### Arbitral Award Upheld as Limitation Period Commences from Last Communication Acknowledging Liability for Outstanding Payments

The Respondent (contractor) was awarded multiple work orders by the Appellant (MCD) following a tender process. Upon completion of works and submission of final bills, the MCD made only partial payments

Despite the MCD communicating in 2000 and 2001 that payments for deviated/additional works were sanctioned, no funds were released

The contractor invoked arbitration in August 2003. The Sole Arbitrator allowed the contractor's claims for deviations, pre-award interest (9%), and future interest (15%), while dismissing the MCD’s counter-claims

The MCD’s objections under Section 34 of the Arbitration and Conciliation Act, 1996, were dismissed by the Commercial Court in July 2008

The MCD approached the High Court under Section 37 of the Act to assail these judgments

1. Whether the claims were barred by limitation under the Limitation Act, having been filed three years after the work completion or initial sanction

2. Whether the arbitral award was a non-speaking award and patently illegal

3. Whether the grant of pre-award and future interest was illegal in the absence of a specific contractual provision

The court applied Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, regarding the limited scope of judicial interference in arbitral awards

It relied on the principle from PSA Sical Terminals (P) Ltd. v. V.O. Chidambaranar Port Trust, which restricts interference to "patent illegality" where findings are perverse or shock the court's conscience

Regarding interest, the court applied Section 31(7) of the Act and the precedent of Indian Hume Pipe Co. Ltd. v. State of Rajasthan, which affirms the arbitrator's competence to award interest for pre-award and post-award periods as a matter of procedure and substantive law

On limitation, the Court observed that though the MCD sanctioned payments in January 2000, it issued a further communication on 04.07.2001 advising the contractor to collect payments.

Since the payment was never actually released, the cause of action was held to be continuous, and the invocation of arbitration in 2003 was within the three-year limit

On the "non-speaking" challenge, the Court noted that the MCD was given over twenty opportunities to lead evidence or cross-examine the contractor but failed to do so, even claiming (without proof) that its measurement books were stolen. Consequently, the arbitrator's reliance on the contractor's unmitigated evidence was not arbitrary.

Regarding interest, the Court held that Section 31(7) grants statutory power to the arbitrator to award interest unless the agreement expressly prohibits it, which was not the case here

The Court upheld the arbitrator’s power to grant pre-award interest at 9% and future interest at 15%. All pending applications were disposed of accordingly