Calling for Arbitral Records is Mandatorily Required for Adjudicating Section 34 Applications Under the Arbitration Act

The Appellant (Union of India) challenged an arbitral award dated May 26, 2026, passed by a Sole Arbitrator, which directed the Appellant to pay ₹23,21,54,534/- to the Respondent contractor.

The contract, involving road improvements from Gangtok to Nathula, was extended until March 31, 2015.

During Section 34 proceedings, the Appellant raised the plea of limitation, arguing the counterclaims were filed in September 2022, long after the cause of action arose in March 2015.

The Commercial Court, Gangtok, dismissed the Section 34 application and upheld the award without summoning or reviewing the original arbitral records.

1. Whether the Commercial Court was justified in adjudicating an application under Section 34 of the Arbitration and Conciliation Act, 1996, without calling for the records of the Arbitral Tribunal.

2. Whether a plea of limitation can be waived in the context of a private arbitral forum.

The court applied Section 34 of the Arbitration and Conciliation Act, 1996, noting that setting aside an award requires a party to establish grounds "on the basis of the record of the arbitral tribunal".

It relied on Alpine Housing Development Corporation Pvt. Ltd. v. Ashok S. Dhariwal (2023) and Oil and Natural Gas Corporation Ltd. v. H.N. Roy (2025), which establish that arbitral records are essential to decide the lis.

Furthermore, it cited Emkay Global Financial Services Ltd. v. Girdhar Sondhi (2018) and Canara Nidhi Ltd. v. M. Shashikala (2019) to reaffirm that Section 34 proceedings are typically restricted to the record before the arbitrator.

The court also referenced Section 3 of the Limitation Act, 1963, as a matter of public policy.

The High Court observed that while the Arbitral Tribunal had provided reasons for overruling the limitation objection, the Commercial Court failed to perform its statutory duty under Section 34.

The Court reasoned that since the grounds for setting aside an award must be established based on the arbitral record, it is mathematically and legally "imperative" for the lower court to look into those records to satisfy itself of the validity of the grounds raised.

Deciding the matter "merely on the basis of the arbitral award and upon hearing the parties" without the record is contrary to the statutory framework.

Regarding the plea of limitation, the Court noted that while Section 3 of the Limitation Act is based on public policy, a distinct question arises in arbitration—a private forum—regarding whether such a plea can be waived if not expressly pleaded.

However, the Court declined to rule on the merits of limitation, concluding that such a determination cannot be made without first examining the lower court's procedural failure.

The judgment of the Commercial Court, Gangtok, was set aside. The matter was remanded to the Commercial Court for fresh reconsideration on all issues, with a specific direction to summon the records from the Arbitral Tribunal and decide the case within two months of receiving said records.