Mumbai 400 093 vs Mr Atul Rajadhyakshya
2012 Latest Caselaw 41 Bom

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                                                                             ARBPL-1239-1240.12a




                                                                                     
                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                         ORDINARY ORIGINAL CIVIL JURISDICTION




                                                             
                        ARBITRATION PETITION (L) NO.1239 OF 2012
                                                   WITH




                                                            
                             ARBITRATION PETITION (L) NO.1240OF 2012

      Rolta India Limited,

      a Company incorporated under




                                                      
      the provisions of the Companies
                                   
      Act, 1956, having its office at
                                  
      Rolta Bhavan, Rolta Technology

      Park, MIDC, Marol, Andheri (E)
             

      Mumbai 400 093.                                       .... Petitioner.
          



                                                   Versus

      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 400 033.

      Mr Milind Sathe, Senior Advocate a/w Ms Aplana Ghone i/b M/s Kanga & Co. for the
      Petitioner.

      Mr Atul Rajadhyakshya, Senior Advocate a/w Gaurav Joshi with B.H. Anita, Kaza
      Shroff, Avinash Joshi, Vipul Bilve i/b Mulla & Mulla and Craigie Blunt & Caroe for
      the Respondent.
                                           CORAM : R.D. DHANUKA, J.

DATE : 1ST OCTOBER, 2012.

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ORAL JUDGMENT :

1 By this petition under Section 34 of the Arbitration and Conciliation Act

1996 (for short 'Arbitration Act 1996) the petitioner seeks that the portion of the

interim award dated 26th July, 2012 declared by the arbitral tribunal rejecting the

counter claims made by the petitioner on the ground of limitation be set aside.

2 The learned counsel for the parties submitted that facts and issues

involved in these petitions are identical and can be disposed off together. Therefore,

by consent, both the petitions were heard together finally and are being disposed of by

this common order. Some of the facts which are relevant for the purpose of deciding

these two petitions are as under :

The facts in ARBP(L) NO.1239 of 2012

3 By an agreement dated 22th July 2001 entered into between the etitioner

and respondent, the respondents agreed to construct two new buildings and to carry

out modification of the existing building owned by the petitioner. On 20th June, 2012

the petitioner released two work orders to the respondent for supply of 100 TR

imported Air cooled Screw Chiller for Rs.1,18,62,200/- and for erection,

commissioning, testing and handing over a chiller amounting to Rs.1,06,37,800/-. By

letter dated 3rd December, 2004 the petitioner terminated the construction agreement

including modification made by third addendum dated 27th January, 2004. The

Petitioner notified the respondent that they would assert all its rights under the

Agreements/Addenda, claiming compensation and damages and for having the project

completed by third party/parties. By letter dated 9th December, 2004, the respondent

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denied any delay on its part and contended that the termination of the agreement by

the petitioner was illegal. It is the case of the petitioner that by its letter dated 10th

December, 2004, it asserted rights under clause 36.3 of the contract and asserted the

right to recover damages from the respondent.

4 On 1st March, 2005, respondent submitted its final bill and also listed its

claim for compensation and damages.

The Petitioner by its advocate's letter dated 18th March, 2005 denied

the contents of the letter dated 1st Mach, 2005 and reiterated its stand as contained in

the letter dated 3rd December, 2004 that there was delay, incomplete work, unfinished

work and bad quality work on the part of the respondent. By its advocates letter

dated 7th April, 2005, the respondents contended that the termination of contract by

the petitioner was not tenable in law and that the petitioner had not suffered any loss

or damages. The respondents called upon the petitioner to release claims made by it

in its earlier letters.

6 The petitioner by its advocates letter dated 27th April, 2005 denied that it

was liable to pay any amount to the respondent towards compensation or damages or

other amounts as claimed by the respondent in its letter dated 1st March, 2005. The

petitioner once again asserted that it was suffering and or has suffered losses and

damages for which the respondent was solely responsible. By its advocate's letter

dated 29th March, 2006, the respondent contended that the disputes and differences

had arisen between the parties to the agreement and invoked the arbitration clause

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and called upon the petitioner/CMD of the petitioner to appoint an independent

and unbiased arbitrator within 30 days from the date of receipt of the said notice.

