[Arbitration Act] S.37(1)(c) Applies To Entire S.34; Dismissal On Limitation Or Technical Grounds Is Appealable: Delhi High Court

The Delhi High Court recently observed that the application of Section 37(1)(c) of the A&C Act is not limited to any specific sub-section, and applies to the entire Section 34 of the A&C Act. The Court, while clarifying the law laid down in Chintels India Ltd. v. Bhayana Builders Pvt. Ltd., [2021 INSC 76], observed that a dismissal of a Section 34 application on the grounds of limitation can be challenged u/s 37(1)(c) of the A&C Act. The division bench of Justice Navin Chawla and Justice Rajneesh Kumar Gupta was hearing a Section 37 appeal against the order of the District Judge where the Primemover Mobility Technologies Pvt. Ltd.'s (“Primemover”) section 34 application on the ground of failure to file the Fixed Deposit Receipt (“FDR”) of the mandatory pre-deposit of 75% of the awarded amount under Section 19 of the MSMED Act. It was the case of Primemover (“Appellant”) before the District Judge that,, due to an email received by the bank requesting a signature from the Registrar/Prothonotary & Senior Master to prepare the FDR, there was a delay in filing the FDR. This development was brought to the notice of the District Judge, who took the view that such a requirement cannot be imposed, and the Court would not interfere in the matter concerning the Appellant and the bank. Before the division bench, Primemover (“Appellant”) submitted that the FDR, along with the interest, has been prepared and can be deposited. Furthermore, the amount required for FDR had been duly debited by the bank within the period granted by the learned District Judge. It was the case of Sanmarg ('Respondent”) that the present appeal is not maintainable as it falls outside the scope of Section 37(1)(c) of the A&C Act. The impugned order is not an order refusing to set aside the Arbitral Award. Reliance was placed on Chintels India Ltd. v. Bhayana Builders Pvt. Ltd., [2021 INSC 76]. Furthermore, the Appellant, via order dated 04.07.2025, was directed to deposit 75% of the Arbitral Award, which was not deposited. The bench observed that the Appellant was required to comply with the condition laid down in Section 19(1) of the MSME Act. The District Judge was, in a sense, correct that the matter was between Primemover (“Appellant”) and its banker. However, the inability of the Appellant to comply with the directions in terms of the order dated 04.07.2025 was not malafide. The District Judge should have given the Appellant further time to make the deposit. The bench further observed that the impugned order dismissing an application u/s 34 of the A&C Act would fall within the scope of Section 37(1)(c) of the A&C Act, as the District Judge has refused to set aside the award. The bench set aside the impugned order dated 07.08.2025 and restored the application filed by the Appellant u/s 34 of the A&C Act, subject to the deposit of the FDR of 75% of the awarded amount along with the interest calculated till the preparation of the FDR. Case Name: Primemover Mobility Technologies Pvt. Ltd. v. Sanmarg Infra Tech Private Limited Case Number: FAO (COMM) 310/2025 Counsels for the Appellant: Mr. Shreesh Chadha, Mr. Kartik Bhatnagar, Mr. Aman Singh Bakhshi, Mr. Shaurya Agarwal, Mr. Faiz, Advs. Counsels for the Respondent: Mr. Rohit Jain, Adv.Click Here To Read/Download Order

[Arbitration Act] S.37(1)(c) Applies To Entire S.34; Dismissal On Limitation Or Technical Grounds Is Appealable: Delhi High Court

Mohd Talha Hasan

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