JUDGMENT Justice Rajiv Sharma, Judge. This petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996 against the award dated 8.4.2010. . “Key facts” necessary for the adjudication of this petition are that the tenders were floated by the respondents on 5.8.1989 for the work – C/O commercial complex at KZC (SH: C/O FG, HI, JM and N Block including WS and SI). Petitioner also participated in the tender process. The work order was issued to the petitioner on 31.1.1990. The work was to be completed within a period of twenty four months. However, fact of the matter is that the work was completed by the petitioner on 15.7.1994. Petitioner served a legal notice on the respondents for making final payment on 8.7.2002. Payment was refused by the respondents on 21.8.2002. Thereafter, the petitioner again served a notice on the respondents on 18.12.2002 for the appointment of the Arbitrator. Consequently, J.R. Kainth, Engineer-in-Chief (Retd.) was appointed as an Arbitrator. However, he resigned. The Superintending Engineer, Arbitration Circle, HP PWD Solan was appointed as an Arbitrator on 1.10.2004. Thereafter, the learned Arbitrator entered into reference. The petitioner filed his claim on 4.8.2007 to which the reply was submitted by the respondents on 23.2.2008. Rejoinder was also filed by the petitioner on 5.4.2008. Learned Arbitrator rejected the claim of the petitioner being barred by limitation vide impugned Award dated 8.4.2010. Hence, the objections. 3. Mr. Sumit Raj Sharma, learned Advocate, has vehemently argued that the claim filed by the petitioner was within limitation. He has also argued that the cause of action has arisen to the petitioner when final bill was raised by him and the payment was refused by the respondents. 4. Mr. Bhupender Gupta, learned Senior Advocate, has supported the impugned Award dated 8.4.20 10. 5. I have heard learned counsel for the parties and have perused the pleadings and award carefully. 6. What emerges from the facts, enumerated hereinabove, is that the work order was issued to the petitioner on 31.1.1990. The work was completed on 15.7.1994. According to the petitioner, final payment was not released to the petitioner despite notice dated 8.7.2002. Mr. Sumit Raj Sharma, Advocate, has further argued that the actual final bill was submitted on 31.3.2009 as per proceedings held by the learned Arbitrator on 19.11.2008. The Court has gone through the proceedings dated 19.11.2008. The work was completed on 15.7.1994. According to the petitioner, final payment was not released to the petitioner despite notice dated 8.7.2002. Mr. Sumit Raj Sharma, Advocate, has further argued that the actual final bill was submitted on 31.3.2009 as per proceedings held by the learned Arbitrator on 19.11.2008. The Court has gone through the proceedings dated 19.11.2008. The respondent/Executive Engineer was directed to submit copy of final bill within four weeks. However, by 19.11.2008 he had not submitted the same. According to the Executive Engineer, final bill could not be submitted as the deviation statement, which was sent to the competent authority for approval, was not approved and received back with certain observations/pending discussion with the competent authority. He asserted that all-out efforts were being made to finalize final bill and requested for a period of six weeks for submitting copy of the final bill to the Arbitral Tribunal. He was granted six weeks’ time to submit copy of the final bill. Thereafter, proceedings were held on 1.4.2009. It is recorded in the proceedings held on 1.4.2009 that the respondent/Executive Engineer submitted a copy of the final bill vide his letter dated 1.4.2009. The same was taken on record. The abstract of the final bill has already been placed on record by the petitioner as Annexure P-1. It is evident from the proceedings dated 19.11.2008 and 1.4.2009 that the final bill was submitted only on 1.4.2009 before learned Arbitral Tribunal. According to the learned Arbitrator, while construing clause 7 of the agreement entered into between the parties, the matter could be referred within a period of three years after the completion of the work, i.e. 15.7.1994. According to him, arbitration proceedings should have commenced by 6.3.1998. 7. The petitioner has relied on the ratio laid down by their Lordships of Hon’ble Supreme Court in AIR 1988 SC 1007 and AIR 1999 SC 801 . Learned Arbitrator has distinguished both the judgments. In the instant case, final bill, as discussed hereinabove, was not prepared by the respondents and the dispute arose between the parties regarding non payment of the amount. The petitioner raised claim on 8.7.2002 and the same was refused to him on 21.8.2002. Learned Arbitrator has distinguished both the judgments. In the instant case, final bill, as discussed hereinabove, was not prepared by the respondents and the dispute arose between the parties regarding non payment of the amount. The petitioner raised claim on 8.7.2002 and the same was refused to him on 21.8.2002. In notice dated 8.7.2002, the petitioner had specifically stated that the bill prepared by the concerned J.E. was still pending with the concerned Executive Engineer since 31.7.1994 besides it 50% of the security amount was still to be released to the petitioner. He had also asked for amount of Rs.3,00,000/- towards 10 cc claim. He had further raised dispute with regard to the deductions made. According to the reply filed by respondents to the legal notice on 21.8.2002, the security amount could only be released to the petitioner after completion of maintenance period prescribed under clause 17 of the contract agreement. The petitioner was not entitled to 10 CC claim amounting to Rs.3,00,000/-. Notice for the payment was also issued on 18.12.2002. Thus, date of actual cause of action to the petitioner was 8.7.2002 when he raised the bill. The dispute would arise when claim is made by one party and the same is denied by other. Thus, learned Arbitral Tribunal has come to wrong conclusion that the arbitration proceedings should have commenced by 6.3.1998. It is reiterated that the cause of action had arisen on 8.7.2002 when the petitioner had raised the claim. The learned Arbitrator has not correctly appreciated the ratio laid down by their Lordships of Hon’ble Supreme Court in AIR 1988 SC 1007 . 