Delhi District Court
Leader Valves Ltd vs M/S Engineering Projects India Ltd on 17 May, 2024
IN THE COURT OF DISTRICT JUDGE-01, SOUTH EAST DISTRICT,
SAKET COURTS, NEW DELHI
ARBTN No. 21417/16
LEADER VALVES LTD
S-3, S-4, Industrial Area,
Jalandhar
..... Petitioner
VERSUS
M/S ENGINEERING PROJECTS INDIA LTD.
Core-3, Scope Complex, Lodhi Road,
New Delhi-110003.
..... Respondent
Date of Institution : 14.09.2016
Date of Reserving judgment : 18.03.2024
Date of Judgment : 17.05.2024
Judgment:
1. The present dispute germinates out of 3 purchase orders dated
03.03.2006, 24.08.2006 and 27.12.2006 issued by the Respondent to the
petitioner for supply of valves of different specifications for the project of
the Respondent in Jharkhand. During the supply of the said valves certain
disputes arose between the parties as to the quality and specification of the
valves supplied by the petitioner to the Respondent.
2. On the factual matrix, the petitioner submitted that the
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petitioner supplied the goods as per the purchase order and has raised
various invoices from 19.09.2006 to 26.06.2007. It is stated that only part
payment was received for the various invoices and the balance of ₹
17,06,457/- is still pending. It is stated that as per the terms of the purchase
order, with respect to purchase order dated 03.03.2006 the amount was to
be paid against documentary evidence and with respect to the rest two
purchase orders, 90% of amount was payable through bank against
dispatch of documents and balance 10% on receipt of material at site. It is
stated that there were some complaints made by the Respondents regarding
the working of the various valves supplied by the Petitioner. The petitioner
attended to the complaints and solved the problems. However, during the
course of attending the complaints the petitioner found out that the
Respondent was not using the material for the services it was ordered for
and according to the technical specifications according to which they were
manufactured. The Petitioner brought this to the notice of the Respondent
vide letter dated 10.12.2007 and vide minutes of meeting dated 25.08.2008,
the Respondent asked the Petitioner to repair 61 valves at site. However,
after technical analysis, it was found out that it was not possible to repair
these number of valves at the site and the decision was conveyed to the
respondent.
3. Since the balance payment was long pending and the payment
was not being released despite various reminders, the petitioner was
constrained to issue legal notice dated 24.02.2008 through his advocate. In
reply to the notice, the Respondent denied that any amount is payable and
further informed the Petitioner that Respondent incurred huge expenses in
making the plant operational.
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4. The Petitioner filed a suit for recovery before the learned Trial
Court at Jalandhar court 19.09.2009. Summons were issued in the suit and
the Respondent herein appeared as defendant in that suit and filed an
application under section 5 read with section 8 of the Arbitration and
Conciliation Act 1996 (hereinafter to be referred as 'the Act'). Finally vide
order dated 31.01.2015, the learned trial court was pleased to refer the
matter to the Respondent's Chairman for appointment of arbitrator as per
terms of the general purchase conditions of the purchase orders.
5. Proceedings before the Learned Arbitrator commenced on
11.05.2015 and the petitioner herein filed its claims and the Respondent
filed its counter claims before the Learned Arbitrator. The Respondents
filed its reply along with its counter claims on 03.09.2015. Thereafter,
rejoinder was filed and the matter was partly heard when on 02.03.2016 the
Respondent filed its additional counter claim which was taken on record.
Finally, vide award dated 18.04.2016, the Learned Arbitrator allowed the
claims of the Petitioner in full and some of the counter claims including the
belatedly filed counter claim of the Respondent were also allowed by the
Learned Arbitrator.
6. Aggrieved by the said award, the petitioner herein filed an
application under section 151 CPC before the learned Trial Court at
Jalandhar seeking a declaration that the award was a nullity in law. The
petitioner also filed an application under Section 33 of the Act, seeking to
rectify certain mistakes and sought an opportunity of being heard before
the Learned Arbitrator as well. The learned arbitrator vide his order dated
08.06.2016 denied the Petitioner any opportunity of being heard and
rejected the application. At the time of filing of the present petition, the
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application under section 151 CPC was pending before the learned trial
court, however, vide order dated, 07.11.2016 the said application was
dismissed as not maintainable.
7. The petitioner has challenged the award on the following
grounds:
(i) That there are certain computation errors which has resulted in excess
amount being awarded to the counter claimant.
(ii) That the award is a nullity in the eyes of law as the dispute referred to
the learned arbitrator did not include the counter claim and in terms of the
judgement of Hon'ble Supreme Court of India in the case of Voltas Ltd
versus Rolta India limited, the Learned Arbitrator could not have decided
the same. It is stated that vide the order of the learned trial court at
Jalandhar only the dispute raised by the Petitioner was referred to
arbitration as there was no counterclaim at that point of time ever raised by
the Respondent. At the time of the reference to arbitration the only dispute
between the parties was the dispute which were raised as the claims of the
petitioner, as such, counter claims could not have been taken up by the
Learned Arbitrator. Petitioner has relied upon the judgement of Hon'ble
Supreme Court in Major (retired) Inder Singh Rekhi versus Delhi
Development Authority, (1998) 2 SCC 338 and Jammu and Kashmir State
Forest Corporation Vs. Abdul Karim Wani and others, (1989) 2 SCC 701 to
state that the dispute referred was only the claims of the petitioner and not
the counter claims which later got filed by the respondent.
(iii) Further the additional counter claims were allowed without proper
opportunity being given to the petitioner to reply to the same. Thus, it is
submitted that the part of the award granting the additional counter claim is
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nullity in the eyes of law as it violates the natural justice of the petitioner as
he was given no opportunity to challenge the said additional counter claim
and it goes against the rule of audi altram partem.
