Manish Jain vs Ambuja Cement Rajasthan Ltd
2009 Latest Caselaw 795 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                             OMP No.325/2006

%                       Date of Decision: 13.03.2009

Manish Jain                                             .... Petitioner
                       Through Ms.Sonia Mathur, Advocate

                                     Versus

Ambuja Cement Rajasthan Ltd                               .... Respondent

                   Through Mr.T.S.Ahuja           and    Mr.Arun Arora,
                            Advocates.

CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR

1.   Whether reporters of Local papers may be                    YES
     allowed to see the judgment?
2.   To be referred to the reporter or not?                      NO
3.   Whether the judgment should be reported in                  NO
     the Digest?

1. This is a petition under Section 34 of the Arbitration &

Conciliation Act, 1996 filed by Sh.Manish Jain, proprietor of

M/s.Chetanya Road Carriers for setting aside the award dated 12th

February, 2006

2. The petitioner contended that he is running a transport company

having its head office at 181-182, Sadar Bazar, Nasirabad District,

Ajmer, Rajasthan. The respondent claimant is alleged to be a company

engaged in the business of manufacturing and marketing cement under

the brand name of "Ambuja Cement". In terms of an agreement dated

29th January, 1999 the petitioner was appointed as the authorized

transporter of the respondent with effect from 1st February, 1999.

3. Under the agreement for transporting the goods of the

respondent/claimant, the petitioner was also liable for any shortage,

pilferage, damage etc during handling and transportation. The

petitioner contended that 729 metric tons of cement was taken by the

petitioner from the claimant for transportation to various destinations.

4. The petitioner was entitled for the transportation charges at the

market rate under the transportation agreement. It is also contended

that no transportation charges were payable in case of loss.

5. The agreement between the parties contained an arbitration

agreement. On account of alleged breaches by the petitioner and the

claimant disputes arose and in view of the arbitration agreement

between the parties an arbitration panel was appointed. The presiding

arbitrator was appointed by this Court which gave an award dated 12th

February, 2006.

6. Before the arbitration panel, besides the claims of the

respondent/claimant the petitioner also raised counter claims and in

respect of the counter claims the following issues were framed by the

arbitration panel:-

"1. Whether the letter dated 28.12.99 issued by the claimant company was received and acted upon by the respondent, if so its effects? OPP

2. Whether the counter claim of the respondent is barred by limitation and is not maintainable? OPP

3. Whether the claimant is entitled to the amount as claimed in the claim petition? OPP

4. Whether the respondent is entitled to the amount as claimed in the counter claim? OPP

5. What would be rate of interest pendente lite and future interest on the amount awarded? OPP

6. Whether the reply and the counter claim is properly signed and verified, if not its effect? OPP

7. Relief."

7. While dealing with the issues no.2 & 4 the arbitration panel has

held that the agreement between the parties was of 29th January, 1999

for transportation of the cement bags and the dispute relates back to

the period till 31st March, 2000. The counter claims were first raised by

the petitioner before the Arbitration Panel when the counter claims were

filed. The counter claims which were preferred for the first time in

October, 2004 are therefore, barred by limitation. The contention of the

counsel for the petitioner that the period of limitation would run from

the date of filing of the claim petition or it would be from the date of

demand notice sent by the respondent was rejected by the arbitration

panel.

8. Against the award dated 12.2.2006 given by Arbitration Panel,

though a number of objections have been filed by the petitioner under

section 34 of the Arbitration and Conciliation Act, 1994, however, the

learned counsel for the petitioner has pressed objection only against

rejection of the counter claim of the petitioner being barred by time. The

learned counsel for the petitioner has challenged only the findings of

the arbitration panel pertaining to issue No.2 "whether the counter

claim of the respondent is barred by the limitation and is not

maintainable."

