TaxTMI 
TaxTMI 
2022 (1) TMI 755
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....espondent in the arbitral proceeding and also respondent in the commercial arbitration petition. For the sake of convenience, the parties are described as per their original status in the statement of claim before the learned arbitrator. Some of the relevant facts for the purpose of deciding this appeal are as under :- 3. It is the case of the claimant that on 30th October, 2020 offer was sent to the respondent for supply of steel material by the claimant. The claimant accordingly supplied the steel material to the respondent as per various purchase orders and as per the said offer. On 20th July, 2011, the respondent vide their email addressed to the claimant acknowledged the debt and admitted the liability to the extent of 15 lakhs allegedly due and payable to the claimant. According to the claimant, the steel material supplied to the respondent as per purchase order was amounting to approximately Rs. 25 crores. 4. It is the case of the claimant that vide an email dated 5th January, 2012, the respondent acknowledged the debt and admitted the liability to the extent of Rs. 1.5 lakhs allegedly due and payable to the claimant. The respondent paid an amount of Rs. 3,74,30,757....
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....the claimant on the ground of limitation except part of the claim in the sum of Rs. 3,68,005/- with interest thereon from the date of award until payment and/or realization. On 15th June, 2018, the learned arbitrator forwarded an amended arbitral award. Being aggrieved by the said order dated 9th June, 2018 and amended award dated 15th June, 2018, the claimant filed Commercial Arbitration Petition No. 987 of 2018 under Section 34 of the Arbitration and Conciliation Act, 1996. 9. A learned Single Judge of this Court delivered a judgment on 5th September, 2019 dismissing the said Commercial Arbitration Petition No. 987 of 2018. The respondent also filed a Commercial Arbitration Petition No. 1081 of 2018 for different reliefs which petition was not pressed by the claimant before the learned Single Judge and thus the same was dismissed as withdrawn. Being aggrieved by the said judgment dated 5th September, 2019, the claimant filed this appeal. 10. Mr. J. P. Sen, learned senior counsel for the claimant invited our attention to various documents annexed to the compilation filed along with Commercial Appeal and also tendered a compilation of judgments in support of his submission. H....
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....atives of the respondent admitted that a sum of Rs. 2,22,49,067/was due and payable by the respondent to the claimant. On 31st March, 2016. the parties agreed to reconcile their accounts in view of the claimant's position that the amount due was in fact far larger. By an order dated 29th November, 2016, the disputes and difference between the parties were referred to arbitration. The said company petition was thus disposed of. 14. It is submitted by the learned senior counsel that the last invoice by which the claim was brought by the claimant was on 2nd July, 2011. The company petition was filed on 11th March, 2015. The reference to arbitration was by an order dated 29th November, 2016. Learned senior counsel placed reliance on email dated 28th July, 2011 addressed by the respondent to the claimant and email dated 5th January, 2012 addressed by the respondent to the claimant. He vehemently urged that a sum of Rs. 3,74,30,757/- during the financial year 2012-2013 and aggregating to Rs. 76 lakhs during the financial year 2013-2014 was made by the respondent to the claimant. He submits that the said cheque in the sum of Rs. 50 lakhs was dishonored on 30th July, 2013. The responden....
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....writing of the person liable to pay the debt. This evidence, both of fact of payment and of acknowledgment are within the meaning of section 18 of the Indian Limitation Act. Thus, a fresh period of limitation is liable to be computed from the time when the cheque was handed over to the creditor. He submits that even the dishonored cheque would constitute such an admission of liability. 18. It is submitted by the learned senior counsel that theacknowledgment does not have to be for exact amount payable by the respondent to the claimant. As long as it constitutes an admission of existing jural relationship, the Court or Tribunal is entitled to consider all other material on record to determine the promised amount due. He submits that the period spent in prosecuting the winding up petition bonafidely has to be excluded for the purpose of determining whether the claim was within time or not. 19. It is submitted by the learned senior counsel that each of the cheques issued by the respondent would constitute an acknowledgment in writing. The appropriation of Rs. 50 lakhs towards specific invoices by the claimant would not preclude the claimant to contend extension of limitation for....