Respondent's Case:
8. On the factual matrix, the case of the Respondent is that the
purchase orders as mentioned hereinabove were issued to the Petitioner for
supply of certain goods as per the details mentioned therein. As per the
terms of the purchase order, time was of the essence of the contract and the
goods were to be supplied within the time frame mentioned in the purchase
orders. The Petitioner supplied the goods belatedly and there was a
prolonged delay in the supply of the goods which resulted in overall delay
of the project. It is submitted that as per clause 14 of the Commercial
Terms and Conditions and clause 13 of the General Purchase Conditions,
the Petitioner was liable for compensation at the rate of 0.5% percent of the
contract amount for every week of delay subject to the maximum of 5% of
the contract amount. As the petitioner delayed the delivery of the goods,
the Respondent was entitled to compensation for delay.
9. The Petitioner had supplied defective and sub-standard quality
valves and despite various complaints and letters to the Petitioner, the
Petitioner failed to rectify the defective and substandard valves as per the
terms of the contract between the parties. It is stated that as per clause 11
and clause 12 of the Commercial Terms and Conditions, the defect liability
period was 18 months from the date of dispatch or 12 months from the date
of commissioning, whichever was earlier and the Petitioner was liable to
make good any defect in or damage to the goods as pointed out by the
Respondent in the defect liability period. Thus, the petitioner not only
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supplied defective and substandard quality valves but also did not rectify
the same or replace the same and as such the petitioner was constrained to
procure new valves from different vendors and incurred huge expenses on
the same. It is stated that as per clause 14 of the General Purchase
Conditions, the Respondent was within its rights to purchase the defective
valves from a different supplier at the risk and cost of the petitioner.
10. Due to breach of various terms of the contract between the
parties by the petitioner, the Respondent vide its letter dated 27.09.2008
made provisional debit of ₹ 5 Lacs from the account of the petitioner and
stated that the actual amount to be debited to the account would be
intimated to the Petitioner later. Despite various defects pointed out by the
Respondents and asked to be rectified, the petitioner not only did not
rectify the defects as per its liability according to the terms of the contract,
but the petitioner filed a suit for recovery of ₹ 21,40,442.75/- before the
learned Additional Civil Judge, Jalandhar. The said suit was finally referred
to arbitration vide order of the learned Trial Court dated 31.01.2015.
Thereafter, Sh. S. K. Mahajan was appointed as the sole arbitrator to
adjudicate upon the instant dispute pertaining to the aforesaid purchase
orders.
11. That on the legal grounds the Respondents has submitted as
follows:
(i) That the present petition is filed in the way of appeal and this court
cannot sit in appeal on the arbitrator award and is only to look at the
grounds available to the petitioner under section 34 of the Act.
(ii) That the present petition is barred by res sub-judice as a similar
application under section 151 CPC has already been filed by the petitioner
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before the learned trial Court at Jalandhar.
(iii) That this Court does not have the jurisdiction to try the present petition
because, as per clause 23 of the Special Terms and Conditions, any dispute
between the parties was subject to the jurisdiction of courts situated at
Kolkata only. As such, the present court does not have jurisdiction to
entertain the present petition.
(iv) That in terms of the judgment of Hon'ble Supreme Court in Project
Director, NHAI versus M Hakim (2021) SCC 473 an award cannot be
partially quashed and as such the counter claims awarded by the learned
Arbitrator cannot be set aside. Further it is submitted that the additional
counter claim can also not be set aside without setting aside the whole
Award. It is submitted that as the Award regarding the claims of the
Petitioner has already been upheld, the present petition cannot be allowed
as the same will amount to partial setting aside of the Award which is not
permitted.
(v) That the counter claim filed by the Respondent was not barred by the
Limitation. It is stated that the learned arbitrator has rightly placed reliance
on the judgement passed by the Hon'ble Supreme Court of India State of
Goa versus Praveen Enterprises (2012) 12 SCC 581.
12. It is further the case of the Respondents that no ground
specified under section 34 of the Act has been raised by the petitioner and
as held in BCCI versus Korchi Cricket Pvt. Ltd., an erroneous application
of law would not be a ground of setting aside an award.
13. On these grounds the Respondents has prayed for the
dismissal of the present petition.
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Analysis and Reasoning:
14. Law on objections filed to challenge an arbitration award
covered under Section 34 of the Act has seen many changes. Initially, the
definition of public policy was decided in the seminal case of Renusagar
Power Co. Ltd.v. General Electric Co., [1994 Supp (1) SCC 644] whereby
the Hon'ble Supreme Court of India was dealing with the Foreign Award
(Recognition and Enforcement Act 1961), whereby narrow definition of
public policy was given. However, in later judgments starting with ONGC
Ltd Vs. Saw Pipes Ltd (2003) 5 SCC 705 and culminating in Associate
Builders Vs. Delhi Development Authority, have widened the scope of
Section 34 and had placed the objections to be tested on the Wednesburry
principles of reasonableness and had included grounds relating to
reasonableness and arbitrariness to challenge the arbitration award.
15. However, the Arbitration and Conciliation Act was
comprehensively amended in 2015 and Section 34 was comprehensively
overhauled. The relevant portion of the amended section reads as follows:
"34. Application for setting aside arbitral award.--(1) (2) An
arbitral award may be set aside by the court only if-- ***
(b) the court finds that--
***
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 8 of 32 or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute."
"(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence."