7 By its letter dated 17th April, 2006, the petitioner denied its alleged

liability to make payment to the respondent. By the said letter, the petitioner

quantified the claims and called upon the respondents to pay a sum of Rs

686372743.08 within seven days of the receipt of the said letter and stating that if

payment was not made as demanded, it would invoke the arbitration clause of civil

contract and refer the dispute to arbitration.

8 By its advocates letter dated 21st April, 2006, the petitioners conveyed

the respondent that its Chairman and Managing Director was out of India and had

only returned on 19th April, 2006 and sought time to appoint arbitrator Petitioner

however did not nominate any arbitrator.

9 The respondent filed arbitration Application (90 of 2006) in this court

under section 11(6) of the Arbitration Act 1996 for appointment of sole arbitrator to

adjudicate the disputes and differences that had arisen between the parties relating to

agreement dated 2nd February, 2001. Oral evidence was recorded by and between the

parties as directed by this court in the said Application (90 of 2006). By an order

dated 19th November, 2010 this court appointed Shri Justice B.N. Srikrishna, former

Judge of the Supreme Court as sole arbitrator to arbitrate on the disputes between the

parties arising in the civil and air conditioning contracts. On 27th January, 2011, the

learned arbitral tribunal directed the parties to file pleadings along with its

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compilation of documents. On 13th April, 2011, the respondent filed its statement of

claim. On 24th August, 2011, the petitioner filed its statement of defence denying

the claims made by the petitioner. On 26th September, 2011, the petitioner filed its

counter claim before the arbitral tribunal.

10 The respondent filed its reply on 25th November, 2011 opposing the counter

claim on the ground that the same was barred by law of limitation and not maintainable

and was beyond the scope of reference as no arbitration clause was invoked by the

petitioner.

11 On 7th January, 2012,the learned arbitral tribunal framed issues

including the issues of tenability and limitation of the counter claim as under :

"9. Whether the Counter claim or a substantial part thereof is barred by the

law of limitation?

10. Whether the Counterclaim is not maintainable and beyond the scope of

reference?"

12 The arbtiral tribunal by its interim award dated 26th July, 2012 rejected

the counter claim filed by the petitioner on the ground that it is barred by law of

limitation. It is however held that the counter claim raised by the petitioner was

within the scope of reference and that the tribunal had jurisdiction to entertain the

same. The arbitral tribunal answered the issues accordingly. The claims made by the

respondents are being heard by the arbtiral tribunal.

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13 The Petitioner has impugned paragraphs 20 to 22 and 24A of the

interim award declared by the arbitral tribunal in these petitions dismissing

Counterclaims made by the petitioner.

The facts in ARBP(L) NO.1240 of 2012

14 On 14th December 2001 petitioner invited tenders for four types of air-

conditioning systems proposed for the corporate complex of the petitioner

comprising of RBII and RBIII. On 20th June, 2002, the petitioner placed Work Order

on the respondent for supply of Air Cooled Screw Chiller systems and BMS for air

conditioning of is corporate complex comprising of RBII and RBIII on the terms and

conditions set out therein.

15 On 3rd December 2004, the petitioner terminated the said air-conditioning

contract. The petitioner, by its letter dated 5th January, 2006 demanded Performance

Bank guarantee and asked the respondent to provide comprehensive maintenance for

three years from the date of handing over of the plant.

16 By its letter dated 2nd March 2006, the petitioner informed the respondent

that any loss or damage that it may suffer because of the breaches on account of the

petitioner would be on account of the respondent. On 3rd May 2006 respondent

denied contentions and demands of the petitioner.

17 By letter dated 21st March 2006, the respondent called upon the

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petitioner to pay Rs.19,99,728.58. By letter dated 27th March 2006, petitioner refuted

the claim of the respondent. By its advocate's letter dated 29th March 2006, the

respondent invoked arbitration clause and called upon the petitioner to appoint an

arbitrator.

