Delhi High Court
Deepak Builders And Engineers Limited vs M/S Engineering Projects (India) Ltd on 20 February, 2026
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 12.02.2026
Judgment pronounced on: 20.02.2026
Judgment uploaded on: 20.02.2026
+ FAO (COMM) 185/2024 & CM APPL. 54337/2024
DEEPAK BUILDERS AND ENGINEERS LIMITED
.....Appellant
Through: Mr. Varun Chugh & Mr.
Mayank Kaushik, Advs.
versus
M/S ENGINEERING PROJECTS (INDIA) LTD
.....Respondent
Through: Mr. Debarshi Bhadra, Adv.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE AMIT MAHAJAN
JUDGMENT
ANIL KSHETARPAL, J.
1. Through the present Appeal under Section 371 of the
Arbitration and Conciliation Act, 19962, the Appellant assails the
correctness of the judgment dated 16.05.2024 [hereinafter referred to
as ‘Impugned Order’], passed in ARBTN-248/18, whereby the learned
District Judge allowed the Petition filed by the Respondent under
Section 343 of the A&C Act [hereinafter referred to as ‘Section 34
Petition’] and set aside the Arbitral Award dated 13.07.2018
[hereinafter referred to as ‘the Award’] passed by the learned Sole
1
Section 37
2
A&C Act
3
Section 34
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Arbitrator.
2. The learned District Judge, by way of the Impugned Order, has
held that the Award suffers from patent illegality on account of the
claims being barred by limitation under the Limitation Act, 19634.
3. Accordingly, the principal issue which arises for consideration
before this Court is whether the learned District Judge was justified in
interfering with the Award under Section 34 on the ground of
limitation, particularly in the absence of a timely objection before the
learned Arbitrator.
FACTUAL MATRIX
4. In order to appreciate the controversy involved in the present
Appeal, the relevant facts, in brief, are required to be noticed.
5. The Respondent invited tenders for civil and internal electrical
work for planning, designing, and construction of a Zonal Office
Building for Punjab National Bank at Ludhiana, Punjab [hereinafter
referred to as ‘work’]. On 12.01.2006, EPIL issued a letter of award
bearing LOI No. NRO/CON/494-TEC/0245 for construction, to the
Appellant.
6. It is the case of the Appellant that the work stood completed in
all respects on 30.06.2008, however, the date of completion of the
work as per the agreement was 11.04.2007. On 08.09.2008, the
Appellant raised its final bill for an amount of Rs.25,72,035.87/-,
4
Limitation Act
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payable within 6 months. In the said bill, it was noted that the gross
amount was subject to statutory deductions against taxes, cess, etc.
7. On 07.11.2008, the Respondent released a sum of Rs.4,98,849/-
to the Appellant while withholding an amount of Rs.20,73,187/- on
account of alleged service tax, labour cess, security deposit and other
deductions.
8. Subsequently, correspondence ensued between the parties with
regard to the deductions so made. The Respondent addressed a letter
dated 04.02.2009 to the Labour Commissioner, Punjab, seeking
clarification regarding the applicability of labour cess for construction
completed before 11.11.2008. In response, the Labour Commissioner,
vide communication dated 19.02.2009, clarified that the State
Government has not taken a decision on levying labour cess on
projects completed before 11.11.2008.
9. In the context of the Impugned Order assailed before this Court,
the correspondence dated 07.03.2009, 03.08.2009 and 07.07.2011 is
relevant. Vide letter dated 07.03.2009, the Respondent stated that the
final bill dated 08.09.2008 had been certified and paid, subject to
certain deductions towards labour cess, service tax and commissioning
charges, and that 50% of the retention money had been released. The
claim for interest was denied, and the issue of labour cess was stated
to be under consideration with Punjab National Bank.
10. By letter dated 03.08.2009, the Respondent stated that the
building had not yet been handed over to Punjab National Bank and,
therefore, the Appellant’s assertion of completion in all respects was
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disputed. It was further stated that tax-related issues were under
consideration and that the claim of full payment due was not
acceptable under the contract. Subsequently, vide letter dated
07.07.2011, the Respondent reiterated that payment of Rs.34,98,849/-
had been released on 07.11.2008 and maintained that no further
amount or interest was payable under the contract.