8. Their Lordships of Hon’ble Supreme Court in Major (Retd.) Inder Singh Rekhi vs. Delhi Development Authority, AIR, 1988 SC 1007 have held that Article 137 of the Limitation Act 1963 would apply to any petition or application filed in a Civil Court under Arbitration Act, 1940 and the cause of action arose in favour of the appellant when the assertion of claim was made on 28.2.1983 and there was non-payment. Their Lordships have further held that in order to be entitled to order of reference under Section 20 of the Arbitration Act, 1940, it is necessary that there should be an arbitration agreement and secondly difference must arise to which this agreement applied. Their Lordships have further held that in order to be entitled to order of reference under Section 20 of the Arbitration Act, 1940, it is necessary that there should be an arbitration agreement and secondly difference must arise to which this agreement applied. There has been an assertion of claim by the appellant and silence as well as refusal in respect of the same by respondent. Therefore, a dispute has arisen regarding non-payment of the alleged dues of the appellant. Their Lordships of Hon’ble Supreme have held as under:- “4. Therefore, in order to be entitled to order of reference under S. 20, it is necessary that there should be an arbitration agreement and secondly, difference must arise to which this agreement applied. In this case, there is no dispute that there was an arbitration agreement. There has been an assertion of claim by the appellant and silence as well as refusal in respect of the same by respondent. Therefore, a dispute has arisen regarding non payment of the alleged dues of the appellant. The question is for the present case when did such dispute arise. The High Court proceeded on the basis that the work was completed in 1980 and, therefore, the appellant became entitled to the payment from that date and the cause of action under Art. 137 arose from that date. But in order to be entitled to ask for a reference under S. 20 of the Act there must not only be an entitlement to money but there must be a difference or a dispute must arise. It is true that on completion of the work a right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from the record and when the assertion of the claim was made on 28th Feb. 1983 and there was non-payment, the cause of action arose from that date, that is to say, 28th of Feb. 1983. It is also true that a party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. It is also true that a party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of an arbitrator under S. 8 or a reference under S. 20 of the Act. See Law of Arbitration by R.S. Bachawat, 1st Edition, page 354. There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion in denying, not merely inaction to accede to a claim or a request. When in a particular case a dispute has arisen or not has to be found out from, the facts and circumstances of the case.” 9. Similar principles have been reiterated by the Hon’ble Supreme Court in Union of India and another vs. M/s. L.K. Ahuja and Co., (1988) 3 SCC 76 . Their Lordships have held as under:- “8. In view of the well-settled principles we are of the view that it will be entirely wrong to mix-up the two aspects, namely, whether there was any valid claim for reference under S. 20 of the Act, and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under S. 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under S. 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. It is true that on completion of the work right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case, the claim for reference was made within three years commencing from April, 16, 1976 and the application was filed on December 18,1976. We are, therefore, of the view that the High Court was right in this case. See in this connection the observations of this Court in Major (Retd.) Inder Singh Rekhi v. D.D.A.” 10.Their Lordships of Hon’ble Supreme Court in Hari Shankar Singhania and ors. vs. Gaur Hari Singhania and ors., (2006) 4 SCC 658 have held that the right to file application accrues when difference or dispute arises between the parties to the arbitration agreement. Their Lordships have held as under:- “10. It is now well settled that Article 137 of the Limitation Act, 1963 applies to an application under Section 20 of the Arbitration Act, 1940. Accordingly, an application under Section 20 of the Act for filing the arbitration agreement in Court and for reference of disputes to arbitration in accordance therewith is required to be filed within a period of three years when the right to apply accrues. The right to apply accrues when difference or dispute arises between the parties to the arbitration agreement. In the facts of the case, it is therefore necessary to find out as to when the right to apply accrued. 37. Therefore, we observe that the right to apply under section 20 of the Arbitration Act, 1940 accrued to the appellants only on the date of the last correspondence between the parties and the period of limitation commences from the date of the last communication between the parties. Therefore, the finding of the High Court that the application under section 20 of the Arbitration Act, 1940, is beyond the period of limitation is erroneous. 