OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited & Anr.

OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited & Anr.

13. We now proceed to consider why Article 115 of the First Schedule to the Limitation Act should apply to the facts of the present case. Article 115 applies when there is a breach of contract, and suit is for compensation for the loss suffered by the innocent party. A breach of contract ‘occurs where a party repudiates or fails to perform one or more of the obligations imposed upon him by the contract’: (vide Cheshire and Fifoot, p 484). ‘If one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise – a right of action conferred upon the party injured by the breach’ (vide Anson’s Law of Contract, p 412). Admittedly, in the present case, there was a contract and according to the plaintiff and the findings of the court a breach of contract had occurred inasmuch as the defendants failed to pay the stipulated amount upon the date fixed under the contract.

14. Difficulty can, however, be caused by the word ‘compensation’ used in Article 115. It can be argued that the words compensation for breach of contract point rather to a claim for unliquidated damages than to the payment of a certain sum, and, therefore, where the suit is for the recovery of a specified sum, and not for the determination of unliquidated damages, this article should not apply. In our opinion this contention would be wholly untenable because it was not accepted by this court in the Full Bench case of Hussain Ali Khan versus Hafiz Ali Khan95 and by the Privy Council in the case of Tricomdas Coovarji Bhoja versus Sri Gopinath Jiu Thakur.96 In the case of Husain Ali Khan Article 116 of Schedule II of the Limitation Act (Act XV of 1877) was the subject of interpretation. Articles 115 and 116 of Schedule II of Act XV of 1877 have been reproduced verbatim in the Indian Limitation Act, 1908. Article 115 deals with the breach of contracts not in writing and registered while Article 116 provided for breach of contracts in writing and registered.

95 I.L.R. 3 All 600 96 AIR 1916 PC 182

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It is, therefore, obvious, that the meaning which has to be given to the words ‘compensation for breach of contract’ occurring in both the Articles will have to be the same. xxx xxx xxx

16. In the case of Tricomdas Cooverji Bhoja the argument that the words ‘compensation for breach of a contract’ point rather to a claim of unliquidated damages than to the claim of payment of certain sum was not accepted because the word compensation has been used in the Indian Contract Act in a very wide sense.

17. The relevant portion of section 73 of the Indian Contract Act reads as follows: ‘73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach…… Illustrations ……………….. (n) A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day; B, in consequence of not receiving the money on that day is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest up to the day of payment.’

18. It is, therefore, clear that the word compensation has been used, in section 73 of the Indian Contract Act in a very wide sense and the present case would be covered by it.

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19. We see no reason why the words ‘compensation for breach of contract’ as used in Article 115 should be given a meaning different from the same words as used in Article

116. Article 115 being a residuary Article for suits based on breach of contract, it is obvious that the suit out of which this revision arises would be governed by the said Article.” (Emphasis supplied)

98Copy pinpoint98. On a consideration of the aforesaid decisions as well as the provisions of Section 73 of the Contract Act and Article 55 of the Schedule to the 1963 Act, we are of the view that even a suit for recovery of a specified amount, based on a contract, is a suit for compensation, and if the suit is a consequence of defendant breaching the contract or not fulfilling its obligation(s) thereunder, the limitation for institution of such a suit would be covered by Article 55 of the Schedule to the 1963 Act, provided the suit is not covered by any other Article specially providing for it.

99Copy pinpoint99. In the instant case, there is no dispute that the claim is based on a contract. The finding of the Arbitral Tribunal in paragraph 13.13 (i)97 of the award is that the appellant(s) herein had failed to undertake the performance guarantee test, despite request of the claimant, within the period specified therefor. The final payment of the bill(s) / invoice(s) was dependent on issuance of certificate(s) including one relating to successful completion of the performance guarantee test (PG Test). Further, the contract provided that if the performance guarantee is not undertaken by the purchaser (appellant(s) herein), it could be deemed that the supplier (claimant -R-1) had fulfilled its obligation of providing a guaranteed performance of the project under the contract. In these circumstances, when, despite request of the contractor /supplier, the employer/ purchaser failed to undertake the PG Test, the Arbitral Tribunal justifiably concluded that even though the supplier (claimant) had fulfilled its obligations under the contract, the purchaser (appellant(s) herein) had failed in fulfilling its obligation of making payment of the outstanding principal amount to the claimant, which had become due and payable under the contract. In our view, therefore, the claim being one for ‘compensation’ (which

97 Extracted in paragraph 88 (16) of this judgment.

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term includes a specified outstanding amount), based on breach of a contract, the limitation for the claim would fall within the ambit of Article 55 of the Schedule to the 1963 Act unless demonstrated that the claim is specially covered by any other Article of the Schedule.

100Copy pinpoint100. In Geo Miller (supra)98 a three-Judge Bench of this Court held that in a commercial dispute, though mere failure to pay may not give rise to a cause of action, once the applicant has asserted their claim and the respondent fails to respond to such claim, such failure will be treated as a denial of the applicant’s claim giving rise to a dispute and, therefore, a cause of action for reference to arbitration would come into existence. It was also observed that it would not lie in the mouth of the claimant to plead that it waited to refer the dispute to arbitration because it was making representations and sending reminders to the respondent to settle the matter.

101Copy pinpoint101. In Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority,99 in the context of commencement of the period of limitation for making a reference application under Section 20 of the erstwhile Arbitration Act, 1940, it was held by this Court that to be entitled to have an order of reference under Section 20, it is necessary that there should be an arbitration agreement and secondly, differences must arise to which the agreement applied. Once there is an assertion of claim by the appellant and silence as well as refusal in respect of the same by the respondent, a dispute would arise regarding non-payment of the alleged dues. The Court thereafter went on to observe: “4. ……. The High Court proceeded on the basis that the work was completed in 1980 and therefore, the appellant became entitled to the payment from that date, and the cause of action under article 137 arose from that date. But in order to be entitled to ask for the reference under section 20 of the Act there must not only be an entitlement to money but there must be a difference, or dispute must arise. It is true that on completion of the work a right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from

98 See paragraph 29 of the judgment in Geo Miller (supra) 99 (1988) 2 SCC 338

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the record and when the assertion of the claim was made on 28.².1983 and there was non- payment, the cause of action arose from that date, that is to say, 28.².1983. It is also true that a party cannot postpone the approval of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of an arbitrator under Section 8 or reference under section 20 of the Act. There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request. Whether in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case.”

