Madhya Pradesh High Court
D. Biswas vs Bharat Sanchar Nigam Limited on 7 August, 2025
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE DEEPAK KHOT
ON THE 7 th OF AUGUST, 2025
ARBITRATION CASE No. 68 of 2018
D. BISWAS
Versus
BHARAT SANCHAR NIGAM LIMITED AND OTHERS
Appearance:
Shri Piyush Kumar Tiwari - Advocate for the applicant.
Shri Sapan Usrethe, learned counsel for the respondent No.3.
ORDER
The present application has been filed by the applicant under section
11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as
'the Act of 1996') for appointment of an Arbitrator to resolve the dispute
which arose between the parties pursuant to an agreement dated 28.1.2010
(Annexure A/2).
2. It is submitted by learned counsel for the applicant that a NIT was
issued on 7.11.2009 in respect of work "Operation and Comprehensive
maintenance of Electro- mechanical service at TE Building, RSU and S/Qtrs,
Civil Lines, Balaghat, RSU, Bharveli and MBM Waraseoni". The applicant
being the successful bidder has obtained the work and an agreement dated
28.1.2010 has been issued. It is submitted that despite the applicant had
completed the work, the payment was not made, therefore, a representation
dated 30.12.2013 (annexure RJ-4) was issued to the respondent/non-
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applicant to verify from the site and make necessary payment. In the
representation it was stated that the work was completed on 1.11.2013. It is
further submitted that the applicant had filed an application under section 9
of the Act of 1996 on 30.11.2011 (annexure RJ2), which was registered as
Arbitration Case No.25/2011; but, the same was dismissed on the point that
no interim relief as provided under section 9 can be granted as the matter is
related to payment of the bill. It is further submitted that the final bill was
sent vide bill dated 15.1.2014 (annexure A3). On 7.2.2015 the Sub
Divisional Engineer forwarded the deviation statement to the Executive
Engineer vide annexure RJ5. Again, a letter has been issued by the Sub
Divisional Engineer to the Executive Engineer with regard to the recovery
statement of the sites maintained by the applicant on 18.3.2016 filed as
annexure RJ6. It was informed to the applicant that the final bills were
submitted to the competent Authority BSNL Electrical Division, Bhopal, and
the applicant is required to remain present for his signatures. Again, a letter
has been sent by Executive Engineer to the Superintendent Engineer
(Electrical) by which a request was made to hand over the unpassed bills to
the applicant. Thereafter, the bills were passed, however, after making some
deductions without any basis. The applicant has accepted the payment under
protest. Again, the applicant has preferred representation dated 18.1.2017
with regard to the outstanding amount and demand in different heads. It is
further submitted that in other contracts assigned to the applicant of the
similar nature some dispute arose and the applicant had filed an application
for appointment of an arbitrator in A.C.No.56/2017. In the said application
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also the facts were similar. The notice for invocation of arbitration was of
the year 2017 and the objections of the non-applicants were also identical.
This Hon. Court after considering all objections of the parties, had decided
the said application for appointment of an Arbitrator vide order dated
16.4.2019, annexure RJ7. It is further submitted that the present case is
exactly similar and identical to the facts of the earlier case. Thus, no
different view can be taken.
3. Per Contra, refuting the submissions made by learned counsel for
the applicant, learned counsel for the non-applicant has vehemently opposed
the application on the ground that the application is time barred. It is
submitted that the application ought to have been filed within three years
from the date when cause of action arose. It is submitted that for the first
time the cause of action arose in the year 2014 when the applicant had
submitted an application dated 31.7.2014 and 2.9.2015 by which the
applications were submitted for appointment of an Arbitrator. It is further
submitted that the Hon. Apex Court in the case of BSNL and others Vs. M/s
Nortel Networks India Pvt. Ltd. vide judgment dated 10.3.2021 in SLP (C)
No.1531-32/2021 had decided the issue of limitation and on the basis of
aforesaid legal proposition, it is stated that though the arbitration clause
/agreement has been executed between the parties but because the claim/
dispute of the applicant became stale, the application under section 11(6) is
barred by limitation.
4. The only question which has been raised is in regard to the issue of
limitation that whether the present application is barred by limitation or not.
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Other factual aspects of the matter have not been denied by the non-applicant
and arbitrability of the dispute and intention of the parties were
acknowledged by the non-applicant. However, in regard to deduction no
Arbitrator has been appointed The only objection is that now Arbitrator
cannot be appointed on the ground that application is barred by limitation.