16. The Hon'ble Supreme Court of India had occasion to deal with the development of law and the effect of amendments in the celebrated case of Ssangyong Engineering & Construction Company. Ltd Vs. National Highways Authority of India 2019 SCC Online SC 677. Para 19 of the said judgment is extracted below:
"19. There is no doubt that in the present case, fundamental changes have been made in the law. The expansion of "public policy of India" in ONGC v. Saw Pipes Ltd.[ONGC v. Saw Pipes Ltd., (2003) 5 SCC 705] ["Saw Pipes"] and ONGC v. Western Geco International Ltd. [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ["Western Geco"] has been done away with, and a new ground of "patent illegality", with inbuilt exceptions, has been introduced. Given this, we declare that Section 34, as amended, will apply only to Section 34 applications that have been made to the Court on or after 23-10-2015, irrespective of the fact that the arbitration proceedings may have commenced prior to that date."
17. It is clear that any petition filed under Section 34 of the Arbitration and conciliation Act after the amendments of 2015 is to be tried ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 9 of 32 under the amended section 34 of the Arbitration Act. As the present case was filed on 06.07.2017, there is no doubt that the amended section 34 of the act will be applicable to the present dispute.
18. Paragraph 34 of Ssangyong Engineering (supra) reads as follows:
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This that Western would necessarily mean Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 :
(2014) 5 SCC (Civ) 12] , as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] ."
19. Thus, the developments made in the law by the judgments of Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] and Associate Builders Vs. Delhi Development Authority have to be checked in relation with the new amended Section 34 of the Act. The Hon'ble Supreme Court of India has stated that after the amendment, the ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 10 of 32 expansive understanding of the term public policy has been restricted and the law on the definition of public policy has been relegated to the position as envisaged in Renusagar Power Co. Ltd. v. General Electric Co., (supra) . A clear reading of the above discussion will show that the expansion in the definition of public policy of India has been done away with and the term public policy of India which would mean fundamental policy of Indian law as explained in paragraphs 18 and 27 of the Associate Builders Vs. Delhi Development Authority. It is also observed that the expansion of the definition done in Western Geco International Ltd. has been done away with by the amendments in 2015. Hon'ble Supreme Court of India has elaborated the various grounds which are still available in a challenge to petition under Section 34 and has held that the position of law is that the objections as mentioned in paragraphs no. 18, 27, 36 to 39 and 42.2 of Associate Builders Vs. Delhi Development Authority will survive. However, the grounds mentioned in paragraphs no. 28, 29, 31, 32 and 42.1 of Associate Builders (supra) have been done away with and these grounds are not available to a petitioner in a petition under section 34 of the act filed after the amendment. In view of the same, it is to be seen whether the grounds raised by the petitioner have survived after the amendments as explained in the judgment of the Hon'ble Supreme court of India in Ssangyong Engineering (supra).
20. Para 18 and 37 of the judgment of Hon'ble Supreme Court of India in Associate Builders (supra) are of specific relevance in this case and read as follows:
"18. In Renusagar Power Co. Ltd. v. General Electric Co. [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] , the Supreme Court construed Section 7(1) ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 11 of 32
(b)(ii) of the Foreign Awards (Recognition and Enforcement) Act, 1961:
"7. Conditions for enforcement of foreign awards .--(1) A foreign award may not be enforced under this Act--
***
(b) if the Court dealing with the case is satisfied that--
***
(ii) the enforcement of the award will be contrary to the public policy."
In construing the expression "public policy" in the context of a foreign award, the Court held that an award contrary to
(i) The fundamental policy of Indian law,
(ii) The interest of India,
(iii) Justice or morality, would be set aside on the ground that it would be contrary to the public policy of India. It went on further to hold that a contravention of the provisions of the Foreign Exchange Regulation Act would be contrary to the public policy of India in that the statute is enacted for the national economic interest to ensure that the nation does not lose foreign exchange which is essential for the economic survival of the nation ( see SCC p. 685, para 75). Equally, disregarding orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian law, but the recovery of compound interest on interest, being contrary to statute only, would not contravene any fundamental policy of Indian law (see SCC pp. 689 & 693, paras 85 & 95).
(emphasis supplied)"
"37. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will first deal with the head "fundamental policy of Indian law".
It has already been seen from Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 12 of 32 superior court being disregarded would be equally violative of the fundamental policy of Indian law."
21. Thus, from the above reading of the two judgments of the Hon'ble Supreme Court of India, it becomes clear that disregarding the orders of superior courts of India has to be regarded as against the fundamental policy of Indian Law.
22. This brings us to the question of the jurisdiction of the learned Arbitrator with respect to the counter claims raised by the Respondent and to the question whether the dispute referred to the learned Arbitrator included the counter claim. The question of the counter claim being barred by limitation is also ancillary to the jurisdiction of the learned Arbitrator with respect to the dispute referred to it.
23. Certain timelines are important to be noted while discussing this issue. It is revealed from the pleadings of the parties that the purchase orders for supply of certain valves were issued in favour of the defendant on 03.03.2006, 26.08.2006 and 27.12.2006. Respondent has stated that the supplies were delayed and the actual date of receipt of material on site was between 10.10.2006 and 16.07.2007. Thereafter, certain defaults were pointed out by the respondent vide their various letters from 16.07.2007 till 27.09.2008.
24. The petitioner sent the legal notice to the respondent on 24.02.2008 and demanded a payment of balance amount from the respondents. The respondent replied to the legal notice vide their letter dated 14.03.2008. No demand or any amount was mentioned by the respondent in the reply to the said legal notice. Thereafter, the respondent issued letter dated 27.09.2008 and informed the petitioner that an amount ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 13 of 32 of Rs. Five lacs has been provisionally debited from the account of petitioner. However, no details of the reasons for such debit were given in the said letter.
25. The petitioner, thereafter, filed civil suit before the Ld. Civil Court in Jalandhar in September 2009. After service of summons, the respondent appeared before the Court and filed application under Section 8 of the Act. Even in that application, no counter-claims were raised by the respondent. The matter was thereafter referred to Arbitration by the order of the Ld. Trial Court dated 31.01.2015.
