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TMI Blog2024 (9) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... holding company of OPG, had actively participated in the formation of the contract for the project. Not only did it place purchase order(s) on Enexio but made advance payment(s) thereunder to Enexio, which were subsequently affirmed by OPG. The two, therefore, not only acted as a single economic entity but as agents of each other. Hence, the arbitral tribunal was justified in holding that Gita Power was bound by the arbitration agreement and jointly and severally liable along with OPG to pay the awarded amount. (ii) The claim of Enexio was an indivisible claim for compensation in lieu of goods supplied, and work done, based on breach of the contract, therefore limitation for the claim was governed by Article 55, and not by Articles 14, 18 and 113, of the Schedule to the 1963 Act. (iii) The claimant s claim for the outstanding principal amount matured on 19 March 2016. Therefore, limitation started to run from that date. However, even if we count limitation from 21 September 2015 (as found by the Tribunal) it will have no material bearing on the award for the reason indicated below. (iv) The limitation for the claim as well as counterclaim(s), other than those relating to cost of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oated a composite tender for design, manufacture, supply, erection and commissioning of air-cooled condenser unit (ACC Unit) with auxiliaries for 160 MW Coal Based Thermal Power Plant (Project) at Gummidipoondi in the State of Tamil Nadu. Enexio Power Cooling Solutions (in short Enexio - Respondent No.1 (R-1) in the leading appeal) bid for the project. After a series of correspondences /negotiations, on 4 March 2013, R-2 issued two separate orders: (i) for design, engineering and supply of one ACC Unit with auxiliaries for 160 MW Coal Based Power Project at Gummidipoondi (in short, Supply Purchase Order); and (ii) for erection and commissioning of one unit of ACC with auxiliaries for 160 MW Coal Based Power Project at Gummidipoondi (in short, Erection Purchase Order). Interestingly, the tender was floated by OPG but the supply and erection orders were issued by its holding Civil Appeal @ SLP (C) Nos.21017-21018 of 2021 Page 3 of 150 company (Gita Power - R-2) on 4 March 2013. However, later, in the month of July 2013, OPG confirmed those orders by issuing two separate orders with same terms and bearing the same date i.e. 4 March 2013. 3. The supply / erection purchase orders with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to Enexio (R-1), Rs. 6,75,15,631 remained payable to it. Whereas, according to the appellant, nothing was due as from the remaining amount, following sums were deductible: (i) Rs. 3,30,00,000, vide debit note dated 24.08.2015, towards liquidated damages for delay in supply and erection. (ii) Rs. 5,94,06,693, vide debit note dated 16.01.2016, towards customs duty. (iii) Rs. 1,72,854 towards dismantling modification - TG building. (iv) Rs. 27,40,161 towards ACC duct fabrication. Totaling Rs. 9,53,19,708. 7. On 19 April 2018 a meeting took place between the representatives of the parties. Minutes of that meeting were drawn in the following terms: Minutes of meeting with M/s. OPG Power Generation Pvt. Ltd. and M/s. ENEXIO Power Cooling Solutions (I) Pvt. Ltd. dated 19.04.2018. Members Present: OPGS ENEXIO 1. Mr. S. Swaminathan 1. Mr. Parasuram 2. Mrs. C. Kiruthiga 2. Mr. Ravi Rengasamy Sub.: Supply of Air-cooled condenser with auxiliaries for 160 MW Coal based Power Project of OPG Power Generation Pvt. Ltd. (OPGPG) Debit Notes. Ref.: 1. Order No. OPGPG/ED/P-III/SUPPLY/008, dated 04.03.2013. 2. Order No. OPGPG/ED/P-III/ ERECTION /009, dated 04.03.2013 Description Amount in R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts till 31.03.2019. 3,51,43,446 E Interest on outstanding principal amount calculated @ 18% p.a. for further period starting from 01.04.2019 till the date of payment. - F Damages under the Purchase Orders 8,00,00,000 G Costs of arbitration THE COUNTERCLAIM 11. On 15 July 2019 OPG submitted its defense, and raised counterclaims in respect of: (a) liquidated damages for delay; (b) customs duties; (c) cost of erection of horizontal and vertical exhaust through external agency; (d) cost of repair/ replacement of gear boxes; and (e) cost of repair/ replacement of fan modules. THE AWARD 12. On 13 July 2020 ICC Arbitral Tribunal, comprising of three members, delivered a unanimous award, where under OPG and Gita Power, who have separately filed these two appeals, were required to pay, jointly and severally, to the claimant (R-1 - Enexio): (i) Rs. 6,11,75,470/- towards outstanding principal amount due under the purchase orders; (ii) Rs. 95,27,533/- towards ICC Administrative Costs and the Tribunal fees and expenses incurred in the arbitration; and (iii) Rs. 40,65,515/- towards claimant s legal fees and expenses. In addition to the above, OPG and Gita Power were directed to pay simple intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal ) observed that the declaratory relief qua the debit notes (i.e., towards: (a) Liquidated damages for the delay; and (b) Customs duty) was sought beyond three years from the date when the right to sue first accrued, therefore it was beyond the limitation period prescribed by Article 58 of the Schedule to the 1963 Act. The Tribunal noticed that the debit note for liquidated damages was issued on 24 August 2015; the claimant acknowledged its receipt vide letter dated 28 August 2015; whereas the request for arbitration was received by ICC Secretariat on 2 May 2019. Likewise, the debit note for customs duty was issued on 12 January 2016 that is, beyond three years from the date of request for arbitration. 15. Insofar as the relief for recovery of the unpaid amount under the purchase orders was concerned, the Tribunal opined that it was not barred by limitation because meaningful negotiations were ongoing between the parties as evidenced by the minutes of meeting dated 19 April 2018, which was followed by a written offer of the purchaser/ employer, dated 26 May 2018, to pay Rupees three crores to the claimant as full and final settlement of the account. The relevant observations i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 2014) when the work ought to have been completed as per the contract. It was also beyond three years from the deemed date of completion (i.e., 21 September 2015). (ii) Different yardstick was adopted in computing the limitation period of the claim than what was adopted for the counterclaim, which was not at all justified as both arose out of same contractual relationship. (iii) One part of the minutes of meeting dated 19 April 2018 that supported the counterclaim was discarded, while the other part, which favored the claimant, was accepted. This is nothing but perverse. (iv) The time for completion of the work under the contract was extended without any basis. (v) Findings in the award are self-contradictory in as much as, if challenge to the debit note for damages on account of the delay was beyond limitation, there was no logic in denying adjustment of those damages against the unpaid dues payable to Enexio under the purchase orders. (vi) Material evidence qua liability for customs duty was ignored. SINGLE JUDGE S ORDER U/S 34 OF THE 1996 ACT 19. The learned Single Judge in its judgment and order on the application, under Section 34 of the 1996 Act, charted the undisputed da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire award. Further, it was observed, if the arbitral tribunal had taken the date of joint meeting (i.e., 19 April 2018), and the follow up offer dated 26 May 2018, as the starting point of limitation for the claim, the same would be the starting point of limitation for the counterclaim as well. And if the starting point of limitation is taken as 21 September 2015 (i.e., the date of completion of the work), the claim, which was filed on 2 May 2019, was well beyond three years and as such barred by limitation. Thus, according to the learned Single Judge there was inherent contradiction in the arbitral award which made it vulnerable to a challenge under Section 34 of the 1996 Act. Consequently, the learned Single Judge set aside the arbitral award. 