5. Heard the learned counsel for the parties and perused the record.
6. This Court in an identical set of facts between the same parties and
in fact the dates were also more or less same as in that case also the last
notice was of 18.1.2017, decided the application in favour of the applicant by
directing appointment of an Arbitrator. This Court in the order dated
16.4.2019 passed in A.C.No.56/2017 in para 8 has held as under :-
"(8) The case of the applicant is that although the work of NIT was over
in the year 2011, the bills arising thereto were not settled. The
correspondences filed with the rejoinder as Annexure-RJ/4, Annexure-
RJ/5, Annexure-RJ/6 & Annexure-RJ/7 show that correspondence
regarding remaining payment continued and applicant was even
directed to remain present before the Office of Electrical Division at
Bhopal, which is evident from the communication dated 09.02.2016
(Annexure-RJ/6). The pivotal question in this matter is
whether limitation is to be counted from the date of completion of work
i.e., 2011 or from the date the final bill was settled and applicant felt
aggrieved therefrom. As noticed, the parties have taken a diametrically
opposite stand on the aspect of limitation. In Clause 25(1) it is
mentioned that the applicant may submit his claim to Engineer-In-Chief
within 30 days from the date of disallowances. The word
"Disallowances", in the context it is used in Sub-clause (i) of Clause
25, makes it clear that it includes the grievance and dispute in relation
to less payment etc. The question of less payment etc. emerged when
final bill was settled in 2016. Thereafter, applicant promptly preferred
the application dated 18.01.2017. After completion of work in 2011, the
question of payment continued. There were continuous correspondence
in this regard which culminated with payment of final bill. The actual
grievance and cause of action for applicant emerged when he felt
dissatisfied with final payment. Thus, he sent a notice dated 18.01.2017
(Annexure-A/4) for appointment of arbitrator. In this view of the
matter, earlier correspondence for appointment of arbitrator pales into
insignificance. The grievance of the applicant falls within the ambit
of "dispute" because one party is claiming something which has been
denied by the other party."
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7. From the above analysis of the facts when the facts of the present
case are verified / cross checked, then this Court has found that in that case
also final bill was prepared in the year 2016 and prior to that there were
applications by the applicants in regard to appointment of an Arbitrator. But,
this Court holding that after notices which were sent earlier, non-applicant
satisfied the demand by making payment, so as such there was no dispute till
the final payment was made and when in the final bills deductions were
made dispute arose. The Court has held that as such the date of dispute
would be from the date of deduction and payment of final bill and after that
thereafter immediately notice on 18.1.2017 was sent.
8. In the present case also, the final bills were settled in the year 2016
and on 18.1.2017 notice was sent showing dissatisfaction and appointment of
an Arbitrator by the applicant in regard to resolution of the dispute for
making deduction in the final bill and non payment of legitimate dues. The
earlier notice was in regard to non payment of entire bill and resolution of
dispute but the non-applicant has chosen to resolve the dispute at their end
and ultimately passed the bill in the year 2016. So, as such when the claim
of the applicant was satisfied in the year 2016, if any notice was issued prior
to it, has got no significance because later, on the basis of deduction made in
the final bill, dispute arose. This Court in the earlier litigation
A.C.No.56/2017 vide order dated 16.4.2019 has dealt with clause 25(1) and
sub clause (i) of clause 25 of agreement stating that the intention of the
parties as per the agreement is in regard to settlement of dispute even after
the payment of bills because the word 'disallowances' has been used. This
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Court in total agreement with the order passed in earlier litigation is also of
the opinion that the dispute has arisen only because of deduction in the final
bill in the year 2016, therefore, as per clause 25(1)(i) of the agreement
annexure A/2 dated 28.1.2010, the dispute is arbitrable and deserves to be
resolved by the mechanism provided under the agreement, which provides
for an appointment of an Arbitrator.
9. The Hon. Apex Court in the case of Uttarakhand Purv Sainik
Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455 , while
over-ruling the order of this Court in the case of Uttarakhand Purv Sainik
Kalyan Nigam Limited Vs. Northern Coalfield Limited, 2018 (4) MPLJ 45,
has held that after the amendment in the Act of 1996, section 6A has been
inserted which provides that all the questions in regard to jurisdiction,
limitation or which goes to the root shall be decided by the Arbitrator and
those are not to be decided by this Court at the referral stage. For ready
reference the principal laid down in Para 7 is reproduced here and below :-
"7. We have heard the learned counsel for the parties and perused the
pleadings.
7.1. Section 21 of the 1996 Act provides that arbitral proceedings
commence on the date on which a request for disputes to be referred to
arbitration is received by the respondent.