11. In the meantime, on 26.09.2009, the Appellant sought release of
Rs.20,00,000/- against the final bill along with 50% of the retention
money and interest @ 18%. The Respondent informed that 50% of the
retention money had already been released and that no delay interest
was payable. The defect liability period expired on 30.06.2009 in
terms of Clause 12 of the Purchase Order and Clause 35 of the
General Conditions of Contract (‘GCC’). Subsequently, on
29.04.2011, a demand-cum-show cause notice was issued by the
Commissioner of Central Excise and Service Tax, Ludhiana, Punjab,
raising a demand of service tax in respect of the work.
12. Pursuant thereto, in the year 2015, the Appellant asked for
recovery of money from the Respondent and thereafter sent a legal
notice and approached the High Court of Punjab and Haryana for the
appointment of Arbitrator. Vide order dated 29.07.2016, the Appellant
had obtained an ex parte order for the appointment of Arbitrator
without serving EPIL, and the said arbitration proceedings were also
conducted and concluded on 01.12.2016 in the absence of the
Respondent.
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13. Further, vide order dated 28.04.2017, the High Court of Punjab
and Haryana set aside the aforesaid ex parte arbitral award dated
01.12.2016 and appointed Mr. Vinod Jain as the sole Arbitrator.
14. The learned sole Arbitrator, after considering the material
placed on record, passed the Award dated 13.07.2018, allowing the
claims of the Appellant and awarding a sum of Rs.39,01,041/- along
with interest and costs.
15. Aggrieved by the Award, the Respondent filed the Section 34
Petition. The learned District Judge, vide the Impugned Order,
allowed the said Petition and set aside the Award primarily on the
ground that the claims were barred by limitation.
16. Aggrieved by the same, the present Appeal has been preferred.
CONTENTIONS OF THE PARTIES
17. Heard learned Counsel for the parties at length and, with their
able assistance, perused the paperbook.
18. Learned counsel for the Appellant, assailing the Impugned
Order, advanced the following submissions:
i. The Respondent did not raise any plea of limitation at the
stage of appointment of the Arbitrator under Section 115 of the
A&C Act, nor did it invoke Section 166 of the A&C Act before5
Section 11
6
Section 16
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the learned Arbitrator. The objection, therefore, stood waived in
terms of Section 47 of the A&C Act.
ii. The learned Sole Arbitrator, being the final arbiter of
facts and law within the arbitral domain, had considered the issue
of deductions and the correspondence exchanged between the
parties, and the finding rendered on limitation could not have
been substituted by the Court under Section 34.
iii. The Impugned Order is contrary to settled jurisprudence
of the Supreme Court that limitation is a mixed question of fact
and law and, unless the finding is perverse or patently illegal, the
same is not open to interference under Section 34.
19. Per contra, learned counsel for the Respondent supported the
Impugned Order and contended as follows:
i. The cause of action arose in the year 2008 when the final
bill was submitted and part payment was made, and therefore, the
invocation of arbitration beyond three years was ex facie barred
by limitation.
ii. Since limitation goes to the root of the matter, the Court
was justified in setting aside the Award under Section 34.
20. No other submissions have been advanced on behalf of the
parties.
7
Section 4
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ANALYSIS & FINDINGS
21. This Court has analysed the submissions advanced by the
learned Counsel for the parties.
22. It would be apposite to set out herein the scrutiny permissible
by this Court in exercise of its powers under Section 37. It is now
well-settled that the appellate jurisdiction of the Court under Section
37 is to be exercised with due restraint, ensuring that it does not
traverse beyond the statutory confines delineated under Section 34.
The Supreme Court in the judgment of MMTC Ltd. v. Vedanta Ltd.8
contemplated upon the limited and supervisory nature of an appeal
under Section 37 and has observed that:
“14. As far as interference with an order made Under Section 34,
as per Section 37, is concerned, it cannot be disputed that such
interference Under Section 37 cannot travel beyond the restrictions
laid down Under Section 34. In other words, the court cannot
undertake an independent assessment of the merits of the award,
and must only ascertain that the exercise of power by the court
Under Section 34 has not exceeded the scope of the provision.
