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2018 Supreme(Del) 1881
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, A.K. CHAWLA, JJ.
Hindustan Vidyut Products Ltd. – Appellant
Versus
Delhi Power Company Ltd. & Anr. – Respondents
FAO (OS) 337 of 2007, FAO (OS) 338 of 2007
Decided On : 06-08-2018
For the Appellant : Mr. B. Mohan and Mr. Siddharth Aggarwal, Advs.
For the Respondent: Mrs. Avnish Ahlawat and Ms. Palak Rohmetra, Advs. with Mr. Gaurav Gupta, GM (Legal)
The main legal point established in the judgment is the interpretation of the limitation period for invoking the arbitration clause under the Arbitration and Conciliation Act, specifically under Article 113, Article 14, and Article 15 of the Limitation Act.
Headnote:
Arbitration and Conciliation Act - Limitation - Article 113, Article 14, Article 15
Fact of the Case:
The appellant entered into a contract for supply of goods with DESU and three DISCOMS. The appellant invoked arbitration due to the withholding of payment by DESU for allegedly defective goods supplied under the contract.
Finding of the Court:
The court analyzed the question of limitation in invoking the arbitration clause. The learned Arbitrator held that the claim was within limitation under Article 113, but the learned Single Judge disagreed, finding the claim time-barred.
Issues: The pertinent question was the limitation in invoking the arbitration clause, specifically whether the claim was time-barred under Article 113, Article 14, or Article 15 of the Limitation Act.
Ratio Decidendi: The court held that the right to apply for appointment of an Arbitrator did not accrue until a dispute or difference arose, and the claim was not time-barred under Article 113. The court also discussed the liabilities of the respondents under the award.
Final Decision: The impugned judgment was set aside, and the award was set aside as against the instant respondents, Delhi Transco Ltd. and Delhi Power Supply Co. Ltd.
A.K. CHAWLA, J.
Both the appeals in hand, preferred under Section 37 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), extend challenge to the judgment dated 25.07.2007 passed by the learned Single Judge allowing the two petitions being OMP No.114/2006 (Delhi Power Company Limited vs. Hindustan Vidyut Products Ltd. and Anr.) and OMP No.115/2006 (Delhi Transco Limited vs. Hindustan Vidyut Products Ltd. and Anr.) under Section 34 of the Act, where-under, an award dated 22.12.2005 passed by the learned Arbitrator in favour of the appellant and against the respondents; BSES Rajdhani Power Ltd.; Delhi Power Co. Ltd. (D.P.C.L.); North Delhi Power Ltd. (N.D.P.L.); and, BSES Yamuna Power Ltd., was set aside. Objections against the award came to be filed by the respondents only, claiming to be two independent entities other than as one, as find mention in the award. Instant appeals are so preferred against the order passed by the learned Single Judge on the objections filed by them.
2. Concisely, the facts relevant for the disposal of the appeals are that the appellant had entered into a contract for supply of goods with DESU-the predecessor-in-interest of Delhi Vidyut Board and the three DISCOMS i.e. Rajdhani Power Ltd., Yamuna Power Ltd. and North Delhi Power Ltd. in the year 1992. For the goods supplied by the appellant between 8th October, 1992 and 18th February, 1993, the challans/bills no. 201 dated 08.12.1992; 202 dated 08.10.1992; 270 dated 10.12.1992; 307 dated 17.01.1993; 320 dated 05.02.1993 and 334 dated 18.02.1993 were raised upon DESU. Goods so supplied were received by DESU without any objection. As per the terms of payment, the appellant was to receive 100% payment with tax through bank or direct cash, within three days from the date of the receipt of the challan. At the time of release of the payment against such bills, a sum of Rs.10 lakh was withheld on the premise that the appellant had supplied defective goods against contract no. TE 1949 and a penalty in that regard was contemplated. On the appellant making a representation dated 11.05.93, DESU vide its letter dated 24.05.1993 informed the appellant that the amount of Rs.10 lakh was being withheld and rest of the amount was being released, on account of an earlier contract, where-under, allegedly, defective goods were received by it. Later, on the representations made by the appellant, vide its letter dated 19/21.06.2001, DVB, since successor-in-interest of DESU, informed the appellant that a penalty of Rs.24,23,659.80 had been levied upon the appellant and the withheld amount of Rs.10 lakh stood already adjusted. For the balance payment towards the penalty, demand was also raised. On this, the appellant sent notice dated 08.03.2002 demanding payment of the withheld amount of Rs.10 lakh along with interest. It was not responded and the appellant proceeded to invoke the arbitration clause sending notice dated 08.03.2002. Arbitral proceedings so ensued amongst the parties.
3. The pertinent question agitated in the appeals is with regard to the question of limitation in invoking the arbitration clause. According to the respondent, the arbitration clause was invoked much beyond the prescribed time and the claim made was therefore, time barred.
4. Undisputedly, the goods were delivered to and received by DESU during the period from 8.10.1992 to 18.2.1993. All such goods were supplied under one contract no. TE-45. It is also not in dispute that as per the terms of payment under the subject contract no.TE-45, 100% payment was payable within three days from the date of the receipt of challan. There is also no dispute to the fact that there was neither any defect in the goods nor in the documents furnished along with the bill/challan at the time of the delivery of the goods under contract no. TE-45. Whether the respective payments against the different supplies made under the subject contract no. TE-45 had come to be made by DESU within three days