18 By its letter dated 17th April 2006, the petitioner called upon the

respondent to comply with its requisition contained in letters dated 2nd March 2006

and 27th March 2006 and to fulfill the contractual obligation to the petitioner. The

petitioner made it clear that it reserved its right to claim damages due to air-

conditioning system not functioning properly. It is claimed that such claim, which

would include cost of replacement of parts and/or system, which would be referred to

arbitration. The petitioner did not appoint any arbitrator.

19 The respondent thereafter filed Arbitration Application (89/06) under

Section 11(6) of the Act of 1996 for appointment of an Arbitrator. By an Order dated

19th November 2010, this Court appointed Shri Justice B.N.Srikrishna (Retd.) a former

Judge of Supreme Court as an Arbitrator. The Arbitral Tribunal gave direction to the

parties to file pleadings. On 15th April 2011, the respondent filed its Statement of

Claim. Petitioner filed its statement of defence on on 26th August 2011 and

counterclaim on 26th September, 2011. The Arbitral Tribunal framed various issues

including the issues as to whether the Counterclaim or a substantial part thereof is

barred by the law of limitation? and whether the Counterclaim is not maintainable and

beyond the scope of reference ?

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20 By an Interim Award dated 26th July 2012 the Arbitral Tribunal rejected

the Counterclaim filed by the petitioner, however held that the same was withing the

scope of reference and the Tribunal has jurisdiction to entertain the same. The

petitioner therefore, filed Arbitration Petition (L) No.1240 of 2012 impugning

paragraph nos.18 to 20 and 22(A) of the impugned Award by which Counterclaim

made by the petitioner came to rejected by the Arbitral Tribunal.

21 Dr. M.R. Sathe, the leaned senior counsel appearing for the petitioner

made the following submissions :

(a) Section 21 of the Arbitration Act, 1996 contemplates the disputes and

not claims. On the date of notice issued on 29th march, 2006 by the respondent

invoking arbitration clause for referring the disputes to arbitration, there were existing

disputes between the parties including the disputes raised by the petitioner relating to

losses, damages suffered by the petitioner. Under Section 43(2) of the Arbitration Act,

1996, the arbitration shall be deemed to have commenced on the date referred in

section 21. The arbitral proceedings thus in respect of the disputes raised by the

respondent and also the petitioner commenced on the date on which the notice dated

29th March, 2006 was received by the petitioner. The limitation in respect of the

disputes raised by the petitioner also thus stopped when the said notice issued by

the respondent was received by the petitioner.

(b) The respondent itself in its arbitration application (90 of 2006) filed

under section 11(6) of the Arbitration Act,1996 in para 20 had referred to clause 2(f)

and had pointed out the nature of disputes between the parties and points of issues

as set out in Paragraph 1 to 13 of the said application. Para 1 to 13 of the said

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application refers to the correspondence exchanged between the parties including the

letter addressed by the petitioner raising the disputes in respect of the claims made

by the respondent and also letter addressed by the petitioner raising disputes about the

entitlement of the respondent and also raising the claims. It is submitted that the said

application under section 11(6) of the Arbitration Act, 1996, was for appointment of

the sole arbitrator to adjudicate the disputes and differences that had arisen between

the parties relating to agreement dated 2nd February, 2001 which includes the disputes

raised by the petitioner. The claims made by the petitioner were quantified in the

proceedings before the arbitral tribunal in furtherance of the disputes having arisen

between the parties.

(c) By the order passed by this Court, the application filed by the

respondent under section 11 came to be allowed. As a result of the said order, the

disputes that had arisen between the parties relating to agreement dated 2nd February,

2001 were referred to arbtiral tribunal including the disputes raised by the petitioner

which were quantified by way of counter claim before the arbitral tribunal.

