TaxTMI 
TaxTMI 
2012 (9) TMI 1107
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtain claims on the respondent and demanded payments from the respondent vide letter dated 22.02.1999. On 09.08.1999 (vide R-46), the respondent disputed the said claims. It was alleged that the petitioner had stopped the work and did not restart the same despite notice. It was also stated that the respondent had no alternative but to get the balance work executed at the petitioner‟s risk and cost. It was specifically stated that "there is a lot of owner issue materials outstanding with M/s RKC which is required to be returned to NTPC. The detail of the outstanding owner issue material based on the last RA Bills no.142 is accounted and enclosed as Annex-I. It is a matter of record that no efforts have been made to return balance owner issue material inspite of repeated verbal and written requests". The respondent demanded the petitioner to return the balance owner issue material. It was stated that the total recoveries amounted to ₹ 283 lacs approximately which includes recoveries against unaccounted owner issue material. It was stated that in case the amount of ₹ 283 lacs is not paid within 15 days, the respondent would be constrained to seek arbitration under cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t before this Court. Vide order dated 25.11.2003, this Court appointed the aforementioned arbitrator to adjudicate the disputes between the parties. 2.6. The Arbitral Tribunal vide impugned Award dated 13.11.2009 allowed: A. Claims of the Petitioner to the following extent: Claim No. Head Amount awarded 1(a) and 1(i)(i) Balance amount payable to the Petitioner/claimant on the basis of the measurements of the work executed by the Petitioner/claimant and duly entered by the Respondent in its measurement books. ₹ 17,96,281/- 1(i)(ii) Balance payment of structure steel of cladding structure ₹ 73,500/- 1(k) Fitting and fixtures of teak wood frames ₹ 1,69,802/- 2 Quantities of Work executed beyond the deviation limits in various items of work ₹ 1,54,28,696/- 3 Escalation charges ₹ 47,54,047/- 7 and 9 „Overhead losses suffered by the Petitioner/claimant due to under utilisation/ partial utilisation of tools, plants, machinery, staff and personnel- for the prolongation of work from the stipulated date of completion‟ AND „Loss of profitability/ loss of turnover for prolongation of the work‟ ₹ 60,04,386/- 10 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issions 4. Learned Senior Counsel for the petitioner, Mr. Chetan Sharma, submitted that the Counter claims of the Respondent could not have been adjudicated upon as the same were barred by limitation. It is submitted that the Respondent raised a demand towards material accounting/reconciliation vide letter dated 06.12.1999. Therefore, the cause of action for the respondent to initiate recovery proceedings arose on that date and, as such, the Respondent should have filed its counter claims within 3 years from that date either by filing a suit or commencing arbitral proceedings in terms of Section 21 of the Act. Not having done so, the counter claims were barred by limitation. The Counter claims, for the first time, came to be filed along with the Statement of defence, on or about June 2004, which was beyond the prescribed period of limitation. Reliance was placed upon the judgments of the Supreme Court in State of Goa v. Praveen Enterprises, 2011 STPL (Web) 561 SC; J.C. Budhiraja v. Chairman, Orissa Mining Corporation Ltd. & Anr., (2008) 2 SCC 444; S. Rajan v. State of Kerala and Anr., AIR 1992 SC 1918; and the judgment of this Court in Smt. Biba Sethi v. Dyna Securities Limited, 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Arbitral tribunal. Since such a plea was never raise by the Petitioner before the tribunal, the Petitioner cannot raise the same before this Court for the first time in these proceedings. Reliance was placed on the judgment of the Bombay High Court in Bharat M. Nagori v. Satish Ashok Sabnis & Anr., 2003 (4) R.A.J. 47 (Bom); Vimal G. Jain v. Vertex Financial Services Pvt. Ltd., 2007 (4) Arb. LR 18 (Bombay) (DB) and judgment of the Supreme Court in Balasaria Construction (P) Ltd. v. Hanuman Seva Trust & Ors., (2006) 5 SCC 658. 10. It was submitted that even under Order VII Rule 11, CPC, a suit cannot be dismissed on the ground of limitation without proper pleadings, framing of issues and taking of evidence. Reference in this regard was made to the judgment of the Supreme Court in Ramesh B. Desai and Others v. Bipin Vadilal Mehta and Others, (2006) 5 SCC 638. It was submitted that this Court while exercising jurisdiction under Section 34 of the Act cannot re-appreciate the facts and evidence. The Court does not sit in appeal to take up the issues which were never argued or pleaded before the Arbitral Tribunal. 11. Learned senior counsel submitted that the counter claims were no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,49,458.70/-. According to the Respondent, the same was merely an afterthought. It was submitted that the entire claim allowed with respect to claim no. 2 was ₹ 1,54,28,696.15/-, which was the amount shown in the final bill (as the recovery amount could have been worked out only then). After giving adjustment of the payment made, till the second last running bill of ₹ 1,47,49,458.70/-, the petitioner (under the final bill) was entitled to only ₹ 6,79,237.45/- under claim no. 2. Petitioner's submissions in Rejoinder 15. The Petitioner in rejoinder arguments denied that the Petitioner is an unregistered partnership firm. It was submitted that the same objection was raised by the Respondent before the Arbitral tribunal, to which the Petitioner had furnished a registration certificate- available on the records of the Arbitral Tribunal at page C-820. It was further denied that the present petition had not been duly instituted by an authorised person. Reliance was placed by the Petitioner on a power of attorney executed in favour of the person who has instituted the present petition, viz. Shri Jitendra Singh S/o Late Sh. Khajan Singh. Furthermore, it was submitted tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to render Section 28 of the Act and Section 3 of the Limitation Act otiose. The Tribunal would, therefore, be obliged to decide the dispute in accordance with the Substantive law in force in India. 