Case title: NHAI v. Transstroy (India) Limited

Facts: Appellant NHAI entered into an Construction Agreement with the Transstroy (India) Limited (โ€œRespondentโ€) for improvement of Karaikudi-Ramanathapuram Section of National Highway No. 210. Certain disputes arose during the performance of the Contract for which respondent invoked Arbitration.

๐Ÿ‘‰ After filing Statement of Claim, NHAI filed a letter in the Tribunal to seek extension for filing of its counter claim. The request was rejected by the Tribunal through an email, on the grounds that no Application had been filed by NHAI to place its counter claim on the record.

๐Ÿ‘‰ Thereafter, NHAI moved an application under Section 23(2A) of the Arbitration and Conciliation Act, 1996 (โ€œthe Actโ€) to again place its counter claim on the record. The Tribunal via order dated 15.09.2017 rejected NHAIโ€™s application on the grounds that the procedure envisaged under Clauses 26.1 and 26.2 of the Contract had not been followed by NHAI.

๐Ÿ‘‰ The Tribunal was of the opinion that as the dispute raised in the counter claim was beyond the scope of Arbitration therefore Tribunal cannot adjudicate on the same.

SCI’s Sequitur:

๐Ÿ‘‰ The Honโ€™ble supreme court of India observed that when the Act has a specific provision for filing of counter claim, then there is no reason to curtail the Appellantโ€™s right to submit counter claim. Further, it was observed by the Apex Court that the High Court in its judgment had lost sight of the fact that, by denying counter claim to be placed on record various parallel proceedings will emerge.

๐Ÿ‘‰ The Honโ€™ble Supreme Court of India held that by not permitting the nhai to file the counter claim would defeat the object and purpose of permitting to file the counter claim/set off as provided under Section 23(2A) of the Arbitration Act, 1996.

๐Ÿ‘‰ The High Court had narrowly interpreted the Clause 26 of the Contract and had therefore erred by rejecting the application under Section 34/37 of the Act and also by confirming the order passed by the Arbitral tribunal.

๐Ÿ‘‰ The Honโ€™ble Supreme Court of India by acknowledging the above reasons, quashed and set aside the order of the Tribunal dated 15.09.2017 and impugned judgment of the High Court and permitted NHAI to file its counter claim before the Tribunal.

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