Rejection of jurisdictional plea under Section 16(2) (limitation bar) by arbitral tribunal not challengeable under Section 34 pre-final award; must await final award per Section 16(6), distinguishing preliminary limitation decisions as interim awards.

JUDGMENT :

SANJAY KUMAR, J.

1. Leave granted.

2. During the arbitral proceedings between the parties, a fundamental legal aspect came to be glossed over on a patent misunderstanding of a decision of this Court. Hence, this order, to clarify the legal position.

3. Arbitration commenced between the parties upon appointment of a sole Arbitrator by the Delhi High Court in the context of the disputes arising under their Memorandum of Understanding (MoU) dated 02.03.2006 read with the Memorandum of Understanding (MoU) dated 05.05.2008 of the respondent, M/s. Construction Industry Development Council, with Employment Generation and Marketing Mission, Department of Rural Development, Government of Andhra Pradesh.

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 ¹ [ 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 learned Arbitrator dismissed the application on merits, by order dated 16.04.2022. Assailing the said order, the respondent filed OMP (Comm.) No. 24 of 2022, an application under Section 34 of the Arbitration Act, before the learned District Judge (Comm.), South-East, Saket Courts, New Delhi. The application was rejected by the learned District Judge on 11.11.2022, holding that the said order was not amenable to challenge under of the Arbitration Act. The respondent assailed this order before the Delhi High Court in FAO (Comm.) No. 50 of 2023. The High Court dismissed the same on 24.02.2023 but granted liberty to the respondent to file an application before the learned Arbitrator under Section 16 of the Arbitration Act.

6. Pursuant to such liberty, the respondent filed an application before the learned Arbitrator under Section 16 of the Arbitration Act with the following prayer: -

‘Dismiss the present statement of claim as the same is not maintainable since the Ld. Sole Arbitrator does not possess jurisdiction to entertain the same due to barred by limitation.’

This application was dismissed by the learned Arbitrator on 19.05.2023. Aggrieved thereby, the respondent again filed an application under Section 34 of the Arbitration Act in OMP (Comm.) No. 64 of 2023 before the learned District Judge (Commercial Court-01), South-East, Saket Courts, New Delhi. Significantly, the appellant raised the issue of maintainability of this application under of the Arbitration Act against an order passed under Section 16 thereof. The specific contention of the appellant was that, in the scheme of the Arbitration Act, an order rejecting the contention that the arbitrator