M/S Quality Engineers and Contractors v. M/S Distribution Logistics Infrastructure Private Ltd

6. The learned Arbitrator vide the impugned order has allowed the claim of the appellant only to the extent of Rs.16,75,128/- against the respondent, on an application filed under Order XII Rule 6 CPC, and by accepting the plea of limitation of the respondent, for the claim over and above Rs. 16,75,128/-.

7. The facts to be noted from the record are that the appellant filed the claim against the respondent for recovery of Rs.84,04,943/- with interest @ 24% per annum. It was the case of the appellant that the respondent had, assigned the work to the appellant for a sum of Rs.2,28,13,193/- which was completed by the appellant, but the respondent did not make the due payments.

8. It was the case of the appellant that it had completed the original work and also the additional work assigned to it from time to time by the respondent and raised the final bill for payment to the tune of Rs.2,98,41,535/- against which, it received an amount of Rs.2,14,36,592/-, but an amount of Rs.84,04,943/- was outstanding, for which the appellant raised a dispute, which was referred to the arbitration. In the claim petition, the appellant relied upon the invoices dated 20.08.2015, 19.02.2015 and 12.07.2014. It was the case of the appellant that the respondent had admitted that a sum of Rs.5,99,927/- was unpaid. It was also stated that, on 31.07.2018, the respondent categorically admitted that, as per the books of account, the balance amount of Rs.16,75,128/- is payable to the appellant. A legal notice dated 10.09.2018 was sent by the appellant, which was duly replied to by the respondent on 08.10.2018.

9. The case of the appellant before the learned Arbitrator was that, whenever it demanded the payment from the respondent, it raised various objections and asked to furnish various documents. It was also stated that the appellant had completed all the work. He also relied upon the email dated 09.11.2016 wherein the respondent has admitted that some amount has to be paid. The appellant had also relied upon various communications including the documents, viz bank details/cancelled cheque, request for no claim certificate, legal notice etc., to contend, the same constitute acknowledgment.

10. During the Arbitral Proceedings, the appellant relied upon the reply dated 08.10.2018 to the legal notice of the appellant wherein the respondent had admitted its liability to pay Rs.16,75,128/-. It was in this context, an application under Order XII Rule 6 of the CPC was filed seeking the judgment/award to the tune of Rs.16,75,128/-.

11. The case of the respondent before the learned Arbitrator was that the appellant is not entitled to the sum of Rs.16,75,128/- which happens to be 5% of the retention amount, which was payable to the appellant only when the conditions as mentioned in the letter of intent to provide the bank guarantee for defect liability period is satisfied. Since, the said condition was never satisfied by the appellant, as such there is no unequivocal admission on the part of the respondent acknowledging the payment as sought in the claim.

12. The learned Arbitrator in the order dated 09.01.2020 also considered the application under Order VII Rule 11 of the CPC filed by the respondent seeking dismissal of the claim petition on the ground of limitation. The learned Arbitrator while considering the application of the respondent under Order VII Rule 11 of the CPC also considered the application under Order XII Rule 6 of the CPC. The Arbitrator held that the limitation period would be three years from the date of completion of work in view of Article 18 of the Schedule of the Limitation Act, 1963. The learned Arbitrator held that the right to get the payment upon completion of the work exist, as the respondent has unequivocally acknowledged its liability towards the amount of Rs.16,75,128/-.

13. The learned Arbitrator rejected the claim of the appellant, over and above the amount of Rs.16,75,128/- on the ground that the same shall be barred by limitation, primarily by not accepting the stand of the appellant that the respondent has acknowledged the liability as is contemplated in Section 18 of the Limitation Act, 1963. This can be seen from paragraph no.13 onwards of the Award dated 09.01.2020 wherein the learned Arbitrator held that there is no correspondence wherein the respondent had accepted that it is liable to pay Rs.84,04,943/- to the appellant.

14. The submission of Mr. Vishwendra Verma is that the learned District Judge has not considered the factual matrix involved in the matter in right perspective.

15. According to him, the cause of action to claim the amount of Rs.84,04,943/- has arisen only when the respondent denied the payment to the appellant. He stated that, if the liability is admitted, the limitation gets extended for initiating the action for recovery. The limitation period for total outstanding shall start on the date when the cause of action has arisen, which according to him, was on 01.09.2016. His submission is also that while considering the application under Order VII Rule 11 CPC, the learned Arbitrator is only required to see the claim and the documents filed by the appellant/claimant and not the stand/case set up by the respondent that the claim is barred by limitation, which is a mixed question of law and facts.

