The court confirmed that under Section 34 of the Arbitration Act, an arbitral award can only be set aside on narrow grounds, emphasizing the interpretation of contract terms is primarily for the arbitral tribunal.

JUDGMENT :

AVNEESH JHINGAN, J.

1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') challenging the arbitral award dated 28.08.2024 read with the addendum dated 22.11.2024.

FACTS

2. The brief facts are that the parties to the lis entered into a contract on 03.03.2008 for setting up a Hot Dip Galvanising Line (HDGL) and Electrolytic Cleaning Line (ECL). The contract amount was Rs.223,78,09,443/- for HDGL and Rs.67,77,77,720/- for ECL and was to be executed within twenty-eight months. The projects were successfully commissioned by the respondent on 26.06.2018 and 20.02.2017 respectively. The final acceptance certificates were issued on 05.05.2023 and 15.02.2019 respectively.

2.1 The contract provided for a minimum guaranteed CENVAT credit (for short 'MGCC') to be passed on to the petitioner. Deduction for shortfall in MGCC from the net contract value led to the invocation of arbitration proceedings.

2.2 The Arbitral Tribunal (for short 'tribunal') decided the issue against the petitioner relying upon the decision of this court in Steel Authority of India Limited v. M/s Primetals Technologies India Pvt. Limited (formerly known as Siemens VAI Metals Technologies Pvt. Ltd.) 2020 SCC OnLine Del 2496. It was considered that the issue has been finally decided inter se the parties by learned single judge of this court and the decision was upheld by the Division Bench and the SLP was dismissed.

CONTENTIONS OF PETITIONER

3. Learned senior counsel for the petitioner contends that claim no.1 relating to the deduction made on account of shortfall in MGCC is barred by limitation. It is submitted that the cause of action arose on expiry of forty-five days after submission of the invoices dated 03.04.2017, 10.09.2018 and 30.10.2018 but the arbitration proceedings were invoked on 02.03.2022 i.e. beyond three years. The argument is that clause 12.1.6 of the General Conditions of Contract (for short 'GCC') provides that payment was to be made within forty- five days of submission of the invoices and thereafter the respondent had cause of action.

3.1 Claim no. 2 pertaining to reimbursement of excise duty is contested to be barred by limitation in view of clause 12.1.6 of the GCC. It is submitted that payment of the invoices issued between 28.11.2009 and 07.12.2016 was to be made within forty-five days and thereafter grievance if any arose however, the arbitration proceedings were invoked after expiry of three years on 02.03.2022.

3.2 The contention is that in terms of clause 14.5.6 of the GCC in the eventuality of a shortfall in MGCC the petitioner was entitled to deduct the corresponding amount from the net contract value to compensate for the shortfall. Lastly, it is submitted that the tribunal ignored the terms of the contract in holding that the deduction could have been made either from the gross or the net contract value.

ARGUMENTS OF RESPONDENT

4. Learned counsel for the respondent defends the impugned award and submits that neither claim no. 1 nor claim no. 2 is barred by limitation. Vis-a-vis claim no.1 it is argued that the cause of action arose upon deduction of the amount on 09.03.2019 and not upon submission of the invoices. Qua claim no.2 it is emphasized that till 14.02.2022 the reimbursement of excise duty was under active consideration by the petitioner.

4.1 The submission is that the tribunal while interpreting clause 14.5.6 of the contract relied upon the judgment of this Court in Steel Authority of India v. Primetal