Delhi HC Upholds Dismissal Of Power Distributor’s MSME Award Challenge: Even Excluding Wrong-Court Proceedings, The 120-Day Limit Expired

The appellant awarded the respondent a turnkey contract for construction of a sub-station and associated lines. Disputes were referred under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006, and an arbitral award dated 21 May 2024 was served on the appellant on 28 May 2024.

The appellant filed a Section 34 objection petition before the Commercial Court, Agra in August 2024; that petition was dismissed on 8 January 2026 for want of territorial jurisdiction. The appellant then filed a petition before the Delhi High Court on 10 June 2026, which was dismissed as time-barred.

In appeal, the appellant argued that the respondent was not registered under the MSMED Act when the contract was made and that the award was therefore without jurisdiction; no other issue was pressed.

Section 34(3) of the Arbitration and Conciliation Act, 1996 requires a setting-aside application to be filed within three months of receipt of the award and permits a further extension of no more than thirty days for sufficient cause; Section 5 of the Limitation Act, 1963 cannot extend that statutory outer limit.

The Court relied on Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, Singh Enterprises v. CCE, Commissioner of Customs and Central Excise v. Hongo India (P) Ltd., and Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission for the principle that a statutory limitation period with a specified extension excludes further condonation under Section 5.

Section 14 of the Limitation Act may exclude time spent prosecuting a proceeding in a court lacking jurisdiction, but the resulting delay remains subject to Section 34(3)’s limit.

Under Section 37, the appellate court’s role is confined to reviewing whether the Section 34 court acted within its jurisdiction; it does not independently reassess the award’s merits.

The initial petition before the Commercial Court was filed within ninety days, but even after excluding the period spent pursuing that proceeding under Section 14, the petition filed in Delhi on 10 June 2026 fell beyond Section 34(3)’s maximum period of 120 days. The Court also noted that no sufficient cause explained the delay.

Because the Section 34 petition was properly dismissed as time-barred, the appellant’s contention that the award was without jurisdiction could not be examined on its merits in the Section 37 appeal.

It upheld the dismissal, declined to adjudicate the merits of the challenge to the award, dismissed the appeal, and disposed of all pending applications.