NATIONAL HIGHWAYS AUTHORITY OF INDIA V. M/S ABHIJEET ANGUL SAMBALPUR TOLL ROAD LIMITED

COURT: High Court of Delhi

CORAM: C. Hari Shankar, J.

DATE OF JUDGEMENT: 28 February 2022

FACTS

The Petitioner filed petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the act’). The petition was passed by the majority of learned Arbitral Tribunal, which consisted of three member, whereby the learned tribunal held that it would not entertain or adjudicate any of the counter-claims raised by the petitioner NHAI vide its application dated 4th February, 2020 except the counter claim for Rs. 12.2 crores.

The above-said petition was filed after the impugned order of 24th September, 2019 wherein the tribunal held that respondent NHAI’s prayer cannot be accepted. The Claimant filed an application before Hon’ble High Court of Delhi seeking stay on encashment of the bank guarantee (bid security) of Rs. 12.2 crores available with the Respondent. The Hon’ble High Court stayed the invocation of bank guarantee till final orders. The High Court decided on 22.8.2013 to get the money deposited in the court. On the money being deposited with the Registry of the Court, the Registry will invest the same in an interest bearing fixed deposit.

The final orders of the Hon’ble High Court were passed on 16.09.2013subject to the conditions: (i) The Concessionaire would keep the bank guarantee alive during the pendency of the Petition and to invoke arbitration within 10 days. (ii) The captioned petition will be placed before the Arbitrator who will treat the same as an application u/s 17of the Act and decide the same in accordance with law. (iii) Both parties are free to prefer their claim and counter claims if any. (iv)The money deposited in the court will abide by the order of the Arbitrator (v) The arbitrator will be at liberty to pass an appropriate order in accordance with qua the application u/s 17 of the Act (vi) In case the Respondent is aggrieved by any acts of commission or omission of the Petitioner and in that behalf seeks to exercise its right under the agreement, the Respondent will be free to do so.

The tribunal had certain findings- that interim measure granted by court is already in place and will continue till adjudication of matter by the arbitral tribunal. That AT finds that the prayer of the Respondent is not for any interim measure of protection but to allow the Respondent to withdraw the amount deposited with the Court. And finally the AT held that prayer made by respondent cannot be accepted. The respondent NHAI was also allowed to file a counter claim if so desired.

After this the petition under section 34 was filed before arbitral tribunal, the order was passed on 26th August, 2020. The appeal of which has been sought before this Hon’ble High Court of Delhi.

ISSUE RAISED

Whether counter claim can be filed by party after grant of interim award? If yes, can the Arbitral Tribunal decline the entertainment of such counter claim? If yes, then what is the scope of those limitations?

JUDGMENT

The hon’ble judge relying on the judgment by Supreme Court in Indian Farmers Fertiliser Cooperative ltd v. Bhadra Products, the hon’ble judge observed “The impugned order dated 26th August 2020, of the learned Arbitral Tribunal has effectively rejected the counterclaims filed by the petitioner by stating that it “refused to entertain” the said claims. The reason for such rejection is, as is apparent from the impugned paragraph from the order dated 26th August, 2020, that the claims were not maintainable in view of the limited liberty granted by the learned Arbitral Tribunal vide its earlier order dated 24th September, 2019. A decision that the counter-claim is not maintainable and is, therefore, liable to be rejected, is a decision which an Arbitral Tribunal can certainly take at the final stage of the proceedings, especially in view of the power conferred on the Arbitral Tribunal, by Section 16 of the 1996 Act, to rule on its own jurisdiction especially in view of the power conferred on the Arbitral Tribunal by Section 16 of the 1996 Act, to rule on its own jurisdiction. Being, therefore, in the nature of a decision which could be taken at the final stage of the proceedings, i.e. in the final award which the Arbitral Tribunal would pass, such a decision, when taken at an interlocutory stage, would, in my view, certainly constitute an “interim award” within the meaning of the 1996 Act, in view of the law laid down in IFFCO.”

Further differing to the judgment of High Court of Calcutta in the case of Lindsay International pvt. ltd v. IFGL Refectories ltd, the hon’ble judge observed, “It is seen, from the aforesaid decision of the High Court of Calcutta, that the High Court has not alluded to the authority of the Arbitral Tribunal, in exercise of its jurisdiction under Section 16 of the 1996 Act, to rule on its own jurisdiction, which would include the power to reject a claim or counter-claim as being beyond the scope of the reference made before it. Viewed thus, any decision to the said effect, taken at the interim stage, would, in my view, constitute an “interim award” and would, therefore, be amenable to challenge under Section 34. I respectfully regret my inability to subscribe to the view, expressed by the Calcutta High Court, that a decision of the Arbitral Tribunal to reject counter-claims as beyond the scope of reference is not an “interim award” amenable to challenge under Section 34 of the 1996 Act.”

Accordingly, the impugned decision of the learned Arbitral Tribunal, whereby it has declined to entertain the counter claims of the NHAI, as preferred by its application dated 4th February, 2020, save and except the counterclaim for ₹12.2 crores, cannot sustain in law. It is, accordingly, quashed and set aside. The petition is, accordingly, allowed with consequential relief to NHAI with no order as to costs. All pending applications also stand disposed of.

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