Counter claim does not bar interim arbitral award on admitted liability; Section 34 interference requires patent illegality or perversity.

Section 31(6) of the Arbitration and Conciliation Act empowers an arbitral tribunal to issue an interim award on matters that could form part of a final award. A pending counter claim does not, by itself, prevent the tribunal from granting interim relief on an admitted liability, because a counter claim is treated as an independent claim. The legality of the interim award must be assessed on the material supporting the admitted claim, not merely on the existence of unresolved disputes. On that basis, interference under Section 34 was held unwarranted absent patent illegality or perversity.

---

---

Issues: Whether the pendency of a counter claim barred the arbitral tribunal from making an interim award for the admitted amount, and whether such interim award suffered from any legal infirmity warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Analysis: Section 31(6) of the Arbitration and Conciliation Act, 1996 empowers the arbitral tribunal to make an interim arbitral award on any matter on which a final award may be made. A counter claim is treated as an independent claim and does not, by itself, deprive the tribunal of jurisdiction to grant an interim award on an admitted liability. The validity of the interim award had to be tested on the material supporting it, not on the mere existence of unresolved disputes or counter claims. Since the amount of Rs. 7.69 crores was found to be admitted on the correspondence and pleadings, there was no patent illegality or perversity in directing payment of that sum by way of interim award.

Conclusion: The interim award was legally competent and was not liable to be set aside merely because a counter claim was pending; interference under Section 34 was unwarranted.

Ratio Decidendi: A counter claim does not bar an interim arbitral award on an admitted liability, and such an award will not be interfered with under Section 34 unless it is shown to suffer from patent illegality or perversity.

---