{"id":219656,"date":"2011-07-04T00:00:00","date_gmt":"2011-07-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-of-goa-vs-ms-praveen-enterprises-on-4-july-2011"},"modified":"2018-12-24T15:48:35","modified_gmt":"2018-12-24T10:18:35","slug":"state-of-goa-vs-ms-praveen-enterprises-on-4-july-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-of-goa-vs-ms-praveen-enterprises-on-4-july-2011","title":{"rendered":"State Of Goa vs M\/S Praveen Enterprises on 4 July, 2011"},"content":{"rendered":"
Supreme Court of India<\/div>\n
State Of Goa vs M\/S Praveen Enterprises on 4 July, 2011<\/div>\n
Author: R.V.Raveendran<\/div>\n
Bench: R.V. Raveendran, A.K. Patnaik<\/div>\n
                                                                                                       Reportable\n\n                       IN THE SUPREME COURT OF INDIA\n\n\n                         CIVIL APPELLATE JURISDICTION\n\n\n                          CIVIL APPEAL NO. 4987 OF 2011\n\n                     [Arising out of SLP [C] No.15337 of 2009]\n\n\n\n\nState of Goa                                                                    ... Appellant\n\n\nVs.\n\n\nPraveen Enterprises                                                             ... Respondent\n\n\n\n\n                                       J U D G M E N T\n<\/pre>\n
R.V.RAVEENDRAN, J.\n<\/p>\n
       Leave granted.\n<\/p>\n
2.     Under   an   agreement   dated   4.11.1992,   the   appellant   (State   of   Goa) <\/p>\n
entrusted a construction work (Farm Development Works in Command Area <\/p>\n
of Water Course No.3 and 3A of minor M-3 of SIP in Salcette Taluka) to the <\/p>\n
respondent. Clause 25 of the agreement provided for settlement of disputes <\/p>\n
by arbitration, relevant portions of which are extracted below:\n<\/p>\n
       “Except   where   otherwise   provided   in   the   contract,   all   questions   and <\/p>\n
       disputes  relating  to  the  meaning   of the  specifications,  designs,   drawings <\/p>\n
       and   instructions   herein   before   mentioned   and   as   to   the   quality   of <\/p>\n
       workmanship or materials used on the work or as to any other question, <\/p>\n
       claim   right   matter   or   thing   whatsoever,   in   any   way   arising   out   of   or <\/p>\n
       relating   to   the   contract,   designs,   drawings,   specifications,   estimates, <\/p>\n
                                                     2<\/span><\/p>\n
       instructions orders or these conditions or otherwise concerning the works, <\/p>\n
       or the execution or failure to execute the same whether arising during the <\/p>\n
       progress of the work or after the completion or abandonment thereof shall <\/p>\n
       be   referred   to   the   sole   arbitration   of   the   person   appointed   by   the   Chief <\/p>\n
       Engineer, Central Public Works Department in charge of the work at the <\/p>\n
       time   of   dispute……………….It   is   a   term   of   contract   that   the   party <\/p>\n
       invoking arbitrations shall specify the dispute or disputes to be referred to <\/p>\n
       arbitration under this clause together with the amount or amounts claimed <\/p>\n
       in respect of each such disputes.”<\/p>\n
\n<\/blockquote>\n
As   per   the   contract,   the   work   had   to   be   commenced   on   16.11.1992   and <\/p>\n
completed by 5.5.1994. On the ground that the contractor did not complete <\/p>\n
the work even by the extended date of completion (31.3.1995), the contract <\/p>\n
was terminated by the appellant.\n<\/p>\n
3.     Respondent raised certain claims and gave a notice to the appellant to <\/p>\n
appoint an arbitrator in terms of the arbitration clause. As the appellant did <\/p>\n
not   do   so,   the   respondent   filed   an   application   under   section   11   of   the <\/p>\n
Arbitration   and   Conciliation   Act,   1996   (`Act’   of   `new   Act’   for   short)   for <\/p>\n
appointment of an arbitrator. By order dated 4.12.1998 the said application <\/p>\n
was   allowed   and   Mr.   S.V.Salilkar,   retired   Adviser,   Konkan   Railway <\/p>\n
Corporation was appointed as the sole arbitrator. The arbitrator entered upon <\/p>\n
the reference on 22.2.1999 and called upon the parties to file their statement.\n<\/p>\n
4.     The   respondent   filed   its   claim   statement   before   the   arbitrator   on <\/p>\n
15.4.1999.   The   appellant   filed   its   Reply   Statement   with   counter   claim   on <\/p>\n
                                               3<\/span><\/p>\n
30.6.1999.   The   arbitrator   considered   the   fourteen   claims   of   the   contractor <\/p>\n
and   four   counter   claims   of   the   appellant.   The   Arbitrator   made   an   award <\/p>\n
dated 10.7.2000. He awarded to the respondent, Rs.1,00,000\/- towards claim <\/p>\n
No.2   with   interest   at   12%   per   annum   from   26.8.1998   to   19.2.1999;\n<\/p>\n
Rs.3,63,416\/-   towards   claim   No.3   with   interest   at   12%   per   annum   from <\/p>\n
18.9.1995 to 22.2.1999; and Rs.59,075\/-   towards claim No. 14 (additional <\/p>\n
claim No. ii) with interest at 12% per annum from 18.9.1995 to 22.2.1999.\n<\/p>\n
In regard to the counter claims made by the appellant, the arbitrator awarded <\/p>\n
to the appellant Rs.2,94,298\/- without any interest in regard to counter claim <\/p>\n
No.3. The  arbitrator rejected the other claims  of respondent and appellant.\n<\/p>\n
He awarded simple interest at 18% per annum on the award amount from the <\/p>\n
expiry of one month from the date of the award and directed both parties to <\/p>\n
bear their respective costs.\n<\/p>\n
5.      Feeling aggrieved the respondent filed an application under section 34 <\/p>\n
of the Act, challenging the award insofar as (i) rejection of its other claims;\n<\/p>\n
and   (ii)   award   made   on   counter   claim   No.3.   The   civil   court   (Adhoc <\/p>\n
Additional   District  Judge,  Fast  Track  Court  No.1, South Goa)  disposed of <\/p>\n
the matter upholding the award in regard to the claims of the respondent but <\/p>\n
accepted the objection raised by the respondent in regard to award made on <\/p>\n
the   counter   claim.  The   court   held   that   the   arbitrator   could   not   enlarge   the <\/p>\n
                                                4<\/span><\/p>\n
scope of the reference and entertain either fresh claims by the claimants or <\/p>\n
counter claims from the respondent.\n<\/p>\n
6.      The   appellant   challenged   the   said   judgment   by   filing   an   arbitration <\/p>\n
appeal   before   the   High   Court.   The   High   Court   of   Bombay   dismissed   the <\/p>\n
appeal by judgment dated 31.8.2007. The High Court held that the counter <\/p>\n
claims were bad in law as they were never placed before the court by the <\/p>\n
appellant (in the proceedings under section 11 of the Act for appointment of <\/p>\n
arbitrator) and they were not referred by the court to arbitration. The High <\/p>\n
Court   held   that   in   such   circumstances   arbitrator   had   no   jurisdiction   to <\/p>\n
entertain   a   counter   claim.  The   High   Court   followed   its   earlier   decision  in  <\/p>\n
Charuvil Koshy Verghese v. State of Goa – 1998 (2) SCC 21. In that case, an <\/p>\n
application   was   made   by   a   contractor   under   Section   20   of   the   Arbitration <\/p>\n
Act,   1940   (`old   Act’   for   short),   for   filing   the   arbitration   agreement   and <\/p>\n