7.2. In the present case, the notice of arbitration was issued by the
petitioner Contractor to the respondent Company on 9-3-2016. The
invocation took place after Section 11 was amended by the 2015
Amendment Act, which came into force on 23-10-2015, the amended
provision would be applicable to the present case.
7.3. The 2015 Amendment Act brought about a significant change in
the appointment process under Section 11: first, the default power of
appointment shifted from the Chief Justice of the High Court in
arbitrations governed by Part I of the Act, to the High Court; second,
the scope of jurisdiction under sub-section (6-A) of Section 11 was
confined to the examination of the existence of the arbitration
agreement at the pre-reference stage.
7.4. Prior to the coming into force of the 2015 Amendment Act, much
controversy had surrounded the nature of the power of appointment by
the Chief Justice, or his designate under Section 11. A seven-Judge
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Constitution Bench of this Court in SBP & Co. v. Patel Engg. Ltd.
[SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] defined the scope
of power of the Chief Justice under Section 11. The Court held that the
scope of power exercised under Section 11 was to first decide:
(i) whether there was a valid arbitration agreement; and
(ii) whether the person who has made the request under Section
11, was a party to the arbitration agreement; and
(iii) whether the party making the motion had approached the
appropriate High Court.
7.5. Further, the Chief Justice was required to decide all threshold
issues with respect to jurisdiction, the existence of the agreement,
whether the claim was a dead one; or a time-barred claim sought to be
resurrected; or whether the parties had concluded the transaction by
recording satisfaction of their mutual rights and obligations, and
received the final payment without objection, under Section 11, at the
pre-reference stage. The decision in Patel Engg. [SBP & Co. v. Patel
Engg. Ltd., (2005) 8 SCC 618] was followed by this Court in Boghara
Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.,
(2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , Master Construction
[Union of India v. Master Construction Co., (2011) 12 SCC 349 :
(2012) 2 SCC (Civ) 582] , and other decisions.
7.6. The Law Commission in the 246th Report [ Amendments to the
Arbitration and Conciliation Act, 1996, Report No. 246, Law
Commission of India (August 2014), p. 20.] recommended that:
"33. ... the Commission has recommended amendments to
Sections 8 and 11 of the Arbitration and Conciliation Act, 1996.
The scope of the judicial intervention is only restricted to
situations where the court/judicial authority finds that the
arbitration agreement does not exist or is null and void. Insofar as
the [Ed.: The matter between two asterisks has been emphasised in
original.] nature [Ed.: The matter between two asterisks has been
emphasised in original.] of intervention is concerned, it is
recommended that in the event the court/judicial authority is prima
facie satisfied against the argument challenging the arbitration
agreement, it shall appoint the arbitrator and/or refer the parties to
arbitration, as the case may be. The amendment envisages that the
judicial authority shall not refer the parties to arbitration only if it
finds that there does not exist an arbitration agreement or that it is
null and void. If the judicial authority is of the opinion that prima
facie the arbitration agreement exists, then it shall refer the dispute
to arbitration, and leave the existence of the arbitration agreement
to be finally determined by the Arbitral Tribunal."
(emphasis
supplied)
7.7. Based on the recommendations of the Law Commission, Section
11 was substantially amended by the 2015 Amendment Act, to
overcome the effect of all previous judgments rendered on the scope of
power by a non obstante clause, and to reinforce the kompetenz-
kompetenz principle enshrined in Section 16 of the 1996 Act. The 2015
Amendment Act inserted sub-section (6-A) to Section 11 which
provides that:
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"(6-A) The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-
section (5) or sub-section (6), shall, notwithstanding any
judgment, decree or order of any court, confine to the examination
of the existence of an arbitration agreement."
(emphasis
supplied)
7.8. By virtue of the non obstante clause incorporated in Section 11(6-
A), previous judgments rendered in Patel Engg. [SBP & Co. v. Patel
Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National
Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 :
(2009) 1 SCC (Civ) 117] , were legislatively overruled. The scope of
examination is now confined only to the existence of the arbitration
agreement at the Section 11 stage, and nothing more.
7.9. Reliance is placed on the judgment in Duro Felguera S.A. v.
Gangavaram Port Ltd. [Duro Felguera S.A. v. Gangavaram Port Ltd.,
(2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764. Refer to TRF Ltd. v.
Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ)
72] , wherein this Court held that: (SCC p. 759, para 48)
"48. ... From a reading of Section 11(6-A), the intention of the
legislature is crystal clear i.e. the court should and need only look
into one aspect--the existence of an arbitration agreement. What
are the factors for deciding as to whether there is an arbitration
agreement is the next question. The resolution to that is simple --
it needs to be seen if the agreement contains a clause which
provides for arbitration pertaining to the disputes which have
arisen between the parties to the agreement."
