6) of the Act, 1996 is a result of legislative vacuum as 
there is no statutory prescription regarding the time limit. We would 
again like to reiterate that the period of three years is an unduly 
long period for filing an application under Section 11 of the Act, 1996 
and goes against the very spirit of the Act, 1996 which provides for 
expeditious resolution of commercial disputes within a time-bound 
manner. Various amendments to the Act, 1996
have been made over 
the years so as to ensure that arbitration proceedings are conducted 
and concluded expeditiously. We are of the considered opinion that 
the Parliament should consider bringing an amendment to the Act, 
1996 prescribing a specific period of limitation within which a party 
may move the court for making an application for appointment of 
arbitrators under Section 11 of the Act, 1996. The Petition stands 
disposed of in the aforesaid terms. 
95.	 Pending application(s), if any, shall stand disposed of.
Headnotes prepared by: Divya Pandey
Result of the case: 
Petition allowed.