referring   the   disputes   to   the   arbitrator.   In   its   reply   statement   to   the   said <\/p>\n
application,   the   respondent   did   not   assert   its   counter   claim.   The   court <\/p>\n
allowed   the   application   under   section   20   and   appointed   an   arbitrator   to <\/p>\n
decide the disputes raised by the contractor. However when the matter went <\/p>\n
before   the   arbitrator,   the   respondent   therein   made   a   counter   claim,   which <\/p>\n
was   allowed   by   the   arbitrator.   The   Bombay   High   Court   held   that   the <\/p>\n
                                               5<\/span><\/p>\n
arbitrator had no jurisdiction to entertain or allow such a counter claim as the <\/p>\n
same   had   neither   been   placed   before   the   court   in   the   proceedings   under <\/p>\n
section 20 nor the court had referred it to the arbitrator. The said judgment of <\/p>\n
the High Court is challenged in this appeal by special leave.\n<\/p>\n
7.      The appellant contends as a respondent in arbitration proceedings, in <\/p>\n
the absence of a bar in the arbitration agreement, it was entitled to raise its <\/p>\n
counter claims before the arbitrator, even though it had not raised them in its <\/p>\n
statement   of   objections   to   the   proceedings   under   section   11   of  the   Act.   It <\/p>\n
further contends that section 11 of the Act does not contemplate `reference <\/p>\n
of   disputes’   by   the   Chief   Justice   or   his   designate;   and   the   High   Court <\/p>\n
committed a serious error in holding that in the absence of a reference by the <\/p>\n
court,   the   arbitrator   had   no   jurisdiction   to   entertain   a   counter   claim,   by <\/p>\n
following its earlier decision in  Charuvil Koshy Verghese (supra), rendered <\/p>\n
with   reference   to   section   20   of   the   old   Act,   which   is   materially   different <\/p>\n
from section 11 of the new Act.   The respondent supported the decision of <\/p>\n
the High Court, contending that having regard to the provisions of section 21 <\/p>\n
of the Act, an arbitrator will have jurisdiction to decide only those disputes <\/p>\n
which were raised and referred to him by the court.\n<\/p>\n
                                              6<\/span><\/p>\n
8.     Therefore the question that arises for our consideration is as under:\n<\/p>\n
       Whether   the   respondent   in   an   arbitration   proceedings   is   precluded <\/p>\n
       from making a counter-claim, unless <\/p>\n<\/blockquote>\n
       a)      it   had   served   a   notice   upon   the   claimant   requesting   that   the <\/p>\n
               disputes relating to that counter-claim be referred to arbitration <\/p>\n
               and the claimant had concurred in referring the counter claim to <\/p>\n
               the same arbitrator;\n<\/p><\/blockquote>\n
<\/blockquote>\n
                                                   and\/or<\/p>\n<\/blockquote>\n
       b)      it had set out the said counter claim in its reply statement to the <\/p>\n
               application under section 11 of the Act and the Chief Justice or <\/p>\n
               his designate refers such counter claim also to arbitration. <\/p>\n<\/blockquote>\n
What is `Reference to arbitration’<\/p>\n
9.       `Reference   to   arbitration’   describes   various   acts.   Reference   to <\/p>\n
arbitration can be by parties themselves or by an appointing authority named <\/p>\n
in the arbitration agreement or by a court on an application by a party to the <\/p>\n
arbitration agreement. We may elaborate.\n<\/p>\n
(a)    If   an   arbitration   agreement   provides   that   all   disputes   between   the <\/p>\n
parties   relating   to   the   contract   (some   agreements   may   refer   to   some <\/p>\n
exceptions)   shall   be   referred   to   arbitration   and   that   the   decision   of   the <\/p>\n
arbitrator shall be final and binding, the `reference’ contemplated is the act <\/p>\n
of parties to the arbitration agreement, referring their disputes to an agreed <\/p>\n
arbitrator to settle the disputes.\n<\/p>\n
                                             7<\/span><\/p>\n
(b)    If an arbitration  agreement provides that in the event of any dispute <\/p>\n
between the parties, an authority named therein shall nominate the arbitrator <\/p>\n
and   refer   the   disputes   which   required   to   be   settled   by   arbitration,   the <\/p>\n
`reference’ contemplated is an act of the appointing authority referring the <\/p>\n
disputes to the arbitrator appointed by him.\n<\/p>\n
(c)    Where the parties fail to concur in the appointment of arbitrator\/s as <\/p>\n
required   by   the   arbitration   agreement,   or   the   authority   named   in   the <\/p>\n
arbitration agreement failing to nominate the arbitrator and refer the disputes <\/p>\n
raised   to   arbitration   as   required   by   the   arbitration   agreement,   on   an <\/p>\n
application by an aggrieved party, the court can appoint the arbitrator and on <\/p>\n
such   appointment,   the   disputes   between   the   parties   stand   referred   to   such <\/p>\n
arbitrator in terms of the arbitration agreement.\n<\/p>\n
10.    Reference to arbitration can be in respect of all disputes between the <\/p>\n
parties   or   all   disputes   regarding   a   contract   or   in   respect   of   specific <\/p>\n
enumerated disputes. Where `all disputes’ are referred, the arbitrator has the <\/p>\n
jurisdiction  to  decide  all  disputes  raised   in  the  pleadings  (both   claims   and <\/p>\n
counter   claims)   subject   to   any   limitations   placed   by   the   arbitration <\/p>\n
agreement. Where the arbitration agreement provides that all disputes shall <\/p>\n
be settled by arbitration but excludes certain matters from arbitration, then, <\/p>\n
the   arbitrator   will   exclude   the   excepted   matter   and   decide   only   those <\/p>\n
disputes which are arbitrable. But where the reference to the arbitrator is to <\/p>\n
                                               8<\/span><\/p>\n
decide   specific   disputes   enumerated   by   the   parties\/court\/appointing <\/p>\n
authority,   the   arbitrator’s   jurisdiction   is   circumscribed   by   the   specific <\/p>\n
reference and the arbitrator can decide only those specific disputes.\n<\/p>\n
11.     Though an arbitration agreement generally provides for settlement of <\/p>\n
future disputes by reference to arbitration, there can be `ad-hoc’ arbitrations <\/p>\n
relating   to   existing   disputes.   In   such   cases,   there   is   no   prior   arbitration <\/p>\n
agreement   to   refer   future   disputes   to   arbitration.   After   a   dispute   arises <\/p>\n
between   the   parties,   they   enter   into   an   arbitration   agreement   to   refer   that <\/p>\n
specific   dispute   to   arbitration.   In   such   an   arbitration,   the   arbitrator   cannot <\/p>\n
enlarge the scope of arbitration by permitting either the claimant to modify <\/p>\n
or add to the claim or the respondent to make a counter claim. The arbitrator <\/p>\n
can only decide the dispute referred to him, unless the parties again agree to <\/p>\n
refer the additional disputes\/counter claims to arbitration and authorize the <\/p>\n
arbitrator to decide them.\n<\/p>\n
12.     `Reference   to   arbitration’   can   be   in   respect   of   reference   of   disputes <\/p>\n
between the parties to arbitration, or may simply mean referring the parties <\/p>\n
