[Cites 30, Cited by 0]
Kerala High Court
The Pharmaceuticals & Chemicals (P) Ltd vs Kerala Medical Services Corporation ... on 16 January, 2026
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
FRIDAY, THE 16TH DAY OF JANUARY 2026 / 26TH POUSHA, 1947
AR NO. 172 OF 2025
PETITIONER:
M/S.THE PHARMACEUTICALS & CHEMICALS (P) LTD.
T.C.27/729 TO 27/735, SWAMINATHAVILAS, VANCHIYOOR
P.O., THIRUVANANTHAPURAM - 695 035,
REPRESENTED BY ITS DIRECTOR, SMT.RANI MOHANDAS,
RANI BHAVAN, KESTON ROAD, KQWDIAR P.O.,
THIRUVANANTHAPURAM, PIN - 695003.
BY ADVS.
SRI.K.BABU THOMAS
SMT.MARYKUTTY BABU
SMT.DRISYA DILEEP
RESPONDENTS:
1 KERALA MEDICAL SERVICES CORPORATION LTD.
THYCAUD P.O., THIRUVANANTHAPURAM, PIN - 695014.
REPRESENTED BY ITS MANAGING DIRECTOR.
2 THE GENERAL MANAGER
KERALA MEDICAL SERVICES CORPORATION LTD., THYCAUD
P.O., THIRUVANANTHAPURAM, PIN - 695014.
OTHER PRESENT:
ADV M AJAY, SC, KERALA MEDICAL SERVICES CORPORATION LTD.
THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON
8.1.2026, ALONG WITH AR.No.173/2025 & AR.No.174/2025, THE COURT
ON 16.1.2026 PASSED THE FOLLOWING:
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
FRIDAY, THE 16TH DAY OF JANUARY 2026 / 26TH POUSHA, 1947
AR NO. 173 OF 2025
PETITIONER:
M/S.THE PHARMACEUTICALS & CHEMICALS (P) LTD.
T.C.27/729 TO 27/735, SWAMINATHAVILAS, VANCHIYOOR
P.O., THIRUVANANTHAPURAM - 695 035, REPRESENTED BY
ITS DIRECTOR, SMT. RANI MOHANDAS, RANI BHAVAN, KESTON
ROAD, KOWDIAR P.O., THIRUVANANTHAPURAM, PIN - 695003.
BY ADVS.
SRI.K.BABU THOMAS
SMT.MARYKUTTY BABU
SMT.DRISYA DILEEP
RESPONDENTS:
1 KERALA MEDICAL SERVICES CORPORATION LTD.
THYCAUD P.O., THIRUVANANTHAPURAM,
REPRESENTED BY ITS MANAGING DIRECTOR, PIN - 695014.
2 THE GENERAL MANAGER
KERALA MEDICAL SERVICES CORPORATION LTD.,
THYCAUD P.O., THIRUVANANTHAPURAM, PIN - 695014.
ADV M AJAY, SC, KERALA MEDICAL SERVICES
CORPORATION LTD.
THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON
8.1.2026, ALONG WITH AR.No.172/2025 AND A.R.No.174/2025, THE
COURT ON 16.1.2026 PASSED THE FOLLOWING:
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
FRIDAY, THE 16TH DAY OF JANUARY 2026 / 26TH POUSHA, 1947
AR NO. 174 OF 2025
PETITIONER:
THE PHARMACEUTICALS & CHEMICALS (P) LTD.
T.C.27/729 TO 27/735, SWAMINATHAVILAS, VANCHIYOOR
P.O., THIRUVANANTHAPURAM, REPRESENTED BY ITS
DIRECTOR,
SMT. RANI MOHANDAS, RANI BHAVAN, KESTON ROAD,
KOWDIAR P.O.,
THIRUVANANTHAPURAM - 695 003.
BY ADVS.
SRI.K.BABU THOMAS
SMT.MARYKUTTY BABU
SMT.DRISYA DILEEP
RESPONDENTS:
1 KERALA MEDICAL SERVICES CORPORATION LTD.,
THYCAUD P.O., THIRUVANANTHAPURAM,
REPRESENTED BY ITS MANAGING DIRECTOR, PIN - 695014.
