Limitation for arbitration reference begins only when a dispute crystallises, not during bona fide settlement negotiations.

Article 137 applies to an application under Section 20 of the Arbitration Act, 1940, so limitation runs only when the right to seek reference accrues. Where parties were still engaged in bona fide negotiations for an amicable family settlement, no crystallised dispute existed and limitation did not begin merely because implementation was delayed. A dispute arises only when settlement is no longer possible and the claim is denied or repudiated. On that basis, the application was held to be within limitation, the High Court's contrary view was set aside, and the matter was directed to proceed to arbitration.

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Issues: (i) Whether the application under Section 20 of the Arbitration Act, 1940 was barred by limitation under Article 137 of the Limitation Act, 1963; (ii) whether a dispute or difference could be said to have arisen so as to start limitation when the parties were still negotiating and there was no clear denial or repudiation of the claim.

Issue (i): Whether the application under Section 20 of the Arbitration Act, 1940 was barred by limitation under Article 137 of the Limitation Act, 1963.

Analysis: Article 137 applies to an application under Section 20 of the Arbitration Act, 1940, and time begins when the right to apply accrues. The correspondence showed continuous attempts by the parties to work out an amicable division of the family assets, and the last communication dated 29 September 1989 still reflected ongoing efforts to settle the matter. In a family arrangement, limitation should not be computed so rigidly as to force immediate litigation while bona fide negotiations continue.

Conclusion: The application was within limitation; the finding of the High Court that it was time-barred was incorrect.

Issue (ii): Whether a dispute or difference could be said to have arisen so as to start limitation when the parties were still negotiating and there was no clear denial or repudiation of the claim.

Analysis: A dispute under the arbitration agreement arises when the parties reach a point where settlement is no longer possible and the claim is met by denial or repudiation. The record disclosed ongoing efforts to achieve an agreed distribution, with letters exchanged in conciliatory terms and no final break in relations before the last correspondence. Mere delay in implementing the dissolution terms or appointment of nominees did not, by itself, establish an enforceable dispute for limitation purposes.

Conclusion: A dispute had not crystallised until the last correspondence on 29 September 1989, and limitation commenced only from that point.

Final Conclusion: The order of the High Court was set aside, the arbitration reference was held to be in time, and the dispute was directed to proceed to arbitration.

Ratio Decidendi: For an application under Section 20 of the Arbitration Act, 1940, limitation under Article 137 begins only when the dispute has crystallised and the right to seek reference arises, not while bona fide negotiations for an amicable settlement are still continuing.

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