(emphasis
supplied)
7.10. In view of the legislative mandate contained in Section 11(6-A),
the Court is now required only to examine the existence of the
arbitration agreement. All other preliminary or threshold issues are left
to be decided by the arbitrator under Section 16, which enshrines the
kompetenz-kompetenz principle.
7.11. The doctrine of "kompetenz-kompetenz", also referred to as
"compétence-compétence", or "compétence de la recognized", implies
that the Arbitral Tribunal is empowered and has the competence to rule
on its own jurisdiction, including determining all jurisdictional issues,
and the existence or validity of the arbitration agreement. This doctrine
is intended to minimise judicial intervention, so that the arbitral process
is not thwarted at the threshold, when a preliminary objection is raised
by one of the parties. The doctrine of kompetenz-kompetenz is,
however, subject to the exception i.e. when the arbitration agreement
itself is impeached as being procured by fraud or deception. This
exception would also apply to cases where the parties in the process of
negotiation, may have entered into a draft agreement as an antecedent
step prior to executing the final contract. The draft agreement would be
a mere proposal to arbitrate, and not an unequivocal acceptance of the
terms of the agreement. Section 7 of the Contract Act, 1872 requires the
acceptance of a contract to be absolute and unqualified [Dresser Rand
S.A. v. Bindal Agro Chem Ltd. , (2006) 1 SCC 751. See
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also BSNL v. Telephone Cables Ltd. , (2010) 5 SCC 213 : (2010) 2 SCC
(Civ) 352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal
Nehru Port Trust , (2018) 10 SCC 525 : (2019) 1 SCC (Civ) 1] . If an
arbitration agreement is not valid or non-existent, the Arbitral Tribunal
cannot assume jurisdiction to adjudicate upon the disputes.
Appointment of an arbitrator may be refused if the arbitration
agreement is not in writing, or the disputes are beyond the scope of the
arbitration agreement. Article V(1)( a) of the New York Convention
states that recognition and enforcement of an award may be refused if
the arbitration agreement "is not valid under the law to which the
parties have subjected it or, failing any indication thereon, under the law
of the country where the award was made".
7.12. The legislative intent underlying the 1996 Act is party autonomy
and minimal judicial intervention in the arbitral process. Under this
regime, once the arbitrator is appointed, or the tribunal is constituted, all
issues and objections are to be decided by the Arbitral Tribunal.
7.13. In view of the provisions of Section 16, and the legislative policy
to restrict judicial intervention at the pre-reference stage, the issue of
limitation would require to be decided by the arbitrator. Sub-section (1)
of Section 16 provides that the Arbitral Tribunal may rule on its own
jurisdiction, "including any objections" with respect to the existence or
validity of the arbitration agreement. Section 16 is as an inclusive
provision, which would comprehend all preliminary issues touching
upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is
a jurisdictional issue, which would be required to be decided by the
arbitrator under Section 16, and not the High Court at the pre-reference
stage under Section 11 of the Act. Once the existence of the arbitration
agreement is not disputed, all issues, including jurisdictional objections
are to be decided by the arbitrator.
7.14. In the present case, the issue of limitation was raised by the
respondent Company to oppose the appointment of the arbitrator under
Section 11 before the High Court. Limitation is a mixed question of fact
and law. In ITW Signode (India) Ltd. v. CCE [ITW Signode (India)
Ltd. v. CCE, (2004) 3 SCC 48] a three-Judge Bench of this Court held
that the question of limitation involves a question of jurisdiction. The
findings on the issue of limitation would be a jurisdictional issue. Such
a jurisdictional issue is to be determined having regard to the facts and
the law. Reliance is also placed on the judgment of this Court in NTPC
Ltd. v. Siemens Atkeingesellschaft [NTPC Ltd. v. Siemens
Atkeingesellschaft, (2007) 4 SCC 451] , wherein it was held that the
Arbitral Tribunal would deal with limitation under Section 16 of the
1996 Act. If the tribunal finds that the claim is a dead one, or that the
claim was barred by limitation, the adjudication of these issues would
be on the merits of the claim. Under sub-section (5) of Section 16, the
tribunal has the obligation to decide the plea; and if it rejects the plea,
the arbitral proceedings would continue, and the tribunal would make
the award. Under sub-section (6) a party aggrieved by such an arbitral
award may challenge the award under Section 34.
