( 1 ) THIS petition under Section 34 of Arbitration and Conciliation act, 1996 has been filed by the petitioner challenging the validity of award dated 22nd December, 2005 passed by the learned Arbitrator awarding a sum of rs. 20,26,000/- to the claimant (respondent no. 1) and holding that petitioner and others were jointly and severally liable to pay this amount to the claimant/respondent no. 1 (and hereinafter referred to as respondent ). ( 2 ) IT is submitted by the petitioner that when the Arbitrator was appointed to adjudicate upon the dispute, Delhi Vidyut Board was still in existence. But in the meantime, when statement of claim was filed before the arbitrator unbundling of Delhi Vidyut Board had taken place and Delhi Vidyut board was no more in existence. The three Discoms, Generation company (GENCO), transmission Company (Delhi Transco Limited) and the holding company viz. Delhi power Company Limited had come into existence. Under Rule 8 of the Delhi electricity (Transfer Scheme) Rules, 2001, all suits and proceedings pending on the day of transfer stood transferred to the transferee companies. Rule 8 (3) of delhi Electricity Reforms (Transfer Scheme) Rules, 2001 as amended in 2002 stipulated that the liabilities under all pending suits will be of transferee the companies. e. Discoms Companies, subject to a cap of Rs. 1 crore in a year. Delhi Transco Limited was one of the successor companies of Delhi Vidyut Board and the petitioner had pointed out to the Arbitrator that petitioner was not liable for any claim of the claimant and it was also pointed out that the claim was barred by limitation. ( 3 ) THE award is challenged on the ground that Arbitrator misconducted himself as the award given by the Arbitrator on the face of it was against the law of the land. e. law of limitation and was contrary to Public Policy. The Arbitrator allowed hopelessly time barred claim of the claimant. The other ground is that the petitioner company has been jointly and severally made liable to pay the amount, while petitioner was not the successor company of Delhi Vidyut Board for the purpose of the claim under delhi Electricity Reform (Transfer Scheme), Rules 2001 and no liability could be affixed to the petitioner. The other ground is that the petitioner company has been jointly and severally made liable to pay the amount, while petitioner was not the successor company of Delhi Vidyut Board for the purpose of the claim under delhi Electricity Reform (Transfer Scheme), Rules 2001 and no liability could be affixed to the petitioner. ( 4 ) THE brief facts relevant for the purpose of deciding the objections raised by petitioner are that claimant/respondent entered into a contract for supply of goods to DESU in 1992. The good were supplied between 8th October, 1992 and 18th February, 1993 as per the contract and the bills No. 201 dated 8. 12. 1992; 202 dated 8. 10. 1992; 270 dated 10. 12. 1992; 307 dated 17. 1. 1993; 320 dated 5. 2. 1993 and 334 dated 18. 2. 1993 were raised for each supply. These bills were accepted by DESU and the goods were received without any objection. However, while releasing payment against the bills, a sum of rs. 10 lakh was withheld and only part payment was made in respect of two bills. e. Bill No. 307 and 320 dated 17. 1. 1993 and 5. 2. 1993 respectively. The withholding of this amount was done by DESU because the respondent had supplied defective goods while executing another contract No. TE 1949 and a penalty for supply of defective goods was contemplated by DESU. The Accounts department of desu had first withheld the payment of last three bills after 17. 1. 1993, however, the claimant/respondent urged the department vide letter dated 11. 5. 1993 not to withhold the amount and make payment of bills. On this vide letter dated 24. 5. 1993 DESU informed the respondent that an amount of Rs. 10 lakh was being withheld out of the above two bills payable to the claimant/respondent and rest of the amount was being released. Claimant/respondent was also informed the reason for withholding this amount that the goods supplied by claimant/respondent in earlier contract were defective. On representations made by the claimant/respondent, petitioner vide its letters dated 24. 11. 1999 and dated 19/21. 6. 2001, informed the claimant/respondent that the amount of Rs. 10 lakh had been withheld for defective supplies in contract no. TE 1949 and also informed that penalty of Rs. 24,23,659. 80 was levied on the claimant/respondent and Rs. On representations made by the claimant/respondent, petitioner vide its letters dated 24. 