Case Note & Summary
This matter comprised three commercial appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 before the High Court of Judicature at Bombay, arising from a common order dated 4 December 2019 passed by a learned Single Judge in three petitions under Section 34 of the same Act. The appellant, Urban Infrastructure Real Estate Fund, a private equity fund incorporated in Mauritius, had entered into a share subscription agreement and shareholders agreement dated 23 July 2008 with respondent No.1, Neelkanth Realty Private Ltd., and other respondents. The appellant invested Rs.25,00,00,000 in shares and debentures of respondent No.5 company for a project on 700 acres in Pune district. Disputes arose over alleged breaches of the agreements. The Supreme Court, on the appellant's application, appointed a sole arbitrator by order dated 15 January 2018. The appellant filed its statement of claim on 1 October 2018; respondent No.5 filed statement of defence on 22 November 2018; respondent No.1 filed counter claim on 26 November 2018. The arbitral tribunal framed issues on 26 June 2019, including Issue No.1: whether all or any of the claims made by the claimant are barred by law of limitation. On 14 August 2019, the claimant filed an affidavit in lieu of examination-in-chief of its witness. On 27 August 2019, the arbitral tribunal decided to deal with the limitation issue as a preliminary issue on the basis of demurrer and passed an interim award answering Issue No.1 in the negative, holding that the entire claim of the appellant was within limitation. The respondents challenged this interim award in three petitions under Section 34. The learned Single Judge, by impugned order dated 4 December 2019, modified the interim award to the extent that the finding recorded by the arbitrator on the basis of demurrer would not foreclose the issue and would not preclude the arbitrator from examining the issue of limitation on the basis of evidence and other materials on record if tendered and if so warranted. Aggrieved, the appellant filed these appeals. The appellant contended that under Section 19 of the 1996 Act, the arbitral tribunal is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, and parties are free to agree on procedure; the respondents had consented to determination of the preliminary issue on demurrer, and therefore were estopped from approbating and reprobating; the Single Judge exceeded the limited scope of Section 34, especially in an international arbitration where an award can be set aside only on the ground of conflict with public policy of India; and the interim award is final on matters decided therein. The respondents argued that the interim award read as a whole showed they expected the arbitrator to consider their defence while deciding the preliminary issue, but they were surprised when the arbitrator declared he would decide limitation finally on demurrer; the procedure was analogous to an Order VII Rule 11 inquiry and the preliminary finding could not foreclose their right to lead evidence; and the award was in conflict with public policy. The court heard extensive submissions and reserved judgment on 27 March 2025, pronouncing it on 2 April 2025. The available excerpt of the judgment ends before the court's final analysis and operative order; therefore, the final decision, ratio decidendi, and full headnote cannot be extracted from the provided text.
Headnote
Not mentioned - final legal digest cannot be prepared because the provided judgment excerpt contains procedural history, facts, and parties' submissions, but not the court's final analysis, holdings, or operative directions.
Issue of Consideration
Whether the learned Single Judge erred in modifying the interim arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996; whether the arbitral tribunal could decide the issue of limitation as a preliminary issue on the basis of demurrer with consent of parties under Section 19; whether respondents were estopped or had waived right to contest limitation after consenting to demurrer procedure; whether the interim award is final and can only be set aside on limited grounds under Section 34, especially public policy in international commercial arbitration; whether the Single Judge acted as an appellate court beyond Section 34 jurisdiction
Final Decision
Not mentioned - the available judgment excerpt ends before the court's final ruling on the appeals.
Law Points
- Legal points not extracted
- Arbitral tribunal not bound by Code of Civil Procedure
- 1908 or Indian Evidence Act
- 1872 under Section 19
- parties free to agree on procedure
- Section 34 petition not appellate review
- international arbitration award can be set aside only on ground of conflict with public policy of India
- interim award final on matters decided therein
- party cannot approbate and reprobate after consenting to procedure
- doctrine of waiver and estoppel may apply to agreed procedural steps
- decision on limitation on demurrer analogous to Order VII Rule 11 inquiry
- preliminary finding on demurrer does not foreclose issue if evidence later warranted
- Section 34 as amended by Arbitration and Conciliation (Amendment) Act
- 2015
Case Details
2025 LawText (BOM) (04) 58
Commercial Appeal No. 37 of 2020 in Commercial Arbitration Petition No. 1278 of 2019 with Interim Application No. 2137 of 2019; Commercial Appeal No. 40 of 2020 in Commercial Arbitration Petition No. 1260 of 2019 with Interim Application No. 2140 of 2019; Commercial Appeal No. 38 of 2020 in Commercial Arbitration Petition No. 1312 of 2019 with Interim Application No. 2138 of 2019
Alok Aradhe, CJ; M.S. Karnik, J
Citation not available, 2025:BHC-OS:5596-DB
Fredun Devitre, Senior Advocate; Aditya Bapat; Siddharth Joshi; Hamd Bhati; Venkatesh Dhond, Senior Advocate; Runali Samgiskar; Gulnar Mistry; Saket Mone; Subit Chakrabarti; Shrey Shah; Bhupen Garud; Akshay Petkar
Urban Infrastructure Real Estate Fund
Neelkanth Realty Private Ltd. & Ors.; Bhavik Rashmi Bhimjyani & Ors.; Rashmi Chunilal Bhimjyani & Ors.
