Bombay High Court
M/S Shagun Exports, Mumbai Thr. Vice ... vs Shri. Kavinder Kumar Jogindernath ... on 14 October, 2025
2025:BHC-NAG:10867
1 9-mca-295-25.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
Misc. Civil Application (ARBN) No. 295 of 2025
M/s Shagun Exports, Mumbai through its Vice President and authorized
representative Shri Sharukh Kesri Master
Versus
Shri Kavinder Kumar Jogindernath Talwar and others
Office Notes, Office Memoranda of Court's or Judge's Order
Coram, appearances, Court's Orders
or directions and Registrar's order
Shri Shadan Khan Advocate h/f Shri Masood Shareef, Advocate
for the applicant.
Ms. Anvita Pande, Advocate for the respondent nos. 1 to 3.
CORAM : NIVEDITA P. MEHTA, J.
Reserved on : 25th SEPTEMBER, 2025.
Pronounced on : 14th OCTOBER, 2025.
The applicant has preferred the present application under
Section 11 of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as "the Act of 1996") for appointment of
Arbitrator. The applicant has invoked clause no. 30 of the
Supplementary Agreement dated 29.04.1997 entered into
between Smt. Amritbala Wd/o Late Shri Jogindernath Talwar
and M/s Shagun Exports and clause no.29 of the Agreement of
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Development and Sale dated 31.12.1994 entered into between
Smt. Amritbala Wd/o Late Shri Jogindernath Talwar and M/s
Satyam Exports, a proposed Company (later on M/s Shagun
Exports since the said proposed Company could not be
incorporated). The subject matter of the application is
reproduced below :
(a) Apartment No.A-001 on the Ground Floor of the building
known and styled as "Shubham Apartments" covering a built up
area of about 1213 square feet; and
(b) Row House No.-B-002 consisting of Ground Floor, First
Floor and Top or Terrace of the building known and styled as
"Shubham Apartments" together with restricted area of 169.00
Sq. Mtrs. comprising of the restricted area of the earlier retained
Apartment (i.e. 95.00 Sq. Mt.).
2. Pursuant to the said Agreement of Development M/s
Shagun Exports prepared a plan of a multi-storey building
known and styled as "Shubham Apartments". The respondent
no.1's mother had entered into an agreement dated 29.04.1997
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with the applicant captioned as "Supplementary Agreement"
whereby it was agreed that applicant shall sell to her the entire
RCC Superstructure comprising Row House No. B-001
consisting of ground floor, first floor and top or terrace of the
building admeasure 1363 Sq. Ft together with restricted area of
169.00 Sq. Mtrs. It was specifically agreed that the entire cost of
construction was to be paid by the respondents' late mother
which was fixed for a total consideration amount of
Rs.8,00,000/-.
3. The respondents' mother had entered into an Agreement
of Development & Sale on 31.12.1994 in relation to entire land
bearing Nazul Plot No-5, Sheet No-34-C, admeasuring 19500
sq.ft. and in which it was agreed that the respondents' mother
shall be entitled for owning one Apartment on ground floor
covering a super built area of about 1213 sq. ft. in the proposed
Multi-storied Building No-A which was to be constructed by the
developer at its own costs. After completion of the same, the
delivery of possession was given in favor of respondents' late
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mother and accordingly a possession letter was duly signed by
both parties.
4. It is the contention of the learned counsel for the applicant
that in consequence of the agreement of sale which was executed
between the applicant and the mother of the respondent, the
apartment was duly handed over to the mother of the
respondent vide possession letter dated 22.05.1997. However, as
per the "Supplementary Agreement" dated 29.04.1997, it was
agreed that the applicant shall sell to the respondent no.1's
mother the entire RCC superstructure comprising Row Hose
No.-B-001 consisting of Ground Floor, First Floor and Top or
terrace of the building admeasuring 1363 Sq. Ft together with
restrict area of 169.00 Sq. mtrs. It was necessary on the part of
respondent No.1's late mother to make necessary payments
towards the cost of construction of the which was fixed for a
total consideration amount of Rs. 8,00,000/-. However, the said
payment was not made and therefore till date the possession of
the row house has not been handed over. The respondents'
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mother passed away on 22.03.2007. During her life time, she
had failed to pay the balance amount of Rs.6,00,000/- along
with necessary interest.