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....ment delivered on dated 23rd October, 2017 by the Supreme Court in case of Kanyalal Rewachand Mirani v/s. M/s. Trans - Fabpower India Pvt. Ltd. in Diary No(s). 14198 of 2017. (l) The Judgment of this Court in case of Chintaman Dhundiraj v/s. Sadguru Narayan Maharaj Datta Sansthana and Ors., 1956 SCC OnLine Bom 61. 22. Mr. Chetan Kapadia, learned counsel for the respondent on the other hand also tendered written arguments along with a compilation of judgments. It is submitted that the arbitration agreement was arrived at between the parties on 22nd November, 2016 read with order dated 29^th November, 2016 and thus the arbitral proceedings commenced on 22^nd November, 2016. The goods were supplied by the claimant to the respondent during the period between April, 2011 to June, 2011. Out of the several invoices raised, 38 invoices were outstanding, each of which provided for a credit period of 45 days. It is submitted that the first alleged acknowledgment was dated 20th July, 2011 and the last alleged acknowledgment was dated on 25th May 2015 after a gap of more than three years between them. The second alleged acknowledgment dated 25th May, 2015 thus would not extend the ....
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....vited our attention to some of the paragraphs of the statement of claim dated 25th December, 2016 filed by the claimant contending that 38 invoices to the tune of Rs. 3,74,25,675/- were due and payable by the respondent. It was alleged in the statement of claim that the respondent had made part payment to the claimant, thereby acknowledging the debt. It was alleged that the respondent had addressed emails thereby acknowledging the debt payable to the claimant. 27. Learned counsel for the respondent invited our attention to some of the averments from the statement of defense filed by the respondent and also from the counter claim contending that the claims made by the claimant were barred by law of limitation. The claimant had adjusted part payments made by the respondent towards the invoices which did not form part of the statement of claim before the learned Arbitrator. The emails allegedly acknowledging debt would not extend the period of limitation. 28. It is submitted that though the claimant had sought to rely upon the emails dated 20th July, 2011 and 5th January, 2012 alleged to have been sent by the respondent allegedly acknowledging its liability towards payment due t....
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....vidence that the email dated 20th July, 2011 was in fact under duress because of antisocial elements engaged by the claimant. He submits that the email mentioned the amount of Rs. 15 crores which was due and payable by the respondent to the claimant, whereas as on 20th July, 2011 even according to the ledger statement of the claimant, the amount of Rs. 9 crores approximately was payable by the respondent. No reliance thus on the said email which was sent under duress could be placed by the claimant. He submits that even if the said emails dated 20th July, 2011 and 6th January, 2012 could be considered as acknowledgement of liability, the period of limitation could extend only up to 21st July, 2014 or 6th January, 2015 which is well prior to the commencement of the arbitral proceedings i.e. on 22nd November, 2016 and thus the claims in any event were already barred by law of limitation much prior to the date of commencement of the arbitral proceedings. 32. Learned counsel placed reliance on Section 60 of the Contract Act and submitted that the claimant having elected to adjust Rs. 50 lakhs payment against four invoices i.e. three invoices fully and 4th invoice partly and not havi....
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....nst four invoices. He invited our attention to the findings rendered by the learned Arbitrator in paragraphs 25 and 38 of the arbitral award. He submits that the learned Arbitrator after considering the adjustment made by the claimant of the said part payment of Rs. 50 lakhs against three invoices fully and against one invoice partly allowed the claim in respect of the said partly invoice by rejecting the plea of limitation in respect of the said partly paid invoice raised by the claimant. Both the parties have led oral evidence before the learned Arbitrator. The claimant had failed to prove that the claims made by various invoices which were the subject matter of the arbitral proceedings were within the period of limitation. Learned counsel tendered a copy of the company petition filed by the claimant before the Company Court and relied upon the averments made in paragraph 18 and 27 thererof. 36. It is submitted by the learned counsel that the scope and extent of judicial scrutiny under section 34 of the Arbitration Act is narrow. He submits that the extent of judgment scrutiny and the scope of interference under Section 37 of the Arbitration Act is narrower than scope under Se....