Thus, it is evident that in case an arbitral award has been
confirmed by the court Under Section 34 and by the court in an
appeal Under Section 37, this Court must be extremely cautious
and slow to disturb such concurrent findings.”
(Emphasis supplied)
23. Similar observations have been made by the Supreme Court in
Punjab State Civil Supplies Corpn. Ltd. v. Sanman Rice Mills9,
which reads as follows:
“20. In view of the above position in law on the subject, the scope
of the intervention of the court in arbitral matters is virtually
prohibited, if not absolutely barred and that the interference is
confined only to the extent envisaged under Section 34 of the Act.
8
(2019) 4 SCC 163.
9
2024 SCC OnLine SC 2632.
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The appellate power of Section 37 of the Act is limited within the
domain of Section 34 of the Act. It is exercisable only to find out
if the court, exercising power under Section 34 of the Act, has
acted within its limits as prescribed thereunder or has exceeded or
failed to exercise the power so conferred. The Appellate Court
has no authority of law to consider the matter in dispute before
the arbitral tribunal on merits so as to find out as to whether the
decision of the arbitral tribunal is right or wrong upon
reappraisal of evidence as if it is sitting in an ordinary court of
appeal. It is only where the court exercising power under Section
34 has failed to exercise its jurisdiction vested in it by Section 34
or has travelled beyond its jurisdiction that the appellate court
can step in and set aside the order passed under Section 34 of the
Act. Its power is more akin to that superintendence as is vested in
civil courts while exercising revisionary powers. The arbitral
award is not liable to be interfered unless a case for interference as
set out in the earlier part of the decision, is made out. It cannot be
disturbed only for the reason that instead of the view taken by the
arbitral tribunal, the other view which is also a possible view is a
better view according to the appellate court.”
(Emphasis supplied)
24. Further, a three-judge Bench of the Supreme Court in UHL
Power Co. Limited v. State of Himachal Pradesh10 held the
following:
“15. This Court also accepts as correct, the view expressed by the
appellate court that the learned Single Judge committed a gross
error in reappreciating the findings returned by the Arbitral
Tribunal and taking an entirely different view in respect of the
interpretation of the relevant clauses of the implementation
agreement governing the parties inasmuch as it was not open to the
said court to do so in proceedings Under Section 34 of the
Arbitration Act, by virtually acting as a court of appeal.
16. As it is, the jurisdiction conferred on courts Under Section 34
of the Arbitration Act is fairly narrow, when it comes to the scope
of an appeal Under Section 37 of the Arbitration Act, the
jurisdiction of an appellate court in examining an order, setting
aside or refusing to set aside an award, is all the more
circumscribed.”
(Emphasis supplied)
10
(2022) 4 SCC 116.
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25. Learned Counsel for the Respondents has placed his reliance
upon the judgment rendered by the two-judge Bench of the Supreme
Court in McDermott International (supra), where the Court has taken
a similar view. The relevant extracts of the same are extracted
hereunder:
“52. The 1996 Act makes provision for the supervisory role of
courts, for the review of the arbitral award only to ensure fairness.
Intervention of the court is envisaged in few circumstances only,
like, in case of fraud or bias by the arbitrators, violation of
natural justice, etc. The court cannot correct errors of the
arbitrators. It can only quash the award leaving the parties free to
begin the arbitration again if it is desired. So, the scheme of the
provision aims at keeping the supervisory role of the court at
minimum level and this can be justified as parties to the
agreement make a conscious decision to exclude the court’s
jurisdiction by opting for arbitration as they prefer the expediency
and finality offered by it.
