Case Note & Summary
The case involves an appeal against a judgment of a Learned Single Judge of the Bombay High Court, which affirmed an arbitral award granting refund of retention money of Rs.1,43,028/- with interest to the respondent. The appellant, M/s. Essar Projects Ltd., was the original petitioner in an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award. The dispute arose from a contract between the parties, where the respondent claimed refund of retention money withheld by the appellant. The appellant argued that the claim for refund of retention money was not raised in the invocation of arbitration on 22 May 2002, nor during the arbitration proceedings, and was only introduced after proceedings were closed for award. The appellant contended that the Arbitral Tribunal lacked jurisdiction to entertain this claim. The respondent countered that the claim had been made prior to invocation, was referenced in the statement of claim, and the appellant had responded to it without raising any jurisdictional objection. The court analyzed the submissions and noted that under Section 16(2) of the Arbitration and Conciliation Act, 1996, a plea that the arbitral tribunal lacks jurisdiction must be raised not later than the submission of the statement of defence. Since the appellant did not raise any such objection in its written statement or counter claim, it was deemed to have waived the right. The court held that the Learned Single Judge was justified in rejecting the challenge to the award on this ground. Consequently, the appeal was dismissed, and the judgment of the Learned Single Judge was affirmed.
Headnote
A) Arbitration Law - Jurisdiction of Arbitral Tribunal - Section 16(2) of Arbitration and Conciliation Act, 1996 - Objection as to jurisdiction must be raised at the earliest opportunity - The appellant did not raise any objection regarding the arbitral tribunal's jurisdiction to entertain the claim for refund of retention money in its written statement or counter claim - Held that the appellant waived its right to object and cannot raise the issue for the first time in a petition under Section 34 (Paras 1-6).
Issue of Consideration
Whether the Arbitral Tribunal lacked jurisdiction to entertain a claim for refund of retention money when the claim was not raised in the initial invocation of arbitration but was subsequently raised and responded to without objection.
Final Decision
Appeal dismissed. Judgment of Learned Single Judge affirmed.
Law Points
- Arbitration
- Jurisdiction
- Retention Money
- Section 16(2) Arbitration and Conciliation Act 1996
- Waiver of Objection
Case Details
2013 LawText (BOM) (01) 44
Appeal No.86 of 2012 in Arbitration Petition No.313 of 2007 with Appeal No.92 of 2012 in Arbitration Petition No.316 of 2007
Dr. D.Y. Chandrachud, A.A. Sayed
Mr. Nishant Sasidharan with Mr. Nikhil Karnawat i/b Mr. Nivit Srivastava for the Appellant; Mr. Shailesh Shah, Senior Advocate i/b Ms. Vaishali Choudhari for the Respondent
M/s. Edifice Developers and Projects Engineers Ltd.
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Nature of Litigation
Appeal against judgment of Learned Single Judge affirming arbitral award on refund of retention money.
Remedy Sought
Appellant sought to set aside the judgment of the Learned Single Judge and the arbitral award to the extent it allowed refund of retention money.
Filing Reason
Appellant challenged the arbitral award on the ground that the Arbitral Tribunal lacked jurisdiction to entertain the claim for refund of retention money.
Previous Decisions
Learned Single Judge affirmed the arbitral award on the claim for refund of retention money with interest.
Issues
Whether the Arbitral Tribunal lacked jurisdiction to entertain the claim for refund of retention money when the claim was not raised in the initial invocation of arbitration but was subsequently raised and responded to without objection.
Submissions/Arguments
Appellant: No claim for refund of retention money was raised in invocation of arbitration or during proceedings; claim introduced after closure; Arbitral Tribunal lacked jurisdiction.
Respondent: Claim was made prior to invocation; referenced in statement of claim; appellant responded without jurisdictional objection; Section 16(2) requires objection at earliest opportunity.
Ratio Decidendi
Under Section 16(2) of the Arbitration and Conciliation Act, 1996, a plea that the arbitral tribunal lacks jurisdiction must be raised not later than the submission of the statement of defence. Failure to raise such objection at the earliest opportunity results in waiver of the right to object.
Judgment Excerpts
The challenge in the Appeal is to the judgment of a Learned Single Judge dated 11 November 2011 on a petition filed under Section 34 of the Arbitration and Conciliation Act 1996.
In the written statement and counter claim that was filed by the Appellant, the claim for refund of retention monies was traversed and as a matter of fact, the Appellant in its counter claim sought a set off in respect of the retention monies.
In the written statement that was filed before the Arbitral Tribunal, no objection in regard to the jurisdiction of the Arbitrator to entertain a claim for refund of retention monies was taken.
Procedural History
Arbitration invoked on 22 May 2002. Arbitral award granted refund of retention money. Appellant filed Arbitration Petition No.313 of 2007 under Section 34 of the Arbitration and Conciliation Act, 1996. Learned Single Judge dismissed the petition on 11 November 2011. Appellant filed Appeal No.86 of 2012 before the Division Bench.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 16(2), Section 34
