STATE OF WEST BENGAL & ORS.versusM/S B.B.M. ENTERPRISES

          [2026] 5 S.C.R. 154 : 2026 INSC 358

               State of West Bengal & Ors.
                            v.
                 M/s B.B.M. Enterprises
                (Civil Appeal No. 4320 of 2026)
                          09 April 2026
     [Sanjay Kumar and K. Vinod Chandran, JJ.]


                     Issue for Consideration
Whether a notice seeking commencement of arbitration, issued
on 02.06.2022, could set in motion the process of resolution of a
dispute regarding a work completed as early as on 30.07.2000.

                            Headnotes†
Arbitration and Conciliation Act, 1996 – ss.42, 43 – Limitation
Act, 1963 – Article 18 – Work completed in the year 2000 –
Notice seeking commencement of arbitration issued after 21
years in 2022 – By way of the impugned judgment, Arbitrator
appointed by High Court – Sustainability:
Held: Unsustainable – Arbitration though is an alternate dispute
resolution system, which has to be encouraged, it cannot deviate
from the fundamental principle that law favours the diligent and
not the indolent – For recovery of amounts, as in this case, the
limitation is three years as provided in Article 18 of the Limitation
Act, 1963 – The commencement of arbitration proceedings as per
sub-section (2) of s.43 being the date referred in s.21, which is
the date on which a request for initiation of arbitration is received
by the respondent, the claim itself was hopelessly time barred,
the notice having been issued after 21 years – Despite the work
having concluded on 30.07.2000, the petitioner did not attempt to
raise a bill or initiate the arbitration proceedings till 2022, when
a notice requiring commencement of arbitration proceedings was
first issued – Appellant slept over its claim for 21 years before the
notice seeking arbitration was issued in 2022; an ex-facie dead
claim – High Court erred insofar as finding failure on the part of
the Engineer-in-Charge to determine the final amount payable,
having extended the limitation – If there was such a failure on the
part of the Engineer-in-Charge, it was for the contractor to have
initiated arbitration then and there – Neither was notice issued
[2026] 5 S.C.R.                                                              155

         State of West Bengal & Ors. v. M/s B.B.M. Enterprises


     for arbitration nor was a final bill raised or a request made to
     determine the total amount payable – Order initiating arbitration
     set aside. [Paras 5, 6]

                              Case Law Cited
     Vishram Varu and Company v. Union of India (2023) 12 SCC 588;
     Arif Azim Company Limited v. Aptech Limited [2024] 3 SCR 73 :
     (2024) 5 SCC 313; Aslam Ismail Khan Deshmukh v. ASAP Fluids
     Private Limited and Another [2024] 12 SCR 108 : (2025) 1 SCC
     502; Vidya Drolia and Ors. v. Durga Trading Corporation [2020] 11
     SCR 1001 : (2021) 2 SCC 1; Bharat Sanchar Nigan Limited and
     Anr. v. Nortel Networks India Private Limited [2021] 2 SCR 644 :
     (2021) 5 SCC 738; Interplay between Arbitration Agreements under
     Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, In Re.
     [2023] 15 SCR 1081 : (2024) 6 SCC 1 – referred to.

                                 List of Acts
     Arbitration and Conciliation Act, 1996; Limitation Act, 1963.

                              List of Keywords
     Claim ex-facie time barred; Claim hopelessly time barred; Section 42
     of the Arbitration and Conciliation Act, 1996; Limitation for recovery
     of amounts; Article 18 of the Limitation Act, 1963; Law favours the
     diligent; Ex-facie dead claim; Notice seeking commencement of
     arbitration issued after 21 years.

                             Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4320 of 2026
     From the Judgment and Order dated 27.06.2024 of the High Court
     at Calcutta in AP No. 535 of 2022.

                         Appearances for Parties
     Advs. for the Appellant(s):
     Kunal Chatterji, Ms. Maitrayee Banerjee, Rohit Bansal, Varij Nayan
     Mishra.
     Advs. for the Respondent(s):
     Sudhanshu Choudhari, Sakya Sen, Sr. Advs., Sarad Kumar
     Singhania, Yash Singhania, Ms. Nilanjana Adhya.
156                                                           [2026] 5 S.C.R.

