Full Text
HIGH COURT OF DELHI
Date of Decision: 23rd JANUARY, 2026 IN THE MATTER OF:
IN
NHPC LIMITED .....Petitioner
Through: Ms. Maninder Acharya, Sr. Advocate
CONSORTIUM-PARBATI HE PROJECT STAGE-III .....Respondent
Through: Mr. Amitesh Chand Mishra, Mr. Prashant Kumar Mishra, Advocates
JUDGMENT
1. The present Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as „the Arbitration Act‟) has been filed challenging the Award dated 18.04.2017 (hereinafter referred to as the „Impugned Award‟) passed by the learned Arbitral Tribunal.
2. I.A. 1707/2020 has been filed by the Petitioner under Section 14 of the Limitation Act, 1963 (hereinafter referred to as „the Limitation Act’) seeking condonation of delay of 2 years, 5 months and 18 days in filing the present Petition on the ground that the Petitioner was bonafidely pursuing its remedy in a Court was ultimately held by the Apex Court as one not having the territorial jurisdiction to entertain a Petition under Section 34 of the Arbitration Act.
3. I.A. 7844/2022 has been filed by the Respondent under Section 3 of the Limitation Act for rejection of the present Petition on the ground that it is time-barred.
4. Shorn of unnecessary details, the facts of the case, are as follows:a. It is stated that the Petitioner invited bids for Construction of Diversion cum Spilway Tunnel including Gates & Hoists. Rockfill Dam, Intake Structures and part Head Race Tunnel for Parbati Hydroelectric Project Stage-III, which is located in Kullu district of Himachal Pradesh. b. It is stated that the Respondent submitted its bid and it was declared as the successful bidder, and subsequently a Contract dated 25.01.2006 (hereinafter referred to as the „Contract‟) was signed between the parties. c. It is stated that disputes arose between the parties and the Respondent invoked the Arbitration Clause under the Contract by sending a Notice dated 05.08.2012 under Section 21 of the Arbitration Act, wherein the Respondent also appointed its nominee Arbitrator. d. It is stated that vide its reply dated 08.09.2012, the Petitioner herein also appointed its nominee Arbitrator and both the nominee Arbitrators appointed the presiding Arbitrator. e. The Arbitral Tribunal passed the Award dated 02.03.2017, directing the Petitioner herein to pay Rs.29,41,00,000/-, inclusive of pre-award interest from 01.02.2013 till the date of passing of the Impugned Award, along with future interest on the total amount @ 10% p.a. from the date of the Impugned Award till the date of payment. f. It is stated that an application under Section 33(1)(a) of the Arbitration Act was filed seeking certain corrections in the Impugned Award and vide Order dated 18.04.2017, the Arbitral Tribunal passed the corrected order, thereby rectifying certain computational errors in the Impugned Award dated 02.03.2017 to the extent that the Petitioner was directed to pay Rs.29,15,00,00/-, inclusive of pre-award interest of Rs.9,84,68,055/- from 01.02.2013 till the date of passing of the Impugned Award and future interest @ 10 % p.a. from the date of passing of the Impugned Award till the date of actual payment. g. Aggrieved by the Impugned Award, the Petitioner herein filed a Petition under Section 34 of the Arbitration Act before the District Court at Faridabad in view of Clause 67.[3] of the Contract of Conditions of Particular Application (hereinafter referred to as „the COPA’) which states that Courts at New Delhi/Faridabad will be the competent Courts for the purpose of matters arising out of the Contract. h. In the said Petition under Section 34 of the Arbitration Act, the Respondent herein filed an Application under Order VII Rule 11 of the CPC, read with Sections 2(1) (e) (i) and Section 42 of the Arbitration Act, challenging the territorial jurisdiction of the District Court at Faridabad. i. It is stated that while the matter was pending before the District Court at Faridabad, the State of Haryana, vide a notification, transferred all the commercial matters to the Commercial Court, Gurugram, Haryana. Accordingly, the Petition under Section 34 of the Arbitration Act was also transferred to the Commercial Court, Gurugram, Haryana. The Commercial Court, Gurugram, Haryana, vide Order dated 23.01.2018 allowed the application under Order VII Rule 11 of the CPC filed by the Respondent on the ground of lack of territorial jurisdiction. j. In the meantime, the Respondent herein also filed a Petition, being OMP(ENF.)