2 THE GENERAL MANAGER
KERALA MEDICAL SERVICES CORPORATION LTD., THYCAUD
P.O., THIRUVANANTHAPURAM, PIN - 695014.
ADV M AJAY, SC, KERALA MEDICAL SERVICES
CORPORATION LTD.
THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON
8.1.2026, ALONG WITH AR.No.172/2025 AND AR.No.173/2025, THE
COURT ON 16.1.2026 PASSED THE FOLLOWING:
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
4
S.MANU, J.
--------------------------------------------------
A.R.Nos.172, 173 & 174 of 2025
-------------------------------------------------
Dated this the 16th day of January, 2026
ORDER
The applicant in these arbitration requests is a company
engaged in manufacture and supply of drugs/medicines. From
2008 onwards, it has been supplying drugs/medicines to the 1 st
respondent, a government company. Disputes projected in
these arbitration requests pertain to various agreements
executed between the petitioner and the 1st respondent for
supply of drugs and medicines.
2. Dispute in A.R.No.172/2025 pertains to the tender
year 2019-20. In A.R.No.173/2025, agreement entered during
the tender year 2018-19 is involved. In A.R.No.174/2025, the
agreement involved is of the tender year 2017-18. Since the
nature of disputes is one and the same in all these arbitration
requests, I propose to dispose them by a common order.
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A.R.Nos.172, 173 & 174 of 2025
References made to documents in this order is as per they are
indexed in A.R.No.172/2025.
3. The dispute precisely is with regard to the alleged
shortage in the payment of the amounts claimed by the
petitioners for the supply of medicines and drugs under the
respective agreements. It is the case of the petitioners that
huge amounts remained unpaid, and the respondents resorted
to the levy of liquidated damages, fines, blacklisting, etc.
4. All agreements between the parties contain
arbitration clauses. There is no dispute in this regard.
5. The petitioner approached this Court in
A.R.No.93/2024 seeking appointment of a sole arbitrator for
resolution of the disputes pertaining to six different contracts
between the parties. The respondents objected, contending that
each contract is different and therefore a single arbitration
request was not maintainable. By order dated 23.6.2025 the
arbitration request was permitted to be withdrawn with liberty
to file new distinct applications.
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A.R.Nos.172, 173 & 174 of 2025
6. Annexure-A4 is a notice issued to the respondents by
the petitioner through its counsel on 29.1.2024, calling upon
the 1st respondent to pay various amounts and stating that, in
case of non-payment as demanded, the arbitration clause in the
agreement would ipso facto stand invoked without any further
notice. It was also stated in the notice that it may be read,
construed, treated and understood as that stipulated in Section
11 of the Arbitration and Conciliation Act, 1996, Sections 1 to 4
of the Interest Act, 1978 and Section 63 of the Sale of Goods
Act, 1930.
7. The respondents replied to Annexure-A4 notice by
Annexure-A5 dated 12.3.2024. Annexure-A6 is another notice
issued on 14.11.2024 by the petitioner through counsel, to the
respondents. Contents of the said notice are more or less the
same, though the demands were slightly different. Annexure-A7
is a reply issued by the respondents on 21.12.2024 to
Annexure-A6 notice. Annexure-A8 is yet another notice issued
by the petitioner on 10.3.2025 through the counsel.
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Annexure-A9 is the reply from the respondents to Annexure-A8.
8. Respondents have filed separate counter affidavits in
these arbitration requests. Petitioner has filed reply affidavits
refuting the contentions in the counter affidavit.
9. Keeping in mind the restricted scope of adjudication
in an application filed under Section 11 of the Arbitration and
Conciliation Act (hereinafter referred to as 'the Act'), I do not
venture to narrate the facts in further detail. I shall now address
the objections raised by the respondents.
10. Respondents raised a primary objection to these
arbitration requests. According to the respondents, the claims
projected in these arbitration requests are ex-facie time-barred.
