Limitation No Ground To Refuse Arbitration Reference Unless Claim Is Clearly Time- Barred: J&K&L High Court

The High Court of Jammu and Kashmir and Ladakh has reiterated that a plea of limitation cannot by itself block the appointment of an arbitrator unless the claim is clearly time-barred, and that such questions should ordinarily be left to the arbitral tribunal.

A bench of Justice Sanjay Dhar relying on earlier precedents held,

“at the time of considering a petition under Section 11(6) of the Act, unless it is shown that the claim is ex facie time barred or hopelessly time barred, the Court exercising power under Section 11(6) of the Act for appointment of an arbitrator should not reject such application.”

It added that even a slight doubt must favour reference to arbitration:

“If there is slightest doubt with regard to arbitrability of the claim on account of it being time barred, the issue for determination in this regard should be left to the Arbitrator and the Court while exercising its power under Section 11 of Act should not venture to determine the said issue at reference stage.”

The court also made it clear that once an arbitration clause exists and is invoked without response, reference is mandatory. It said:

“once it has been found that there is an arbitration clause existing between the parties, which has been invoked by the petitioner without any response from the respondents, there is no other option available with this Court but to refer the dispute arising between the parties to the Arbitral Tribunal.”

The case arose from a 2008 contract for drilling borewells at two hospitals, where the contractor said part of its payment remained unpaid. An earlier writ petition filed in 2013 was dismissed in 2020 with liberty to pursue other remedies. The contractor then invoked arbitration in 2022 and 2023 after no arbitrator was appointed.

The corporation opposed the plea, arguing that the claim was stale and that no work had been carried out at one of the sites, making the dispute non-arbitrable.

Rejecting this, the court said the issue of delay required factual examination and could not be decided conclusively at this stage. It noted that the contractor could seek exclusion of time spent in earlier proceedings and observed:

“prima facie, it appears that the petitioner has the right to seek exclusion of time taken in pursuing the remedy before a wrong forum by relying upon the provisions contained in Section 14 of the Limitation Act.”

It clarified that this plea must be assessed by the arbitrator:

“The petitioner can very well plead before the Arbitrator that he was prosecuting the proceedings before a wrong forum in good faith and claim exclusion of the period during which the writ petition remained pending before this Court.”

The court concluded:

“thus, it cannot be stated that the claim of the petitioner is ex-facie time barred, though this issue has to be gone into and analysed by the Arbitral Tribunal before considering the claim of the petitioner on merits. This court, while exercising its power under Section 11(6) of the Act of 1996, cannot go into this issue and it is only the Arbitral Tribunal who can go into all these issues during the arbitral proceedings.”

The court appointed a sole arbitrator and directed that the issue of limitation be decided first before examining the merits of the dispute.

For Petitioner: Senior Advocate Z.A. Qureshi; Advocate Rehana Fayaz

For Respondents: Government Advocate Waseem Gull