(COMM) No. 59/2018, before this Court seeking execution of the Impugned Award dated 18.04.2017. k. The Order dated 23.01.2018, passed by the Commercial Court, Gurugram, Haryana, was challenged by the Petitioner by filing an Appeal before the High Court of Punjab and Haryana. Vide Order dated 12.09.2018, the High Court of Punjab and Haryana, allowed the said Appeal, holding that the Commercial Court at Gurugram had the territorial jurisdiction to entertain the Petition under Section 34 of the Arbitration Act. l. It is stated that the said Order dated 12.09.2015 was challenged by the Respondent by filing a Special Leave Petition (SLP) before the Apex Court, which was allowed and converted to Civil Appeal No.9307/2019. In the said Appeal, reported as BGS SGS Soma JV v. NHPC Limited, (2020) 4 SCC 234, the Apex Court Vide Judgment dated 10.12.2019, set aside the Order passed by the High Court of Punjab and Haryana, by holding that this Court has the territorial jurisdiction to entertain a Petition under Section 34 of the Arbitration Act. m. It is stated that on receiving the certified copy of the Judgment dated 10.12.2019 passed by the Apex Court, the Petitioner sought return of the Petition filed before the Commercial Court at Gurugram and after return of the said Petition, the Petitioner filed the present Petition before this Court on 06.01.2020, i.e., post its re-opening after the Winter Vacations.
5. Learned Senior Counsel for the Petitioner contends that in view of Clause 67.[3] of the COPA, the Petitioner was under the impression that the challenge to the Impugned Award could be made before the Court of competent jurisdiction at Faridabad, Haryana. She further states that the High Court of Punjab and Haryana by its Order dated 12.09.2018 held that the Court at Gurugram, Haryana, has the territorial jurisdiction to entertain the Petition under Section 34 of the Arbitration Act and, therefore, it cannot be said that the Petitioner was not pursuing its remedy bonafidely. She further contends that after the Judgment of the Apex Court, the Petitioner had to move an Application before the Commercial Court at Gurugram for return of the Petition, modify the same according to the prescribed format of this Court and only then file the same before this Court, which took the Petitioner 25 days and, therefore, the delay of 25 days ought to be condoned. She places reliance on the Judgment passed by a co-ordinate Bench of this Court in NHPC Ltd. v. BGS-SGS-Soma JV, 2020 SCC OnLine Del 2368, where this Court had extended the benefit of Section 14 of the Limitation Act to one of the parties therein.
6. Per contra, learned Counsel for the Respondent vehemently contends that despite knowing fully well that the Courts at Faridaband did not have the jurisdiction to entertain the Petition under Section 34 of the Arbitration Act, it cannot be said that the Petitioner was pursuing the case bonafidely. He also states that the present Petition was filed only on 24.01.2020 and, therefore, in any event it was filed beyond the time specified under Section 34 of the Arbitration Act and, therefore, it cannot be entertained. He states that a reading of the Judgment passed by the Apex Court in BGS SGS Soma JV v. NHPC Limited, (2020) 4 SCC 234, shows that the Petitioner deliberately filed the Petition under Section 34 of the Arbitration Act before a Court not having the jurisdiction and, therefore, the present Petition ought not be entertained.
7. Heard the learned Counsels for the parties and perused the material on record.
8. Though in the counter affidavit, the learned Counsel of the Respondent takes a stand that the present Petition was filed only on 24.01.2020, however, on obtaining the filing log report of the case, this Court has verified that the present Petition was filed on 06.01.2020 at 02:41 PM and not 24.01.2020. Therefore, taking the date of the Judgment passed by the Apex Court as the date for calculating the 30 days period, the present Petition was filed well within limitation.
9. A perusal of the material on record shows that on taking 18.04.2017 (being the date of passing of the Impugned Award) as terminus quo for calculating the limitation period to challenge the Impugned Award, the Petition under Section 34 of the Arbitration Act was filed before the Court at Faridabad on the 87th day. Thereafter, the Apex Court finally decided the territorial jurisdiction on 10.12.2019, while the present Petition came to be filed on 06.01.2020, i.e. on the 25th day.
10. Section 34(3) of the Arbitration Act prescribes the time within which the application for setting aside an award has to be made. Section 34(3) of the Arbitration Act reads as under: “Section 34. Application for setting aside arbitral awards. ***** (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.”