102Copy pinpoint102. Interpreting the decision of this Court in Inder Singh Rekhi (supra), in B & TG AG (supra) it was, inter alia, held that three principles of law are discernible from the aforesaid decision: (1) ordinarily, on the completion of the work, the right to receive the payment begins; (2) a dispute arises when there is a claim on one side and its denial/ repudiation by the other; and (3) a person cannot postpone the accrual of cause of action by repeatedly writing letters, or sending reminders. In other words, bilateral discussions for an indefinite period would not save the situation so far as the accrual of cause of action and the right to apply for appointment of arbitrator is concerned.

103Copy pinpoint103. In the case in hand, the award reveals that in respect of payment of Claimant’s invoices, the Purchase Orders provided that 65% of the Order Price was to be paid on pro rata basis along with 100% taxes and duties after receipt of material at site, within 25 days of submission of Invoice/ request for payment, and other documents.100 The award recites that there is no indication in the Purchase Orders as to what

100 Paragraph 13.08 (b) of the Award

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‘other documents’ were required.101 Not only that, payment, including balance payment, was dependent on issuance of: (i) certificate on completion of punch points signed by parties; (ii) take over certificate of equipment (to be issued by the Purchaser); and (iii) certificate of completion of performance test of equipment (to be issued by the Purchaser).102 But none of these certificates was issued.103 In these circumstances, the Arbitral Tribunal had to consider various facts and circumstances to come to a definite conclusion that the work was completed on 21 September 2015. In holding so, Tribunal relied on: (a) an e-mail sent by the claimant on 21 September 2015 showing its readiness to a performance guarantee test; and (b) the fact that there was no evidence to suggest that the certificates on completion, as ought to have been issued, should not have been issued on or before 21 September 2015.104 The Tribunal also took note of the terms and conditions of the contract which were to the effect that the performance guarantee test can be deemed satisfactory if, despite request, it is not carried out within 180 days of the issue of the taking over certificate. The Tribunal noticed that vide certificate dated 2 March 2017 the appellant(s) admitted that unit was commissioned in May 2015 and there was a request of the claimant dated 21 September 2015 to undertake performance guarantee test.105 Taking all of this into account, the Tribunal held that the “deemed achievement of supplier’s liability in respect to performance guarantee”, pursuant to clause 10.5 of Annexure A of the Erection Purchase Order, became effective on 19 March 2016.106

104Copy pinpoint104. From the discussion thus far, following dates emerge which, in our view, would be relevant for determining the start point of limitation for the claim: (a) 21 September 2015 i.e., the deemed date of completion of the supply/ work undertaken by the claimant under the Purchase Orders/ contract; and

101 Paragraph 13.08 (c) of the Award 102 Paragraph 7.32 of the Award 103 Paragraph 13.13 (d) of the Award 104 Paragraph 13.13 (h) of the Award. 105 See Paragraph 88 (16) above including paragraph 13.13 (f) of the Award. 106 Paragraph 13.13 (i) of the Award.

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(b) 19 March 2016 i.e., the deemed date by which the supplier (Claimant) had fulfilled its liability under the contract relating to guaranteed performance of the Unit concerned.

105Copy pinpoint105. Now, we shall consider whether Articles 14 and 18 of the Schedule to the 1963 Act were applicable or not. Article 14 applies where the suit is for the price of the goods sold and delivered, and there is no fixed period of credit agreed upon. Here, there is an indivisible claim in respect of the outstanding principal amount for the goods supplied and the work done. Moreover, the payment(s) under the supply purchase order were to be on pro rata basis, and full payment for the supplies was dependent on supporting documents, including certificates, to be provided by the purchaser, which were not provided. Thus, when full payment(s) under the supply/erection purchase order(s) were dependent on certificates relating to completion/ commissioning /guaranteed performance etc., the claimant waited till successful completion / commissioning / guaranteed performance of the project to file a composite claim for the balance amount payable under both the purchase orders. In our view, therefore, Article 14 is not applicable to the claim as framed.

106Copy pinpoint106. Insofar as Article 18 is concerned, it is to apply where the suit is for the price of the work done by the plaintiff for the defendant at his request, and where no time has been fixed for payment. In the instant case, there is an indivisible claim for the outstanding amount in respect of goods supplied and the work done. As already noticed above, the payment(s) under the contract were to be made on pro rata basis, dependent on work done and certificates issued, which, as per the finding in the award, were not issued. Hence, the claimant was entitled to make a composite claim for the goods supplied and the work done after the project was successfully complete i.e., when the Unit was commissioned followed by guaranteed performance. Because it is only then, when the outstanding amount, as per the Bills / Invoices raised, became due and payable to the claimant in terms of the contract. Thus, in our view, Article 18 would also not apply.

107Copy pinpoint107. As it is not demonstrated that any other Article of the Schedule specially providing for the claim, as was made by R-1, was applicable, in our view, Article 55 of the Schedule was applicable to the claim, inter alia, for the following reasons:

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(a) The claim was for compensation (in as much as the term ‘compensation’ includes a specified amount payable under a contract107) in respect of the goods supplied and the work done under a contract; and (b) The claim was based on a breach of the contractual obligation as, according to the findings returned by the Arbitral Tribunal, the respondents to the claim (appellant(s) herein) had failed to fulfil their obligation(s) of making payment of the outstanding principal amount payable under the contract despite raising of bills / invoices by the claimant. Starting Point of Limitation for the Claim

108Copy pinpoint108. Having determined that limitation for the claim would be governed by Article 55 of the Schedule to the 1963 Act, we shall now ascertain the date from which the limitation period is to be counted.

109Copy pinpoint109. Under Article 55, the limitation period begins to run when the contract is broken or where there are successive breaches, when the breach in respect of which the suit is instituted occurs, or where the breach is continuing, when it ceases.

110Copy pinpoint110. In the case in hand, it is nobody’s case that either party repudiated the contract. Further, the claim is not in respect of non-payment of any specific bill or invoice during execution of the contract. Rather, it is for the outstanding principal amount due to the claimant on discharge of his obligations under the contract. No doubt, list of unpaid bills / invoices was placed on record of the arbitral proceedings to demonstrate that bills / invoices were raised / issued, but the same was by way of evidence to support the claim, which was for the entire outstanding principal amount payable to the claimant on discharge of its obligations under the contract. Thus, simply put, the cause of action for the claim in question is appellant(s)’ failure to make payment of the outstanding principal amount to the claimant despite discharge of contractual obligations by it.

111Copy pinpoint111. At this stage, we would like to put on record that nothing was brought to our notice that there was any fixed date, or period of credit, for payment of the balance amount. In the above circumstances, in our view, the starting point of limitation should be the date when

107 See our discussion in paragraphs 96 to 98 of this judgment

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the claimant had fulfilled all its obligations under the contract and was entitled for release of the outstanding amount payable under the contract.

