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Delhi high court dismisses section 34 challenge, holds limitation not raised before tribunal cannot be agitated for the first time, rejects plea of incapacity
Case Title: Prime Meiden Ltd. v. Kirby Building System India Pvt. Ltd.
Case No.: O.M.P. (COMM) 113/2021
Coram: Justice Jasmeet Singh
Citation: (2026) ibclaw.in 5217 HC
Date of Decision: 08 September 2026
The Delhi High Court has dismissed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award of Rs. 1,23,75,000 in favour of a contractor. The Court held that the plea of limitation, not raised before the Arbitral Tribunal, could not be agitated for the first time in the Section 34 petition, and that internal management disputes of a company do not amount to incapacity under Section 34(2)(a)(i).
Justice Jasmeet Singh was hearing the petition filed by Prime Meiden Ltd. against an award dated 18.09.2020 passed in favour of Kirby Building System India Pvt. Ltd.
Background
A work order dated 29.05.2009 was issued by Prime Meiden to Kirby for supply and erection of pre-engineered buildings for its transformer manufacturing unit at an SEZ in Naidupet, Andhra Pradesh, at a fixed price of Rs. 12,50,00,000. A supplementary work order dated 28.06.2010 for Rs. 98,57,500 raised the total value to Rs. 13,48,57,500.
Kirby claimed to have completed the work between February and April 2012, while Prime Meiden stated that no completion certificates were issued. Water leakage was noticed at the plant and Kirby attributed it in a meeting to human error in transferring design data to construction drawings. Kirby raised a final invoice on 12.03.2014. Prime Meiden wrote a letter dated 14.08.2014 setting out its losses, and Kirby replied on 08.09.2014 claiming Rs. 1,23,75,000. Kirby invoked arbitration on 04.03.2017.
Prime Meiden did not file a statement of defence or a counter-claim before the Tribunal. The Tribunal awarded Rs. 1,23,75,000 with interest at 9% from 12.03.2014, along with costs of Rs. 6,60,500 and Rs. 3,00,000.
Contentions
Prime Meiden argued that the claim was barred under Article 18 of the Limitation Act, 1963, as the work was completed in January 2012, and that the letter dated 14.08.2014 did not refer to any invoice and created no jural relationship. It further argued that it was unable to present its case due to internal management disputes, that the mandate of the Tribunal had expired because the first extension was recorded on the consent of a counsel without authority, and that the award was non-speaking.
Kirby argued that the award was reasoned and that the petition sought re-appreciation of evidence. It submitted that the contract was an indivisible works contract treated as subsisting by Prime Meiden itself through snag lists, meetings and further work, and that the plea of incapacity was misconceived.
Limitation
The Court noted that no statement of defence was filed and the issue of limitation was not raised before the Tribunal, which examined it on its own. Relying on the Division Bench decision in International Breweries (P) Ltd. v. Kalpana International Breweries Ltd., the Court held that such an objection cannot be agitated for the first time in a Section 34 petition and can be rejected outrightly.
The Court nevertheless examined the issue on facts. It held that the finding of the Tribunal, that the letter dated 14.08.2014 created a jural relationship, was based on cogent reasons. The letter itself showed that Prime Meiden treated the contract as subsisting by asking Kirby to rectify snags, as also reflected in the minutes of meetings. The letter was written within three years of January 2012 and the demand for arbitration dated 04.03.2017 was within three years of the letter. The Court held that limitation is a mixed question of law and fact, that the view of the Tribunal was plausible, and that it could not re-appreciate the evidence. It distinguished Satender Kumar v. Municipal Corporation of Delhi as a decision under Section 11 on different facts.
Incapacity And Inability To Present Case
Relying on Delhi Jal Board v. Reliable Diesel Engg. (P) Ltd., the Court held that incapacity under Section 34(2)(a)(i) relates to the legal capacity of a party at the time of entering into the arbitration agreement, such as minority or mental incapacity. It cannot mean the functional inability of a party to present its case on account of internal issues.
On Section 34(2)(a)(iii) read with Section 18, the Court went through the procedural orders of the Tribunal. It noted that the Tribunal had issued repeated notices, granted time to file a reply, recorded its intention to proceed under Section 25 on non-compliance, and ultimately proceeded ex parte after counsel appeared repeatedly without filing a Vakalatnama or instructions. The Court held that the Tribunal afforded multiple opportunities, that the petitioner could not benefit from its own defaults, and that the NCLAT order of 29.11.2018 imposed no restriction on participating in the arbitration.
Mandate Of The Tribunal
The Court noted that the first extension by six months on 10.04.2019 was granted only with the consent of the claimant, since the petitioner had been proceeded ex parte. The second extension of six months was granted by the High Court on 04.12.2019, and the final extension followed from the exclusions allowed by the Supreme Court in Cognizance for Extension of Limitation, In re. The contention that the mandate had expired was held to be without basis.
Decision
Finding no perversity, patent illegality or other recognised ground under Section 34, the Court dismissed the petition with pending applications. The bank guarantee furnished by the petitioner for the awarded amount was directed to be released in favour of the respondent within four weeks.
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