2009 (12) TMI 1053 - HC - Indian Laws

Summary

Issues Involved:
1. Challenge to the interim award under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Maintainability of the main original petition.
3. Execution of the interim award.
4. Admission of liability and its implications on the interim award.
5. Distinction between adjustment, set-off, and counter-claim.

Detailed Analysis:

1. Challenge to the Interim Award under Section 34 of the Arbitration and Conciliation Act, 1996:
The Petitioner challenged an interim award passed by the Arbitrator directing them to deposit Rs. 56,63,990/-. The Arbitrator concluded that there was an admission by the Petitioner regarding this amount. The Petitioner contended that the Arbitrator's power under Section 31(6) does not include passing an interim award on admission akin to Order XII, Rule 6, Code of Civil Procedure. This contention was rejected, with the court noting that Section 31(6) allows for interim awards and that such power is intended to expedite dispute resolution. The court referenced various legal precedents and scholarly opinions to support the broad interpretation of Section 31(6).

2. Maintainability of the Main Original Petition:
The Respondent filed applications to reject the main original petition as not maintainable and to permit withdrawal of the amount deposited by the Petitioner. The court found the petition maintainable and proceeded to hear it on merits, despite the absence of a formal application from the Respondent to reopen the case after an ex parte order was passed.

3. Execution of the Interim Award:
The Petitioner sought an interim injunction to restrain the Respondent from executing the award. The court initially retained the deposited amount until the Arbitrator passed the final award. Later, the court allowed the Respondent to withdraw the amount upon furnishing a Bank Guarantee, as the interim award was upheld.

4. Admission of Liability and Its Implications on the Interim Award:
The Petitioner admitted liability of Rs. 56,63,990/- in their Statement of Defence and Counter Claim. The court found this admission clear, unequivocal, and sufficient to justify the interim award. The Arbitrator did not act blindly but considered various factors, including contract clauses and relevant documents, before passing the interim award.

5. Distinction Between Adjustment, Set-Off, and Counter-Claim:
The Petitioner argued that their claim of adjustment should prevent the interim award. The court distinguished between adjustment, set-off, and counter-claim, noting that the Petitioner's adjustment did not negate the clear admission of liability. The court held that the distinction had no bearing on the interim award, which was based on the admitted amount.

Conclusion:
The main original petition challenging the interim award was dismissed. The Respondent was allowed to withdraw the deposited amount upon furnishing a Bank Guarantee. The court found the interim award justified and not arbitrary, thus rejecting all contentions raised by the Petitioner.