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.

JUDGMENT

Vibhu Bakhru, J. The appellant has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning an order dated 24.06.2020 (hereafter `the impugned order') rendered by the learned Commercial Court. By virtue of the impugned order, the learned Commercial Court rejected the appellant's application preferred under Section 34 of the A&C Act [being OMP (COMM) No. 20/2018 captioned Web Overseas Limited v. Universal Industrial Plants Manufacturing Company Pvt. Ltd.], impugning an interim award dated 01.10.2018 (hereafter `the impugned award') passed by the Arbitral Tribunal. In terms of the impugned award, the appellant's contention that the counter-claim preferred by the respondent was barred by limitation, was rejected.

2. The Arbitral Tribunal had accepted that the respondent had not issued any notice under Section 21 of the A&C Act and therefore, the period of limitation would run from the date of cause of action till the date of filing of the counter-claim. However, the Arbitral Tribunal found that the respondent was entitled to the benefit of Section 14 of the Limitation Act, 1963 (hereafter `the Limitation Act') as it had filed an application under Section 8 of the A&C Act in the suit preferred by the appellant. The Arbitral Tribunal found that the time spent by the respondent in pursuing its application under Section 8 of the A&C Act was required to be excluded for considering whether its counter-claim was preferred within the period of limitation.

3. The learned Commercial Court found no fault with the view of the Arbitral Tribunal that the respondent was entitled to the benefit of Section 14 of the Limitation Act and consequently, the counter-claim was found to be within the period of limitation. The learned Commercial Court did not accept the view of the Arbitral Tribunal that the respondent had not issued a notice under Section 21 of the A&C Act; it held that the legal notices dated 18.10.2013 and 05.02.2014 issued by the respondent - which were referred to in the application under Section 8 of the A&C Act - constituted notices invoking arbitration as contemplated under Section 21 of the A&C Act. The learned Commercial Court held that in the aforesaid view, the period of limitation would end with the respondent filing the application under Section 8 of the A&C Act. Thus, the counter-claim was filed within the period of limitation for this reason as well.

4. Two questions arise for consideration of this Court. First, whether the time consumed by the respondent in pursuing its application under Section 8 of the A&C Act is required to be excluded for computing the period of limitation by virtue of Section 14 of the Limitation Act. And second, whether the legal notices issued by the respondent can be construed as notices commencing arbitral proceedings in terms of Section 21 of the A&C Act.

Factual Context

5. The parties entered into negotiations for the purchase of an Oxygen Nitrogen Plant. The respondent company agreed to manufacture and supply the Oxygen Nitrogen Plant with "Bochi, Italian Brand Oxygen Nitrogen Plant Model UBT - 100" for a total consideration of USD 435,000 equivalent to Rs.2,37,51,000/- (Rupees two crores thirty-seven lacs fifty-one thousand only) at the material time. The respondent issued a proforma invoice dated 05.11.2012 for supplying the said plant. The terms and conditions required the appellant to pay 25% of the invoiced amount amounting to Rs.59,37,750/- as advance in the following manner: Rs.5,00,000/- (by cheque no.526295) dated 05.11.2012, Rs.5,00,000/- (by cheque no.526329) dated 17.11.2012, Rs.37,50,200/- before 30.11.2