Order Dismissing Application U/S 23(3) A&C Act Only Procedural; Does Not Qualify As ‘Interim Award’: Delhi High Court
The Delhi High Court dismissed a Petition filed under Section 34 of the A&C Act against the Arbitral Tribunal's Order, which dismissed an Application under Section 23(3).
The Delhi High Court held that an Order dismissing an Application under Section 23(3) of the Arbitration and Conciliation Act, 1996 (A&C Act) is only a procedural one and does not qualify as an ‘interim award’.
The Court held thus in a Petition filed under Section 34 of the A&C Act against the Order of the Arbitral Tribunal, which dismissed an Application under Section 23(3).
A Single Bench of Justice Subramonium Prasad remarked, “This Court is rejecting the present petition only on the short ground that an order dismissing an application under Section 23(3) of the Arbitration & Conciliation Act is only a procedural order and does not qualify as an ‘interim award’ amenable to challenge under Section 34 of the Arbitration & Conciliation Act.”
The Bench enunciated that an Order rejecting an Application under Section 23(3) of the A&C Act does not decide any matter with respect to which it has to make a final award.
Advocate Puneet Taneja represented the Petitioner while Advocate Pawan Upadhyay represented the Respondent.
Facts of the Case
The Petitioner floated a tender for "Construction of Roads and Drains in Solapur STPP" for a total order value of Rs. 22,35,16,730/- and the Respondent made a bid. A Letter of Award was issued in favour of the Respondent and the Contract Agreement was executed between the parties. The work was to be completed within 15 months from the scheduled date of work. The disputes arose between the parties under the said Letter of Award and a Petition under Section 11(6) of A&C Act was filed by the Respondent, for the appointment of an Arbitrator. The High Court appointed a former Judge of the Apex Court as the Sole Arbitrator to adjudicate the disputes between the parties under the agreement.
The Petitioner filed 9 counter-claims totalling to Rs. 1,19,27,70,295/- and contended that as per the Contract, the dispute resolution process by an Arbitrator through arbitration can adjudicate claims and counter claims only to a maximum of Rs. 25 crores. Resultantly, an Application under Section 23(3) was filed, withdrawing Claim No.1 which was the loss on account of non-inclusion of capital cost in the tariff amounting to Rs. 21,51,25,592/- and counter-claim No. 5 which was the return on equity amounting to Rs. 83,36,11,670/-. The said Application was rejected by the Arbitrator stating that once the claims and counter-claims have been filed, they are not amenable to any change as agreed by the parties vide the contract agreement. Hence, this was challenged before the High Court.
Reasoning
The High Court in the above regard, observed, “A Coordinate Bench of this Court in Punit A. Bhardwaj v. Rashmi Juneja , 2022 SSC OnLine Del 2691, while deciding a challenge under Section 34 of the Arbitration & Conciliation Act to an order passed by the Tribunal rejecting an application for amendment of the claims has held that an application under Section 23(3) of the Arbitration & Conciliation Act does not amount to an interim award.”
The Court said that it is always open for the Petitioner to challenge the award on the ground that the Arbitrator did not have the jurisdiction to entertain a dispute beyond Rs. 25 crores.
“It is pertinent to mention that the Arbitrator has rejected the application, on a reading of the arbitration clause stating that once the arbitration has been invoked, then no party is allowed to amend the claims, on the ground that the Petitioner is considered to have given up his right to pursue the Counter Claims at any other forum”, it added.
The Court refused to make any comment on the said finding of the Arbitrator, leaving it open for the Petitioner to challenge the same after the award is pronounced.
Accordingly, the High Court dismissed the Petition.
Cause Title- NTPC Limited v. Starcon Infra Projects India Pvt Ltd (Neutral Citation: 2025:DHC:1572)
Appearance:
Petitioner: Advocates Puneet Taneja, Amit Yadav, Anil Kumar, and Manmohan Singh Narula.
Respondent: Advocates Pawan Upadhyay, Rishab Khare, and Anmol Wadhwa.