112Copy pinpoint112. As per the contract, if, after takeover, the purchaser (appellant(s) herein) fails to undertake the performance guarantee test, within 180 days from the date of request for it by the supplier (i.e., claimant), it is to be deemed that the supplier has fulfilled its liability in respect of the guaranteed performance. Apparently, passing the performance guarantee test was last of the supplier’s (claimant’s) obligations, whereafter the supplier was entitled for release of the balance amount. The Tribunal has found: (a) that as per certificate dated 2 March 2017, the commissioning took place in May 2015; (b) at that time there were certain technical issues, which were resolved later; (c) on 21 September 2015, claimant sent request to the appellant(s) to undertake performance guarantee test, but there was no response to the request; and (d) the period of 180 days, counted from 21 September 2015, expired on 19 March 2016. In the light of the above findings, the Tribunal concluded that commissioning took place in the month of May 2015; technical issues were resolved by 21 September 2015; and performance guarantee period expired on 19 March 2016.

113Copy pinpoint113. Based on the above, while bearing in mind that final payment of the principal outstanding amount was dependent on meeting the requirement of performance guarantee, in our view, the cause of action for the claim, as made, matured on expiry of that stipulated period of 180 days within which, despite request, the appellant(s) (i.e., purchaser) failed to undertake the performance guarantee test. Thus, even though there might be several bills/ invoices raised/ issued by the claimant during execution of the contract, the claim of the claimant for the outstanding principal amount matured on expiry of 180 days from the date of the notice given by the claimant to the appellant(s) (i.e., respondents to the claim) to undertake the performance guarantee test. We, therefore, conclude that limitation for the claim started to run from 19 March 2016.

114Copy pinpoint114. At this stage, we may notice, only to reject, an alternative submission made on behalf of the appellant, which is, that if Article 55 was applicable, the breach of the contract occurred when the claimant failed to complete the project by 31 March 2014, as promised, therefore, the period of limitation should be counted from that date.

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This argument, in our view, is not sustainable, because time was not the essence of the contract in as much as there was a clause for liquidated damages for delay in completion (See Clause 13 of Annexure A of the Supply Purchase Order as extracted in paragraph 7.32 of the award). Moreover, there is no material on record to indicate that the contract was repudiated by the appellant on any date for non-completion of the project by the date stipulated. Rather, the materials on record, as recited in the award, indicate that parties continued to engage with each other and accepted performance of contractual obligations even beyond the stipulated date. Further, there is a clear finding in the award that the claimant was entitled to extension of 539 days. For the above reasons, we reject the alternative submission made on behalf of the appellant(s). Limitation Extended by Acknowledgement dated 19.04.2018 under Section 18 of the 1963 Act

115Copy pinpoint115. As the limitation period of three years prescribed by Article 55, if counted from 19 March 2016, expired before the date of commencement of the arbitral proceeding (i.e., 2 May 2019), we will have to consider whether, by virtue of acknowledgment, if any, the claimant was entitled to extension of the period of limitation.

116Copy pinpoint116. Section 18108 of the 1963 Act deals with the effect of acknowledgement in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for a suit or application in respect of any right, an acknowledgement of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. The Explanation to this section provides that an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come or is accompanied by a refusal to pay, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the right.

117Copy pinpoint117. In Khan Bahadur Shapoor Fredom Mazda v. Durga Prasad Chamaria and others109 while dealing with Section 19 of the 1908 Act, which is pari materia Section 18 of the 1963 Act, this Court held

108 See Footnote 73 109 [1962] 1 SCR 140 : AIR 1961 SC 1236

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that for a valid acknowledgement, under the provision, the essential requirements are: (a) it must be made before the relevant period of limitation has expired; (b) it must be in regard to the liability in respect of the right in question; and (c) it must be made in writing and must be signed by the party against whom such right is claimed. In paragraph 6 of the judgment, it was observed: “6. ….. The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favor of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning……

7. …… The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document…….” (Emphasis supplied)

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118Copy pinpoint118. In J.C. Budhraja v. Chairman Orissa Mining Corporation Ltd. and Others,110 following the decision in Khan Bahadur Shapoor (supra), a three-Judge Bench of this Court held: “21. It is now well settled that a writing to be an acknowledgement of liability must involve an admission of a subsisting jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship in regard to an existing liability. The admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification and payment, it amounts to an acknowledgment. But if the defendant merely says, without admitting liability, it would like to examine the claim or the accounts, it may not amount to acknowledgment. In other words, a writing, to be treated as an acknowledgement of liability should consciously admit his liability to pay or admit his intention to pay the debt. Let us illustrate. If a creditor sends a demand notice demanding payment of Rs.¹,00,000 due under a promissory note executed by the debtor and the debtor sends a reply stating that he would pay the amount due, without mentioning the amount, it will still be an acknowledgment of liability. If a writing is relied on as an acknowledgement for extending the period of limitation in respect of the amount or right claimed in the suit, the acknowledgement should necessarily be in respect of the subject matter of the suit. If a person executes a work and issues a demand letter making a claim for the amount due as per the final bill and the defendant agrees to verify the bill and pay the amount, the acknowledgement will save limitation for a suit for recovery of only such bill amount, but will not extend the limitation in regard to any fresh or additional claim for damages made in the suit, which was not a part of the bill or the demand letter. ……….. What can be acknowledged is a present subsisting liability. An

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acknowledgement made with reference to a liability, cannot extend limitation for a time-barred liability or a claim that was not made at the time of acknowledgement or some other liability relating to other transactions. Any admission of jural relationship in regard to the ascertained sum due or a pending claim, cannot be an acknowledgment for a new additional claim for damages. (Emphasis supplied)

119Copy pinpoint119. In the instant case, as found above, the limitation period started to run from 19 March 2016. Within three years therefrom, in the minutes of meeting dated 19 April 2018111 there was a clear acknowledgement that the amount claimed by Enexio (as is there in the claim) is the balance amount payable, though subject to debit, by way of set off, against various claims made by the appellant(s) herein upon the claimant. In our view, such an acknowledgment is sufficient to extend the limitation period as it admits the existing liability of the appellant(s) qua the balance amount payable to the claimant under the contract. Benefit of such an acknowledgement would not be lost merely because a set off is claimed, inasmuch as clause (a) of the Explanation to Section 18, inter alia, provides that an acknowledgement for the purposes of this Section may be sufficient though it is accompanied by a refusal to pay, or is coupled with a claim to set off. This would imply that, subject to fulfilment of other conditions of Section 18, once the defendant acknowledges that he owes a certain sum to the plaintiff there would be sufficient acknowledgment within the meaning of Section 18, even though he states that he is entitled to set off against this sum another sum which the plaintiff owes him. Thus, in our view, the minutes of meeting dated 19 April 2018, though claims a set off, is a valid acknowledgement of the existing liability within the ambit of Section 18 of the 1963 Act and it extends the period of limitation for a period of 3 years from the date it was made. In consequence, the claim of Enexio, made on 2 May 2019, was well within the period of limitation. Sub-issue (b) is decided in the aforesaid terms.

