Not invoking Section 16 does not waive an objection that the claims were time-barred

A Division Bench of Justices Rajnesh Oswal and Rahul Bharti dismissed an arbitration appeal, holding limitation goes to the admissibility of a claim rather than the arbitrator's jurisdiction.

A contractor of 83 whose arbitral award was set aside as time-barred has lost his appeal, and the judgment settles a point that is argued often and decided rarely: a party that never challenged the arbitrator's jurisdiction under Section 16 has not thereby waived its objection that the claims were stale. A Division Bench of Justice Rajnesh Oswal and Justice Rahul Bharti held that procedural issues such as a claim being time-barred cannot be confused with jurisdictional issues, that limitation goes to the admissibility of a claim rather than to the arbitrator's authority to decide it, and that neither an exchange of letters nor settlement discussions extend the period for issuing a notice of arbitration. The judgment, authored by Justice Rajnesh Oswal, is marked speaking and reportable.

A claim against the power department

The appeal was brought under Section 37 against a judgment of a Single Bench which had set aside an arbitral award, except as to the arbitrator's fee, on the ground that the claims the arbitrator entertained and decided were barred by limitation. The appellant, acting through his duly constituted attorney, was a contractor; the respondents were the Union Territory of Jammu and Kashmir through its Chief Secretary, the Commissioner Secretary of the Power Development Department, the Managing Director of the Power Development Corporation, the Chief Engineer in charge of generation at USHP-II, and the Executive Engineer of the Civil Maintenance Division, formerly the Wangat Link Division. The appeal was reserved on 10 July 2026 and pronounced and uploaded on 6 October 2026, with the full judgment, rather than only the operative part, pronounced.

Mr. M. A. Dar appeared for the appellant. Mr. M. A. Chashoo, senior advocate, with Ms. Hikma appeared for the respondents.

Two waiver arguments, and why both failed

The appellant's first argument was one of conduct: the respondents had waived their right to object to the claims by participating in the arbitral proceedings and by not raising any objection about the stale claims during the proceedings under Section 11 of the Act. The Bench rejected it.

The second was more technical and is the one the judgment answers at length. The respondents, it was argued, ought to have resorted to Section 16 of the Act to challenge the arbitrator's jurisdiction on the ground of limitation, and having failed to do so could not raise the point later.

For the answer the Bench went to the Supreme Court's judgment in the BSNL case. The issue of limitation, that judgment holds, in essence goes to the maintainability or admissibility of the claim, which is to be decided by the arbitral tribunal; a challenge that a claim is time-barred, or prohibited until some precondition is fulfilled, is a challenge to the admissibility of that claim and not a challenge to the jurisdiction of the arbitrator to decide the claim at all.

From that premise the conclusion follows directly. Procedural issues, including claims being time-barred, cannot be confused with jurisdictional issues, which alone can be raised by invoking Section 16. A failure to invoke Section 16 therefore does not by itself amount to a waiver of the right to object to stale and time-barred claims.

What does not stop the clock

The same passage from BSNL supplied the limitation reasoning. The period of limitation for issuing a notice of arbitration does not get extended by a mere exchange of letters, nor by mere settlement discussions, where a final bill is rejected by making deductions or otherwise. For the first proposition the Supreme Court had drawn on S.S. Rathore v. State of M.P., (1989) 4 SCC 582, Union of India v. Har Dayal, (2010) 1 SCC 394, and CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., (2020) 5 SCC 185.

Sections 5 to 20 of the Limitation Act do not exclude the time taken on account of settlement discussions. Section 9 puts it beyond argument: once time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it.

The Single Bench is upheld

The Bench examined the Single Bench judgment, which had relied on the Supreme Court's decisions in M/s B and T AG v. Ministry of Defence, (2023) 7 SCR 599, and M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd., 2024 INSC 155. It found no error in the approach adopted there in setting aside the award, except to the extent of the arbitrator's fee.

Measured against the narrow appellate jurisdiction under Section 37, that was the end of the matter. The Single Bench had rightly appreciated the material on record and had correctly concluded that the claims entertained and adjudicated by the arbitrator were barred by limitation, and the appellant had failed to demonstrate any error of law or jurisdictional infirmity warranting interference.

Order

Finding no merit in the appeal, the Bench dismissed it. There was no order as to costs. The judgment records that the order is speaking and that it is reportable.