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Urban Infrastructure Real Estate Fund vs. Neelkanth Realty Private Limited & Ors.

Not available · 2025 INSC 1255Decided 15 Sept 2025
Not available
Justice J.B. Pardiwala · Justice K.V. Viswanathan

Background

Urban Infrastructure Real Estate Fund (UIREF), a Mauritius-based private equity fund, had invested in Neelkanth Realty Private Limited under a 2008 Share Subscription Agreement and Shareholders Agreement to develop a large township project spanning about 700 acres near Pune. A dispute arose and went to arbitration, where an Arbitral Tribunal passed an interim award in 2019 deciding a preliminary issue of limitation "on demurrer" (i.e., without taking evidence, assuming the opposing party's factual case to be true) and treating that finding as final. The Bombay High Court, both at the Single Judge and Division Bench level, held that this method of deciding limitation could not foreclose the issue and needed to be examined properly with evidence. UIREF challenged this before the Supreme Court.

Decision Breakdown

The Supreme Court dismissed UIREF's petitions and upheld the High Court's view. It undertook a detailed examination of what "demurrer" means in Indian and comparative (US) jurisprudence, and held that an arbitral tribunal cannot use party autonomy to adopt a procedure that effectively bypasses Section 3 of the Limitation Act, 1963. Deciding a limitation question finally on mere demurrer, without permitting evidence, and then treating it as conclusively "foreclosed," offended basic principles of justice. The Court held this part of the interim award warranted interference under Section 34 of the Arbitration Act, while clarifying that the remainder of the award would stay intact, and sent the limitation issue back for proper examination with evidence.

Lesson Learnt

Parties cannot use arbitration agreements or tribunal procedure to shortcut mandatory limitation-law safeguards: a limitation finding made without any evidence, on assumed facts alone, cannot be treated as final and unchallengeable, and courts will step in to ensure it is properly tested.

Official source (sci.gov.in)View Judgment (PDF)

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