Therefore, according to them, these arbitration requests are
liable to be rejected for that sole reason. The next ground of
challenge seriously raised during the course of the arguments
was that there was no proper notice as required under Section
21 of the Act and therefore these arbitration requests are
premature. The learned counsel for the respondents elaborated
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A.R.Nos.172, 173 & 174 of 2025
these contentions by pointing out that the contracts in these
cases pertain to the tender years 2017-18, 2018-19 and 2019-
20. He submitted that the petitioner issued Annexure-A4 notice
only on 29.1.2024. Even if it is construed as a proper notice as
contemplated under Section 21 of the Act, the same was issued
after the alleged dues had become time-barred. The learned
counsel therefore submitted that no order referring the parties
to arbitration can be passed in these cases, in view of the
various judgments rendered by the Hon'ble Supreme Court
regarding reference of stale claims. The learned counsel further
submitted that no specific request for initiating arbitral
proceedings and nominating an arbitrator was there in any of
the notices issued by the petitioner. He argued that various
claims were raised in the notices issued and in the concluding
paragraphs it was stated that the notice should be construed as
issued under various provisions of different enactments. There
was no definite request pertaining to arbitral proceedings. He
hence submitted that for want of proper notice, which is an
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A.R.Nos.172, 173 & 174 of 2025
essential requirement to invoke the jurisdiction of this Court
under Section 11 of the Act, the Arbitration Requests are liable
to be rejected. The learned counsel relied on the following
judgments in support of his contentions:-
1. Alan Mervyn Arthur Stephenson v.
J. Xavier Jayarajan [2025 SCC OnLine SC
2227];
2. Arif Azim Co. Ltd. (M/s.) v. M/s.Aptech
Ltd. [2024 SCC OnLine SC 215];
3. M/s.B and TAG v. Ministry of Defence
[(2024) 5 SCC 358].
11. Learned counsel for the petitioner on the other hand
retorted that the disputes are not time-barred. He made
reference to Annexure-A3 issued by the Public Information
Officer of the 1st respondent. He submitted that the 1st
respondent acknowledged the short payment in Annexure-A3.
The learned counsel submitted that Annexure-A3 was issued on
14.12.2023, and thereafter the petitioner noticed the
deductions, penalty, shortage, liquidated damages, etc.,
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A.R.Nos.172, 173 & 174 of 2025
imposed by the 1st respondent. In other words, the deductions,
etc., came to the knowledge of the petitioner only when
Annexure-A3 was received. He submitted that thereafter
Annexure-A4 notice was issued and the petitioner diligently
pursued the matter. He hence submitted that the disputes are
not time-barred and the objection raised by the respondents in
this regard is untenable. The learned counsel also submitted
that the cause of action is recurring and since the bill accounts
were not closed, no question of limitation would arise. The
learned counsel also submitted that there was proper notice as
contemplated under Section 21 of the Act. He referred to
Annexures-A4, A6 and A8 in this connection. The learned
counsel pointed out that there was specific mention of the
Arbitration clause in all notices issued. Hence, he submitted that
the contention regarding lack of proper notice is also untenable.
The learned counsel relied on the following judgments in
support of his contentions:-
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A.R.Nos.172, 173 & 174 of 2025
1. Goqii Technologies (P) Ltd. v. Sokrati
Technologies (P) Ltd. [(2025) 2 SCC 192].
2. Arif Azim Co. Ltd. v. Aptech Ltd.
[(2024)5 SCC 313].
3. Vidya Drolia v. Durga Trading Corpn.
[(2021) 2 SCC 1].
4. Aslam Ismail Khan Deshmukh v. ASAP
Fluids (P) Ltd.[(2025) 1 SCC 502].
5. TRF Ltd. v. Energo Engg. Projects Ltd.
[(2017) 8 SCC 377].
12. I shall now analyse the contention regarding
limitation. As noted at the outset, the dispute raised in
A.R.No.174/2025 pertains to tender year 2017-18. In
A.R.No.173/2025 the relevant tender year is 2018-19. In
A.R.No.172/2025 the tender was of the year 2019-20. It is
pertinent to note that the first notice was issued only on
29.1.2024. Therefore, it is clear that the first notice was issued
after more than three years even from the tender year 2019-
20. In this regard, merit of the contention of the learned
counsel for the petitioner, relying on Annexure A3 needs to be
analysed. First limb of submission on the basis of Annexure A3
is that the details of deductions were revealed only by Annexure
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A.R.Nos.172, 173 & 174 of 2025
A3. However, the learned Standing Counsel for the Respondents
effectively controverted the contention by pointing out that all
relevant details were available to the petitioner as access to the
relevant digital data was provided to the petitioner and also to
all other contractors engaged in supply. This was not denied by
the learned counsel for the petitioner. Hence the contention that
the petitioner came to know about the deductions, short
payments, etc. only when it received Annexure A3 cannot be
accepted.
