Bharat Sanchar Nigam Ltd. & Anr. Vs Nortel Networks India Pvt. Ltd. (Supreme Court of India)
Summary: The Supreme Court considered two issues arising from BSNL’s challenge to the Kerala High Court orders referring its dispute with Nortel Networks India Pvt. Ltd. to arbitration: the limitation period for an application under Section 11 of the Arbitration and Conciliation Act, 1996, and whether a referral court may decline appointment where the underlying claims are ex facie time-barred. BSNL had rejected Nortel’s claim concerning deductions/withholding of Rs.99,70,93,031 on 04.08.2014. Nortel invoked arbitration only on 29.04.2020, after more than 5½ years. The Court held that Section 11 itself prescribes no limitation period for an application seeking appointment of an arbitrator. By virtue of Section 43 of the 1996 Act, the Limitation Act, 1963 applies, and Article 137 governs such an application. Accordingly, the Section 11 application must be filed within three years from the date when the right to apply accrues, ordinarily after failure to appoint the arbitrator following a notice invoking arbitration.
The Court emphasized that limitation for a Section 11 application is distinct from limitation governing the substantive contractual claims. On the facts, Nortel’s Section 11 application filed on 24.07.2020, after BSNL rejected the request for appointment on 09.06.2020, was itself within Article 137. The Court, however, separately examined whether the underlying claims could be referred. Reviewing the legislative history of Section 11, the 2015 amendment, the kompetenz-kompetenz principle and authorities including SBP & Co., Duro Felguera, Mayavati Trading and Vidya Drolia, the Court held that limitation concerning the claim ordinarily goes to admissibility and is for the arbitral tribunal.