11. A perusal of Section 34(3) of the Arbitration Act shows that an application for setting aside the award can be made within three months of receiving the arbitral award or, if a request had been made under section 33, then from the date on which that request under section 33 had been disposed of by the Arbitral Tribunal. Applying the same, this Court observes that the Petition under Section 34 of the Arbitration Act filed by the Petitioner before the Court at Faridabad, was filed within the limitation of three months.
12. The questions which, therefore, arise for consideration before this Court are as to whether the Petitioner was bonafidely pursuing the case in a Court which was not having the jurisdiction to entertain such a Petition and if the answer to that question is in affirmative, then whether the delay of 25 days from the date of the Judgment passed by the Apex Court, in approaching this Court ought to be condoned or not.
13. Section 14 of the Limitation Act reads as under: “Section 14. Exclusion of time of proceeding bona fide in court without jurisdiction. (1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.—For the purposes of this section,— (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;
(c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.”
14. It is now a settled proposition of law that Section 14 of the Limitation Act is applicable to arbitration proceedings. The Apex Court in Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169, while explaining the phrases “due diligence” and “good faith” has succinctly laid down the factors that would entitle a party to get the benefit of Section 14 of the Limitation Act and the same reads as under:
to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is unable to give him such a trial, would not be applicable to an application filed under Section 34 of the Act of 1996. The principle is clearly applicable not only to a case in which a litigant brings his application in the court, that is, a court having no jurisdiction to entertain it but also where he brings the suit or the application in the wrong court in consequence of bona fide mistake or (sic of) law or defect of procedure. Having regard to the intention of the legislature this Court is of the firm opinion that the equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong court, should be excluded.
23. At this stage it would be relevant to ascertain whether there is any express provision in the Act of 1996, which excludes the applicability of Section 14 of the Limitation Act. On review of the provisions of the Act of 1996 this Court finds that there is no provision in the said Act which excludes the applicability of the provisions of Section 14 of the Limitation Act to an application submitted under Section 34 of the said Act. On the contrary, this Court finds that Section 43 makes the provisions of the Limitation Act, 1963 applicable to arbitration proceedings. The proceedings under Section 34 are for the purpose of challenging the award whereas the proceeding referred to under Section 43 are the original proceedings which can be equated with a suit in a court. Hence, Section 43 incorporating the Limitation Act will apply to the proceedings in the arbitration as it applies to the proceedings of a suit in the court. Sub-section (4) of Section 43, inter alia, provides that where the court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the court shall be excluded in computing the time prescribed by the Limitation Act, 1963, for the commencement of the proceedings with respect to the dispute so submitted. If the period between the commencement of the arbitration proceedings till the award is set aside by the court, has to be excluded in computing the period of limitation provided for any proceedings with respect to the dispute, there is no good reason as to why it should not be held that the provisions of Section 14 of the Limitation Act would be applicable to an application submitted under Section 34 of the Act of 1996, more particularly where no provision is to be found in the Act of 1996, which excludes the applicability of Section 14 of the Limitation Act, to an application made under Section 34 of the Act. It is to be noticed that the powers under Section 34 of the Act can be exercised by the court only if the aggrieved party makes an application. The jurisdiction under Section 34 of the Act, cannot be exercised suo motu. The total period of four months within which an application, for setting aside an arbitral award, has to be made is not unusually long. Section 34 of the Act of 1996 would be unduly oppressive, if it is held that the provisions of Section 14 of the Limitation Act are not applicable to it, because cases are no doubt conceivable where an aggrieved party, despite exercise of due diligence and good faith, is unable to make an application within a period of four months. From the scheme and language of Section 34 of the Act of 1996, the intention of the legislature to exclude the applicability of Section 14 of the Limitation Act is not manifest. It is well to remember that Section 14 of the Limitation Act does not provide for a fresh period of limitation but only provides for the exclusion of a certain period. Having regard to the legislative intent, it will have to be held that the provisions of Section 14 of the Limitation Act, 1963 would be applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award.