13. The next limb of the argument was that the
deductions, penalties, short payments, etc. were acknowledged
by Annexure-A3. Annexure-A3 is a reply furnished under the
provisions of the Right to Information Act. The Public
Information Officer of the 1st respondent has given details
pertaining to various contracts of different tender years in
Annexure-A3. It was issued in reply to an application submitted
by the Managing Director of the petitioner. In my view, it cannot
be considered as an acknowledgment of liabilities. It certainly
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A.R.Nos.172, 173 & 174 of 2025
reveals deductions, penalties, etc. However, there is no
acknowledgment to the effect that any amounts are due from
the 1st respondent to the petitioner. In other words, no liability
to make any payments to the petitioner is acknowledged. The
document was issued in view of the statutory obligation under
the Right to Information Act. Such a reply cannot be depicted as
an acknowledgment of liabilities. Therefore, the petitioner
cannot be heard to contend that the limitation is to be counted
from the date of issuance of Annexure-A3. That being so, it
must be held without any hesitation that the petitioner issued
notices to the respondents only after the liabilities became time-
barred.
14. Next aspect is as to whether it is within the authority
of the Court exercising powers under Section 11 of the Act to
take into consideration the objection regarding limitation.
Learned counsel for the petitioner submitted that the scope of
examination by a referral court under Section 11 of the Act is
narrow. The learned counsel referred to the following
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A.R.Nos.172, 173 & 174 of 2025
observations of the Hon'ble Supreme Court in Aslam Ismail
Khan Deshmukh (supra);
"51. It is now well-settled law that, at the stage of Section
11 application, the referral Courts need only to examine
whether the arbitration agreement exists -- nothing more,
nothing less. This approach upholds the intention of the
parties, at the time of entering into the agreement, to
refer all disputes arising between themselves to
arbitration. However, some parties might take undue
advantage of such a limited scope of judicial interference
of the referral Courts and force other parties to the
agreement into participating in a time-consuming and
costly arbitration process. This is especially possible in
instances, including but not limited to, where the claimant
canvasses either ex facie time-barred claims or claims
which have been discharged through "accord and
satisfaction", or cases where the impleadment of a non-
signatory to the arbitration agreement is sought, etc."
15. The learned counsel also placed reliance on the
judgment of the Hon'ble Supreme Court in Goqii Technologies
(P) Ltd. (supra) to contend that the scope of enquiry under
Section 11 is limited to ascertaining the prima facie existence of
an arbitration agreement. The Court is not expected to surpass
the limited scope by undertaking an exhaustive examination of
the factual aspects.
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
16. The learned counsel placed reliance on the judgment
in Vidya Drolia (supra) to explain the scope of the expression
"existence" in Section 11 and contended that the only enquiry
to be undertaken by this Court is to find out whether an
arbitration agreement is in existence that meets and satisfies
the statutory requirements of both the Arbitration Act and
Contract Act and whether it is enforceable in law. The learned
counsel also referred to the judgment of the Hon'ble Supreme
Court in Arif Azim Co. Ltd (supra) and contended that the
petitioner has approached this Court by filing the arbitration
request within a period of three years from the date of
Annexure-A4 notice and therefore the arbitration request was
filed within time.
17. It is well settled that no elaborate factual enquiry can
be undertaken by a court exercising the power under Section 11
of the Act. However, as rightly pointed out by the learned
counsel for the respondents, the Hon'ble Supreme Court has
held that when the claims are ex facie time-barred parties need
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A.R.Nos.172, 173 & 174 of 2025
not be relegated to the arbitrator. It is apposite to refer to the
observations of the Hon'ble Supreme Court in M/s.B and T AG
(supra) in this connection which are extracted hereunder:-
"67. In Law of Arbitration by Justice Bachawat at p. 549,
commenting on Section 37, it is stated that subject to the
1963 Act, every arbitration must be commenced within
the prescribed period. Just as in the case of actions the
claim is not to be brought after the expiration of a
specified number of years from the date when the cause
of action accrues, so in the case of arbitrations the claim
is not to be put forward after the expiration of a specified
number of years from the date when the claim accrues.
