The main legal point established in the judgment is the interpretation of the provisions of Section 21 and 43 of the Arbitration and Conciliation Act in relation to the filing of counter claims and the application of the twin tests established by the Supreme Court for saving the limitation for filing a counter claim.

Gita Mittal, J.

FAO(OS) 30/2018

1. By way of this petition, the appellants have assailed the order dated 24th January, 2017 dismissing O.M.P. No.18/2017 in which order dated 11th January, 2017 passed by the ld. Arbitrator rejecting the counter claim filed by the appellants herein as barred by limitation was challenged under Section 34 of the Arbitration Act.

2. It is undisputed that the proceedings before the ld. Arbitrator pertain to two agreements both dated 30th March, 2012 relating to Business and Asset Transfer Deed and Employment Agreement. As per the terms of the Business and Asset Transfer Deed, the respondent had acquired the business of the petitioner/appellant company including pending projects without taking over any of the movable as well as immovable assets for the total sale consideration of Rs.12,00,000/-. As per the Employment agreement, Mr. Vikrant Bhatkar, appellant no.3 herein had joined as Executive Director of the respondent’s company at the monthly salary of Rs.2,00,000/-.

3. Mr. Vikrant Bhatkar admittedly submitted his resignation from service vide letter dated 18th August, 2013 to the respondent company. This resignation was premised on reasons of ill health of his son. This resignation letter was not accepted by the respondents, who responded to the same vide letter dated 26th August, 2013 setting out reasons as to why the services of the appellant no.3 were being terminated. The respondents made extensive allegations regarding the working of the appellant no.3 and set up a financial claim against all the appellants placing reliance on the terms of the two agreements between the parties.

4. Based on the same assertions, the respondent filed a petition on 11th October, 2013 being O.M.P. No.1034/2013, Nelson Planning and Design Private Limited vs. Ten Creative Studio Private Limited & Ors. under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim orders against the appellants herein. Ad-interim ex-parte relief was granted to the respondents whereby the appellants were restraint from entering into any fresh contract with a third party. The appellants filed a reply dated 28th May, 2014 to this petition (page 150).

5. Our attention is drawn to the order dated 4th September, 2014 whereby the ld. Single Judge has disposed of the petition filed under Section 9 of the Arbitration and Conciliation Act for the reason that the prayer of the petitioner became infructuous by reasons of efflux of time.

6. The respondents filed two arbitration petitions being Arb.P.No.114/2015 and Arb.P.No.115/2015 under Section 11 of the enactment seeking reference of the disputes to arbitration.

7. On 7th October, 2015, when these petitions were came up, a submission was made by ld. counsel for the respondents that “in terms of the arbitration clause, an arbitrator may be appointed”. In these circumstances, by an order of the same date, a former judge of this court was appointed as an Arbitrator and the petitions were disposed of.

8. The respondents filed its statement of claim before the Delhi Arbitration Centre on 16th January, 2016 in case bearing reference DAC/1062/10-15. The appellant also filed its detail reply to the statement of claim on 27th May, 2016. The respondent had also filed an application under Section 17 which was registered with case reference DAC/1069/10-15. Thereafter on 19th July, 2016, the appellant herein filed its counter claim in case reference no.DAC/1062/10-15 against the respondent based on the allegations of loss, dues and humiliation suffered by it at the hands of the respondents. The respondents also filed its statement of claim in case reference no.DAC/1069/10-15 on 17th September, 2016. The second counter claim in DAC/1069/10-15 was filed by the appellant only on 1st December, 2016.

9. The respondents objected that the counter claims filed by the appellants were grossly barred by time. The ld. Arbitrator sustained this objection of the respondents vide order dated 11th January,