PETROLEUM CORPORATION LIMITED versus GO AIRLINES (INDIA) LIMITED

Citation: [2019] 13 S.C.R. 1044 · Decided: 23-10-2019 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 13 S.C.R.
BHARAT PETROLEUM CORPORATION LIMITED
v.
GO AIRLINES (INDIA) LIMITED
(Civil Appeal No. 8227 of 2019)
OCTOBER 23, 2019
[R. BANUMATHI, A. S. BOPANNA AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996 – ss.16, 37 – Counter
claims raised by the respondent, whether beyond the scope of
reference to arbitration – Under the Agreement dtd. 01.01.07 for
Aviation Fuel Supply, the appellant was to supply aviation fuel to
the respondent – Initially, agreement was  for the period from
01.01.07 to 31.03.09– Second Aviation Fuel Supply agreement dtd.
01.04.09 was from 01.04.09 to 31.03.11 – Dispute arose between
the parties when the appellant raised claim for interest for the
delayed payments of the fuel supplied during the period from
01.04.09 to 31.03.11 – Respondent did not accept any amount
payable towards interest –Appellant vide notice dtd. 25.03.10
invoked arbitration clause – Agreed by the respondent vide letter
dtd. 27.04.10 – Appellant raised claim for Rs.1,95,21,032/- with
interest @ 18% p.a. from the date of presentation of the claim till
payment and/or realization – Denying the claims, the respondent
also raised two counter claims and sought award directing the
appellant to issue CENVAT invoices in its favour for the aviation
fuel supplied under the agreement – Appellant also filed application
u/s.16 – Allowed by the Arbitrator– High Court allowed the appeal
by the respondent – Held: Merely because the respondent did not
specify the nature of claims against BPCL in the letter dtd. 27.04.10,
may not be a ground to reject the counter claim of CENVAT invoices
at the threshold – Questions whether the issue regarding CENVAT
invoices was outside the terms of agreement or whether CENVAT
invoices relates to the agreement dtd. 01.01.07 and 01.04.09; whether
it is arbitrable and falls beyond the scope of reference to arbitration
and such other related questions, are to be determined only during
the enquiry – After enquiry, the Arbitrator might reject the counter
claim for CENVAT invoices as not arbitrable and the counter claim
 [2019] 13 S.C.R. 1044
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beyond the scope of reference to arbitration, but to reject the counter
claim at the threshold on the ground that the Arbitrator has no
jurisdiction would not be proper – High Court rightly set aside the
order of the Arbitrator – Judgment of the High Court, affirmed –
However, observations of the High Court in the impugned order in
para no.(10) as to the availability of CENVAT credit allegedly
specified in the 2004 Rules may not be considered as expression of
opinion on the merits of the matter – Arbitrator to proceed with the
matter on its own merits and in accordance with law – CENVAT
Credit Rules, 2004.
Dismissing the appeal, the Court
HELD: 1.1 Clause 12 provides for reference of dispute to
an Arbitrator nominated by mutual consent. If the parties fail to
decide the Arbitrator by mutual consent, each party will nominate
an Arbitrator of their choice and the Arbitrators so nominated
shall choose the third Arbitrator. Merely because the respondent
did not specify the nature of claims against BPCL in the letter
dated 27.04.2010, that may not be a ground to reject the counter
claim of CENVAT invoices at the threshold. Whether the counter
claim regarding CENVAT invoices is outside the terms of
arbitration agreement and whether it is arbitrable or outside the
scope of reference to arbitration could be seen only after enquiry
by the learned Arbitrator. [Para 19][1053-A-D]
1.2 The questions whether the issue regarding CENVAT
invoices was outside the terms of agreement or whether CENVAT
invoices relates to the agreement dated 01.01.2007 and
01.04.2009 and whether it is arbitrable and whether it falls beyond
the scope of reference to arbitration and such other related
questions, are to be determined only during the enquiry. It may
be that after enquiry, the Arbitrator might reject the counter claim
for CENVAT invoices as not arbitrable and the counter claim
beyond the scope of reference to arbitration. But to reject the
counter claim at the threshold on the ground that the Arbitrator
has no jurisdiction would not be proper. The High Court, in our
view, has rightly set aside the order of the learned Arbitrator
dated 18.04.2011. The parties have inter alia raised various
contentions. Not inclined to consider those contentions at this
BHARAT PETROLEUM CORPORATION LIMITED v.
GO AIRLINES (INDIA) LIM

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