For the purpose of Section 37(1) "action" and "cause of
arbitration" should be construed as arbitration and cause
of arbitration. The cause of arbitration arises when the
claimant becomes entitled to raise the question, that is,
when the claimant acquires the right to require
arbitration. An application under Section 11 of the 1996
Act is governed by Article 137 of the Schedule to the
1963 Act and must be made within 3 years from the date
when the right to apply first accrues. There is no right to
apply until there is a clear and unequivocal denial of that
right by the respondent. It must, therefore, be clear that
the claim for arbitration must be raised as soon as the
cause for arbitration arises as in the case of cause of
action arisen in a civil action.
68. Whether any particular facts constitute a cause of
action has to be determined with reference to the facts of
each case and with reference to, the substance, rather
than the form of the action. If an infringement of a right
happens at a particular time, the whole cause of action
will be said to have arisen then and there. In such a case,
it is not open to a party to sit tight and not to file an
application for settlement of dispute of his right, which
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A.R.Nos.172, 173 & 174 of 2025
had been infringed, within the time provided by the
Limitation Act, and, allow his right to be extinguished by
lapse of time, and thereafter, to wait for another cause of
action and then file an application under Section 11 of the
1996 Act for establishment of his right which was not
then alive, and, which had been long extinguished
because, in such a case, such an application would mean
an application for revival of a right, which had long been
extinguished under the 1963 Act and is, therefore, dead
for all purposes. Such proceedings would not be
maintainable and would obviously be met by the plea of
limitation under Article 137 of the 1963 Act.
.................................................................................
74. In Panchu Gopal Bose v. Port of Calcutta [(1993) 4
SCC 338], this Court had held that the provisions of the
1963 Act would apply to arbitrations and notwithstanding
any term in the contract to the contrary, cause of
arbitration for the purpose of limitation shall be deemed
to have accrued to the party, in respect of any such
matter at the time when it should have accrued but for
the contract. Cause of arbitration shall be deemed to have
commenced when one party serves the notice on the
other party requiring the appointment of an arbitrator.
The question was when the cause of arbitration arises in
the absence of issuance of a notice or omission to issue
notice for a long time after the contract was executed?
Arbitration implies to charter out timeous commencement
of arbitration availing of the arbitral agreement, as soon
as difference or dispute has arisen. Delay defeats justice
and equity aids promptitude and resultant consequences.
Defaulting party should bear the hardship and should not
transmit the hardship to the other party, after the claim in
the cause of arbitration was allowed to be barred. It was
further held that where the arbitration agreement does
not really exist or ceased to exist or where the dispute
applies outside the scope of arbitration agreement
allowing the claim, after a considerable lapse of time,
would be a harassment to the opposite party. It was
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accordingly held in that case that since the petitioner
slept over his rights for more than 10 years, by his
conduct he allowed the arbitration to be barred by
limitation and the Court would be justified in relieving the
party from arbitration agreement under Sections 5 and
12(2)(b) of the Act. [See : State of Orissa v. Damodar
Das (1996) 2 SCC 216]."
In the above judgment, the Hon'ble Supreme Court held that
the claim was hopelessly time-barred and the application for
appointment of arbitrator was rejected.
18. In Arif Azim Co. Ltd. (supra) also the Hon'ble
Supreme Court dealt with the same issue. The Hon'ble Court
undertook a thorough analysis of the position of law. The
pertinent paragraphs for the purpose of the present case are
extracted hereunder:-
"63..............................................................................
(ii) Issue 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?
64. As discussed above, the present petition filed by the
petitioner is not barred by limitation. Thus, the next
question that falls for our 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
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65. There are two categories of issues that may be raised
against an application for appointment of arbitrator under
Section 11(6) of the 1996 Act. 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.
66. 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".
67. This Court in BSNL v. Nortel Networks (India) (P) Ltd.,
[(2021) 5 SCC 738], 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 the decision of the
Singapore Court of Appeal in Swissbourgh Diamond Mines
(P) Ltd. v. Kingdom of Lesotho [(2019) 1 SLR 263], this
Court explained the "tribunal versus claim" test thus:
"43. Applying the "tribunal versus 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."
68. Although, limitation is an admissibility issue, yet it is
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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.
...................................................................................