111 Minutes are quoted in paragraph 7 of this judgment

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APPELLANT(S) COUNTERCLAIM IN RESPECT OF COST OF REPAIR/ REPLACEMENT OF GEAR BOX AND FAN MODULES BARRED BY TIME

120Copy pinpoint120. Now, we shall consider whether the counterclaim was barred by limitation. Before that, we must understand the true nature of a counterclaim. A counterclaim is a claim made by a defendant in a suit against the plaintiff. It is a claim, independent of and separable from the plaintiff’s claim, which can be enforced by a cross action. Counterclaim preferred by the defendant in a suit is a cross suit and even if the suit is dismissed, counterclaim shall remain alive for adjudication. The purpose of the scheme relating to counterclaim is to avoid multiplicity of proceedings.112

121Copy pinpoint121. In Afcons Gunanusa JV (supra), after considering a plethora of precedents and authoritative texts, this Court summarized the legal principles relating to counterclaims, in the context of arbitral proceedings, as under: “168. On our analysis of the statutory framework of the Arbitration Act and the CPC, related academic discourse and judicial pronouncements, the following conclusions emerge: (i) Claims and counter-claims are independent and distinct proceedings; (ii) A counter-claim is not a defense to a claim and its outcome is not contingent on the outcome of the claim; (iii) Counter-claims are independent claims which could have been raised in separate proceedings but are permitted to be raised in the same proceeding as a claim to avoid a multiplicity of proceedings; and (iv) the dismissal of proceedings in relation to the original claim does not affect the proceedings in relation to the counter-claim.”

112 Rajni Rani v. Khairati Lal, (2015) 2 SCC 682, paragraph 9.6.

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122Copy pinpoint122. Section 23 (2A)113 of the 1996 Act gives respondent to a claim a right to submit a counterclaim or plead a set off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set off falls within the scope of the arbitration agreement. Section 43 (1)114of the 1996 Act provides that the 1963 Act shall apply to arbitrations as it applies to proceedings in court. Section 3(2)(b)115 of the 1963 Act provides that any claim by way of set off or a counterclaim, shall be treated as a separate suit and shall be deemed to have been instituted – (i) in the case of a set off, on the same date as the suit in which the set off is pleaded; (ii) in the case of a counterclaim, on the date on which the counterclaim is made in court. It is thus clear that a counterclaim is to be treated as a separate suit for the purposes of limitation and, to ascertain whether it is within limitation, the date of reckoning is the date when the counterclaim is filed and not when the claim/ suit is filed. At this stage, it be noted that Section 21 of the 1996 Act is not relevant for determining the date of institution of a counterclaim as it is for a claim. There is however one exception. Where the respondent against whom a claim is made, had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counterclaim in the arbitration proceedings initiated by the claimant, instead of filing a separate application under Section 11 of the 1996 Act, the limitation for such counterclaim should be computed, as on the date of service of notice of such claim on the claimant and not on the date of filing of the counterclaim.116

123Copy pinpoint123. In Thomas Mathew v. KLDC Ltd.117 this Court, in the context of a claim referable to Article 55 of the Schedule to the 1963 Act, by relying on Section 3 (2)(b) of the 1963 Act, held that a

113 Section 23. Statement of claim and defence.— (1) ….. (2) ….. (2-A) The respondent, in support of his case, may also submit a counter-claim or plead set-off, which shall be adjudicated by the arbitral tribunal, if such counter-claim or set-off falls within the scope of the arbitration agreement. 114 See Footnote 64 115 See Footnote 66 116 See State of Goa v. Praveen Enterprises, (2012) 12 SCC 581, paragraph 20; and Voltas Ltd. v. Rolta India Ltd., (2014) 4 SCC 516. 117 (2018) 12 SCC 560, paragraph 9

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counterclaim is required to be treated as a separate suit and the period of limitation would be three years from the date of accrual of the cause of action.

124Copy pinpoint124. It is therefore well settled that a counterclaim is like a cross suit, or a separate suit, and the limitation of a counterclaim is to be counted from the date of accrual of the cause of action which it seeks to espouse. As a logical corollary thereof, it is quite possible that even though a suit or a claim is within the period of limitation, the counterclaim may well be barred by limitation, if the cause of action espoused therein accrued beyond the prescribed period of limitation.

125Copy pinpoint125. In the instant case, the counterclaims were for: (a) liquidated damages for the delay in supply and erection; (b) reimbursement of customs duties; (c) cost of erection of horizontal and vertical exhaust duct through an external agency; (d) cost of repair/ replacement of Gear Box, due to alleged defective supply; and (e) cost of repair/ replacement of Fan Modules, due to alleged defective supply. Out of the above five counterclaims, three counterclaims, namely, (a), (b) and (c), were dealt by the Arbitral Tribunal on merits, as they stood recited in the minutes of meeting dated 19 April 2018. Whereas the remaining two, namely, (d) and (e), were treated as barred by limitation because in respect thereof there was no recital / material to show that they were subject matter of negotiation between the parties. The counterclaim (a) (i.e., relating to liquidated damages for the delay) was rejected because the Tribunal found the claimant entitled to extension of time as the ACC Unit project envisaged Hook-up / connection to the turbine generator flange which could took place only in February 2015 as turbine generator installation, which was being done by another contractor employed by OPG, got delayed.118 The counterclaim (b) (i.e., reimbursement of customs duties) was rejected because, according to the Tribunal, as per the Supply Purchase Order, all Taxes, duties and levies were to be borne by the purchaser (appellant(s) herein).119 Insofar as counterclaim (c) was concerned, it was allowed and the counterclaimant was allowed set off in respect thereof. The summary of how each of the counterclaims were dealt with, is found in paragraph 17 of the Award.

118 See paragraphs 13.13 (c) and 13.15 of the Award, extracted in 88 (10) and 88 (19) above. 119 Paragraph 14 of the Award.

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126Copy pinpoint126. We have, therefore, to consider whether the two counterclaims (d) and (e) were justifiably held time-barred or not. More particularly, because claimant’s claim which arose out of same contract was found within limitation.