22. Aggrieved by the judgment and order of the learned Single Judge, dated 23 December 2020, Enexio (R-1 herein) filed two appeals, namely, O.S.A. (CAD) Nos. 174 and 175 of 2021, before the Division Bench of the High Court, which came to be allowed by the impugned judgment. IMPUGNED JUDGMENT 23. The Division Bench of the High Court, inter alia, took the view that the minutes of meeting dated 19 April 2018, read with e-mail dated 26 May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) Associate Builders v. Delhi Development Authority.8 (iii) The Arbitral Tribunal applied different yardstick for computing limitation of the claim than what was adopted for the counterclaim. For example, the start point of limitation for the claim was taken as 26 May 2018 whereas for the counterclaim it was taken as 21 September 2015. This amounted to unequal treatment of the parties more so when claim as well as counterclaim arose from the same contractual relationship. (iv) Once the declaratory relief qua Debit Notes dated 24 August 2015 (i.e. in respect of Rs. 3,30,00,000 towards liquidated damages for the delay in supply and erection under the purchase orders) and 12 January 2016 (i.e. in respect of Rs. 5,94,06,693/- towards Customs Duties) was held barred by limitation, the amount reflected in the Debit Notes ought to have been deemed payable by the claimant and that amount ought to have been adjusted against any amount payable to the claimant. (v) The Division Bench erroneously relied on the minutes dated 19 April 2018 to apply Section 18 of the 1963 Act for extending the period of limitation of the claim when it was nobody s case that limitation stood extended thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion; (ii) customs duty; and (iii) cost of erection of horizontal and vertical exhaust duct through an external agency, were considered and decided on merits. The counterclaims for liquidated damages and customs duty were rejected whereas counterclaim for cost of erection of vertical duct was allowed. Only two counterclaims towards (i) cost of repair/ replacement of Gear Boxes, due to alleged defective supply, amounting to Rs. 9,76,000, and (ii) cost of repair/ replacement of Fan Modules, due to alleged defective supply, amounting to Rs. 14,80,802, were dismissed as barred by limitation. The finding that these two counterclaims were barred by limitation is premised on there being no material to indicate that they were included in the ongoing negotiation. (iii) The arbitral tribunal considered the three counterclaims on merit by adopting the same yardstick qua limitation as applied to the claims. These three counterclaims were not treated as barred by limitation as they were cited in the minutes of the meeting dated 19 April 2018 wherein the principal amount due to OPG was also acknowledged. It is thus incorrect to state that the arbitral tribunal adopted different yardstick on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 2018. Therefore, benefit of Section 18 of the 1963 Act was not available qua those counterclaims. Moreover, there cannot be a general rule that limitation for claims and counterclaims must have a common run because counterclaim is a separate action which must stand on its own legs, as has been held by this Court in Oil and Natural Gas Corporation Ltd. v. Afcons Gunanusa JV17. (vii) The counterclaim for the cost of repair/ replacement of gearboxes and fan modules was rightly rejected by the arbitral tribunal as barred by limitation as regarding it there was no recital in the minutes of meeting dated 19 April 2018. Moreover, it was not intertwined with the claim for the balance amount as the cause of action for the two were different. One arose from supply and erection, and the other arose subsequently, post commissioning/ completion of the project, on account of alleged defect in the material supplied. (viii) Gita Power being the holding company of OPG and having actively participated in the formation of the contract as also in issuance of purchase orders for the supply/ works, which carried the arbitration clause, was bound by the arbitration agreement and also liable jointly and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not statutorily defined, though it has been used in statutes, rules, notification etc. since long, and is also a part of common law. Section 23 19 of the Contract Act, 1872 uses the expression by stating that the consideration or object of an agreement is lawful, unless, inter alia, opposed to public policy. That is, a contract which is opposed to public policy is void. 31. In Chitty on Contracts, scope of public policy, largely accepted across jurisdictions for invalidation of contracts, has been summarized in the following terms: Objects which on grounds of public policy invalidate contracts may, for convenience, be generally classified into five groups: first, objects which are illegal by common law or by legislation; secondly, objects injurious to good government either in the field of domestic or foreign affairs; thirdly, objects which interfere with the proper working of the machinery of justice; fourthly, objects injurious to marriage and morality; and, fifthly, objects economically against the public interest, viz contracts in restraint of trade .. 32. In Gherulal Parakh v. Mahadeodas Maiya and others21, a three-Judge Bench of this Court, in the context of Section 23 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectric Co.23, a three-Judge Bench of this Court observed that the doctrine of public policy is somewhat open- textured and flexible. By citing earlier decisions, it was observed that there are two conflicting positions which are referred to as the narrow view and the broad view . According to the narrow view, courts cannot create new heads of public policy whereas the broad view countenances judicial law making in these areas. In the field of private international law, it was pointed out, courts refuse to apply a rule of foreign law or recognize a foreign judgment or a foreign arbitral award if it is found that the same is contrary to the public policy of the country in which it is sought to be invoked or enforced. However, it was clarified, a distinction is to be drawn while applying the rule of public policy between a matter governed by domestic law and a matter involving conflict of laws. It was observed that the application of the doctrine of public policy in the field of conflict of laws is more limited than that in the domestic law and the courts are slower to invoke public policy in cases involving a foreign element than when a purely municipal legal issue is involved. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/ judgment/ decision is likely to adversely affect the administration of justice. Hence, in our view, in addition to narrower meaning given to the term public policy in Renusagar case, it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void. (Emphasis supplied) 38. Following the expansive view of the concept contrary to public policy , in D.D.A v. M/s. R.S. Sharma Co.29, which related to a matter arising from a proceeding under Section 34, as it stood prior to 2015 amendment, a two-Judge Bench of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l juristic principle in Indian law and is enshrined in Sections 1833 and 34 (2)(a)(iii)34 of the 1996 Act. In addition to the earlier recognized principles forming fundamental policy of Indian law, it was held that disregarding: (a) orders of superior courts in India; and (b) the binding effect of the judgment of a superior court would also be regarded as being contrary to the fundamental policy of Indian law35. Further, elaborating upon the third juristic principle (i.e., qua perversity), as laid down in Western Geco (supra), it was observed that where: (i) a finding is based on no evidence; or (ii) an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse36. To this a caveat was added by observing that when a court applies the public policy test to an arbitration award, it does not act as a court of appeal and, consequently, errors of fact cannot be corrected; and a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b)(ii)39 and Section 48(2)(b)40, in place of the earlier Explanation. The significance of the newly inserted Explanation 1 in both the sections is two-fold. First, it does away with the use of words: (a) without prejudice to the generality of sub-clause (ii) in the opening part of the pre-amended Explanation to Section 34(2)(b)(ii); and (b) without prejudice to the generality of clause (b) of this section in the opening part of the pre-amended Explanation to Section 48(2)(b); secondly, it limits the expanse of public policy of India to the three specified categories by using the words only if . Whereas, Explanation 2 lays down the standard for adjudging whether there is a contravention with the fundamental policy of Indian law by providing that a review on merits of the dispute shall not be done. This limits the scope of the enquiry on an application under either Section 34(2)(b)(ii) or Section 48(2)(b) of the 1996 Act. 45. The Amendment, 2015 by inserting sub-section (2- A)41 in Section 34, carves out an additional ground for annulment of an arbitral award arising out of arbitrations other than