9911796707
TMI Blog2012 (9) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... anded payments from the respondent vide letter dated 22.02.1999. On 09.08.1999 (vide R-46), the respondent disputed the said claims. It was alleged that the petitioner had stopped the work and did not restart the same despite notice. It was also stated that the respondent had no alternative but to get the balance work executed at the petitioner‟s risk and cost. It was specifically stated that there is a lot of owner issue materials outstanding with M/s RKC which is required to be returned to NTPC. The detail of the outstanding owner issue material based on the last RA Bills no.142 is accounted and enclosed as Annex-I. It is a matter of record that no efforts have been made to return balance owner issue material inspite of repeated verbal and written requests . The respondent demanded the petitioner to return the balance owner issue material. It was stated that the total recoveries amounted to ₹ 283 lacs approximately which includes recoveries against unaccounted owner issue material. It was stated that in case the amount of ₹ 283 lacs is not paid within 15 days, the respondent would be constrained to seek arbitration under clause 56 of the GCC for recoveries. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide order dated 25.11.2003, this Court appointed the aforementioned arbitrator to adjudicate the disputes between the parties. 2.6. The Arbitral Tribunal vide impugned Award dated 13.11.2009 allowed: A. Claims of the Petitioner to the following extent : Claim No. Head Amount awarded 1(a) and 1(i)(i) Balance amount payable to the Petitioner/claimant on the basis of the measurements of the work executed by the Petitioner/claimant and duly entered by the Respondent in its measurement books. ₹ 17,96,281/- 1(i)(ii) Balance payment of structure steel of cladding structure ₹ 73,500/- 1(k) Fitting and fixtures of teak wood frames ₹ 1,69,802/- 2 Quantities of Work executed beyond the deviation limits in various items of work ₹ 1,54,28,696/- 3 Escalation charges ₹ 47,54,047/- 7 and 9 Overhead losses suffer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in theoretical and actual weight of steel for the work done up to 31.1.99. 12.b A declaration stating that payment of difference in theoretical and actual weight of steel will continue to accrue, if work is allowed to be done, after 31.1.99 till date of completion. 2.9. Being aggrieved by the Award and the order of modification, the Petitioner has preferred the present petition. 3. The Petitioner herein has sought to challenge the Arbitral award to the extent it has allowed Counter Claim No.1 of the Respondent. Petitioner s Submissions 4. Learned Senior Counsel for the petitioner, Mr. Chetan Sharma, submitted that the Counter claims of the Respondent could not have been adjudicated upon as the same were barred by limitation. It is submitted that the Respondent raised a demand towards material accounting/reconciliation vide letter dated 06.12.1999. Therefore, the cause of action for the respondent to initiate recovery proceedings arose on that date and, as such, the Respondent should have filed its counter claims within 3 years from that date either by filing a suit or commencing arbitral proceedings in terms of Section 21 of the Act. Not having done so, the count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 20 of the Code of Civil Procedure, 1908 (hereinafter referred to as the CPC‟), it was further submitted that present petition has also not been filed by a duly authorised and competent person. The locus of the person executing the General Power of Attorney in favour of the person who has filed the present petition was disputed by the Respondent 9. Learned senior counsel submitted that limitation is a mixed question of fact and law. Specific pleading with necessary particulars with regard to the question of limitation should have been raised before the Arbitral tribunal. Since such a plea was never raise by the Petitioner before the tribunal, the Petitioner cannot raise the same before this Court for the first time in these proceedings. Reliance was placed on the judgment of the Bombay High Court in Bharat M. Nagori v. Satish Ashok Sabnis An r., 2003 (4) R.A.J. 47 (Bom); Vimal G. Jain v. Vertex Financial Services Pvt. Ltd ., 2007 (4) Arb. LR 18 (Bombay) (DB) and judgment of the Supreme Court in Balasaria Construction (P) Ltd. v. Hanuman Seva Trust Ors ., (2006) 5 SCC 658. 10. It was submitted that even under Order VII Rule 11, CPC, a suit cannot be dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verweight steel, which was also accounted for. It was reiterated that the Petitioner cannot be permitted to set up a new defence in the present proceedings which did not form part of the pleadings before the Arbitrator. 14. It was submitted that by virtue of the modification order, the Arbitral tribunal corrected a calculation error with respect to the payment of claim no. 2 and that the same was well within the powers of the Arbitrator under Section 33 of the Act. It was denied that the Petitioner is entitled to ₹ 1,54,28,696.15/- in addition to the amount of ₹ 1,47,49,458.70/-. According to the Respondent, the same was merely an afterthought. It was submitted that the entire claim allowed with respect to claim no. 2 was ₹ 1,54,28,696.15/-, which was the amount shown in the final bill (as the recovery amount could have been worked out only then). After giving adjustment of the payment made, till the second last running bill of ₹ 1,47,49,458.70/-, the petitioner (under the final bill) was entitled to only ₹ 6,79,237.45/- under claim no. 2. Petitioner s submissions in Rejoinder 15. The Petitioner in rejoinder arguments denied that the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Act, 1963 applies to arbitrations under the Act, as it applies to proceedings in Court. Relying upon Section 28(1)(a) of the Act, it was submitted that in an arbitration (other than an international commercial arbitration), which takes place in India, the arbitral tribunal is bound to decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India. It was submitted that Section 4 of the Act applies only to derogable provisions under the Act, such as, Section 12(3), 19(2), 20(1), 22 etc., and the said provision (Section 4), therefore, cannot be invoked to render Section 28 of the Act and Section 3 of the Limitation Act otiose. The Tribunal would, therefore, be obliged to decide the dispute in accordance with the Substantive law in force in India. 