127Copy pinpoint127. Since counterclaim is to be treated as a separate suit or a cross-suit, its limitation would have to be determined independent of the claim, based on the cause of action espoused therein. Therefore, we would have to determine as to when the right to seek for the counterclaims (d) and (e) accrued. In this context, while dealing with the previous issue i.e., regarding the claim being within limitation, we noticed a few dates which, in our view, would be helpful in determining the present issue. These dates are: (a) May 2015 - when ACC Unit got commissioned and was operating satisfactorily, as per certificate dated 2 March 2017 issued by OPG. (b) 21 September 2015 – deemed date of takeover of the project i.e., when all alleged defects were removed by the claimant, and a request was made by the claimant to the purchaser (appellant(s) herein) to undertake performance guarantee test. (c) 19 March 2016 – when the period of 180 days of guaranteed performance expired. This date is important because, as per the contract, if, within the aforesaid period, the performance guarantee test is not undertaken, despite request of the supplier, it is to be deemed that the supplier has discharged its liability of a guaranteed performance of 180 days.

128Copy pinpoint128. The Tribunal takes 21 September 2015 as the start point of limitation for the counterclaim on the premise that it would be the date when the Takeover Certificate is deemed to have been issued. That is, the supplier had fulfilled its obligations. On basis thereof, the Tribunal found counterclaims (d) and (e) barred by time as the counterclaim was filed on 15 July 2019 i.e., more than three years later, and there existed no acknowledgement in respect thereof.

129Copy pinpoint129. However, while dealing with the previous issue, we found 19 March 2016 as the start point of limitation for the claim because that is the date when 180 days period of guaranteed performance, which was part of supplier’s liability, expired. Be that as it may, whether we count the limitation period from 21 September 2015 or 19 March

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2016, the counterclaim which was filed on 15 July 2019 was beyond the prescribed period of three years inasmuch as its cause of action could not have arisen after 19 March 2016 because by 19 March 2016, the supplier / contractor had fulfilled its obligation of guaranteed performance for 180 days. Minutes of meeting dated 19 April 2018 did not extend limitation of counterclaims (d) and (e)

130Copy pinpoint130. In these circumstances, the question that falls for our consideration is whether the minutes of meeting dated 19 April 2018 extended the period of limitation for counterclaim(s)120 (d) and (e) as it did for the claim as well as counterclaims (a) (b) and (c). The contention on behalf of the appellant(s) is that the claim and the counterclaim arose out of same contractual relationship, therefore, if the acknowledgment dated 19 April 2018 extends limitation of one part of the claim/ counterclaim, it would automatically extend limitation of the remaining part of the claim / counterclaim. Per contra, learned counsel for Enexio (R-1) contended that there could be multiple claims arising out of the same contract, if the acknowledgment extending limitation under Section 18 of 1963 Act relates to only few, limitation for the rest would not get extended. Thus, the Tribunal committed no such error which may warrant interference under Section 34 of the 1996 Act.

131Copy pinpoint131. We have given our thoughtful consideration to the rival submissions. The minutes of meeting dated 19 April 2018 was drawn within three years of accrual of the cause of action for the claim, whether we count limitation from 19 March 2016 (as determined by us) or 21 September 2015 (as determined by the Tribunal). Therefore, the crucial question, which we must consider and decide, is whether those minutes could be considered as an acknowledgment of subsisting liability qua counterclaims (d) and (e).

132Copy pinpoint132. The minutes121 of meeting dated 19 April 2018 incorporates a table giving specific description of the items and their corresponding value on which parties, purportedly, admitted their respective liabilities. Interestingly, the balance amount payable to the contractor (Enexio - R-1) finds mention there and so does contractor’s liability towards

120 For description of counterclaims (a) to (e), see paragraph 126 of this judgment. 121 Extracted in paragraph 7 of this judgment

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liquidated damages, customs duty, dismantling – TG Building and ACC Duct fabrication, which have all been addressed on merits in the Award. But, there is no mention of items referable to counterclaims (d) and (e), which have been held time barred. Further, the minutes do not state that parties acknowledge, or are willing to settle, any other, or all their rights/ obligations, arising from, or under, the contract. Thus, the acknowledgment is specific and in respect of certain items only.

133Copy pinpoint133. In J.C. Budhraja (supra) this Court held that a writing to be an acknowledgement of liability must involve an admission of a subsisting jural relationship between the parties and conscious affirmation of an intention of continuing such relationship regarding existing liability. The Court added that the admission need not be in respect of any precise amount nor by expressed words. However, it was clarified that any admission of jural relationship in regard to a certain sum due, or a pending claim, cannot be an acknowledgement for a new additional claim for damages.122 That apart, in J.C. Budhraja (supra), this Court rejected an argument that if there was acknowledgment of any liability in regard to a contract, then one was at liberty to make any claim in regard to the contract. Relevant portion of the judgment is extracted below: “27. The appellant next contended, relying on Section 18 of the Limitation Act, that as there was acknowledgement of liability in regard to Contract no. 30/F-2 in the letter dated 28-10-1978, and the notice invoking arbitration was issued on 4-6-1980 within three years from 28-10-1978, he was at liberty to make any claim in regard to the contract before the arbitrator even though such claims had not been made earlier and all such claims have to be treated as being within the period of limitation. Such a contention cannot be countenanced. As noticed above, the cause of action arose on 14-4-1977. But for the acknowledgement on 28- 10-1978, on the date of invoking arbitration 4-6-1980, the claims could have been barred by time as being beyond the period of limitation. The limitation is extended only in regard to the liability which was acknowledged in the letter

122 See paragraph 21 of J.C. Budhraja (supra) extracted in paragraph 119 of this judgment.

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dated 28-10-1978. It is not in dispute that either on 28-10- 1978 or on 4-3-1980, the contractor had not made the fresh claims aggregating to Rs.67,64,488 and the question of such claims made in future for the first time on 27-6-1986, being acknowledged by OMC on 28-10-1998 did not arise.” (Emphasis supplied)

134Copy pinpoint134. On the question of extension of limitation, where only a part of the liability, or a specific amount, is acknowledged during the period of limitation, there are long-standing decisions of various High Courts upholding the same principle as is discernible from the decision in J.C. Budhraja (supra). Some of these decisions are being noticed below.