16. In support of his submissions, Mr Verma has relied upon the following decisions:a) Popat and Kotecha Property v. State Bank of India Staff Association, (2005) 7 SCC 510; b) Balasaria Construction (P) Limited v. Hanuman Seva Trust & Another, (2006) 5 SCC 658; c) Madanuri Sri Ram Chandra Murthy v. Syed Jalal, (2017) 13 SCC 174; and d) Daliben Bailjibhai & Others v. Prajapati Kodarbhai Kachrabhai & Another, 2024 SCC OnLine SC 4105.

17. The submissions made by Mr Verma are not persuasive. This we say so, for the reasons given by the learned District Judge both on the scope of the judicial review in a petition under Section 34 of the Act and also on the merits of the claim made by the appellant before the learned Arbitrator, more specifically in the context of Section 18 and Article 18 of the Schedule of the Limitation Act, 1963.

18. Before we refer to the scope of the judicial review in a petition under Section 34 of the Act, the issue that needs to be decided is whether the learned Arbitrator and the learned District Judge were right in dismissing the claim over and above Rs. 16,75,128/- as being barred by limitation.

19. Mr Verma has not contested that the issue of limitation has to be looked from the prospective of the Article 18 of the schedule of the Limitation Act, 1963. The limitation period fixed for making a claim for the work done when no time has been fixed for payment in the contract, is three years from the date when the work was completed. If that be so, there is no dispute that the work was completed on 20.08.2015 and various invoices dated 20.08.2015 and 22.08.2015 were raised. So, it follows that limitation expired on 19.08.2018. The notice invoking arbitration was issued by the appellant on 10.09.2018, to which a reply was sent by the respondent on 08.10.2018. Hence, in that sense, the claim petition was required to be filed within three years, w.e.f. 20.08.2015.

20. But we note the appellant had invoked the arbitration clause beyond the period of limitation of three years effective from 20.08.2015. The learned Arbitrator was justified in dismissing the claim petition of the appellant for a sum over and above Rs.16,75,128/-, being barred by limitation. The learned Arbitrator has awarded the amount of Rs. 16,75,128/- to the appellant as the amount has been acknowledged by the respondent vide email dated 19.07.2018, wherein, the respondent has in the draft copy of No Claim Certificate stated that they have no financial or any claim what so ever other than Rs.16,75,128/- as on 18.07.2018. If the Section 18 of the Limitation Act is seen, there is no acknowledgment by the respondent accepting the liability over and above Rs. 16,75,128/-.

21. We are of the view that, in the facts of this case, the conclusions drawn by the learned Arbitrator and the learned District Judge needs no interference.

22. In so far as the decision relied upon by Mr Verma in the case of Madanuri Sri Ram Chandra Murthy (supra) is concerned, the ratio of the judgment is primarily that the plea of limitation is a mixed question of law and facts and as such the issue of limitation could not have been decided on an application filed under Order VII Rule 11 CPC. We are not in agreement with such a plea, when facts are admitted, which conclusively prove the claim is beyond limitation. Suffice to state, the learned District Judge has held that the decision given by learned Arbitrator is based on the plea taken by appellant itself including the date of final bill raised by the appellant. It is not necessary that in all the cases, question of limitation involves question of law and facts. In the present case, the facts as disclosed by appellant were taken on their face value for deciding the question of limitation. Those facts were assessed on the parameters of declared law of limitation, which were applicable to the facts of this case. Hence, the reliance on the above judgment is misplaced.

23. Further the averments in the claim and the documents attached thereto read as a whole discloses that the claim is beyond limitation. Even on this ground, the Arbitrator has rightly held that the claim over and above Rs.16,75,128/- is barred by time.

24. Similarly, in the case of Popat and Kotecha Property (supra), which has been relied upon by Mr Verma for identical proposition is concerned, the same shall not help his case, in view of the order passed by the learned Arbitrator, more specifically, paragraphs 9 and 10 of the Award, which we have already reproduced above.

25. Insofar as the decision in the case of Daliben Bailjibhai & Others (supra) is concerned, the Supreme Court in the facts has held that, there is no justification for the High Court to allow the application under Order VII Rule 11 of the CPC as it is not evident from the averments made in the plaint that the limitation commenced from the date of the registration itself. So, the facts having been disputed, the application under Order VII Rule 11 CPC could not have been allowed. The said judgment is distinguishable on facts.

26. Lastly, Balasaria Construction (P) Limited (supra) is relied upon for a similar proposition, wherein the Supreme Court held that the suit cannot be dismissed as barred by limitation without proper pleadings, framing of issue of limitation and taking of evidence. The ratio of the said judgment shall not be applicable in the facts of this case, more particularly, in view of the findings of the learned Arbitrator / learned District Judge and our findings above.

27. The present appeal filed by the appellant is devoid of merits. Accordingly, the appeal along with pending application is dismissed at the admission stage. No costs.

V. KAMESWAR RAO, J

MANMEET PRITAM SINGH ARORA, J MAY 26, 2026 M