***
112. It is trite that the terms of the contract can be express or
implied. The conduct of the parties would also be a relevant factor
in the matter of construction of a contract. The construction of the
contract agreement is within the jurisdiction of the arbitrators
having regard to the wide nature, scope and ambit of the
arbitration agreement and they cannot be said to have misdirected
themselves in passing the award by taking into consideration the
conduct of the parties. It is also trite that correspondences
exchanged by the parties are required to be taken into
consideration for the purpose of construction of a contract.
Interpretation of a contract is a matter for the arbitrator to
determine, even if it gives rise to determination of a question of
law. (See Pure Helium India (P) Ltd. v. ONGC [(2003) 8 SCC 593]
and D.D. Sharma v. Union of India [(2004) 5 SCC 325] .)
113. Once, thus, it is held that the arbitrator had the jurisdiction,
no further question shall be raised and the court will not exercise
its jurisdiction unless it is found that there exists any bar on the
face of the award.
114. The above principles have been reiterated in Chairman and
MD, NTPC Ltd. v. Reshmi Constructions, Builders &
Contractors [(2004) 2 SCC 663] , Union of India v. Banwari Lal &
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Ltd. v. State of U.P. [(2003) 8 SCC 4] and State of U.P. v. Allied
Constructions [(2003) 7 SCC 396] .”
(Emphasis supplied)
26. The Courts have adopted the same consistent view in a catena
of decisions, a few of which may be adverted to, namely, Vedanta
Ltd. v. Shenzhen Shandong Nuclear Power Construction Co. Ltd.11;
ONGC Ltd. Western Geco International Ltd.12; Numaligarh
Refinery Ltd. v. Daelim Industrial Co. Ltd.13; Tata Hydro-Electric
Power Supply Co. Ltd. v. Union of India14; Ssangyong Engg. &
Construction Co. Ltd. v. NHAI15; and, NHAI v. M. Hakeem16.
27. Thus, it is a well-embedded principle in arbitration
jurisprudence that the scope of interference under Section 37 is even
narrower than that contemplated under Section 34. The appellate
court, while examining an order passed under Section 34, does not sit
in substantive review of the arbitral award, nor does it reassess or re-
appreciate the evidence underlying the Arbitrator’s findings. Thus, the
enquiry under Section 37 is confined to testing whether the court
below has acted within the statutory boundaries prescribed under
Section 34, and whether its decision suffers from patent illegality,
perversity, or a jurisdictional infirmity warranting correction.
28. Consistent with this framework, the Supreme Court has
repeatedly underscored that an appeal under Section 37 is supervisory
and not corrective in the ordinary appellate sense. The appellate court
11
(2019) 11 SCC 465.
12
(2014) 9 SCC 263.
13
(2007) 8 SCC 466.
14
(2003) 4 SCC 172.
15
(2019) 15 SCC 131.
16
(2021) 9 SCC 1.
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is not empowered to expand the permissible grounds of challenge,
revisit factual determinations, or substitute its own view for that of
either the Arbitral Tribunal or the Section 34 Court. Its remit is
limited to ascertaining whether the lower court has applied the correct
legal standards and whether its interference with, or refusal to
interfere with, the award aligns with the restrictive contours of Section
34.
29. Having delineated the contours of the jurisdiction exercisable
under Section 37, we now proceed to examine whether the learned
District Judge, while exercising powers under Section 34, acted within
the statutory confines in setting aside the Award on the ground that the
claims were barred by limitation.
30. Section 43 of the A&C Act makes the Limitation Act applicable
to arbitrations as it applies to proceedings before courts. The mandate
is unequivocal: arbitral claims must be brought within the prescribed
period of limitation, failing which they are legally non-maintainable.
Further, Article 18 of the Limitation Act prescribes a period of three
years for filing an application/suit for recovery for the price of work
done by the Plaintiff for the Defendant at his request, where no time
has been fixed for payment, the period of limitation commences from
the date when the work is done.
31. At this juncture, it is also apposite to note that the limitation is
not a mere technical defence. It is founded on public policy. It ensures
certainty in commercial dealings and prevents resurrection of stale
claims. An arbitral tribunal, therefore, cannot ignore statutory
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limitation; nor can parties, by consent or inaction, confer jurisdiction
upon a tribunal to adjudicate claims that are ex facie time-barred.
