Safiya Malik

The High Court of Delhi, Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar dismissed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, filed by a public sector undertaking challenging an arbitral award in favour of a supplier. The dispute pertained to a supply contract for electrical transmission conductors. The Court upheld the arbitral award and affirmed that once the High Court has condoned delay in filing a petition under Section 34 of the Act, the same issue of limitation cannot be reopened by the District Court upon transfer of the case. The Bench held that the earlier condonation order, having attained finality, was binding and precluded any further reconsideration of limitation.

The appellant, Delhi Transco Limited (DTL), a statutory undertaking engaged in electricity transmission within the NCT of Delhi, invited bids in 1991 for supply of 1500 km of ACSR “Bersimis” conductors for a 400 KV Double Circuit Transmission Line forming part of the 400 KV Delhi Ring Main System. The respondent, M/s Hindusthan Urban Infrastructure Limited (then M/s Hindusthan Vidyut Products Ltd.), bid on 13 May 1991. The bid was accepted on 29 May 1992 and a Letter of Award/Purchase Order issued on 30 June 1992 setting out obligations of both parties. In compliance with contractual terms, DTL opened a Revolving Letter of Credit on 10 February 1994 (communicated on 18 February 1994). At the respondent’s request, the supply schedule was revised and formally communicated on 28 February 1994.

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DTL alleged that despite extensions, the respondent failed to supply within time, leading to rejection of waiver of liquidated damages (LD) by letter dated 11 November 1997. The respondent contended that DTL failed to perform corresponding obligations, that the contract imposed reciprocal obligations, and that after renegotiations DTL still did not comply, resulting in delays and partial non-performance. DTL alleged a shortfall of 304 km in supply, terminated the contract on 26 February 2002, and imposed LD. On 14 March 2002, DTL invoked the bank guarantee to the extent of Rs. 23,92,462/-, appropriating the amount towards LD. The respondent invoked arbitration on 1 March 2004; a three-member tribunal was constituted and the disputes were formally referred on 7 December 2005. The respondent filed its Statement of Claim in December 2005; DTL filed reply and counter-claim in July 2006. The tribunal passed its award on 2 September 2008.

DTL instituted a Section 34 petition (OMP 33/2009) to set aside the award. Delay was condoned by a Single Judge on 21 January 2009 and the petition admitted on 5 February 2009. Following changes under the Commercial Courts Act and revised pecuniary jurisdiction, the matter was transferred to the District Court on 14 December 2016 and renumbered as Arbitration No. 117/2017. On 28 March 2025, the District Court dismissed the Section 34 petition, holding it time-barred and, on merits, finding no ground to interfere.

In appeal under Section 37, DTL argued that the District Court erred in revisiting limitation previously condoned by the High Court; that the arbitral tribunal failed to decide limitation of the respondent’s claims; that the award lacked reasoning on DTL’s counter-claims; and that interest upon interest was wrongly granted. The respondent maintained that the District Court passed a reasoned judgment on merits; the contract was foreclosed on 26 February 2002 and the guarantee invoked on 14 March 2002; arbitration was invoked on 1 March 2004 and claims were within limitation; the counter-claims were rightly rejected; and the “interest on interest” objection was an afterthought not raised earlier.

The Bench recorded: “the scope of interference in an appeal under Section 37 is extremely narrow and is confined to identifying errors of law or jurisdictional defects… [and] does not empower the Court to re-appreciate evidence, re-assess factual findings, or revisit the merits of the dispute.” It added that “the powers under Section 37… are not beyond the scope of interference provided under Section 34 of the Act.”

The Bench cited that “the appellate power under Section 37 of the Act is not akin to the normal appellate jurisdiction… the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists.” It further noted that “the court cannot undertake an independent assessment of the merits of the award… [and] must be extremely cautious and slow to disturb such concurrent findings.”

On the District Court’s consideration of limitation, the Bench recognized that delay in filing the Section 34 petition had been condoned by the Single Judge and that revisit was unwarranted, stating that once condoned, that decision “attained finality” and “the District Court was bound to proceed with the matter on the merits.” Nonetheless, it recorded that the District Court had, in fact, also considered and rejected the limitation objection on merits, extracting the dates of foreclosure (26 February 2002), invocation of arbitration (1 March 2004), and subsequent steps, and concluded that the respondent’s claims were within limitation. The Division Bench stated, “the objection relating to limitation… was wholly devoid of substance… We see no infirmity in the District Court’s reasoning or conclusion in this regard.”

On the arbitral tribunal’s treatment of counter-claims, the Court reproduced the award’s reasoning, including the tribunal’s conclusion that LD was incorrectly levied and that the counter-claims failed in view of the analysis under the claimant’s claim No. 1 and the respondent’s own unfulfilled obligations. It recorded that proceedings under Section 34 are summary in nature and that the Section 37 scope is “much more summary,” reiterating that the appellate court does not reappraise evidence or substitute views when two views are possible.

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As to the “interest upon interest” point, the Bench recorded that DTL sought to raise this for the first time in the Section 37 appeal and, when queried, did not show that such ground had been raised before the Section 34 court. The Bench stated that Section 37 is not a forum for new grounds never urged earlier and that even a pure question of law must have a proper foundation in pleadings. It concluded: “This objection, therefore, stands rejected.”

The Court ordered: “In light of the foregoing discussion, no grounds have been made out by the Appellant to set aside the Impugned Judgment dated 28.03.2025 passed by the learned District Judge and the present Appeal is dismissed.” It further directed that “The present appeal, along with pending application(s), if any, stand disposed of in the above terms.” The Court made “No order as to costs.”

Advocates Representing the Parties

For the Petitioners: Mr. S.K. Singh, Advocate
For the Respondents: Mr. Chirag Kher, Ms. Neha Gupta, Advocates

Case Title: Delhi Transco Limited v. M/s Hindusthan Urban Infrastructure Limited
Neutral Citation: 2025: DHC:8941-DB
Case Number: FAO (COMM) 146/2025 (with CM APPL. 34141/2025)
Bench: Justice Anil Kshetrapal; Justice Harish Vaidyanathan Shankar