Limitation Is Mixed Question Of Fact And Law Required To Be Adjudicated U/S 16 Of Arbitration Act: Delhi High Court

Brief Facts

The present writ petition impugns order dated 22nd August, 2024, passed by the Sole Arbitrator disposing off an application under Section 16 of the Arbitration and Conciliation Act, 1996, deferring the issue of limitation to be adjudicated at the time of final disposal of the case.

The Petitioner asserts that limitation being a critical threshold issue ought to have been adjudicated upfront. It is argued that, contrary to the Court's observations, the impugned order effectively postpones this determination, leaving the issue unresolved until the final disposal, thus, rendering the current proceedings vulnerable to further procedural complications and potential delays.

By failing to decide the issue of limitation as a preliminary matter, the Arbitrator has, according to the Petitioner, acted contrary to established legal principles and in disregard of this Court's directions. Consequently, the Petitioner seeks intervention from this Court to ensure that the issue of limitation is conclusively decided before the arbitration proceeds any further.

It was argued that the bar of limitation is evident from the Respondent's own pleadings and documents, and therefore, the Arbitrator should not have proceeded without first adjudicating the limitation issue.

It was further contended that the failure to address the objection raised under Section 16 of the Arbitration and Conciliation Act at the outset of the proceedings, amounts to a procedural irregularity.

Court's Analysis

The court ruled that the interference of the court in writ jurisdiction is extremely limited against the orders passed by the arbitrator. In the present case, the impugned order pertains to an application under Section 16 of the Arbitration and Conciliation Act, 1996, which empowers the Arbitral Tribunal to rule on its own jurisdiction. The court held as under:

“If the Tribunal accepts the plea of jurisdiction under Section 16(2) or 16(3), an appeal is permissible under Section 37 of the Act. However, if the Tribunal rejects the plea or reserves its decision, as it has done here, the proceedings continue, and any challenge to the Tribunal's findings can only be made after the final award is rendered.”

The scheme of the Act is clear: judicial interference at an intermediate stage, where the Arbitral Tribunal chooses to proceed with the arbitration, is expressly prohibited.

The correct avenue for addressing grievances against the Arbitral Tribunal's decision, including any rulings under Section 16, is through a challenge to the final award under Section 34 of the Act.

Based on the above, the court held that the present petition was not maintainable.

However, the court moved to decide the objection with respect to limitation as well. The court observed that moreover, it must be noted that the observations made in an order deciding an application under Section 11 of the Arbitration and Conciliation Act, cannot be construed as a final determination on the issue of limitation.

The court further observed that “the order under Section 11 is passed at a preliminary stage, where the disputes sought to be referred to arbitration are broadly outlined. It is only during the arbitration proceedings, when the statement of claims and counterclaims are presented, that the foundation facts fully emerge for consideration.”

The court further observed that furthermore, the issue of limitation, raised as a jurisdictional challenge under Section 16, is rarely a pure question of law. More often, it is a mixed question of law and fact. Whether a claim is barred by the law of limitation depends upon the facts that determine the cause of action and the point from which the limitation period is to be computed.

These facts are frequently contested and require the parties to lead evidence. While the Petitioner may argue that the limitation issue is ex facie evident from a bare perusal of the statement of claim, and thus, a pure question of law, this is seldom the case.

The court concluded that while the Petitioner may view the limitation question as a threshold issue, the decision to defer it until sufficient evidence is available is within the Arbitrator's discretion. Challenging the same through a writ petition under Article 226 or 227 of the Constitution is neither appropriate nor permissible.

Accordingly, the present petition was dismissed.

Case Title: HOME AND SOUL PRIVATE LIMITED V. T.V. TODAY NETWORK LIMITED

Citation: 2024 LiveLaw (Del) 1174

Case Reference: W.P.(C) 14422/2024, CM APPL. 60450/2024 & CM APPL. 60451/202

Court: Delhi High Court

Judgment Date: 15/10/2024

Click Here To Read/Download The Order