32. It is equally well settled that limitation is ordinarily a mixed
question of fact and law. Where the determination of limitation
depends upon disputed factual issues or appreciation of evidence, the
arbitrator’s view, if plausible, would not warrant interference.
However, where the relevant dates are admitted and the bar of
limitation is evident on the face of the record, the matter assumes a
jurisdictional character.
33. Moreover, an award granting relief on claims that are
demonstrably barred by limitation would suffer from patent illegality
within the meaning of Section 34(2A) of the A&C Act. In such
circumstances, the Court under Section 34 is justified in setting aside
the award, not by reappreciating evidence, but by enforcing a statutory
bar.
34. The submission of the Appellant that the limitation stood
waived as it was not pressed under Section 16 or at the Section 11
stage does not merit acceptance. At this stage, reference to Section 4 is
pertinent and the same is reproduced hereunder:
“4. Waiver of right to object.–A party who knows that–
(a) any provision of this Part from which the parties may
derogate, or
(b) any requirement under the arbitration agreement,
has not been complied with and yet proceeds with the arbitration
without stating his objection to such non-compliance without undue
delay or, if a time limit is provided for stating that objection, within
that period of time, shall be deemed to have waived his right to so
object.”
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35. In this regard, it is important to note that the plea of limitation is
a substantive defence grounded in statute. Section 4 applies to
derogable procedural requirements; it cannot be invoked to override a
statutory limitation.
36. Further, the stage of appointment of an arbitrator under Section
11 is not determinative of limitation unless the claim is ex facie dead.
Even otherwise, failure to conclusively establish limitation at that
stage does not prevent the Court under Section 34 from examining
whether the award disregards a clear statutory prohibition.
37. Thus, the settled position that emerges is:
i. Limitation applies with full vigour to arbitral claims;
ii. A claim ex facie barred cannot be sustained; and
iii. An award ignoring limitation is vulnerable under Section
34.
38. The controversy in the present matter turns substantially on the
accrual of cause of action and identification of the relevant starting
point for limitation.
39. On the admitted factual matrix, the cause of action for recovery
of the amount arose on 30.06.2008, as the work stood completed as
per the Appellant on 30.06.2008. However, upon release of partial
payment on 07.11.2008 and simultaneous withholding of the
remaining amount, the entitlement of the Appellant to claim the
unpaid balance crystallised as per Section 19 of the Limitation Act.
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Thus, the cause of action accrued on 07.11.2008. The limitation period
began to run for taking steps to recover the balance amount by
invoking arbitration and the same lapsed on 06.11.2011. Thereafter,
there was no written acknowledgment of the debt on the part of the
Respondent, which may have extended the period of limitation,
whereas the Appellant invoked arbitration in the year 2015.
40. The learned District Judge, in the Impugned Order, has
analysed three crucial dates emerging from the record, which also find
reference in Paragraph Nos.9 and 10 of the factual matrix narrated
hereinabove.
41. The first relevant date is 07.03.2009. The tenor of the letter
dated 07.03.2009 is significant. It was not a provisional or tentative
communication. It conveyed the Respondent’s position that payment
had been made in accordance with its understanding of the contract
and that further claims, including interest, were not acceptable. This
constituted a clear intimation of dispute.
42. The second relevant date is 03.08.2009. In this letter, the
Respondent disputed the Appellant’s assertion that the building had
been completed in all respects and categorically stated that the claim
of full payment due was not acceptable under the contract. It reiterated
that tax-related issues were under consideration and declined the
Appellant’s demand. This communication further crystallised the
dispute. The Respondent’s refusal to accede to the demand was
unequivocal. The cause of action, therefore, stood firmly established
at least by this date.
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43. The third crucial date is 07.07.2011. By this letter, the
Respondent once again reiterated that payment of Rs.34,98,849/- had
been released on 07.11.2008 and maintained that no further amount or
interest was payable under the contract.
