The right to file a counter-claim exists independent of any liberty granted by the Arbitral Tribunal, and an interim award is susceptible to challenge under Section 34 of the 1996 Act.

JUDGMENT

Najmi Waziri, J. This appeal under section 37 of the Arbitration and Conciliation Act, 1996 (`the Act') impugns the order dated 28.02.2022 passed by the learned Single Judge in a section 34 petition [O.M.P. (Comm.) No. 224 of 2021 National Highways Authority of India vs. M/s Abhijeet Angul Sambalpur Toll Road Limited] The impugned order has set aside the order of the Arbitral Tribunal dated 26.08.2020. By majority decision the Arbitral Tribunal had declined to entertain two of the three counter-claims filed by the NHAI on the ground that except for the counter-claim for Rs.12.2 crores, the other two had been "filed without authority". It concluded that it "shall not entertain to adjudicate the other counter-claims". The Arbitral Tribunal then proceeded to consider only the counter-claim of Rs.12.2 crores. The impugned order of the learned Single Judge has held that the right to file a counter-claim exists independent of any liberty granted by the Arbitral Tribunal and it was always open to the Arbitral Tribunal, in exercise of the powers conferred by it under section 16 of the Act, to reject the counter-claims either on merits or on limitation or even on the ground that they are not arbitrable within the scope of the reference made to the Arbitral Tribunal. The appellant had objected to the maintainability of NHAI's section 34 petition on the ground that the order of the Arbitral Tribunal was not an interim Award. The impugned order held as under:

"8. Decisions of the Arbitral Tribunal are amenable to challenge, before the Court, either under Section 34 or under Section 37 of the 1996 Act. Section 37 envisages appeals against orders passed by the Arbitral Tribunal. Of these, direct appeals from a decision of the Arbitral Tribunal are covered by Section 37(2), and lie against orders either accepting applications under Section 16(2)(3) or granting or refusing to grant an interim measure under Section 17. As such, orders which do not fall within one or the other of the aforesaid sub clauses of Section 37(2) would not be amenable to challenge by way of appeal.

9. Section 34 of the 1996 Act allows recourse to a Court against any "arbitral award". "Arbitral award" is defined in Section 2(1)(c) as including an interim award.

10. "Interim award" is, however, not defined in the 1996 Act. Section 31(6) of the 1996 Act, however, empowers an Arbitral Tribunal to make an interim award on any matter with respect to which it may make a final arbitral award. Section 31 (6) of the 1996 Act reads thus:

"The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award...."

2. The impugned order has further reasoned as under:

"11. Inasmuch as an interim award is also an "arbitral award" as defined in Section 2(c), an interim award would be susceptible to challenge under Section 34 of the 1996 Act. This fact was noticed by the Supreme Court in Indian Farmers Fertilizer Cooperative Ltd. v. Bhadra Products (IFFCO, hereinafter). The issue before the Supreme Court, in that case, was whether an order rejecting a claim on the ground of limitation, could be treated as "interim award", so as to make the order amenable to challenge under Section 34 of the 1996 Act. The Supreme Court, in IFCO, while noticing that the 1996 Act does not define "interim award", proceeded to opine as under:

"7. As can be seen from Section 2(c) and Section 31(6), except for stating that an arbitral award includes an interim award, the Act is silent and does not define what an interim award is. We are, therefore, left with Section 31(6) which delineates the scope of interim arbitral awards and states that the arbitral tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award."

8. The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make