Delhi High Court
M/S Ved Prakash Mithal And Sons vs Principal Kirorimal College & ... on 24 September, 2020
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 24th September, 2020
+ CM(M) 452/2020& CM APPLN. 22682/2020
M/S VED PRAKASH MITHAL AND SONS ..... Petitioner
versus
PRINCIPAL KIRORIMAL COLLEGE & ANR. ..... Respondents
Advocates who appeared in this case:
For the Petitioner: Mr. Peeyoosh Kalra, Advocate
For the Respondents: Mr. Ankur Chhibber, Mr. Anshuman Mehrotra, Mr. Harsh
Dhankar, Mr. Parv Garg and Mr. Nikund Arora, Advocates
CORAM:-
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
JUDGMENT
SANJEEV SACHDEVA, J.
1. The hearing was conducted through video conferencing.
2. Petitioner, by this petition, impugns order dated 25.08.2020
whereby the arbitral tribunal has dismissed the application filed by the
petitioner under Order VII Rule 11 (a) and (d) read with Section 151
CPC for rejection of the counter claim filed by the respondent.
3. It is contended by learned counsel for the petitioner that the
subject application was filed on three grounds; i) the counter claim
being barred by limitation; ii) there was no specific reference of the
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counter claims to arbitration; and iii) the counter claim did not
disclose any cause of action.
4. Learned counsel for the petitioner submits that since the
Arbitrator has held that the question of limitation is a mixed question
of fact and law and that the counter claim does disclose a cause of
action and he is not pressing his challenge to the said order on those
two grounds and reserves his right to raise the plea of limitation in the
arbitration proceedings.
5. Learned counsel submits that the challenge to the order dated
25.08.2020 is restricted to the plea that there is no specific reference
by the Court of the counter claim to arbitration and as such the arbitral
tribunal is precluded from entertaining the counter claims.
6. It is contended by learned counsel for the petitioner that Suit
was filed by the petitioner for recovery on 04.09.2014. Written
Statement was filed and thereafter the petitioner amended the Plaint
and Written Statement to the Amended Plain was filed by the
respondent.
7. Thereafter, respondent filed an application under Section 8 of
the Arbitration and Conciliation Act, 1996 for referring the parties to
arbitration, which application was allowed by order dated 30.04.2019.
8. Learned counsel submits that by till order dated 30.04.2019 was
passed, no counter claim had been raised by the respondent and as
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such the reference was only of the claims raised by the petitioner and
the Arbitral Tribunal has erred in not rejecting the claims under Order
7 rule 11 CPC.
9. Learned counsel submits that since there was no specific
reference of the counter claim to arbitration, the arbitral tribunal is
precluded from entertaining the same.
10. Reliance is placed by learned counsel for the petitioner on the
judgment of the Supreme Court in State of Goa Vs. M/s Parveen
Enterprises 2012 (12) SCC 581 to contend that where reference to the
arbitrator is to decide specific disputes enumerated by the
parties/court/appointing authority, the arbitrator's jurisdiction is
circumscribed by the specific reference and the arbitrator can decide
only those specific disputes.
11. Learned counsel for the Respondent contends that order dated
30.04.2019, whereby parties were referred to arbitration did not refer
only specified disputes and did not restrict the arbitral proceedings to
only the disputes referred, respondent is not precluded from filing a
counter claim.
12. Learned counsel for the respondent also relies on the judgment
of Parveen Enterprises (supra) in support of his submission.
13. The Supreme Court in of Parveen Enterprises (supra) inter-
alia held as under:
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"11. Reference to arbitration can be in respect of all
disputes between the parties or all disputes regarding a
contract or in respect of specific enumerated disputes.
Where "all disputes" are referred, the arbitrator has
jurisdiction to decide all disputes raised in the pleadings
(both claim and counter-claim) subject to any limitation
placed by the arbitration agreement. Where the
arbitration agreement provides that all disputes shall be
settled by arbitration but excludes certain matters from
arbitration, then, the arbitration will exclude the
excepted matter and decide only those disputes which are
arbitrable. But where the reference to the arbitrator is to
decide specific disputes enumerated by the
parties/court/appointing authority, the arbitrator's
jurisdiction is circumscribed by the specific reference
and the arbitrator can decide only those specific
disputes.
***** ***** *****
27. Section 23 read with Section 2(9) makes it clear
that a respondent is entitled to raise a counter claim
"unless the parties have otherwise agreed" and also add
to or amend the counter claim, "unless otherwise
agreed". In short, unless the arbitration agreement
requires the arbitrator to decide only the specifically
referred disputes, the respondent can file counter claims
and amend or add to the same, except where the
arbitration agreement restricts the arbitration to only
those disputes which are specifically referred to
arbitration, both the claimant and the respondent are
entitled to make any claims or counter claims and further
entitled to add or amend such claims and counter claims
provided they are arbitrable and within limitation.
***** ***** *****
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32. A counterclaim by a respondent presupposes the
pendency of proceedings related to the disputes raised by
the claimant. The respondent could no doubt raise a
dispute (in respect of the subject-matter of the
counterclaim) by issuing a notice seeking reference to
arbitration and follow it by an application under Section
11 of the Act for appointment of arbitrator, instead of
raising a counterclaim in the pending arbitration
proceedings. The object of providing for counterclaims is
to avoid multiplicity of proceedings and to avoid
divergent findings. The position of a respondent in an
arbitration proceedings being similar to that of a
defendant in a suit, he has a choice of raising the dispute
by issuing a notice to the claimant calling upon him to
agree for reference of his dispute to arbitration and then
to resort to an independent arbitration proceedings or
raise the dispute by way of a counterclaim, in the
pending arbitration proceedings.
