Arbitration limitation starts when a dispute is asserted and denied, not when work ends or payment first falls due.

An application under section 20 of the Arbitration Act, 1940 is governed by the date when a dispute actually arises, not merely when contractual payment becomes due or work is completed. A dispute arises when one party asserts a claim and the other denies or repudiates it; mere non-payment or inactivity is insufficient. On that basis, the limitation period under article 137 of the Limitation Act, 1963 runs from the date of the first clear dispute, and the application was treated as within time. The consequence was that the matter was directed to proceed to arbitration.

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Issues: (i) Whether an application under section 20 of the Arbitration Act, 1940 was barred by limitation under article 137 of the Limitation Act, 1963; (ii) when the cause of action and dispute arose for the purpose of seeking a reference to arbitration under section 20 of the Arbitration Act, 1940.

Issue (i): Whether an 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 applications filed in a civil court. The application under section 20 is maintainable when an arbitration agreement exists and a dispute has arisen to which that agreement applies. Limitation therefore turns on the date when the dispute, not merely the contractual entitlement to payment, came into existence.

Conclusion: The application was not barred by limitation.

Issue (ii): When the cause of action and dispute arose for the purpose of seeking a reference to arbitration under section 20 of the Arbitration Act, 1940.

Analysis: A dispute arises when one party asserts a claim and the other denies or repudiates it. Mere inaction or failure to pay does not by itself constitute a dispute. Where final bills had not been prepared and the first demand for payment was made on 28 February 1983, the cause of action accrued from that date and not from completion of the work in 1980. The filing in January 1986 was therefore within three years.

Conclusion: The dispute arose on 28 February 1983, and the application was within time.

Final Conclusion: The High Court's limitation view was set aside and the matter was directed to proceed to arbitration with consequential directions.

Ratio Decidendi: For section 20 of the Arbitration Act, 1940, limitation runs from the date when a dispute actually arises through assertion of a claim and its denial or repudiation, and not merely from the date when payment becomes contractually due or work is completed.

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