Hopelessly time barred application for appointment of arbitrator, cannot be entertained

The contractor entered into an agreement with the Cantonment Board for repairing internal and main roads. As per the final contract certificates, a final payment was received by the respondent, contractor in respect of the works in question. The contractor then started making demands towards reimbursement on account of variation in prices of material, labour and fuel.

Demand for arbitration in the present case was made by the letter dated 07.11.2006. This demand was reiterated by a letter dated 13.01.2007, in which the letter itself informed the Appellant that appointment of an arbitrator would have to be made within 30 days. Therefore, time began to run on and from 12.02.2007. On and from 12.02.2007, when no arbitrator was appointed, the cause of action for appointment of an arbitrator accrued to the respondent and time began running from that day. Once time has started running, any final rejection by the Cantonment Board by its letter dated 10.11.2010 would not give any fresh start to a limitation period that has already begun running.

As quoted by Justice R.F. Nariman, J. “Even otherwise, the claim made by the Respondent was also ex facie time-barred. It is undisputed that final payments were received latest by the end of March 2003 by the Contractor. That apart, even assuming that demand could have been made on account of price variation, such demand was made on 08.09.2003. Repeated letters were written thereafter by the Contractor, culminating in a legal notice dated 30.01.2010. Vide the reply notice dated 16.02.2010, it was made clear that such demands had been rejected. Even taking 16.02.2010 as the starting point for limitation on merits, a period of three years having elapsed by February 2013, the claim made on merits is also hopelessly time-barred.”

On this count, the Supreme Court held that hopelessly time-barred application for appointment of an arbitrator, cannot be entertained.

Image Credit : cvrock.com