Arbitration Petition Dismissed as Time-Barred; Supreme Court Declines Appointment of Arbitrator

A bench comprising Chief Justice B.R. Gavai and Justice K. Vinod Chandran adjudicated an arbitration petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, filed by a petitioner residing in the United Kingdom seeking appointment of an arbitrator under an arbitration clause in a partnership deed; the respondent contended that the claim was hopelessly barred by limitation.

The Court held that the claim for recovery was time‑barred and dismissed the arbitration petition. The judges observed that the dispute arose from payments alleged to have been made in connection with a partnership venture and that the notice seeking appointment of an arbitrator was issued on 09.12.2020, by which time the claim for recovery was barred by limitation. The Court, in its reasoning, observed: “Admittedly, the purchase of the land alleged, was on 04.05.2016 and as per the notice dated 09.12.2020 produced as per the Annexure P-1, the amounts were paid before the said date. As on the date of notice, hence the claim for recovery of amounts was barred by limitation. It is also pertinent that the petitioner, in their arbitration request itself, admits that on 06.05.2017, a Police Complaint was raised before the Police Commissioner, Bangalore against the respondent for fraud and cheating. ... Even if limitation is computed from the said date [04.08.2017], the claim stands barred on 09.12.2020, when the notice was issued seeking appointment of arbitrator.” The Court further recorded: "The Arbitration Petition seeking appointment of arbitrator stands dismissed."

Background: The petitioner and respondent had been associated through earlier and later partnership arrangements. The original partnership dated 10.04.2008 was dissolved on 22.12.2008; a new partnership between the petitioner and respondent was executed on 20.09.2014. The petitioner alleged payments totalling Rs.2,31,85,600 made on the strength of Clause 6 of the partnership agreement, which obliged 75% of profits to be transferred to the petitioner, and complained that nothing was done in respect of property allegedly purchased on 04.05.2016. The petitioner served a notice produced as Annexure P‑1 and sought appointment of an arbitrator by invoking the arbitration clause.

The respondent pleaded limitation. The record showed a police complaint dated 06.05.2017 by the petitioner, which was closed after the petitioner prosecuted a complaint under Section 200 CrPC before the Chief Metropolitan Magistrate, Bangalore; that magistrate’s order was rejected on 16.06.2017. A subsequent challenge to that order was rejected by the Sessions Judge for inordinate delay of 234 days. The arbitration notice was dated 09.12.2020; even acknowledging a payment receipt of Rs.1 lakh on 04.08.2017 mentioned in the arbitration request, the Court found that the claim was time‑barred by the date of the notice. The petitioner had earlier placed an arbitration request before the Karnataka High Court on 22.06.2022, which remained pending until 20.01.2025 when the High Court disposed of it leaving liberty to take appropriate remedies; the present petition followed. Applying limitation principles to the admitted dates, the Supreme Court concluded that the arbitration request and the subsequent petition were barred and therefore dismissed the petition. Pending applications, if any, were ordered to stand disposed of.

Case Details: Case No.: Arbitration Petition No. 21 of 2025 Case Title: Alan Mervyn Arthur Stephenson v. J. Xavier Jayarajan Appearances: For the Petitioner(s): Not indicated For the Respondent(s): Not indicated