26. Thereafter, Ld. Arbitrator was appointed by the Chairman of the respondent vide his order dated 27.03.2015 and referred the claims raised by the petitioner to the Ld. Arbitrator alongwith counter-claims, if any. The arbitration proceedings commenced on 15.05.2015 and on the first hearing claim was filed by the petitioner herein. On 03.09.2015, the respondent filed its reply and counter-claim before the Ld. Arbitrator. The same was taken on record vide order dated 08.09.2015. Arguments in the arbitration proceedings were heard from 10.02.2016. After the arguments of the petitioner, additional counter-claim was filed by the Respondent on 26.02.2016 which was taken on record vide order dated 02.03.2016. Finally, Ld. Arbitrator published the award dated 18.04.2016 allowing the claims of the petitioner and partly allowing the counter-claims of the respondent.
27. Ld. Counsel for the petitioner has challenged the award regarding the counter-claim on the ground that the dispute referred to the Arbitrator did not include the counter-claim and the counter-claim was barred by law of limitation.
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28. Section 43 of the Act states that the Limitation Act shall apply to arbitrations as it applies to proceedings in Court. As the counter-claims of the respondent are for breach of a contract, the same shall be governed by Article 55 of the Schedule to the Limitation Act, according to which the limitation of filing the suit for damages for breach of contract is three years from the date of the breach. As per the case of the respondent itself, the breach by the petitioner was conducted during the supply of the goods i.e. in 2006-2007. Although, letter dated 27.09.2008 mentions that Rs. Five lacs are being provisionally debited from the account of the petitioner; however, no steps were taken by the respondent till the filing of the counter-claim to realize the said amount.
29. Ld. Counsel for the respondent has relied upon the judgment of Hon'ble Supreme Court of India in State of Goa Vs. Praveen Enterprises, (2012) 12 SCC 581. Taking recourse of the above judgment, Ld. Counsel for the respondent has submitted that the counter-claims are withing limitation as vide letter dated 27.09.2008, the respondent had intimated the petitioner about a provisional debit of Rs. Five lacs and for intimation of actual amount to the petitioner later on.
30. Hon'ble Supreme Court of India had the occasion to deal with and further explain the above judgment in Voltas Limited Vs. Rolta India Limited, 2014 SCC OnLine SC 128, and observed as below:
"21. Keeping in view the aforesaid factual scenario we shall now proceed to appreciate what has been stated by this Court in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] . In the said case, the respondent therein had raised certain claims and given a notice to the appellant therein to appoint an arbitrator in terms of the arbitration clause.
As the appellant did not do so, the respondent filed an ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 15 of 32 application under Section 11 of the Act and an arbitrator was appointed. The respondent filed its claim statement before the arbitrator and the learned arbitrator passed an award. In regard to the counterclaims made by the appellant, the arbitrator awarded certain sum without any interest. An application under Section 34 of the Act was filed by the respondent challenging the award for rejection of its other claims and award made on a particular item of the counterclaim. The civil court disposed of the matter upholding the award in respect of the claims of the respondent but accepted the objection raised by it in regard to the award made on the counterclaim opining that the arbitrator could not have enlarged the scope of the reference and entertain either fresh claims by the claimants or counterclaims from the respondent. The said judgment came to be assailed before the High Court which dismissed the appeal by holding that the counterclaims were bad in law as they were never placed before the court by the appellant in the proceeding under Section 11 of the Act and they were not referred to by the court to arbitration and, therefore, the arbitrator had no jurisdiction to entertain the matter.
22. This Court posed two questions, namely: (Praveen Enterprises case [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] , SCC p. 587, para 9) "9. ... whether the respondent in an arbitration proceeding is precluded from making a counterclaim, unless
(a) it had served a notice upon the claimant requesting that the disputes relating to that counterclaim be referred to arbitration and the claimant had concurred in referring the counterclaim to the same arbitrator; and/or
(b) it had set out the said counterclaim in its reply statement to the application under Section 11 of the Act and the Chief Justice or his designate refers such counterclaim also to arbitration."
Thereafter, the Court referred to the concept of "reference to arbitration" and, analysing the anatomy of Sections 21 and 43 ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 16 of 32 of the Act and Section 3 of the Limitation Act, 1963 opined thus: (Praveen Enterprises case [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] , SCC p. 590, para 18) "18. ... Section 3 of the Limitation Act, 1963 specifies the date of institution for suit, but does not specify the date of 'institution' for arbitration proceedings. Section 21 of the Act supplies the omission. But for Section 21 there would be considerable confusion as to what would be the date of 'institution' in regard to the arbitration proceedings. It will be possible for the respondent in an arbitration to argue that the limitation has to be calculated as on the date on which statement of claim was filed, or the date on which the arbitrator entered upon the reference, or the date on which the arbitrator was appointed by the court, or the date on which the application was filed under Section 11 of the Act. In view of Section 21 of the Act providing that the arbitration proceedings shall be deemed to commence on the date on which 'a request for that dispute to be referred to arbitration is received by the respondent' the said confusion is cleared. Therefore, the purpose of Section 21 of the Act is to determine the date of commencement of the arbitration proceedings, relevant mainly for deciding whether the claims of the claimant are barred by limitation or not."