55. Thus we conclude by observing that, the Arbitration suit filed by the appellants is well within time as the dispute is deemed to have arisen only after the last communication between the parties dated 29th September, 1989, whereby, there were efforts made to amicably settle the dispute between the parties.” 11.Their Lordships of Hon’ble Supreme Court in Punjab State and ors. vs. Dina Nath, (2007) 5 SCC 28 have held that the limitation period commences from the accrual of the right to apply and that right accrues when difference or dispute arises between the parties to the arbitration agreement. In the present case, the Principal after completion of the work did not take steps for making final payment despite the contractor’s request. Therefore, the Contractor issued final notice to the Principal to refer the dispute to an Arbitrator as per the arbitration agreement. There was no response from the side of the Principal. Their Lordships have held that application filed by the contractor under Section 20 of the Arbitration Act 1940 was within limitation as contemplated under Article 137 of the Limitation Act. Their Lordships have held as under:- “22. For the purpose of deciding the question of limitation, it may be stated that the application under Section 20 of the Act was filed within 3 years from the date the demand notice was made by the respondent as contemplated under Article 137 of the Limitation Act. 23. In order to determine when the cause of action arose, it is essential for us to refer to a case decided by this court. In the case of S. Rajan v. State of Kerala [ (1992) 3 SCC 608 ] it was held by this Court that the right to apply for arbitration proceeding under Section 20 of the Arbitration Act, 1940 runs from the date when the dispute arises. It observed: “Reading Article 137 and Sub-section (1) of Section 20 together, it must be said that the right to apply accrues when the difference arises or differences arise, as the case may be, between the parties. It is thus a question of fact to be determined in each case having regard to the facts of that case.” 24. Accepting the principles laid down in the case of S. Rajan (supra), this Court in the case of Hari Shankar Singhania and Ors. v. Gaur Hari Singhania and Ors. It is thus a question of fact to be determined in each case having regard to the facts of that case.” 24. Accepting the principles laid down in the case of S. Rajan (supra), this Court in the case of Hari Shankar Singhania and Ors. v. Gaur Hari Singhania and Ors. [ (2006) 4 SCC 658 ] again reiterated the principle that an application under section 20 of the Act for filing the arbitration agreement in Court and for reference of the dispute to arbitration in accordance therewith is required to be filed within a period of three years when the right to apply accrues and that the said right accrues when difference or dispute arises between the parties to the arbitration agreement. Keeping the principles in mind, let us now examine as to when difference or dispute arises between the parties to the arbitration agreement, when the right to apply accrues. As noted herein earlier, demand notice was served on the appellants by the respondent on 16th April 1990 and the application under section 20 of the Act was filed on 13th November 1990 which is admittedly within the period of limitation as contemplated under Article 137 of the Limitation Act. 25. The Additional District judge, Roopnagar, Punjab, held on the question of limitation in filing the application under section 20 of the Act that the cause of action did not arise when notice of demand was served but arose when the respondent first acquired either the right of action or the right to require that arbitration takes place upon the dispute concerned. 26. Keeping the decisions of this court in the cases of S. Rajan (supra) and Hari Shankar Singhania (supra) in mind, in our opinion, the view of the Additional District Judge was totally erroneous. In the aforesaid two decisions, it was held that the right to apply accrued for the difference arising between the parties only when service of demand notice was effective, which should be the date for holding that the difference had already arisen between the parties. In the aforesaid two decisions, it was held that the right to apply accrued for the difference arising between the parties only when service of demand notice was effective, which should be the date for holding that the difference had already arisen between the parties. Such being the settled law, we are of the view that the application under section 20 of the Act was clearly filed within the period of limitation.” 12.Their Lordships of Hon’ble Supreme Court in Assam Urban Water Supply and Sewerage Board vs. Subash Projects and Marketing Limited, (2012) 2 SCC 624 have held that Limitation Act 1963 is applicable to arbitration matters covered under 1996 Act except as expressly provided for under Section 34(3) of 1996 Act. 13 In view of above discussions and analysis, the objections are allowed and the impugned award dated 8.4.2010 passed by the Superintending Engineer, Arbitration Circle, HP PWD, Solan is set aside. The dispute between the parties is referred back to the Superintending Engineer Arbitration Circle, HP PWD, Solan to decide it afresh on merits, by considering the evidence already adduced by the parties, within a period of six months. Needless to say, the Award shall be speaking and reasonable. Pending application(s), if any, also stands disposed of. No costs.