Bombay High Court
Rolta India Limited vs Voltas Limited on 16 August, 2013
Author: M.S. Sanklecha
Bench: Mohit S. Shah, M.S. Sanklecha
ASN 1/21 Appeal No.7-13.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 7 OF 2013
IN
ARBITRATION PETITION LODGING NO.1239 OF 2012
Rolta India Limited,
a company incorporated under the
Companies Act, 1956, having its office at
Rolta Bhavan, Rolta Technology Park,
MIDC, Marol, Andheri(E),
Mumbai 400093. ig ....Appellant.
vs.
Voltas Limited, a company
incorporated under the provisions of
the Companies Act, 1956, having its
registered office at Voltas House,
"A" Dr. Babasaheb Ambedkar Road,
Chinchpokli, Mumbai 400033. ....Respondent.
Mr. J.D. Dwarkadas, Senior Advocate with Mr. S. Ganoo with Mr.
A.R. Aswin i/by Kanga & Co. for the Appellant.
Mr. Atul Rajadhyaksha,Senior Advocate with Mr. G. R. Joshi, Mr. K.
Shroff, Mr. B. A. Antra, Mr,. Avinash Joshi and Mr. Vipul Bilve i/by
Mulla & Mulla for the Respondent.
CORAM : MOHIT S. SHAH, C.J. AND
M.S. SANKLECHA, J.
DATE : Reserved on 20 June 2013
Pronounced on 16 Aug.2013
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ASN 2/21 Appeal No.7-13.doc
JUDGMENT :(PER M.S. SANKLECHA, J.) This appeal challenges the order dated 1 October 2012 passed by the learned Single Judge under Section 34 of the Arbitration and Conciliation Act, 1976 ("the Act"). By the impugned order the appellant' petition against the interim award dated 26 July 2012 of the Arbitral Tribunal rejecting the counter claim made by the appellant as time barred was dismissed.
2) Briefly, the facts leading to this appeal are:
a) On 2 February 2001, a civil construction contract was entered into between the respondent and the appellant. In terms of the contract dated 2 February 2001 the respondent was to construct two buildings known as Rolta Bhavan-II and Rolta Bhavan III and also carry out modification in the existing building known as Rolta Bhavan-I owned by the appellant.
b) On 3 December 2004, the appellant by its
communication terminated the above contract dated 2 February
2001 on failure to complete the work within the stipulated time. The appellant also invoked the bank guarantee furnished by the respondent under the contract. Besides the appellant also notified to the respondent that it shall assert its rights to claim compensation and damages from it. In response to the above demand, on 5 December 2004, the respondent denied any delay on its part thus contending that the termination of the contract dated ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 3/21 Appeal No.7-13.doc
2 February 201 was illegal.
c) On 10 December 2004, the appellant repeated and reiterated its earlier contention in the letter dated 3 December 2004. Further the appellant also pointed out that it was in the process of determining the amount recoverable from the respondent in terms of the contract dated 2 February 2001.
d) On 1 March 2005, the respondent forwarded its final bill for Rs.18.30 crores and also sought compensation and damages from the appellant which were quantified at Rs.4.09 crores. On 18 March 2005, the appellant disputed not only the contents of the letter dated 1 March 2005 of the respondent but reiterated that on account of the delay, incomplete and inferior quality work on the part of the respondent it had suffered losses which would be compiled and claimed.
e) On 7 April 2005, the respondent by its Advocate's letter addressed to the appellant, disputed the claim of the appellant that it had suffered any loss or damages on the respondent's account. Further, by the above communication it also called upon the appellant to release its claim made in its letter dated 1 March, 2005 for Rs.18.30 crores (Final Bill) and Rs.4.09 crores (Damages).
f) In response, the appellant by its Advocate's letter dated 27 April 2005 informed the respondent that they were not liable to pay any compensation and/or damages as claimed by the ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 4/21 Appeal No.7-13.doc respondent. The appellant once more asserted that losses and damages were suffered by it on account of the conduct of the respondent and placed reliance upon its earlier letters dated 3 December 2004 and 18 March 2005. The appellant also reserved its rights to take appropriate steps against the respondent in terms of the contract dated 2 February 2001.