                               Supreme Court Reports


                       Judgment / Order of the Supreme Court

                                      Order

1.     The neat question arising in the above case is as to whether a notice
       seeking commencement of arbitration, issued on 02.06.2022, could
       set in motion the process of resolution of a dispute regarding a
       work completed as early as on 30.07.2000. The High Court dealing
       with the application under Section 11 found from the agreement
       that there is an ambiguity in Clause 7 which requires the final bill
       to be submitted by the contractor within one month from the date
       fixed for completion of work dehors which the Engineer-in-Charge is
       competent to issue a certificate of measurement and the total amount
       payable for the work, which shall be final and binding on all parties.
       Since no such certificate was issued by the Engineer concerned
       and the communication of 04.01.2001 produced as Annexure P9,
       speaks only of a part payment, the dispute would not be beyond the
       scope of Section 11 of the Arbitration and Conciliation Act, 19961.
       The objection as to limitation was found to be effaced insofar as the
       final measurement with the total amounts payable having not been
       determined by the Engineer-in-Charge.
2.     Sri Kunal Chatterji, learned counsel appearing for the State, the
       appellant, would rely on Vishram Varu and Company v. Union of
       India2. While Sri Sudhanshu Choudhari, learned Senior Counsel
       appearing for the respondent relied on Arif Azim Company Limited
       v. Aptech Limited3 and Aslam Ismail Khan Deshmukh v. ASAP
       Fluids Private Limited and Another4.
3.     Vishram Varu and Company 2 was a case in which the work
       undertaken was completed in the year 1985-86 when the claim for
       money accrued. Correspondences were initiated from the year 2012
       under the RTI Act and eventually a legal notice seeking arbitration
       was issued on 22.10.2018. It was held that since the claim arose
       in the year 1985-86, the mere issuance of a notice in 2018 cannot



1    For brevity, ‘1996 Act’
2    (2023) 12 SCC 588
3    (2024) 5 SCC 313
4    (2025) 1 SCC 502
[2026] 5 S.C.R.                                                            157

         State of West Bengal & Ors. v. M/s B.B.M. Enterprises


     enable the party to contend that the cause of action arose in the
     year 2018, after expiry of 32 years.
4.   Arif Azim Company Limited3 considered both the question of
     limitation with respect to the claim for recovery of money and the
     limitation provided for filing an application under Section 11(6). It
     was categorically found after referring to a host of precedents of
     this Court that the Limitation Act, 1963 is applicable to arbitration
     proceedings in general and Article 137 of that Act applies to a petition
     under Section 11(6) of the 1996 Act in particular. Insofar as the
     substantive claim in that case was concerned, it was found that the
     right to bring a claim arose on 28.03.2018, the claim being one of
     recovery of money. The period of limitation of three years ended on
     27.03.2021; within the period in which limitation was suspended by
     this Court by reason only of the Covid-19 pandemic. The limitation
     having commenced from 01.03.2022 again as per the orders of this
     Court, the balance period available from the date of suspension,
     extended the expiry of limitation to 13.03.2023. The notice seeking
     arbitration under Section 21 was issued on 24.11.2022, bringing the
     initiation of the proceeding within the limitation of three years. Insofar
     as the limitation for making an application under Section 11(6), this
     Court found applicable Article 137, which also provides for a period
     of three years, the commencement of which was on expiry of 30
     days from the date of receipt of the notice for initiation of arbitration.
     Notice issued on 24.11.2022 was delivered on 29.11.2022, thus, the
     limitation having commenced from 28.12.2022. The application under
     Section 11(6) was filed on 19.04.2023 within the period of three
     years from the expiry of 30 days from the receipt of notice. Thus,
     both the claim and the application under Section 11(6) were found
     to be within the limitation period, which in the present case is not
     satisfied insofar as the claim is concerned. We extract paragraph 68
     from the aforesaid decision :
           “68. Although, limitation is an admissibility issue, yet it is
           the duty of the Courts to prima facie examine and reject
           non-arbitrable or dead claims, so as to protect the other
           party from being drawn into a time-consuming and costly
           arbitration process.”
5.   Aslam Ismail Khan Deshmukh4, was a case in which the question
     arose as to whether the claim was barred by limitation, while the
158                                                            [2026] 5 S.C.R.