international commercial arbitrations. Subsection (2-A) provides that the Court may al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded, resulting in much greater interference with arbitral awards than what the lawmakers intended. This led to the Amendment, 2015 in the 1996 Act. 51. In Ssangyong Engineering (supra), this Court dealt with the effect of the Amendment, 2015. While doing so, it took note of a supplementary report of February 2015 of the Law Commission of India made in the context of the proposed 2015 amendments. The said supplementary report has been extracted in paragraph 30 of that judgment. The key features of it are summarized below: (a) Mere violation of law of India would not be a violation of public policy in cases of international commercial arbitrations held in India. (b) The proposed 2015 amendments in 1996 Act (i.e., in Sections 34(2)(b)(ii) and 48(2)(b) including insertion of sub-section (2-A) in Section 34) were on the assumption that the terms, such as, fundamental policy of Indian law or conflict with most basic notions of morality or justice would not be widely construed. (c) The power to review an award on merits is contrary to the object of the Act and international practice. (d) The judgment in Western Geco (supra) would expand the court s power, contrary to international practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders, however, would remain, for if an arbitrator gives no reasons for an award and contravenes section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award. 40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders, namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair minded or reasonable person would; in short, that the arbitrator s view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with the matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34 (2-A). 41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders, while no longer being a ground for challenge under public policy of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law , which means mere contravention of law is not enough to make an award vulnerable. To bring the contravention within the fold of fundamental policy of Indian law, the award must contravene all or any of such fundamental principles that provide a basis for administration of justice and enforcement of law in this country. Without intending to exhaustively enumerate instances of such contravention, by way of illustration, it could be said that (a) violation of the principles of natural justice; (b) disregarding orders of superior courts in India or the binding effect of the judgment of a superior court; and (c) violating law of India linked to public good or public interest, are considered contravention of the fundamental policy of Indian law. However, while assessing whether there has been a contravention of the fundamental policy of Indian law, the extent of judicial scrutiny must not exceed the limit as set out in Explanation 2 to Section 34(2)(b)(ii). Most basic notions of morality and justice 53. In Renusagar (supra) this Court held that an arbitral award is in conflict with the public policy of India if it is, inter alia, contrary to justice and morality . Explanation 1, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p 223-224, Falcon Publications, 1947). 56. In Associate Builders (supra), while this Court was dealing with the concept public policy of India , in the context of a Section 34 challenge prior to 2015 amendment, it was held that an award can be said to be against justice only when it shocks the conscience of the court45. The Court illustrated by stating that where an arbitral award, without recording reasons, awards an amount much more than what the claim is restricted to, it would certainly shock the conscience of the court and render the award vulnerable and liable to be set aside on the ground that it is contrary to justice. 57. In Ssyangyong (supra), which dealt with post 2015 amendment scenario, it was observed that an argument to set aside an award on the ground of being in conflict with most basic notions of justice , can be raised only in very exceptional circumstances, that is, when the conscience of the court is shocked by infraction of some fundamental principle of justice. Notably, in that case the majority award created a new contract for the parties by applying a unilateral circular, and by substituting a workable formula under the agreement by another, dehors the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudent to cull out the most basic notions of justice . Suffice it to observe, they48 ought to be such elementary principles of justice that their violation could be figured out by a prudent member of the public who may, or may not, be judicially trained, which means, that their violation would shock the conscience of a legally trained mind. In other words, this ground would be available to set aside an arbitral award, if the award conflicts with such elementary/ fundamental principles of justice that it shocks the conscience of the Court. Morality 59. The other ground is of morality. On the question of morality, in Associate Builders (supra), this Court, after referring to the provisions of Section 23 of the Contract Act, 1872; earlier decision of this Court in Gherulal (supra); and Indian Contract Act by Pollock and Mulla, held that judicial precedents have confined morality to sexual morality. And if morality were to go beyond sexual morality, it would cover such agreements as are not illegal but would not be enforced given the prevailing mores of the day. The court also clarified that interference on this ground would be only if something shocks the court s conscience49. Patent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under this category of challenge to an arbitral award53. Perversity as a ground of challenge 63. Perversity as a ground for setting aside an arbitral award was recognized in Western Geco (supra). Therein it was observed that an arbitral decision must not be perverse or so irrational that no reasonable person would have arrived at the same. It was observed that if an award is perverse, it would be against the public policy of India. 64. In Associate Builders (supra) certain tests were laid down to determine whether a decision of an arbitral tribunal could be considered perverse. In this context, it was observed that where: (i) a finding is based on no evidence; or (ii) an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. However, by way of a note of caution, it was observed that when a court applies these tests it does not act as a court of appeal and, consequently, errors of fact cannot be corrected. Though, a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Court does not sit in appeal over the arbitral award. Interference with an arbitral award is only on limited grounds as set out in Section 34 of the 1996 Act. A possible view by the arbitrator on facts is to be respected as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon. It is only when an arbitral award could be categorized as perverse, that on an error of fact an arbitral award may be set aside. Further, a mere erroneous application of the law or wrong appreciation of evidence by itself is not a ground to set aside an award as is clear from the provisions of subsection (2-A) of Section 34 of the 1996 Act. 69. In Dyna Technologies (supra), a three-Judge Bench of this Court held that Courts need to be cognizant of the fact that arbitral awards are not to be interfered with in a casual and cavalier manner, unless the court concludes that the perversity of the award goes to the root of the matter and there is no possibility of an alternative interpretation that may sustain the arbitral award. It was observed that jurisdiction under Section 34 cannot be equated with the normal appellate jurisdiction. Rather, the approach ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to set out each step by which it reached its conclusion or to deal with each and every point made by the parties. It is sufficient that the tribunal should explain what its findings are and the evidential route by which it reached its conclusions. 71.2 On the requirement of recording reasons in an arbitral award and consequences of lack of, or inadequate, reasons in an arbitral award, this Court in Dyna Technologies (supra) held: 34. The mandate under section 31 (3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute. 35. When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In a challenge to such award, before taking a decision the Court must take into consideration the nature of the issues arising between the parties in the arbitral proceedings and the degree of reasoning required to address them. The Court must thereafter carefully peruse the award, and the documents referred to therein. If reasons are intelligible and adequate on a fair-reading of the award and, in appropriate cases, implicit in the documents referred to therein, the award is not to be set aside for inadequacy of reasons. However, if gaps are such that they render the reasoning in support of the award unintelligible, or lacking, the Court exercising power under Section 34 may set aside the award. Scope of interference with the interpretation / construction of a contract accorded in an arbitral award. 