Under a composite supply contract, limitation runs from communication of final deductions, not interim payments.

The Delhi Transport Corporation (DTC) appealed under Section 37 of the Arbitration and Conciliation Act, 1996, against a judgment that had partly allowed its Section 34 challenge to an arbitral award.

The dispute arose from a contract for fabrication and supply of bus bodies: DTC reduced the order from 100 buses to 40, and the contractor later challenged deductions from payments.

The arbitrator allowed several of the contractor’s claims, including a refund of liquidated damages, but rejected others.

The District Judge set aside the award of interest because the contract barred interest, while upholding the remaining award.

Whether the contractor’s claims were time-barred because the cause of action accrued separately upon payment of each invoice

Whether the arbitrator’s decision to allow a refund of liquidated damages, in the absence of proof of loss and given DTC’s contribution to the delay, warranted interference under Section 37

Whether the affirmed portions of the award disclosed a ground for interference under the restricted appellate jurisdiction conferred by Section 37

Section 37 of the Arbitration and Conciliation Act, 1996, confines the appellate court to reviewing whether the Section 34 court acted within the limits of that provision; it does not permit an independent reassessment of the arbitral merits.

MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, and Haryana Tourism Ltd. v. Kandhari Beverages Ltd., (2022) 3 SCC 237, affirm that restricted scope of review and the limited grounds on which an arbitral award may be set aside.

Article 18 of the Limitation Act, 1963, was invoked by DTC in support of its argument that limitation ran separately from each payment; the Court assessed limitation by reference to when the cause of action crystallized in the circumstances of the contract.

Under Section 74 of the Indian Contract Act, 1872, compensation for breach is subject to proof of loss or injury, and a stipulated sum cannot be recovered automatically where no loss is established.

Kailash Nath Associates v. DDA, (2015) 4 SCC 136, was relied on for that principle.

The Court held that the contract was a composite arrangement rather than 40 independent transactions: the retained 2.5% warranty deposit was payable only after the warranty period and final adjustment of accounts.

DTC communicated the finalized warranty deductions and sought a supplementary bill on 20 February 2003; the Court accepted the arbitrator’s view that the contractor’s entitlement crystallized then.

The arbitration notice of 4 November 2004 was therefore within the three-year limitation period.

On liquidated damages, the arbitrator had found that DTC’s delayed and irregular supply of chassis contributed to the delivery delays and that DTC had not produced documentary evidence of actual loss.

Applying Section 74 and Kailash Nath Associates, the Court found no basis to disturb the arbitrator’s conclusion that DTC could not automatically levy the stipulated damages.

Given the limited scope of Section 37 review, the Court declined to reappreciate the evidence or interfere with the concurrent findings.

The District Judge’s setting aside of interest under claim no. 7 remained undisturbed, and the pending application was disposed of.