g) On 29 March 2006, the respondent by its Advocate's letter to the appellant claimed that disputes and differences had arisen between them and in view thereof sought to invoke the arbitration clause in the contract dated 2 February 2001. Therefore, the appellant and its CMD(Chairman & Managing Director) was called upon to appoint an Arbitrator within 30 days of the receipt of the notice.
h) On 17 April 2006, the appellant by its Advocate's letter denied its liability to make any payment as alleged or otherwise to the respondent. On the contrary, a claim was made by the appellant on the respondent to pay it a sum of Rs.68.63 crores within 7(seven) days of the receipt of the letter failing which it would invoke the arbitration clause in the contract dated 2 February 2001.
i) On 9 May 2006, the respondent in response to the appellant' letter dated 17 April 2006 denied that it was liable to pay the appellant any amount, either as alleged or otherwise. Nevertheless the respondent informs the appellant that as it had already invoked the arbitration clause i. e. contract dated 2 February ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 5/21 Appeal No.7-13.doc 2001 under letter dated 29 March 2006, the question of the appellant invoking the arbitration clause in respect of the same contract once again does not arise.
j) In the mean time, on 3 May 2006 the respondent filed arbitration application under Section 11 of the Act in this Court. In this application the respondent sought appointment of the sole arbitrator to adjudicate the dispute between the parties. In the application the respondent had stated that disputes and difference had arisen between the respondent and the appellant relating to contract dated 2 February 2001 and prayed for an appointment of an arbitrator.
k) In the arbitration application under Section 11 of the Act there was a dispute between the parties as to whether or not the appellant had appointed one Mr. Singh as the sole arbitrator to adjudicate upon the dispute prior to the respondent making application on 9 May 2006 for an appointment of the sole arbitrator.
In the above view of the matter, evidence was required to be taken and only thereafter on 19 November 2010 this Court concluded that the appellant had not appointed any arbitrator. Thus Mr. Justice B. N. Srikrishna (Retired) was appointed as the sole arbitrator to resolve the disputes between the parties by the order dated 19 November 2010.
l) On 27 January 2011, a preliminary meeting was held by the Arbitral tribunal giving directions to the parties. Consequent to ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 6/21 Appeal No.7-13.doc the directions the respondent filed its statement of claim on 13 April 2011. The appellant filed its statement of defence on 16 August 2011 and its counter claim for sum of Rs.3.33 crores together with interest thereon on 26 September 2010. The counter claim also pleaded set off in the event of it being found that the appellant owed any amount to the respondent. On 24 November 2011, the respondent filed its objection to the counter claim stating that the same is time barred and also beyond the scope of the reference. So far as appellant' claim for set off was concerned, the Arbitral tribunal rejected the plea of set off raised by the appellant on the ground that the set off has to be an ascertained of sum of money. The claim as made by the appellant is not an ascertained sum of money and the same has to be adjudicated by the Tribunal before it can be ascertained. Thus, the alternative submission with regard to claim for set off was rejected.
m) On the above pleadings, on 7 January 2012, the Arbitral Tribunal inter alia framed the following two issues with regard to the tenability and limitation of the counter claim made by the appellant as under:-
a) Whether the counter claim or a substantial part thereof is barred by the law of limitation?
b) Whether the counter claim is not maintainable and beyond the scope of reference?
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n) On 26 July 2012, the Arbitral Tribunal by a interim
award rejected the counter claim of the appellant holding that it is barred by limitation. However, on merits the Arbitral tribunal held that the counter claim is within the scope of reference made to it and it had jurisdiction to otherwise entertain the same.