72. An arbitral tribunal must decide in accordance with the terms of the contract. In a case where an arbitral tribunal passes an award against the terms of the contract, the award would be patently illegal. However, an arbitral tribunal has jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties including correspondences ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , could be subjected to arbitral proceedings and made jointly and severally liable along with OPG for the dues of Enexio, a look at the facts relating to formation of the contract including the conduct of the parties would be apposite. 78. The relevant facts in this regard, which find mention in the award, are as follows: (a) There were two companies, namely, Gita Power (R-2) and OPG (appellant). Gita Power is the holding company of OPG. Two Tenders were floated. One by a Gujarat Company in the same group, which related to design, manufacture, delivery to site, erection testing and commissioning of two ACC units with auxiliaries for a thermal power plant in Gujarat (for short Gujarat Unit). The other was issued by OPG in respect of design, manufacture, delivery to site, erection testing and commissioning of an ACC unit with auxiliaries for a thermal power plant at Gummidipoondi in Tamil Nadu (for short T.N. Unit). (b) Enexio (R-1 the claimant) submitted a single unpriced techno-commercial offer covering both projects. Following negotiations, a revised techno commercial offer covering both projects was submitted in August 2012. Thereafter, following further negotiations, another tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the claimant by R-2. The statement of defense further states that soon after issuance of the purchase orders in the beginning of April 2013, OPG and R-2 were advised that as the project was being set up by OPG, and it had all the required registrations, etc. it would be advisable that the Purchase Orders placed on the claimant by R-2 for supply and erection of ACC Unit be substituted/ replaced by Purchase Orders in the name of OPG. In addition to above, OPG pleaded that the substitution/ replacement of purchase orders maintained the continuity of the rights and obligations undertaken from 4 March 2013. 79. Based on the above-noted facts, and the evidence brought on record during the arbitral proceedings, the Tribunal concluded that the Group of Companies doctrine is applicable, as OPG and R-2 have represented themselves as a single economic entity which could switch duties and obligations from one to the other. The Tribunal held that (a) R-2 is a proper party; (b) both OPG and R- 2 were bound by the arbitration agreements, which gave rise to the arbitral proceedings; and (c) OPG and R-2 were jointly and severally liable to the claimant for complying with the award. 80. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LIMITATION. 82. On the issue as to whether Enexio s claim was barred by time, the submissions of the appellants, inter alia, are: (a) The date fixed by the contract for completion of the obligations of supply of goods and erection of ACC unit is 31 March 2014. Hence, the date of reckoning for the purposes of limitation ought to be 31 March 2014. (b) The contract was a mixture of supply of goods and services (i.e., works). Therefore, Article 14 of the Schedule to the 1963 Act applied for the price of goods supplied, and Article 18 applied for the price of works provided, for computing the limitation period of the claim. In either case, the limitation period of three years would commence to run, not later than, from 31 March 2014. (c) Even if it is assumed that the deemed date of completion was 21 September 2015 (as held by the arbitral tribunal), the claim being filed on 2 May 2019, was well beyond 3 years from that date. (d) Once the period of limitation started to run, in terms of Articles 14 and 18, mere negotiations could not have extended the period of limitation. Therefore, the award, which takes a contrary view, is patently illegal. 83. Before proceeding further, we must rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter71 expressing intent to award contract for the project at a composite cost of 44 crores. This letter also sets out a tentative date for completion / takeover of the project i.e., March 2014. (d) In that backdrop, on 4 March 2013, Gita Power (R-2) issued two separate orders, one, for Design, Engineering and Supply of 1 Unit of ACC with Auxiliaries (Supply Purchase Order) and, second, for Erection and Commissioning of it (Erection Purchase Order). (e) Pursuant to these purchase orders, on 1 April 2013, Enexio (R-1) submitted a Work Schedule. As per which, commissioning of the ACC Unit was planned on 31 March 2014. In furtherance thereof, Enexio received 10% of the order price in advance on 4 July 2013, and another 10% on 23 July 2013. Both the advance payments were received from Gita Power (R-2). (f) While the work was in progress, in July 2013 OPG issued two orders replicating those that were issued by Gita Power (R-2) with insignificant variation. (g) As per the Supply Purchase Order, payments were to be made in the following order: Payments: (i) 10% of Order Price as advance money on submission of request for advance and advance payment bank guarantee for 10% of the Order P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork. (k) Enexio claimed that successful operation of the vacuum pump was carried out on 21 May 2015, which implies commissioning of the ACC unit. In response OPG asserted that three components of the ACC unit were defective. (l) On 2 July 2015, OPG issued a debit note towards modifications to the turbine generator building. Thereafter, on 24 August 2015, OPG issued two debit notes: (i) towards work related to lifting of the vertical duct; and (ii) towards liquidated damages permissible under the Supply Purchase Order and Erection Purchase Order for the delay in execution. (m) On 28 August 2015 Enexio wrote to OPG questioning the debit notes. (n) On 21 September 2015 Enexio informed OPG that the turbine generator was running at full load and, thereby, requested OPG to arrange for Performance Guarantee Test (PG Test). This request was repeated by e-mails dated 3 October 2015 and 8 October 2015. Later, on 9 October 2015, Enexio sent a letter to OPG attaching six protocols confirming commissioning of all relevant segments of the project. Not only that, on 20 October 2015, Enexio sent a procedure for the PG Test. But the PG Test was not undertaken. (o) On 12 January 2016, OPG issued deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly recorded in the minutes even though there was no agreement in respect thereof. (t) On 26 May 2018, on reiteration of demand by Enexio, OPG responded, vide communication dated 26 May 2018, and offered Rs. 3 crores to Enexio as full and final settlement of the account. This offer was rejected by Enexio. Whereafter, arbitration proceeding commenced. Material Observations in the Award. 87. We shall now extract few observations/ findings in the award which, in our view, would be useful in determining the limitation issue. These observations/ findings, with their corresponding paragraph number in the award, are extracted below: 1). On 1st April 2013 the Claimant prepared its L1 Network Schedule which indicated the final activities leading to commissioning ..: Hook up with TG: 8-Mar-14 to 14-Mar-14 Commissioning 22-Mar-14 to 31-Mar-14. (para 13.02 of the award) 2). The Purchase Orders are silent on the mode of payment of the Claimant s invoices except to note that: 7.3. 65% of the Order Price shall be paid on Pro rata basis along with 100% Taxes and Duties after receipt of material at site. 7.7 Payments will be made within twenty-five days of submission of Invoice/ request for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... large and changed the specified pump to a smaller pump on 21st November 2013. As a result, both the pump and the electric motor, which was required to drive the pump, had to be re-ordered. The claimant asserts, and respondent no.1 does not deny, that the original pump and motor would have been delivered to site on or about 17th February 2014. ..