Rejection of Section 16 limitation plea cannot be challenged via Section 37 appeal against Section 17 interim order during arbitration; deferred to Section 34. No interference absent perversity in tribunal's measures.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background:

1. The challenge in this Petition filed under Section 37 of the ARBITRATION AND CONCILIATION ACT , 1996 (“the Act”), is to an interim order passed under Section 17 dated March 6, 2025 passed by a Learned Arbitral Tribunal.

2. By the said order, the Learned Arbitral Tribunal was pleased to direct certain interlocutory arrangements, specifically in the form of a deposit of Rs. 1.33 crores by a Demand Draft, to be kept with the Advocate for the Claimant, who would act as an escrow agent and hold the same subject to the outcome of the arbitral proceedings.

3. By an order dated February 23, 2025 (“ Section 16 Order”), the Learned Arbitral Tribunal had also been pleased to reject an Application under Section 16 , which was fundamentally founded on the claim being barred by limitation. The grounds on which the Section 17 order is assailed are essentially dependent on the plea of limitation which was pressed into service and was rejected in the Section 16 order.

Analysis and Findings:

4. It is now settled law that the rejection of a Section 16 Application is not amenable to challenge during the pendency of the arbitral proceedings. Grievances about such rejection could form the subject matter of a ground of challenge under Section 34, should the arbitral award eventually result in an outcome adverse to the party that filed the Section 16 Application. This is an explicit legislative policy choice indicated in Section 16 (6) of the Act.

5. I find that the fundamental grievance against the Section 17 Order pressed into service by the Learned Advocate for the Petitioner is about the nature of the measure formulated by the Arbitral Tribunal not being consistent with the Petitioner’s contention on limitation. The Learned Advocate for the Petitioner contends that the Arbitral Tribunal ought to have dealt with the limitation issue upfront before deciding upon a protective relief.

6. In my opinion, this would be a backdoor route to having this Court rule upon the Learned Arbitral Tribunal’s Section 16 Order, which is not permissible. The scheme of Section 16 of the Act read with Section 5 of the Act is that Court intervention in respect of the rejection of a Section 16 Application is impermissible. Under Section 16 , the stage for challenge is explicitly postponed to the Section 34 of the Act, while Section 5 renders intervention under Part I of the Act impermissible except where specifically provided for. In the garb of a challenge under Section 37 of the Act to a Section 17 Order, the very ground on which a challenge under Section 16 of the Act would be founded, cannot be agitated to get this Court to pronounce upon it.

7. It is the Learned Arbitral Tribunal that is the master of the evidence and it is for the Learned Arbitral Tribunal to judge the quality and quantity of evidence to decide upon facets of limitation. It would be improper for this Court to intervene under Section 37 in a manner that stultifies the scheme of restricted interference by Courts into the conduct of arbitral proceedings.

8. That apart, the Learned Arbitral Tribunal is the best judge, as the master of the evidence, of the nature of the measure that would be responsive to an appropriate degree of preservation of the subject matter of the arbitration agreement. The grounds on which the challenge has been mounted, do not lend themselves to acceptance for an interference by this Court. It must be remembered that the Court’s interference must be kept to a min