5. The learned counsel for the applicant further contends
that in May, 2021 the respondents had illegally and without any
legal right or authority started work of constructing a water tank
on the terrace of the said Row House. On coming to know
about the same, applicant had visited the said row house and was
shocked to note that the lock of the applicant stood replaced
with a new lock on the door; which had been illegally done by
the respondents. In February 2021, the applicant had last visited
the said building, placed his lock on the entry door, and
maintained exclusive possession throughout the period. Due to
these illegal activities, the applicant issued a notice to the
respondents alleging therein that, (1) the removal of the
applicant's lock amounts to criminal offense and (2) the
demolition of a portion of the ground floor wall, and
subsequent construction amounted to trespass and illegal
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construction, as the respondents had allegedly unlawfully
entered the row house. This legal notice was duly replied to by
the respondents.
6. The learned counsel for the applicant further pointed out
that there is a specific clause i.e., clause 30 of the supplementary
agreement dated 29.04.1997 and clause 29 of the development
and sale agreement dated 31.12.1994 which specifies that if any
dispute arises between the parties, the same shall be referred to
the panel of Arbitrators to be appointed by each of the party and
in view of the said agreement clause, the applicant has preferred
the present application for appointment of the arbitrator.
7. The applicant submits that he has also issued a notice to
that effect on 20.08.2024 which has been duly received by the
respondents on 21.08.2024. However the respondents have
failed to comply with the said notice.
8. Learned counsel for the applicant has placed reliance on
the judgments of the Hon'ble Apex Court in Uttarakhand Purv
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Sainik Kalyan Nigam Limited v. Northern Coal Field Limited,
reported in (2020) 2 SCC 455, and Interplay between
Arbitration Agreements under the Arbitration and Conciliation
Act, 1996 and the Indian Stamp Act, 1899 , reported in 2023
SCC OnLine SC 1666, to contend that, in view of the mandate
of Section 16 of the Arbitration and Conciliation Act, 1996,
judicial intervention at the pre-reference stage is limited. It is
submitted that the issue of limitation is a jurisdictional question
that falls within the domain of the arbitral tribunal and,
therefore, ought to be decided by the arbitrator under Section
16, rather than by the High Court at the pre-reference stage.
9. Per contra, the learned counsel for the respondents
submits that present application is ex-facie barred by limitation
and is not maintainable. It is her further contention that as per
Section 11 of the Act of 1996, the period for referring a dispute
to arbitration or for seeking appointment of an arbitrator is three
years from the date on which the cause of action arises.
According to her, the cause of action arose on 26.03.1998 when
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late Smt. Amritbala Talwar took possession of the incomplete
row house bearing No.B-002. As per the clause 3 of the
supplementary agreement wherein it is specifically mentioned
that it is agreed between the parties the developer will strictly
deliver the possession of the said row house duly completed and
finished by 25.03.1998. In case failure to do so by the
Developer it was agreed that the owner will be entitled to take
possession of the row house no. B-002 on 26.03.1998 and
accordingly possession was taken by the respondent no.1's
mother. The late mother of the respondent no.1, completed the
remaining construction of the row house at her own expenses.
Moreover, the respondents continue to remain in possession till
date and the applicant has never raised any objection to the
possession of the respondents.
10. Learned counsel for the respondents further contends that
the applicant even after issuing the legal notice dated
07.06.2021 failed to take any further steps for nearly three years
thereafter. Inaction to complete the row house on part of the
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applicant clearly reflects lack of diligence and renders the present
application not only belated but also illegal and unsustainable.
She further submits that almost 27 years have passed from the
date of execution of the agreement to sale and development and
also supplementary agreement and therefore the application
under Section 11 of the Arbitration and Conciliation Act is
devoid of merits and should be dismissed.
11. Upon considering the pleadings, submissions of both
parties, and the documents on record, the core issue that arises
for adjudication is whether the present application under Section
11 of the Act of 1996, is maintainable in light of the
respondent's objection that the claim is ex facie barred by
limitation.