(para 13.10 (a) of the award) 8). It was agreed at the hearing in this arbitration that the actual delivery date of the motors (which arrived a few days after the pump) could be taken as on or about 7th May 2014. Thus, there was a delay of approximately 79 days in delivery. (para 13.10 (b) of the award). 9). On balance, the Tribunal is satisfied that the drain pump together with its motor, although a low value component, was a necessary part of the ACC unit and the decision by Respondent no. 1 to replace it at a late stage risked delaying the project. The time elapsed between the original estimated delivery date, and the assumed actual delivery date was 79 days. .(para 13.10 (e) of the award) 10). The tribunal finds the following facts to be significant: (i) The ACC unit could not be connected to the turbine generator flange until the turbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the claimant. ..(para 13.13 (c) of the award) 11). The tribunal now considers when, if at all, the ACC system was completed. There are three certificates which are referred to in the erection purchase order. These are: A certificate on competition of punch points; A Take Over Certificate of Equipment; and A certificate of competition of performance test. None of these certificates have been issued. (para 13.13 (d) of the award) 12). The only certificate issued by the respondents was dated 2nd March 2017. In separate correspondence, Respondent no.1 stated that this certificate was issued for marketing purposes and did not absolve the claimant from its contractual obligation under the Purchase Orders. ..(para 13.13 (e) of the award) 13). Notwithstanding the respondents caveat, the issuance by the respondents of the 2nd March 2017 certificate is considered significant by the tribunal. The respondents knew the purpose for which the certificate was required by the claimant and, if it did not believe in the veracity of what it was certifying, even for marketing purposes, then it behaved dishonestly. The tribunal has no basis for assuming that the respondents would have acted in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tribunal finds that the deemed achievement of Supplier s liability in respect to Performance Guarantee Test pursuant to Clause 10.5 of Annexure A of the Erection Purchase Order only became effective on 19th March 2016. As the claimant was still requesting a PG test as late as 20th May 2016 the tribunal is satisfied that the deeming provisions apply and the ACC unit is deemed to have passed the PG test. The Erection Purchase Order states that, where the PG test is deemed to have been carried out, the respondents remained liable for the guaranteed performance during the 180 days. However, it is silent on whether the deemed achievement of supplier s liability in respect to Performance Guarantee test is retrospective to the date when the performance can be said to have been achieved. The tribunal finds that for the purposes of determining the delay caused by the failure to arrange a PG test it would be just to consider that the required performance was achieved on 21st September 2015 - the date on which the tribunal has found that the ACC unit was deemed to have been taken over. (para 13.13 (i) of the award) 17). Respondent no.1 did not issue the takeover certificate of equipment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58, and there is no serious challenge to that finding. As regards claim for the outstanding principal amount, it was a composite claim for the balance amount payable for supplies made and work done under the Supply Purchase Order and the Erection Purchase Order respectively, which was found within limitation. 89. According to the appellant(s), Article 14 is applicable to the claim in respect of balance amount for the price of the goods supplied under the Supply Purchase Order; and Article 18 would apply to the claim for the work done under the Erection Purchase Order. It is their case that if the project was to be completed by 31 March 2014, three years period should be counted from that date and, therefore, claim would be barred by limitation as on 2 May 2019 i.e., the date of commencement of the arbitral proceeding. 90. Per contra, Enexio s case is that it is a composite contract for design, manufacture, supply, erection and commissioning of air-cooled condenser unit (ACC Unit) with auxiliaries for 160 MW Coal Based Thermal Power Plant (Project) at Gummidipoondi in the State of Tamil Nadu whereunder payments were to be made on pro rata basis, and final payment was to be made only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Articles 11578 and 11679 of the First Schedule to the 1908 Act, is a residuary Article in respect of all actions based on a contract not otherwise specially provided for. For the applicability of Article 55, four requirements should be satisfied, namely, (1) the suit should be based on a contract; (2) there must be breach of the contract; (3) the suit should be for compensation; and (4) the suit should not be covered by any other Article specially providing for it. 93. A breach of a contract may be by non-performance, or by repudiation or by both80. In Anson s Law of Contract (29th Oxford Edition), under the heading Forms of Breach Which Justify Discharge , it is stated thus: The right of a party to be treated as discharged from further performance may arise in any one of three ways: the other party to the contract (a) may renounce its liabilities under it; (b) may by its own act make it impossible to fulfil them, (c) may fail to perform what it has promised. Of these forms of breach, the first two may take place not only in the course of performance but also while the contract is still wholly executory i.e., before either party is entitled to demand a performance by the other o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid articles governs the suit in its entirety. It is, however, urged that the action comprises two claims, one for the price of the material supplied by the plaintiff, and the other relating to the price of the work done by him, and that these two claims should be dealt with separately, and that they are governed by article 52 and article 56, respectively. The rule of law is no doubt firmly established that a combination of several claims in one action does not deprive each claim of its specific character and description. The Code of Civil Procedure allows a plaintiff, in certain circumstances, to combine in one action two or more distinct and independent claims, and it is quite possible that one of the claims may be barred by limitation, and the other may be within time; though both of them arise out of one and the same cause of action. In a case of that description there is no reason why the court should not apply to each claim the rule of limitation specially applicable thereto. It is nowhere laid down that only one article should govern the whole of the suit, though it may consist of several independent claims, and that the suit should not be split up into its component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a suit for compensation within articles 115 and 116 --- vide Nobocoomar Mookhopadhaya v. Siru Mullick89 and Husain Ali Khan v. Hajiz Ali Khan90. We are accordingly of opinion that the present claim must be regarded as one for compensation for the breach of a contract, and that there is no special provision in the Act which governs the claim. It must, therefore, come under the general provision contained in article 115, which governs every action arising out of contract, not otherwise specially provided for. (Emphasis supplied) 97. In Dhapia v. Dalla91 before a Full Bench of the Allahabad High Court the question was, what Article of the First Schedule to the 1908 Act would apply to a suit for recovery of a specified sum under a contract. In that suit, the plaintiff had made defendant(s) partner to one half of the fishery rights in the tank arising from a Theka, on the condition that they would pay him half the Theka money. The allegations made in the plaint showed that the defendant(s) had already worked out the Theka in respect of their share in it. As that suit was not filed within three years from the date of breach, it was dismissed by the trial court as barred by limitation by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation Act, 1908 xxxxx xxxxx 13. We now proceed to consider why Article 115 of the First Schedule to the Limitation Act should apply to the facts of the present case. Article 115 applies when there is a breach of contract, and suit is for compensation for the loss suffered by the innocent party. A breach of contract occurs where a party repudiates or fails to perform one or more of the obligations imposed upon him by the contract : (vide Cheshire and Fifoot, p 484). If one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise a right of action conferred upon the party injured by the breach (vide Anson s Law of Contract, p 412). Admittedly, in the present case, there was a contract and according to the plaintiff and the findings of the court a breach of contract had occurred inasmuch as the defendants failed to pay the stipulated amount upon the date fixed under the contract. 