135Copy pinpoint135. In Bans Gopal v. Mewa Ram123 in the context of applicability of Section 19 of the 1908 Act, which is pari materia Section 18 of the 1963 Act, the question before the Allahabad High Court was, whether a creditor could recover Rs.585 when acknowledgment was in respect of Rs.200 only. One of the arguments was that acknowledgment of a sum of Rs.200 cannot be taken as an acknowledgment of a sum of Rs.585. Accepting the argument, the Court held: “4. ….. It is true that if no definite sum had been mentioned and there had been an acknowledgement in general terms the amount of the debt would have been discovered from the evidence as mentioned in Explanation 1, Section 19 of the Limitation Act. In the present case, however, there is a definite acknowledgement of Rs.200 and if this is to be used to save limitation, it could be done only with respect to the sum acknowledged, and not with respect to any sum that may be proved to be due on that date.” (Emphasis supplied)

136Copy pinpoint136. In Kali Das Chaudhuri v. Drapaudi Sundari Dassi124 for the purpose of seeking the benefit of extension of limitation, the letter sought to be relied by the plaintiff as an acknowledgement made by solicitor of the defendant stated thus:

123 AIR 1930 All 461 : 1929 SCC OnLine All 152 124 AIR 1918 Cal 294: 1917 SCC OnLIne Cal 23

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“Your client Babu Hari Prasad Saha was the gomoshta at Calcutta in the employ of the firm of Dwarka Nath Makhan Lal Saha, remunerated by a share of the profits, and being liable for a proportionate share of the losses. He was struck by paralysis in the Bengali year 1307, from which time he could not do active work. He, however, continued to be in Calcutta till 1311 when he left Calcutta and went away to his home at Urapara. Our clients have all along been ready and willing to have the accounts duly taken up to this time that your client retired from Calcutta. Your client as the managing gomostha has to make up and explain the accounts up to that time. Our clients will offer every facility in the matter of the adjustment of accounts. …… It is not the fact that your client retired on 27th June 1910. He ceased to do active work in 1307 and retired in 1311. Our clients have no recollection of any notice from Messrs Dutta and Guha. Our clients are ready to pay to your client whatever may be found due on an adjustment of the accounts up to 1311.” Interpreting the aforesaid letter, in the context of plaintiff’s argument that it be treated as an acknowledgment of subsistence of relationship up to 27 June 1910, the Calcutta High Court held: “Now, as I read that letter, that contains three material statements: it contains a statement that plaintiff was gomostha of the defendants; the second statement is that he was employed up to 1311 (BS) (corresponding with 1904 - 1905], and no longer; and the third statement is that the defendants were willing and ready to pay to the plaintiff whatever might be found due to him on an adjustment of the accounts up to 1311. Now, what is the claim of the plaintiff in this case? He brought his suit in order to establish his right to have the accounts taken upon the basis that he was a partner, and that he was entitled to have the accounts taken down to June 1910. The defendants’ solicitors wrote that he was not a partner and that he was not entitled to have the accounts taken up to 1910, but that he was only entitled to have the accounts up to 1311 (BS) (corresponding with 1904 –

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1905). I cannot understand how that can be taken to be an acknowledgement of the right which the plaintiff was endeavoring to substantiate in his plaint. I can understand it being said and argued with considerable force that it was an acknowledgement of some part of the plaintiffs claim, inasmuch as his claim was to have the accounts taken up to June 1910, and inasmuch as the defendants admitted that he was entitled to have the accounts taken up to 1904 - 1905: to that extent it is an acknowledgment, but in my judgment it is not an acknowledgement of the right alleged by the plaintiff, namely, that he was entitled to have the accounts taking up to June 1910.” (Emphasis supplied)

137Copy pinpoint137. Having considered the judicial precedents on the subject, in our view, to extend the period of limitation with the aid of Section 18, the acknowledgment must involve an admission of a subsisting jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship regarding an existing liability. Such intention can be gathered from the nature of the admission. In other words, the admission in question need not be express, or regarding a precise amount, but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as on the date of the statement. However, where an acknowledgement is in respect of a specified sum of money or a specific right only, and not in general terms, it would extend the period of limitation only in respect thereof, and not of other claims which, though may have arisen out of same jural relationship, are not specified therein. In other words, where an acknowledgement of liability is made only with reference to a portion of the claim put forward by the plaintiff/ claimant, it would extend limitation only in respect of such portion, and not of the entire claim of the plaintiff.

138Copy pinpoint138. Reverting to the case in hand, the minutes of meeting dated 19 April 2018 made no reference to the items referable to counterclaims (d) and (e). There is also no acknowledgment in general terms in regard to liabilities subsisting under the contract. Therefore, in our view, the said minutes could not be treated as an acknowledgment for the purpose of extending limitation of counterclaims (d) and

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(e), which were not specified therein. In consequence, when counterclaims (d) and (e) were otherwise barred by limitation on the date of filing of counterclaim, the Tribunal was legally justified in rejecting them as barred by limitation. Sub-issue (c) is decided in the aforesaid terms. REJECTION OF PRAYER TO DECLARE DEBIT NOTES INVALID DID NOT AFFECT ENEXIO’S CLAIM FOR THE OUTSTANDING PRINCIPAL AMOUNT.

139Copy pinpoint139. We shall now consider whether rejection of Enexio’s prayer to declare debit notes invalid, had adversely affected the claim for the outstanding principal amount in respect of the goods supplied/ work done under the contract. In this regard, at the outset, we must bear in mind that it is trite that limitation bars the remedy but does not extinguish the right, save in a case which is covered by Section 27 of the 1963 Act.125 It is equally settled that in a suit or a claim, multiple reliefs may be claimed by virtue of Order II Rule 3 of the Code of Civil Procedure, 1908,126 that is, the plaintiff may unite in the same suit several causes of action against the same defendant(s). The period of limitation is prescribed by the Schedule to the 1963 Act.127 The Schedule to the 1963 Act is divided into three Divisions. The First Division, which deals with suits, is relevant for the purposes of this case inasmuch as by virtue of Section 43 (1) of the 1996 Act the provisions of the 1963 Act apply to arbitrations as they apply to proceedings in Court. The First Division of the Schedule comprises of ten (X) Parts. Each Part deals with suit(s) of a different nature. The period of limitation, including its start point, is dependent on its nature as well as event, if any, as specified in the Article(s) of the Schedule. Therefore, when CPC, in certain circumstances, permits combining in one action two or more distinct and independent claims, it is quite possible that one of the claims may be barred by limitation and the other may be within time.128

125 Prem Singh & Ors v. Birbal & Ors., (2006) 5 SCC 353, paragraphs 11 and 12. 126 Order II Rule 3, CPC.— Joinder of causes of action.— (1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit. (2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matter at the date of instituting the suit. 127 See Section 2(j) of the Limitation Act, 1963. 128 See Mohamed Ghasita v. Siraj-ud-Din and Ors. (supra), extracted in paragraph 97 of this judgment.