9. The learned counsel for the petitioner has contended that though

the last transaction between the parties was on 20th May, 2000 when

an amount of Rs.18,200/- was debited in the account of the respondent

on account of transportation charges on account of invoice No.337

which was for transportation of goods to Agra and a balance amount of

Rs.2,03,979.05/- was due on that date, however, the learned counsel

has contended that since there were negotiations going on between the

parties and the amount due to the petitioner had not crystallized on

20th May, 2000 when the last invoice was raised, therefore the cause of

action will lastly arise on the date when the amounts became payable

after negotiation and when the dispute in terms of the arbitration

agreement were raised by the respondent/claimant. The learned

counsel for the petitioner has also contended that the ratio of AIR 1969

Kerala 310, Govindji Jevat & Co. and Ors v. Cannanore Spinning and

Weaving Mills Ltd is not applicable to the facts and circumstances of

the present case and the Arbitration panel could not have relied on the

same.

10. The learned counsel for the respondent has refuted the plea

raised by the learned counsel for the petitioners that the cause of action

will arise when the arbitration agreement was invoked by the

respondent or on the date when the negotiations between the parties

had ended. The learned counsel has categorically contended that a

notice dated 6th June, 2002 was given on behalf of the respondent. A

reply dated 25th June, 2002 was received from the petitioner, however,

no counter claims were raised. It is also contended that in reply to the

petition filed for appointment of a presiding arbitrator, no counter

claims were raised by the petitioner. It is contended that the counter

claims were raised for the first time when the counter claims were filed

by the petitioner before the arbitration panel. It is contended in the

facts and circumstances that for the purpose of computation whether

the claims are within time or not, the date on which the counter claims

were first raised has to be considered. The learned counsel for the

respondent further contended that the view taken by the arbitration

panel is a plausible view and this court while dealing with the

objections to the award will not sit in appeal over the findings recorded

by the arbitrators nor would examine correctness of the award by

reappraisal of fact and law. The learned counsel very emphatically

submitted that the cause of action in the facts and circumstances will

not arise on account of receipt of notice from the respondent raising

claims against the petitioner for the purpose of alleged counterclaims of

the petitioner which were first raised before the arbitration panel when

the counterclaims were filed. It is also asserted that the period of

limitation will not be extended on account of alleged negotiations

between the parties unless there had been acknowledgement of the

counter claim by the respondent in writing. In the circumstances it is

contended that the cause of action last arose on 20th May, 2000 when

the last invoice was raised by the petitioner.

11. This cannot be disputed that the counter claim was filed by the

petitioner on 30th October, 2004 and in the counter claim dated 9th

October, 2004 in paras 14 to 17 an amount of Rs.2,03,979.05/- has

been claimed with interest at 18% per annum. Perusal of the statement

of account of Chetanya Road Carriers, Nasirabad of M/s.DLF Cement

Ltd shows that the invoice No.337 dated 20th May, 2000 was debited on

20th May, 2000 for transportation of goods to Agra for an amount of

Rs.18,200/-. With the debiting of the said amount, the amount which

became due from the claimant/respondent to the petitioner was

Rs.2,03,979.05/-.

12. The agreement between the petitioner and the respondent was for

transportation of the goods and consequently for the price of work done

by the petitioner at the request of the claimant/respondent the period of

limitation would be three years from when the work is done as under

the agreement and in the invoices raised by the petitioner no time had

been fixed for payment. In case the last invoice was raised on 20th May,

2000, the amounts due to the petitioner on account of invoices raised

for the work done on behalf of respondent will be three years from the

last invoice of 20th May, 2000 and consequently the period of limitation

to claim the said amount will expire on 20th May, 2003.

13. Under the Limitation Act the limitation for preferring a claim gets

extended on account of acknowledgement of the liability in writing or on

account of part payment within the period of limitation. Section 18 of

the Limitation Act contemplates that where before the expiry of the

period of suit, an acknowledgement of liability in respect of such claim

or right is made in writing by the party against whom such a right is

claimed, then a fresh period of limitation has to be computed from the

time when the acknowledgement was so signed. Under Section 19 of the

Limitation Act the period of limitation is also extended, if a part

payment is made on account of the liability of the opposite party.

14. Apparently in the present case neither there has been an

acknowledgement in writing nor has there been a part payment of the

amount due from the claimant/respondent to the petitioner.