In Iffco Ltd. v. Bhadra Products [Iffco Ltd. v. Bhadra Products, (2018)
2 SCC 534 : (2018) 2 SCC (Civ) 208] this Court held that the issue of
limitation being a jurisdictional issue, the same has to be decided by the
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tribunal under Section 16, which is based on Article 16 of
the Uncitral Model Law which enshrines the kompetenz principle.
10. This view has also been taken by the Larger Bench of the Hon'ble
Apex Court in the case of Central Organisation for Railway Electrification v.
ECI SPIC SMO MCML (JV), (2025) 4 SCC 641, wherein it is held that at
the stage of deciding an application for appointment of an Arbitrator, the
Court must not conduct an intricate enquiry into the matter, where the claim
raised by the applicant is time barred and should be left open for
determination by the Arbitrator. Such an approach gives true meaning to the
view taken in the case of Interplay Between Arbitration Agreements under
Arbitration, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1.
11. When the case of the applicant is tested on the anvil of the law laid
down by Hon. Apex Court and the law cited by the non-applicant, this court
is of the considered opinion that now the consistent view of the Hon. Apex
court is that all the questions going to the root including limitation and
jurisdiction are to be decided by the Arbitrator.
12. In the case of BSNL (supra) the Hon. Apex Court in Para 38-39
has discussed about the limitation on the ground of breach of contract.
However, in the present case, the question is only that whether the payment
of bills made by the non-applicant constitutes a dispute between the parties
which can be settled as per the mechanism provided under the agreement.
13. The Apex Court in the case of SBI General Insurance Co. Ltd. Vs.
Krish Spinning, 2024 SCC Online 1754 has held as under :-
108. Section 11 of the Act, 1996 is provided to give effect to the
mutual intention of the parties to settle their disputes by arbitration in
situations where the parties fail to appoint an arbitrator(s). The
parameters of judicial review laid down for Section 8 differ from those
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prescribed for Section 11. The view taken in SBP & Co. (supra) and
affirmed in Vidya Drolia (supra) that Sections 8 and 11 respectively of
the Act, 1996 are complementary in nature was legislatively overruled
by the introduction of Section 11(6-A) in 2015. Thus, although both
these provisions intend to compel parties to abide by their mutual
intention to arbitrate, yet the scope of powers conferred upon the courts
under both the sections are different.
110. The scope of examination under Section 11(6-A) is confined to
the existence of an arbitration agreement on the basis of Section 7.
The examination of validity of the arbitration agreement is also limited
to the requirement of formal validity such as the requirement that
the agreement should be in writing.
111. The use of the term 'examination' under Section 11(6-A)
as distinguished from the use of the term 'rule' under Section 16
implies that the scope of enquiry under section 11(6-A) is limited to a
prima facie scrutiny of the existence of the arbitration agreement, and
does not include a contested or laborious enquiry, which is left for
the arbitral tribunal to 'rule' under Section 16. The prima facie view
on existence of the arbitration agreement taken by the referral court
does not bind either the arbitral tribunal or the court enforcing the
arbitral award.
14. Taking guidance from the decision of the Hon. Apex court in the
case of SBI General Insurance Co. Ltd. (supra) , this Court is of the view that
application is within limitation from the date of notice dated 18.1.2017 and,
therefore, even if non applicant has raised any question in regard to the
limitation can be resolved by the Arbitrator. Non-applicants are free to take
all the objections before the Arbitrator and the Arbitrator as per the scheme
and legislative intent of section 11 (6)(a) would decide all the questions.
15. Considering the totality of the case and the enunciation of law laid
down by the Hon. Apex court, the application is allowed.
16. With the consent of learned counsel for the parties and considering
the list of empanelled Arbitrator issued by the M.P. Arbitration Centre,
Jabalpur, following order is passed :-
(i) Justice Shri S.S.Jha, Former Judge, High Court of M.P., 914-915,
Gol Bazar, Jabalpur, Mob. No.94251-10066 e-mail [email protected] is
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appointed as sole Arbitrator to resolve the dispute between the parties in the
case.
(ii) Arbitrator shall issue the notices and fix the date and suitable
venue for arbitration. Said arbitration will take place at Jabalpur.
(iii) Parties are directed to deposit necessary charges and fees as per
M.P. Arbitration Center (Domestic and International) Rules, 2019.
(iv) Director of Madhya Pradesh Arbitration Centre [Domestic and
International, Jabalpur (M.P.D.I.A.C.)] shall communicate the decision of
this Court to the Sole Arbitrator.
(v) Other provisions of Section 15(3)(4) of the Arbitration and
Conciliation Act, 1996 will apply to Substitute Arbitrator.
17. Arbitration case is disposed of.
(DEEPAK KHOT)
JUDGE
HS