14. Difficulty can, however, be caused by the word compensation used in Article 115. It can be argued that the words compensation for breach of contract point rather to a claim for unliquidated damages than to the payment of a certain sum, and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case would be covered by it. 19. We see no reason why the words compensation for breach of contract as used in Article 115 should be given a meaning different from the same words as used in Article 116. Article 115 being a residuary Article for suits based on breach of contract, it is obvious that the suit out of which this revision arises would be governed by the said Article. (Emphasis supplied) 98. On a consideration of the aforesaid decisions as well as the provisions of Section 73 of the Contract Act and Article 55 of the Schedule to the 1963 Act, we are of the view that even a suit for recovery of a specified amount, based on a contract, is a suit for compensation, and if the suit is a consequence of defendant breaching the contract or not fulfilling its obligation(s) thereunder, the limitation for institution of such a suit would be covered by Article 55 of the Schedule to the 1963 Act, provided the suit is not covered by any other Article specially providing for it. 99. In the instant case, there is no dispute that the claim is based on a contract. The finding of the Arbitral Tribunal in paragraph 13.13 (i)97 of the award is that the appellant(s) herein had failed to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should be an arbitration agreement and secondly, differences must arise to which the agreement applied. Once there is an assertion of claim by the appellant and silence as well as refusal in respect of the same by the respondent, a dispute would arise regarding non-payment of the alleged dues. The Court thereafter went on to observe: 4. . The High Court proceeded on the basis that the work was completed in 1980 and therefore, the appellant became entitled to the payment from that date, and the cause of action under article 137 arose from that date. But in order to be entitled to ask for the reference under section 20 of the Act there must not only be an entitlement to money but there must be a difference, or dispute must arise. It is true that on completion of the work a right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from the record and when the assertion of the claim was made on 28.2.1983 and there was non- payment, the cause of action arose from that date, that is to say, 28.2.1983. It is also true that a party cannot postpone the approval of cause of action by writing reminders or sending reminders but wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces to come to a definite conclusion that the work was completed on 21 September 2015. In holding so, Tribunal relied on: (a) an e-mail sent by the claimant on 21 September 2015 showing its readiness to a performance guarantee test; and (b) the fact that there was no evidence to suggest that the certificates on completion, as ought to have been issued, should not have been issued on or before 21 September 2015104. The Tribunal also took note of the terms and conditions of the contract which were to the effect that the performance guarantee test can be deemed satisfactory if, despite request, it is not carried out within 180 days of the issue of the taking over certificate. The Tribunal noticed that vide certificate dated 2 March 2017 the appellant(s) admitted that unit was commissioned in May 2015 and there was a request of the claimant dated 21 September 2015 to undertake performance guarantee test105. Taking all of this into account, the Tribunal held that the deemed achievement of supplier s liability in respect to performance guarantee , pursuant to clause 10.5 of Annexure A of the Erection Purchase Order, became effective on 19 March 2016106. 104. From the discussion thus far, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, in our view, Article 18 would also not apply. 107. As it is not demonstrated that any other Article of the Schedule specially providing for the claim, as was made by R-1, was applicable, in our view, Article 55 of the Schedule was applicable to the claim, inter alia, for the following reasons: (a) The claim was for compensation (in as much as the term compensation includes a specified amount payable under a contract107) in respect of the goods supplied and the work done under a contract; and (b) The claim was based on a breach of the contractual obligation as, according to the findings returned by the Arbitral Tribunal, the respondents to the claim (appellant(s) herein) had failed to fulfil their obligation(s) of making payment of the outstanding principal amount payable under the contract despite raising of bills / invoices by the claimant. Starting Point of Limitation for the Claim 108. Having determined that limitation for the claim would be governed by Article 55 of the Schedule to the 1963 Act, we shall now ascertain the date from which the limitation period is to be counted. 109. Under Article 55, the limitation period begins to run when the contract is broken or where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above findings, the Tribunal concluded that commissioning took place in the month of May 2015; technical issues were resolved by 21 September 2015; and performance guarantee period expired on 19 March 2016. 113. Based on the above, while bearing in mind that final payment of the principal outstanding amount was dependent on meeting the requirement of performance guarantee, in our view, the cause of action for the claim, as made, matured on expiry of that stipulated period of 180 days within which, despite request, the appellant(s) (i.e., purchaser) failed to undertake the performance guarantee test. Thus, even though there might be several bills/ invoices raised/issued by the claimant during execution of the contract, the claim of the claimant for the outstanding principal amount matured on expiry of 180 days from the date of the notice given by the claimant to the appellant(s) (i.e., respondents to the claim) to undertake the performance guarantee test. We, therefore, conclude that limitation for the claim started to run from 19 March 2016. 114. At this stage, we may notice, only to reject, an alternative submission made on behalf of the appellant, which is, that if Article 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1908 Act, which is pari materia Section 18 of the 1963 Act, this Court held that for a valid acknowledgement, under the provision, the essential requirements are: (a) it must be made before the relevant period of limitation has expired; (b) it must be in regard to the liability in respect of the right in question; and (c) it must be made in writing and must be signed by the party against whom such right is claimed. In paragraph 6 of the judgment, it was observed: 6. .. The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the acknowledgement should necessarily be in respect of the subject matter of the suit. If a person executes a work and issues a demand letter making a claim for the amount due as per the final bill and the defendant agrees to verify the bill and pay the amount, the acknowledgement will save limitation for a suit for recovery of only such bill amount, but will not extend the limitation in regard to any fresh or additional claim for damages made in the suit, which was not a part of the bill or the demand letter. .. What can be acknowledged is a present subsisting liability. An acknowledgement made with reference to a liability, cannot extend limitation for a timebarred liability or a claim that was not made at the time of acknowledgement or some other liability relating to other transactions. Any admission of jural relationship in regard to the ascertained sum due or a pending claim, cannot be an acknowledgment for a new additional claim for damages. (Emphasis supplied) 119. In the instant case, as found above, the limitation period started to run from 19 March 2016. Within three years therefrom, in the minutes of meeting dated 19 April 2018111 there was a clear acknowledgement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitral proceedings, as under: 168. On our analysis of the statutory framework of the Arbitration Act and the CPC, related academic discourse and judicial pronouncements, the following conclusions emerge: (i) Claims and counter-claims are independent and distinct proceedings; (ii) A counter-claim is not a defense to a claim and its outcome is not contingent on the outcome of the claim; (iii) Counter-claims are independent claims which could have been raised in separate proceedings but are permitted to be raised in the same proceeding as a claim to avoid a multiplicity of proceedings; and (iv) the dismissal of proceedings in relation to the original claim does not affect the proceedings in relation to the counter-claim. 