Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-012529-012530 – 2025 |
| Diary Number | 30170/2024 |
| Judge Name | HON’BLE MR. JUSTICE DIPANKAR DATTA |
| Bench | HON’BLE MR. JUSTICE DIPANKAR DATTA; HON’BLE MR. JUSTICE AUGUSTINE GEORGE MASIH |
| Precedent Value | Binding Authority |
| Overrules / Affirms | Affirms existing Supreme Court precedents on court-appointment under Section 11 |
| Type of Law | Arbitration and Conciliation Act, 1996; Limitation Act, 1963 |
| Questions of Law |
|
| Ratio Decidendi |
|
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
|
| Facts as Summarised by the Court |
The respondent awarded a turnkey contract in December 2016 with a five-month completion period; work completed January 2018. The appellant raised the final bill on 20 March 2018, issued a no-claim certificate on 3 October 2018, and sought arbitrator appointment on 14 June 2021 and filed under Section 11(6) on 15 March 2022. The Madhya Pradesh High Court declined appointment as time-barred; review petition was dismissed. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All courts and tribunals adjudicating Section 11 appointment applications |
| Persuasive For | High Courts in commercial arbitration matters |
| Overrules | Judgment and Order of the Madhya Pradesh High Court dated 19.12.2023 & 10.04.2024 in Arbitration Case No. 23 of 2022 |
| Follows | TRF Limited v. Energo Engineering Projects Ltd.; Perkins Eastman v. HSCC; Voestalpine Schienen GmbH v. DMRC |
What’s New / What Lawyers Should Note
- The inoperability of a contractual arbitrator-appointment clause (due to Section 12(5) disqualification) does not nullify the arbitration agreement; courts retain power under Section 11(6).
- A Section 11 application’s limitation period begins when a claim becomes due (30 days after final bill submission).
- The COVID-19 exclusion order (15 March 2020–28 February 2022) applies to Section 11 limitation, effectively extending the filing window.
- Counsel may invoke this decision to override defective appointment clauses and secure arbitrators in legacy contracts predating the 2015 Amendment.
Summary of Legal Reasoning
- The 2015 Amendment inserted Section 12(5) to ensure arbitrator neutrality; any contract clause naming a disqualified arbitrator is invalid but does not void the arbitration agreement.
- Under Section 11(6), courts have jurisdiction to appoint an arbitrator when the agreed procedure is inoperative, consistent with TRF Limited and Perkins Eastman decisions.
- The limitation for applying under Section 11 commences when the dispute becomes ripe—i.e., 30 days after the final bill is due—relying on Article 137 and precedents like Geo Miller & Grasim Industries.
- The Supreme Court’s COVID-19 extension order excludes 15 March 2020–28 February 2022 from limitation calculus, saving an otherwise barred application.
Arguments by the Parties
Petitioner (Offshore Infrastructures Ltd.)
- Reliance on Arif Azim v. Aptech: limitation begins on refusal or failure to appoint arbitrator after a valid notice.
- Part payment on 11.06.2019 extends limitation under Section 19 Limitation Act.
- COVID-19 exclusion order suspends limitation from 15.03.2020 to 28.02.2022.
- Perkins Eastman: defective appointment by MD pre-2015 Amendment does not preclude court appointment.
Respondent (Bharat Petroleum Corp. Ltd.)
- Cause of action arose when final bill became due (21.04.2018); no invocation within three years.
- Clause 8.6(a) of GCC exclusively empowers MD or nominee; statutory change renders the clause otiose, extinguishing the arbitration mechanism.
Factual Background
Offshore Infrastructures Ltd. was awarded a tender on 31 December 2016 with a five-month completion timeline; actual completion occurred on 31 January 2018. The final bill was raised on 20 March 2018 and became due on 21 April 2018. A no-claim certificate was issued on 3 October 2018. The appellant served a Section 11 notice on 14 June 2021 and filed the Section 11(6) application on 15 March 2022; the High Court dismissed it as time-barred and refused review.
Statutory Analysis
- Section 11(6), 1996 Act: Court’s power to appoint arbiters if procedure fails.
- Section 12(5) & Seventh Schedule, 1996 Act (2015 Amendment): Disqualification of arbitrators to secure neutrality.
- Limitation Act, 1963 (Article 137, Schedule 26): Three-year period from cause of action—due date of the final bill.
- Section 19, Limitation Act: Effect of part payment on limitation period.
- COVID-19 Extension Order (10.01.2022): Exclusion of 15 March 2020–28 February 2022 from all judicial/quasi-judicial limitation calculations.
Alert Indicators
- ✔ Precedent Followed – Upholds and applies existing Supreme Court jurisprudence on court-appointment of arbitrators and limitation computation.