Bombay high court condones 527 days delay in section 11 arbitration application

Bombay High Court pardons a 527-day delay in filing a Section 11 arbitration application, demonstrating flexibility in legal proceedings.

The Bombay High Court in Atul Projects India Pvt. Ltd. v. Taksha Spaces Pvt. Ltd. & Ors., decided on 1 September 2026, considered whether a delay of 527 days in filing an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 could be condoned. The Court held that the Applicant had shown sufficient cause and that the case was an exceptional one warranting exercise of discretion under Section 5 of the Limitation Act, 1963. The delay was accordingly condoned and a Sole Arbitrator was appointed.

The dispute arose from a Development Management Agreement dated 30 January 2018 between Atul Projects India Pvt. Ltd. and Taksha Spaces Pvt. Ltd. The agreement contained an arbitration clause under Clause 18.7, providing that disputes arising out of or in connection with the agreement would be referred to arbitration, with Mumbai as the seat. The Applicant subsequently claimed a balance principal amount of Rs. 19.12 crore along with interest.

On 2 February 2021, the Applicant invoked the arbitration agreement and suggested the name of its nominee arbitrator. The Respondents did not agree to the appointment. The Applicant thereafter pursued proceedings under Section 9 of the Arbitration Act seeking protection in respect of the Respondents' assets. By an order dated 14 June 2021, the Court directed disclosure of the Respondents' assets, while recording their statement that they would not create third party rights in their assets.

The Section 11(6) application, however, was filed only on 10 August 2026. The Court accepted that Article 137 of the Limitation Act applies to an application under Section 11(6). It also held that the Applicant was entitled to the benefit of the period excluded on account of the COVID 19 pandemic. On that calculation, the limitation period expired around 1 March 2025, resulting in a delay of approximately 527 days.

The Court then considered whether this delay could be condoned under Section 5 of the Limitation Act. Relying on the Supreme Court's decision in HPCL Bio Fuels Ltd. v. Shahaji Bhanudas Bhad, the Court observed that the benefit of Section 5 is available in respect of applications for appointment of an arbitrator under Section 11(6). However, this power is not to be exercised routinely. In view of the Arbitration Act's objective of expeditious dispute resolution, the Court held that discretion under Section 5 should be exercised only in exceptional cases where the Applicant establishes a strong case for condonation.

In examining whether sufficient cause existed, the Court considered the Applicant's conduct. The Applicant had invoked arbitration and subsequently pursued the Section 9 proceedings. The Court found that these proceedings could not simply be disregarded because they demonstrated that the Applicant had continued taking steps in relation to its dispute. The Applicant had also pursued proceedings under the Negotiable Instruments Act concerning the same monetary claim.

An important circumstance was the Applicant's case that it had specifically instructed its then Advocates, by email dated 21 July 2021, to file an application under Section 11(6). According to the Applicant, those instructions were not acted upon. The Court also noted that the Section 9 proceedings had themselves suffered procedural difficulties, including the rejection of the petition for non-removal of office objections and its subsequent restoration. These circumstances were considered relevant while examining the Applicant's explanation for the delay.

The Court nevertheless did not find that the Applicant had acted with complete diligence. It observed that a person pursuing a claim of this size would ordinarily be expected to follow up regarding the appointment of an arbitrator. The Applicant's failure to properly supervise its litigation amounted to negligence. However, the Court distinguished such negligence from a conscious abandonment of arbitration. On the material before it, the Court found that the Applicant had invoked arbitration, pursued the Section 9 proceedings and other proceedings concerning its claim, and had produced material showing that it had instructed its Advocates to file the Section 11 application. These circumstances did not establish a conscious decision to abandon arbitration.

The Court also clarified that certain circumstances relied upon by the Applicant could not themselves extend limitation. The incomplete disclosure of assets did not keep the Section 11 remedy alive indefinitely. Similarly, the incarceration of Respondent No. 2 could not stop limitation, although it could explain some difficulty in obtaining instructions or records. The pendency of the Section 9 proceedings also did not extend the limitation period for filing the Section 11 application.

Ultimately, the Court assessed the circumstances. It found that the Applicant had not been fully diligent, but the negligence had not reached the level of conscious abandonment or want of bona fides. The Applicant had invoked arbitration in February 2021, filed the Section 9 proceedings shortly, thereafter, pursued proceedings concerning its monetary claim and had material showing that its earlier Advocates had been instructed to file the Section 11 application. Taken together, these circumstances constituted sufficient cause for condonation.

The Court therefore condoned the 527 day delay in filing the Section 11(6) application. It expressly clarified that condonation of the delay did not amount to acceptance of the Applicant's underlying monetary claim. The Respondents remained entitled to raise all objections available to them, including objections concerning limitation of individual claims, liability, maintainability and merits, before the appropriate forum.

Following the condonation, the Court appointed a sole arbitrator to adjudicate the disputes between the parties. The Court directed compliance with the statutory disclosure requirements and provided for the parties to appear before the tribunal for directions concerning the conduct of the arbitration. The Section 9 application was directed to stand converted into an application under Section 17 of the Arbitration Act and to be considered by the learned Sole Arbitrator.

The judgment therefore demonstrates that while limitation for a Section 11(6) application is an important procedural requirement, the Court retains discretion under Section 5 of the Limitation Act to condone delay in an exceptional case where sufficient cause is established. At the same time, the judgment makes clear that condonation is not automatic merely because a party has continued with related proceedings or because the underlying claim may remain within limitation. The circumstances surrounding the delay and the overall conduct of the party must be examined before such discretion is exercised.