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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Indian Oil Corporation Ltd - Appellant
Versus
Great Eastern Shipping Co Ltd & Anr - Respondent
O.M.P. (Comm) No. 188 of 2020
Decided On : 17-03-2021
Limitation Act - Arbitration - Section 34 of the Arbitration and Conciliation Act, 1996 - COA-2006 - COA-2007 - [Section 14 of the Limitation Act, 1963] - [Summary of Acts and Sections: Section 14 of the Limitation Act, 1963, Section 34 of the Arbitration and Conciliation Act, 1996] - The court examined whether the impugned award suffered from any patent illegality warranting interference under Section 34(2A) of the A&C Act. The case involved disputes between Indian Oil Corporation Ltd. (IOCL) and The Great Eastern Shipping Co. Ltd. (GESCO) regarding claims under COA-2006 and COA-2007. The court found that IOCL's claim for damages under COA-2006 was time-barred when it filed its counter claims before the First Arbitral Tribunal, and thus the question of extending the benefit of Section 14 of the Limitation Act was not relevant. The court also noted that IOCL had not acted with due diligence, and the Arbitral Tribunal's findings were not amenable to judicial review. The petition was dismissed.
Fact of the Case:
Indian Oil Corporation Ltd. (IOCL) filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an Arbitral Award made by an Arbitral Tribunal comprising of three members, rejecting IOCL's claim as barred by limitation. The case involved disputes between IOCL and The Great Eastern Shipping Co. Ltd. (GESCO) regarding claims under COA-2006 and COA-2007.
Finding of the Court:
The court found that IOCL's claim for damages under COA-2006 was time-barred when it filed its counter claims before the First Arbitral Tribunal, and thus the question of extending the benefit of Section 14 of the Limitation Act was not relevant. The court also noted that IOCL had not acted with due diligence, and the Arbitral Tribunal's findings were not amenable to judicial review. The petition was dismissed.
Issues: The issues involved the applicability of Section 14 of the Limitation Act, 1963, to IOCL's claim, the due diligence of IOCL in pursuing its claims, and the jurisdiction of the First Arbitral Tribunal to entertain IOCL's counter claim for damages under COA-2006.
Ratio Decidendi: The court held that IOCL's claim for damages under COA-2006 was time-barred when it filed its counter claims before the First Arbitral Tribunal, and thus the question of extending the benefit of Section 14 of the Limitation Act was not relevant. The court also noted that IOCL had not acted with due diligence, and the Arbitral Tribunal's findings were not amenable to judicial review.
Final Decision: The petition was dismissed.
JUDGMENT
Vibhu Bakhru, J. - Indian Oil Corporation Ltd. (hereafter 'IOCL') is a Public Sector Undertaking engaged in the business of import, distribution and sale of petroleum and other ancillary products. It has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the 'A&C Act') impugning an Arbitral Award dated 16.04.2012 (hereafter 'the impugned award') made by an Arbitral Tribunal comprising of three members. The Arbitration was conducted under the aegis of the Indian Council of Arbitration (Respondent No. 2) and in accordance with the Maritime Arbitration Rules of the Indian Council of Arbitration. By the impugned award, the Arbitral Tribunal had rejected IOCL's claim as barred by limitation.
2. Iocl contends that the impugned award is patently illegal, as the Arbitral Tribunal could not have denied the benefit of Section 14 of the Limitation Act, 1963 (hereafter the 'Limitation Act') to IOCL. IOCL claims that its claim was within the period of limitation as the period spent by it in pursuing its claim as a counter claim before another Arbitral Tribunal, ought to have been excluded in terms of Section 14 of the Limitation Act.
3. Respondent No. 1, The Great Eastern Shipping Co. Ltd. (hereafter 'GESCO'), disputes the aforesaid contention. According to GESCO, IOCL had not acted with due diligence. IOCL had claimed an amount of Rs. 1,09,86,726/- as a counter claim in the arbitral proceedingsinstituted by GESCO in respect of another contract. GESCO had contested the same on the ground that the Arbitral Tribunal, constituted in that matter (hereafter referred to as the 'First Arbitral Tribunal'), did not have the jurisdiction to entertain IOCL's counter claim. However, despite GESCO pointing out that the First Arbitral Tribunal lacked the jurisdiction to decide IOCL's counter claim, IOCL did not take the necessary steps for commencing arbitral proceedings or for the appointment of an Arbitrator to adjudicate its claim. It continued to press its counter claim before the First Arbitral Tribunal, which IOCL knew, or ought to have known, did not have the jurisdiction to decide the same. Second, it is submitted that even if it is ignored that the First Arbitral Tribunal did not have jurisdiction to entertain IOCL's claim, it could not have done so as the claim was barred by limitation as on the date when such counter claim was filed before the First Arbitral Tribunal.
4. The controversy arising in this case is confined to examining whether the impugned award suffers from any patent illegality which warrants interference under Section 34(2A) of the A&C Act.
Factual Matrix
5. The parties had entered into a Contract of Affreightment dated 12.05.2006 (hereafter 'COA-2006'). In terms of COA-2006, GESCO agreed to provide a vessel to IOCL for carriage of crude oil from the Middle East, Red Sea Port to the West Coast or East Coast of India, for a duration of one year from June, 2006 to May, 2007. The term was extendable by a further period of three months at the option of the Charterers (IOCL). IOCL agreed to provide two Laycans for "two Suezmax parcels" for each month. It was agreed that each parcel would be a minimum of 132,000 MT.
6. Iocl was required to advise GESCO about the Laycans for the following month latest by the 20th day of each month. GESCO agreed to accept the Laycans without any deviation and was obliged to arrange for suitable tonnage and ensure that the cargo is lifted from the ports as per IOCL's schedule. GESCO agreed to nominate a suitable vessel for the same, at least fifteen days in advance of the commencement of first day of the Laycan or within three days of IOCL's intimation of the Laycan's, whichever is later. It was also agreed that in case the owner (GESCO) fails to nominate a suitable vessel and/or the nominated vessel misses the Laycan or the nominated vessel is not accepted by the suppliers/terminals, GESCO would substitute the vessel. It was agreed that if GESCO fai
The main legal point established in the judgment is that the applicability of Section 14 of the Limitation Act, 1963, and the due diligence of the claimant in pursuing its claims are crucial factors ....
The court affirmed that claims for breach of contract are subject to statutory limitation periods, which cannot be extended by claims of continuing breaches.
Time limitation for counter-claims must be computed from the date of cause of action, and notices under Section 21 must explicitly invoke arbitration to affect limitation.
The main legal point established in the judgment is the application of limitation principles under the Arbitration and Conciliation Act to determine the timeliness of the counter claim and the reject....
The main legal point established in the judgment is that parties cannot raise new defenses at a later stage and that interest awarded in excess of the claim made by a party is not valid.
The limitation period for claims in arbitration commences upon receipt of notice invoking arbitration, not from the breach date, and claims cannot be barred if defenses were not properly raised.
The limitation period for arbitration claims commences from the date of the Cure Notice, and claims not filed within three years are barred, affirming the arbitrator's findings.
The court ruled that arbitration findings are minimally subject to judicial review, confirming compensation awarded for unlawful possession and possession restoration based on the terms of the compro....
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