(d) If finding of the Arbitral Tribunal that the respondent had committed

breach of contract or as to whether termination was illegal was in affirmative,

Counterclaim made by the petitioner would survive or vice versa. Counterclaim arises

out of the same set of facts and thus could not have been rejected at this stage.

Section 2(9) of the Act of 1996 provides that claim includes Counterclaim. Whether

petitioner filed Counterclaim or statement of claim, it was still a Claimant and thus

limitation stopped when notice given by the respondent invoked arbitration.

(e) The Counterclaim made by the petitioner have to be considered as set off.

Though legal set off can be rejected on the ground of limitation, but equitable set off

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can not be rejected unless the matter was tried by the Arbitral Tribunal. Claim for

equitable set off, need not be an ascertained sum. Reliance is placed on a para from

the commentary by Mulla on Civil Procedure Code 18th addition in support of the

pleading that equitable set off can be pleaded in Indian Courts. It is submitted that

vide Order XX Rule 19(3) of CPC (equitable set off), there is no limitation

applicable , thus the Arbitral Tribunal could not have rejected the Counterclaim which

was claimed as equitable set off.

22.

on the other hand, Mr. Rajadhyaksha, the learned counsel appearing for the

respondent made following submissions :

(a) Section 43 of the Arbitration Act, 1996 read with section 21 makes it clear

that when the notice invoking arbitration agreement was given by the claimant and

was received by the respondent, the arbitral proceedings commenced in respect of

only such dispute in respect of which request for referring that dispute to the

arbitration was given. It is submitted that admittedly no notice by the petitioner

invoking the arbitration agreement was issued. By reply given by the respondent,

claims of the respondent were denied. Such notice was not a notice for referring the

disputes in respect of the counter claim made by the petitioner before the arbitral

tribunal.

(b) The claim includes the counter claim. Reliance is placed on section 3(2)(b)

(ii) of the Limitation Act,1963. The said provision reads thus :

"3. Bar of Limitation : (1) .........................

(2)For the purposes this Act--

(3)(a) a suit is instituted-- .........................................

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(b) any claim by way of a set off or a counter claim, shall be treated as a separate suit and shall be deemed to have been instituted--

(i) .............................

(ii)in the case of a counter claim, on the date on which the counter claim is made in court;"

(c) Since there was no notice invoking arbitration agreement given by the

petitioner in respect of the dispute relating to counter claim, the limitation stopped in

respect of such counter claim only when the such counter claim was made before the

arbitral tribunal. It is submitted that the counter claim was admittedly filed before the

arbitral tribunal on 26th September, 2011 i.e. after five years of the notice dated 17th

April, 2006 issued by the respondent invoking arbitration agreement by the

respondent. The contract was admittedly terminated on 3rd December, 2004. The

Petitioner had already conveyed the respondents that the claim shall be made by the

petitioner before the notice was issued by the respondent on 29th March, 2006. In the

said notice invoking arbitration agreement given by the respondent, there was no

reference to the counter claim/dispute raised by the petitioner against the respondent.

There was no reference to any of the letters addressed by the petitioner to the

respondent in the said notice. The counter claim will have to be independently proved

even if the claim of the respondent is rejected. By letter dated 17th April, 2006, the

petitioner enumerated its claim and threatened to invoke arbitration clause in the

event of respondent refusing to pay the said amount. Admittedly no notice invoking

arbitration agreement was thereafter given by the petitioners. The said letter dated 17th

April, 2006 proposing to invoke arbitration agreement was given after notice

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invoking arbitration agreement by the petitioner. In no circumstances, it can be said

that the dispute in respect of the counter claim made by the petitioners were existing

on 29th March, 2006 and was thereafter referred to arbitration along with the claims

made by the respondent.

(d) There is no reference to any of the letters addressed by the petitioner in

application under Section 11 except the letter dated 27th April, 2005 by which the

petitioner had denied its liability to pay to the respondent herein. By the said letter the

petitioner had not asserted its counter claim and had not raised any dispute. Para 6 of

the said application filed under section 11, though refers to various letters, all such

letters were addressed by the respondent and not by the petitioner. Reliance placed by

the petitioner on clause 2(f) of Para 20 of the said application was thus totally

misplaced.

