Supreme Court urges Parliament to introduce limitation period for arbitrator appointment pleas

The Supreme Court on Friday urged the parliament to address the legislative vacuum in the Arbitration and Conciliation Act with regard to the limitation period for filing applications to appoint arbitrators [Arif Azim Co Ltd vs Aptech Ltd]..A bench of Chief Justice of India (CJI) DY Chandrachud with Justices JB Pardiwala and Manoj Misra stated that there is no statutory limit for such pleas and the existing norm being followed was three years.However, the same is unduly long, the Court said. "There is no statutory prescription regarding the time limit. We would again like to reiterate that the period of three years is an unduly long period for filing an application under Section 11 of the Act, 1996 and goes against the very spirit of the Act, 1996 which provides for expeditious resolution of commercial disputes within a time-bound manner ... Parliament should consider bringing an amendment prescribing a specific period of limitation," it explained..The observations came while disposing of a petition under Section 11(6) of the Arbitration and Conciliation Act of 1996. The plea was filed by Arif Azim Co., a firm based in Kabul, Afghanistan and engaged in the business of providing training to students in computer education and English.The company sought the appointment of an arbitrator for the adjudication of disputes and claims arising from a 2013 contract with Indian company, Aptech Limited.In the earlier round of litigation before the Bombay High Court, the parties in 2022 had resorted to mediation, albeit unsuccessfully. Thereafter, the foreign company asked for dues of ₹1,48,31,067 inclusive of interest of ₹82,13,367, and nominated Senior Advocates V Giri and ML Verma as arbitrators.However, the Indian company denied all contentions and refused to participate in proceedings on grounds of limitation, leading to the instant case before the apex court..The Supreme Court eventually held that the case was filed within three years of the respondent having failed to comply with the first notice of invocation of arbitration, and hence it was not hit by limitation."The notice for invocation of arbitration having been issued by the petitioner within a period of three years from the date of accrual of cause of action, the claims cannot be said to be ex-facie dead or time-barred on the date of commencement of the arbitration proceedings," the Court stated. The three-year timeframe is according to norms in arbitration cases going by Section 137 of the Limitation Act, the bench said..It, therefore, proceeded to appoint retired judge, Justice Sanjay Kishan Kaul as the sole arbitrator. Parties were given the liberty to decide on his fees for the same..Advocate R Sathish appeared for Arif Azim Co. Senior Advocate Rana Mukherjee appeared for Aptech Ltd..[Read Judgment]