Case Note & Summary
The petitioner, Chaudhary Transport, a partnership firm, entered into a Transport Agreement with the respondent, Hindustan Petroleum Corporation Ltd. (HPCL), on 19.05.2003 for a period of two years from 1/9/2002 to 31/08/2004. During the contract, the respondent received notices under Section 39 of the Bombay Sales Tax Act, 1959, directing them to pay amounts due to the petitioner to the Sales Tax Authorities. Consequently, the respondent withheld payments due to the petitioner. The contract ended by efflux of time on 31/08/2004. On 21/12/2004, the Deputy Commissioner of Sales Tax issued a notice of provisional attachment, directing HPCL not to pay any amount to the petitioner. On 27/08/2007, the petitioner's chartered accountant requested release of transport charges of Rs.12,75,458/-, security deposit of Rs.50,000/-, and bank guarantee of Rs.1,50,000/-. On 31/10/2007, the Bombay High Court in Writ Petition No.5755 of 2007 set aside the demand notice and provisional attachment. The petitioner then invoked arbitration on 28/12/2007. The arbitral tribunal rejected all claims and counterclaims. The petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The court held that the award was not perverse or contrary to law, and that the claims were barred by limitation. The petition was dismissed.
Headnote
A) Arbitration - Challenge to Award - Section 34 of Arbitration and Conciliation Act, 1996 - Court's jurisdiction under Section 34 is limited to grounds of public policy, fraud, or perversity - The award rejecting claims and counterclaims was based on appreciation of evidence and limitation - Held that the court cannot re-appreciate evidence or substitute its own view unless the award is perverse or contrary to law (Paras 1-10). B) Limitation - Claims for Transport Charges - Limitation Act, 1963 - Claims for transport charges, security deposit, and bank guarantee were barred by limitation as the contract ended on 31/08/2004 and the notice invoking arbitration was issued on 28/12/2007 - Held that the claims were time-barred under Article 113 of the Limitation Act (Paras 5-8). C) Sales Tax - Attachment under Section 39 of Bombay Sales Tax Act, 1959 - The respondent withheld payments due to a notice of provisional attachment from Sales Tax Authorities - The notice was later set aside by the High Court on 31/10/2007 - Held that the respondent was justified in withholding payments until the attachment was lifted (Paras 2-4).
Issue of Consideration
Whether the arbitral award rejecting all claims and counterclaims is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The petition is dismissed. The arbitral award dated 25 February 2009 is upheld.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- Limitation Act
- 1963
- Section 39 of Bombay Sales Tax Act
- 1959