18. It was submitted that the Counter Claims‟ are also Claims‟ raised by a Respondent. Hence, the provision of Section 21 of the Act is squarely applicable and, consequently, until and unless a notice is served upon the claimant, the question of Arbitral proceeding, in respect of the counter claim, commencing would not arise. 19. It was submitted that the Arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its submission, the petitioner referred to the judgment of the Supreme Court in State of Goa v. Praveen Enterprises (supra), and more specifically to the following observation: 17. As far as counter claims are concerned, there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of Limitation Act, 1963 provides that in regard to a counter claim in suits, the date on which the counter claim is made in court shall be deemed to be the date of institution of the counter claim. As Limitation Act, 1963 is made applicable to arbitrations, in the case of a counter claim by a respondent in an arbitral proceedings, the date on which the counter claim is made before the arbitrator will be the date of institution in so far as counter claim is concerned. There is, therefore, no need to provide a date of commencement‟ as in the case of claims of a claimant. Section 21 of the Act is therefore not relevant for counter claims. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Act, so as to make Section 43 thereof- and, consequently, the Limitation Act inapplicable to such arbitration. The Court held that the legislative intent was not to empower the State Government to, while framing rules, prescribe the period of limitation for preferring claims. The byelaw to that extent was held to be purely contractual and, in view of Section 28 of the Contract Act, the same was declared to be void. 27. The judgment of the Supreme Court in J.C. Budhiraja (supra) also does not bolster the submissions of the petitioner herein, since the same dealt with an entirely different issue. In that case, the Supreme Court set aside the finding/assumption of the Arbitrator that if the application for appointment of arbitrator was made in time, then all claims made in the claim statement filed before the appointed arbitrator are also in time. The Supreme Court held that Section 37(3) of the Arbitration Act 1940 provides that for the purpose of the Limitation Act, an arbitration is deemed to have been commenced when one party to the arbitration agreement serves on the other party thereto, a notice requiring the appointment of an arbitrator. Such a notice having been served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the same was barred by limitation. The respondent/defendant had it in its written statement, inter-alia, raised a preliminary objection that the suit was barred by limitation. On the basis of the pleadings the trial court framed the preliminary issue- whether the suit is within the period of limitation. The trial court decided the same in favour of the respondent/defendant and dismissed the suit. In appeal, this Court observed that the question of limitation, in the case at hand, was a question of fact and the appellant/plaintiff could not be non-suited without a trial. The order of the trial court was accordingly set aside and the suit was remanded back to the trial. 31. The last three decisions referred to above do not advance the petitioner‟s submissions for the reason that in all those cases, the Court which permitted the raising of the issue of limitation for the first time was acting as the appellate Court. It is well settled that an appeal is a continuation of the original proceedings. The entire matter is at large before an appellate Court. The same is not true about a Court hearing objections to an arbitral award under Section 34 of the Act. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendant had waived the said plea, as a partial decree had been passed on admission under Order 12 Rule 6 C.P.C. The Supreme Court held that the plea of waiver was not a pure question of law, and could not be permitted to be raised at a later stage. Therefore, the issue of limitation had to be examined. As aforesaid, in the present case the issue of limitation qua the counter claim was never raised by the petitioner before the Arbitral Tribunal. It cannot be said that the counter claim was ex-facie barred by limitation. Consequently, this case is of no avail to the petitioner. 36. In Balasaria Construction (P) Ltd . (Supra), the Supreme Court took the view that the suit could not be dismissed as barred by limitation without proper pleadings, framing of an issue of limitation and taking of evidence. Question of limitation is a mixed question of law and fact. Ex facie in the present case on the reading of the plaint it cannot be held that the suit is barred by time. 37. In Ramesh B. Desai (Supra), the appellants had filed a company petition under Section 155 of the Companies Act, 1956. Respondent no. 1 and 2 moved an application to dismiss the petition on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of fact and law. In order to decide the issue of limitation, the Court has to perforce appreciate the facts and evidence, unless from a plain reading of the plaint, the suit appears to be unambiguously barred by limitation . This Court further observed that In such a