Arbitration – Preliminary issue of limitation decided on the basis of demurrer
The appellant – private equity fund – is public company incorporated in Mauritius. Respondent No.1 is registered under the Indian Companies Act, Respondent Nos.2, 4 and 5 are Directors of the said Company. Respondent Nos.3(a) to 3(d) are legal representatives of original Respondent No.3.
On 23.7.2008, there was Share Subscription and Shareholders’ Agreements, the appellant invested a sum of Rs.25 crores in share and the respondents were required to put up a project of 700 acres in Pune through respondent no.5 Company.
On 15.1.2018, on the application of the appellant, the Supreme Court appointed sole Arbitrator to resolve the dispute between the parties.
After filing statements of claim, defence and counter claim, the issues were framed on 26.6.2019. Issue No.1 was whether all or any of the claims are barred by limitation.
The said issue of limitation decided as preliminary was answered in the negative vide interim Award dated 27.8.2019.
The learned Single Judge had modified the said order that the issue of limitation would not foreclose the issue and would not preclude the Arbitrator from examining the same on the basis of evidence and other materials on record.
HELD that when the proceedings were fixed before the Arbitrator on 27.8.2019, the Arbitrator had recorded a finding that the parties were told that issue no.1 has to be decided on the basis of demurrer and the averments in the state of claim must be taken correct. The Arbitrator has failed to adopt a judicial approach in the absence of a finding whether the issue of limitation being mixed question of law can be decided without recording any evidence.
In fact, it was stated on behalf of respondent no.3 that the issue of limitation should not be decided on the basis of demurrer but on principles analogous to Order XIV Rule 2 of CPC. Thus, the impugned interim Award was passed in violation of the fundamental policy of Indian law.
Judgment dated 2.4.2025 of the Division Bench of the High Court of Bombay in Commercial Appeal No.37 of 2020 (OS) of Urban Infrastructure Real Estate Fund Vs. Neelkanth Realty Private Ltd and others with connected matters.