122. Section 23 (2A)113 of the 1996 Act gives respondent to a claim a right to submit a counterclaim or plead a set off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set off falls within the scope of the arbitration agreement. Section 43 (1)114 of the 1996 Act provides that the 1963 Act shall apply to arbitrations as it applies to proceedings in court. Section 3(2)(b)115 of the 1963 Act provides that any claim by way of set off or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y; and (e) cost of repair/ replacement of Fan Modules, due to alleged defective supply. Out of the above five counterclaims, three counterclaims, namely, (a), (b) and (c), were dealt by the Arbitral Tribunal on merits, as they stood recited in the minutes of meeting dated 19 April 2018. Whereas the remaining two, namely, (d) and (e), were treated as barred by limitation because in respect thereof there was no recital / material to show that they were subject matter of negotiation between the parties. The counterclaim (a) (i.e., relating to liquidated damages for the delay) was rejected because the Tribunal found the claimant entitled to extension of time as the ACC Unit project envisaged Hookup / connection to the turbine generator flange which could took place only in February 2015 as turbine generator installation, which was being done by another contractor employed by OPG, got delayed118. The counterclaim (b) (i.e., reimbursement of customs duties) was rejected because, according to the Tribunal, as per the Supply Purchase Order, all Taxes, duties and levies were to be borne by the purchaser (appellant(s) herein)119. Insofar as counterclaim (c) was concerned, it was allowed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n period from 21 September 2015 or 19 March 2016, the counterclaim which was filed on 15 July 2019 was beyond the prescribed period of three years inasmuch as its cause of action could not have arisen after 19 March 2016 because by 19 March 2016, the supplier / contractor had fulfilled its obligation of guaranteed performance for 180 days. Minutes of meeting dated 19 April 2018 did not extend limitation of counterclaims (d) and (e) 130. In these circumstances, the question that falls for our consideration is whether the minutes of meeting dated 19 April 2018 extended the period of limitation for counterclaim(s)120 (d) and (e) as it did for the claim as well as counterclaims (a) (b) and (c). The contention on behalf of the appellant(s) is that the claim and the counterclaim arose out of same contractual relationship, therefore, if the acknowledgment dated 19 April 2018 extends limitation of one part of the claim/ counterclaim, it would automatically extend limitation of the remaining part of the claim / counterclaim. Per contra, learned counsel for Enexio (R-1) contended that there could be multiple claims arising out of the same contract, if the acknowledgment extending limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The appellant next contended, relying on Section 18 of the Limitation Act, that as there was acknowledgement of liability in regard to Contract no. 30/F-2 in the letter dated 28-10- 1978, and the notice invoking arbitration was issued on 4-6-1980 within three years from 28- 10-1978, he was at liberty to make any claim in regard to the contract before the arbitrator even though such claims had not been made earlier and all such claims have to be treated as being within the period of limitation. Such a contention cannot be countenanced. As noticed above, the cause of action arose on 14-4-1977. But for the acknowledgement on 28-10-1978, on the date of invoking arbitration 4-6-1980, the claims could have been barred by time as being beyond the period of limitation. The limitation is extended only in regard to the liability which was acknowledged in the letter dated 28-10-1978. It is not in dispute that either on 28-10-1978 or on 4-3-1980, the contractor had not made the fresh claims aggregating to Rs. 67,64,488 and the question of such claims made in future for the first time on 27-6-1986, being acknowledged by OMC on 28-10-1998 did not arise. (Emphasis supplied) 134. On the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retired in 1311. Our clients have no recollection of any notice from Messrs Dutta and Guha. Our clients are ready to pay to your client whatever may be found due on an adjustment of the accounts up to 1311. Interpreting the aforesaid letter, in the context of plaintiff s argument that it be treated as an acknowledgment of subsistence of relationship up to 27 June 1910, the Calcutta High Court held: Now, as I read that letter, that contains three material statements: it contains a statement that plaintiff was gomostha of the defendants; the second statement is that he was employed up to 1311 (BS) (corresponding with 1904 - 1905], and no longer; and the third statement is that the defendants were willing and ready to pay to the plaintiff whatever might be found due to him on an adjustment of the accounts up to 1311. Now, what is the claim of the plaintiff in this case? He brought his suit in order to establish his right to have the accounts taken upon the basis that he was a partner, and that he was entitled to have the accounts taken down to June 1910. The defendants solicitors wrote that he was not a partner and that he was not entitled to have the accounts taken up to 1910, but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extending limitation of counterclaims (d) and (e), which were not specified therein. In consequence, when counterclaims (d) and (e) were otherwise barred by limitation on the date of filing of counterclaim, the Tribunal was legally justified in rejecting them as barred by limitation. Sub-issue (c) is decided in the aforesaid terms. REJECTION OF PRAYER TO DECLARE DEBIT NOTES INVALID DID NOT AFFECT ENEXIO S CLAIM FOR THE OUTSTANDING PRINCIPAL AMOUNT. 139. We shall now consider whether rejection of Enexio s prayer to declare debit notes invalid, had adversely affected the claim for the outstanding principal amount in respect of the goods supplied/ work done under the contract. In this regard, at the outset, we must bear in mind that it is trite that limitation bars the remedy but does not extinguish the right, save in a case which is covered by Section 27 of the 1963 Act125. It is equally settled that in a suit or a claim, multiple reliefs may be claimed by virtue of Order II Rule 3 of the Code of Civil Procedure, 1908126 , that is, the plaintiff may unite in the same suit several causes of action against the same defendant(s). The period of limitation is prescribed by the Schedule t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it as barred by limitation would not extinguish the claim in respect of which substantive relief is sought. In the instant case, debit note was unilaterally issued by the employer of the contractor. It, therefore, did not bind the contractor. In such circumstances, it was open for the contractor to sue for its dues without seeking a declaration qua the debit notes. Consequently, rejection of the declaratory relief as barred by limitation, in our considered view, did not have a material bearing on Enexio s claim against the appellant(s) herein for the outstanding principal amount payable under the contract. And, further, that amount, as shown debited in the debit note(s), was not to be automatically adjusted against the principal outstanding amount payable to Enexio. In our view, while deciding the claim of Enexio, the arbitral tribunal was well within its remit to adjudicate upon the issue whether such amount should be adjusted or not against the outstanding principal amount payable to Enexio. For the reasons aforesaid, there is no perversity in the award on this count. Sub-issue (d) is decided accordingly. THE ARBITRAL TRIBUNAL DID NOT ADOPT DIFFERENT YARDSTICK / REASONING OF THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred by limitation. In these circumstances, though paragraph 16.03(d) of the award gives the impression that limitation was extended because negotiations were ongoing in respect of items related to the claim, the limitation was extended by applying the principle of acknowledgment as enshrined in Section 18 of the 1963 Act on basis of two documents i.e., the minutes of meeting dated 19 April 2018; and the offer