to arbitration. Section 8 of the Act is an example of referring the parties to <\/p>\n
arbitration.   While   section   11   contemplates   appointment   of   arbitrator   [vide <\/p>\n
                                                 9<\/span><\/p>\n
sub-sections   (4),   (5)   and   (9)]   or   taking   necessary   measure   as   per   the <\/p>\n
appointment   procedure   under   the   arbitration   agreement   [vide   sub-section <\/p>\n
(6)], section 8 of the Act does not provide for appointment of an arbitrator, <\/p>\n
nor referring of any disputes to arbitration, but merely requires the judicial <\/p>\n
authority before whom an action is brought in a matter in regard to which <\/p>\n
there is an arbitration agreement, to refer the parties to arbitration. When the <\/p>\n
judicial   authority   finds   that   the   subject   matter   of   the   suit   is   covered   by   a <\/p>\n
valid arbitration agreement between the parties to the suit, it will refer the <\/p>\n
parties to arbitration, by refusing to decide the action brought before it and <\/p>\n
leaving   it   to   the   parties   to   have   recourse   to   their   remedies   by   arbitration.\n<\/p>\n
When such an order is made, parties may either agree upon an arbitrator and <\/p>\n
refer   their   disputes   to   him,   or   failing   agreement,   file   an   application   under <\/p>\n
section 11 of the Act for appointment of an arbitrator. The judicial authority <\/p>\n
`referring the parties to arbitration’ under section 8 of the Act, has no power <\/p>\n
to   appoint   an   arbitrator.   It   may   however   record   the   consent   of   parties   to <\/p>\n
appoint an agreed arbitrator.\n<\/p>\n
Sections 21 and 43 of the Act<\/p>\n
13.     Section   21   provides   that   unless   otherwise   agreed   by   the   parties,   the <\/p>\n
arbitral proceedings in respect of a particular dispute commences on the date <\/p>\n
                                                10<\/span><\/p>\n
on which a request for that dispute to be referred to arbitration is received by <\/p>\n
the respondent. Taking a cue from the said section, the respondent submitted <\/p>\n
that arbitral proceedings can commence only in regard to a dispute in respect <\/p>\n
of   which   notice   has   been   served   by   a   claimant   upon   the   other   party, <\/p>\n
requesting such dispute to be referred to arbitration; and therefore, a counter <\/p>\n
claim can be entertained by the arbitrator only if it has been referred to him, <\/p>\n
after   a   notice   seeking   arbitration   in   regard   to   such   counter   claim.   On   a <\/p>\n
careful consideration we find no basis for such a contention. The purpose of <\/p>\n
section   21   is   to   specify,   in   the   absence   of   a   provision   in   the   arbitration <\/p>\n
agreement in that behalf, as to when an arbitral proceedings in regard to a <\/p>\n
dispute commences. This becomes relevant for the purpose of section 43 of <\/p>\n
the Act. Sub-section (1) of section 43 provides that the Limitation Act 1963 <\/p>\n
shall apply to arbitrations as it applies to proceedings in courts. Sub-section <\/p>\n
(2)   of   section   43   provides   that   for   the   purposes   of   section   43   and   the <\/p>\n
Limitation Act, 1963, an arbitration shall be deemed to have commenced on <\/p>\n
the date referred to in section 21 of the Act. Having regard to section 43 of <\/p>\n
the Act, any claim made beyond the period of limitation prescribed by the <\/p>\n
Limitation   Act,   1963   will   be   barred   by   limitation   and   the   arbitral   tribunal <\/p>\n
will have to reject such claims as barred by limitation.\n<\/p>\n
                                                     11<\/span><\/p>\n
14.     Section   3 of the  Limitation  Act, 1963  provides  for  bar of limitation <\/p>\n
and is extracted below:\n<\/p>\n
        “3. Bar of Limitation. (1) Subject to the provisions contained in sections <\/p>\n
        4 to 24 (inclusive),  every suit instituted, appeal preferred, and application <\/p>\n
        made  after   the   prescribed   period   shall  be   dismissed  although   limitation <\/p>\n
        has not been set up as a defence.\n<\/p><\/blockquote>\n
\n        (2) For the purposes of this Act,-\n<\/p><\/blockquote>\n
<\/blockquote>\n
        (a) a suit is instituted,-\n<\/p><\/blockquote>\n
<\/blockquote>\n
            (i)  in   an   ordinary   case,   when   the   plaint   is   presented   to   the   proper  <\/p>\n
            officer;\n<\/p><\/blockquote>\n
<\/blockquote>\n
            (ii) in the case of a pauper, when his application for leave to sue as a <\/p>\n
            pauper is made; and <\/p>\n<\/blockquote>\n
            (iii) in the case of a claim against a company which is being wound up <\/p>\n
            by the court, when the claimant first sends in his claim to the official <\/p>\n
            liquidator;\n<\/p><\/blockquote>\n
<\/blockquote>\n
        (b) any claim by way of a set off or a counter claim, shall be treated as a  <\/p>\n
        separate suit and shall be deemed to have been instituted-<\/p>\n<\/blockquote>\n
            (i) in the case of a set off, on the same date as the suit in which the set <\/p>\n
            off is pleaded;\n<\/p><\/blockquote>\n
<\/blockquote>\n
            (ii) in the case of a counter claim, on the date on which the counter  <\/p>\n
            claim is made in court;\n<\/p><\/blockquote>\n
<\/blockquote>\n
        (c) an application by notice of motion in a High Court is made when the <\/p>\n
        application is presented to the proper officer of that court.”<\/p>\n<\/blockquote>\n
                                                                       (emphasis supplied)<\/p>\n<\/blockquote>\n
15.     In regard to a claim which is sought to be enforced by filing a civil <\/p>\n
suit,   the   question   whether   the   suit   is   within   the   period   of   limitation   is <\/p>\n
decided with reference to the date of institution of the suit, that is, the date of <\/p>\n
                                              12<\/span><\/p>\n
presentation   of   a   plaint.   As   Limitation   Act,   1963   is   made   applicable   to <\/p>\n
arbitrations,  there   is  a need  to  specify the  date  on which  the  arbitration  is <\/p>\n
deemed   to   be   instituted   or   commenced   as   that   will   decide   whether   the <\/p>\n
proceedings   are   barred   by   limitation   or   not.   Section   3   of   Limitation   Act, <\/p>\n
1963 specifies the date of institution for suit, but does not specify the date of <\/p>\n
`institution’ for arbitration  proceedings.  Section  21 of the Act supplies  the <\/p>\n
omission.  But  for   section  21,  there  would  be  considerable   confusion  as   to <\/p>\n
what   would   be   the   date   of   `institution’   in   regard   to   the   arbitration <\/p>\n
proceedings. It will be possible for the respondent in an arbitration to argue <\/p>\n
that the limitation has to be calculated as on the date on which statement of <\/p>\n
claim   was   filed,   or   the   date   on   which   the   arbitrator   entered   upon   the <\/p>\n
reference, or the date on which the arbitrator was appointed by the court, or <\/p>\n
the date on which the application was filed under section 11 of the Act. In <\/p>\n
view of section 21 of the Act providing that the arbitration proceedings shall <\/p>\n
be deemed to commence on the date on which “the request for that dispute <\/p>\n
to be referred to arbitration is received by the respondent” the said confusion <\/p>\n
