AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 1098
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....rotating machines and piping of 2X270 MW Units (Unit I & II) at GVK, Goindwal Thermal Power Station, District Tarantaran, Punjab. The Contract was awarded to the respondent for an amount of Rs. 380,000,000/- vide Letter of Intent bearing No. BHEL/NR/SCT/GVKGOINDWAL/BOILER/709 (718) dated 09.07.2010. 3. Certain disputes arose between the parties under the Contract and the respondent/claimant Company invoked arbitration in terms of Clause 33 of the General Instructions to Tenders and Contract dated 09.07.2010 and an Arbitrator was appointed. 4. The learned Arbitrator commenced the hearing on 05.11.2018 but thereafter, adjourned the proceedings sine die vide Order dated 12.02.2019 in view of the initiation of CIRP proceedings. The proceedings, however, were later resumed. The respondent filed its Statement of Claim for a sum of Rs. 22,24,10,826/- before the learned Arbitrator on 27.09.2019. 5. The appellant moved an Application under Section 14 of the Insolvency and Bankruptcy Code, 2016 on the ground that no pending proceedings can be continued once the petition against the Creditor Debtor/respondent was admitted by NCLT and requested that the arbitral proceedings be adjourn....
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....itrator vide Order dated 13.08.2020 allowed the application of the respondent/Claimant and granted an Interim Award for a sum of Rs. 69,03,671.85/-. The learned Sole Arbitrator recorded in detail her powers under Section 19(4) of the Act, 1996 to determine the admissibility, reliance, materiality and weight of any evidence and her jurisdiction to pass interim orders under Section 17(3) of the Act, 1996. A reference was made to Section 2(c) of the Act, 1996 which defines "Award" to include "interim Award". Reliance was also placed on Numero Uno International Ltd. vs. Prasar Bharti (MANU/DE/0199/2008) & Gammon India Ltd. vs. Sankaranarayana Construction (Banglore) Pvt. Ltd. (MANU/TN/3737/2009), wherein the power to make an interim Award under Section 31(6) of the Act, 1996, is recognised. The learned Arbitral Tribunal rejected the plea of the appellant that the set-off amount cannot be held as an admission till it is adjudicated. The learned Arbitral Tribunal, thus, allowed the interim award in the sum of Rs. 69,03,671.85/- with the observations that "it is only an interim Award and at the time of conclusion of arbitral proceedings, if any amount is eventually held payable between th....
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....he impugned Order based on set-off, is an afterthought and without any valid reason. It is asserted that the facts in the case of K.S. Oil Ltd. vs. State Trade Corporation of India Ltd. & Anr. Company Appeal (AT) No. 284/2017 are distinguishable in so much as in that case the Arbitration claim was filed by the Operational Creditor, while in the present case, the Arbitration claim has been filed by Resolution Professional on behalf of the respondent Company which is under moratorium under Section 14 of Insolvency & Bankruptcy Code, 2016. 13. It is asserted that the learned Arbitrator has rightly placed reliance on Nimbus Communication Ltd. vs. Prasar Bharti & Ors. (MANU/DE/0821/2016) and Numero Uno International Ltd. (supra) to hold that mere filing of the Counter-Claim does not denude the Arbitrator of its power to make an interim Award in the original suit/claim, if such an interim Award is otherwise justified. An interim Award does not in any manner prevent the Arbitrator from making the adjustment of the amount in the final Award, as has also been observed in the impugned Arbitration Award. 14. It was further asserted that the impugned interim Award does not suffer from an....
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....d. (supra) which are completely distinguishable and not applicable to the facts of the instant case. 21. It is asserted that the impugned Award as well as the Order dated 10.11.2020, dismissing the objections under Section 34 of the Act, 1996, is liable to be set aside. 22. The respondent has contended that the appellant has concealed the most important fact that pursuant to the Order dated 10.11.2020 of the learned District Judge upholding the interim Award, the appellant has filed a Counter-Claim for an amount of Rs. 2,64,19,997.33/- before the learned Arbitrator which is pending adjudication. The set-off of Rs. 69,03,671.85/-, as mentioned in Form B filed by the appellant before the IRP, does not find any mention in the Counter-Claim thereby indicating that the appellant has accepted the judgement of the learned Arbitrator. The appeal is liable to be dismissed on this ground itself. 23. It is further asserted that the facts in hand are squarely covered by the judgements in Nimbus Communications Ltd. (supra), Numero Uno International Ltd. (supra), Cofex Exports Ltd. vs. Canara Bank MANU/DE/0500/1997, Gammon India Ltd. vs. Sankaranarayana Construction (Banglore) Pvt. Ltd.....
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....arned Arbitrator and cannot be treated as an unequivocal admission in the present proceedings. 29. To understand the controversy, it would be pertinent to first expound what a set off is. 30. "Set-off" is defined in Black's Law Dictionary (7th Edn., 1999) inter alia as a debtor's right to reduce the amount of a debt by any sum the creditor owes the debtor; the counterbalancing sum owned by the creditor. In Union of India vs. Karam Chand Thapar & Bros. (Coal Sales) Ltd. and Others, (2004) 3 SCC 504, while referring to concept of set-off under Sub-rule (1) of Rule 6 of Order VIII CPC, 1908 the Apex Court stated thus: - "What the rule deals with is legal set-off. The claim sought to be set off must be for an ascertained sum of money and legally recoverable by the claimant. What is more significant is that both the parties must fill the same character in respect of the two claims sought to be set off or adjusted. Apart from the rule enacted in Rule 6 above-said, there exists a right to set-off, called equitable, independently of the provisions of the Code. Such mutual debts and credits or cross-demands, to be available for extinction by way of equitable set-ff, must h....
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....mission. 35. The other grievance is that the reasoning for allowing the interim Award was that the counter-claim could not be filed by the Operational Creditor/appellant herein before the Arbitrator during the moratorium period. Since pursuant to the directions of learned District judge, counter-claim has also been filed before the learned Arbitrator, no prejudice would be caused to either party if the claim/counter-claim is adjudicated together for final determination of the disputes. 36. The counter-claim is like an independent Suit filed by the appellant which needs independent adjudication. It may have now been filed before the learned Arbitrator before whom the Claims of the respondent are pending adjudication, but it cannot be overlooked that both the appellant as well as the respondent are required to prove their respective claims by adducing legally admissible evidence. The set-off as discussed above is an admission made by the appellant about the admitted amount that it has to pay to the respondent. Merely because, the set-off finds mention in the counter-claim/documents filed by the appellant, it does not take away the character of the set-off which is an admission ....