Back
IN THE HIGH COURT OF DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Prasar Bharati - Appellant
Versus
Shyam Spectra Pvt. Ltd. - Respondent
FAO (COMM) 77 of 2022
Decided On : 12-07-2022
Mistake - Commercial Contract - A&C Act, 1996, Section 8, Section 11, Section 21, Section 34 - The Arbitral Tribunal's decision to allow the appellant's claim and award a sum of Rs.14,50,502/- along with interest at the rate of 18% per annum till the date of payment was set aside by the learned Commercial Court. The court found that the claims made by the appellant were barred by limitation and the impugned award was vitiated by patent illegality.
Fact of the Case:
The appellant claimed recovery of an amount of Rs.14,50,502/- as excess payment made to the respondent due to the failure to enforce a 10% discount provision. The respondent disputed the claim, contending that the appellant was not entitled to any discount and that the claim was barred by limitation.
Finding of the Court:
The court found that the appellant's claims were barred by limitation and that the Arbitral Tribunal had erred in concluding otherwise. It also held that the appellant was not entitled to the 10% discount as the conditions for its provision were not met.
Issues: 1. Whether the appellant's claims were within the period of limitation. 2. Whether the appellant was entitled to the 10% discount as per the agreement.
Ratio Decidendi: The court held that the appellant's claims were barred by limitation as the payments were made beyond the period of three years from the last date of payment. It also ruled that the appellant was not entitled to the 10% discount as the conditions for its provision were not met.
Final Decision: The appeal was dismissed, and the impugned order setting aside the arbitral award was upheld.
JUDGMENT
Vibhu Bakhru, J.
1. The appellant impugns an order dated 04.06.2021 (hereafter `the impugned order') passed by the learned Commercial Court in O.M.P.(COMM.) 43/2020 captioned "Shyam Spectra Pvt. Ltd. v. Prasar Bharti". By the impugned order, the learned Commercial Court set aside an arbitral award dated 07.01.2020 (hereafter `the impugned award'), whereby the Arbitral Tribunal allowed the appellant's claim and awarded a sum of Rs.14,50,502/- along with interest at the rate of 18% per annum till the date of payment. In addition, the Arbitral Tribunal also awarded costs, in favour of the appellant.
2. The learned Commercial Court found that the Arbitral Tribunal had construed the contract between the parties as no reasonable person would. The claims made by the appellant were barred by limitation and the impugned award is vitiated by patent illegality.
3. It is contended on behalf of the appellant that the learned Commercial Court has exceeded its jurisdiction; it has re-appreciated the evidence and re-adjudicated the disputes, which is impermissible.
4. The dispute between the parties relates to the appellant's claim for recovery of an amount of Rs.14,50,502/-, which according to the appellant was the excess amount paid to the respondent. The appellant claims that the respondent was required to provide a discount of 10% but had raised invoices without accounting for the said discount. The respondent disputes the said claim. According to it, the appellant is not entitled to any discount. In addition, the respondent claims that the appellant's claim is barred by limitation.
FACTUAL CONTEXT
5. The appellant had invited bids for obtaining Fibre Optic Links/Connectivity for Analog Video and Audio. A division of Punj Lloyd Ltd. (Spectranet) was successful in securing the said contract. Thereafter, the said parties entered into an agreement dated 25.09.2007 (hereafter `the Agreement').
6. The respondent is a successor in interest of Spectranet.
7. In terms of the Agreement, Spectranet agreed to provide facility (including Fibre Optic Links) and equipment as per the technical specifications. The term of the Agreement was for a period of one year extendable by mutual consent. The appellant agreed to pay consideration for the same on a monthly basis on receipt of invoices.
8. Note 1 in Annexure-A to the Agreement stipulated that if the contract was renewed beyond the initial period of one year, a 10% discount would be provided on monthly charges.
9. Prior to expiry of the term of the Agreement, the appellant sent a letter dated 29.08.2008 calling upon the respondent to confirm whether it was ready to give a discount of 10%, if the contract was extended. The respondent replied, by a letter dated 20.08.2008, stating that it would offer a discount of 10%, if the contract was renewed for a period of one year.
10. The appellant did not agree to extend the contract for a period of one year; and, instead, by a letter dated 07.10.2008, the appellant extended the Agreement for a further period of two months (that is, up to 24.11.2008) on the same terms and conditions. The term of the Agreement was further extended from time to time.
11. Admittedly, the respondent raised its invoices without providing any discount. The said invoices were paid. The last payment was made on 13.01.2010.
12. The Controller and Auditor General (hereinafter `CAG'), in its report dated 06.04.2011, observed that the appellant had failed to enforce the provision of 10% discount, which was available for the extended period October, 2008 to 2009. The same had resulted in an avoidable payment of Rs.21.67 lacs to the contractors (Bharti Airtel and Spectranet). Thereafter, on 27.07.2012, the appellant sent a legal notice calling upon the respondent to refund the excess payment of Rs.14,05,592/- along with interest within a period of two weeks from receipt of the said notice. The respondent did not make the payment as demanded.
13. In the aforesaid context, o
AI
The main legal point established in the judgment is that claims must be made within the prescribed period of limitation, and entitlement to contractual benefits is contingent upon meeting the specifi....
The main legal point established in the judgment is that the decision of the Arbitral Tribunal must be based on evidence and material on record, and the Court will not interfere with the award unless....
Failure to raise claims for escalation in a timely manner and acceptance of payments in full and final settlement preclude further claims.
The acknowledgment of debts in accounts extends the limitation period, validating claims for trade discounts despite non-receipt of subsidies, under the Arbitration and Conciliation Act.
The main legal point established in the judgment is that the notice under Section 21 of the A&C Act must be received for the arbitration to commence, claims must be initiated within the limitation pe....
The entitlement to compensation for overheads incurred during the extended period of the agreement and the calculation of rates for extra items were central legal points established in the judgment.
An arbitral tribunal's ruling on rates for substituted contract items and overhead compensations due to project delays is binding unless manifestly erroneous.
The limited grounds for interference with an award under Sec. 37 and the supervisory nature of jurisdiction under Sec. 34 of the Arbitration and Conciliation Act, 1996.
The impugned award did not contravene the fundamental policy of Indian law, and the claims were not barred by limitation.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