23. Thereafter, addressing the issue pertaining to counterclaims, the Court observed as follows: (Praveen Enterprises case [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] , SCC pp. 590-91, para 20) "20. As far as counterclaims are concerned, there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of the Limitation Act, 1963 provides that in regard to a counterclaim in suits, the date on which the counterclaim is made in court shall be deemed to be the date of institution of the counterclaim. As the Limitation Act, 1963 is made applicable to arbitrations, in the case of a counterclaim by a respondent in an arbitral proceeding, the date on which the counterclaim is made before the arbitrator will be the date of ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 17 of 32 'institution' insofar as counterclaim 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 counterclaims. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counterclaim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under Section 11 of the Act, the limitation for such counterclaim 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 counterclaim."
(emphasis supplied)
24. Mr R.F. Nariman, learned Senior Counsel appearing for the respondent, submitted that the case of the respondent comes within that exception because it had raised its claims on various dates and crystallised it by letter dated 17-4-2006 and had sought arbitration also. It is his submission that the learned Single Judge had incorrectly understood the exception carved out in the aforesaid case and has opined that the date of filing of the counterclaims i.e. 26-9-2011 is the pertinent date. It is urged by him that the Division Bench has correctly determined the date to be 17-4-2006. Mr Venugopal, learned Senior Counsel, has disputed the said position by relying upon Section 3 of the Limitation Act which stipulates the limitation to be mandatory.
25. On a careful reading of the verdict in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] , we find that the two-Judge Bench, after referring to, as we have stated hereinbefore, Sections 21 and 43 of the Act and Section 3 of the Limitation Act has opined, regard being had to the language employed in Section 21, that an exception has to be carved out. It saves the limitation for filing a counterclaim if a respondent against whom a claim has been made satisfies the twin test, namely, he had made a claim ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 18 of 32 against the claimant and sought arbitration by serving a notice to the claimant. In our considered opinion the said exception squarely applies to the case at hand inasmuch as the appellant had raised the counterclaim and sought arbitration by expressing its intention on number of occasions. That apart, it is also perceptible that the appellant had assured for appointment of an arbitrator. Thus, the counterclaim was instituted on 17-4- 2006 and hence, the irresistible conclusion is that it is within limitation.
26. Presently to the alternative submission of Mr Venugopal, learned Senior Counsel for the appellant. It basically pertains to the nature, scope and gamut of applicability of the exception carved out in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] for the purpose of saving a counterclaim being barred by limitation. The learned Senior Counsel would submit that the respondent had crystallised its claims by letter dated 17-4-2006 amounting to Rs 68,63,72,743.08 whereas in the counterclaim dated 26-9-2011 filed before the learned arbitrator amounts to Rs 333,73,35,026 which is impermissible. In essence, the submission of Mr Venugopal is that the claims which were not raised in the letter dated 17-4-2006 have to be treated as being barred by limitation.
27. Mr R.F. Nariman, learned Senior Counsel for the respondent, on the contrary, has referred to para 11 of the Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] to buttress his submission that when all the disputes are referred to the arbitrator, he has the jurisdiction to decide all the disputes i.e. both the claims and counterclaims. That apart, the respondent had reserved its rights to quantify the claim. In this regard, he has also drawn inspiration from McDermott International Inc. [(2006) 11 SCC 181] wherein this Court has stated that while claiming damages, the amount therefor is not required to be quantified, for quantification of a claim is merely a matter of proof. Mr ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 19 of 32 Nariman has also commended us to the decision in BSNL v. Motorola India (P) Ltd. [(2009) 2 SCC 337 : (2009) 1 SCC (Civ) 524] wherein it has been ruled that the question of holding a person liable for liquidated damages and the question of quantifying the amount to be paid by way of liquidated damages are entirely different. Fixing of liability is primary while the quantification is secondary to it.
28. In our considered opinion, the aforesaid decisions do not render any assistance to the proposition canvassed by the learned Senior Counsel for the respondent. We are inclined to think so on two counts. First, in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] the Court has carved out an exception and, while carving out an exception, has clearly stated that the limitation for "such counterclaim"
should be computed as on the "date of service of notice" of "such claim on the claimant" and not on the date of final counterclaim. We are absolutely conscious that a judgment is not to be read as a statute but to understand the correct ratio stated in the case it is necessary to appreciate the repetitive use of the words. That apart, if the counterclaim filed after the prescribed period of limitation before the arbitrator is saved in entirety solely on the ground that a party had vaguely stated that it would be claiming liquidated damages, it would not attract the conceptual exception carved out in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] . In fact, it would be contrary to the law laid down not only in the said case, but also to the basic principle that a time-barred claim cannot be asserted after the prescribed period of limitation.
29. Mr Nariman, learned Senior Counsel, has also contended that the counterclaims filed before the learned arbitrator is an elaboration of the amount stated in the notice and, in fact, it is an amendment of the claim of the respondent which deserved to be dealt with by the learned arbitrator. In this context, we may refer with profit to the ruling in K. Raheja Constructions ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 20 of 32 Ltd. v. Alliance Ministries [1995 Supp (3) SCC 17] wherein the plaintiff had filed a suit for permanent injunction and sought an amendment for grant of relief of specific performance. The said prayer was rejected by the learned trial court. A contention was canvassed that the appellant had not come forward with new plea and, in fact, there were material allegations in the plaint to sustain the amendment of the plaint. The Court observed that having allowed the period of seven years to elapse from the date of filing the suit, and the period of limitation being three years under Article 54 of the Schedule to the Limitation Act, 1963 any amendment on the grounds set out, would defeat the valuable right of limitation accruing to the respondent. The said principle has been reiterated in South Konkan Distilleries v. Prabhakar Gajanan Naik [(2008) 14 SCC 632] and Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit v. Ramesh Chander [(2010) 14 SCC 596 : (2012) 1 SCC (Civ) 777] .
30. In Revajeetu Builders and Developers v. Narayanaswamy and Sons [(2009) 10 SCC 84 : (2009) 4 SCC (Civ) 37] , while laying down some basic principles for considering the amendment, the Court has stated that as a general rule the court should decline amendments if a fresh suit on the amended claims would be barred by limitation on the date of application.
