Arbitration Request Made 2 Years After Initial Notice: Supreme Court Dismisses Application Seeking Arbitrator’s Appointment

The petitioner, a UK resident, having entered into a partnership, the deed of which contained an arbitration clause, sought the appointment of an arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996.

The Division Bench of Chief Justice Of India B.R. Gavai and Justice K. Vinod Chandran said,“It goes without saying even the notice of arbitration was delayed and barred by limitation and the arbitration request itself was made two years after the initial notice.”

“The Arbitration Petition seeking appointment of arbitrator stands dismissed”, it further ordered.

Senior Advocate Diya Kapur represented the Appellant while AOR V. N. Raghupathy represented the Respondent.

Factual Background

The partnership was entered into by the petitioner’s sister and the respondent in the year 2008 to engage in a real estate business of the construction of service apartments. The business was carried on, according to the respondent, with the active involvement of the petitioner, the brother of one of the partners. Later, the said partnership was dissolved and both parties admitted that a new partnership was entered into between the petitioner and the respondent in the year 2014. The petitioner alleged that substantial amounts were paid by him, amounting to Rs 2,31,85,600, on the strength of Clause 6 of the Partnership Agreement, which obligated 75% of the profits to be transferred to the petitioner, and nothing was done in the purchased property. It was hence the prayer for the appointment of an arbitrator. It was the respondent’s case that the claim was hopelessly barred by limitation.

Reasoning

The Bench noted that the petitioner, in the arbitration request itself, admitted that a Police Complaint was raised before the Police Commissioner on May 6, 2017, against the respondent for fraud and cheating, and the same was closed. The petitioner in the arbitration request spoke of the receipt of payment of Rs 1 lakh on August 4, and as per the Bench, the claim stood barred on December 9, 2020, when the notice was issued seeking the appointment of an arbitrator.

It was further noticed that as per the Counter Affidavit of the respondent, a delayed challenge was made to the order of the Magistrate after about a year, which was also rejected by the Sessions Judge for the reason that no explanation had been offered for the delay of 234 days. “Even after the notice issued on 09.12.2020, the arbitration request was first made before the High Court of Karnataka at Bengaluru on 22.06.2022 which remained in that Court till 20.01.2025, when the same was disposed of leaving liberty to take appropriate remedies”, it stated.

Finding the notice of arbitration and the arbitration request to be delayed, the Bench dismissed the Arbitration Petition.

Cause Title: Alan Mervyn Arthur Stephenson v. J. Xavier Jayarajan (Neutral Citation: 2025 INSC 1228)

Appearance

Appellant: Senior Advocate Diya Kapur, Advocates Nakul Gandhi, Utsav Trivedi, Mujeeb, Tanish Gupta, Siddhi Sahoo, Aditya Ladha, Raghav Kumar, Shivani Bhushan, Harsh Pandya, M/S. Tas Law

Respondent: AOR V. N. Raghupathy, Advocate Raghavendra M. Kulkarni, Mythili S, Advocates M. Bangaraswamy, Venkata Raghu Mannepalli, D. Girish Kumar

Click here to read/download Judgment