(e) the Petitioner had filed detailed reply to application filed by the

respondent under section 11 for seeking appointment of the arbitrator. Even in the said

reply, there was no reference to any counter claim and or alleged disputes between the

respondent and the petitioner in respect of counter claim. It is submitted that even if

all the claims and disputes between the parties are referred to the arbitral tribunal by

the order passed by this court under section 11(6), that does not stop limitation with

retrospective effect. In such a situation, the limitation would stop only when the

counter claim is lodged by the petitioner.

(f) By consent of both the parties, the arbitral tribunal had framed issues on

limitation and jurisdiction and had decided the same. The arbitral tribunal has given

finding of fact after considering all the correspondence and provisions of law that the

counter claims made by the petitioners were time barred. Thus this court under section

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34 of the Act will not interfere with the such findings of fact. It is submitted that the

interpretation of the arbitral tribunal on the basis of the documents produced by both

the parties and provisions and law is a possible interpretation and this court shall not

substitute its own views with the views of the arbitral tribunal.

(g) The Petitioner had not raised any plea of set of/equitable set off before

the arbitral tribunal and thus cannot be allowed to raise such plea for the first time in

this proceedings under section 34 of the Arbitration Act.

23.

The respondents placed reliance on the judgment of this court in the case of

ISPAT Industries Limited. Vs. Shipping corporation of India Limited delivered in

Arbitration Petition No. 570 of 2001 on 4th December, 2001. Relying upon the said

judgment, it is submitted that the limitation would stop in respect of counter claim

only when it is lodged with the arbitral tribunal. Para 7and 8 of the said judgment

reads thus :

"7. It is clear from the provisions of Section 21 of the Act that in terms

of these provision limitation stops running from the date of reference in respect of a particular dispute in relation to which a request for referring it to arbitration has been made. Thus Section 21 of the Act applies to the particular disputes mentioned in the reference. It will not take into its

compass all the existing disputes between the parties, unless in the reference letter it is so stated. It is clear from the provisions of Section 23 of the Act that once an arbitrator has been appointed, the parties have to appear before the arbitrator and the claimant has to file his statement of claim and the Respondent has to file his statement of claim and the Respondent has to file his defence. If the submission of the learned counsel for the Petitioner is accepted, that by letter dated 9th April, 1999 all disputes between the parties stood referred to the arbitrator, then there will

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be two claimants before the arbitrator namely the Petitioner and the Respondent, and both will have to file their respective claim statements. If it

was the case of the Petitioner that by letter dated 9th April, 1999 all the

disputes stood referred to the arbitrator including his claim against the Respondent, then it was for the Petitioner to file his claim statement. But he did not do so. On the contrary he filed his defence and thereafter a

counter claim, thereby conceding the position that before the arbitrator the Respondent was the claimant, whose claim only has been referred and so far as his claim is concerned, it was not already referred to arbitration, and

it has raised by filing a counter claim. If the claim of the Petitioner also stood referred to arbitrator by communication dated 9th April, 1999, I fail

to understand why it was necessary for the petitioner to file a counter claim and why he could not have field is claim along with the Petitioner.

This conduct of the Petitioner shows that he also proceeded on the basis that it is only the Respondent's claim that has been referred and the Petitioner had to make his claim by filing a counter claim.

