The Delhi High Court, led by Justice Jyoti Singh, has clarified that the statutory time limit for filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, cannot be avoided simply by arguing that the arbitration notice was sent by an unauthorized advocate.
“Accepting such a plea would defeat the very purpose of prescribing a time frame for such applications,” the Court observed.
Background of the Dispute
The case centered around a Memorandum of Understanding (MoU) signed on 25 November 2013, between K. Rasa International Pvt. Ltd. and the respondent, for the purchase of two property units in the upcoming ‘Lifestyle Street K8’ project in Noida. Additionally, the petitioner was offered Unit B-04-31 in Gurgaon Hills, Gurugram, as part of the consideration.
An Agreement to Sell followed on 13 December 2013, with a payment schedule ending on 30 June 2014. A subsequent addendum on 12 August 2014 extended the deadline, charging interest at 12% per annum until 31 December 2014. The petitioner alleged that the project was shelved due to land acquisition problems, making the MoU void and entitling them to a refund.
Despite several legal notices issued from 2015 to 2024, the respondents failed to respond. On 22 April 2024, the petitioner sent a fresh arbitration notice and approached the Court under Section 11(6) of the Arbitration Act to appoint an arbitrator.
Arguments and Counterarguments
The respondents stated that the petitioner’s lawyer had already sent an arbitration invocation notice back on 12 January 2017, following an initial demand notice in 2016. They argued that if this date is considered, the application filed in 2024 exceeds the three-year limitation period outlined in Article 137 of the Limitation Act.
In response, the petitioner argued that they never instructed the lawyer to send the 2017 notice and were unaware of the respondent’s reply dated 30 December 2016. It was only during the court proceedings that they became aware of this communication. Therefore, according to them, the actual notice invoking arbitration was sent in March 2024, making the petition timely.
Court’s Observations
The High Court referred to the Supreme Court’s decision in Arif Azim Company Ltd. v. Aptech Ltd. (2024), which emphasized that Section 43 of the Arbitration Act makes the Limitation Act applicable to arbitration matters. Since no specific time limit is mentioned under Section 11(6), Article 137 applies, giving a three-year window from the date of a valid arbitration notice.
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The Court also cited the decision in SBI General Insurance Co. Ltd. v. Krish Spinning (2024), reiterating that it is not the Court's role to investigate the merits or timeliness of the claim itself, but to check if the application is filed within the prescribed limitation period.
“The referral court will not conduct an intricate evidentiary inquiry into whether the claims are time-barred,” noted the High Court.
Justice Singh rejected the petitioner’s claim that their lawyer acted without authority, calling it implausible. The Court emphasized that allowing parties to disown notices sent by their advocates would undermine Section 21 of the Arbitration Act and render limitation periods meaningless.
“No lawyer acts without instruction or authority. Accepting such a claim would open the floodgates to bypass statutory limitations,” the Court remarked.
The Delhi High Court firmly held that the application under Section 11(6) was barred by limitation and dismissed the petition.
Case Title: RINKOO AGGARWAL versus GAURAV SABHARWAL & ANR.
Case Number: ARB.P. 1199/2024
Judgment Date: 07/05/2025
For Petitioner: Mr. Aarush Bhandari, Mr. Dev Ahuja and Ms. Simran Jha, Advocates.
For Respondent: Mr. Dhruv Madan and Mr. Shivanshu Gusain, Advocates.
