The Supreme Court held that an arbitration clause is not rendered invalid merely because the named arbitrator becomes statutorily ineligible; courts retain authority under Section 11(6) of the Arbitration Act to appoint a neutral arbitrator. Additionally, the limitation period for filing the application was extended by excluding the COVID-19 period from 15 March 2020 to 28 February 2022.
Facts Of The Case:
The appellant, Offshore Infrastructures Limited, was awarded a contract by the respondent, Bharat Petroleum Corporation Limited (formerly Bharat Oman Refineries Limited), for composite works at the Bina Refinery. The work, accepted on 31 December 2016, was to be completed by 30 May 2017 but was ultimately finished on 31 January 2018. The appellant raised its final bill on 20 March 2018 and issued a “No Claim Certificate” on 3 October 2018. The respondent released part payment on 11 June 2019, deducting 5% as liquidated damages for delay. After the respondent failed to settle outstanding claims, the appellant issued a notice for arbitrator appointment on 14 June 2021 under the contract’s arbitration clause, which named the respondent’s Managing Director or nominee as the sole arbitrator. The respondent rejected the notice. The appellant then filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the High Court for arbitrator appointment. The High Court dismissed the application as time-barred, holding limitation began from the “No Claim Certificate” date (3 October 2018). The appellant’s review petition was also dismissed, leading to the present appeal before the Supreme Court.
Procedural History:
The procedural history commenced with the appellant filing Arbitration Case No. 23 of 2022 under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the High Court of Madhya Pradesh at Jabalpur, seeking appointment of a sole arbitrator. The High Court, vide its Judgment and Order dated 19.12.2023, dismissed the application, holding it was barred by limitation. The appellant subsequently filed Review Petition No. 76 of 2024 before the same High Court, which was also dismissed vide Order dated 10.04.2024. Aggrieved by both orders, the appellant approached the Supreme Court by way of Special Leave Petitions, which were granted leave, leading to the instant Civil Appeals.
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Court Observation:
The Supreme Court made pivotal observations on two core issues. Firstly, it held that the invalidation of a named arbitrator under Section 12(5) of the Arbitration Act, due to statutory amendments, does not annul the entire arbitration agreement. The court retains its power under Section 11(6) to appoint a neutral arbitrator, ensuring the dispute resolution mechanism survives. Secondly, on limitation, the Court observed that while the cause of action accrued when the final bill became due, the extraordinary exclusion of the period from 15 March 2020 to 28 February 2022, as per its orders during the COVID-19 pandemic, applied. Consequently, the appellant’s application, filed thereafter, was within the prescribed limitation period.
Final Decision & Judgement:
The Supreme Court allowed the appeals and set aside the impugned judgments of the High Court. It held that the appellant’s application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was within the period of limitation after excluding the COVID-19 period from 15 March 2020 to 28 February 2022. The Court further directed that the matter be referred to the Delhi International Arbitration Centre for the appointment of a sole arbitrator to adjudicate the dispute in accordance with law.
Case Details:
Case Title: Offshore Infrastructures Limited vs. M/s Bharat Petroleum Corporation Limited CITATION: 2025 INSC 1196 Civil Appeal No.: (Arising out of SLP (C) Nos. 22105-22106 of 2024) Date of Judgement: October 07, 2025 Judges/Justice Name: Justice Dipankar Datta and Justice Augustine George Masih