Supreme Court of India by way of two recent judgments in the matters of Secunderabad Cantonment Board case1 and Bharat Sanchar Nigam Limited case2 gave a clarity with regard to the limitation applicable for filing of an application for appointment of arbitrator under section 11 of the arbitration and cancellation act 1996. The said judgments differentiated the limitation applicable to the maintainability of a legal proceedings with regard to the substantive disputes between the parties and the limitation applicable to maintain an application for the appointment of arbitrator under Section 11 of the act.

In the above Judgments it is held that, prior to the 2015 amendment act the courts had powers to examine whether the disputes are hopelessly time barred or not, at the time of dealing with an application under section 11 of the act seeking to appoint an arbitrator. But post 2015 amendments to the act the powers of the courts got restricted to only consider whether there is a valid arbitration agreement between the parties and whether the disputes between the parties are arbitrable in nature. But at the same time if a party issues a notice seeking appointment of arbitrator to the other party, the other party requires to fulfil its obligation under the arbitration agreement by appointing its nominee arbitrator, if not the party issued the notice has to seek remedy by approaching the appropriate High Court or Supreme Court. The act does not provide any limitation with regard to approaching of the court under section 11 of the act, after issuance of the notice seeking appointment of arbitrator. But at the same time a party after issuing a notice seeking appointment of arbitrator cannot be allowed to in definitely sleep over the notice without taking any action and seek remedy of appointment of arbitrator after a large lapse of time. The following are the important contentions raised by the parties in the above said cases.

In the case of BSNL (Supra)the first issue arose was whether the Limitation to file an application seeking to appoint an arbitrator starts from the date of arising of right to sue in the main dispute or not. it was contended that the cause of action for invoking arbitration arose on 04.08.2014 when the claim made by Nortel was rejected by making deductions from the final bill. It was contended that Nortel had slept over its rights for a period of 5.5 years before issuing the notice of arbitration on 29.04. 2020 and hence the notice in working arbitration had become legally stale, non arbitrable and unenforceable. It was further argued that appointment of arbitrator process is covered under Article 137 of the Limitation Act and hence action has to be taken necessarily within 3 years from the date on which right to apply accrues. The Court after examining various Judgments of various High Courts came to the conclusion that the limitation for the maintainability of appointment of arbitrator application cannot be calculated from the date of right to sue accrued to take action, with regard to the main dispute. The limitation for the maintaining of an application seeking appointment of arbitrator shall start from thirty days from the date of receipt of the notice seeking appointment of arbitrator by the opposite party. The Court also held that since there is no specific limitation provided in the Act for calculating the limitation for filing of an application, seeking appointment of arbitrator, the residuary provision of Limitation Act Article 137 would apply. Hence, Court held that, since Nortel issued notice of arbitration vide letter dated 29.04.2020, which was rejected by BSNL vide its reply dated 09.06.2020 and the application seeking appointment of arbitrator was filed before the High Court on 24.07.2020 i.e., within the period of three years from the date of rejection of the request for appointment of arbitrator by BSNL, the application was held to be filed within Limitation period and it was not time barred.

In the BSNL (Supra) case, the second issue that arose for consideration of the court was weather the court while exercising jurisdiction under section 11 of the act is obligated to appoint an arbitrator even in the case where the claims are ex facie time barred. The Court held in SBP & Co case3 that the Judge while exercising the jurisdiction under section 11 of the act can also look into the claims and ascertain whether they are time barred. The same view was consistently followed by the courts till the amending act came into force in the year 2015. In the year 2015, the amending Act added 11 (6-A) of the Act which clearly expressed the view of the Legislature that that the court shall examine only the existence of arbitration agreement well exercising the Power to appoint an arbitrator. In Mayavati Trading Company Private Limited case4 a three Judge Bench of the Supreme Court of India upheld the requirement of narrow view to be taken by courts in view of the 2015 Amendment.

The above said view is again confirmed by the Supreme Court of India in the case of Secundrabad cantonment Case (Supra) and hence law is well settled that the limitation for filing of an application under Section.11 starts from the date of 30 days after receipt of notice for appointment of Arbitrator or from the date of refusal by the other party to appoint an arbitrator.