11. 1999 and dated 19/21. 6. 2001, informed the claimant/respondent that the amount of Rs. 10 lakh had been withheld for defective supplies in contract no. TE 1949 and also informed that penalty of Rs. 24,23,659. 80 was levied on the claimant/respondent and Rs. 10 lakh had already been adjusted out of the amount payable to the claimant/respondent in 1993 and balance amount of penalty be paid by the claimant/respondent. The claimant/respondent thereafter, sent a notice of demand dated 8th March, 2002 claiming amount of Rs. 10 lakh which was withheld by the petitioner in 1993 and also claimed interest over this amount. The claimant/respondent then sent a notice for appointment of an arbitrator, to the chairman of Delhi Vidyut Board since, DESU had been succeeded by Delhi Vidyut board by that time. The arbitration clause was invoked on 8th March, 2002 by sending notice to Delhi Vidyut Board. ( 5 ) THE Arbitrator took the view that claimant/respondent had not given any consent for withholding of amount of Rs. 10 lakhs out of the bills in supply order no. TE-45. The claimant/respondent had only suggested 'retention of certain money' subject to final decision of the petitioner on the alleged defective supply against Supply Order No. TE-1949. DESU vide letter dated 24. 5. 1993 informed the claimant/respondent that a sum of Rs. 10 lakh was withheld subject to final decision as to the exact of quantum of penalty, which was yet to be worked out. This, in opinion of Arbitrator showed that DESU was in the decision making process and the penalty, if any, was to be levied in future for goods supplied against TE-1949. The amount of Rs. 10 lakh was not payable in 1993 and the amount exactly payable was to be actually determined. Thus, the consent of claimant/respondent for retention of Rs. 10 lakh cannot be treated as consent to adjust the amount towards penalty. The learned Arbitrator relied upon AIR 1975 SC 2557 M/s Sant Ram and Co. v. State of Rajasthan (the citation seems to be wrongly mentioned as there is no such case), AIR 1984 SC 29 M/s kamaludin Ansari and Co. v. Union of India and Ors. 10 lakh cannot be treated as consent to adjust the amount towards penalty. The learned Arbitrator relied upon AIR 1975 SC 2557 M/s Sant Ram and Co. v. State of Rajasthan (the citation seems to be wrongly mentioned as there is no such case), AIR 1984 SC 29 M/s kamaludin Ansari and Co. v. Union of India and Ors. , AIR 1974 SC 1265 Union of india v. Raman Iron Foundary and came to conclusion that the contract of supply of the respondent/claimant did not allow the petitioner/dvb to withhold payment due under other contract for claim raised but not established. A claim for damages for breach of contract was not a claim for sum presently due and payable and the purchaser was not entitled to recover the amount of such claim and appropriate amount of Rs. 10 lakh due to the contractor. The Arbitrator held that in this view, it was not necessary for him to consider the other contentions whether the claim for payment of sum of money was admitted by the contractor or not and Arbitrator held that petitioner had no right to withhold the amount till final decision was taken about levy of damages. The purchaser. e. petitioner at best, was asserting its lien and nothing more and there was an implied promise or undertaking in such withholding that it would be returned to the contractor, if, finally no damages or less damages were payable. The learned Arbitrator held that the limitation would start only when final decision of levy of penalty was communicated to the contractor/claimant and it would not start from the day when amount became payable or the amount was appropriately withheld. Arbitrator held that limitation would be governed by Article 113 and not by Article 14 of the Schedule to the Limitation Act. Under these circumstances, the Arbitrator came to the conclusion that the limitation of three years would start from 19th June, 2001 and since the claimant invoked arbitration clause within three years of this day, the claim was within limitation. ( 6 ) REGARDING other contentions of the petitioner that petitioner was not liable to pay the claim arbitrarily observed as under: thus I find that DESU, predecessor in interest of the Respondent was legally bound to release the amount of Rs. 10 Lacs to the claimant. ( 6 ) REGARDING other contentions of the petitioner that petitioner was not liable to pay the claim arbitrarily observed as under: thus I find that