Interim arbitral award on admitted claim may rest on a quantified defence admission, even where adjustment and counterclaim are pleaded.

Section 31(6) of the Arbitration and Conciliation Act, 1996 is treated as permitting an arbitral tribunal to make an interim award on an admitted claim, including a claim analogous to a judgment on admission under Order XII Rule 6 CPC. A quantified liability stated in the defence and then described as adjusted against the other side's claim was regarded as a clear, positive and unequivocal admission to that extent. The label of adjustment, as distinct from set-off or counterclaim, did not defeat the admitted character of the sum or bar interim relief for it. The commentary notes that a separate counterclaim does not prevent an interim award on the admitted amount.

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Issues: (i) Whether an arbitral tribunal can pass an interim award under Section 31(6) of the Arbitration and Conciliation Act, 1996 on the basis of an admission; (ii) whether the statement in the defence amounted to a clear, positive and unequivocal admission of liability; (iii) whether the plea of adjustment, as distinct from set-off or counterclaim, prevented an interim award on the admitted amount.

Issue (i): Whether an arbitral tribunal can pass an interim award under Section 31(6) of the Arbitration and Conciliation Act, 1996 on the basis of an admission.

Analysis: Section 31(6) was treated as an express departure from both the earlier arbitration regime and the Model Law. The power to make an interim arbitral award was held wide enough to include a determination on an admitted claim, and it was not artificially confined so as to exclude an award akin to one on admission under Order XII Rule 6 of the Code of Civil Procedure, 1908. The object of the Act, namely speedy dispute resolution, supported that construction.

Conclusion: The arbitral tribunal had power to pass an interim award on an admitted claim.

Issue (ii): Whether the statement in the defence amounted to a clear, positive and unequivocal admission of liability.

Analysis: The defence expressly quantified the amount payable to the claimant and then stated that the sum had been adjusted towards the opposite party's claim. The pleading went beyond a vague acknowledgment and amounted to a categorical admission of liability to the extent stated. The tribunal was therefore justified in acting upon that admission.

Conclusion: The liability to the admitted extent was clearly and unequivocally admitted.

Issue (iii): Whether the plea of adjustment, as distinct from set-off or counterclaim, prevented an interim award on the admitted amount.

Analysis: Although adjustment is conceptually distinct from set-off and counterclaim, that distinction did not alter the admitted nature of the amount in question. Once the amount was treated by the party itself as liable and appropriated against its own claim, the tribunal could grant interim relief for that sum. The separate counterclaim did not bar such an award.

Conclusion: The plea of adjustment did not prevent the interim award.

Final Conclusion: The challenge to the interim award failed, the original petition was dismissed, and the respondent was permitted to withdraw the deposited amount on furnishing bank guarantee.

Ratio Decidendi: Section 31(6) empowers an arbitral tribunal to make an interim award on an admitted claim, and a quantified liability expressly appropriated by the party itself constitutes a clear admission capable of being acted upon notwithstanding the presence of a counterclaim or the label of adjustment.

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