Claims barred by limitation; acknowledgment of debt made post-limitation does not extend the limitation period.

JUDGMENT :

VIBHU BAKHRU,C.J.

1. The appellant has filed the present appeal under Section 37(1)(c) of the Arbitration & Conciliation Act, 1996 ['the A&C Act'] impugning an order dated 11.07.2025 [impugned order] passed by the Court of the LXXXVI Additional City Civil & Sessions Judge, Commercial Court, Bengaluru (CCH-87) [Commercial Court] in Com.A.P.No.31/2025.

2. The appellant had preferred the said petition under Section 34 of the A&C Act impugning an arbitral award dated 12.02.2015 [impugned award] passed by the Arbitral Tribunal constituted by a sole Arbitrator [Arbitral Tribunal]. The learned Commercial Court had dismissed the petition to set aside the impugned award. Aggrieved by the same, the appellant has preferred the present appeal.

3. The Arbitral Tribunal had awarded a sum of Rs.19,30,000/- along with interest at the rate of 18% per annum from 22.09.2009 till the date of payment, in favour of the respondent [HDFC]. In addition, the appellant was also directed to pay costs of Rs.15,000/-. The appellant claims that the claims made by HDFC were time barred and therefore, the impugned award was required to be set aside.

4. The principal dispute to be addressed in the present appeal is, whether the impugned award was vitiated by patent illegality, as the claims made by HDFC [claimant before the Arbitral Tribunal], were barred by limitation.

Prefatory facts

5. HDFC is a successor-in-title of the erstwhile Centurion Bank of Punjab Limited [Centurion Bank] by virtue of a scheme of amalgamation as confirmed by the Reserve Bank of India.

6. Centurion Bank and the appellant had entered into a Leave and Licence Agreement dated 01.01.2007 [the Lease Agreement in respect of the property described as Ground Floor of the building in the premises bearing Old No.165, New No.165/6, RVS Paradise, 36^th 'D' Cross, IV T Block, Jayanagar, Bengaluru-560 041, admeasuring 1800 sq.ft. with two car parking spaces and two- wheeler parking spaces [the demised premises]. The term of the lease was 11 (eleven) months with an option to renew the same by mutual agreement.

7. HDFC claimed that on the same date, that is on 01.01.2007, the appellant and erstwhile Centurion Bank had entered into a Memorandum of Understanding [MOU] to extend the term of Lease Agreement for further eight terms of eleven months each on the same terms and conditions, subject to escalation in the licence fee.

8. Centurion Bank had paid the appellant an amount of Rs.17,80,000/- (Rupees seventeen lakhs eighty thousand only) towards interest free refundable security deposit. Additionally, Centurion Bank had paid a sum of Rs.1,50,000/- (Rupees one lakh fifty thousand only) also interest free towards 15 KVA of power supply to the demised premises. Thus, in aggregate, the Centurion Bank had paid a sum of Rs.19,30,000/- (Rupees nineteen lakhs thirty thousand only), which was acknowledged by the appellant as interest free security deposit. As noted above, Centurion Bank merged with HDFC and thus, HDFC as the successor-in-interest, is entitled to all assets of the erstwhile Centurion Bank with effect from 23.05.2008.

9. HDFC stated that it decided to vacate the demised premises and on 22.04.2009, issued a termination notice [first termination notice] as required under the lease agreement. HDFC alleges that the appellant evaded receiving the said notice and the postal cover was returned as unclaimed on 19.05.2009. On 25.05.2009, HDFC sent another termination notice [second termination notice], which was delivered to the appellant on 08.06.2009. HDFC called upon the appellant to treat the second termination notice as a two month written noti