31. In the present case, when it is absolutely clear that the counterclaim in respect of the enhanced sum is totally barred by limitation and is not saved by exception carved out by the principle stated in Praveen Enterprises [State of Goa v. Praveen Enterprises, (2012) 12 SCC 581] , we are unable to agree with the view of the Division Bench of the High Court that the counterclaim, as a whole, is not barred by limitation. Thus analysed, the counterclaim relating to the appeal which deals with civil contracts shall be restricted to the amount stated in the letter dated 17-4-2006 i.e. Rs 68,63,72,178.08, and as far as the other appeal which pertains to air-conditioning contract, the quantum shall stand restricted to as specified in the letter dated ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 21 of 32 21-3-2006 i.e. Rs 19,99,728.58."
31. Thus, it is clear from the above observations of Hon'ble Supreme Court that in case of a claim filed by a petitioner, the petitioner would get benefit of Section 21 of the Act whereby the date of commencement of arbitral proceedings has been held to be the date on which request to refer the dispute to arbitration is received by the respondent. As explained by Hon'ble Supreme Court, the benefit is given to the petitioner as the petitioner has taken the initial step to refer the dispute to arbitration and any delay of the parties to mutually agree on the appointment of the arbitrator or the delay caused by way of application under Section 11 of the Act cannot be used to penalize the petitioner when the delay has not been caused by him.
32. However, the same benefit is not available to the counter- claimant if the counter-claim is directly filed before the Ld. Arbitrator. Hon'ble Supreme Court in State of Goa Vs. Praveen Enterprises (supra) has carved out an exception to the counter-claims filed by the respondent if in reply to the notice of invocation of arbitration, the respondent had informed the petitioner of the counter-claims which the counter-claimant also wishes to be tried by the Ld. Arbitrator. In Voltas Limited (supra), Hon'ble Supreme Court was seized of the dispute whereby, in reply to the notice invoking arbitration, the respondent had raised certain counter- claims, however, the respondent by way of counter-claim before the Ld. Arbitrator, enhanced the amount of the counter-claims from the amount mentioned in reply to the notice invoking arbitration. Hon'ble Supreme Court rejected the contention that the counter-claims filed before the Ld. Arbitrator were an elaboration of the amount stated in the notice and, in ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 22 of 32 fact, were in the nature of amendment of the claims of the respondent.
33. In the present case, the respondent never mentioned about the counter-claims in his application under Section 8 of the Act or in reply dated 14.03.2008 to the legal notice sent on behalf of the petitioner nor sent any notice to the petitioner regarding its claim or for invocation of arbitration. The only letter which talks about any amount being charged to the petitioner for breach of the agreement between the parties is the letter dated 27.09.2008. The said letter is extracted herein below:
"Dear Sirs, With reference to above this is to bring to your kind notice that most of valves supplied by M/s Leader Valves were encountered with severe problems during the testing and commissioning of the plant. These were informed to you from time to time. Though you have deputed your personnel for making good to same, but problems are yet to be resolved. In the process lot of expenditures were incurred by EPI to make the plaint operate. In view of above, a provisional amount of Rs. 5.0 Lakhs is being debited to your account. The actual debitable amount shall be intimated in due course of time.
Thanking you, Yours faithfully,"
34. A bare perusal of the said letter would reveal that the said letter only debits a provisional amount of Rs. Five lacs, but no details required to establish the claim of the respondent are mentioned in the said letter. The said letter does not give any inclination to the petitioner as to for what heads or on what account the said amount is being debited. Thus, this letter cannot be treated as a letter putting forward the counter-claims of the respondent. First time the claims were raised by the respondent was before the Ld. Arbitrator on 03.09.2015 and additional counter-claim on 26.02.2016. Thus, this letter dated 27.09.2008 cannot help the respondent ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 23 of 32 as the starting point for computation of limitation. Thus, it is clear that the counter-claims of the respondent were not within the period of limitation on the date of filing before the Ld. Arbitrator.
35. Hon'ble High Court of Delhi In Pawan Hans Helicopter Limited Vs. IDEB Projects Pvt. Ltd., 2017 SCC OnLine Del 7560 and Ten Creative Studios Pvt. Limited and ors. Vs. Nelson Planning and Design Pvt. Limited, 2018 SCC OnLine Del 9774 has followed and explained the judgment of Voltas Limited (supra) and has held that in respect of the counter-claims filed directly before the Ld. Arbitrator, the date of filing shall be the actual date on which the counter-claims are presented before the Ld. Arbitrator and the advantage of the exception carved out by the judgment of Voltas Limited (supra) and State of Goa (supra) would not be available to such a counter-claim.
36. Thus, in view of the above discussion and law laid down by the Hon'ble Apex Court and Hon'ble High Court of Delhi, it has to be held that the counter-claims filed by the respondent before the Ld. Arbitrator were barred by limitation.
37. Another aspect which would negate the jurisdiction of the Ld. Arbitrator with respect to the counter-claims is also covered by Voltas Limited (supra). The Hon'ble Supreme Court relying upon previous judgments in Major (Retd.) Inder Singh Rekhi Vs. DDA, (2006) 11 SCC 182 and J&K State Forest Cooperation Vs. Abdul Karim Wani and ors., (1988) 2 SCC 338, has held that dispute entails a claim by one party and denial of the same by the other. A mere silence or failure to pay the amount claimed does not amount to a dispute. Further, it was held that :
"12. In Inder Singh Rekhi [Inder Singh Rekhi v. DDA, (1988) 2 ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 24 of 32 SCC 338] the High Court had rejected the petition preferred under Section 20 of the Arbitration Act, 1940 as barred by limitation. The two-Judge Bench referred to Section 20 of the 1940 Act and opined that in order to be entitled to order of reference under Section 20, it is necessary that there should be an arbitration agreement and secondly, a dispute must arise to which the agreement applied. In the said case, there had been an assertion of claim of the appellant and silence as well as refusal in respect of the same by the respondent. The Court observed that a dispute had arisen regarding non-payment of the alleged dues to the appellant and, in that context, observed thus: (SCC p. 340, para 4) "4. ... A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of an arbitrator under Section 8 or a reference under Section 20 of the Act. See Law of Arbitration by R.S. Bachawat, First Edn., P. 354. There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request. Whether in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case."