3) Being aggrieved by the interim award dated 26 July 2012 of the Arbitral Tribunal, the appellant filed a petition under Section 34 of the Act before the learned Single Judge. The learned Single Judge while dismissing the petition by the impugned order inter alia held :-
a) In terms of Section 21 of the Act, an Arbitration shall be deemed to have commenced on the date on which a request to refer the matter is received by the opposite party. In this case the date of the notice by the respondent is 29 March 2006. The petitioner had not even asserted its claim till than. The petitioner had asserted its claim by its letter only on 17 April, 2006. Therefore, the dispute raised in counter claim did not exist when notice was given by the respondent on 29 March 2006. The counter claim was filed on 26 September 2011.Therefore, the counter claim was clearly beyond the period of limitation;
b) Even if the refusal of the respondent to pay the amount as demanded by the petitioner on 17 April 2006 is taken as the date of commencement of dispute yet the counter claim is barred by ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 8/21 Appeal No.7-13.doc limitation, as it was filed as on 26 September 2011;
c) The application under Section 11 of the Act made by the respondents made no reference to the claims of the appellant/petitioner. Moreover, in the reply filed by the appellant to the application under Section 11 of the Act no reference to any counter claim was made by the appellant/petitioner. In the circumstances, reliance upon the application filed under Section 11 of the Act by the appellant/petitioner to state that the entire dispute including the claim made in the counter claim was a part of those proceedings was misplaced; and
d) The plea of set off and/or equitable set off was raised for the first time across the bar in proceedings under Section 34 of the Act. In the circumstances, it could not be entertained;
In view of the above, the learned Single Judge dismissed the arbitration petition filed under Section 34 of the Act by the appellant.
4) Mr. Janak Dwarkadas, learned Senior Counsel for the appellant in support of the appeal urges the following submissions:-
a) On 29 March 2006, when notice was issued by the respondents, invoking the Arbitration Clause, there were existing disputes between the parties, including the loss suffered by the appellant. This is evident from the fact that the notice dated ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 9/21 Appeal No.7-13.doc 29 March 2006 issued by the respondent makes reference to its letter dated 7 August 2005 where the appellant's claim for damage was disputed by the respondents. Therefore, the impugned order incorrectly holds that on the date of notice dated 29 March 2006 by the respondent, there was no dispute raised/asserted by the appellants. In fact the running of limitation stopped even in respect of counter claim of the appellant when notice dated 29 March 2006 was given by the respondent to refer the matter to Arbitration.
b) On 17 April 2006 the appellant by its notice to the respondent had asserted its claim for damages suffered and demanded Rs.68.63 crores within 7 days from the receipt of the notice, failing which the arbitration clause of the contract dated 7 February 2001 was to be invoked. In response, the respondent by its letter dated 9 May 2006 informed the appellant that as arbitration clause in respect of the contract dated 2 February 2001 had already been invoked, no occasion to invoke it once more can arise. In view of the above, it is clear that the respondent were given notice of the claim by the appellant in terms of Section 21 of the Act and the respondent informed the appellant that all the disputes between them was already the subject of arbitration, therefore, the arbitration clause is not invocable. In the above circumstances, all the disputes and differences between the parties were subject matter of arbitration before the Arbitral Tribunal including the counter claim filed by the appellant.
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c) The application made under Section 11 of the Arbitration
Act by the respondent had specifically prayed that disputes and
differences have arisen between the parties relating to contract dated 2 February 2001 and, therefore, the disputes be referred to the sole arbitrator for adjudication. In Arbitration petition filed under Section 11 of the Act the respondent had not specifically detailed the disputes or even its claims. In view of the above, it was submitted that all disputes were to be adjudicated by the sole arbitrator including the disputes raised by the appellant before the Arbitral Tribunal. Therefore, the application under Section 11 of the Act concerned all disputes between the parties. In such circumstances, there could be no question of the counter claim being barred by limitation.
d) The issue of set off was raised by the appellant before the Arbitral tribunal inasmuch as the Arbitral Tribunal has given a finding with regard to issue of set off by holding that the same can only apply to ascertained sums of money and not to un-ascertained sums of money which is still the subject matter of adjudication. Therefore, the impugned order proceeded on a fundamental misconception of facts and on that ground alone, the impugned order has to be set aside.
e) The decisions in the matter of ISPAT Industries Ltd. v. Shipping Corporation of India Ltd. (Arbitration Petition No.520/2001) dated 4 December 2001 and State of Goa v. Praveen Enterprises 2011(3) Arb.L.R. 209 are inapplicable as the facts are ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 11/21 Appeal No.7-13.doc completely distinguishable keeping in view the prayer clause in the Application filed under Section 11 of the Act as well as the voluminous correspondence exchanged between the parties.