18. It was submitted that the „Counter Claims‟ are also „Claims‟ raised by a Respondent. Hence, the provision of Section 21 of the Act is squarely applicable and, consequently, until and unless a notice is served upon the claimant, the question of Arbitral proceeding, in respect of the counter claim, commencing would not arise. 19. It was submitted that the Arbitral tribunal being a creature of the contract between the parties, cannot ignore the provisions of the contract and more specifically, clause 8.3.1 (e) in the present case. It was submitted that the counter claim allowed was beyond the scope of the contract and as such was liable to be set aside. 20. The Petitioner denied to have not disputed the quantity of materials issued, consumed and wasted. It was submitted that the Learned Arbitrator, under the garb of Section 33 of the Act, has re-written the Award against claim No.2 as an adjustment- which is not permissible under the law. Discussion 21. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by a respondent in an arbitral proceedings, the date on which the counter claim is made before the arbitrator will be the date of "institution" in so far as counter claim is concerned. There is, therefore, no need to provide a date of „commencement‟ as in the case of claims of a claimant. Section 21 of the Act is therefore not relevant for counter claims. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counter claim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under section 11 of the Act, the limitation for such counter claim should be computed, as on the date of service of notice of such claim on the claimant and not on the date of filing of the counter claim." 24. The issues which arose before the Supreme Court for consideration, and which the Supreme Court was dealing with were not the same as the one raised by the petitioner. The issue raised and considered by the Supreme Court was "Whether the respondent in an arbitration proceedings is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Supreme Court set aside the finding/assumption of the Arbitrator that if the application for appointment of arbitrator was made in time, then all claims made in the claim statement filed before the appointed arbitrator are also in time. The Supreme Court held that Section 37(3) of the Arbitration Act 1940 provides that for the purpose of the Limitation Act, an arbitration is deemed to have been commenced when one party to the arbitration agreement serves on the other party thereto, a notice requiring the appointment of an arbitrator. Such a notice having been served, it has to be seen whether the claims were in time as on that date. If the claims are barred by limitation on that date, it follows that the claims had to be rejected by the Arbitrator on the ground that the claims were barred by limitation. The said period of limitation has nothing to do with the period of limitation for filing a petition under Section 8(2) of the Arbitration Act, 1940 for appointment of an arbitrator- as the cause of action in that case would arise when the other party fails to comply with the notice invoking arbitration. 28. For the purposes of deciding the question whether the counter claims wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y set aside and the suit was remanded back to the trial. 31. The last three decisions referred to above do not advance the petitioner‟s submissions for the reason that in all those cases, the Court which permitted the raising of the issue of limitation for the first time was acting as the appellate Court. It is well settled that an appeal is a continuation of the original proceedings. The entire matter is at large before an appellate Court. The same is not true about a Court hearing objections to an arbitral award under Section 34 of the Act. The arbitrator is the final judge of facts. The Court while hearing objections does not scrutinize the award as an appellate forum. 32. Reliance placed on Orient Ceramic Products Pvt. Ltd. (supra) also seems to be misplaced. In this case, the defendant sought to set up a counter claim. The Court, after examination of the facts before it, as pleaded in the application, whereby the counter claim was sought to be set up, came to a definite conclusion that the same was barred by limitation. It was on this account that the Court did not permit the counter claim to be filed by the defendant. Moreover, the counter claim was sought to be set u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ook the view that the "suit could not be dismissed as barred by limitation without proper pleadings, framing of an issue of limitation and taking of evidence. Question of limitation is a mixed question of law and fact. Ex facie in the present case on the reading of the plaint it cannot be held that the suit is barred by time." 37. In Ramesh B. Desai (Supra), the appellants had filed a company petition under Section 155 of the Companies Act, 1956. Respondent no. 1 and 2 moved an application to dismiss the petition on the ground that the same was barred by limitation. The application was allowed by the Ld. Company Judge and the order was affirmed in appeal by a Division Bench of the High Court. The Supreme Court, in appeal, observed that "A plea of limitation cannot be decided as an abstract principle of law divorced from facts as in every given case the starting point of limitation has to be ascertained which is entirely a question of fact. A plea of limitation is a mixed question of law and fact". Relying upon the principle laid down in its earlier judgment, in Balasaria Construction (P) Ltd. (Supra), it observed that "unless it becomes apparent from the reading of the company pet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been raised for the first time, is allowed and suit is dismissed without giving an opportunity to the plaintiff to oppose it on the facts and evidence, it may cause prejudice to some of the parties to the suit." The situation, in a case like the present, is still worse for the party raising a belated plea of limitation because the Court, as aforesaid, is not an appellate forum qua the arbitral award. As aforesaid, an appeal is a continuation of an original suit proceeding. Therefore, it is possible to amend the plaint even during the pendency of an appeal. It is also possible to lead additional evidence at the appellate stage. But this facility is not available before the Court hearing objections to an arbitral award. For the aforesaid reason, the decision in Gannmani Anasuya (supra), has no relevance. 