Rejection of Arbitration Claims On Limitation Is Interim Award; Challenge Lies Under Section 34: Calcutta HC

The Calcutta High Court has reiterated that where an arbitral tribunal conclusively rejects claims as barred by limitation, such a determination amounts to an interim award and is amenable to challenge under Section 34 of the Arbitration and Conciliation Act, 1996, and not under Section 37.

While Section 34 provides the remedy for challenging arbitral awards, Section 37 is confined to appeals against limited procedural or jurisdictional orders passed during the arbitral process.

The ruling was delivered by a single-judge bench of Justice Gaurang Kanth.

Explaining the law, the court observed, “The nomenclature assigned to an order by the arbitral tribunal is not determinative; rather, it is the substance and effect of the order that governs the issue of maintainability. The Court must therefore ascertain whether the impugned determination is in the nature of a jurisdictional ruling under Section 16 of the Act, amenable to an appeal under Section 37(2), or whether it constitutes an interim award finally deciding certain claims, thereby attracting a challenge under Section 34.”

The court was hearing a challenge arising from a dispute between Bridge and Roof Company India Limited and Zillion Infraprojects Private Limited. Zillion had been awarded a subcontract by Bridge and Roof Company India Limited for carrying out structural works at the Utkal Alumina International Limited alumina refinery project at Rayagada in Odisha.

Zillion alleged that the project suffered a delay of 419 days attributable to the respondent and that outstanding dues had not been paid. It invoked arbitration and raised claims aggregating to approximately Rs 3.01 crore under nine separate heads.

During the arbitral proceedings, the respondent filed an application under Section 16 of the Act, contending that several of the claims were barred by limitation.

The sole arbitrator accepted the objection and, by an interim award dated August 28, 2025, rejected the claims held to be barred by limitation.

Zillion thereafter approached the High Court under Section 34 of the Act to challenge the interim award. The respondent raised a preliminary objection to the maintainability of the petition, contending that the arbitrator's decision was only jurisdictional in nature and was therefore appealable solely under Section 37.

The Court rejected this objection, holding that the arbitrator had gone into the merits of the issue of limitation and had finally rejected certain claims.

“By allowing the Respondent's application and holding Claim Nos. 2 to 9 to be barred by limitation, the learned Sole Arbitrator has finally and conclusively rejected the said claims, resulting in the termination of arbitral proceedings insofar as those claims are concerned,” the Court said.

Relying on the Supreme Court's decisions in Indian Farmers Fertilizers Cooperative Ltd. and BSNL v. Nortel Networks India Pvt. Ltd., the Court held that such a determination constitutes an interim award, which is open to challenge under Section 34 of the Act.

Accordingly, the preliminary objection was rejected.