                           Supreme Court Reports


       application for appointment of an Arbitrator under Section 11(6)
       though moved before a wrong forum, the High Court, was within
       the limitation period of 3 years as found in Arif Azim3. Arif Azim3
       was found to have been concerned with two issues. First whether
       Limitation Act, 1963 is applicable to an application for appointment
       of arbitrator under Section 11(6) and whether the Court may decline
       reference under Section 11 if the claims are ex-facie and hopelessly
       time barred. This Court noticing Vidya Drolia and Ors v. Durga
       Trading Corporation5, and Bharat Sanchar Nigan Limited and
       Anr. v. Nortel Networks India Private Limited6 held that period
       of limitation for filing a petition seeking appointment of an Arbitrator
       cannot be confused or conflated with the period of limitation applicable
       to substantive claims made in the underlying contract. In BSNL6, the
       notice invoking arbitration having been issued five and a half years
       after the cause of action arose i.e. rejection of claims of Nortel by
       BSNL, the claim itself was held to be ex-facie time barred. However,
       noticing the decision in Interplay between Arbitration Agreements
       under Arbitration and Conciliation Act, 1996 and Stamp Act,
       1899, In Re.7, it was held that in a scenario where the Referral Court
       is able to deal with the frivolity of the litigation on the basis of bare
       minimum pleadings it would be incorrect to assume or doubt that the
       Arbitral Tribunal would not be able to arrive at the same inference.
       It was held that the Referral Court cannot indulge in any intricate
       evidentiary inquiry into the question whether the claims raised by the
       petitioner are time barred which determination has to be left to the
       decision of the Arbitrator. In the case of Arif Azim3, the question of
       limitation was to be considered on the basis of the facts disclosed,
       whether the period commenced from; the date of the letter forming
       the basis of the claim, the date of resignation of the petitioner or
       the date of subsequent legal notice sent by the respondent to the
       petitioner, which was left to be considered by the Arbitrator. However,
       in the present case there is no intricate evidentiary inquiry to be
       done. After Annexure P9 of 04.01.2001, whether it be the interim
       determination of dues or not, the appellant slept over its claim for 21
       years before the notice seeking arbitration was issued on 02.06.2022;
       an ex-facie dead claim.


5   (2021) 2 SCC 1
6   (2021) 5 SCC 738
7   (2024) 6 SCC 1
[2026] 5 S.C.R.                                                           159

            State of West Bengal & Ors. v. M/s B.B.M. Enterprises


6.   Arbitration though is an alternate dispute resolution system, which has
     to be encouraged, it cannot deviate from the fundamental principle
     that law favours the diligent and not the indolent. Section 42 of the
     Arbitration and Conciliation Act, 1996 applies the Limitation Act, 1963
     to arbitrations as it is applied to proceedings in Court. Hence, for
     recovery of amounts, as in this case, the limitation is three years as
     provided in Article 18 of the Limitation Act, 1963. The commencement
     of arbitration proceedings as per sub-section (2) of Section 43 being
     the date referred in Section 21, which is the date on which a request
     for initiation of arbitration is received by the respondent, the claim
     itself was hopelessly time barred, the notice having been issued
     after 21 years.
7.   In the present case, despite the work having concluded on 30.07.2000,
     the petitioner did not attempt to raise a bill or initiate the arbitration
     proceedings till 2022, when a notice requiring commencement of
     arbitration proceedings was first issued. The High Court erred insofar
     as finding failure on the part of the Engineer-in-Charge to determine
     the final amount payable, having extended the limitation. If there was
     such a failure on the part of the Engineer-in-Charge, it was for the
     contractor to have initiated arbitration then and there. Neither was
     notice issued for arbitration nor was a final bill raised or a request
     made to determine the total amount payable.
8.   We find absolutely no reason to sustain the order initiating arbitration.
     We set aside the same and allow the appeal.
9.   Pending application(s), if any, shall stand disposed of.

     Result of the case: Appeal allowed.




     †
         Headnotes prepared by: Divya Pandey