Moreover, the decision of the Apex Court in the matter of Praveen Enterprises (supra) would be applicable to the present facts as the respondent had been served with a notice on 17 April 2006 and limitation stopped running from that date in respect of the appellant's counter claim. In view of the aforesaid submissions, it was urged that the order of the learned Single Judge be quashed and set aside and the petition as filed by the appellant be allowed.
5) As against the above, Mr. Atul Rajadhyaksha, learned Senior Counsel appearing for the respondent in support of the impugned order submits as under:
a) The order of the learned Single Judge calls for no interference. This is so as the issues raised in the petition stands concluded against the appellant by the decision of this Court in the matter of Ispat Industries Ltd. (supra) and that of the Apex Court in the matter of Praveen Enterprises (supra).
b) The scope of enquiry in an arbitration petition filed under Section 34 of the Act is very limited. While exercising jurisdiction under Section 34 of the Act this Court does not sit as an Appellate Court warranting reappraisal of the evidence and scrutinizing whether or not the conclusions arrived at by the Arbitrator is correct or erroneous. In an arbitration proceeding under ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 12/21 Appeal No.7-13.doc Section 34 of the Act for the purpose of exercising jurisdiction the error must be apparent on the face of the record. This would imply that close scrutiny of the documents and the material on record is not warranted as is being done sought to be done by appellant in this case in respect of interim award.
c) The reasons in the impugned order upheld by the interim award of the Arbitral Tribunal holding the counter claim is barred by limitation are unimpeachable and calls for no interference.
The counter claim has been filed by the appellant on 26 September 2011 before the Arbitral Tribunal and the dispute at the very highest could be taken to have commenced on 17 August 2006 yet the counter claim is hopelessly barred by limitation. In view of the above, it is submitted that the appeal be dismissed.
6) Before dealing with the rival submissions, for the sake of convenience, we reproduce the Arbitration Clause in the contract dated 2 February 2001 which reads as under:-
Article 17- dispute Resolution reads as under:-
"A.............
B-Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question claim right matter or thing whatsoever in any way arising out of or relating to the contract designing, drawing, specifications, estimates, instructions, orders of ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 13/21 Appeal No.7-13.doc these conditions or otherwise concerning that works of the execution or failure to execute the same whether existing during the progress of the work or after the completion or abandonment thereof shall be related to the sole arbitration of the person approached by the CMD/Rolta India Ltd. In change of the work at the time of dispute, Subject to prevailing Indian Arbitration Act".
7) The primary submission of the respondent was that in view of the limited jurisdiction possessed by the Court while exercising jurisdiction under Section 34 of the Act, this appeal should not be entertained. We are conscious that the jurisdiction to set aside an award, including an interim award as in this case is circumscribed by Section 34(2) of the Act which specifies the circumstances in which an arbitral award can be set aside. The above submission was subject to examination by the Apex Court in the matter of ONGC Limited vs. Saw Pipes Ltd. (2003) 5 SCC Page 705 which while setting out the scope of jurisdiction under Section 34(2) of the Act and particularly, with regard to public policy has observed as under:-
"31. Therefore, in our view, the phrase "public policy of India" used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to be public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 14/21 Appeal No.7-13.doc public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term "public policy" in Renusagar case it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to :
(a) Fundamental policy of Indian law; or
(b) The interest of India; or
(c) Justice or morality, or
(d) In addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy, Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void."
The above test has been reiterated in the matter of Phulchchand Exports Limited vs. O.O.O. Patriot (2011) 10 SCC 300. Further, the Apex Court in the matter of Mcdermott International Inc. vs. Burn Standard Co. Ltd. and ors. (2006) 11 SCC 181 at Para 112 has observed as under:-
"It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract....."
Therefore, where critical documents/correspondence has not been considered by the Tribunal while deciding the dispute between the ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 15/21 Appeal No.7-13.doc parties, it would be a sufficient cause for the Court to interfere in exercise of its jurisdiction under Section 34 of the Act. In light of the above test, the decision of the Apex Court in the matter of State of Rajasthan vs. Puri Construction (1994) 6 SCC 485 relied upon by the respondent has to be considered/tested. The respondent placed reliance upon the above decision to contend that even if there be an error of law or fact by the arbitrator the Court in exercise of its jurisdiction under Section 34 of the Act will not interfere. However, in view of the decision in the matter of ONGC Ltd. (supra) an error of law which is opposed to public policy or is so manifestly unjust then the Court under Section 34 of the Act is bound to exercise its jurisdiction.
