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TMI Blog2019 (10) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitrator has rightly held that the counter claim is beyond the specific reference and would not fall within the jurisdiction of the Arbitrator. The questions whether the issue regarding CENVAT invoices was outside the terms of agreement or whether CENVAT invoices relates to the agreement dated 01.01.2007 and 01.04.2009 and whether it is arbitrable and whether it falls beyond the scope of reference to arbitration and such other related questions, are to be determined only during the enquiry. It may be that after enquiry, the Arbitrator might reject the counter claim for CENVAT invoices as not arbitrable and the counter claim beyond the scope of reference to arbitration. But to reject the counter claim at the threshold on the ground that the Arbitrator has no jurisdiction would not be proper. The High Court has rightly set aside the order of the learned Arbitrator dated 18.04.2011 - the impugned judgment of the High Court of Bombay is affirmed - Appeal dismissed. - Civil Appeal No. 8227 2019 (Arising out of SLP(C) No.5563 of 2012) - - - Dated:- 23-10-2019 - JUSTICE R. BANUMATHI, JUSTICE A. S. BOPANNA And JUSTICE HRISHIKESH ROY JUDGMENT R. BANUMAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010 agreed to the dispute being referred for arbitration and accepted Mrs. Justice (Retd.) Sujatha Manohar as the Arbitrator. In the said letter, respondent stated that they are sure that the learned Arbitrator would be able to adjudicate the issues appropriately considering the respondent s various claims against appellant- BPCL. The appellant raised a claim for an aggregate sum of ₹ 1,95,21,032/- with interest at the rate of 18% per annum from the date of presentation of the said claim till payment and/or realization. 5. The respondent filed its statement of defence denying the claims made by the appellant and it also raised two counter claims before the Arbitrator seeking an award directing the appellant to issue CENVAT invoices in favour of the respondent in respect of the Aviation fuel supplied under the agreement; in the alternative prayed for an award for a sum of ₹ 11,60,44,466/- plus ₹ 4,31,45,967/- being interest, as well as further interest on the principal amount computed at the rate of 15% per annum with effect from 01.10.2009 till payment. In its second claim, the respondent demanded damages for alleged imposition of Cash and Credit ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 of the Act. The High Court vide impugned judgment dated 07.02.2011 allowed the appeal preferred by the respondent and set aside the order of the Arbitrator dated 18.04.2011 by holding that the Arbitrator has jurisdiction to entertain the counter claim filed by the respondent relating to non-furnishing of invoices for CENVAT credit. Insofar as the observations of the Arbitrator, the High Court held that the learned Arbitrator may be well within the rights to reject the counter claim on merits after the parties put forth their case. The High Court however held that the rejection of the counter claim at the threshold, was not justified in view of the arbitration agreement between the parties. Being aggrieved, the appellant-BPCL has filed this appeal. 10. Mr. S. Guru Krishnakumar, learned Senior counsel appearing for the appellant has submitted that as per the arbitration clause in the agreement dated 01.01.2007, the Arbitrator could adjudicate disputes arising out of the terms and conditions of the agreement and the counter claim raised by the respondent in an arbitration proceeding does not arise from the terms and conditions of the contract/agreement under which the Arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 01.01.2007, considering the business efficacy, the same is to be held as an implied term of the contract and the appellant-Company was under a duty to issue CENVAT invoices pertaining to all taxes and duties as applicable. 12. The learned Senior counsel for the respondent further contended that the question whether or not the counter claim raised by the respondent-Company falls within the scope of the agreement entered into between the parties or within the terms of reference is a question of fact and the same could be decided by the learned Arbitrator after due enquiry and the learned Arbitrator was not right in rejecting the counter claim at the threshold which is not in accordance with the settled position of law. 13. We have carefully considered the rival contentions and perused the impugned judgment and materials on record. The points falling for consideration are whether the counter claim regarding CENVAT invoices was beyond the scope of reference to arbitration and whether the High Court was right in holding that the learned Arbitrator had jurisdiction to consider the counter claim regarding CENVAT invoices raised by the respondent. 14. Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry) with delivery ticket attached shall be submitted to Buyer s local office/designated bank for payment/factoring in full. Cost of factoring insurance shall be borne by Go Air. iii. Seller will invoice the Buyer as per the following periodicity, to the designated persons/address:- Billing period Date of Credit into BPC A/c by Bank 1st to 7th 16th 8th to 15th 23rd 16th to 23rd 30th/31st 24th to month end 8th (next month) In case the above dates are weekend or holidays payment will be made on the next working day. iv. In case of any delay in payment beyond due date, the outstanding amount will attract interest at PLR plus 2%. v. In case Bank limits get choked, payment shall be made by due dates directly by Go Air. vi. In case the factoring limit remains choked, exposure would need to be covered with adequate BG, in absence of which woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of reference to arbitration could be seen only after enquiry by the learned Arbitrator. 20. Taking us through the relevant materials, the learned Senior counsel for the appellant made earnest submissions that before 05.05.2010, the respondent did not make any claim of CENVAT invoices and only for the first time on 05.05.2010 that is after the commencement of the arbitration proceeding, the respondent called upon the claimant to issue CENVAT invoices. According to the appellant, as per the terms of the agreement, the appellant was not bound to issue CENVAT invoices to the respondent and levy of service tax on domestic air travel came into force only by the Finance Act, 2010 and therefore, the learned Arbitrator has rightly held that the counter claim is beyond the specific reference and would not fall within the jurisdiction of the Arbitrator. 21. The learned Senior counsel for the appellant submitted that when the jurisdiction of the Arbitrator is circumscribed by specific reference, the Arbitrator can decide only those specific disputes. In support of this contention, the learned Senior counsel placed reliance upon State of Goa v. Praveen Enterprises (2012) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion agreement requires the disputes to be formulated and referred to arbitration by an appointing authority, and the appointing authority fails to do so, the Chief Justice or his designate will direct the appointing authority to formulate the disputes for reference as required by the arbitration agreement. The assumption by the courts below that a reference of specific disputes to the arbitrator by the Chief Justice or his designate is necessary while making appointment of arbitrator under Section 11 of the Act, is without any basis. Equally baseless is the assumption that where one party filed an application under Section 11 and gets an arbitrator appointed the arbitrator can decide only the disputes raised by the applicant under Section 11 of the Act and not the counter claims of the respondent. 23. The questions whether the issue regarding CENVAT invoices was outside the terms of agreement or whether CENVAT invoices relates to the agreement dated 01.01.2007 and 01.04.2009 and whether it is arbitrable and whether it falls beyond the scope of reference to arbitration and such other related questions, are to be determined only during the enquiry. It may be that after en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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