8. So far as second submission, mainly that by communication dated

26-5-1999 the claim of the Petitioner also stood referred to the arbitration is concerned, subsequent conduct of the Petitioner which has been referred to above of not filing a claim, but filing the defence and then counter claim

belies the interpretation put on the recital letter dated 26-5-1999 by the learned Counsel for the Petitioner. The conduct of the Petitioner during the arbitral proceedings shows that he clearly understood that only the

claims of the Respondent were referred to the arbitrator and therefore, if the Petitioner wanted to raise his own claims, he had to do so by filing counter claim. If it is not in dispute before me that, in case it is held that the claims of the Petitioner were not referred to arbitration either by letter dated 9th April, 1999 or by letter dated 26-5-1999, then the counter claim submitted by the Petitioner on 10th March, 2000 is barred by the law of limitation. The result of the award is that the arbitrator has interpreted the two letters referred on above in the same manner as were understood by the

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petitioner. Therefore, it does not lien in the mouth of the petitioner that the view that has been taken by the arbitrator is an impossible view of the

material on record. Thus, I find that view that has been taken by the

arbitrator namely that the claim made in the counter claim is barred by law of limitation is a possible view of the law and the facts on record. Therefore, considering the extremely limited jurisdiction of this Court

under Section 34 of the Arbitration Act, in my opinion, petition cannot be entertained. It is clear from the observations of this Court in its judgment in the case of Vijaya Bank Vs. Maker Development Services, 2001 (4) ALL

MR 143 that even an error of law committed by an arbitrator cannot be corrected by this court in its limited jurisdiction under Section 34 of the

Arbitration Act, unless this Court find that the award is in conflict with the public policy of India. In my opinion, in view of the law laid down by this

Court, the jurisdiction of this Court under Section 34 cannot be extended in correcting the view taken by the arbitrator, which is a possible view of the facts and the law. "

24. The respondents also placed reliance on the judgment of the Supreme Court in

the case of State of Goa Versus Praveen Enterprises reported in 2011(3) Arb. L.R.

209 (SC) more particularly Paragraphs 13, 15 and 17 which reads thus :

"13. Section 21 provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences on the

date on which a request for that dispute to be referred to arbitration is received by the Respondent. Taking a cue from the said section, the Respondent submitted that arbitral proceedings can commence only in regard to a dispute in respect of which notice has been served by a claimant upon the other party, requesting such dispute to be referred to arbitration;

and therefore, a counter claim can be entertained by the arbitrator only if it has been referred to him, after a notice seeking arbitration in regard to such counter claim. On a careful consideration we find No. basis for such a

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contention. The purpose of Section 21 is to specify, in the absence of a provision in the arbitration agreement in that behalf, as to when an arbitral

proceedings in regard to a dispute commences. This becomes relevant for

the purpose of Section 43 of the Act. Sub-section (1) of Section 43 provides that the Limitation Act 1963 shall apply to arbitrations as it applies to proceedings in courts. Sub-section (2) of Section 43 provides that for the

purposes of Section 43 and the Limitation Act, 1963, an arbitration shall be deemed to have commenced on the date referred to in Section 21 of the Act. Having regard to Section 43 of the. Act, any claim made beyond the period

of limitation prescribed by the Limitation Act, 1963 will be barred by limitation and the arbitral tribunal will have to reject such claims as barred

by limitation.

15.In regard to a claim which is sought to be enforced by filing a civil suit,

the question whether the suit is within the period of limitation is decided with reference to the date of institution of the suit, that is, the date of presentation of a plaint. As Limitation Act, 1963 is made applicable to

arbitrations, there is a need to specify the date on which the arbitration is

deemed to be instituted or commenced as that will decide whether the proceedings are barred by limitation or not. Section 3 of 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 "the request for that dispute to be referred to arbitration is received by the

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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.

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 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."

25. I have heard the learned counsel for the parties and have given my anxious

considerations to the rival submissions made by counsel for both the sides. Section

43(2) and section 21 reads as under :

"43(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced onteh dtae refererd in section 21."

"21. Commencement of arbitral proceedings : Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute

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commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. "

26. Section 43(2) read with section 21 of the Act clearly provides that the

arbitration shall be deemed to have commenced on the date referred to in section 21.

The arbitral proceedings in respect of the particular dispute commenced on the date on

which the request for that dispute to be referred to arbitration is received by the

respondent. It is thus clear that only such disputes which were referred in the notice

invoking arbitration agreement with a request to refer the same to arbitration, arbitral

proceedings commenced and not Counter-claim. When the notice was given by the

respondent on 29th March, 2006, the said notice was only in respect of the disputes

having arisen between the parties due to refusal of claims made by the petitioner. On

the date of issuance of such notice, the petitioner had not even asserted its claim.

