Karnataka HC – Arbitral Award – time barred claim – Section 43 of AA and Sections 3 & 18 of the Limitation Act
Judgment dated 5.12.2025 of the Division Bench of the High Court of Karnataka in COMAP No.461 OF 2025 of Smt. Rashmi Vs. M/s. HDFC Bank Limited
The issue was whether the claims of claimant HDFC were barred by limitation and if yes, whether the impugned arbitral award suffers from patent illegality on that count.
Clause 22 of the lease agreement shows that the appellant was liable to refund security deposit on or before expiry of 90 days notice period.
On 22.4.2009, the first termination notice was given.
On 25.5.2009, the second termination notice was given.
On 22.9.2009, the Bank vacated the premises.
Thus, the limitation to claim refund of security deposit started from 22.9.2009.
On 22.2.2013, section 21 notice invoking arbitration was given i.e. beyond three years period.
However, the Bank contended that the period of limitation stood extended by the letter dated 7.11.2012 of the appellant acknowledging the liability.
The High Court noted that sub-section (1) of section 18 of the Limitation Act would be operative where the acknowledgement of liability is prior to the expiry of limitation period.
In this context, the reference to Section 43 of AA was made that the Limitation Act applies to the arbitral proceedings.
It was HELD that in terms of Section 3 of the Limitation Act, 1963, the Arbitral Tribunal was required to reject the claim notwithstanding that the limitation had not been set up as a defence. The bar of limitation excluded the remedy available to HDFC. The failure of the Arbitral Tribunal to reject the claim on the said ground, is foundational and vitiates the impugned award by patent illegality on the face of the record.