letter dated 26 May 2018. Importantly, the principle of extension of limitation by acknowledgement was applied in respect of only those claims regarding which a mention was there in the minutes of meeting dated 19 April 2018. In respect of claims regarding which there was no recital in the minutes, the tribunal observed that they were not part of the negotiations. Thus, though the term used in paragraph 16.03(d) of the award is negotiation(s) , the tribunal, by referring to minutes dated 19 April 2018 and settlement offer dated 26 May 2018, indicated the underlying legal principle / rationale behind its conclusion. We, therefore, conclude that though reasons recorded in the award at first blush appear insufficient, or a bit confusing, but, when those reasons are examined in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all its claim. In these circumstances, based on the evidence led by the parties, the tribunal was well within its remit to conclude that the claimant was not liable in respect of those items which formed part of the counterclaim. Such conclusion, which is based on proven circumstances, is a plausible view and cannot be termed perverse. Hence, it is not amenable to interference in a challenge under Section 34 of the 1996 Act. In our view, therefore, the learned Single Judge of the High Court erred in law while interfering with the arbitral award. 147. Before closing discussion on the issue, it would be necessary to address an alternative submission raised on behalf of the appellants. It was argued that the learned Single Judge and the Division Bench of the High Court, admittedly, were exercising jurisdiction under Sections 34 and 37, respectively, of the 1996 Act. As, while exercising jurisdiction under Section 34, the Court does not sit in appeal over the award, it cannot substitute the reasoning in the award with its own. Likewise, the appellate court exercising power under Section 37 cannot have greater power than what a Court possesses under Section 34. Consequently, it was argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of the analysis above, we summarize our conclusions as follows: (i) Though the ACC Unit /project was of OPG, Gita Power, as the holding company of OPG, had actively participated in the formation of the contract for the project. Not only did it place purchase order(s) on Enexio but made advance payment(s) thereunder to Enexio, which were subsequently affirmed by OPG. The two, therefore, not only acted as a single economic entity but as agents of each other. Hence, the arbitral tribunal was justified in holding that Gita Power was bound by the arbitration agreement and jointly and severally liable along with OPG to pay the awarded amount. (ii) The claim of Enexio was an indivisible claim for compensation in lieu of goods supplied, and work done, based on breach of the contract, therefore limitation for the claim was governed by Article 55, and not by Articles 14, 18 and 113, of the Schedule to the 1963 Act. (iii) The claimant s claim for the outstanding principal amount matured on 19 March 2016. Therefore, limitation started to run from that date. However, even if we count limitation from 21 September 2015 (as found by the Tribunal) it will have no material bearing on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with the dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with the provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation 1. For the avoidance of any doubt, it is clarified that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25paragraph 65 of Renusagar (supra) 26paragraph 66 of Renusagar (supra) 27paragraph 75 of Renusagar (supra) 28(2003) 5 SCC 705 29(2008) 13 SCC 80 30(2014) 9 SCC 263 paragraphs 35, 38 and 39 31 See Footnote 18 32See paragraph 30 of the judgment in Associate Builders (supra) 33 Section 18. Equal treatment of parties. -- The parties shall be treated with equality and each party shall be given a full opportunity to present his case. 34See Footnote 18 35 See paragraph 27 of the judgment in Associate Builders (supra) 36 Paragraph 31 of the judgment in Associate Builders (supra) 37 Paragraph 33 of the judgment in Associate Builders (supra) 38 Ssangyong Engineering Construction Co. Ltd (supra) 39 See footnote 18 40 Section 48(2)(b).-- Explanation 1. For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if ,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.-- For the avoidance of doubt, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 126. 61 Adani Power (Mundra) Ltd. v. Gujarat ERC, (2019) 19 SCC 9 62 Nabha Power Limited (NPL) v. Punjab State Power Corporation Limited (PSPCL) and Another, (2018) 11 SCC 508, followed in Adani Power (supra) 63 (2024) 4 SCC 1 64 Section 43. Limitations. (1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it applies to proceedings in Court. (2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section 21. (3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within the time specified by the agreement, and a dispute arises to which the agreement applies, the court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper. (4) Where the Court orders that an arbitral award be set aside, the period bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the plaintiff for the defendant at his request, where no time has been fixed for payment. Three years When the work is done. 55. For compensation for the breach of any contract, express or implied not herein specially provided for. Three years When the contract is broken or (where there are successive breaches) when the breach in respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases. PART III SUITS RELATING TO DECLARATIONS 58 To obtain any other Declaration Three years When the right to sue first accrues. PART X SUITS FOR WHICH THERE IS NO PRESCRIBED PERIOD 113 Any suit for which no period of limitation is provided elsewhere in this Schedule Three years When the right to sue accrues. 70 As gathered from paragraph 7 (including sub paragraphs 7.01 to 7.76) of the Arbitral Award under the title Background to the Dispute 71 Quoted in paragraph 79 (c) above 72 See Paragraph 7 of this judgment. 73 Section 18. Effect of acknowledgment in writing. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, Volume 2, at pages 1342 1343, published by LexisNexis. 82 AIR 1922 Lah 198 (FB) : ILR (1921) 2 Lah 376 (FB) : 1921 SCC OnLine Lah 303 83 First Schedule of Limitation Act, 1908 Article Description of Suit Period of Limitation Time from which Period begins to run 52 For the price of goods sold and delivered, where no fixed period of credit is agreed upon. Three years The date of the delivery of the goods. 84 First Schedule of Limitation Act, 1908 Article Description of Suit Period of Limitation Time from which Period begins to run 56 For the price of work done by the plaintiff for the defendant at his request where no time has been fixed for payment. Three years When the work is done. 85 First Schedule of Limitation Act, 1908 Article Description of Suit Period of Limitation Time from which Period begins to run 120 Suit for which no period of limitation is provided elsewhere in this Schedule. Six years When the right to sue accrues. 86 First Schedule of Limitation Act, 1908 Article Description of Suit Period of Limitation Time from which Period begins to run 115 For compensation for the breach of any contract, express or implied, not in writing registered and not herein speciall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Award 101 Paragraph 13.08 (c) of the Award 102 Paragraph 7.32 of the Award 103 Paragraph 13.13 (d) of the Award 104 Paragraph 13.13 (h) of the Award. 105 See Paragraph 88 (16) above including paragraph 13.13 (f) of the Award. 106 Paragraph 13.13 (i) of the Award. 107 See our discussion in paragraphs 96 to 98 of this judgment 108 See Footnote 73 109 AIR 1961 SC 1236: (1962) 1 SCR 140 110 (2008) 2 SCC 444 111 Minutes are quoted in paragraph 7 of this judgment 112 Rajni Rani v. Khairati Lal, (2015) 2 SCC 682, paragraph 9.6. 113 Section 23. Statement of claim and defence. (1) .. (2) .. (2-A) The respondent, in support of his case, may also submit a counter-claim or plead set-off, which shall be adjudicated by the arbitral tribunal, if such counter-claim or set-off falls within the scope of the arbitration agreement. 114 See Footnote 64 115 See Footnote 66 116 See State of Goa v. Praveen Enterprises, (2012) 12 SCC 581, paragraph 20; and Voltas Ltd. v. Rolta India Ltd., (2014) 4 SCC 516. 117 (2018) 12 SCC 560, paragraph 9 118 See paragraphs 13.13 (c) and 13.15 of the Award, extracted in 88 (10) and 88 (19) above. 119 Paragraph 14 of the Award. 120 For description of counterclaims (a) to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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