2012 (9) TMI 1107 - HC - Indian Laws

Summary

Issues Involved:
1. Limitation on Counter Claims
2. Contractual Terms and Excess Material Consumption
3. Modification of the Arbitral Award

Issue 1: Limitation on Counter Claims

The petitioner challenged the arbitral award on the grounds that the counter claims of the respondent were barred by limitation. The petitioner argued that the respondent's demand for material accounting/reconciliation dated 06.12.1999 should have triggered the limitation period, thus requiring the respondent to file its counter claims within three years. The counter claims were filed in June 2004, beyond the prescribed period. The court, however, held that limitation is a mixed question of fact and law and must be raised at the earliest before the Arbitral Tribunal. Since the petitioner did not raise this issue before the tribunal, it could not be entertained for the first time in proceedings u/s 34 of the Act. The court cited several judgments to support the view that the plea of limitation must be raised during the arbitral proceedings and not for the first time during the challenge to the award.

Issue 2: Contractual Terms and Excess Material Consumption

The petitioner contended that the amount awarded for the respondent's counter claim regarding wastage and excess consumption of materials was in violation of Clause 8.3.1(e) of the contract, which limits unaccounted material to 10% of the value of the security deposit unless permitted in writing by the Engineer In-charge. The court found that the Arbitral Tribunal had interpreted the clause correctly and noted that the petitioner was not allowed to get undue enrichment. The tribunal's finding that there was excess consumption of materials was based on the evidence and was not disputed. The court upheld the tribunal's decision, stating that the interpretation of the contractual terms was logical and plausible.

Issue 3: Modification of the Arbitral Award

The petitioner also challenged the modification of the award, arguing that the amount awarded under Claim No. 2 was in addition to the amount already paid. The court found that the petitioner had admitted to receiving the amount way back in December 1997 and could not now claim otherwise. The court held that the petitioner could not take inconsistent stands and dismissed this objection as frivolous.

Conclusion

The court dismissed the petitioner's objections, upheld the arbitral award, and imposed costs of Rs. 30,000 on the petitioner. The court emphasized that issues of limitation and contractual interpretation must be raised at the earliest during arbitral proceedings and cannot be introduced for the first time during a challenge to the award.