Facts: The Applicant, a registered Limited Liability Partnership, entered into a redevelopment project for 'Panwala Chawl' in Mumbai by becoming the eighth partner in the Respondents' firm via a Deed of Alteration of Partnership dated 10 April 2013. Following disputes and a stop-work notice, the Applicant sought to withdraw and requested a refund of approximately Rs.29.63 crores. In June 2020, the Applicant invoked the arbitration clause. However, the project faced acquisition threats from MHADA, leading the Applicant to engage in extensive litigation, including Writ Petitions and Section 9 interim measures, to preserve the subject matter. After the property was finally acquired by MHADA in March 2025, the Applicant filed the present application for the appointment of an arbitrator in November 2025.
Procedural Posture: The matter reached the Bombay High Court as an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator. Along with it, an Interim Application was filed seeking condonation of a 258-day delay in filing the Section 11 application.
Issue: Whether the delay in filing an application under Section 11(6) of the Arbitration Act can be condoned under Section 5 of the Limitation Act, 1963, and whether the Applicant made out a "very strong" or "exceptional" case for such condonation.
Holding: Yes, the Court held that Section 5 of the Limitation Act applies to Section 11(6) applications, and the delay was condoned as the Applicant demonstrated an exceptional case.
Reasoning: The Court relied on the Supreme Court's ruling in "HPCL Bio-Fuels Ltd. v. Shahaji Bhanudas Bhad", which established that while Section 5 is available for Section 11(6) applications, it must be exercised only in exceptional cases. The Court first excluded the Covid-19 pandemic period (15 March 2020 to 28 February 2022) as per Supreme Court mandates, regardless of whether the party was litigating elsewhere. This left a delay of 258 days. The Court reasoned that the Applicant was not dormant but was proactively litigating to save the project (the subject matter of arbitration) from state acquisition. It held that seeking the appointment of an arbitrator was dependent on preserving the project itself. Since the Applicant demonstrated "strong cause" and was not negligent, the delay was condoned, and a sole arbitrator was appointed.