Time-barred arbitration claims may make an award vulnerable to public policy challenge under section 34.

Section 3 of the Limitation Act applies to arbitration through section 43 of the Arbitration and Conciliation Act, so a claim referred outside the governing limitation period cannot be sustained. Under the relevant bye-law, disputes had to be referred within six months from the date the claim or dispute arose. On the stated facts, the dispute arose when the demand was rejected, but arbitration was invoked later, making the claim time-barred. An award allowing a barred claim under the contractual arbitral regime is treated as contrary to public policy and is vulnerable to challenge under section 34.

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Issues: Whether the arbitral award was liable to be set aside under section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the respondent's claim was barred by limitation and the award was contrary to public policy.

Analysis: The limitation plea was examined notwithstanding the contention that it had been given up before the arbitrator, because section 3 of the Limitation Act, 1963 applies to arbitration proceedings through section 43 of the Arbitration and Conciliation Act, 1996. The relevant bye-law required claims, differences or disputes to be referred within six months from the date on which the claim arose or the dispute arose or was deemed to have arisen. On the facts, the demand was rejected on 27-11-1998, so the dispute arose on that date, whereas the reference to arbitration was made only on 10-1-2000. The claim was therefore beyond the prescribed period. An award granting a time-barred claim under the applicable contractual arbitral regime was held to conflict with public policy and could not stand.

Conclusion: The arbitral award was liable to be set aside. The petitioner's challenge succeeded and the award was quashed.

Final Conclusion: A claim referred to arbitration after the expiry of the governing limitation period cannot be sustained, and an award allowing such a barred claim is vulnerable under section 34 for conflict with public policy.

Ratio Decidendi: Where the arbitral claim is instituted beyond the contractual or statutory limitation period applicable to arbitration, an award allowing that claim is contrary to public policy and is liable to be set aside under section 34.

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