Order Passed U/S 23(3) Of Arbitration Act Is Procedural & Not An Interim Award, Cannot Be Challenged U/S 34 Of Arbitration Act: Delhi High Court

The Delhi High Court Bench of Justice Subramonium Prasad has held that an order dismissing an application under Section 23(3) of the Arbitration & Conciliation Act is only a procedural order and does not qualify as an 'interim award' amenable to challenge under Section 34 of the Arbitration & Conciliation Act Brief Facts of the case: The petitioner issued a tender for Construction of Roads and Drains in Solapur STPP for a total order value of Rs. 22,35,16,730. Then, a Letter of Award was issued in favour of the Respondent herein and the Contract Agreement had been executed between the parties. Disputes arise between the parties and a petition was filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 for the appointment of an Arbitrator. Then, a sole arbitrator was appointed, and the petitioner filed an application under Section 23(3) of the Arbitration and Conciliation Act, 1996 wherein the petitioner was withdrawing claim no 1 and counter-claim no. 5 because as per the contract arbitration can adjudicate claims and counterclaims only up to a maximum of Rs.25 crores. The arbitrator rejected the application under Section 23(3) and held that once the claims and counter-claims have been filed, they are not amenable to any change as agreed by the parties vide the contract agreement. Aggrieved by this, the petitioner challenged the order of the Arbitral Tribunal under Section 34 of the Act. Observation of the Court: The court held that an interim award must be one which must deal with a point of dispute among the parties and that point of dispute has to be answered by the Tribunal. Unless the award does not deal with a point of dispute between the parties, it cannot be termed as an interim award which can be the subject matter of a challenge under Section 34 of the Act. Further, the court relied on the judgment in Satwant Singh Sodhi v. State of Punjab & Ors. (1999) and held that for any order to be termed as an interim award, it must finally determine the rights of the parties and any order which does not give any imprimatur on the rights of the parties cannot be termed as an interim award. Then, the court rejected the petition and held that an order dismissing an application under Section 23(3) of the Arbitration & Conciliation Act is only a procedural order and does not qualify as an 'interim award' amenable to challenge under Section 34 of the Arbitration & Conciliation Act. Case Title: NTPC LIMITED versus STARCON INFRA PROJECTS INDIA PVT LTDCitation: 2025 LiveLaw (Del) 329 Case Number: O.M.P. (COMM) 234/2024 & I.A. 29934/2024, I.A. 29936/2024 Counsel for the Petitioner: Mr Puneet Taneja, Mr Amit Yadav, Mr Anil Kumar, Mr Manmohan Singh Narula, Advocates. Counsel for the Respondent: Mr. Pawan Upadhyay, Mr. Rishab Khare, Mr. Anmol Wadhwa, Advocates. Date of Judgment: 07.03.2025 Click Here To Read/Download The Order

Order Passed U/S 23(3) Of Arbitration Act Is Procedural & Not An Interim Award, Cannot Be Challenged U/S 34 Of Arbitration Act: Delhi High Court

Soumya Chakrabarti

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