MSEM Arbitral Award Set Aside For Failure to Decide Limitation Objection
Judgment dated 1.10.2026 of the LXXXVIII Additional City Civil & Sessions Judge (Exclusive – Commercial Court), Bengaluru City (CCH 89) in Com. A.P. No.103 of 2023 of Department of State Education Research and Training Vs. Puthur Infotech Private Limited and another
On 2.4.2014, the respondent – claimant was given tender work for Annual Maintenance Contract of UPSs systems with batteries, MFD Printers and LCD projectors in the schools.
In 2018, the respondent approached the MSME Facilitation Council for failure to make payment of bills.
The petitioner filed statement of objections and also counter claim.
The petitioner had specifically raised the issue of limitation not only in the statement of defence but also in the counter claim The contract ended in April 2015 and the claimant raised the claim only in July, 2018 for the first time. The invoices were issued in 2014 and 2015.
The petitioner has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the Arbitral Award dated 26.05.2023 and additional award dated 12.06.2023 passed in Arbitration Case No. 4/2022, whereby the learned Sole Arbitrator partly allowed the claim of Respondent No.1 and rejected the counter-claim filed by the petitioner. By the said award, the learned Sole Arbitrator directed the petitioner to pay a sum of 7,75,17,356/- along ₹ ₹ with interest at the rate of 18% per annum and a further sum of 1,27,90,319/- along with interest @ 6% p.a., besides ₹5,00,000/- towards legal fee and 1,00,000/- as ₹ miscellaneous expenses. Subsequently, by an Additional Award dated 12.06.2023, the learned Sole Arbitrator directed the petitioner to issue an NOC and hand over the original bank guarantee documents to the claimant.
In view of the specific defence of limitation raised by the respondent, the Arbitral Tribunal was required to record a finding with regard to limitation. The Arbitral Tribunal has ignored this vital issue. The omission to record a finding on limitation is a fundamental defect which goes to the root of the matter and renders the award patently illegal for non consideration of the defence raised by the respondent. Such omission also amounts to violation of the principles of natural justice. The award is consequently in contravention of the fundamental policy of Indian law and opposed to the principles of natural justice on account of non-consideration of the material defence raised by the respondent. Hence, Point No.1 is answered in the affirmative.