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140Copy pinpoint140. In the instant case, as already held, the claim for compensation i.e., recovery of outstanding principal amount was covered by Article 55 of the Schedule and the start point of limitation was 19 March 2016; whereas for the relief of declaration, Article 58 was applicable. For which, the start point of limitation was the date when the debit note was communicated to Enexio i.e., the claimant. According to the arbitral tribunal, one debit note was issued on 24 August 2015, which was acknowledged by the claimant vide letter dated 28 August 2015, and the other was issued on 12 January 2016. Therefore, the period of limitation i.e., three years expired before 2 May 2019, that is, when request for arbitration was received by ICC Secretariat. In these circumstances, the relief for declaratory relief was held barred by limitation, and rightly so, by the arbitral tribunal.

141Copy pinpoint141. Now, the question is whether rejection of declaratory relief impacted the relief for compensation. Answer to it, in our view, is obviously no. The reason is that the relief for compensation was not a consequential relief i.e., dependent on debit note(s) being declared invalid because issuance of debit note(s) was a unilateral act of the employer which on its own did not extinguish the right of the contractor. No doubt, where the relief sought is consequential to the declaration, and declaratory relief is found barred by time, the prayer for consequential relief will also fail.129 But where declaration is just an optional relief i.e., on which the main relief is not dependent, rejection of it as barred by limitation would not extinguish the claim in respect of which substantive relief is sought. In the instant case, debit note was unilaterally issued by the employer of the contractor. It, therefore, did not bind the contractor. In such circumstances, it was open for the contractor to sue for its dues without seeking a declaration qua the debit notes. Consequently, rejection of the declaratory relief as barred by limitation, in our considered view, did not have a material bearing on Enexio’s claim against the appellant(s) herein for the outstanding principal amount payable under the contract. And, further, that amount, as shown debited in the debit note(s), was not to be automatically adjusted against the principal outstanding amount payable to Enexio. In our view, while deciding the claim of Enexio, the arbitral tribunal was well within its remit to adjudicate upon the

129 See Padhiyar Prahladji Chenaji v. Maniben Jagmalbhai & Ors., (2022) 12 SCC 128, paragraph 17

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issue whether such amount should be adjusted or not against the outstanding principal amount payable to Enexio. For the reasons aforesaid, there is no perversity in the award on this count. Sub- issue (d) is decided accordingly. THE ARBITRAL TRIBUNAL DID NOT ADOPT DIFFERENT YARDSTICK / REASONING OF THE ARBITRAL TRIBUNAL IS NOT FLAWED OR PERVERSE

142Copy pinpoint142. The next argument on behalf of the appellant(s) is that the arbitral tribunal adopted different yardstick for adjudicating the claim than what was adopted for the counterclaim; and the reasoning is completely flawed and perverse. By referring to paragraphs 16.03 (d)130 and 16.04131 of the award it was submitted: (a) If negotiations could extend limitation for the claim, it would extend limitation for the counterclaim as well, because both arise from same contractual relationship. Moreover, it is well settled that negotiations by themselves do not extend limitation as held by this Court in Geo Miller (supra) and B & T AG (supra). (b) If the minutes of meeting dated 19 April 2018 could be relied on to hold that appellant(s) had admitted their liability qua the claim for the outstanding principal amount, it ought to have been relied also for upholding Enexio’s liability qua liquidated damages for delay and customs duty.

143Copy pinpoint143. At first blush, the above arguments appear attractive, but, when we test them by reading the award in its entirety, we find that the tribunal did not reject the counterclaims qua liquidated damages and custom duties as barred by limitation. Rather, rejected them on merit. Liquidated damages were denied because Enexio was entitled to 539 days extension for completion; and customs duties were found payable by the purchaser. The findings thereon are based on construction of the terms of the contract with reference to the conduct of the parties, therefore, it does not call for interference under Section 34 of the 1996 Act.

130 See paragraph 15 of this judgment wherein paragraph 16.03(d) of the award has been extracted. 131 See paragraph 16 of this judgment wherein paragraph 16.04 of the award has been extracted.

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144Copy pinpoint144. As far as extension of limitation by negotiation is concerned, a careful look at paragraph 16.03(d) of the arbitral award would indicate that there is a reference to two more aspects, ‘apart from meaningful negotiations’, to conclude that limitation for the claim was saved. These are: (a) the minutes of meeting dated 19 April 2018; and (b) the written offer of OPG (respondent(s) to the claim) dated 26 May 2018 to settle the matter. We have already found, while deciding sub- issues (b) and (c), that the minutes of meeting dated 19 April 2018 tantamounted to an acknowledgment under Section 18 of the 1963 Act qua the items mentioned therein. We also noticed that it carried no mention regarding those items on which counterclaims were based, and therefore, they were rejected as barred by limitation. In these circumstances, though paragraph 16.03(d) of the award gives the impression that limitation was extended because negotiations were ongoing in respect of items related to the claim, the limitation was extended by applying the principle of acknowledgment as enshrined in Section 18 of the 1963 Act on basis of two documents i.e., the minutes of meeting dated 19 April 2018; and the offer letter dated 26 May 2018. Importantly, the principle of extension of limitation by acknowledgement was applied in respect of only those claims regarding which a mention was there in the minutes of meeting dated 19 April 2018. In respect of claims regarding which there was no recital in the minutes, the tribunal observed that they were not part of the negotiations. Thus, though the term used in paragraph 16.03(d) of the award is ‘negotiation(s)’, the tribunal, by referring to minutes dated 19 April 2018 and settlement offer dated 26 May 2018, indicated the underlying legal principle / rationale behind its conclusion. We, therefore, conclude that though reasons recorded in the award at first blush appear insufficient, or a bit confusing, but, when those reasons are examined in the context of the documents placed and the arguments advanced, the underlying reasons, which form basis of the conclusion, are not only intelligible but sound. For the aforesaid reasons and in the light of the law expounded in paragraph 71.6 above, we reject the submission of the appellant(s)’ counsel that the reasoning of the arbitral tribunal is flawed/perverse or that the award is vitiated by adopting different yardstick for adjudging the claim than what was adopted for the counterclaim. Even otherwise, the mistake, if any, committed by the arbitral tribunal in using the words ‘ongoing negotiations’ in place of acknowledgement is trivial does not go to the root of the matter as to have a material bearing

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on the conclusion. Therefore, for this mistake alone, the award is not liable to be set aside.