***** ***** *****
41. The position emerging from the above discussion
may be summed up as follows:
(a) Section 11 of the Act requires the Chief Justice or
his designate to either appoint the arbitrator(s) or to take
necessary measures in accordance with the appointment
procedure contained in the arbitration agreement. The
Chief Justice or the designate is not required to draw up
the list of disputes and refer them to arbitration. The
appointment of the Arbitral Tribunal is an implied
reference in terms of the arbitration agreement.
(b) Where the arbitration agreement provides for
referring all disputes between the parties (whether
without any exceptions or subject to exceptions), the
arbitrator will have jurisdiction to entertain any
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counterclaim, even though it was not raised at a stage
earlier to the state of pleadings before the arbitrator.
(c) Where however the arbitration agreement requires
specific disputes to be referred to arbitration and
provides that the arbitrator will have the jurisdiction to
decide only the disputes so referred, the arbitrator's
jurisdiction is controlled by the specific reference and he
cannot travel beyond the reference, nor entertain any
additional claims or counterclaims which are not part of
the disputes specifically referred to arbitration.
(underlining supplied)
14. The Supreme Court in Parveen Enterprises (supra) has held
that the Chief Justice or his designate while exercising the powers of
appointment under Section 11 is not required to draw up a list of
disputes and refer them to arbitration and further where the arbitration
agreement provides for referring all disputes between the parties,
whether without any exception or subject to exception, the arbitrator
would have the jurisdiction to entertain any counterclaim even though
it was not raised at a stage earlier to the stage of pleadings before the
arbitrator.
15. The Supreme Court further held that the position of a
respondent in an arbitration proceedings is similar to that of a
defendant in a suit, he has the choice of raising the dispute by issuing
a notice to the claimant calling upon him to agree for reference of his
dispute to arbitration and then to resort to an independent arbitration
proceedings or raise the dispute by way of a counterclaim, in the
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pending arbitration proceedings.
16. Respondent is entitled to raise a counterclaim unless the parties
have otherwise agreed and also to amend or add to the counterclaim
unless otherwise agreed. Unless the arbitration agreement requires the
arbitrator to decide only the specific referred disputes, respondent can
file counterclaim and amend or add to the same. Except where
arbitration agreement restricts the arbitration to only those disputes
which are specifically referred to arbitration, both parties are entitled
to make claims or counter claims and further entitled to add or amend
such claims or counterclaims provided they are arbitrable and within
limitation.
17. Learned counsel for the petitioner fairly concedes that there is
no stipulation in the arbitration agreement which restricts reference
only of any particular type of disputes or excludes reference of any
other dispute.
18. Reference may also be had to the order dated 30.04.2019 in
CS(Comm.) 580/2016 wherein this Court has held as under:-
"15. Under these circumstances and also in view of the
consent given by Defendant Nos. 1 and 2, an independent
Arbitrator is appointed to adjudicate the disputes
between the parties. Hon'ble Mr. Justice S. P. Garg
(Retd) - (M: 9910384631, Add: D-72,. Saket Court
Residential Complex, Saket, New Delhi - 110017) retired
judge of this Court is appointed as the Sole Arbitrator to
adjudicate the disputes between the parties. The claims
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raised by the Plaintiff in the amended plaint, shall be
treated as the Claims before the Arbitrator. Both parties
agree, that the arbitration may be conducted under the
aegis of the Delhi International Arbitration Centre
(DIAC) and its Ru1es.
16. None of the observations made, either in the order
dated 6th December, 2018 or in today's order would bind
the Arbitrator in terms of the adjudication of issues which
may arise. All issues and objections are left open to both
the parties."
19. Perusal of order dated 30.04.2019 shows that the order does not
refer any particular dispute or excludes from reference any particular
or other disputes. Rather the Court has held that "None of the
observations made, either in the order dated 6th December, 2018 or in
today's order would bind the Arbitrator in terms of the adjudication
of issues which may arise. All issues and objections are left open to
both the parties.", which clearly signifies that there is a general
reference of all disputes and issues that have arisen or may arise
between the parties.
20. Clearly since there is no restriction either in the arbitration
agreement or in the order of reference dated 30.04.2019 with regard to
disputes that can be referred or exclusion from reference of certain
disputes. Accordingly, the contention of learned counsel for the
petitioner that the counterclaims could not have been entertained by
the Arbitral Tribunal is not sustainable.
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21. The issue as to whether the counterclaims are within limitation
or not has already been held by the arbitral tribunal to be a mixed
question of fact and law and said issue has been left open to be
decided at the time of final adjudication of the arbitral proceedings.
22. I find no merit in the petition or ground to interfere with the
impugned order dated 25.08.2020 of the Arbitral Tribunal.
23. The petition is accordingly dismissed.
24. Copy of the order be uploaded on the High Court website and
be also forwarded to learned counsels through email by the Court
Master.
SANJEEV SACHDEVA, J
SEPTEMBER 24, 2020
'rs'
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