Interference Warranted In Section 11 Only When Claims Are Ex-Facie Time-Barred: Analysis Of Bharat Sanchar Nigam Ltd. And Anr. vs. Nortel Network India Private Ltd.
The Hon'ble Supreme Court, in its judgment titled Bharat Sanchar Nigam Limited Vs. Nortel Networks India Private Limited1 dated 10.03.2021, considered an appeal filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Act"), in which the division bench of Justice Indu Malhotra and Justice Ajay Rastogi pondered on two key issues, namely, (i) the time limit for applying Section 11 of the Act; and (ii) whether the court has the authority to refuse to issue a referral under Section 11 if the claims are ex facie time-barred.
Issues in Question
- What is the period of limitation for applying Section 11 of the Act?
- Whether the court may refuse to refer to Section 11 of the Act where claims are ex facie time-barred.
The Supreme Court has ruled that (a) the time limit for making an application under Section 11 of the Act is three years from the date of failure to appoint the arbitrator, and (b) a court may refuse to submit a claim to arbitration if the claims are ex facie time-barred. The Supreme Court's decision, in this case, is a positive step toward providing much-needed clarification on the jurisprudence of Section 11, particularly in light of the many decisions and modifications to the statute itself. The court has made it plain that only extraordinary circumstances necessitate involvement at the Section 11 stage. Nevertheless, in light of the Vidya Drolia decision, where the court equated examination under Section 11 of the Act with review under Section 8 of the Act, a well-defined and concise explanation from a bigger bench is still required.
Furthermore, the Hon'ble Court correctly observed that the three-year time limit for applying Section 11 of the Act, as stipulated by Article 137 of the Limitation Act, is a very long period, which is inconsistent with the Act's goals. It is frequently observed that recalcitrant parties take advantage of the long term of limitation, thus a modification to reduce the time restriction for applying Section 11 of the Act would be highly advantageous under the Indian arbitration regime.
(This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.)