145Copy pinpoint145. The other submission on behalf of the appellant that the arbitral tribunal was obliged to accept the admission contained in the minutes of meeting dated 19 April 2018 qua liquidated damages and customs duties, because it relied on it for extending the limitation, is equally unacceptable. Reason being that acknowledgment is just a piece of evidence, like an admission. An admission can always be explained. Therefore, even if it is used for extending the limitation, it cannot be regarded as conclusive proof of either the claim or the counterclaim regarding which there is an acknowledgement. Because the Court or the Tribunal would have to decide the claim or the counterclaim, if within limitation, upon consideration of the entire evidence led before it. No doubt, in that process, the acknowledgement would also have to be considered as a piece of evidence. Thus, in our view, the tribunal was well within its jurisdiction in drawing a conclusion, based on consideration of the entire evidence, at variance with the recitals in the acknowledgement.

146Copy pinpoint146. Otherwise also, as is clear from the award, the claimant had challenged the recital in the minutes i.e., regarding its liability for liquidated damages and customs duties, by claiming that it was economically coerced into making such admission. Circumstances, proven on record, indicated that (a) soon after the meeting dated 19 April 2018, the claimant had sent a denial of its liability; and (b) later, on 26 May 2018, the appellant(s) herein had made an offer of Rs.3 crores to Enexio towards full and final settlement of all its claim. In these circumstances, based on the evidence led by the parties, the tribunal was well within its remit to conclude that the claimant was not liable in respect of those items which formed part of the counterclaim. Such conclusion, which is based on proven circumstances, is a plausible view and cannot be termed perverse. Hence, it is not amenable to interference in a challenge under Section 34 of the 1996 Act. In our view, therefore, the learned Single Judge of the High Court erred in law while interfering with the arbitral award.

147Copy pinpoint147. Before closing discussion on the issue, it would be necessary to address an alternative submission raised on behalf of the appellants. It was argued that the learned Single Judge and the Division Bench of the High Court, admittedly, were exercising jurisdiction under

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Sections 34 and 37, respectively, of the 1996 Act. As, while exercising jurisdiction under Section 34, the Court does not sit in appeal over the award, it cannot substitute the reasoning in the award with its own. Likewise, the appellate court exercising power under Section 37 cannot have greater power than what a Court possesses under Section 34. Consequently, it was argued, the appellate court (i.e., the Division Bench of the High Court) exceeded its jurisdiction while providing its own reasons to support the conclusion in the award. It was also urged that in absence of proper reasons in the award, the only course available was to set aside the award with liberty to the parties to undertake fresh arbitration.

148Copy pinpoint148. We have given due consideration to the above submission. In our view, a distinction would have to be drawn between an arbitral award where reasons are either lacking/unintelligible or perverse and an arbitral award where reasons are there but appear inadequate or insufficient.132 In a case where reasons appear insufficient or inadequate, if, on a careful reading of the entire award, coupled with documents recited/ relied therein, the underlying reason, factual or legal, that forms the basis of the award, is discernible/ intelligible, and the same exhibits no perversity, the Court need not set aside the award while exercising powers under Section 34 or Section 37 of the 1996 Act, rather it may explain the existence of that underlying reason while dealing with a challenge laid to the award. In doing so, the Court does not supplant the reasons of the arbitral tribunal but only explains it for a better and clearer understanding of the award.

149Copy pinpoint149. In the instant case, the appellate court took pains, and rightly so, to understand and explain the underlying reason on which the claim of Enexio was found within limitation. As noticed above, paragraph 16.03 (d) of the award contains the reason based on which the arbitral tribunal concluded that Enexio’s claim was within limitation. However, in paragraph 16.03 (d), the arbitral tribunal failed to state, in so many words, that it was treating the minutes of meeting dated 19 April 2018 as an acknowledgment within the meaning of Section 18 of the 1963 Act. This omission on the part of the arbitral tribunal was trivial and did not travel to the root of the award, therefore, in our

132 See paragraphs 71.² to 71.6 of this judgment.

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view, the appellate court was well within its jurisdiction to explain the underlying legal principle which the arbitral tribunal had applied; and in doing so, it did not supplant the reasons provided in the award. In this view of the matter, the impugned order of the Division Bench does not suffer from any legal infirmity. Sub-issue (e) is decided in the aforesaid terms. SUMMARY OF OUR CONCLUSIONS

150Copy pinpoint150. In the light of the analysis above, we summarize our conclusions as follows: (i) Though the ACC Unit /project was of OPG, Gita Power, as the holding company of OPG, had actively participated in the formation of the contract for the project. Not only did it place purchase order(s) on Enexio but made advance payment(s) thereunder to Enexio, which were subsequently affirmed by OPG. The two, therefore, not only acted as a single economic entity but as agents of each other. Hence, the arbitral tribunal was justified in holding that Gita Power was bound by the arbitration agreement and jointly and severally liable along with OPG to pay the awarded amount. (ii) The claim of Enexio was an indivisible claim for compensation in lieu of goods supplied, and work done, based on breach of the contract, therefore limitation for the claim was governed by Article 55, and not by Articles 14, 18 and 113, of the Schedule to the 1963 Act. (iii) The claimant’s claim for the outstanding principal amount matured on 19 March 2016. Therefore, limitation started to run from that date. However, even if we count limitation from 21 September 2015 (as found by the Tribunal) it will have no material bearing on the award for the reason indicated below. (iv) The limitation for the claim as well as counterclaim(s), other than those relating to cost of repair/replacement of gear boxes and fan modules, stood extended, under Section 18 of the 1963 Act, on the basis of acknowledgement made in the minutes of meeting dated 19 April 2018, and, therefore, those were within limitation as on the date of : (a) commencement of arbitration (i.e. 2 May 2019); and (b) the date of filing counterclaim (i.e. 15 July 2019) and were rightly considered on merit.

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(v) The counterclaims qua cost of repair /replacement of gear boxes and fan modules were rightly held barred by time as in respect thereof there was no recital in the minutes of meeting dated 19 April 2018. (vi) Rejection of prayer to declare debit notes invalid, on ground of limitation, had no adverse impact on the claimant’s claim for compensation, which was well within the extended period of limitation.

151Copy pinpoint151. Based on our conclusions above, we are of the view that there is no palpable error in the arbitral award as to be termed ‘patently illegal’ / ‘perverse’, or in conflict with public policy of India. Therefore, the Division Bench of the High Court was justified in setting aside the judgment and order of the Single Judge and restoring the arbitral award. Accordingly, the appeal(s) fail and are hereby dismissed. Parties to bear their own costs.

152Copy pinpoint152. Pending application(s), if any, stand disposed of.

Result of the Case: Appeal dismissed.

† Headnotes prepared by: Nidhi Jain