DESU, predecessor in interest of the Respondent was legally bound to release the amount of Rs. 10 Lacs to the claimant. The claimant is entitled to recover the same now from the successor-in-interest of DESU. The first statutory successor-in-interest was Delhi Vidyut Board. Now Delhi Vidyut board's rights and liabilities have been statutorily passed on to the five respondents as per Delhi Electricity Reform (Transfer Scheme) Rules, 2001 Delhi electricity Reform (Transfer Scheme Amendment) Rules, 2002 (framed under Delhi electricity Reform Act, 2000 ). The scope of this arbitration is not to decide inter se extent of liability between the Respondents in respect of liabilities of Delhi Vidyut Board. These supplies have been made by the Claimant to DESU. e. much before even DVB came into existence, as successor to DESU. ( 7 ) IT is argued by the counsel for the petitioner that the arbitrator had taken palpably wrong view of the Limitation Act and the date from which the limitation had to start. The bills became payable to claimant in january/february 1993. At that time the payment of these bills was stopped by the DESU because claimant/respondent in its other order had supplied defective material to the knowledge of the claimant/respondent. The amount was withheld within the knowledge of the claimant/respondent. The cause of action for the respondent arose in 1993 when this amount was withheld. If the respondent had a grievance that the amount of ten lakh was wrongly withheld, the respondent should have immediately raised a dispute about the adjustment of this amount and the period of limitation would start in May, 1993 itself when it was told to the respondent by the petitioner that this amount had been withheld against defective supplies under other contract and the respondent had written a letter to the petitioner that the amount be released which was not agreed by the petitioner. There could be no extension of period of limitation because of correspondence between the petitioner and the respondent. The correspondence going on between the petitioner and the respondent was only about the quantum of penalty. There was no doubt at any point of time that the amount of Rs. 10 lakh had been withheld and adjusted. There could be no extension of period of limitation because of correspondence between the petitioner and the respondent. The correspondence going on between the petitioner and the respondent was only about the quantum of penalty. There was no doubt at any point of time that the amount of Rs. 10 lakh had been withheld and adjusted. ( 8 ) IT is also submitted that the learned Arbitrator had expressed that it had no jurisdiction to decide the question as to whether the petitioner was the successor in interest of DESU/dvb and was liable to make the payment of the claim. If the Arbitrator had no jurisdiction to decide this question, the arbitrator could not have awarded claim against the petitioner jointly with other or severally. It was incumbent upon the Arbitrator to decide as to whether petitioner was successor in the interest of the DESU/dvb or not. ( 9 ) ON the other hand, it is argued by the counsel for the respondent that the learned Arbitrator rightly held that the limitation would start from June 2001. The learned Counsel relied upon 2006 (4) Scale 74 Hari shankar Singhania and Ors. v. Gaur Hari Singhania and Ors. wherein Hon'ble supreme Court held that where the negotiations were taking place between the parties by way of various letters written by both the parties the right to apply for arbitration can be said to accrue when it becomes necessary to. e. when a dispute in fact arose. The Supreme Court also observed that right to apply under Section 20 accrued to the petitioners on the last day of communication between the parties. ( 10 ) IT is settled law that question of limitation is a mixed- question of law and facts. The facts in this case are not in dispute. It is to be seen whether the limitation in this case would start running from 1993 or from 2001 as observed by the learned Arbitrator. ( 11 ) IT is undisputed that amount of Rs. 10 lakh was withheld by desu in 1993. Despite protest of the respondent, the amount was not paid to the respondent. Rather vide its letter dated 24. 5. 1993 DESU confirmed withholding of Rs. 10 lakh against defective supplies made by the respondent in contract no. TE 1949. ( 11 ) IT is undisputed that amount of Rs. 10 lakh was withheld by desu in 1993. Despite protest of the respondent, the amount was not paid to the respondent. Rather vide its letter dated 24. 