No Arbitration Until A Clear Right Is Denied: (Southern Railway v Cherian Varkey Construction Co PVT Ltd

The Division Bench of the Kerala High Court has held that the cause of action giving a party the right to refer a dispute to arbitration only accrues when there is a clear and unequivocal denial of a right asserted by the proposed Respondent.

Facts

Disputes arose between the Southern Railway and its contractor, Cherian Varkey in connection with works for the construction of a bridge. The following timeline is relevant in relation to the facts:

1. 2008 – Work was completed by the Contractor.

1. 2010 – The Contractor raised a claim on the Railway for ₹1.19 Crores.

1. 2012 – The final bill was drawn by the Railway.

1. 2014 – The Contractor invoked arbitration for the payment of ₹1.19 Crores.