Claims in arbitration must adhere to statutory limitation periods; failure to comply renders them non-maintainable, emphasizing the strict nature of limitation under arbitration law.

JUDGMENT :

ANIL KSHETARPAL, J.

1. Through the present Appeal under Section 37 , [ ] of the Arbitration and Conciliation Act, 1996, [A&C Act], 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 34 , [ ] of the A&C Act [hereinafter referred to as ‘ Petition’] and set aside the Arbitral Award dated 13.07.2018 [hereinafter referred to as ‘the Award’] passed by the learned Sole 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, 1963, Limitation Act

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/-, 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 disputed. It was further stated that tax-related issues were under consideration and that the claim