8) Keeping in mind the law laid down by the Apex Court as discussed herein above, we are considering the rival submissions.
It is pertinent to note that the disputes between the parties with regard to the contract dated 2 February 2001 was first raised by the appellant in its letter dated 3 December 2004 when it sought to terminate contract dated 2 February 2001. Thereafter, there was voluminous correspondence as referred to facts herein above particularly letters dated 10 April 2004, 18 March 2005 and 27 April 2005 wherein the appellant has asserted that they have suffered damages on account of delay and default on the part of the respondent. The aforesaid claims made by the appellants were disputed/denied by letters dated 5 December 2004, 1 March 2005 and 7 April 2005 of the respondent. Thus on 29 March 2006 when the respondent invoked the arbitration clause in the contract dated ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 16/21 Appeal No.7-13.doc 2 February 2001, it would necessarily mean that all the disputes which had arisen between the parties and including those claims raised by the appellant in its various letters and denied by the respondent were also the subject matter of the arbitration. This was also the manner in which the respondent understood the invocation of arbitration clause by its letter dated 29 March 2006.
This is very evident from the response of the respondent dated 9 May 2006 to the appellant's letter dated 17 April 2006 calling upon the respondent to pay an amount of Rs.68.63 crores on account of damages and consequent loss, failing which the arbitration clause would be invoked. The respondent by its letter dated 9 May 2006 informed the appellant that as it had already invoked the arbitration clause by letter dated 29 March 2006 therefore, the question of the appellant invoking arbitration clause in respect of the aforesaid contract dated 2 February 2001 would not arise. In the above circumstances, clearly the period of limitation would stop running even in respect of the appellant's counter claim from 29 March 2006 and the counter claim filed on 26 September 2001 before the Arbitral Tribunal cannot be said to be time barred. It appears that neither the impugned order nor the interim award dated 26 July 2012 noticed the communication dated 9 May 2006 of the respondent to the appellant. By not noticing and considering the letter dated 9 May 2006, the interim award would suffer from an error apparent on record warranting the exercise of jurisdiction under Section 34 of the Act. Non consideration of the above letter dated 9 May 2006 of the respondent to the appellant while considering whether the counter claim filed by the appellant on ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 17/21 Appeal No.7-13.doc 26 September 2011 is time barred or not would make the award subject to jurisdiction under Section 34 of the Act. For the above reason the interim award dated 26 July 2012 is not sustainable.
9) In any event, even if one ignores the letter dated 9 May 2006 of the respondent, the letter dated 17 April 2006 of the appellant which called upon the respondent to make the payment of Rs.68.83 Crores, failing which the arbitration clause would be invoked is notice to the respondent of the appellant's claim. The Arbitration clause was per se not invoked only in view of the representation of the respondent, that arbitration clause had already been invoked, so do not invoke. In fact, the Supreme Court in the matter of Praveen Enterprises at Para 17 thereof has held as follows:-
"17. As far as counter claims are concerned, there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of Limitation Act, 1963 provides that in regard to a counter claim in suits, the date on which the counter claim is made in court shall be deemed to be the date of institution of the counter claim as Limitation Act, 1963 is made applicable to arbitrations, in the case of a counter claim by a respondent in an Arbitral proceedings, the date on which the counter claim is made before the arbitrator will be the date of "institution" in so far as counter claim is concerned. There is, therefore,no need to provide a date of 'commencement' as in the case of claims of a claimant. Section 21 of the Act is, therefore, not relevant for counter claims. There is however one exception. Where the respondent against whom a claim is made had also made a ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 18/21 Appeal No.7-13.doc claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counter claim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under Section 11 of the Act, the limitation for such counter claim should be computed, as on the date of service of notice of such claim on the claimant and not on the date of filing of the counter claim." (emphasis supplied) In this case the appellant would be covered by the exception pointed out herein above. The appellant who has made counter claim before the Arbitral Tribunal on 26 September 2011, had in fact served a notice on the respondent and in response thereto the respondent preempted the appellant by stating that arbitration clause having already been triggered with regard to all the disputes, the same cannot once again be invoked. In the above circumstances, the period of limitation will stop running not on the date of filing of the counter claim on 26 September 2011 but on the date when the notice dated 17 April 2006 was given by the appellant. In view of the above, jurisdiction under Section 34 of the Act ought to have been exercised as the issue is covered by the decision of the Apex Court in the matter of Praveen Enterprises (supra) i.e. law of the country. Besides the interim award, in the above facts would be against justice. Thus, interim award dated 26 July 2012 is not sustainable to the extent it holds the counter claim to be time barred.
