M/S. INDIAN FARMERS FERTILIZER CO-OPERATIVE LIMITED versus M/S BHADRA PRODUCTS

Citation: [2018] 1 S.C.R. 848 · Decided: 23-01-2018 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

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848
SUPREME COURT REPORTS
[2018] 1 S.C.R.
M/S. INDIAN FARMERS FERTILIZER CO-OPERATIVE
LIMITED
v.
M/S BHADRA PRODUCTS
(Civil Appeal No. 824 of 2018)
JANUARY 23, 2018
[R. F. NARIMAN AND NAVIN SINHA, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 2(c), 31(6), 32
and 34 – Interim Arbitral Award – Whether an award delivered by
an Arbitrator, which decides the issue of limitation, can be said to
be an interim award and whether such interim award can then be
set aside u/s.34 of the Act – Held: Insofar as first question is
concerned, yes, the language of s.31(6) is advisedly wide in nature –
A reading of the said sub-section makes it clear that the jurisdiction
to make an interim arbitral award is left to the good sense of the
arbitral tribunal and that it extends to “any matter” with respect to
which it may make a final arbitral award – The expression “matter”
is wide in nature and subsumes issues at which the parties are in
dispute – It is clear, therefore, that any point of dispute between the
parties which has to be answered by the arbitral tribunal can be
the subject matter of interim arbitral award – Insofar as second
question is concerned, yes, such an “interim award” is within the
meaning of s.2(1)(c) of the Act and being subsumed within the
expression “arbitral award”, therefore, can be challenged u/s.34
of the Act – English  Arbitration Act, 1996 – s. 47.
Arbitration and Conciliation Act, 1996 – s.16 – Appellant
issued a tender enquiry for supply of Defoamers – Respondent
successfully submitted its bid, pursuant to which respondent supplied
the Defoamers – Respondent demanded payment – However,
appellant took the stand that nothing was due and payable to
respondent – Since, dispute arose between the parties, respondent
invoked arbitration – Issue of limitation was taken first by the
Arbitrator and vide an award the said issue was decided in favour
of respondent-claimant stating that their claim had not become time
barred – Whether a decision on a point of limitation would go to
jurisdiction and, therefore, be covered by s.16 of the Act, in which
case all other issues have to be decided first, and it is only after
848
[2018] 1 S.C.R. 848
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such issues are decided that such an award can be challenged u/s.
34 of the Act – Held: In the instant case, the award passed by the
Arbitrator is an interim award, which being an arbitral award, can
be challenged separately and independently u/s.34 of the Act –
Such an award, which does not relate to the arbitral tribunal’s own
jurisdiction u/s.16, does not have to follow the drill of s.16(5) and
(6) of the Act – In the light of this, Parliament may consider amending
s.34 of the Act so as to consolidate all interim awards together with
the final arbitral award, so that one challenge u/s. 34 can be made
after delivery of the final arbitral award – Piecemeal challenges
like piecemeal awards lead to unnecessary delay and additional
expense.
Words and Phrases – “Jurisdiction” – The sense of term
“jurisdiction” used in s.16 of the Arbitration and Conciliation Act,
1996 – Discussed.
Doctrines/Principles – Kompetenz - kompetenz  principle –
Discussed – English Arbitration Act, 1996 – ss. 30, 31 – UNCITRAL
Model Law – Art. 16.
Allowing the appeal, the Court
HELD:  Whether an award on the issue of limitation can
first be said to be an interim award?
1.1  As can be seen from Section 2(c) and Section 31(6) of
Arbitration and Conciliation Act, 1996, except for stating that an
arbitral award includes an interim award, the Act is silent and
does not define what an interim award is.  Section 31(6) which
delineates the scope of interim arbitral awards and states that
the arbitral tribunal may make an interim arbitral award on any
matter with respect to which it may make a final arbitral award.
[Para 8]  [856-F-G]
1.2  The language of Section 31(6) is advisedly wide in
nature.   A reading of the said sub-section makes it clear that the
jurisdiction to make an interim arbitral award is left to the good
sense of the arbitral tribunal, and that it extends to “any matter”
with respect to which it may make a final arbitral award. The
expression “matter” is wide in nature, and subsumes issues at
which the parties are in dispute.  It is clear, therefore, that any
point of dispute between the parties which has to be answered by
M/S. INDIAN FARMERS FERTILIZER CO-OPERATIVE LTD. v.
M/S BHADRA PRODUCTS
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SUPREME COURT REPORTS
[2018] 1 S.C.R.
the arbitral

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