Time-Barred Claim Order Is Arbitral Award, Superfluous Termination Remark Cannot Bar Challenge: Allahabad High Court

Referring to Section 32(2)(c), the bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra held

“The said provision has nothing to do in a case where the Arbitral Tribunal has come to the conclusion that the reference/claim made is barred by limitation. The order, in fact, would be covered by provisions of Section 32(1) of the Act which provide for termination of arbitral proceedings by way of final arbitral award which, in the present case, is on account of the Council coming to the conclusion that the claim made was time barred.”

The appellant had raised a claim against the respondent before the Zonal Micro and Small Enterprises Facilitation Council, Agra. Finding that a payment entry shown in the ledger account did not appear to be genuine, the Council dismissed the reference as time-barred, but also recorded in its order that the arbitral proceedings stood terminated under Section 32(2)(c) of the Act.

The appellant's Section 34 application against the award was dismissed as not maintainable by the Commercial Court No.2, Agra on 30 October 2025, on the ground that proceedings closed under Section 32(2)(c) did not result in an award. The appellant then appealed to the High Court under Section 37 of the Act.

Counsel for the appellant argued that the remark on termination was unnecessary once the claim was held time-barred, and the Commercial Court should have ignored it and heard the application on merits. Relying on Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products, it was submitted that the Supreme Court has treated even an order deciding the limitation objection in the claimant's favour as an interim award open to challenge under Section 34.

The Court held that the Council's order was in substance a final award under Section 32(1) and observed that

“the observations made regarding termination of proceedings under Section 32(2)(c) of the Act were superfluous only and were not required at all.”

It held that the Commercial Court had looked only at the purported termination under Section 32(2)(c) without examining the award as a whole, and its order could not be sustained.

Accordingly, the appeal was allowed and the order dated 30 October 2025 was set aside. The matter was remanded to the Commercial Court No.2, Agra to decide the Section 34 application on merits.

For Appellant: Shalini Goel, Rama Goel Bansal

For Respondent: Akhilesh Singh for Rajendra Singh