2008 (2) TMI 964 - HC - Indian Laws

Summary

Issues involved:
The judgment involves the legality of an interim arbitral award passed by an arbitrator based on admissions made by the appellant company, the contention regarding the competency of the arbitrator to make an interim award, and the impact of a counter claim made by the appellant on the interim award.

Issue 1: Legality of Interim Arbitral Award:
The appellant company challenged an interim arbitral award directing payment of Rs. 7.69 crores to the respondent Prasar Bharti based on the appellant's admissions. The Single Judge upheld the interim award, stating that the arbitrator had valid reasons for the decision. The appellant argued that the arbitrator should have considered the appellant's counter claim of Rs. 25 crores. However, the Court found that the arbitrator had correctly assessed the material on record, including the admissions of liability by the appellant, and had the authority to issue the interim award.

Issue 2: Competency of Arbitrator to Make Interim Award:
The respondent contended that the arbitrator had the power to issue an interim arbitral award, as per Section 31(6) of the Arbitration and Conciliation Act, 1996. The respondent argued that the arbitrator had appropriately considered the pleadings and correspondence, acknowledging the appellant's liability. The respondent emphasized that the existence of a counter claim did not affect the arbitrator's authority to issue the interim award, citing legal precedents to support this position.

Issue 3: Impact of Counter Claim on Interim Award:
The Court examined whether the appellant's counter claim affected the validity of the interim award. It was established that a counter claim operates as an independent suit and does not prevent the arbitrator from issuing an interim award based on admitted liabilities. The Court emphasized that the interim award ensured timely payment of admitted amounts, with adjustments possible in the final award based on the resolution of all claims. The Court affirmed the arbitrator's finding of Rs. 7.69 crores being payable by the appellant to the respondent, leading to the dismissal of the appeal.