2007 (2) TMI 692 - SC - Indian Laws

Supreme Court Dismisses NTPC Appeal, Upholds Tribunal's Decision on Non-Arbitrable Counter-Claims Under Arbitration Act.

The SC upheld the HC's decision, ruling NTPC's appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996, as non-maintainable. The ... Challenging the partial award given by the Arbitration Tribunal - Whether against the order of partial award an appeal is maintainable directly u/s 37 of the of the Arbitration and Conciliation Act, 1996 (Act) Or Not - Jurisdiction by the Arbitral Tribunal in terms of Sub-section (2) of Section 16 of the Act - HELD THAT:- An appeal under sub-section (2) of Section 37 only lies if there is an order passed u/s 16(2) & (3) of the Act. Section 16(2) & (3) deals with the exercise of jurisdiction. The plea of jurisdiction was not taken by the appellant. It was taken by the respondent in order to meet their counterclaim. But it was not in the context of the fact that the Tribunal had no jurisdiction, it was in the context that this question of counterclaim was no more open to be decided for the simple reason that all the issues which had been raised in counterclaim Nos. 1 to 10 had already been settled in the minutes of meeting and it was recorded that no other issues to be resolved in 1st and 3rd contracts. Therefore, we fail to understand how the question of jurisdiction was involved in the matter. In fact it was in the context of the fact that the entire counterclaims have already been satisfied and settled in the meeting that it was concluded that no further issues remained to be settled. In this context, the counterclaims filed by the appellant was opposed. If any grievance was there, that should have been by the respondent and not by the appellant. It is only the finding of fact recorded by the Tribunal after considering the counterclaim vis-a-vis the minutes of the meeting. Therefore, there was no question of jurisdiction involved in the matter so as to enable the appellant to approach the High Court directly. Therefore, the question of jurisdiction in the present controversy did not arise because the counter-claim was opposed by the respondent-SAG as the same has since been stood settled. In view of the finding of fact recorded by the Tribunal that all the counter-claims stood covered by the decisions of the minutes of meeting though it was initially opposed by the respondent-SAG that it was not arbitrable or the Tribunal could not go into counter-claim, despite that it examined on the merit of the matter and on the merits the Tribunal disposed of the counter-claim by giving partial award. We fail to understand how can the appellant-NTPC can raise the question of jurisdiction and bring its case u/s 16(2) & (3). We are satisfied that the view taken by the High Court is correct, appeal was not maintainable u/s 37(2) of the Act before the High Court and there is no ground to interfere with the order passed by the High Court. Accordingly, the appeal is dismissed Issues Involved:1. Maintainability of NTPC's appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996.2. Jurisdiction of the Arbitral Tribunal to entertain NTPC's counter-claims in light of the Memorandum of Understanding (M.O.M.).Detailed Analysis:Issue 1: Maintainability of NTPC's Appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996.The Arbitral Tribunal had issued a partial award, rejecting NTPC's counter-claims based on the M.O.M. NTPC sought to appeal this partial award under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996. NTPC argued that the Tribunal's refusal to entertain its counter-claims constituted a decision on jurisdiction, making it appealable under Section 37(2)(a).The Supreme Court examined whether the Tribunal's decision could be considered a refusal to exercise jurisdiction. It was noted that the Tribunal had not declined jurisdiction but had adjudicated the counter-claims on their merits, finding them unsustainable due to the M.O.M. The Court clarified that Section 37(2)(a) allows appeals only when the Tribunal accepts a plea of absence or excess of jurisdiction. Since the Tribunal's decision was based on the merits and not on jurisdictional grounds, NTPC's appeal was not maintainable under Section 37(2)(a).The Court cited the case of Pandurang Dhoni Chougule v. Maruti Hari Jadhav to emphasize that a plea of limitation or res judicata concerns jurisdiction, but in this case, the Tribunal's decision was not about jurisdiction but about the merits of the counter-claims.Issue 2: Jurisdiction of the Arbitral Tribunal to Entertain NTPC's Counter-Claims in Light of the M.O.M.The Tribunal had found that most of NTPC's counter-claims were settled by the M.O.M., and thus, did not survive for adjudication. NTPC contended that this amounted to a refusal to exercise jurisdiction. However, the Tribunal had considered the M.O.M. and determined that it settled the disputes, making the counter-claims inadmissible.The Supreme Court agreed with the Tribunal's reasoning, stating that the decision was based on the merits of the counter-claims and the M.O.M., not on a jurisdictional issue. The Court highlighted that the Tribunal had the competence to rule on its own jurisdiction under Section 16 of the Act and that NTPC's counter-claims were found to be settled by the M.O.M., making them non-arbitrable.The Court emphasized that the appeal under Section 37(2)(a) is only maintainable when the Tribunal accepts a plea of lack of jurisdiction or excessive jurisdiction. Since the Tribunal had adjudicated the counter-claims on their merits, NTPC's appeal was not maintainable.Conclusion:The Supreme Court upheld the High Court's decision, stating that NTPC's appeal under Section 37(2)(a) was not maintainable as the Tribunal's decision was based on the merits of the counter-claims and not on jurisdictional grounds. The Court dismissed the appeal, affirming that NTPC's counter-claims were settled by the M.O.M. and were thus non-arbitrable.