Full Text
Date of Decision: 30th April, 2014
MAG FILTERS EQUIPMENTS PVT LTD ..... Appellant
Through: Mr. Sunil Dalal, Adv.
Through: None.
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW CM No.7560/2014 (for exemption)
JUDGMENT
1. Allowed, subject to just exceptions.
2. The application is disposed of. FAO(OS) 211/2014 & CM No.7559/2014 (for stay)
3. This intra-court appeal impugns the order dated 19.02.2014 of the learned Single Judge of dismissal of OMP No.117/2013 under Section 34 of the Arbitration & Conciliation Act, 1996 preferred by the appellant. The said OMP was filed assailing the arbitral award dated 24.07.2013 whereby certain claims of the respondent / claimant were allowed and the counterclaim of the appellant was rejected.
4. The appellant before the learned Single Judge restricted the challenge (which has been allowed) to the point of limitation qua claim no.1 of the respondent / claimant contending that the said claim was barred by time. 2014:DHC:2297-DB
5. The learned Single Judge, in the impugned order, has recorded that the arbitral Tribunal rejected the said defence raised by the appellant of limitation by first observing that the same was raised as an afterthought and secondly by considering the merits of the said defence and not finding any substance therein. The learned Single Judge has agreed with the reasoning given in the arbitral award and not found any ground to set aside the award for the said reason.
6. We have heard the counsel for the appellant.
7. The said claim of the respondent / claimant was admittedly for the balance 20% of the consideration agreed to be paid by the appellant to the respondent / claimant for supply of material and for erection of Pre- Engineered Steel Building (PEB) by the respondent / claimant at the site of the appellant. The contention of the counsel for the appellant is that the invoices raised by the respondent / claimant on the appellant for the said balance 20% amount are dated 15.05.2008 and 30.08.2008 and though the appellant did not pay the amount thereof, arbitration was invoked only on 01.09.2011 i.e. after three years from the date of the invoices and the claim for the amount of the said invoices was thus barred by time.
8. We have enquired from the counsel for the appellant as to which of the Articles of the Schedule to the Limitation Act, 1963 would apply.
9. The counsel for the appellant states that Article 14 of the Limitation Act would apply.
10. Article 14 provides a limitation of three years commencing from the date of delivery of goods, for a suit for price of goods sold and delivered, where no fixed period of credit is agreed or given.
11. The Arbitral Tribunal as well as the learned Single Judge have found:
(i) that as per the contract between the parties, the said 20% of the consideration was payable by the appellant to the respondent / claimant, not upon invoice therefor being raised but on submission of performance bank guarantee by the respondent / claimant for the total project costs for 12 months from the date of issue of Completion Certificate by the appellant;
(ii) that though the work of erection of PEB was completed by
07.08.2008 but the appellant wanted some modifications / deviations and for which there was a provision in the contract and which modifications / deviations were carried out till early 2009;
(iii) that the respondent / claimant thus became entitled to full and final payment only after the work had been so completed;
(iv) that the appellant however did not issue the Completion
(v) that though the respondent / claimant was required to furnish the performance bank guarantee only after issuance of the Completion Certificate by the appellant but the respondent / claimant nevertheless furnished a performance bank guarantee dated 29.01.2009, valid upto 31.01.2010; and,
(vi) that the respondent / claimant thus became entitled to the balance 20% only on 29.01.2009 and the arbitration invoked on 01.09.2011 was within three years therefrom.
12. We have enquired from the counsel for the appellant that in the circumstances aforesaid, how can it be said that no fix period of credit was agreed for the payment of balance 20% to the respondent/claimant. We have also invited the attention of the counsel to Article 15 of the Schedule to the Limitation Act which provides limitation of three years commencing from the date when the period of credit expires, for a suit for price of goods, sold, supplied and delivered, to be paid after the expiry of a fixed period of credit. Even though the period from the date of the invoices and till the date of the performance bank guarantee was not the period of credit but since the appellant became liable to pay the amount of the invoice only on the respondent / claimant furnishing a performance bank guarantee, the cause of action, even under the residuary Article 113, would accrue only when the claimant became entitled to recover the balance 20% sale consideration and could not have accrued prior thereto. Help can also be taken from Article 18 which provides limitation of three years commencing from the date when the work is done, for a suit for the price of work done for the defendant where no time has been fixed for payment. Here, as aforesaid, time for payment of the balance 20% consideration was fixed and the claim has been made within three years therefrom.
13. The counsel for the appellant then contends that the respondent / claimant could not unilaterally choose to furnish the bank guarantee at any date and make a claim for the balance 20% within three years therefrom. It is also argued that infact no performance bank guarantee was ever furnished and the same was produced before the Arbitral Tribunal for the first time.
14. The said hypothetical argument is not found to have been raised, neither before the Arbitral Tribunal nor before the learned Single Judge. Moreover that is not even the case. As aforesaid, the finding is, of the work having been completed in early 2009 and the performance bank guarantee having been furnished on 29.01.2009. There was thus no delay in furnishing the same. It also defies logic that the respondent / claimant would have a performance bank guarantee prepared but not submit the same to the appellant.
15. Section 37 of the Arbitration Act under which appeal is preferred, does not permit interference with a finding of fact and law by the Arbitral Tribunal on the basis of material on record, particularly when the said finding has been accepted by the learned Single Judge also. As has been famously said, once the parties agree to be bound by the award of the arbitrator, they agree to an award even if wrong on law and facts. Even under the old law, mere error in application of law was not a ground for setting aside the award unless the arbitrator was found to have misconducted or was shown to be biased and having acted unfairly or the award to be improperly procured. The 1996 Act has further restricted the challenge and the grounds as are urged, are not available.
16. There is thus no merit in the appeal which is dismissed. We refrain from imposing costs.
CHIEF JUSTICE RAJIV SAHAI ENDLAW, J. APRIL 30, 2014 ‘gsr’..