After issuance of such notice on 29th March, 2006, the petitioner by its letter dated

17th April, 2006 had asserted its claim for the first time. The dispute in respect of

the counter claim raised when the petitioner did not pay the said amount as

demanded. Such disputes thus did not exist when the notice invoking arbitration

agreement was given by the respondent on 29th March, 2006. In my view, the arbitral

proceedings therefore, cannot be said to have commenced in respect of the counter

claim when the notice was given by the respondent on 29th March, 2006. The counter

claim was admittedly filed on 26th September, 2011 which was made beyond the

period of limitation. The arbitral proceedings commenced in respect of the counter

claim only when the said counter claim was lodged by the petitioner on 26th

September, 2011. Even if the date of refusal on the part of the respondent, to pay the

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amount as demanded by the petitioner by its notice dated 17th April, 2006 is considered

as commencement of dispute, even in such case on the date of filing the counter claim

i.e. 26th September, 2011, the counter claim was barred by law of limitation. In my

view, thus the arbitral tribunal was justified in rejecting the counter claim filed by the

petitioner as time barred.

27. Considering the correspondence and the averments made in the application

filed by respondent under section 11 of the Act, it is clear that there was no reference

to the claims made by the petitioner arising out of any alleged disputes raised by the

petitioner resulting in a counter claim. All the correspondence referred by the

respondent in the said application were letters addressed by the respondent and not the

petitioners except one letter which did not pertain to the counter claim. Even in the

reply filed by the petitioner to the said application under section 11, did not refer to

any counter claim. The petitioner on the other hand had threatened to invoke

arbitration agreement by its letter dated 17th April, 2006 in the event of respondent

refusing to pay the amount claimed in the counter claim. Admittedly no notice came

to be given by the petitioner for appointment of the arbitrator though the respondent

did not pay the amount as demanded in the counter claim. Reference made to the

application filed under section 11 by the petitioner is totally misplaced.

28. In my view, the petitioner cannot be allowed to raise the issue of set off and or

equitable set off for the first time across th bar. No such plea was raised by the

petitioner in the written statement and or counter claim and not even in the present

petition. The issue of limitation is a mixed question of fact and law. The petitioner

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thus cannot be allowed to raise this issue for the first time in this proceedings.

29. The Judgment of this court in the case of ISPAT Industries Ltd (supra) and the

judgment of the Supreme Court in case of State of Goa (supra), relied upon by both

the parties and referred to aforesaid are squarely applicable to the facts of this case. It

has been held by the Supreme Court that if no notice under section 21 is given by

the party who had made counter claim, limitation in respect of the counter claim

would stop only when the same is lodged before the arbitral tribunal. It is held that

the separate notice in respect of the counter claim under section 21 is required to be

issued otherwise arbitration proceedings does not commence in respect of the counter

claim when other party gives notice under section 21 in respect of its claim. The facts

before this court and the judgments referred above are identical. The arbitral tribunal

has rightly rejected the counter claim. The arbitral tribunal has given finding of fact

after referring to the correspondence and after considering the provisions of law that

the claims are barred by Law of limitation. In my view such finding of fact can not be

interfered with by this court under section 34 of the Arbitration Act unless the same

are perverse. I do not find any perversity in the findings of the learned arbitral tribunal.

The interpretation of the arbitral tribunal based on the documents and provisions of

law is a possible interpretation and thus no interference is warranted with the said

interpretation of the arbitral tribunal.

30. I do not find any merit in the submissions made by the petitioner. Therefore, I

pass the following order :

hvn

ARBPL-1239-1240.12a

Arbitration Petition (L) No.1239 of 2010 and Arbitration Petition (L) No. 1240

of 2010 are dismissed. There shall be no order as to costs.

(R.D. DHANUKA, J.)