is cleared. Therefore the purpose of section 21 of the Act is to determine the <\/p>\n
date   of  commencement   of  the   arbitration   proceedings,   relevant   mainly   for <\/p>\n
deciding whether the claims of the claimant are barred by limitation or not. <\/p>\n
                                               13<\/span><\/p>\n<\/blockquote>\n
16.     There   can   be   claims   by   a   claimant   even   without   a   notice   seeking <\/p>\n
reference.   Let   us   take   an   example   where   a   notice   is   issued   by   a   claimant <\/p>\n
raising disputes regarding claims `A’ and `B’ and seeking reference thereof <\/p>\n
to   arbitration.   On   appointment   of   the   arbitrator,   the   claimant  files   a   claim <\/p>\n
statement   in   regard   to   the   said   claims   `A’   and   `B’.   Subsequently   if   the <\/p>\n
claimant   amends   the   claim   statement   by   adding   claim   `C’   [which   is <\/p>\n
permitted under section 23(3) of the Act] the additional claim `C’ would not <\/p>\n
be   preceded   by   a   notice   seeking   arbitration.   The   date   of   amendment   by <\/p>\n
which   the   claim   `C’   was   introduced,   will   become   the   relevant   date   for <\/p>\n
determining the limitation in regard to the said claim `C’, whereas the date <\/p>\n
on which the notice seeking arbitration was served on the other party, will be <\/p>\n
the relevant date for deciding the limitation in regard to Claims `A’ and `B’.\n<\/p>\n
Be that as it may.\n<\/p>\n
17.     As far as counter claims are concerned, there is no room for ambiguity <\/p>\n
in regard to the relevant date for determining the limitation. Section 3(2)(b) <\/p>\n
of Limitation Act, 1963 provides that in regard to a counter claim in suits, <\/p>\n
the date on which the counter claim is made in court shall be deemed to be <\/p>\n
the date of institution of the counter claim. As Limitation Act, 1963 is made <\/p>\n
applicable to arbitrations, in the case of a counter claim by a respondent in <\/p>\n
                                             14<\/span><\/p>\n
an arbitral proceedings, the date on which the counter claim is made before <\/p>\n
the arbitrator will  be the date of “institution” in so far as counter claim is <\/p>\n
concerned.   There   is,   therefore,   no   need   to   provide   a   date   of <\/p>\n
`commencement’  as in the case of claims of a claimant. Section 21 of the <\/p>\n
Act   is   therefore   not   relevant   for   counter   claims.   There   is   however   one <\/p>\n
exception.   Where   the  respondent   against   whom  a  claim  is   made,   had  also <\/p>\n
made a claim against the claimant and sought arbitration by serving a notice <\/p>\n
to the claimant but subsequently raises that claim as a counter claim in the <\/p>\n
arbitration proceedings initiated by the claimant, instead of filing a separate <\/p>\n
application under section 11 of the Act, the limitation for such counter claim <\/p>\n
should be computed, as on the date of service of notice of such claim on the <\/p>\n
claimant and not on the date of filing of the counter claim.\n<\/p>\n
Scope of sections 11 and 23 of the Act<\/p>\n
18.    Section 11 refers to appointment of arbitrators. Sub-sections (4), (5), <\/p>\n
(6) and (9) of section 11 relevant for our purpose are extracted below:\n<\/p>\n
       “(4) If the appointment procedure in sub-section (3) applies and-<\/p>\n<\/blockquote>\n
             (a) a party fails to appoint an arbitrator within thirty days  from the <\/p>\n
             receipt of a request to do so from the other party; or <\/p>\n<\/blockquote>\n
             (b) the two appointed arbitrators fail to agree on the third arbitrator <\/p>\n
             within thirty days from the date of their appointment, <\/p>\n
                                                       15<\/span><\/p>\n
          the  appointment   shall   be   made,  upon  request  of  a   party,  by the   Chief <\/p>\n
          Justice or any person or institution Designated by him.<\/p>\n<\/blockquote>\n
          (5) Failing any agreement referred to in sub-section (2), in an arbitration <\/p>\n
          with a sole arbitrator, if the  parties fail to agree on the arbitrator within <\/p>\n
          thirty days from receipt of a request by one party from the other party to <\/p>\n
          so agree the appointment shall be made, upon request of a party, by the <\/p>\n
          Chief Justice or any person or institution Designated by him.<\/p>\n
          (6) Where, under an appointment procedure agreed upon by the parties,-<\/p>\n<\/blockquote>\n
                (a) a party fails to act as required under that procedure; or<\/p>\n<\/blockquote>\n
                (b)   the   parties,   or   the   two   appointed   arbitrators,   fail   to   reach   an <\/p>\n
                agreement expected of them under that procedure; or<\/p>\n<\/blockquote>\n
                (c) a person, including an institution, fails to perform any function <\/p>\n
                entrusted to him or it under that procedure,<\/p>\n
          a   party   may   request   the   Chief   Justice   or   any   person   or   institution <\/p>\n
          Designated by him to take the necessary measure, unless the agreement on <\/p>\n
          the  appointment   procedure  provides   other   means   for   securing   the <\/p>\n
          appointment.\n<\/p><\/blockquote>\n
<\/blockquote>\n
                                            xxx        xxx       xxx<\/p>\n
          (9) In the case of appointment of sole or third arbitrator in an international <\/p>\n
          commercial   arbitration,   the   Chief   Justice   of   India   or   the   person   or <\/p>\n
          institution designated by him may appoint an arbitrator of a nationality <\/p>\n
          other   than   the   nationalities   of   the   parties   where   the   parties   belong   to <\/p>\n
          different nationalities.”\n<\/p><\/blockquote>\n
                                                                        (emphasis supplied)<\/p>\n<\/blockquote>\n
19.       Section 23 relating to filing of statements of claim and defence reads <\/p>\n
thus:\n<\/p><\/blockquote>\n
<\/blockquote>\n
          “23.   Statements   of   claim   and   defence.-  (1)   Within   the   period   of   time <\/p>\n
          agreed   upon   by   the   parties   or   determined   by   the   arbitral   tribunal,   the <\/p>\n
          claimant shall state the facts supporting his claim, the points at issue and <\/p>\n
          the relief or remedy sought, and the respondent shall state his defence in <\/p>\n
                                                         16<\/span><\/p>\n
        respect of these particulars, unless the parties have otherwise agreed as to  <\/p>\n
        the required elements of those statements.\n<\/p><\/blockquote>\n
\n        (2)   The   parties   may   submit   with   their   statements   all   documents   they <\/p>\n
        consider to be relevant or may add a reference to the documents or other <\/p>\n
        evidence they will submit.\n<\/p><\/blockquote>\n
\n        (3)  Unless   otherwise   agreed   by   the   parties,   either   party   may   amend   or  <\/p>\n
        supplement   his   claim   or   defence  during   the   course   of   the   arbitral <\/p>\n
        proceedings, unless the arbitral tribunal considers it inappropriate to allow <\/p>\n
        the amendment or supplement having regard to the delay in making it.”<\/p><\/blockquote>\n
\n<\/blockquote>\n