13. In Abdul Karim Wani [J&K State Forest Corpn. v. Abdul Karim Wani, (1989) 2 SCC 701] the question arose whether the dispute mentioned in the contractor's application could have been referred to the arbitration at all. The majority came to hold that the claim raised by the plaintiff in his application was not covered by the arbitration clause and, therefore, was not permissible to be referred for a decision to the arbitrator. Be it ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 25 of 32 noted, in the said case, the work under the contract had already been executed without any dispute. The majority also observed that in the absence of a repudiation by the Corporation of the respondent's right to be considered, if and when occasion arises, no dispute could be referred for arbitration. It further ruled that in order that there may be a reference to arbitration, existence of a dispute is essential and the dispute to be referred to arbitration must arise under the arbitration agreement."
38. Further it was held that the Ld. Arbitrator gets the jurisdiction to try the dispute which were referred to him and the Ld. Arbitrator could not have enlarged the scope of the reference and entertained fresh claims by either of the parties.
39. In the present case also, at the time of appointment of arbitrator, only the disputes raised by the petitioner were pending and till that date, no counter-claims were raised by the respondent and hence, no dispute was pending regarding the counter-claims of the respondent. Thus, it is clear from the above discussion that the Ld. Arbitrator did not have the jurisdiction to try the counter-claims as the same were beyond the scope of reference made to the Ld. Arbitrator. Thus, the counter-claim of the respondent were not maintainable before the Ld. Arbitrator being beyond limitation and being passed by forum having no jurisdiction. As such, the present objections under Section 34 of the Act deserve to be allowed.
40. However, one more argument of the Ld. Counsel for the respondent needs to be dealt with before pronouncing any final order. Ld. Counsel for the respondent has submitted that in terms of the judgment of Hon'ble Supreme Court in the Project Director and NHAI Vs. M. Hakeem, (2021) 9 SCC 1, an award passed by an arbitrator cannot be modified by a Court under Section 34 of the Act. He has submitted that the award ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 26 of 32 regarding counter-claims cannot be set-aside without setting-aside the award regarding the claims as well as such partial setting-aside of an arbitral award would amount to modification of the award which is not permitted in a petition under Section 34 of the Act.
41. Hon'ble High Court of Delhi in NHAI Vs. Trichy Thanjavur Expressway Limited, 2023 SCC OnLine Del 5183, while dealing with the question whether an award can be partially set-aside, after going into the laws of various other countries, UNCITRAL Model Law on International Commercial Arbitration, the discussion of the Law Commission as well as the judgment of Hon'ble Supreme Court in M. Hakeem (supra) has held as follows:
"36. However, and at the same time while courts are enjoined to follow the minimalist intervention route, it would clearly be a travesty of justice if they were to fail to intervene where circumstances warrant and demand corrective measures being adopted. It is these compulsions which have led to courts evolving the serious irregularity or the patent illegality grounds to interfere with an award. Section 34 is a clear and unequivocal embodiment of the Legislature's intent to balance these competing facets of arbitration.
37. That takes us to the heart of the issue that arises, namely, the partial annulment of an award. Undisputedly, Section 34(2)(a)
(iii) speaks of a part of an award being exorcised from the rest.
The Court also finds no justification to lend too much credence on Article 34 of the Model Law ultimately failing to allude to a partial setting aside power even though that was provisioned for in explicit terms in draft Articles 29, 30, 40 and 41. This since neither the Working Group Reports nor the contemporaneous material that we have noticed hereinbefore seem to suggest a conscious deletion of that power. The considerable material, on the aspects surrounding partial setting aside that we have had an ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 27 of 32 occasion to review, does not evidence any deliberation or discussion which may have predicated or actuated its deletion. The said material is also not indicative of any principled decision that may have been taken by member nations for deletion of the partial setting aside power. Its absence from Article 34 which came to be ultimately adopted stands lost in a mist of conjecture. The Court, however, is of the opinion that no useful purpose would be served in speculating on this aspect any further since one would still have to consider whether the power to set aside an award in part stands lost by virtue of Section 34 as it presently stands. The Court has in any case found that the deletion of references to partial setting aside does not appear to have been premised on any principled decision to deprive courts of such a power.
38. In our considered opinion, therefore, the answer to the question which stands posed would have to be rendered on an interpretation of the phrase "setting aside" as ultimately adopted and forming part of Section 34. As was noticed hereinbefore, Section 34(2)(a)(iii) does speak of an award being set aside in part. We find that the key to understanding the intent underlying the placement of the Proviso in sub-clause (iv) of Section 34(2)
(a) is in the nature of the grounds for setting aside which are spoken of in clause (a). As would be manifest from a reading of the five sub-clauses which are positioned in Section 34(2)(a), those constitute grounds which would strike at the very heart of the arbitral proceedings. The grounds for setting aside which are set forth in clause (a) strike at the very foundation of validity of arbitration proceedings. Sub-Clauses (i) to (v) thus principally constitute grounds which would render the arbitration proceedings void ab initio. Although the Section 34(2)(a)(iv) ground for setting aside also falls in the same genre of a fundamental invalidity, the Legislature has sought to temper the potential fallout of the award being set aside in toto on that score. The Proviso to sub-clause (iv) seeks to address a comprehensibly conceivable situation where while some parts ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 28 of 32 of the award may have dealt with non-arbitrable issues or disputes falling outside the scope of the reference, its other components or parts constitute an adjudication which could have been validly undertaken by the AT. The Proviso thus seeks to address such a situation and redeems as well as rescues the valid parts of an award. This saves the parties from the spectre of commencing arbitral proceedings all over and from scratch in respect of all issues including those which could have validly formed part of the arbitration.