44. The learned District Judge has treated these three dates as
material in determining limitation, which was also not correct because
from the date of the last partial payment, the period of limitation will
begin to run continuously as provided in Section 9 of the Limitation
Act. The invocation of arbitration in 2015 was, therefore, beyond the
statutory period.
45. The Appellant has sought to contend that the dispute continued
to remain alive owing to correspondence relating to labour cess and
service tax, and that the cause of action ought to be reckoned from the
demand notice issued by the Commissioner of Central Excise and
Service Tax in April 2011. We find no merit in this submission. The
contractual dispute between the parties regarding payment had
crystallised much earlier. The subsequent tax proceedings did not
create a fresh cause of action for recovery under the contract. At best,
they may have furnished an additional circumstance, but they could
not extend limitation once the claim had already been unequivocally
denied.
46. It is a settled principle that mere exchange of correspondence,
pendency of representations, or discussions between the parties does
not arrest the running of time. For limitation to stand extended under
Section 18 of the Limitation Act, there must be a clear and
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unambiguous acknowledgment of liability made in writing before
expiry of the prescribed period. In the present case, no such
acknowledgment of subsisting liability was made within three years
from the accrual of cause of action on 07.11.2008. In the absence of a
valid acknowledgment, the statutory period could not be enlarged. To
hold otherwise would render the law of limitation nugatory.
47. It may be noted that the learned Arbitrator, while allowing the
claim, did not advert to these dates in a manner consistent with the
statutory mandate. The Award does not disclose any legally
sustainable reasoning for extending limitation beyond the period
prescribed by statute.
48. The learned District Judge, on the other hand, examined the
admitted correspondence and recorded a categorical finding that the
claims were ex facie barred. The finding is based on undisputed
documentary material and involves a straightforward application of
statutory prescription. It cannot be characterised as a reappreciation of
evidence or a substitution of view on merits.
49. The Appellant has further argued that limitation being a mixed
question of fact and law, the Arbitrator’s view ought not to have been
disturbed. This submission overlooks that where the dates are
admitted and the denial is explicit, the computation of limitation
becomes a matter of legal application, not factual appreciation.
50. It is also urged that the Respondent did not press the plea under
Section 16 before the Arbitrator. As already discussed, limitation
cannot be waived by omission. Moreover, the correspondence forming
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the basis of limitation was part of the arbitral record itself. The
statutory bar is apparent on the face of the Award.
51. The Impugned Order reflects that the learned District Judge
confined himself to examining whether the Award contravened the
statutory limitation. There is no re-evaluation of contractual
interpretation or quantum. The interference is squarely within the
narrow window contemplated under Section 34.
52. Furthermore, in exercise of jurisdiction under Section 37, this
Court cannot expand the scope of scrutiny. The question before us is
not whether the Arbitrator’s approach was plausible, but whether the
Section 34 Court exceeded its mandate. Upon careful consideration,
we find that it did not.
CONCLUSION
53. In light of the foregoing discussion, this Court is of the
considered view that the learned District Judge has not transgressed
the jurisdiction vested under Section 34. The Impugned Order reflects
that the Court below examined the Award within the limited
parameters prescribed by law and recorded a finding that the claims
were ex facie barred by limitation.
54. The issue of limitation, going to the root of the maintainability
of the claims, was considered by the learned District Judge on the
basis of the admitted dates and the correspondence on record. The
conclusion arrived at cannot be said to be perverse, patently illegal, or
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in excess of jurisdiction so as to warrant interference under Section
37.
55. As noticed hereinabove, the appellate power under Section 37 is
even more circumscribed than the jurisdiction under Section 34. This
Court does not sit in appeal over the decision of the Section 34 Court
to re-assess the merits of the controversy. No ground has been made
out to demonstrate that the learned District Judge acted contrary to the
settled principles governing interference with arbitral awards.
56. Consequently, this Court finds no merit in the present Appeal.
The Impugned Order warrants no interference.
57. The Appeal is, accordingly, dismissed. Pending applications, if
any, stand disposed of.
58. There shall be no order as to costs.
ANIL KSHETARPAL, J.
AMIT MAHAJAN, J.
FEBRUARY 20, 2026
sp/shahid
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