2013 (4) TMI 622 - HC - Companies Law

Section 37 of the Arbitration & Conciliation Act - Non compliance of clause 52(5) of the agreement - Time barred claims - Held that - The arbitral tribunal rendered finding of fact that the claims were not barred by law of limitation - While doing so has also interpreted the terms of the contract and the documents placed on record by both the parties - On perusal of the record, it is seen that there was no material placed by the appellant before the arbitral tribunal in respect of each claim in support of the plea of limitation as to how each of such claim was affected by alleged non compliance of clause 52(5) of the agreement and as to whether the procedure under clause 67 was followed or not or was time barred. In view of this position, the arbitral tribunal rendered finding of fact based not on any specific averment advanced by the appellant but on consideration of the documents and on interpretation of the provisions of the contract Act - In my view findings rendered by the arbitral tribunal is not perverse and thus the learned District Judge was right in not interfering with such finding of fact rendered by the arbitral tribunal U/s 34 of the Arbitration & Conciliation Act, 1996 - No case is made out for interference with the order of the arbitral tribunal as well as the learned District Judge in this proceedings U/s 37 of the Arbitration Act. In so far as the plea of interest raised by Mr. Gorwadkar, the learned counsel for the appellant is concerned, it is not in dispute that there is no provision in the contract prohibiting the payment of interest - Held that - The arbitral tribunal is empowered to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 for such period and at such rates as the Arbitral Tribunal deems fit - There is no substance in the submission of Mr. Gorwadkar that the claim for interest is beyond the powers of the arbitral tribunal - he arbitral tribunal is empowered to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 for such period and at such rates as the Arbitral Tribunal deems fit. In my view, there is no substance in the submission of Mr. Gorwadkar that the claim for interest is beyond the powers of the arbitral tribunal.

Summary

Issues:
Challenge to arbitral award under section 37 of the Arbitration & Conciliation Act, 1996 based on rejection of application under section 34 by the District Judge, interpretation of clauses 52(5) and 67 of the agreement, consideration of time-barred claims, award of interest by the arbitral tribunal, and scope of interference under section 37 of the Arbitration Act.

Analysis:

1. Challenge to Arbitral Award: The appellant challenged the arbitral award dated 30th June, 2004, which allowed some claims made by the respondent contractor. The appellant sought to challenge this order under section 37 of the Arbitration & Conciliation Act, 1996, after the District Judge rejected their application under section 34. The dispute arose from a contract for construction work in Pune, which led to the arbitration process based on the agreement between the parties.

2. Interpretation of Clause 52(5): The appellant argued that the arbitral tribunal's decision contradicted clause 52(5) of the agreement, which required the contractor to submit claims for additional payment every month. However, the tribunal found that the contractor's obligation under this clause was waived as the appellant prepared all bills themselves, indicating a mutual understanding to deviate from the prescribed procedure. The tribunal concluded that the claims were not time-barred as the appellant took responsibility for bill preparation, leading to the invocation of the arbitration clause within the specified period.

3. Interpretation of Clause 67: The appellant contended that the arbitral award deviated from the mandatory provisions of clause 67, which outlined the procedure for resolving disputes between the parties before invoking arbitration. The tribunal's interpretation was based on the documents and conduct of the parties, finding no breach of the agreement in the invocation of the arbitration clause within the stipulated timeframe. The court upheld the tribunal's decision, emphasizing the limited scope of interference under section 37 of the Arbitration Act.

4. Consideration of Time-Barred Claims: The appellant raised concerns about the tribunal allowing claims rejected prior to the invocation of the arbitration clause, arguing they were time-barred. However, the tribunal's decision was based on the absence of specific pleas on limitation and the lack of evidence presented by the appellant to support the time-barred claim assertion. The court found the tribunal's findings reasonable and not perverse, leading to the dismissal of the appeal on this ground.

5. Award of Interest: The appellant objected to the arbitral tribunal's award of interest on the claims, citing the absence of a provision in the contract for interest payment. However, the tribunal's authority to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 was upheld, dismissing the appellant's argument that the interest award exceeded the tribunal's powers.

In conclusion, the court dismissed the arbitration appeal, vacated any interim order, and made no ruling on costs, affirming the arbitral tribunal's decision and emphasizing the limited scope of interference under section 37 of the Arbitration Act.