The Division Bench of the Delhi High Court in the case of Nabinagar Power Generating Company Ltd. vs AMR India Ltd. consisting of Justices Vibhu Bakhru and Amit Mahajan reiterated that in 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 “institution” insofar as the counterclaim is concerned.
Facts:
The appellant (‘NPGC’) filed this appeal u/s 37(1) of the Arbitration and Conciliation Act, 1996 (‘the A&C Act’) impugning an order dated 05.07.2019 passed by the learned Single Judge of this Court (‘the impugned order’) dismissing NPGC’s application u/s 34 of the A&C Act to set aside the arbitral award dated 10.12.2018.
The respondent (“AIL”) initiated arbitration proceedings by sending a notice. The Arbitral Tribunal mostly upheld the respondent's claims and rejected those of NPGC. NPGC then applied u/s 34 of the A&C Act to challenge the impugned award, which the learned Single Judge dismissed in the impugned judgment. The learned Single Judge failed to determine that the arbitral award was patently unlawful or against Indian public policy. The learned Single Judge also found that the challenged award was based on evidence-based conclusions of fact, which were not subject to appeal u/s 34 of the A&C Act.
Procedural History:
The Coordinate Bench of this Court originally listed this appeal on 20.08.2019 and again on 26.09.2019. The Court held that the Arbitral Tribunal had exclusive jurisdiction over contract clause interpretation, and the Court could not act as the first or second appellate court and re-examine the contractual clauses u/s 34 or 37 of the A&C Act. It was decided that a contractual clause's reasonable interpretation by the arbitral tribunal could not be changed. The Court cited the Supreme Court's decision in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) and upheld the learned Single Judge's view that the Arbitral Tribunal's interpretation of Clause 33.3.0 of the Special Conditions of the Contract was plausible and could not be interfered with in proceedings u/s 34 of the A&C Act.
Thus, by order dated 26.09.2019, NPGC's challenge of the impugned award was rejected because it had declined to interfere with the Arbitral Tribunal's decision to award certain claims raised by AIL. The notice in this appeal was limited to NPGC's plea that the Arbitral Tribunal had erroneously rejected its counterclaims as barred by limitation.
Contentions Made:
Appellant: It was contended that the impugned award holding that its counterclaims were barred by limitation, was wholly erroneous and the impugned award was liable to be set aside.
Observations of the Court:
The Bench opined that the only question that was to be considered was whether the impugned award, to the extent that it rejected NPGC’s counterclaims as barred by limitation, was patently illegal or was it in conflict with the fundamental policy of the Indian law.
It noted from a perusal of the counterclaims that NPGC had raised eight counterclaims. It opined the contention that since NPGC, by its letter dated 04.07.2014, had informed AIL that extra cost implication would be informed to it in the course of time, the same extended the period of limitation for making the claims, was bereft of any merit. Merely informing AIL that NPGC would inform the extra cost subsequently, neither extends the limitation nor defers the cause of action:
“Merely because NPGC had issued various communications, expressly stating that the same was without prejudice to its rights or further action, did not extend the period of limitation.”
It opined that the Limitation Act, 1963 does not extinguish the obligations but merely the remedies for enforcing the same. Thus, notwithstanding that NPGC had reserved its right to act, failure to do so within the stipulated time barred its remedy before the Arbitral Tribunal.
It relied on State of Goa v. Praveen Enterprises to reiterate that 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 “institution” insofar as the counterclaim is concerned. In this case, the counterclaims were filed on 18.09.2017, after three years had elapsed from the date on which the cause of action for claims had arisen.
Judgment:
The Court found no infirmity with the decision of the Arbitral Tribunal in rejecting NPGC’s counterclaims as barred by limitation. The Appeal, being unmerited, was accordingly dismissed.
Case: Nabinagar Power Generating Company Ltd. vs AMR India Ltd.
Citation: FAO(OS) (COMM) 196/2019
Bench: Justice Vibhu Bakhru, Justice Amit Mahajan
Advocates for Appellant: Ms. Manvinder Acharya, Sr. Adv with Mr. R. Sudhinder, Mr. Dattatray Vyas, and Mr. Akshay Singh Sengar
Advocates for Respondent: Mr. Brijesh Kumar Goel, Mr. Rajeev Kumar, Mr. Sajal Goel, and Ms. Rashmi Bhardwaj
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