40. In Gannon Dunkerley (Supra), this Court allowed the plea of limitation to be raised for the first time in a petition/objections under Section 16, 30 and 33 of the Arbitration Act, 1940 against an arbitral award, as the facts of the case were not disputed and the issue of limitation appeared on the face of the record. As aforesaid, that does not appear to be the position in the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of law and fact." Consequently, unless the plea of limitation is raised at the earliest point in time before the learned Arbitrator, it cannot be adjudicated upon as a mixed question of law and fact. In Oil and Natural Gas Corporation Limited vs. Mc Chemical Engineers, 1999 (2) Raj. 149 (SC) the Supreme Court negatived the plea of limitation raised for the first time in the course of challenge to the award before the Court. In Tamil Nadu Water Supply v. M. Abdul Karim, 2010 (4) ALR 581 (Madras) it was again held that without a proper foundation of facts laid before the learned Arbitrator to demonstrate that the claims were barred by limitation, a plea to that effect cannot be raised for the first time in Court. A Division Bench of Bombay High Court in Vimal G. Jain v. Vertex Financial Services Pvt. Ltd., 2007 (4) Arb LR 18 (Bombay) held that if the point regarding the bar of limitation is not raised before the Arbitrator, it should be deemed to have been waived. Consequently, "the question of entertaining such point in proceedings under Section 34 of the Act or in an appeal arising from the order passed therein cannot arise." This Court has held to the same effect in M/s. Uppal Eng....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ked the arbitration agreement, the petitioner itself sought to raise the issue of adjustment sought to be made by the respondent on account of owner issued material, by placing reliance on the communication dated 10.05.2000 extracted in para 2.3 above. The respondent could have also contended that the petitioner itself sought reference of the disputes with regard to the amount adjusted by the respondent to arbitration, as that was the justification offered by the respondent to not pay the dues of the petitioner under the contract. It appears, that because the issue of limitation was never raised by the petitioner, the tribunal could not examine whether the counter claim was in the nature of an adjustment. Even if the said counter claim was not in respect of an adjustment but an independent counter claim, the learned Arbitrator was precluded from considering the issue as to when the cause of action last arose in favour of the respondent, and when the period of limitation for making the said counter claim started to run against the respondent. This was a mixed question of facts and law. The tribunal could also not consider the issue, whether in terms of the arbitration agreement, it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... will first take up the recovery in respect of Reinforcement Steel. Although in the statement of counter claim, the amount claimed in respect of this material was ₹ 1,49,89,462/-. Yet, in the details filed by the respondent during the proceedings on 24.5.2007, which were furnished to the counsel for the claimant at that time but filed on the record on 31.1.2009, show that the respondent is now claiming ₹ 1,27,70,884/-. There is no dispute with regard to the quantity of material issued to the claimant. 198. The claimant however, has endeavored to show that the steel so issued was over weight. The respondent in its calculation has given due account of the overweight material as appeared on the record. The claimant on the other hand has assumed without any basis that over weight found in respect of particular quantity of steel should be spread over by average in a generalized manner in respect of the entire quantity of the steel issued to the claimant. There is no basis for the same. It can be seen at page 151 of Book No.5 (Vol.XXX), the claimant had mentioned about the weight difference at Sl No.3.Col.No.3 for the quantity of steel issued for section 16mm dia, whereas, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of material, as enumerated in the contract, and the quantity of material issued to the petitioner- were not disputed. These aspect, therefore, do not call for interference in these proceedings. 54. The petitioner herein, however, tried to wash its hands of the said liability by endeavouring to show that the steel issued by the respondent was over-weight. The Ld. Arbitrator, while returning a finding of fact, rejected the said defence on the ground that the petitioner assumed, without any basis, that the over weight found in respect of particular quantity of steel should be spread over by average in a generalised manner in respect of the entire quantity of the steel issued to the claimant. The respondent, on the other hand, as taken note of in the award, gave a due account of the overweight material and the material actually issued along with its recorded weight and the corresponding calculation- to stake its counter claim.Consequently, the Ld. Arbitrator found no reason to doubt the correctness of the details given by the respondent and accordingly allowed the counter claim. The reasons given by the Ld. Arbitrator while dealing with the counter claim of the respondent appear to b....