                                                                           (emphasis supplied)<\/p>\n
Section   2   contains   the   definitions.   Sub-section   (9)   clarifies   that   except   in <\/p>\n
sections 25(a) and 32(2)(a) , any reference in the Act to a `claim’ will apply <\/p>\n
to a `counter-claim’. The said sub-section reads thus: <\/p>\n<\/blockquote>\n
        “(9) Where this Part, other than clause (a) of section 25 or clause (a) of <\/p>\n
        sub-section   (2)   of   section   32,   refers   to   a   claim,   it   shall   also   apply   to   a <\/p>\n
        counterclaim,   and   where   it   refers   to   a   defence,   it   shall   also   apply   to   a <\/p>\n
        defence to that counterclaim.”\n<\/p><\/blockquote>\n
\n<\/blockquote>\n
20.     In contrast, section 20 of the old Act which provided for applications <\/p>\n
to file the arbitration agreement in court, read as under:<\/p>\n<\/blockquote>\n
        “20.   Application   to   file   in   Court   arbitration   agreement.   (1)<\/p>\n
        Where any persons have entered into an arbitration agreement before the <\/p>\n
        institution of any suit with respect to the subject matter of the agreement <\/p>\n
        or any part of it, and where a difference has arisen to which the agreement <\/p>\n
        applies, they or any of them, instead of proceeding under Chapter II, may <\/p>\n
        apply to a Court having jurisdiction in the matter to which the agreement <\/p>\n
        relates, that the agreement be filed in Court.<\/p>\n
        (2)   The   application   shall   be   in   writing   and   shall   be   numbered   and <\/p>\n
        registered   as   a   suit   between   one   or   more   of   the   parties   interested   or <\/p>\n
        claiming   to   be   interested   as   plaintiff   or   plaintiffs   and   the   remainder   as <\/p>\n
        defendant or defendants, if the application has been presented by all the <\/p>\n
                                                     17<\/span><\/p>\n
        parties,   or, if  otherwise,  between  the  applicant   as   plaintiff  and  the  other <\/p>\n
        parties as defendants.\n<\/p><\/blockquote>\n
\n        (3) On such application being made, the Court shall direct notice thereof <\/p>\n
        to   be   given   to   all   parties   to   the   agreement   other   than   the   applicants, <\/p>\n
        requiring them to show cause within the time specified in the notice why <\/p>\n
        the agreement should not be filed.\n<\/p><\/blockquote>\n
\n        (4)   Where   no   sufficient   cause   is   shown,   the   Court   shall   order   the <\/p>\n
        agreement   to   be   filed,  and   shall   make   an   order   of   reference   to   the <\/p>\n
        arbitrator   appointed   by   the   parties,   whether   in   the   agreement   or <\/p>\n
        otherwise, or, where the parties cannot agree upon an arbitrator, to <\/p>\n
        an arbitrator appointed by the Court.\n<\/p><\/blockquote>\n
\n        (5) Thereafter the arbitration shall proceed in accordance with, and shall <\/p>\n
        be governed by, the other provisions of this Act so far as they can be made <\/p>\n
        applicable.”\n<\/p><\/blockquote>\n
<\/blockquote>\n
                                                                      (emphasis supplied)<\/p>\n<\/blockquote>\n<\/blockquote>\n
21.     Section   20   of   the   old   Act   required   the   court   while   ordering   the <\/p>\n
arbitration   agreement   to   be   filed,   to   make   an   order   of   reference   to   the <\/p>\n
arbitrator. The scheme of the new Act requires minimal judicial intervention. <\/p>\n<\/blockquote>\n
Section 11 of the new Act, on the other hand, contemplates the Chief Justice <\/p>\n
or his designate appointing the arbitrator but does not contain any provision <\/p>\n
for the court to refer the disputes to the arbitrator. Sub-sections (4), (5) and <\/p>\n
(9)   of   section   11   of   the   Act   require   the   Chief   Justice   or   his   designate   to <\/p>\n
appoint   the   arbitrator\/s.   Sub-section   (6)   requires   the   Chief   Justice   or   his <\/p>\n
designate to `take the necessary measure’ when an application is filed by a <\/p>\n
party complaining that the other party has failed to act as required under the <\/p>\n
appointment   procedure.   All   these   sub-sections   contemplate   an   applicant <\/p>\n
                                              18<\/span><\/p>\n
filing the application under section 11, only after he has raised the disputes <\/p>\n
and   only   when   the   respondent   fails   to   co-operate\/concur   in   regard   to <\/p>\n
appointment of arbitrator.\n<\/p>\n
22.     Section   23   of   the   Act   makes   it   clear   that   when   the   arbitrator   is <\/p>\n
appointed, the claimant is required to file the statement and the respondent <\/p>\n
has to file his defence statement before the Arbitrator. The claimant is not <\/p>\n
bound to restrict his statement of claim to the claims already raised by him <\/p>\n
by   notice,   “unless   the   parties   have   otherwise   agreed   as   to   the   required <\/p>\n
elements”   of   such   claim   statement.   It   is   also   made   clear   that   “unless <\/p>\n
otherwise agreed by the parties” the claimant can also subsequently amend <\/p>\n
or   supplement   the   claims   in   the   claim   statement.   That   is,   unless   the <\/p>\n
arbitration agreement requires the Arbitrator to decide only the specifically <\/p>\n
referred   disputes,   the   claimant   can   while   filing   the   statement   of   claim   or <\/p>\n
thereafter,   amend  or   add   to   the   claims   already   made.   Similarly   section   23 <\/p>\n
read with section 2(9) makes it clear that a respondent is entitled to raise a <\/p>\n
counter claim “unless the parties have otherwise agreed” and also add to or <\/p>\n
amend   the   counter   claim,   “unless   otherwise   agreed”.   In   short,   unless   the <\/p>\n
arbitration agreement requires the Arbitrator to decide only the specifically <\/p>\n
referred disputes, the respondent can file counter claims and amend or add to <\/p>\n
                                               19<\/span><\/p>\n
the same, except where the arbitration agreement restricts the arbitration to <\/p>\n
only   those   disputes   which   are   specifically   referred   to   arbitration,   both   the <\/p>\n
claimant and respondent are entitled to make any claims or counter claims <\/p>\n
and   further   entitled   to   add   to   or   amend   such   claims   and   counter   claims <\/p>\n
provided they are arbitrable and within limitation.\n<\/p>\n
23.     Section 11 of the Act requires the Chief Justice or his designate only <\/p>\n
to   appoint   the   arbitrator\/s.   It   does   not   require   the   Chief   Justice   or   his <\/p>\n
designate to identify the disputes or refer them to the Arbitral Tribunal for <\/p>\n
adjudication. Where the appointment procedure in an arbitration agreement <\/p>\n
requires disputes to be formulated and specifically referred to the arbitrator <\/p>\n
and   confers   jurisdiction   upon   the   arbitrator   to   decide   only   such   referred <\/p>\n
disputes, when an application is filed under section 11(6) of the Act, alleging <\/p>\n
that such procedure is not followed, the Chief Justice or his designate will <\/p>\n
take necessary measures under section 11(6) of the Act to ensure compliance <\/p>\n
by the parties with such procedure. Where the arbitration agreement requires <\/p>\n
