TaxTMI 
TaxTMI 
2026 (5) TMI 260
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....4. The appellant, M/s. MCM Worldwide Private Limited, had earlier filed a suit in CS DJ No. 428 of 2018 for recovery of its alleged dues before the learned District & Session Judge, South-East, Saket Courts, New Delhi, but the respondent filed an application therein under Section 8 of the Arbitration and Conciliation Act, 1996 [For short, 'the Arbitration Act'], to refer the parties to arbitration in terms of the arbitration clause in the MoU dated 05.05.2008, read with Clause 4 of the MoU dated 02.03.2006. On 03.08.2019, the suit was disposed of on this premise. However, as the respondent failed to agree to the appointment of an arbitrator, the appellant approached the Delhi High Court by way of a petition under Section 11(6) of the Arbitration Act, resulting in the appointment of a sole arbitrator by the High Court by order dated 27.09.2021, which was thereafter confirmed on 11.10.2021. 5. While so, at the stage of framing of issues by the learned Arbitrator, the respondent filed an application under Order VII, Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the appellant's claim petition on the ground that its claims were barred by limitation. However, the ....
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....y order dated 26.03.2024. This order was challenged by the respondent before a Division Bench of the Delhi High Court, by way of an appeal under Section 37 of the Arbitration Act, in FAO (Comm.) No. 83 of 2024. Notably, the Division Bench did not choose to consider the maintainability of either the application filed under Section 34 of the Arbitration Act or the appeal filed before it under Section 37 thereof, in the context of an order passed by the learned Arbitrator, rejecting the plea of lack of jurisdiction under Section 16 of the Arbitration Act. The judgment dated 08.05.2025 of the Division Bench, allowing the appeal, focused on the merits, without addressing the essential issue as to whether the case was proceeding on the right track. The said judgment is called in question before us in this appeal. 8. Having given our earnest consideration to the matter, we are of the opinion that neither the learned District Judge nor the Division Bench were correct in entertaining the matters brought before them, i.e., under Section 34 and, thereafter, under Section 37, of the Arbitration Act. In this regard, we may note that Section 16 of the Arbitration Act is titled 'Competence of ....
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....te to take note of what this Court had held in Indian Farmers Fertilizer Cooperative Limited (supra), the decision cited before the learned District Judge during the hearing of the application under Section 34 of the Arbitration Act. This decision did not relate to an order passed under Section 16 of the Arbitration Act. It recorded that an interesting question arises as to whether an award delivered by an arbitrator, which decides the issue of limitation, can be said to be an interim award and whether such an interim award can be set aside under Section 34 of the Arbitration Act. The background of that case was that, after initiation of arbitral proceedings, the learned Arbitrator therein deemed it fit to take up the issue of limitation first. Thereupon, the issue was decided in favour of the claimant, holding that the claims were not time-barred. This decision came to be challenged by way of an application under Section 34 of the Arbitration Act, by styling it as a 'First Partial Award'. The learned District Judge before whom the application was filed dismissed it, stating that he lacked jurisdiction as the decision could not be said to be an interim award for the purposes of Sec....
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....enge the correctness thereof. 13. However, if an arbitrator deals with the very same issue of limitation on an application filed under Section 16 of the Arbitration Act, on the ground that the arbitrator lacks jurisdiction on that count, it would be traceable to Section 16(2) of the Arbitration Act and if the arbitrator rejects that plea, Sections 16(5) and Section 16(6) would apply. In that situation, there is no option for the party aggrieved by the decision of the arbitrator upon the application filed under Section 16 except to wait till the conclusion of the arbitral proceedings and then raise that issue by way of an application under Section 34 against the final award. 14. Though the final award, even in this situation, would not focus upon the issue of limitation as it already stood decided by the rejection of the application filed under Section 16(2) of the Arbitration Act, the scheme of Section 16 and, more particularly, Sections 16(5) and 16(6), would keep the issue alive and enable the party aggrieved to challenge the validity of the rejection order under Section 16 at the final stage, even after the passing of the final award. 15. However, the scheme of Sections....