10) In the above background, it must follow that when the respondent filed the arbitration application on 3 May 2006 being ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 19/21 Appeal No.7-13.doc Application No.90 of 2006 under Section 11 of the Act seeking an appointment of the sole arbitrator, it was for the purpose of adjudicating all the disputes and differences that had arisen between the appellant and respondent relating to the contract dated 2 February 2001. This is evident from prayer clause (a) made in the application filed by the respondent under Section 11 of the Act which reads as under:-
"that this Hon'ble Court be pleased to appoint a Sole Arbitrator as prescribed under Section 11(6) of the Arbitration & Conciliation Act, 1996 to adjudicate the disputes and differences that have arisen between parties relating to the said agreement dated 2 February 2001" (Exhibit 'A' hereto).
It is pertinent to note that in the application, an averment has been made in para 15 thereof that an Arbitrator be appointed to adjudicate upon all the disputes between the parties relating to the contract dated 2 February 2001.This application under Section 11 of the Act was in Court for almost a period of 4 years and finally disposed of only on 19 November 2010. During the aforesaid period beginning with 3 May 2006 and ending with 19 November 2010 the period of limitation against the respondent for the purpose of filing a counter claim must be excluded. The appellant had made its claim on the respondent on 17 April 2006 demanding a sum of Rs.68.63 crores. If the period between 3 May 2006 to 19 November 2010 is excluded then the counter claim filed by the appellant on 26 September 2011 would be within the period of limitation. The aforesaid exclusion of time between the period 3 May 2006 to 19 ::: Downloaded on - 27/08/2013 21:18:18 ::: ASN 20/21 Appeal No.7-13.doc November 2010 would be necessary as there was no way for the appellant to file its counter claim before the appointment of the Arbitrator. This finding is without prejudice to our finding that notice under section 21 of the Act was given by the appellant to the respondent as is evident from the letters dated 17 April 2006 addressed by the appellant and letter dated 9 May 2006 of the respondent. Therefore, the interim award dated 26 July 2012 rejecting the counter claim of the appellant as barred by limitation is not sustainable in the present facts.
11) One more aspect is that the impugned order incorrectly proceeds on the basis that no claim in respect of the set off and/or equitable set off had been made by the appellant before the Arbitral Tribunal. This finding in the impugned order is contrary to the facts on record inasmuch as the interim award dated 27 July 2012 of the Arbitral Tribunal records, considers and rejects the appellant's claim with regard to set off. This is on the ground that for set off to be admissible/allowable, it must be for an ascertained sum of money.
In the present case, set off claim is not for an ascertained sum of money as the same is still to be adjudicated upon. Therefore, though the impugned order may not be sustainable, on merits, we find that Arbitral Tribunal's order dated 26 July 2012 cannot be faulted with in respect of set off.
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12) Accordingly, the appeal is allowed. The impugned order
dated 1 October 2012 of the learned Single Judge is set aside.
Arbitration Petition (L) No.1239 of 2012 is allowed and the interim award dated 26 July 2012 of the Arbitral Tribunal is set aside in so far as the Arbitral Tribunal had rejected the appellant's counter claim as time barred. The learned Arbitrator shall treat the appellant's counter claim as filed within the period of limitation. Rest of the interim award of the Arbitral Tribunal is not disturbed. No order as to costs.
CHIEF JUSTICE M.S. SANKLECHA, J.
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