the   disputes   to   be   formulated   and   referred   to   arbitration   by   an   appointing <\/p>\n
authority, and the appointing authority fails to do so, the Chief Justice or his <\/p>\n
designate  will  direct  the appointing  authority  to formulate the disputes  for <\/p>\n
reference  as   required  by  the  arbitration  agreement.   The  assumption  by  the <\/p>\n
                                                  20<\/span><\/p>\n
courts   below   that   a   reference   of   specific   disputes   to   the   Arbitrator   by   the <\/p>\n
Chief   Justice   or   his   designate   is   necessary   while   making   appointment   of <\/p>\n
arbitrator under section 11 of the Act, is without any basis. Equally baseless <\/p>\n
is the assumption that where one party filed an application under section 11 <\/p>\n
and gets an arbitrator appointed the arbitrator can decide only the disputes <\/p>\n
raised   by   the   applicant   under   section   11   of   the   Act   and   not   the   counter <\/p>\n
claims of the respondent.\n<\/p>\n
24.     Section 23 of the Act enables the claimant to file a statement of claim <\/p>\n
stating   the   facts   supporting   his   claim,   the   points   at   issue   and   the   relief   or <\/p>\n
remedy   sought   by   him   and   enables   the   respondent   to   state   his   defence   in <\/p>\n
respect   of   those   claims.   Section   2(9)   provides   that   if   any   provision   [other <\/p>\n
than section 25 (a) or section 32(2)(a)], refers to a “claim”, it shall apply to a <\/p>\n
“counter claim” and where it refers to a “defence”, it shall also apply to a <\/p>\n
defence to that counter claim. This would mean that a respondent can file a <\/p>\n
counter   claim   giving   the   facts   supporting   the   counter   claim,   the   points   at <\/p>\n
issue and the relief or remedy sought in that behalf and the claimant (who is <\/p>\n
the  respondent   in  the  counter   claim)  will  be  entitled  to  file   his  defence  to <\/p>\n
such   counter   claim.   Once   the   claims   and   counter   claims   are   before   the <\/p>\n
arbitrator, the arbitrator will decide whether they fall within the scope of the <\/p>\n
                                                     21<\/span><\/p>\n
arbitration agreement and whether he has jurisdiction to adjudicate on those <\/p>\n
disputes (whether they are claims or the counter claims) and if the answer is <\/p>\n
in the affirmative, proceed to adjudicate upon the same.\n<\/p>\n
25.    It   is   of   some   relevance   to   note   that   even   where   the   arbitration <\/p>\n
proceedings were initiated in pursuance of a reference under section 20 of <\/p>\n
the old Act, this Court held (in Indian Oil Corporation Ltd. vs. Amritsar Gas  <\/p>\n
Service   and   Ors.<\/a>   –   1991(1)   SCC   533)  that   the   respondent   was   entitled   to <\/p>\n
raise counter claims directly before the arbitrator, where all disputes between <\/p>\n
parties are referred to arbitration. This Court observed :\n<\/p>\n
       “The   appellant’s   grievance   regarding   non-consideration   of   its   counter-<\/p>\n
       claim for the reason given in the award does appear to have some merit. In <\/p>\n
       view of the fact that reference to arbitrator was made by this Court in an <\/p>\n
       appeal   arising   out   of   refusal   to   stay   the   suit   under   Section   34   of   the <\/p>\n
       Arbitration Act and  their reference was made of all disputes between the  <\/p>\n
       parties   in   the   suit,   the   occasion   to   make   a   counter-claim   in   the   written  <\/p>\n
       statement could arise only after the order of reference. The pleadings of <\/p>\n
       the parties were filed before the arbitrator, and the reference covered all <\/p>\n
       disputes   between   the   parties   in   the   suit.   Accordingly,   the   counter-claim <\/p>\n
       could  not be made  at  any earlier  stage. Refusal  to consider the  counter-<\/p>\n
       claim for the only reason given in the award does, therefore, disclose an <\/p>\n
       error of law apparent on the face of the award.”\n<\/p><\/blockquote>\n
<\/blockquote>\n
                                                                           (emphasis supplied)<\/p>\n<\/blockquote>\n
26.    A   counter   claim   by   a   respondent   pre-supposes   the   pendency   of <\/p>\n
proceedings relating to the disputes raised by the claimant. The respondent <\/p>\n
could no doubt raise a dispute (in respect of the subject matter of the counter <\/p>\n
                                            22<\/span><\/p>\n
claim) by issuing a notice seeking reference to arbitration and follow it by an <\/p>\n
application   under   section   11   of   the   Act   for   appointment   of   Arbitrator, <\/p>\n
instead of raising a counter claim in the pending arbitration proceedings. The <\/p>\n
object of providing for counter claims is to avoid multiplicity of proceedings <\/p>\n
and   to   avoid   divergent   findings.   The   position   of   a   respondent   in   an <\/p>\n
arbitration proceedings being similar to that of a defendant in a suit, he has <\/p>\n
the choice of raising the dispute by issuing a notice to the claimant calling <\/p>\n
upon him to agree for reference of his dispute to arbitration and then resort <\/p>\n
to an independent arbitration  proceedings  or raise the dispute by way  of a <\/p>\n
counter claim, in the pending arbitration proceedings. <\/p>\n<\/blockquote>\n
Respondent’s contentions<\/p>\n
27.    The   respondent   submitted   that   this   Court   in  SBP   &   Co.   vs.   Patel  <\/p>\n
Engineering   Ltd.   —  2005   (8)   SCC   618   and  National   Insurance   Co.Ltd.   v  <\/p>\n
Boghara Polyfab Private Ltd. — 2009 (1) SCC 267, has observed that while <\/p>\n
deciding an application under section 11 of the Act, the Chief Justice or his <\/p>\n
designate can decide the question whether the claim was a dead one (long <\/p>\n
time barred) that was sought to be  resurrected. According  to appellant  the <\/p>\n
logical inference from this observation is that an application  under section <\/p>\n
11 should sufficiently enumerate and describe the claims to demonstrate that <\/p>\n
                                               23<\/span><\/p>\n
they   are   within   limitation.   Extending   the   same   logic,   respondent   contends <\/p>\n
that   any   counter   claim   by   the   respondent   should   also   be   described   in   his <\/p>\n
statement of objections with relevant particulars so that the Chief Justice or <\/p>\n
his designate could consider and pronounce whether such counter claim is <\/p>\n
barred by limitation. The respondent therefore argues that every claim unless <\/p>\n
specifically   mentioned   in  the   application   under   section   11  of  the   Act,   and <\/p>\n
every   counter   claim   unless   specifically   mentioned   in   the   statement   of <\/p>\n
objections, cannot be the subject matter of arbitration.\n<\/p>\n
28.     The aforesaid contention of the respondent is based on the erroneous <\/p>\n
premises that whenever an application is filed under section 11 of the Act, it <\/p>\n
is   necessary   for   the   Chief   Justice   or   his   Designate   to   consider   and   decide <\/p>\n
whether the claims or counter claims are barred by limitation or not. In SBP  <\/p>\n
& Co. and Boghara Polyfab, this Court classified the questions that may be <\/p>\n
raised in an application under section 11 of the Act into three groups : (i) <\/p>\n