39. The grounds for setting aside encapsulated in Section 34(2)
(b) on the other hand relate to the merits of the challenge that may be raised in respect of an award and really do not deal with fundamental invalidity. However, the mere fact that the Proviso found in sub-clause (iv) of Section 34(2)(a) is not replicated or reiterated in clause (b) of that provision would not lead one to conclude that partial setting aside is considered alien when a court is considering a challenging to an award on a ground referable to that clause. In fact, the Proviso itself provides a befitting answer to any interpretation to the contrary. The Proviso placed in Section 34(2)(a)(iv) is not only an acknowledgment of partial setting aside not being a concept foreign to the setting aside power but also of parts of the award being legitimately viewed as separate and distinct. The Proviso itself envisages parts of an award being severable, capable of segregation and being carved out. The Proviso is, in fact, the clearest manifestation of both an award being set aside in part as well as an award comprising of distinct components and parts.
40. Undoubtedly, an award may comprise a decision rendered on multiple claims. Each claim though arising out of a composite contract or transaction may be founded on distinct facts and flowing from separate identifiable obligations. Just as claims may come to be preferred resting on a particular contractual right and corresponding obligation, the decision which an AT may render on a particular claim could also be ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 29 of 32 based on a construction of a particular covenant and thus stand independently without drawing sustenance on a decision rendered in the context of another. If such claims be separate, complete and self-contained in themselves, any decision rendered thereon would hypothetically be able to stand and survive irrespective of an invalidity which may taint a decision on others. As long as a claim is not subordinate, in the sense of being entwined or interdependent upon another, a decision rendered on the same by the AT would constitute an award in itself. While awards as conventionally drawn, arranged and prepared may represent an amalgam of decisions rendered by the AT on each claim, every part thereof is, in fact, a manifestation of the decision rendered by it on each claim that may be laid before it. The award rendered on each such claim rules on the entitlement of the claimant and the right asserted in that regard. One could, therefore, validly, subject of course to the facts of a particular case, be entitled to view and acknowledge them as binding decisions rendered by the AT on separate and distinct claims."
42. Thus, it is clear from the above that award in respect of each claim before an Arbitrator can be treated as a separate award. It was further held that in case the grounds of challenge to a particular claim granted by the Ld. Arbitrator can be separated from the other claims granted by the Ld. Arbitrator, only the part which is in contravention of Section 34 of the Act needs to be set-aside. Thus, in case distinct claims/ counter-claims have been filed by the parties before the Ld. Arbitrator and only a part of the award suffers from any of the vices mentioned in Section 34 of the Act, only that part needs to be set-aside and the whole award need not be set- aside.
43. Coming to the facts of the present case, it is clear that the claims and the counter-claims are two distinct parts of the common award ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 30 of 32 passed by the Ld. Arbitrator. It is further clear that the grounds raised to challenge the counter-claim are distinct and only effect the counter-claim. There is no issue as to the delay of filing of the claims of the petitioner and the discussion above regarding the issue of limitation is only limited to the counter-claim. Further, the issue of jurisdiction of the Ld. Arbitrator is also only with respect to the counter-claims. As such, the grounds canvassed by the petitioner to challenge the part of award with respect to counter-claim do not effect the rest of the award i.e. the claims of the petitioner. Thus, it is found that the two portions of the award can be segregated in terms of the judgment of Hon'ble High Court of Delhi in NHAI Vs. Trichy Thanjavur Expressway Limited (supra).
44. With reference to letter dated 27.09.2008, suffices to say that the said letter makes a general debit in the account of the petitioner. Further, by filing of the counter-claim, the respondent had not explained as to which claims pertain to Rs. Five lacs debited vide letter dated 27.09.2008 nor was the same discussed by the Ld. Arbitrator in his award. As such, respondent was not entitled to any claims regarding the said letter dated 27.09.2008.
45. Learned Counsel for the Petitioner has also argued that the present court does not have jurisdiction to entertain the present dispute as the terms of the contract between the parties gives the exclusive jurisdiction of any dispute arising between the parties to the courts at Kolkata. However, as per the pleadings of the parties the Courts at Kolkata do not have jurisdiction to try the present dispute. It is clear law that parties may restrict the jurisdiction of a dispute to a particular Court having jurisdiction, but the parties cannot grant jurisdiction to a Court which does ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 31 of 32 not have jurisdiction as per law. As such, this argument of the respondent is also of no avail to the respondent.
46. Based upon the above discussion and the fact that the counter-claims were barred by limitation, Ld. Arbitrator did not have jurisdiction to entertain the counter-claims and the fact that an award can be partially set- aside, the present petition under Section 34 of the Act is allowed. Consequently, the portion of the award dated 18.04.2016 granting the counter-claims filed by the respondent is set-aside.
47. File be consigned to Record Room.
Announced in the open (RAHUL BHATIA)
Court on 17.05.2024 District Judge-01(SE),
Saket Courts, New Delhi.
ABRTN-21471/2016 LEADER VALVES LTD. VS. M/S ENGINEERING PROJECTS INDIA LTD. Pg. 32 of 32