24. We may notice that in similar circumstances the Division Bench of this Court in State of Goa v. Western Builders [(2006) 6 SCC 239] has taken a similar view. As observed earlier the intention of the legislature in enacting Section 14 of the Act is to give relief to a litigant who had approached the wrong forum. No canon of construction of a statute is more firmly established than this that the purpose of interpretation is to give effect to the intention underlying the statute. The interpretation of Section 14 has to be liberal. The language of beneficial provision contained in Section 14 of the Limitation Act must be construed liberally so as to suppress the mischief and advance its object. Therefore, it is held that the provisions of Section 14 of the Limitation Act are applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award.” (emphasis supplied)
15. A perusal of the above Judgment shows that benefit of Section 14 of the Limitation Act is available in the proceedings under the Arbitration Act as well. The said Judgment has been followed with approval by the Apex Court in M.P. Steel Corpn. v. CCE, (2015) 7 SCC 58.
16. In NHPC Ltd. v. BGS-SGS-Soma JV, 2020 SCC OnLine Del 2368, a Co-ordinate Bench of this Court extended the benefit of Section 14 of the Limitation Act to one of the parties therein, by observing as under:
from the date of the cause of action of an appellate proceeding is to be excluded if such appellate proceeding is from an order in an original proceeding instituted without jurisdiction or which has not resulted in an order on the merits of the case. If this were not so, anomalous results would follow. Take the case of a plaintiff or applicant who has succeeded at the first stage of what turns out to be an abortive proceeding. Assume that, on a given state of facts, a defendant-appellant or other appellant takes six months more than the prescribed period for filing an appeal. The delay in filing the appeal is condoned. Under Explanation (b) of Section 14, the plaintiff or the applicant resisting such an appeal shall be deemed to be prosecuting a proceeding. If the six month period together with the original period for filing the appeal is not to be excluded under Section 14, the plaintiff/applicant would not get a hearing on merits for no fault of his, as he in the example given is not the appellant. Clearly therefore, in such a case, the entire period of nine months ought to be excluded. If this is so for an appellate proceeding, it ought to be so for an original proceeding as well with this difference that the time already taken to file the original proceeding i.e. the time prior to institution of the original proceeding cannot be excluded. Take a case where the limitation period for the original proceeding is six months. The plaintiff/applicant files such a proceeding on the ninetieth day i.e. after three months are over. The said proceeding turns out to be abortive after it has gone through a chequered career in the appeal courts. The same plaintiff/applicant now files a fresh proceeding before a court of first instance having the necessary jurisdiction. So long as the said proceeding is filed within the remaining three month period, Section 14 will apply to exclude the entire time taken starting from the ninety-first day till the final appeal is ultimately dismissed. This example also goes to show that the expression “the time during which the plaintiff has been prosecuting with due diligence another civil proceeding” needs to be construed in a manner which advances the object sought to be achieved, thereby advancing the cause of justice.
50. Section 14 has been interpreted by this Court extremely liberally inasmuch as it is a provision which furthers the cause of justice. Thus, in Union of India v. West Coast Paper Mills Ltd. [(2004) 3 SCC 458], this Court held: (SCC p. 464, para 14)
14. “… In the submission of the learned Senior Counsel, filing of civil writ petition claiming money relief cannot be said to be a proceeding instituted in good faith and secondly, dismissal of writ petition on the ground that it was not an appropriate remedy for seeking money relief cannot be said to be „defect of jurisdiction or other cause of a like nature‟ within the meaning of Section 14 of the Limitation Act. It is true that the writ petition was not dismissed by the High Court on the ground of defect of jurisdiction. However, Section 14 of the Limitation Act is wide in its application, inasmuch as it is not confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases where the prior proceedings have failed on account of other causes of like nature. The expression „other cause of like nature‟ came up for the consideration of this Court in Roshanlal Kuthalia v. R.B. Mohan Singh Oberoi [(1975) 4 SCC 628] and it was held that Section 14 of the Limitation Act is wide enough to cover such cases where the defects are not merely jurisdictional strictly so called but others more or less neighbours to such deficiencies. Any circumstance, legal or factual, which inhibits entertainment or consideration by the court of the dispute on the merits comes within the scope of the section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has a right.” Applying the aforesaid dictum of the Supreme Court, I find no reason to deny the benefit of Section 14 of the Limitation Act to the petitioner.