12. The Act of 1996, while facilitating party autonomy and
minimal judicial interference, does not itself prescribe a
limitation period for invocation of arbitration. However, it is
now well settled through judicial pronouncements that the
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general provisions of the Limitation Act, 1963, govern the
commencement of arbitration proceedings. Article 137 of the
Limitation Act prescribes a three-year limitation for applications
where no specific period is provided, which includes an
application under Section 11 of the Arbitration Act for the
appointment of an arbitrator. This period begins to run from the
date when the cause of action first arises.
13. In the present matter, the Supplementary Agreement
dated 29.04.1997 clearly stipulated in Clause 3 that possession
of the Row House No. B-002 was to be delivered on or before
25.03.1998, and in the event of failure to do so by the developer,
the purchaser late Smt. Amritbala (respondent no.1' mother)
would be entitled to take possession on an "as is where is" basis
from 26.03.1998. The respondents have consistently maintained
that possession was accordingly taken on 26.03.1998, that the
structure was completed by them at their own cost, and that they
have remained in peaceful, continuous possession ever since.
This assertion is not effectively denied by the applicant, nor is
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any credible evidence placed on record to show that possession
was retained by the applicant until the alleged incident in 2021.
14. The applicant's case rests on the contention that cause of
action arose in May 2021, when he discovered alleged
unauthorized entry by the respondents, and thus the arbitration
clause could be validly invoked in 2024. However, this
argument lacks legal substance and factual credibility. First, the
agreement itself fixes a date for performance and possession,
making the date of accrual of cause of action as 26.03.1998,
when according to the applicant, the respondents failed to make
the remaining payment and allegedly took unauthorized
possession. Secondly, the long period of inaction from 1998
until 2021 spanning over two decades is neither explained nor
justified by the applicant. Even assuming the cause of action
revived in 2021, there is a delay of over three years before the
arbitration clause was invoked in August 2024, again without
any explanation or action in the intervening period.
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15. The applicant's plea that discussions for settlement were
ongoing cannot be accepted at face value in absence of any
correspondence or documentary proof. On the contrary, the
reply to the legal notice issued in 2021 reveals that the
relationship between the parties was adversarial, not conciliatory.
The claim of ongoing settlement talks appears to be an
afterthought, aimed merely at explaining the long inaction. It is
further relevant to note that no civil suit, police complaint, or
any form of legal proceeding was initiated by the applicant at
any time prior to 2024, despite alleging trespass, illegal
possession, and non-payment of substantial consideration.
16. It is important here to address the judgments relied upon
by the applicant:
In Uttarakhand Purv Sainik Kalyan Nigam Ltd. v.
Northern Coal Field Ltd., (2020) 2 SCC 455, the Hon'ble
Supreme Court held that issues relating to limitation and
arbitrability are primarily within the domain of the arbitral
tribunal under Section 16 of the Act. However, the Court also
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clarified that where the issue of limitation is not ex facie
apparent, it should be left to the arbitrator. The aforesaid ruling
does not help the applicant in the present case because the delay
is apparent on the face of the record the cause of action (whether
based on non-payment or possession) clearly arose in 1998, and
the arbitration was invoked only in 2024, well beyond the three-
year limitation period. Hence, this is not a case where limitation
is debatable; rather, it is ex facie and demonstrably barred.
The applicant's reliance on N.N. Global Mercantile Pvt.
Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 1666, to
argue that pre-reference scrutiny by the courts must be minimal,
and issues such as validity, limitation, and arbitrability should be
left to the arbitral tribunal, is misplaced. The Hon'ble Apex
Court in this case as dealing with the interplay between
arbitration clauses and stamping requirements not limitation per
se.
17. It is no more res-integra that at the stage of section 11
proceedings the court does not conduct a detailed examination.
