Limitation For Application U/S 11(6) Of Arbitration Act Can't Be Bypassed By Claiming Advocate Was Not Authorised To Issue Notice: Delhi High Court
The Delhi High Court bench of Justice Jyoti Singh has held that the bar of limitation for filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking the appointment of an arbitrator, cannot be circumvented merely on the ground that the demand-cum-arbitration invocation notice was issued by the petitioner's counsel without...
The Delhi High Court bench of Justice Jyoti Singh has held that the bar of limitation for filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking the appointment of an arbitrator, cannot be circumvented merely on the ground that the demand-cum-arbitration invocation notice was issued by the petitioner's counsel without proper authorization. The court held that such a contention, if accepted, would render the limitation period for filing such applications meaningless and defeat the very purpose of prescribing a time frame.
Brief Facts:
The present dispute arises from a Memorandum of Understanding (MoU) dated 25.11.2013 between the parties for the purchase of two units (2250 sq. ft. each) in the proposed project 'Lifestyle Street K8' in Noida, by K. Rasa International Pvt. Ltd.
The MoU also provided that, in consideration of the petitioner's investment, all rights in Unit No. B-04-31, Gurgaon Hills, Gurugram, would be transferred to the petitioner.
Pursuant to the MoU, an Agreement to Sell was executed on 13.12.2013, under which the petitioner was to pay Rs.1,56,00,000 by 30.06.2014, with the balance payable directly to the builder. The petitioner made part payments between December 2013 and April 2014. An addendum dated 12.08.2014 extended the payment timeline, with interest at 12% p.a., until 31.12.2014.
The petitioner's grievance is that the project was shelved due to land acquisition issues, rendering the MoU void. Consequently, the petitioner sought cancellation of the agreement and refund of the payments.
Despite multiple legal notices from May 2015 to April 2024, there was no response from the respondents. On 22.04.2024, the petitioner invoked the arbitration clause in the MoU and, receiving no reply, has approached this Court seeking appointment of the Arbitrator under section 11(6) of the Arbitration Act.
Contentions:
The Respondent submitted that Petitioner had initially sent a legal notice of demand dated 26.11.2016 to which reply dated 30.12.2016 was sent by the Respondents. Responding to the reply, Petitioner through his counsel sent a rejoinder-cum-notice of invocation dated 12.01.2017 requesting for appointment of an Arbitrator. Taken from this date, this petition filed in 2024, is beyond a period of 3 years and hence barred by limitation.
Per contra, the Petitioner submitted that it is true that Petitioner had authorized his lawyer to send a legal notice dated 26.11.2016 to the Respondents but it is equally true that Petitioner was unaware of the reply dated 30.12.2016 allegedly sent by the Respondents to Petitioner's lawyer and learnt of this fact only from the reply filed in this Court.
It was further submitted that Petitioner did not give any instruction to the lawyer to follow up the matter and/or to send any communication to the Respondents, much less the stated invocation notice dated 12.01.2017.
Lastly, it was submitted that since the invocation notice under Section 21 of the Arbitration Act was sent by the Petitioner only on 04.03.2024, the petition is not barred by limitation.
Observations:
The court noted that the Supreme Court in Arif Azim Company Limited v. Aptech Limited, 2024 held that a plain reading of Section 11(6) of the Arbitration Act which deals with the appointment of arbitrators, reveals that no specific time-limit is prescribed for filing an application under this provision. However, Section 43 of the Act makes the Limitation Act applicable to arbitration proceedings as it applies to court proceedings.
The Apex Court after analysing the provisions of both the acts held that since none of the Articles in the Schedule to the Limitation Act provide a time period for filing an application under Section 11(6) of the Arbitration Act, it would be covered by Article 137 of the Limitation Act which is the residual provision.
The Supreme Court further held that the limitation period for filing an application seeking the appointment of an arbitrator must not be conflated with the limitation period for raising the substantive claims intended to be referred to arbitration. The limitation for such an application begins only after a valid notice invoking arbitration has been issued by one party, and the other party has either failed or refused to appoint an arbitrator in accordance with the agreed procedure.
The Court noted that this position was reaffirmed by the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning, 2024. The Court held that the observations in Arif Azim Company Limited (supra)—specifically, that the Limitation Act applies to applications under Section 11(6) and that the referral court must ensure the application is filed within the limitation period prescribed under Article 137 (i.e., three years from the date a valid notice invoking arbitration is issued and there is a failure to act upon it)—require no further clarification.
The Court also noted that the Apex Court further clarified that while determining the issue of limitation in a petition under Section 11(6), the referral Court would confine its inquiry to examining whether the petition is within the period of limitation of 03 years or not.
It further said that the referral Court will not conduct an intricate evidentiary inquiry into the question whether the claims raised by the applicant are time barred and this would be left for determination by the Arbitrator.
Having discussed the law on this issue, the court noted that the petitioner's stand is untenable for several reasons. It is undisputed that the petitioner authorized his counsel to issue the legal notice dated 26.11.2016 demanding outstanding dues. It is implausible that the petitioner failed to follow up with his lawyer regarding the outcome.
It further added that the claim that the lawyer sent a rejoinder-cum-invocation notice without authority is equally unconvincing, as no lawyer typically acts without instructions, authority, or consideration.
It further said that accepting such a plea would undermine the mandatory requirement of issuing a notice under Section 21 of the Arbitration Act and render the limitation period for filing a petition under Section 11(6) meaningless, allowing any applicant to later disown an invocation notice by claiming it was unauthorized.
The court further observed that interestingly, even after allegedly learning about the invocation notice from the respondent's reply filed in this Court, the petitioner did not send any communication to the lawyer questioning the issuance of the notice.
The court concluded that this conduct suggests that the petitioner had abandoned his claims in 2017 after the initial invocation and only resurfaced in 2024 with a fresh notice—evidently as an afterthought, aimed solely at circumventing the bar of limitation.
Accordingly, the present application was dismissed.
Case Title: RINKOO AGGARWAL versus GAURAV SABHARWAL & ANR.
Citation: 2025 LiveLaw (Del) 572
Case Number: ARB.P. 1199/2024
Judgment Date: 07/05/2025
For Petitioner: Mr. Aarush Bhandari, Mr. Dev Ahuja and Ms. Simran Jha, Advocates.
For Respondent: Mr. Dhruv Madan and Mr. Shivanshu Gusain, Advocates.