Trial Court Can't Revisit Issue Of Limitation Once Delay Has Been Condoned By High Court: Delhi High Court

A bench of Mr. Justice Anil Kshetarpal and Mr. Justice Harish Vaidyanathan Shankar held that once the delay was condoned in 2009 by the High Court, the decision attained finality and was binding upon the district court.

It held that “Once the learned Single Judge exercised discretion and condoned the delay, that decision attained finality. Under established principles of judicial discipline and jurisdiction, a matter adjudicated by a competent authority cannot be reopened by a subsequent court unless specifically challenged or reviewed by the parties, which did not occur in this case".

Background:

The dispute arose out of a 1992 contract for the supply of 1500 km of ACSR “Bersimis” conductors for DTL's 400 KV transmission project. The respondent company (then Hindusthan Vidyut Products Ltd.) stated that Delhi Transco Limited (DTL) failed to perform its reciprocal obligations under the contract which led to delays and wrongful invocation of a bank guarantee amounting to Rs.23.92 lakhs.

The Arbitral Tribunal was constituted in 2005 which passed an award on 2 September 2008. The DTL was directed to refund the liquidated damages with interest.The DTL challenged the award under Section 34 of the Arbitration Act. The Petition was dismissed by the District Court on the ground that it was barred by limitation and devoid of merit. Against this order, the present appeal has been filed.

Findings:

The court noted that the District Court erred in reconsidering the issue of limitation which had already been decided by the High Court in 2009. It held that “Since the delay had already been condoned by the learned Single Judge, the District Court had no necessity to revisit or reconsider the question of delay".

The court rejected the respondent's contention that the claim was time barred observed that the cause of action in the present case arose on the date of foreclosure of the contract and encashment of the bank guarantee and the arbitration was invoked within 3 years from the date of cause of action.

The Supreme Court in B & T AG v. Union of India observed that cause of action arises when all material facts exist that entitle a party to seek relief. The limitation period commences from the day when a party does not want to pursue legal settlement and wants to go for arbitration.

Therefore, the claims were not barred by limitation. “Counting three years from the date of contract foreclosure or the date of bank guarantee encashment, the limitation period was adhered to,” the Court said.

The court further rejected the contention of the respondent that since the arbitral tribunal failed to discuss the issue of limitation in detail, the award was invalid. “The mere non-consideration of a plea which admittedly would not impact the outcome cannot be held to be a patent illegality,” the Bench held, citing OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (2025) and Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. (2019). The court also held that to permit the setting aside of an award merely because of a non-material omission would run contrary to the very objective of the Arbitration Act, which seeks minimal judicial interference.

The court also rejected the submission that the arbitral tribunal dismissed the respondent's counter claims without reasons. It held that the arbitral tribunal dealt with the respondent's main claims in detail and provided detailed findings which effectively negated the plea of counter claim. It held that “When the foundational basis of a counter-claim is conclusively negated by the reasoning applied to the principal claim, this constitutes sufficient compliance with the requirement of a reasoned award".

On issue of compound interest, the court observed that “An appellate court under Section 37 does not sit in substantive review of the arbitral award, nor can it entertain entirely new grounds that were never urged earlier".

Accordingly, the present appeal was dismissed.

Case Title: DELHI TRANSCO LIMITED versus M/S HINDUSTAN URBAN INFRASTRUCTURE LIMITED

Case Number: FAO (COMM) 146/2025 and CM APPL. 34141/2025

Judgment Date: 09/10/2025

For Appellant: Mr. S.K. Singh, Adv.

For Respondent: Mr. Chirag Kher, Ms. Neha Gupta, Advs.

Click Here To Read/Download The Order