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However, when there is no reasonable doubt that arbitration
cannot proceed viz., when the claim is barred by limitation,
should it refuse reference. In this context Vidya Drolia v. Durga
Trading Corporation, (2021) 2 SCC 1, which is the leading
authority on Section 11 post-N.N. Global, makes it abundantly
clear that courts can refuse reference if the claim is ex facie
barred by limitation. Specifically, in Vidya Drolia (supra), the
Supreme Court held in paragraph in 147.11, 148 and 154.4:
"147.11 The interpretation appropriately balances the allocation
of the decision-making authority between the court at the
referral stage and the arbitrators' primary jurisdiction to decide
disputes on merits. The court as the judicial forum of the first
instance can exercise prima facie test jurisdiction to screen and
knockdown ex facie meritless, frivolous and dishonest litigation.
Limited jurisdiction of the courts ensures expeditious, alacritous
and efficient disposal when required at the referral stage.
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.....
154.4 Rarely as a demurrer the court may interfere at the
Section 8 or 11 stage when it is manifestly and ex facie certain
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that the arbitration agreement is nonexistent, 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...."
Applying this principle to the present case, the cause of
action admittedly accrued in 1998, and the delay of over two
and a half decades is not only inordinate but also unexplained.
The claim, therefore, amounts to "deadwood", and the Court
would be abdicating its responsibility if it were to mechanically
refer such a stale claim to arbitration. Thus, hopelessly time
barred claims can be treated as "deadwood". In the case in hand
there is "no vestige of doubt" that the claim of applicant is
deadwood.
18. Furthermore, in National Insurance Co. Ltd. v. Boghara
Polyfab Pvt. Ltd., (2009) 1 SCC 267, the Hon'ble Apex Court
emphasized that limitation is part of substantive law and
governs arbitration proceedings just as it governs civil litigation.
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The Court held that if the claims are demonstrably barred by
limitation, they may be rejected at the threshold.
19. In Arif Azim Company Ltd v. Aptech Ltd., (2024) 5 SCC
313, the Hon'ble Supreme Court had observed that Section
11(6) would be covered by Article 137 of the Limitation Act,
1963 which prescribes a limitation period of 3 years from the
date when the right to apply accrues. Furthermore, 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.
20. Finally, the conduct of the applicant further reinforces the
absence of diligence. Despite being aware of the alleged default
in payment and unauthorized possession since 1998, no civil,
criminal, or arbitral proceedings were initiated for over two
decades. Even after alleging illegal acts in 2021, the applicant
took no steps until August 2024. There is no document
evidencing acknowledgment of liability or a fresh promise to
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pay under Section 18 of the Limitation Act that could extend
the limitation period.
21. Thus, the plea of ongoing settlement discussions,
advanced without any supporting material and in the light of
outright vehement denial of the same by respondents, is wholly
unconvincing and insufficient to revive a long-dead claim.
22. In the present case, the claim sought to be referred to
arbitration pertains to events that occurred in or before 1998.
No acknowledgment of liability or promise to pay, as
contemplated under Section 18 of the Limitation Act, is
demonstrated. The application has been filed in 2024 over 26
years after the cause of action allegedly arose without any
intervening steps that could extend or renew the limitation
period. The cause of action sought to be pleaded vis-a-vis the
incidence of 2021 does not inspire confidence as no steps
available in law were taken by the applicant. As such, the
invocation of arbitration clause is hopelessly delayed.
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23. Therefore, in light of the settled legal position, the facts on
record, and the unexplained and inordinate delay of over two
decades, it is manifest that the claims are ex-facie barred by
limitation. The arbitration clause cannot be invoked at such a
belated stage, especially when the applicant has failed to act with
reasonable diligence. This court, exercising jurisdiction under
Section 11 of the Act o f 1996, cannot turn a Nelson's eye to
such glaring latches and stale claims. Arbitration, though a
private dispute resolution mechanism, is not an exception to the
law of limitation, and equity cannot be extended to a party who
has slept over its rights for more than two decades.
24. Accordingly, the application under Section 11 of the Act
of 1996, is dismissed as being barred by limitation. No order as
to costs.
(NIVEDITA P. MEHTA, J.)
Signed by: Mr. S.K. NAIR
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Designation: PS To Honourable Judge
Date: 14/10/2025 18:29:58