case, the appellate Court may set aside the decree and dismiss the suit on the ground of limitation on the basis of the evidence and record available if, from such record and evidence, without more, the suit appears to be struck by the law of limitation. However, if the question of limitation is allowed without examining the relevant facts and evidence, or if the appeal, in which the plea has been raised for the first time, is allowed and suit is dismissed without giving an opportunity to the plaintiff to oppose it on the facts and evidence, it may cause prejudice to some of the parties to the suit. The situation, in a case like the present, is still worse for the party raising a belated plea of limitation because the Court, as aforesaid, is not an appellate forum qua the arbitral award. As aforesaid, an appeal is a continuation of an original suit proceeding. Therefore, it is possible to amend the plaint e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner herein did not raise the plea of the respondent/NTPC‟s claim being barred by limitation before the Arbitral Tribunal. The only difference is that, whereas, in the present case this plea has been raised in these proceedings, in O.M.P. No. 333/2004 it was not even raised in the objection petition. The learned Single Judge rejected the said plea by holding as follows: This ground has been raised only at the time of the arguments. It is a settled position of law that plea of limitation cannot be decided as an abstract plea of law divorced from the facts. As explained in Ramesh B. Desai v. Vipin Vadilal Mehta 2006 (5) SCC 638 a plea of limitation is a mixed question of law and fact. Consequently, unless the plea of limitation is raised at the earliest point in time before the learned Arbitrator, it cannot be adjudicated upon as a mixed question of law and fact. In Oil and Natural Gas Corporation Limited vs. Mc Chemical Engineers, 1999 (2) Raj. 149 (SC) the Supreme Court negatived the plea of limitation raised for the first time in the course of challenge to the award before the Court. In Tamil Nadu Water Supply v. M. Abdul Karim, 2010 (4) ALR 581 (Madras) it was again h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration agreement, and to seek reference of the said dispute to arbitration. It could have been argued that the respondent could well have waited for the petitioner to invoke the arbitration agreement to claim the amounts due to it, and in such proceedings to set up its defence to seek adjustment of the amount due from the petitioner to the respondent towards owner issued materials. One possible view that the tribunal could have taken, could be that the limitation did not run against the respondent, as such a defence could be raised at any point of time, as and when the claim is made against the respondent. The respondent could also have argued that when the petitioner invoked the arbitration agreement, the petitioner itself sought to raise the issue of adjustment sought to be made by the respondent on account of owner issued material, by placing reliance on the communication dated 10.05.2000 extracted in para 2.3 above. The respondent could have also contended that the petitioner itself sought reference of the disputes with regard to the amount adjusted by the respondent to arbitration, as that was the justification offered by the respondent to not pay the dues of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the said clause requires reconciliation of material on quarterly basis on the execution of works up to the specified percentages including at the final stage. He also notes that there was no evidence or averment of the respondent that the procedure had been followed by the Engineer-in-Charge. He thereafter goes on to observe as follows: 196. However, the claimant cannot be allowed to get undue enrichment, if on getting the details from the documents, the respondent is able to prove that the respondent is entitled to make recovery in accordance with the provisions of the contract for excess/less consumption of material is enumerated in the contract, which is not in dispute. 197. I will first take up the recovery in respect of Reinforcement Steel. Although in the statement of counter claim, the amount claimed in respect of this material was ₹ 1,49,89,462/-. Yet, in the details filed by the respondent during the proceedings on 24.5.2007, which were furnished to the counsel for the claimant at that time but filed on the record on 31.1.2009, show that the respondent is now claiming ₹ 1,27,70,884/-. There is no dispute with regard to the quantity of material is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved by the Ld. Arbitrator, and rightly so, would not entitle/allow the petitioner to get undue enrichment. Mere non-obsservance of the procedure prescribed in clause 8.3.1(e) could not efface the factual position as it was found to be existing on the record. The said clause does not say that if the said procedure is not adopted, the respondent would not be entitled to claim any amount in excess of 10% of the security deposit or that the remaining claim of the respondent would be barred or stand waived. The Arbitrator has returned a finding of fact that the respondent was able to prove that there was excess consumption of free issue material. The aspects of the method of calculating the consumption of material, as enumerated in the contract, and the quantity of material issued to the petitioner- were not disputed. These aspect, therefore, do not call for interference in these proceedings. 54. The petitioner herein, however, tried to wash its hands of the said liability by endeavouring to show that the steel issued by the respondent was over-weight. The Ld. Arbitrator, while returning a finding of fact, rejected the said defence on the ground that the petitioner assumed, witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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