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.... the goods sold and delivered and thus the said cheque having been dishonored would extend the period of limitation in respect of all pending invoices. He submits that this issue was specifically urged by the claimant before the learned Arbitrator and also before the learned single Judge. REASONS AND CONCLUSION 40. A short question that arises for consideration of this Court is whether the claimant having exercised the option under section 60 of the Indian Contract Act by adjusting the payment of Rs. 50 lakhs towards four earlier invoices, three invoices fully adjusted and one invoice partly adjusted and not having made the claim in respect of those three fully paid invoices is estopped from raising the plea that the cheque of Rs. 50 lakhs issued by the respondent towards part payment having been dishonored, would amount to acknowledgment of liability in respect of all the outstanding invoices on the date of commencement of the arbitral proceedings or not. 41. It would be beneficial to refer to the plea of the claimant raised in the statement of claim before the learned Arbitrator to appreciate as to how the claimant has adjusted the said amount of Rs. 50 lakhs against the....
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.... outstanding from 28th April, 2011 to 31st December, 2014 against those invoices. 44. In paragraph 9 of the statement of claim, it was averred that against the said liability, the respondent had issued cheque dated 30th June, 2013 of Rs. 50 lakhs for part consideration for the material supplied by the claimant to the respondent with an assurance that the cheque would be honored on its presentation. The said cheque had been issued in favour of the claimant by the respondent against the legal debt and liability. The said cheque however was dishonored on presentation with the remark 'stop payment' vide bank memo of HDFC Bank Ltd. The claimant admittedly proceeded under Section 138 of the Negotiable Instruments Act against the respondent before the learned Metropolitan Magistrate, 6th Court, Mazgaon (Sewree), Mumbai. The said proceedings however were withdrawn as per the order dated 27th July, 2015 passed by this Court in Criminal Writ Petition No.2462 of 2015 filed by the respondent. 45. It is further averred in paragraph 20 of the statement of claim that an amount of Rs. 50 lakhs paid by the respondent in lieu of the earlier dishonored cheque was adjusted against the followi....
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....t's advocate "would it be correct to say that the invoices at serial nos.2 to 38 are outstanding?" All these make it clear that the claimant did not appropriate / adjust any payment received from the respondent towards those 37 invoices, which are at serial nos.2 to 38 of the table at paragraph 6 of the statement of claim. Learned Arbitrator accordingly recorded a finding that it stands to reason that the payments made by the respondent from time to time did not extend the period of limitation for those 37 invoices under section 19 of the Limitation Act. Thus, except for item no.1 of the table in paragraph 6 of the statement of claim, the claims contained in items nos.2 to 38 of the said paragraphs are time barred. 50. A perusal of the statement of claim indicates that the only averment regarding period of limitation is found in paragraph 26 of the statement of claim alleging that the cause of action arose to file the statement of claim. The respondent made last payment of Rs. 16 lakhs. Even according to the claimant, the claimant was entitled to interest at the rate of 21% monthly compoundable interest on principle amount from 20th January, 2011 to 20th December, 2016. It is th....
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.... from the time when the acknowledgment was so signed only where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability. It is thus clear that the acknowledgment, if any, has to be prior to the expiration of the prescribed period for filing the suit. In our view, since the limitation for filing a suit or arbitration proceedings for recovery of the outstanding invoices had already expired much prior to the period of three years prior to the date of commencement of the arbitral proceedings, limitation would not revive under section 18 of the Limitation Act even if there is any part payment or acknowledgment of liability after expiry of the period of limitation. Fresh limitation would arise only during subsistence of the claim i.e. within the period of limitation, if any part payment is made or liability is acknowledged and not after the claim already having become time barred. 54. Admittedly in this case, ....
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.... on a particular date does not mean that the payment was made on that date unless the cheque was accepted as unconditional payment. In our view, the facts before the Hon'ble Supreme Court's in that case were totally different and are distinguishable in the facts of this case. 58. In so far as the judgment of the Calcutta High Court in case of Prafulla Chandra Nag (supra) is concerned, this case will also not assist the case of the claimant on the ground that the claimant had appropriated the said amount of Rs. 50 lakhs towards four invoices by exercising option under Section 60 of the Indian Contract Act. The judgment of Andhra Pradesh High Court in case of Thava Subrahamanyam (supra), judgment of Madhya Pradesh High Court in case of Gorilal Baldeodas (supra), judgment of Patna High Court in case of Rajpati Prasad (supra) and judgment of Delhi High Court in case of Bhushan Steel and Strips Ltd. (supra) are also distinguishable in the facts of this case for the same reason. 59. In so far as the judgment of full Bench of Gujarat High Court in case of Hindustan Apparel Industries Vs. Fair Deal Corporation, New Delhi (supra) is concerned, it is held that the payment by cheque whi....