72. In Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan
Nigam Ltd., [(2020) 14 SCC 643] 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 : (SCC pp. 650-
51, para 21)
"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 and 27 of 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 of 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 before a court only by the
end of 2003, his claim is clearly barred by limitation."
(emphasis supplied)
73. In BSNL v. Nortel Networks (India) (P) Ltd., [(2021) 5
SCC 738], this Court while observing that although the
arbitration petition was not barred by limitation, yet the
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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: (SCC pp. 766-67,
paras 48-52)
"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 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
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A.R.Nos.172, 173 & 174 of 2025
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)
74. This Court, in B & T AG v. Union of India, [(2024) 5 SCC
358], to which two of us, Dr D.Y. Chandrachud, C.J. and J.B.
Pardiwala, J., 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 1996 Act 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 16-2-2016. 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 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 the 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
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
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.
75. Relevant extracts from the judgment are as follows :
"62. 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.
...................................................................................
72. 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.
73. 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.
...................................................................................
76. 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)
....................................................................................
92. 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 1996 Act, the Courts should satisfy themselves
on two aspects by employing a two-pronged test -- first,
whether the petition under Section 11(6) of the 1996 Act is
barred by limitation; and secondly, whether the claims
sought to be arbitrated are ex facie dead claims and are
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
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."
19. Recently in Alan Mervyn Arthur Stephenson
(supra), the Hon'ble Supreme Court rejected an arbitration
petition noticing that the claims were barred by limitation.
20. In view of the settled legal position as noted above,
when the claims are ex facie time barred, the court exercising
jurisdiction under Section 11 of the Act can refuse to make
reference for arbitration. In the instant case, as noted afore,
even the first notice was issued to the respondents only after a
period of more than three years had elapsed, even from the
tender year 2019-20. Needless to say, cause of action if any
pertaining to the previous tender years also was undoubtedly
time barred. Hence, I conclude that the claims raised in these
cases are ex facie time-barred, and therefore, the arbitration
requests cannot be allowed.
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A.R.Nos.172, 173 & 174 of 2025
21. As I have found that the arbitration requests are
liable to be rejected for the reason that the claims are time-
barred, it is unnecessary to address the second limb of the
argument of the respondent that there was no proper notice.
Given the discussion above, these arbitration requests are
rejected.
Sd/-
S.MANU
JUDGE
skj
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
APPENDIX OF AR NO. 172 OF 2025