those which the Chief Justice\/his  designate  shall have to decide; (ii) those <\/p>\n
which the Chief Justice\/his designate may choose to decide or alternatively <\/p>\n
leave to the decision of the Arbitral Tribunal; and (iii) those which the Chief <\/p>\n
Justice\/his designate should leave exclusively for the decision of the Arbitral <\/p>\n
Tribunal. This Court held that the issue whether a claim is dead claim (long <\/p>\n
                                                      24<\/span><\/p>\n
barred   claim)   is   an   issue   which   the   Chief   Justice   or   his   designate   may <\/p>\n
choose   to   decide   or   leave   for   the   decision   of   the   Arbitral   Tribunal.   The <\/p>\n
difference   between   a   dead\/stale   claim   and   a   mere   time   barred   claim   was <\/p>\n
explained   by   this   Court   in  Indian   Oil   Corporation   Ltd.   v.   M\/s   SPS  <\/p>\n
Engineering Ltd.<\/a> [2011 (2) SCALE 291 ] thus : –\n<\/p>\n
        “When   it   is   said   that   the   Chief   Justice   or   his   designate   may   choose   to <\/p>\n
        decide whether the claim is a dead claim, it is implied that he will do so <\/p>\n
        only when the claim is evidently and patently a long time barred claim and <\/p>\n
        there   is   no   need   for   any   detailed   consideration   of   evidence.   We   may <\/p>\n
        elucidate by an illustration: If the contractor makes a claim a decade or so <\/p>\n
        after completion of the work without referring to any acknowledgement of <\/p>\n
        a liability or other factors that kept the claim alive in law, and the claim is <\/p>\n
        patently long time barred, the Chief Justice or his designate will examine <\/p>\n
        whether the claim is a dead claim (that is, a long time barred claim). On <\/p>\n
        the other hand, if the contractor makes a claim for payment, beyond three <\/p>\n
        years of completing of the work but say within five years of completion of <\/p>\n
        work,   and   alleges   that   the   final   bill   was   drawn   up   and   payments   were <\/p>\n
        made within three years  before the claim, the court will not enter into a <\/p>\n
        disputed question whether the claim was barred by limitation or not. The <\/p>\n
        court will leave the matter to the decision of the Tribunal. If the distinction <\/p>\n
        between apparent and obvious dead claims, and claims involving disputed <\/p>\n
        issues of limitation is not kept in view, the Chief Justice or his designate <\/p>\n
        will   end  up  deciding  the   question   of  limitation  in  all  applications  under <\/p>\n
        Section 11 of the Act.”\n<\/p><\/blockquote>\n
\n<\/blockquote>\n
29.     The   issue   of   limitation   is   not   an   issue   that   has   to   be   decided   in   an <\/p>\n
application   under section  11  of  the  Act.  SBP   & Co.  and  Boghara  Polyfab <\/p>\n
held that the Chief Justice or his designate will not examine issues relating <\/p>\n
to limitation, but may consider in appropriate cases, whether the application <\/p>\n
was in regard to a claim which on the face of it was so hopelessly barred by <\/p>\n
                                                       25<\/span><\/p>\n
time,   that   it   is   already   a   dead\/stale   claim   which   did   not   deserve   to   be <\/p>\n
resurrected and referred to arbitration. The said decisions do not support the <\/p>\n
respondent’s contention that the details of all claims should be set out in the <\/p>\n
application under section 11 of the Act and that details of all counter claims <\/p>\n
should be set out in the statement of objections, and that a claim or a counter <\/p>\n
claim which is not referred to or set out in the pleadings in the proceedings <\/p>\n
under section 11 of the Act, cannot be entertained or decided by the arbitral <\/p>\n
tribunal.\n<\/p>\n
30.     Reliance was next placed on the following passage from the Law and  <\/p>\n
Practice  of Commercial Arbitration  in England [Mustill & Boyd  – (1989)  <\/p>\n
Second Edn. Page 131] to contend that the counter claim ought to have been <\/p>\n
submitted to the Arbitrator when he is appointed:\n<\/p>\n
        “The   fourth   situation,   in   which   both   the   claim   and   the   cross-claim   are <\/p>\n
        arbitrable,   is   the   one   most   commonly   encountered   in   practice.  The  <\/p>\n
        arbitrator   should   carefully   consider   whether   the   subject   matter   of   the  <\/p>\n
        counter claim was one of the matters submitted to him at the time of the  <\/p>\n
        appointment. If it is, then it is up to him whether to allow the matter to be <\/p>\n
        raised by counter claim or made the subject  of a separate arbitration. In <\/p>\n
        practice, we have never known the second course to be followed. If, on the <\/p>\n
        other hand, the cross-claim was not a dispute which was submitted to him, <\/p>\n
        he   should   not   entertain   it   unless   it   raises   a   pure   defence,   or   unless   the <\/p>\n
        parties clearly agree that he is to have jurisdiction over it.”<\/p>\n<\/blockquote>\n
<\/blockquote>\n
                                                                                (emphasis supplied)<\/p>\n
                                                         26<\/span><\/p>\n
The   said   observations   were   made   with   reference   to   the   Arbitration   Law <\/p>\n
prevailing   in   United  Kingdom  in  the   year  1989,   prior   to   the  enactment  of <\/p>\n
(English) Arbitration Act, 1996. Further the observations obviously related <\/p>\n
to   an   arbitration   where   specific   disputes   were   referred   to   arbitration   and <\/p>\n
consequently   the   arbitrator   was   bound   to   restrict   himself   to   the   disputes <\/p>\n
referred. We have already adverted to this aspect earlier.  <\/p>\n<\/blockquote>\n
31.     The respondent lastly contended that the Court is required to ascertain <\/p>\n
the precise nature of the dispute which has arisen and then decide whether <\/p>\n
the   dispute   is   one   which   falls   within   the   terms   of   the   arbitration   clause, <\/p>\n
before appointing an arbitrator; and that could be done only if the claims are <\/p>\n
set out in the application under section 11 of the Act and the counter claims <\/p>\n
are   set   out   in   the   statement   of   objections   and   court   had   an   opportunity   to <\/p>\n
examine it.   It  is therefore  submitted that a dispute  (relating  to a claim  or <\/p>\n
counter claim) not referred in the pleadings, is not arbitrable. Reliance was <\/p>\n
placed  upon  certain  observations  in  the decision   of  the House of  Lords  in <\/p>\n
Heyman  v.  Darwins  Ltd.–  1942  AC  356. We  extract   below the  paragraph <\/p>\n
containing the relied upon observations :\n<\/p>\n
        “The   law   permits   the   parties   to   a   contract   to   include   in   it   as   one   of   its <\/p>\n
        terms   an   agreement   to   refer   to   arbitration   disputes   which   may   arise   in <\/p>\n
        connection with it, and the court of England enforce such a reference by <\/p>\n
        staying legal proceedings in respect of any matter agreed to be referred “if <\/p>\n
                                                      27<\/span><\/p>\n
        satisfied  that  there   is  no  sufficient  reason  why   the  matter   should  not  be <\/p>\n
