The question of limitation is not a challenge to the arbitrator’s jurisdiction under Section 16 of Arbitration & Conciliation Act, 1996 but rather it is a challenge to the admissibility of the claims itself – M/s. Zillon Infraprojects Pvt. Ltd. Vs. Bharat Heavy Electricals Ltd. – Calcutta High Court
Hon’ble High Court held that (i) for arbitration to be seen as a viable dispute resolution mechanism and as an alternate recourse to litigation, the independence of arbitration process outside the purview of undue influence and favor needs to be ensured in both letter and spirit. (ii) It is a settle principle of law that the limitation period in a Section 11 application is governed by Article 137 of the Limitation Act, 1963 which provides for three years from the date when the right to apply first accrues.
(iii) In a Section 11 application, the Court is not supposed to undertake a meager cosmetic exercise to examine the existence and/or validity of the arbitration agreement, and then simply refer the matter to arbitration just because the arbitration clause is valid.
(iv) While the Court is appreciative of the parties and their efforts towards amicable settlement of disputes between them, it is natural that differences of opinion restrained the parties to be on the same page, and therefore, it is only logical for this Court to refer the matter to an arbitrator for expeditious adjudication of the said disputes. As extremely limited, and only in those cases, where no iota of doubt regarding a claim being ex-facie time-barred is present. If and when the Court is in doubt, it has to refer the matter to the arbitral tribunal for adjudication. (v) In a Section 11 application, the Court is not supposed to undertake a meager cosmetic exercise to examine the existence and/or validity of the arbitration agreement, and then simply refer the matter to arbitration just because the arbitration clause is valid.