5. 1993 DESU confirmed withholding of Rs. 10 lakh against defective supplies made by the respondent in contract no. TE 1949. There is no letter written by the respondent protesting against initiation of penalty proceedings in respect of supply order no. TE 1949 under which the respondent had supplied defective goods. At no stage, respondent wrote to the petitioner that no penalty proceedings could be initiated or the goods supplied were not defective and the amount could not be withheld. This assumes importance for the question of limitation. If the claimant had a grievance that no amount could be withheld out of the bills of 17. 1. 1993 and 5. 2. 1993 or if he had any grievance that no penalty could be imposed in respect of previous contract or no amount could be recovered regarding previous contract he was supposed to make a grievance of this and raise a dispute in 1993 itself. The claimant did not raise a dispute from May 1993 onward against wrongful withholding of Rs. 10 lakh. I consider that the period of limitation, in a case where amount is payable against a specific contract and is not paid, starts from the date when payment of the amount is refused and no assurance is given that this amount would be paid at any time in future. In the present case, no assurance was given by DESU that this amount would be paid to him. The learned arbitrator came to the conclusion that there was no consent of the respondent for withholding this amount. In view of this finding Learned Arbitrator's conclusion that limitation will start from 19. 6. 2001 is contrary to law. In either case whether there was consent of the respondent to withhold the amount or there was no consent, the limitation cannot be held to have started from 19. 6. 2001. The limitation would start running from the day amount is wrongfully withheld and not paid. 6. 2001 is contrary to law. In either case whether there was consent of the respondent to withhold the amount or there was no consent, the limitation cannot be held to have started from 19. 6. 2001. The limitation would start running from the day amount is wrongfully withheld and not paid. If the respondent had the stand that this amount could not be withheld and could not be adjusted against any contract, this stand need to have been taken immediately and dispute need to have been raised in May 1993 itself or within 3 years of it. The limitation would start running when the amount was ?wrongly? withheld. If, withholding was bad, it was bad in 1993 it did not become bad in 2001. The limitation would therefore start in 1993 and not in 2001. The judgment cited by the respondent is not applicable to the the facts of this case. In the cited case, the dispute was between family members and the family members had been corresponding with each other. It is only when the dispute crystallized that it could be referred to the arbitration. In the present case, the dispute is not between family members and the dispute was purely of commercial nature and parties were being governed by commercial interest. The amount was withheld because of defective supplies of material by the respondent and the respondent was informed of this. If the claimant had wanted to challenge the withholding as a wrongful withholding, he need to have taken action within three years of May 1993. I find that the decision of the arbitrator is contrary to the law and Public Policy that stale claims are required to be rested. The award is liable to set aside on this ground. ( 12 ) THE Arbitrator had not held how petitioner became successor of delhi Vidyut Board in respect of the claim. The Arbitrator ought to have fixed the responsibility of each of the respondent and could not have held that it had no jurisdiction to decide the issue. The Arbitrator had jurisdiction to fix the responsibility as to who was liable to pay the amount. The Arbitrator ought to have fixed the responsibility of each of the respondent and could not have held that it had no jurisdiction to decide the issue. The Arbitrator had jurisdiction to fix the responsibility as to who was liable to pay the amount. Since the award has been given by the Learned Arbitrator in respect of time barred claim, it is a patent illegality and the award is liable to be set aside in view of judgment of supreme Court in Oil and Natural Gas Corporation v. Saw Pipes Limited (2003) 5 scc 705 and Mcdermott International Inc. v. Burn Standard Co. Ltd. and Ors. (2006) 11 SCC 181 . The award is hereby set aside. The petition is allowed.