        referred in accordance with the submission.” Arbitration Act, 1889, sec. 4. <\/p>\n
        Where proceedings at law are instituted by one of the parties to a contract  <\/p>\n
        containing   an   arbitration   clause   and   the   other   party,   founding   on   the  <\/p>\n
        clause, applies for a stay, the first thing to be ascertained is the precise  <\/p>\n
        nature of the dispute which has arisen The next question is whether the  <\/p>\n
        dispute is one which falls within the terms of the arbitration clause. Then <\/p>\n
        sometimes   the   question   is   raised   whether   the   arbitration   clause   is   still <\/p>\n
        effective   or   whether   something   has   happened   to   render   it   no   longer <\/p>\n
        operative.   Finally,   the   nature   of   the   dispute   being   ascertained,   it   having <\/p>\n
        been held to fall within the terms of the arbitration clause, and the clause <\/p>\n
        having   been   found   to   be   still   effective,   there   remains   for   the   court   the <\/p>\n
        question whether there is any sufficient reason why the matter in dispute <\/p>\n
        should not be referred to arbitration.”\n<\/p><\/blockquote>\n
                                                                              (emphasis supplied)<\/p>\n
The said observations were made while examining whether a suit should be <\/p>\n
stayed   at   the   instance   of   the   defendant   on   the   ground   that   there   was   an <\/p>\n
arbitration   agreement   between   the   parties.   If   a   party   to   an   arbitration <\/p>\n
agreement files a civil suit and the defendant contends that the suit should be <\/p>\n
stayed and the parties should be referred to arbitration, necessarily, the court <\/p>\n
will have to find out what exactly is the subject matter of the suit, whether it <\/p>\n
would fall within the scope of the arbitration clause, whether the arbitration <\/p>\n
clause was valid and effective and lastly whether there was sufficient reason <\/p>\n
as to why the subject matter of the suit should not be referred to arbitration. <\/p>\n<\/blockquote>\n
The observations made in  Heymen,  in the context of an application seeking <\/p>\n
stay   of   further   proceedings   in   a   suit,   are   not   relevant   in   respect   of   an <\/p>\n
application under section 11 of the Act. This Court has repeatedly held that <\/p>\n
the questions for consideration in an application under section 8 by a civil <\/p>\n
                                                28<\/span><\/p>\n
court   in   a   suit   are   different   from   the   questions   for   consideration   under <\/p>\n
section 11 of the Act. The said decision is therefore of no assistance.\n<\/p>\n
Summation <\/p>\n
32.     The position emerging from above discussion may be summed up as <\/p>\n
follows:\n<\/p>\n
(a)     Section   11   of   the   Act   requires   the   Chief   Justice   or   his   designate   to <\/p>\n
either appoint the arbitrator\/s or take necessary measures in accordance with <\/p>\n
the appointment procedure contained in the arbitration agreement. The Chief <\/p>\n
Justice  or the designate is not required to draw up the list of disputes and <\/p>\n
refer them to arbitration. The appointment of Arbitral Tribunal is an implied <\/p>\n
reference in terms of the arbitration agreement.\n<\/p>\n
(b)     Where   the   arbitration   agreement   provides   for   referring   all   disputes <\/p>\n
between   the   parties   (whether   without   any   exceptions   or   subject   to <\/p>\n
exceptions),   the   arbitrator   will   have   jurisdiction   to   entertain   any   counter <\/p>\n
claim,   even   though   it   was   not   raised   at   a   stage   earlier   to   the   stage   of <\/p>\n
pleadings before the Arbitrator.\n<\/p>\n
(c)     Where however the arbitration agreement requires specific disputes to <\/p>\n
be   referred   to   arbitration   and   provides   that   the   arbitrator   will   have   the <\/p>\n
jurisdiction   to   decide   only   the   disputes   so   referred,   the   arbitrator’s <\/p>\n
jurisdiction   is   controlled   by   the   specific   reference   and   he   cannot   travel <\/p>\n
                                               29<\/span><\/p>\n
beyond the reference, nor entertain any additional claims or counter claims <\/p>\n
which are not part of the disputes specifically referred to arbitration.\n<\/p>\n
The position in this case<\/p>\n
33.     The   arbitration   clause   in   this   case   contemplates   all   disputes   being <\/p>\n
referred   to   arbitration   by   a   sole   arbitrator.   It   refers   to   an   Appointing <\/p>\n
Authority   (Chief   Engineer,   CPWD),   whose   role   is   only   to   appoint   the <\/p>\n
arbitrator.   Though   the   arbitration   clause   requires   the   party   invoking   the <\/p>\n
arbitration  to specify the dispute\/s to be referred  to arbitration,  it does not <\/p>\n
require the appointing authority to specify the disputes or refer any specific <\/p>\n
disputes to arbitration nor requires the Arbitrator to decide only the referred <\/p>\n
disputes.   It  does  not bar  the arbitrator   deciding any  counter  claims. In the <\/p>\n
absence   of   agreement   to   the   contrary,   it   has   to   be   held   that   the   counter <\/p>\n
claims  by   the  appellant   were   maintainable   and   arbitrable   having   regard   to <\/p>\n
section 23 read with section 2(9) of the Act.\n<\/p>\n
34.     Counter   claim   no.(3)   in   regard   to   which   Rs.2,94,298\/-   has   been <\/p>\n
awarded   by   the   Arbitrator   relates   to   the   cost   of   pipes   entrusted   by   the <\/p>\n
appellant for carriage from store to site, which were not accounted for by the <\/p>\n
respondent. It is not shown to be barred by limitation. We find no error in <\/p>\n
                                               30<\/span><\/p>\n
the reasoning of the arbitrator in awarding Rs.2,94,298\/- under counter claim <\/p>\n
no.(3).\n<\/p>\n
Conclusion<\/p>\n
35.     In view of the above, this appeal is allowed and the order of the High <\/p>\n
Court   affirming   the   judgment  of  the   trial   court   in   regard   to   counter   claim <\/p>\n
No.3,   is   set   aside.   Consequently   the   award   of   arbitrator   is   upheld   in   its <\/p>\n
entirety and the challenge thereto by the respondent is rejected.\n<\/p>\n
                                                        …………………………..J.<\/p>\n
\n\n                                                        (R V Raveendran)\n\n\n\n\n\nNew Delhi;                                              ..............................J.\n\nJuly 4, 2011.                                           (A K Patnaik)\n\n\n\n\n \n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India State Of Goa vs M\/S Praveen Enterprises on 4 July, 2011 Author: R.V.Raveendran Bench: R.V. Raveendran, A.K. Patnaik Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4987 OF 2011 [Arising out of SLP [C] No.15337 of 2009] State of Goa … Appellant Vs. Praveen Enterprises … […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-219656","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nState Of Goa vs M\/S Praveen Enterprises on 4 July, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/state-of-goa-vs-ms-praveen-enterprises-on-4-july-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Of Goa vs M\/S Praveen Enterprises on 4 July, 2011 - 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