Whether the order of the arbitrator refusing to entertain a counterclaim is the interim award?

 Section 34 of the 1996 Act allows recourse to a Court against any "arbitral award". "Arbitral award" is defined in Section 2(1)(c) as including an interim award. {Para 9}

10. "Interim award" is, however, not defined in the 1996 Act. Section 31(6) of the 1996 Act, however, empowers an Arbitral Tribunal to make an interim award on any matter with respect to which it may make a final arbitral award. Section 31(6) of the 1996 Act reads thus:

"The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award."

11. Inasmuch as an interim award is also an "arbitral award" as defined in Section 2(c), an interim award would be susceptible to challenge under Section 34 of the 1996 Act. This fact was noticed by the Supreme Court in Indian Farmers Fertilizer Cooperative Ltd. v. Bhadra Products MANU/SC/0026/2018 : (2018) 2 SCC 534 (IFFCO, hereinafter). The issue before the Supreme Court, in that case, was whether an order rejecting a claim on the ground of limitation, could be treated as "interim award", so as to make the order amenable to challenge under Section 34 of the 1996 Act. The Supreme Court, in IFCO MANU/SC/0026/2018 : (2018) 2 SCC 534, while noticing that the 1996 Act does not define "interim award", proceeded to opine as under:

"7. As can be seen from Section 2(c) and Section 31(6), except for stating that an arbitral award includes an interim award, the Act is silent and does not define what an interim award is. We are, therefore, left with Section 31(6) which delineates the scope of interim arbitral awards and states that the arbitral tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award."

8. The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the Arbitral Tribunal, and that it extends to "any matter" with respect to which it may make a final arbitral award. The expression "matter" is wide in nature, and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award. However, it is important to add a note of caution. In an appropriate case, the issue of more than one award may be necessitated on the facts of that case. However, by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The arbitral tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense. Ultimately, a fair means for resolution of all disputes should be uppermost in the mind of the arbitral tribunal.

12. In my view, the import of the afore-extracted passages from the judgment of the Supreme Court in IFFCO MANU/SC/0026/2018 : (2018) 2 SCC 534 is clear and categorical. Any matter, on which an Arbitral Tribunal may make a final award, can also be subject of an interim award made by it. If, therefore, the decision of the Arbitral Tribunal brings a quietus to an issue before the Arbitral Tribunal, and is an order which the Arbitral Tribunal is empowered to pass at the final stage, it would constitute an "interim award" within the meaning of Section 31(6) and, consequently, within the meaning of Section 34 of the 1996 Act.

A decision that the counter-claim is not maintainable and is, therefore, liable to be rejected, is a decision which an Arbitral Tribunal can certainly take at the final stage of the proceedings, especially in view of the power conferred on the Arbitral Tribunal, by Section 16 of the 1996 Act, to rule on its own jurisdiction especially in view of the power conferred on the Arbitral Tribunal by Section 16 of the 1996 Act, to rule on its own jurisdiction. Being, therefore, in the nature of a decision which could be taken at the final stage of the proceedings, i.e. in the final award which the Arbitral Tribunal would pass, such a decision, when taken at an interlocutory stage, would, in my view, certainly constitute an "interim award" within the meaning of the 1996 Act, in view of the law laid down in IFFCO MANU/SC/0026/2018 : (2018) 2 SCC 534.

IN THE HIGH COURT OF DELHI

O.M.P. (COMM) 224/2021 and I.A. 9860/2021

 National Highways Authority of India Vs.  Abhijeet Angul Sambalpur Toll Road Limited

Hon'ble Judges/Coram:

C. Hari Shankar, J.

Decided On: 28.02.2022

Read full Judgment here: Click here

Citation: MANU/DE/0735/2022

Print Page