Thursday 13 May 2021

Whether the limitation period for issuing the notice of arbitration will extend if there is an exchange of letters or settlement discussions?

 In the notice invoking arbitration dated 29.04.2020, 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.”  The period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters, or mere settlement discussions, where 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” 21 (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.

In the present case, the notice invoking arbitration was issued 5 ½ years after rejection of the claims on 04.08.2014. 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.

Supreme Court of India
Bharat Sanchar Nigam Limited vs M/S Nortel Networks India Pvt. ... on 10 March, 2021
Author: Hon'ble Ms. Malhotra

Bench: Hon'ble Ms. Malhotra, Ajay Rastogi
CIVIL APPEAL Nos. 843-844 OF 2021
Read full Judgment here: Click here
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