TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1029
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 31.03.2009. By virtue of the second agreement dated 01.04.2009, another Aviation Fuel Supply Agreement was entered into between the appellant and the respondent for the period from 01.04.2009 to 31.03.2011. On 06.07.2009, the appellant issued letter to the respondent along with the statement giving details of invoices and requesting inter alia that the payment of outstanding dues as well as the interest amount of Rs. 1.45 crores be released immediately. In reply to the said letter, the respondent by its e-mail dated 06.07.2009 stated inter alia that the outstanding interest was Rs. 1.41 crores and not Rs. 1.45 crores as mentioned in the said letter dated 06.07.2009. As the payments were not made, the appellant-BPCL put the respondent-Airlines on "Cash and Carry" terms on account of default in making payment for supply of fuel and interest on delayed payment. 4. Dispute arose between the parties when the appellant raised a claim for interest for the delayed payments of the fuel supplied during the period from 01.04.2009 to 31.03.2011. The respondent did not accept any amount payable towards interest. Since the dispute in respect of the liability and payment of interest on delayed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the respondent never asked for CENVAT invoices during the subsistence of the said agreement and that the counter claim raised by the respondent was an afterthought. 7. The appellant also filed an application under Section 16 of the Arbitration and Conciliation Act, 1996 inter alia submitting that the counter claim filed by the respondent was beyond the scope and jurisdiction of the Arbitrator and that the respondent demanded the CENVAT invoices from the appellant for the supplies made from the year 2005 onwards for the first time only by letter dated 05.05.2010 i.e. after the commencement of the arbitration. The respondent filed its reply to the said application filed under Section 16 of the Act inter alia stating that the counter claim filed by the respondent was well within the scope and jurisdiction of the Arbitrator. 8. The learned Arbitrator vide order dated 18.04.2011 allowed the application filed by the appellant under Section 16 of the Act inter alia holding that the counter claim relating to CENVAT invoices is beyond the scope and jurisdiction of the Arbitrator and rejected that part of the counter claim. Insofar as the counter claim of the respondent praying for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t was not liable to pay service tax on domestic air travel prior to 01.04.2010, there was no requirement for issuance of CENVAT credit invoices. It was submitted that at no point of time before the commencement of the arbitration proceeding, the respondent ever claimed furnishing of CENVAT invoices and the learned Arbitrator rightly held that the counter claim is beyond the specific reference to the Arbitral Tribunal and the High Court erred in substituting its view with the findings of the learned Arbitrator which is in contravention of the settled position. 11. Per contra, Mr. Ritin Rai, learned Senior counsel appearing for the respondent submitted that the counter claim raised by the respondent in respect to issuance of CENVAT invoices by the appellant falls within the terms of the agreement dated 01.01.2007 and the second agreement dated 01.04.2009 entered into between the appellant and the respondent for supply of Aviation fuel. Taking us through the clauses of the agreement, the learned Senior counsel submitted that as per Clause 7(ii) of the agreement dated 01.01.2007, the appellant-BPCL was duty bound to provide invoices to the respondent-Company including those for taxes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....basis for making the counter claim though they have not specifically stated about CENVAT invoices. Once a claim is made, the defendant has a right to make a counter claim. The respondent relies upon clause 7(ii) of the agreement in the counter claim of CENVAT invoices. Whether or not the counter claim is part of the reference and whether it is arbitrable and whether the dispute are traceable to contractual rights or obligations or wholly outside the contract could be determined only after the enquiry by the Arbitrator. 15. Contention of the respondent is that as per Clause 7(ii) of the agreement, the appellant was required to issue CENVAT invoices pursuant to supply of Aviation fuel under the agreement and the appellant did not do so and therefore, issuance of CENVAT invoices and dispute between the parties relating to the terms and conditions set forth in the agreement and consequently, the Tribunal has the jurisdiction to adjudicate upon the same. 16. Clause 7(ii) of the agreement requires issuance of taxes invoices by the appellant. Clause 7 of the agreement reads as under:- "7. Invoicing and Payment Terms: i. Seller shall invoice Buyer for the fuel deliveries (Jet A-1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... agreement dated 01.01.2007 deals with the arbitration clause. Clause 12 provides for reference of dispute to an Arbitrator nominated by mutual consent. If the parties fail to decide the Arbitrator by mutual consent, each party will nominate an Arbitrator of their choice and the Arbitrators so nominated shall choose the third Arbitrator. As rightly contended by the learned Senior counsel for the respondent, in response to the notice dated 25.03.2010 issued by the appellant suggesting the appointment of Mrs. Justice Sujatha Manohar as Arbitrator, the respondent accepted the same by expressing hope "that she would be able to adjudicate the issues appropriately considering our claims against BPCL". Merely because the respondent did not specify the nature of claims against BPCL in the letter dated 27.04.2010, that may not be a ground to reject the counter claim of CENVAT invoices at the threshold. Whether the counter claim regarding CENVAT invoices is outside the terms of arbitration agreement and whether it is arbitrable or outside the scope of reference to arbitration could be seen only after enquiry by the learned Arbitrator. 20. Taking us through the relevant materials, the learn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laim is outside the jurisdiction of the Arbitrator. In this regard, the learned Senior counsel for the respondent also placed reliance upon Praveen Enterprises in which it was held as under:- "27. Similarly, 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 to or amend such claims and counter claims provided they are arbitrable and within limitation. ......... 29. Where the arbitration agreement requires the disputes to be formulated and referred to arbitration by an appointing authority, and the appointing authority fails to do so, the Chief Justice or his designate will direct....