Consequently, the period of limitation which was to expire on 20th May,

2003 will not be extended. The learned arbitration panel although has

referred to the decision of the Kerala High Court in Govindji Jevat

(Supra) however, it has held that since the agreement between the

parties is of 29th January, 1999 and cement bags were transported till

the period 31st March, 2000 and, therefore, the counter claim having

been preferred in October, 2004 is barred by limitation, therefore, does

not suffer any illegality so as to entail interference by this Court nor the

findings of the arbitrator is contrary to any law.

15. The objections have been filed by the petitioner under section 34

of the Arbitration and Conciliation Act, 1996. The only ground to which

the petitioner can possibly refer in support of its challenge is Section

34(2)(b)(ii) that the award is in conflict with the public policy of India. As

to what is public policy of India has been explained by the Supreme

Court in III (2003) SLT 324=2003 (5) SCC 705, Oil & Natural Gas

Corporation Ltd. v. Saw Pipes Ltd., in the following words:

"From the judgments discussed above, it can be held that the terms "public policy of India" is required to be interpreted in the context of the jurisdiction of the Court where the validity of award is challenged before it becomes final and executable. The concept of enforcement of the award after it becomes final is different and the jurisdiction of the Court at that stage could be limited. Similar is the position with regard to the execution of a decree. It is settled law as well as it is provided under the Code of Civil Procedure that once the decree has attained finality, in an execution proceedings, it may be challenged only on limited grounds such as the decree being without jurisdiction or a nullity. But in a case where the judgment and decree is challenged before the appellate Court or the Court exercising revisional jurisdiction, the jurisdiction of such Court would be wider. Therefore, in a case where the

validity of award is challenged, there is no necessity of giving a narrower meaning to the term public policy of India. On the contrary, wider meaning is required to be given so that the patently illegal award passed by the Arbitral Tribunal could be set aside. If narrow meaning as contended by the learned Senior Counsel Mr. Dave is given, some of the provisions of the Arbitration Act would become nugatory. Take for illustration a case wherein there is a specific provision in the contract that for delayed payment of the amount due and payable, no interest would be payable, still however, if the arbitrator has passed an award granting interest, it would be against the terms of the contract and thereby against the provision of Section 28(3) of the Act which specifically provides that Arbitral Tribunal shall decide in accordance with the terms of the contract. Further, where there is a specific usage of the trade that if the payment is made beyond a period of one month, then the party would be required to pay the said amount with interest at the rate of 15 per cent. Despite the evidence being produced on record for such usage, if the arbitrator refuses to grant such interest on the ground of equity, such award would also be in violation of Sub-sections (2) and (3) of Section 28. Section 28(2) specifically provides that the arbitrator shall decide ex aequo et bono (according to what is just and good) only if the parties have expressly authorised him to do so. Similarly, if the award is patently against the statutory provisions of substantive law which is in force in India or is passed without giving an opportunity of hearing to the parties as provided under Section 24 or without giving any reason in a case where parties have not agreed that no reasons are to be recorded, it would be against the statutory provisions. In all such cases, the award is required to be set aside on the ground of patent illegality."

16. The petitioner has contended that the award rejecting the counter

claim as barred by time is contrary to the Limitation Act. However, the

learned counsel for the petitioner is unable to show that the claim on

the basis of the cause of action which last arose on 20th May, 2000

could be raised for the first time on 30th October, 2004. The cause of

action in the present facts and circumstances would not arise on

account of disputes being raised by the respondent/claimant by giving

a notice nor will the cause of action arise on account of alleged

negotiation between the parties as during the negotiation or afterwards,

there had not been any acknowledgment of liability by the respondent

nor any part payment was made by the respondent towards the alleged

liability of the respondent to the petitioner. This has also not been

disputed that prior to 30th October, 2004, the counter claim for recovery

of Rs.2,03,979.05 with interest at the rate of 18% per annum was not

raised by the petitioner. Thus it cannot be inferred that the counter

claim of the respondent was within time and consequently the award

dismissing the counter claim of the petitioner as being barred by time

cannot be interfered with.

17. The award has not been challenged by the counsel for the

petitioner on any other grounds as only this ground was pressed by the

Learned counsel for the petitioner. Therefore the objections raised by

the petitioner are without any merit and they are dismissed. Parties are

however, left to bear their own costs.

March 13, 2009                                   ANIL KUMAR J.
„K‟