PETITIONER'S ANNEXURES
Annexure A1 TRUE COPY OF RELEVANT PORTION OF THE TENDER
DOCUMENTS, THE LETTER OF INTENT AND
AGREEMENT DATED 17.06.2019
Annexure A2 TRUE COPY OF LETTER TO THE PUBLIC
INFORMATION OFFICER OF THE FIRST OPPOSITE
PARTY DATED 14.11.2023
Annexure A3 TRUE COPY OF CONFIRMATION LETTER OF THE
PUBLIC INFORMATION OFFICER DATED 14.12.2023
Annexure A4 TRUE COPY OF NOTICE DEMANDING PAYMENT OF
RS.3,98, 17,625/- DATED 29.01.2024
Annexure A5 TRUE COPY OF REPLY OF THE 2ND OPPOSITE
PARTY TO THE COUNSEL OF THE APPLICANT DATED
12.03.2024
Annexure A6 TRUE COPY FRESH NOTICE DEMANDING PAYMENT OF
RS. 1,95,57,546/- DATED 14.11.2024
Annexure A7 TRUE COPY OF REPLY OF THE FIRST OPPOSITE
PARTY DENYING DEMAND FOR PAYMENT
Annexure A8 TRUE COPY OF NOTICE TO THE OPPOSITE PARTIES
DATED 10.03.2025
Annexure A9 TRUE COPY OF FURTHER REPLY TO ANNEXURE A8
DATED 05.07.2025
Annexure A10 TRUE COPY OF JUDGMENT IN A.R. NO.93 OF 2024
DATED 23.06.2025
Annexure A11 True copy of relevant portion of the
arbitration clause incorporated in the
tender documents dated 21-11-2018
RESPONDENTS' EXHIBITS
ANNEXURE R1 A true copy of relevant pages of the tender
condition in KMSCL/DRGED/1 and
11/RC/2018/014 Dated 21-11-2018
ANNEXURE R2 A true copy of the Order KMSCL/ED/111 and
VIII/533-PCT/2021 Dated 16-09-2023
ANNEXURE R3 A true copy of the Affidavit filed by the
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
APPENDIX OF AR NO. 173 OF 2025
PETITIONER'S ANNEXURES
Annexure A1 TRUE COPY OF RELEVANT PORTION OF THE
TENDER DOCUMENTS, THE LETTER OF INTENT
AND AGREEMENT DATED 12.06.2018
Annexure A2 TRUE COPY OF LETTER TO THE PUBLIC
INFORMATION OFFICER OF THE FIRST
OPPOSITE PARTY DATED 14.11.2023
Annexure A3 TRUE COPY OF CONFIRMATION LETTER OF THE
PUBLIC INFORMATION OFFICER DATED
14.12.2023
Annexure A4 TRUE COPY OF NOTICE DEMANDING PAYMENT
OF RS.3,98,17,625/- DATED 29.01.2024
Annexure A5 TRUE COPY OF REPLY OF THE 2-D OPPOSITE
PARTY TO THE COUNSEL OF THE APPLICANT
DATED 12.03.2024
Annexure A6 TRUE COPY FRESH NOTICE DEMANDING
PAYMENT OF Rs.1,31,09,099/- DATED
14.11.2024
Annexure A7 TRUE COPY OF REPLY OF THE FIRST
OPPOSITE PARTY DENYING DEMAND FOR
PAYMENT DATED 21.12.2024
Annexure A8 TRUE COPY OF NOTICE TO THE OPPOSITE
PARTIES DATED 10.03.2025
Annexure A9 TRUE COPY OF FURTHER REPLY TO ANNEXURE
A8 DATED 05.07.2025
Annexure A10 TRUE COPY OF JUDGMENT IN A.R.No.93 OF
2024 DATED 23.06.2025
RESPONDENTS' EXHIBITS
ANNEXURE. R1 A true copy of the Order in
KMSCL/ED/111 and VIII/533-PCT/2021
Dated 16-09-2023
ANNEXURE. R2 A true copy of the Affidavit filed by
ANNEXURE. R3 A true copy of the relevant clause
6-29-7
2026:KER:3877
A.R.Nos.172, 173 & 174 of 2025
APPENDIX OF AR NO. 174 OF 2025
PETITIONER'S ANNEXURES
Annexure A1 TRUE COPY OF RELEVANT PORTION OF THE TENDER
DOCUMENTS, THE LETTER OF INTENT AND
AGREEMENT DATED 12-04-2017
Annexure A2 TRUE COPY OF LETTER TO THE PUBLIC
INFORMATION OFFICER OF THE FIRST OPPOSITE
PARTY DATED 14-11-2023
Annexure A3 TRUE COPY OF CONFIRMATION LETTER OF THE
PUBLIC INFORMATION OFFICER.
DATED 14-12-2023
Annexure A4 TRUE COPY OF NOTICE DEMANDING PAYMENT OF
Rs.3,98,17,625/-.DATED 29-01-2024
Annexure A5 TRUE COPY OF REPLY OF THE 2ND OPPOSITE
PARTY TO THE COUNSEL OF THE APPLICANT.
DATED 12-03-2024
Annexure A6 TRUE COPY FRESH NOTICE DEMANDING PAYMENT OF
Rs.1,59,56,057/-.
DATED 14-11-2024
Annexure A7 TRUE COPY OF REPLY OF THE FIRST OPPOSITE
PARTY DENYING DEMAND FOR PAYMENT
DATED 21-12-2024
Annexure A8 TRUE COPY OF NOTICE TO THE OPPOSITE PARTIES
DATED 10-3-2025
Annexure A9 TRUE COPY OF FURTHER REPLY TO ANNEXURE A8
DATED 5-7-2025
Annexure A10 TRUE COPY OF JUDGMENT IN A.R.NO.93 OF 2024
DATED 23-6-2025
RESPONDENTS' EXHIBITS
ANNEXURE R1 A true copy of the Order KMSCL/ED/111 and
VIII/533-PCT/2021, 16-09-2023
ANNEXURE R2 Atrue copy of the Affidavit filed by the
ANNEXURE R3 A true copy of the relevant clause.
6-26-20