27. When the facts of the present case are considered in the light of the principles enunciated by the Supreme Court in M.P. Steel (supra), I find that the petitioner, while filing the original petition in the Faridabad Court and its appeal before the Punjab High Court and while opposing the respondent's appeal in the Supreme Court, has remained mindful of the limitation periods applicable in every proceeding. It has duly prosecuted the proceedings at every stage; in fact, it is undisputed that both the original petition as also the appeal before the Punjab High Court were filed within the prescribed period of limitation. Its decision to approach the Faridabad Court was informed by the decision in BALCO and it was not until the Supreme Court clarified the position of law by its decision dated 10.12.2020 that only the Courts at Delhi are clothed with the territorial jurisdiction to deal with the petitioner's objections, that there was any clarity regarding jurisdiction. I cannot ignore another significant fact that a competent court of law, i.e., the Punjab and Haryana High Court, had found merit in the petitioner's plea regarding the Gurugram Court's jurisdiction to entertain its petition. Even while approaching the High Court by way of an appeal under Section 37 of the Act, which the Supreme Court held as not being tenable, the petitioner had been guided by the decision of a Division Bench of this Court in Antrix Corporation Ltd. v. Devas Multimedia Pvt. Ltd., (2018) 4 Arb LR 66 (Delhi). This is material in establishing that the petitioner does, in fact, satisfy the twin test to qualify for the benefit of Section 14 as set down by the Supreme Court in Surya Chakra (supra) as it acted diligently and in good faith when it filed the original petition. The mere fact that the petitioner did not seek return of its petition from the Gurugram Court after 28.09.2018 - when the Supreme Court granted interim stay, or after 06.11.2019 - when the respondent agreed not to raise the plea of limitation if the petition were to be presented within four weeks, cannot be a valid ground to hold that the petitioner's actions were lacking bonafide, for the petitioner was justifiably prosecuting and awaiting the final adjudication of the respondent's appeal before the Supreme Court. In these circumstances, the respondent's plea in this regard is liable to be rejected. I have, therefore, no hesitation in holding that the petitioner is entitled to be granted benefit under Section 14 of the Limitation Act.
28. In this regard, I have also considered the respondent's reliance on the decision in Pawan Goel (supra) and find it inapplicable to the facts of the present case as the appellant therein pursued its appeal filed before this Court, which lacked jurisdiction, and continued to do so even after it was pointed out that as per the dictum of the Supreme Court in a case bearing similar facts, the appeal was required to be filed before the Punjab & Haryana High Court. The appellant therein, while continuing to oppose this arguments, did not even carry the prosecution to completion and instead withdrew its appeal after some time with liberty to approach the court of competent jurisdiction. Thus, the conduct of the appellant in Pawan Goel (supra) was neither bonafide and diligent nor did the facts deal with the issue of exclusion of time spent in pursuing appellate proceedings arising out of the orders of the court lacking jurisdiction.” (emphasis supplied)
17. This Court is in agreement with the view taken by the Co-ordinate Bench of this Court in NHPC Ltd. v. BGS-SGS-Soma JV (supra). As such, it cannot be said that the Petitioner herein was not pursuing the case bonafidely and with due diligence before the Courts at Gurugram. In fact, the contention of the learned Senior Counsel for the Petitioner is supported by the Judgment passed by the High Court of Punjab and Haryana, which affirmed that the Court at Gurugram had the territorial jurisdiction to entertain the Petition under Section 34 of the Arbitration Act. It was the Apex Court later on which cleared the air by authoritatively holding that neither Faridabad nor Gurugram will have the jurisdiction and only this Court will have the jurisdiction to entertain a Petition under Section 34 of the Arbitration Act.
18. The present Petition has been filed within 30 days of passing of the Judgment by the Apex Court and this Court cannot shut its eyes to the fact that the Petitioner had to move an Application before the Commercial Court at Gurugram for return of the Petition, modify the same according to the prescribed format of this Court and only then file the same before this Court, which took 25 days. In view of these facts, it cannot be said that the Petitioner was not active in pursuing the matter.
19. Since the Petitioner has approached this Court within 30 days of the Order of the Apex Court, this Court is of the opinion that the Petitioner is entitled to the benefit of Section 14 of the Limitation Act.
20. Accordingly, I.A. 1707/2020 is allowed, while I.A. 7844/2022 is dismissed. O.M.P. (COMM) 338/2020 & I.A. 1706/2020, I.A. 2145/2023
21. List on 07.07.2026.
SUBRAMONIUM PRASAD, J JANUARY 23, 2026 Rahul