NUMERO UNO INTERNATIONAL LTD Vs. PRASAR BHARTI

JUDGEMENT

(1.) BASED entirely on the admissions of the appellant company, Justice S. C. Aggarwal, a former Judge of the supreme Court of India has, acting as sole arbitrator, passed an interim award directing the appellant herein to pay to the respondent Prasar Bharti the admitted amount of Rs. 7. 69 crores outstanding against the former. Aggrieved by the said interim award, the appellant filed a petition under section 34 of the Arbitration and conciliation Act, 1996 before a single Judge of this Court who has dismissed the same by his order dated 20th august, 2007. The learned Single Judge was of the opinion that the arbitrator had given cogent reasons for making an interim award in favour of the respondent. He repelled the contention urged on behalf of the appellant that the provisions of Order 12 Rule 6 of the CPC were not applicable and declared that the arbitrator was competent to make an interim award on the admissions of the parties contained either in the pleadings or in the correspondence exchanged between the parties. The Court relied upon two letters, one dated 17th May, 2001 and the other dated 31st May, 2001 to hold that a candid admission had been made by the appellant company as to the outstanding liability of Rs. 7. 69 Crores. The present appeal calls in question the correctness of the said order.

(2.) APPEARING for the appellant, Mr. Jaitley made a solitary submission before us. He contended that while the arbitrator was correct in holding that the appellant had admitted its liability to the extent of Rs. 7. 69 Crores, the arbitrator should have, while making an interim award, also kept in view the fact that the appellant had made a counter claim of Rs. 25 Crores before him. He submitted that the interim award may have been justified if the appellant had not made any counter claim, but once the counter claim was made, the arbitrator could not have, relying upon the admissions of the appellant, made any interim award or directed payment of the amount, no matter the pleadings and the correspondence on the subject clearly admitted the liability of the appellant to the tune of Rs. 7. 69 Crores.

(3.) ON behalf of the respondent, it was on the other hand argued by Mr. Sharma that the arbitrator's power to make an interim arbitral award not being in dispute, the only question which fell for consideration was whether the award suffered from any patent illegality or perversity. He drew our attention to Section 2 (c) of the arbitration and Conciliation Act, 1996 to argue that an arbitral award includes an interim award. He placed reliance upon Section 31 (6) of the Act to contend that the tribunal may, at any time during the arbitral proceedings, make an interim arbitral award. He submitted that the arbitrator had, in the instant case, correctly appraised the material on record including the pleadings of the parties and the correspondence which contained a clear acknowledgement of the liability of the appellant to the tune of Rs. 7. 69 crores after giving adjustment of the payments made and even the set off claimed by it. The fact that the respondent had made a counter claim could not therefore, argued the learned counsel, make any difference insofar as the power of/the arbitrator to make an interim award was concerned. Relying upon the decision of a division Bench of this Court in Cofex exports Limited v. Canara Bank air 1997 Delhi 355 :1997 (43) DRJ 754 (DB), Mr. Sharma argued that a defendant could not be compelled to plead a set off or make a counter claim. Either one of those could be maintained in an independent action and that even if a set off was claimed or a counter claim made, the Court could, in appropriate cases, direct the same to be tried separately. The pendency of a counter claim before the arbitrator was therefore wholly immaterial for determining whether or not the interim award was legally valid. It was further argued by Mr. Sharma that the counter claim in the instant case was ex-facie frivolous and vexatious in nature and had been raised belatedly only in the arbitral proceedings, long after the making of the admissions in the correspondence exchanged between the parties.