Case Note & Summary
The appeal arose from an order of a learned single Judge on a petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the respondent, Prabhudas Lilladher Pvt. Ltd., a member of the National Stock Exchange. The respondent had entered into transactions on behalf of the appellant, Nidhi Verma. The arbitral tribunal, constituted by the National Stock Exchange, passed an award dated 14 October 2009 allowing the respondent's claim in the sum of Rs.3,25,597/- with interest at 12% per annum from 26 September 2008. The appellant's counter claim was dismissed as barred by limitation. The appellant did not challenge the dismissal of the counter claim. However, the respondent filed an arbitration petition under Section 34 challenging the award on the ground that its claim of Rs.24,43,064/- was only partly allowed. The learned single Judge allowed the petition and set aside the entire award solely on the ground that the rejection of the appellant's counter claim on limitation needed reconsideration in light of a circular extending the limitation period to three years. The appellant appealed. The Division Bench held that the ground of challenge was unanswerable. The court observed that the challenge to the award was at the behest of the respondent, who was aggrieved by the partial allowance of its claim. The rejection of the counter claim was not an issue before the court because the appellant, whose counter claim was dismissed, had not challenged the award. Therefore, the learned single Judge erred in setting aside the award on a ground that was not raised by the petitioner and that only aggrieved the opposite party. The appeal was allowed, the order of the single Judge was set aside, and the arbitration petition was dismissed.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Grounds of Challenge - The court cannot set aside an arbitral award on a ground that only aggrieves the opposite party who has not challenged the award. The challenge to the award was by the respondent whose claim was partly allowed; the rejection of the appellant's counter claim was not an issue before the court as the appellant did not challenge the award. Held that the learned single Judge erred in setting aside the award on the ground of rejection of the counter claim. (Paras 2-3)
Issue of Consideration
Whether a court under Section 34 of the Arbitration and Conciliation Act, 1996 can set aside an arbitral award on a ground relating to rejection of a counter claim when the party whose counter claim was rejected has not challenged the award.
Final Decision
Appeal allowed. The order of the learned single Judge dated 25 February 2013 is set aside. The Arbitration Petition No.493 of 2010 filed by the Respondent is dismissed. The arbitral award dated 14 October 2009 is restored. No order as to costs.
Law Points
- Arbitration
- Section 34 of Arbitration and Conciliation Act
- 1996
- Challenge to arbitral award
- Grounds of challenge
- Counter claim
- Limitation
- Party aggrieved