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Nature of Litigation
Commercial appeals under Section 37 of the Arbitration and Conciliation Act, 1996 against a common order of the Single Judge modifying an interim arbitral award on limitation.
Remedy Sought
Appellant sought setting aside of the impugned order dated 4 December 2019 passed by the learned Single Judge and restoration of the interim award dated 27 August 2019 as final on the issue of limitation.
Filing Reason
Appellant challenged the Single Judge's modification of the interim award, which allowed the arbitrator to re-examine the issue of limitation on evidence despite the earlier decision on demurrer.
Previous Decisions
Arbitrator passed interim award dated 27 August 2019 holding the appellant's entire claim within limitation on demurrer. The learned Single Judge by order dated 4 December 2019 modified the interim award to state that the preliminary finding would not foreclose the issue and the arbitrator could examine limitation on evidence if warranted.
Issues
Whether the learned Single Judge erred in modifying the interim arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996?
Whether the arbitral tribunal could decide the issue of limitation as a preliminary issue on the basis of demurrer with consent of parties under Section 19?
Whether respondents were estopped or had waived their right to contest limitation after consenting to the demurrer procedure?
Whether the interim award is final and can only be set aside on limited grounds under Section 34, especially public policy in international commercial arbitration?
Whether the Single Judge acted as an appellate court exceeding Section 34 jurisdiction?
Submissions/Arguments
Appellant argued that under Section 19 of the 1996 Act, the arbitral tribunal is not bound by the Code of Civil Procedure, 1908 or Indian Evidence Act, 1872, and parties are free to agree on procedure, relying on Jagjeet Singh Lyallpuri case.
Appellant contended that respondents had agreed to determination of the preliminary issue of limitation on demurrer and therefore could not approbate and reprobate; having taken a chance and failed, they could not seek a second chance.
Appellant submitted that the Single Judge acted as an appellate court; in an international arbitration, an award can be set aside only on ground of conflict with public policy of India, and no such finding was recorded.
Appellant urged that the interim award is a final award on matters connected therein and finally decides a matter which can be decided in the final award, relying on Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products.
Appellant further contended that the Single Judge substituted his view for the arbitrator's and travelled beyond Section 34, relying on Shri Ramo Barman and Ssangyong Engineering cases.
Respondents argued that the interim award read as a whole shows they were agreeable to preliminary issue being decided after affidavit of evidence was filed, expecting the arbitrator would consider their defence; they were surprised when the arbitrator declared he would decide limitation finally on demurrer and they strongly objected.
Respondents submitted that the procedure adopted by the arbitrator was analogous to an Order VII Rule 11 inquiry, looking only into appellant's pleadings, and such preliminary finding cannot foreclose their right to establish that the claim is barred by limitation on consideration of pleadings and evidence of both parties.
Respondents contended that the impugned award is in conflict with public policy of India and therefore was rightly modified by the Single Judge, relying on the foreign case Leibman v. Curtis.
Ratio Decidendi
Not mentioned - final legal reasoning and ratio decidendi are not included in the provided judgment excerpt.
Judgment Excerpts
The learned Single Judge, by impugned order has modified the interim award dated 27th August 2019 passed by the Arbitrator to the extent that finding recorded by the Arbitrator on the basis of demurrer on issue No.1 viz. whether claims of the appellant are within limitation would not foreclose the issue and would not preclude the Arbitrator from examining the issue of limitation on the basis of material on record if tendered and if so warranted.
The arbitral tribunal is not bound to follow the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 and the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.
It is contended that learned Single Judge ought to have appreciated that the arbitration being an International arbitration, the same could have been set aside only on the ground that the award was in conflict with public policy of India i.e. it was in contravention with fundamental policy of Indian law.
Procedural History
Appellant filed application before Supreme Court; Supreme Court by order dated 15 January 2018 appointed sole Arbitrator. Appellant filed statement of claim on 1 October 2018; respondent No.5 filed statement of defence on 22 November 2018; respondent No.1 filed counter claim on 26 November 2018. Arbitral tribunal framed issues on 26 June 2019, including Issue No.1 on limitation. Claimant filed affidavit in lieu of examination in chief of witness No.1 on 14 August 2019. Arbitral tribunal decided limitation as preliminary issue on demurrer and passed interim award on 27 August 2019 holding entire claim within limitation. Respondents challenged interim award in three petitions under Section 34; learned Single Judge by order dated 4 December 2019 modified interim award to state preliminary finding would not foreclose issue and arbitrator could examine limitation on evidence. Appellant filed these appeals under Section 37 against common order.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 19, Section 34, Section 37
- Companies Act, 2013:
- Code of Civil Procedure, 1908:
- Indian Evidence Act, 1872:
- Arbitration and Conciliation (Amendment) Act, 2015:
