VOLTAS LTD.versusROLTA INDIA LTD.

                      [2014] 2 S.C.R. 797


                         VOLTAS LTD.                               A
                               V.
                        ROLTA INDIA LTD.
                (Civil Appeal No. 2073 of 2014)
                     FEBRUARY 14, 2014
                                                                   8
          [ANIL R. DAVE AND DIPAK MISRA, JJ.)

       ARBITRATION AND CONCILIATION ACT, 1996: ss.21,
 43 - Counter claim - Limitation period - Held: Limitation period
 for filing counter claim should be computed as on the date of C
 service of notice of such claim on the claimant and not on
 the date of final counter claim - Exception to the said rule is
 if a party. against whom a claim is made in arbitration can
 satisfy that he had previously made a claim against the
 claimant and sought arbitration by serving a notice to the D
 claimant - However, limitation cannot be saved solely on the
 ground that a party had previously in a notice vaguely stated
 that it would be claiming liquidated damages.

        JUDGMENT/ORDER: Binding effect of - Held: A
                                                                   E
, judgment is not to be read as a statute but to understand the
  coffect ratio stated in the case it is necessary to appreciate
   the repetitive use of the words.

     The appellant and the respondent entered into a civil
 construction contract for construction of buildings.              F
 Dispute arose between them and on 03.12.2004, the
 respondent terminated the contract. By letter dated
 29.03.2006, the appellant invoked the arbitration clause.
 On 17.04.2006, the respondent denied any amount being
 payable by them and called upon the appellant to pay              G
 Rs.68.63 crores. The appellant filed an application for
 appointment of arbitrator and a sole arbitrator was
 appointed by the High Court. Before the arbitrator, the
 appellant filed its statement of claim on 13.04.2011
                            797                                    H
   798      SUPREME COURT REPORTS                [2014] 2 S.C.R.


A claiming Rs. 23.31 crores. The respondent filed statement
  of defence and counter claim of Rs.333.73 crores on
  24.08.2011. The Arbitrator passed interim order that the
  limitation for making a counter claim is required to be
  asserted with reference to the date on which the cause
B of action arose and the date on which counter claim was
  filed. The respondent filed an application under Section
  34 of Arbitration Act for setting aside decision of
  Arbitrator. The Single Judge of the High court rejected the
  section 34 application holding that when the notice was
c given by the appellant on 29.03.2006, the said notice was
  only in respect of the disputes having arisen between the
  parties due to refusal of claims made by the respondent.
  On the date of issuance of such notice, the respondent
  had not even asserted its claim and after issuance of
  notice dated 29.03.2006, the respondent by its letter dated
0
  17.04.2006 had asserted its claim for the first time and,
  therefore, counter claim was beyond the period of
  limitation. On appeal, the Division Bench of the High
  Court set aside the order of the Single Judge. Hence the
E instant appeal.

         Partly allowing the appeal, the Court

        HELD: 1.1. By letter dated 01.03.2005, the appellant,
  while referring to the letter dated 03.12.2004 issued by the
F respondent terminating the contract on the ground of
  alleged delay and default in completion of the project,
  without prejudice had made a request for payment of final
  bill in full and settle the claim made therein at the earliest.
  It was also suggested therein that if the respondent
G needed any additional information or material in support
  of the claim put forth, the appellant would furnish the
  same. On 18.03.2005, the respondent communicated to
  the appellant that it would compute its losses, damages,
  costs, charges, expenses, etc. after the building work was
  over and claim the same from the appellant. The appellant
H
         VOLTAS LTD. v. ROLTA INDIA LTD.            799


by letter dated 7.4.2005 intimated the respondent that it A
was not liable to pay any alleged losses, damages, costs,
charges and expenses, allegedly suffered by the
respondent. On 27 .04.2005 by another communication an
assertion was made about the losses suffered by the
respondent. The respondent asseverated that it was not B
liable to pay to the appellant any compensation and
damages or other amounts as claimed in the letter dated
01.0~.2005. In fact, the respondent was compelled to
terminate the contract as per the recommendation of the
architects and the respondent had suffered huge losses c
and damages and had incurred heavy costs, charges and
expenses for which the appellant was solely responsible.
It was also mentioned in the letter that the respondent
reserved its right to take appropriate steps against the
appellant as per the agreement entered into between the
                                                           0
parties as per law. On 29.3.2006, the appellant, referring
to its earlier communications dated 14.04.2004,
23.04.2004, 24.05.2004, 18.06.2004, 13.07 .2004 and
01.03.2005, claimed for appointment of an arbitrator. On
17.4.2006, the respondent specified the claims under E
various heads and also claimed payment to be made
within seven days failing which it will invoke the
arbitration clause. Thus, the correspondences between
the parties make it vivid that the claims made by the
respondent were denied by the appellant on many a
ground and, therefore, it would be inappropriate to say F
that there was inaction or mere denial. [Paras 15 and 16]
[812-E-H; 813-A-E; 814-A-B]
    Major (Retd.) lnder Singh Rekhi v. Delhi Development
Authority (1988) 2 sec 338: 1988 (3) SCR 351; Jammu and    G
Kashmir State Forest Corporation v. Abdul Karim Wani and
Ors. (1989) 2 SCC 701: 1989 (2) SCR 380 - held
inapplicable.
    1.2. The two communications dated 17.04.2006 and
21.04.2006 make it clear that the respondent had           H
   800     SUPREME COURT REPORTS             [2014] 2 S.C.R.

A crystallized the claims on various heads by letter dated
  17.4.2006 and the appellant had agreed to appoint an
  arbitrator within thirty days. The heads that have been
  mentioned in the letter dated 17 .4.20~ pertained to
  liquidated damages for delay in performance, cost of
B repairs and rework which had to be done' by the
  respondent, differential cost of the works left over by the
  appellant and was completed by the respondent through
  other agencies, cost of direct consequential damages to
  the respondent due to defect in the work done by the
C appellant, cost of consultancy fees and other expenses,
  loss of profit for four years based on revenue generated
  per employee, etc. and outstanding mobilization advance
  remaining with the appellant. The total sum as mentioned
  in the letter was Rs.74.78 crores. From the said amount
  monies retained by the respondent and monies received
0
  by the respondent as per the contract, i.e., Rs.6.14 trores
  were reduced. The validity of the claims had to be
  addressed by the Arbitrator but the fact remained that the
  respondent had raised the claims by giving heads. Thus,
  there can be no scintilla of doubt that the respondent had
E particularized or specified its claims and sought
  arbitration for the same. [Para 19] [815-E-H; 816-A-B]

       2. In *Praveen Enterprises, the two-Judge Bench,
  after referring to, Sections 21 and 43 of the Act and
F Section 3 of the Limitation Act opined, regard being had
  to the language employed in Section 21, that an
  exception has to be carved out. It saves the limitation for
  filing a counter claim if a respondent against whom a
  claim has been made satisfies the twin test, namely, he
G had made a claim against the claimant and sought
  arbitration by serving a notice to the claimant. The said
  exception squarely applies to the case at hand inasmuch
  as the respondent had raised the counter claim and
  sought arbitration by expressing its intention on number
H of occasions. That apart, it is also perceptible that the
         VOLTAS LTD. v. ROLTA INDIA LTD.                 801


appellant had assured for appointment of an arbitrator.         A
Thus, the counter claim was in·stituted on 17.4.2006 and
hence, the irresistible conclusion is that it was within
limitation. In *Praveen Enterprises, the Court while
carving out an exceptio.n, has clearly stated that the
!imitation for "such counter claim" should be computed          B
as on the "date of service of notice" of "such claim on
the claimant" and not on the date of final counter claim.
A judgment is not to be read as a statute but to
understand the correct ratio stated in the case it is
necessary to appreciate the repetitive use of the words.        c
That apart, if the counter claim filed after the prescribed
period of limitation before the arbitrator is saved in
entirety solely on the ground that a party had vaguely
stated that it would be claiming liquidated damages, it
would not attract the conceptual exception carved out in        D
*Praveen Enterprises. In fact, it would be contrary to the
law laid down not only in the said case, but also to the
basic principle that a time barred claim cannot be
asserted after the prescribed period of limitation. [Paras
24, 26] [819-B-E; 820-E-H; 821-A]
                                                                E
    *State of Goa v. Praveen Enterprises (2012) 12 SCC
581: 2011 (10) SCR 1026 - relied on.

    Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd.
(2003) 5 SCC 705: 2003 (3) SCR 691; Bharat Sanchar              F
Nigam Limited and another v. Motorola India Private Limited
(2009) 2 SCC 337: 2008 (13) SCR 445 - held applicable.

     3. In the instant case, when it is absolutely clear that
the counter claim in respect of the enhanced sum is
totally barred by limitation and is not saved by exception      G
carved out by the principle stated in Praveen Enterprises,
the view of the Division Bench of the High Court that the
counter claim, as a whole, is not barred by limitation is
not correct. Thus analysed, the counter claim relating to
the appeal which deals with civil contracts shall be            H
    802    SUPREME COURT REPORTS                [2014] 2 S.C.R.


A restricted to the amount stated in the letter dated
  17.4.2006, i.e., Rs.68.63 crores, and as far as the other
  appeal which pertains to air-conditioning contract, the
  quantum shall stand restricted to as specified in the letter
  dated 21.3.2006. The interim award passed by Arbitrator
B as regards rejection of the counter claims in toto stands
  nullified. [Paras 29, 31] [822-A-C, G; 823-A]

        Rashtriya /spat Nigam Limited v. Dewan Chand Ram
    Saran 2012 5 SCC 306; 2012 (4) SCR 1 - Distinguished.

C      /spat Industries Limited v. Shipping Corporation of India
  Limited Arbitration Petition No. 570 of 2001 decided on
  4.12.2001 ; Oil and Natural Gas Corporation Ltd. v. Saw Pipes
  Ltd. (2003) 5 SCC 705; McDermott International Inc. v. Bum
  Standard Co. Ltd. and Ors. (2006) 11 SCC 181: 2006 (2)
D Suppl. SCR 409; K. Raheja Constructions Ltd. and another
  v. Alliance Ministries and Ors. 1995 Supp (3) SCC 17: 1995
  (3) SCR 960; South Konkan Distilleries and Anr. v.
  Prabhakar Gajanan Naik and Ors. (2008) 14 SCC 632: 2008
  (13) SCR 295; Van Vibhag Karamchari Griha Nirman Sahkari
E Sanstha Maryadit (Registered) v. Ramesh Chander and
  others (2010) 14 SCC 596: 2010 (12) SCR 1045; Revajeetu
  Builders and Developers v. Narayanaswamy and sons and
  Ors. (2009) 10 SCC 84: 2009 (15) SCR 103 - referred to.

                        Case Law Reference:
F
     2011 (10) SCR 1026          relied on           Para 7
     2003 (3) SCR 691            referred to          Para 9
     2012 (4) SCR 1              distinguished        Para 10
G
     2006 (2) Suppl. SCR 409 referred to              Para 11
     1988 (3) SCR 351            held inapplicable Para 12
     1989 (2) SCR 380            held inapplicable Para 12
H    2008 (13) SCR 445           referred to         .Para 25
          VOLTAS LTD. v. ROLTA INDIA"LTD.                   803


 1995 (3) SCR 960              referred to           Para 27        A
 2008 (13) SCR 295             referred to           Para 27
 2010 (12) SCR 1045             referred to          Para 27
 2009 (15) SCR 103              referred to          Para 28
                                                                    B
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2073 of 2014.

    From the Judgment and Order dated 16/08/2013 of the
High Court of Bombay in APL No. 1239/2012, AN No. 7/2013.           c
                               WITH
Civil Appeal No. 2076 of 2014.

    K.K. Venugopal, Prateek Jalan, R.N. Karanjawala, Manik
Karanjawala (for Karanjawala & Co.} for the Appellant.              D
     R.F. Nariman, Pratap Venugopal, S. Ganoo, Surekha
Raman, Meenakshi Chauhan, Anuj Sharma (for K.J. John &
Co.} for the Respondent.

    The Judgment of the Court was delivered by                      E

    DIPAK MISRA, J. 1. Leave granted in both the Special
Leave Petitions.

     2. Regard being had to the similitude of controversy in
both the appeals they were heard together and are disposed          F
of by a common judgment. Be it noted, the Division Bench of
the High Court of Judicature at Bombay, by two separate
judgments and orders passed on 16.8.2013 in Appeals Nos.
7 of 2013 and 8 of 2013 has set aside the judgment and order
dated 1.10.2012 passed by the learned single Judge in               G
Arbitration Petition (L} Nos. 1239 <;>f 2012 and 1240 of 2012
 respectively as a consequence of which two interim awards
passed by the learned Arbitrator on 26. 7 .2012 in respect of two
contracts between the same parties rejecting the counter claim
of the respondent-herein have been annulled. For the sake of        H
    804     SUPREME ·coURT REPORTS                [2014] 2 S.C.R.

A clarity and convenience we shall state the facts from Civil
  Appeal arising out of Special Leave Petition (C) No. 30015 of
  2013, for the Division Bench has observed that the Appeal No.
  7 of 2013 had emanated from the disputes which arose in
  respect of civil construction agreement dated 2.2.2001 and in
B Appeal No. 8 of 2013 the disputes related to agreement dated
  8.1.2003 for air-conditioning of the two buildings to be
  constructed for the appellant therein and no separate
  submissions were advanced before it and the position was the
  same before the learned single Judge.
c      3. The expose' of facts are that the appellant and
  respondent entered into a civil construction contract for
  construction of two buildings known as Rolta Bhawan II (RB-II) ,
  and Rolta Bhawan Ill (RB-II) and also for modification of building
  Rolta Bhawan l(RB-1) previously constructed by the respondent.
D As certain disputes arose, on 3.12.2004 the respondent
  terminated the contract. After certain correspondences between
  the parties pertaining to the termination of the contract the
  appellant by letter dated 29.3.2006 invoked the arbitration
  clause in respect of its cl~ims against the respondent. As the
E respondent failed to appoint an arbitrator, it filed an application
  under Section 11 of the Arbitration and Conciliation Act, 1996
  (for short "the Act") before the High Court of Bombay for
  appointment of arbitrator and the designated Judge/vide order
  dated 19.11.2010 appointed the sole arbitrator.
F
       4. After the controversy came in seisin before the learned
  Arbitrator, he issued certain directions and, as the facts would
  unfurl, the appellant filed its statement of claim on 13.4.2011
  claiming a sum of Rs.23,31,62,429.77 together with interest at
  the rate of 15% per annum from the respondent. The
G respondent, after filing its defence on 24.8.2011, filed the
  counter claim of Rs.333, 73,35,026/- together with interest at the
  rate of 18% per annum from the date of filing till payment/
  realization thereof. In the counter claim the respondent justified
  the termination of the agreement and contended that it was
H
             VOLTAS LTD. v. ROLTA INDIA LTD.                  805
                    [DIPAK MISRA, J.] .
entitled to damages for breach of contract. In the counter claim      A
the notice dated 17.4.2006 sent by the respondent detailing its
counter claim to the appellant was referred to.

     5. After the counter claim was lodged, the appellant-herein
filed its objections about the tenability of the counter claim        8
stating that the same was not maintainable and was also
barred by limitation. The learned Arbitrator on 7.1.2012 framed
two issues regarding the tenability and limitation of the counter
claim as preliminary iss:ues. They are: -
                         ~ .... · :

      "(i)    Whether th~· counter claim, or a substantial part       C
              thereof, is barred by the law of limitation?

      (ii)    Whether the counter claim is not maintainable and
              beyond the scope of reference?"
                                                                      D
      6. After adumbrating to the facts the learned Arbitrator
came to hold that the limitation for making a counter claim is
required to be asserted with reference to the date on which the
cause of action arises and the date on which the counter claim
is filed. After so opining the learned Arbitrator recorded as
follows: -                                                            E

     "The respondent has been vigilant and assertive of its legal
     rights right from 3rd December 2004 on which date the
     Contract was terminated. The assertions in the letters
     dated 27th April 2005 and 29th March 2006 show                   F
     unmistakable consciousness of its rights on the part of the
     Respondent. The last Jetter dated 29th March 2006 is the
     notice of the Advocates of the Respondent asserting its
     right to invoke arbitration. The Tribunal is of the view that
     cause of action for the Counter-claim which must be treated      G
     as an independent action to be instituted, really arose
     latest by 29th March 2008, if not earlier it is clear that the
     Counter claim is filed only on 26th September, 2011 and
     as such it is beyond the period of limitation of three years."
     It may be noted here that the learned Arbitrator, however,       H
    806        SUPREME COURT REPORTS                         [2014] 2 S.C.R.


A   overruled the objection with regard to the maintainability of the
    counter claim being beyond the scope of reference.

          7. After the interim award was passed by the learned
    Arbitrator, the respondent filed an application under Section 34
    of the Act for setting aside the decision of the learned Arbitrator
B
    rejecting the counter claims made by it on the ground of
    limitation. The learned single Judge, after adverting to the facts
    in detail and the contentions raised by the learned counsel for
    the parties, referred to certain authorities, namely, /spat
    Industries Limited v. Shipping Corporation of India Umited1
C   and State of Goa v. Praveen Enterprises 2, and came to hold
    that the arbitral proceedings in respect of those disputes
    commenced on the date on which the request for the said
    disputes to be referred to arbitration was received by the
    respondent, and further that only such disputes which were
D   referred to in the notice invoking arbitration agreement with a
     request to refer the same to arbitration, the arbitral proceedings
    commenced and it would not apply to the counter claim.
    Thereafter the learned single Judge proceeded to state as
    follows: -
E
          "When the notice was given by the respondent on 29th
          March, 2006, the said notice was only in respect of the
          disputes having arisen between the parties due to refusal
          of claims made by the petitioner. On the date of issuance
          of such notice, the petitioner had not even asserted its
F
          claim. After issuance of such notice on 29th March, 2006,
          the petitioner by its letter dated 17th April, 2006 had
          asserted its claim for the first time. The dispute in respect
          of the counter claim raised when the petitioner did not pay
          the said amount as demanded. Such disputes thus did not
G
          exist when the notice invoking arbitration agreement was
          given by the respondent on 29th March, 2006. In my view,
          the arbitral proceedings therefore, cannot be said to have
    1.   Arbitration Petition No. 570 of 2001 decided on 4.12.2001.
H   2.   (2012> 12 sec 581.
           VOLTAS LTD. v. ROLTA INDIA LTD.                      807
                  [DIPAK MISRA, J.]
     commenced in respect of the counter claim when the                 A
     notice was given by the respondent on 29th March, 2006.
     The counter claim was admittedly filed on 26th September,
     2011 which was made beyond the period of limitation. The
     arbitral proceedings commenced in respect of the counter
     claim only when the said counter claim was lodged by the           B
     petitioner on 26th September, 2011. Even if the date of
     refusal on the part of the respondent, to pay the amount
     as demanded by the petitioner by its notice dated 17th
     April, 2006 is considered as commencement of dispute,
     even in such case on the date of filing the counter claim          c
     i.e. 26th September, 2011, the counter claim was barred
     by law of limitation. In my view, thus the tribunal was
     justified in rejecting the counter claim filed by the petitioner
     as time barred."

     8. After so stating the learned single Judge held that the         D
opinion expressed by the learned Arbitrator was not perverse
and based on co'rrect appreciation of documents and was
resultant of a plausible interpretation and accordingly rejected
the application preferred under Section 34 of the Act..

     9. Being dissatisfied, the respondent-herein preferred an
appeal before the Division Bench which chronologically referred
to the correspondences made between the parties, the
reasoning ascribed by the learned Arbitrator, the submissions
propounded before it, the principles stated in Oil and Natural          F
Gas Corporation Ltd. v. Saw Pipes Ltd. 3 as regards the
jurisdiction of the Court while dealing with an application under
Section 34 of the Act, the concept of limitation as has been
explained in Praveen Enterprises (supra), the demand made
by the appellant therein by letter dated. 17.4.2006 quantifying         G
a sum of Rs.68.63 crores, exclusion of period between
3.5.2006 to 19.11.2010 during which period the application
under Section 11 of the Act was pending before the High Court
and on that foundation, in the ultimate eventuate, came to hold
3.   (2003) s sec 10s.                                                  H
    808      SUPREME COURT REPORTS                   [2014] 2 S.C.R.

A that the counter claim filed on 26.9.2011 was within limitation.
  The aforesaid view obliged the Division Bench to allow the
  appeal, set aside the judgment and order passed by the
  learned single Judge as a consequence thereof the rejection
  of the counter claim by the learned Arbitrator stood overturned.
B Be it noted, rest of the interim award of the learned Arbitrator
  was not disturbed.

       10. Assailing the legal substantiality of the view expressed
  by the Division Bench, Mr. K.K. Venugopal, learned senior
  counsel appearing for the appellant, has raised the following
C contentions: -

       (i) Existence of dispute is fundamentally essential for a
  controversy to be arbitrated upon and in the case at hand there
  being no dispute raised by the respondent as warranted in law,
D the counter claim put forth before the learned Arbitrator
  deserved to be thrown at the threshold and the High Court would
  have been well advised to do so.

          (ii) The limitation for a counter claim has to be strictly in
E accordance with Section 43(1) of the Act read with Section
  3(2)(b) of the Limitation Act, 1963 and any deviation therefrom
  is required to be authorized by any other provision of law. The
  only other provision of law which can depart from Section 43(1)
  of the Act read with Section 3(2)(b) of the Limitation Act, is the
  provision contained in Section 21 of the Act, where the
F respondent to the claimant's claim invokes arbitration in regard
  to specific or particular disputes and further makes a request
  for the said disputes to be referred to arbitration and in +hat
  event alone, the date of filing of the counter c!:::im w ... ;o not be
  the relevant date but the date of rv:c.i<mg such request for
G arbitration would be the dat~ ror computing limitation. The
  Division Bench has not kept itself alive to the requisite twin tests
  and has erroneously ruled that the counter claim as filed by the
  re~r-ondent is not barred by limitation.

H         (iii) The principle stated in Praveen Enterprises's case is
            VOLTAS LTD. v. ROLTA INDIA LTD.                  809
                   [DIPAK MISRA, J.]
not applicable to the present case because the                       A
correspondences made by the respondent, including the letter
dated 17 .4.2006, show that there had neither been any
enumeration of specific claims nor invocation of the arbitration
clause but merely computation of certain claims, though for
application of the exception as carved out in Praveen                B
Enterprises (supra), both the conditions precedent, namely,
making out a specific claim and invocation of arbitration are
to be satisfied.
     (iv) The exclusion of the period during pendency of the
application under Section 11 of the Act, as has been held by         C
the Division Bench, is wholly contrary to the principle laid down
in paragraphs 20 and 32 in Praveen Enterprises (supra).
     (v) Assuming the principle stated in Praveen Enterprises
(supra) is made applicable, the claims asserted by the               D
respondent in its letter dated 17.4.2006 could only be saved
being not hit by limitation and not the exaggerated counter claim
that has been filed before the learned Arbitrator.
     (vi) The Division Bench completely erred in interfering with
the interim award in exercise of power under Section 34 of the       E
Act, though the principle stated in Saw Pipes Ltd. (supra) is not
attracted and further that the recording of finding that the award
passed by the learned Arbitrator suffers from perversity of
approa..ch is not acceptable inasmuch as a possible and
plausible interpretation of the contract and documents has been      F
made which is within the domain of the learned Arbitrator as
has been stated in Rashtriya /spat Nigam Limited v. Dewan
Chand Ram Saran 4 •
     11. Mr. R.F. Nariman, learned senior counsel appearing
for the respondent, defending the impugned judgment, has             G
proponed the following: -
      (a)     The documents brought on record demonstrably
            · establish that dispute existed between the parties
-  ----
4. c2012) s sec 306.                                                 H ..
    810           SUPREME COURT REPORTS               (2014) 2 S.C.R.


A                  as regards the counter claim and hence, the
                   submission raised on behalf of the appellant on that
                   score is sans substance.

           (b)     The Division Bench has rightly come to hold that the
                   counter claim filed by the respondent-herein was
B
                   within time on the basis of the law laid down in
                   Praveen Enterprises (supra) inasmuch as the date
                   of filing of the counter claim has to relate back to
                   the date of claim made by the respondent and the
                   correspondences between the parties do clearly
c                  show that the respondent had raised its claim and
                   also sought for arbitration in a legally accepted
                   manner.
            (c)     The alternative submission that the counter claim
D                   has to be confined to the amount quantified in the
                    letter dated 17.4.2006 is unacceptable in law, for
                    in Praveen Enterprises (supra) it has been held
                    that the statement of claim need not be restricted
                    to the claims in the notice and on that base it can
                    safely be concluded that the said proposition holds
E
                    good for counter claims as well. That apart, the
                    principle also gets support from what has been laid
                    down in McDermott International Inc. v. Burn
                    Standard Co. Ltd. and others5.
F      12. First, we shall address to the submissions pertaining
  to existence and raising of dispute as regards the counter
  claim. We are required to deal with the same in the case at
  hand since Mr. Venugopal, learned senior counsel, has urged
  that if no dispute was raised at any point of time, it could not
G have been raised before the learned Arbitrator as it would be
  clearly hit by limitation. Learned senior counsel has placed
  reliance on Major (Retd.) lnder Singh Rekhi v. Delhi
  Development Authority6 and Jammu and Kashmir State
    s.    (2006) 11 sec 181.
H   6.    (1988) s sec 338.
            VOLTAS LTD. v. ROLTA INDIA LTD.                  811
                   [DIPAK MISRA, J.]
Forest Corporation v. Abdul Karim Wani and others7, to bolster       A
the submission that in the case at hand the disputes as regards
the counter claim really had not arisen, for mere assertions and
denials do not constitute a dispute capable of reference to
arbitration and hence, not to be entertained when it is dead or
stale.                                                               B

      13. In Major (Retd.) lnder Singh Rekhi (supra) the High
Court had rejected the petition preferred under Section 20 of
Arbitration Act, 1940 as barred by limitation. The two-Judge
Bench referred to Section 20 of the 1940 Act and opined that
in order to be entitled to order of reference under Section 20,      C
it is necessary that there should be an arbitration agreement
and secondly, dispute must arise to which the agreement
applied. In the said case, there had been an assertion of claim
of the appellant and silence as well as refusal in respect of the
same by the respondent. The Court observed that a dispute            D
had arisen regarding non-payment of the alleged dues to the
appellant and, in that context, observed thus: -

      "A dispute arises where there is a claim and a denial and
      repudiation of the claim. The existence of dispute is          E
      essential for appointment of an arbitrator under Section 8
      or a reference under Section 20 of the Act. See Law of
      Arbitration by R.S. Bachawat, first edition, page 354. 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      F
      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     G
      found out from the facts and circumstances of the case."

    14. In Abdul Karim Wani and others (supra) the question
arose whether the dispute mentioned in the contractor's

7.   (1989) 2 sec 101.                                               H
    812     SUPREME COURT REPORTS                     [2014] 2 S.C.R.

A application could have been referred to the arbitration at all. The
  majority came to hold that the claim raised by the plaintiff in his
  application was not covered by the arbitration clause and,
  therefore, was not permissible to be referred for a decision to
  the arbitrator. Be it noted, in the said case, the work under the
B contract had already been executed without any dispute. The
  majority also observed that in the absence of a repudiation by
  the Corporation of the respondent's right to be considered, if
  and when occasion arises, no dispute could be referred for
  arbitration. It further ruled that in order that there may be a
c reference to arbitration, existence of a dispute is essential and
  the dispute to be referred to arbitration must arise under the
  arbitration agreement.

         15. The principles laid down in the aforesaid cases were
    under the 1940 Act at the stage of appointment of arbitrator. In
D   the case at hand, though we are dealing with a lis under the
    1996 Act, yet we are to deal with the said facet as the learned
    Arbitrator has passed an interim award as regards the
    sustenance of the counter claim. In this regard, it is necessary
    to refer to the correspondences entered into between the
E   parties and to appreciate the effect and impact of such
    communications. By letter dated 1.3.2005 the appellant, while
    referring to the letter dated 3.12.2004 issued by the respondent
    terminating the contract on the ground of alleged delay and
    default in completion of the project, without prejudice had made
F   a request for payment of final bill in full and settle the claim made
    therein at the earliest. It was also suggested therein that if the
    respondent needed any additional information or material in
    support of the claim put forth, the appellant would furnish the
    same. On 18.3.2005 the respondent communicated to the
G   appellant through its counsel that it would compute its losses,
    damages, costs, charges, expenses, etc. after the building work
    was over and claim the same from the appellant. The appellant
    vide letter dated 7.4.2005, through its counsel, intimated the
    respondent that it was not liable to pay any alleged losses,
H   damages, costs, charges and expenses, allegedly suffered by
          VOLTAS LTD. v. ROLTA INDIA LTD.                      813
                 [DIPAK _MISRA, J.] .
the respondent. On 27.4.2005 by another communication an             A
assertion was made about the losses suffered by the
respondent. The respondent asseverated that it was not liable
to pay to the appellant any compensation and damages or
other amounts as claimed in the letter dated 1.3.2005 to the
respondent. In fact, the respondent was compelled to terminate       B
the civil contractor as per the recommendation of the Architects,
M/s. Master & Associates, and the respondent had suffered
huge losses and damages and had incurred heavy costs,
charges and expenses for which the appellant was solely
respondible. It was also mentioned in tt:ie letter that the          c
respondent reserved its right to take appropriate steps against
the appellant as per the agreement entered into between the
parties as per law. As the factual exposition would unfurl, on
29.3.2006 the appellant, referring to its earlier communications
dated 14.4.2004, 23.4.2004, 24.5.2004, 18.6.2004, 13.7.2004          D
and 1.3.2005, claimed for appointment of an arbitrator. On
17.4.2006 the respondent specified the claims under various
heads and also claimed payment to be made within seven days
failing which it will invoke the arbitration clause. To the said
communication and another communication dated 21.4.2006
we shall refer to at a later stage while dealing with the other      E
facet of submission. It may be noted here that on 9.5.2006 the
appellant, referring to letter dated 17.4.2006 whereby the
respondent had raised its claims, stated as follows: -

     "Our clients deny that the claim made against you is false      F
     and frivolous. Our clients deny that any amount is due to
     you for the alleged breach of the aforesaid contract. Our
     clients deny that they have committed any breach of the
     aforesaid contract.
                                                                     G
           xxx                    xxx                    xxx
     In view of what is stated hereinabove, our clients deny that
     they are liable to pay to you a sum of Rs.68,63,72,743.08
     or any other sum."
                                                                     H
    814      SUPREME COURT REPORTS                    [2014] 2 S.C.R.


A       16. Thus, the correspondences between the parties make
  it vivid that the claims made by the respondent were denied
  by the appellant on many a ground and, therefore, it would be
  inappropriate to say that there was inaction or mere denial.
  Therefore, in the obtaining fact situation, the principles stated
B in Major (Retd.) lnder Singh Rekhi (supra) and Abdul Karim
  Wani and others (supra) are not applicable.

         17. The next aspect that has been highlighted by Mr.
    Venugopal is that the respondent had never, in the true sense
C   of the term, invoked arbitration by appropriately putting forth
    specified claims. In this context, we may refer to the letter dated
    29.3.2006 which would show that the appellant had asserted
    that the disputes and differences had arisen between the
    parties to the agreement and invoked the arbitration clause
    calling upon the respondent to appoint an independent
D   unbiased arbitrator within 30 days from the receipt of the said
    notice, failing which they would be constrained to approach the
    designated Judge of the Chief Justice of Bombay High Court
    for appointment of an arbitrator under Section 11 of the Act.
    The respondent, vide letter dated 17.4.2006, sent through its
E   counse.1 while stating that it was surprised to receive the demand
    made by the appellant with regard to the final R.A. bill dated
    21.12.2004, clearly stated that the earlier letter dated 1.3.2005
    had already been replied to vide letter dated 18.3.2005. In the
    said letter it was mentioned by the respondent that it had
F   crystallized its claim amounting to Rs.68,63,72,743.08 and, be
    it noted, the said claim was made on various heads by the
     respondent. Reproduction of part of the said letter would be
    apposite: -

          "The final R.A. Bill sent by you is incorrect in many respects;
G
          one of them being that you have made claims based on
          works actually not done by you Nothing is due and payable
          by us to you against your final R.A. Bill. We call upon you
          to pay to us the aforesaid sum of Rs.68,63,72,743.08
          within seven days of the receipt of this letter, failing which
H
          VOLTAS LTD. v. ROLTA INDIA LTD.                     815
                 [DIPAK MISRA, J.]
    you will be liable to pay interest at the rate of 18% p.a. on     A
    expiry of seven days after receipt of this letter by you, till
    payment and/or realization. Please note that if the
    aforesaid payment is not made within seven days of the
    receipt of this letter, we will invoke the arbitration clause
    of the civil contract and refer the disputes to arbitration."     B

     18. In this regard reference to letter dated 21.4.2006 written
by the appellant is seemly. The relevant part of the said letter
is as follows: -

     "We are instructed to inform you that our client was out of      C
     India in connection with the business tour and returned to
     India on 19th April, 2006. Our client thereafter has been
     extremely busy with the work of the Company. He has seen
     your letter dated 29th March, 2006.
                                                                      D
     Please, therefore, ask your clientS to note that our client
     will appoint an Arbitrator within 30 days from the date of
     his return to India."

      19. These two communications make it clear that the
respondent had crystallized the claims on various heads by E
letter dated 17.4.2006 and the appellant had agreed to appoint
an arbitrator within thirty days. The heads that have been
mentioned in the letter dated 17.4.2006 pertained to liquidated .
damages for delay in performance, cost of repairs and rework
which had to be done by the respondent, differential cost of the F
works left over by the appellant and was completed by the
respondent through other agencies, cost of direct consequential
damages to the respondent due to defect in the work done by
the appellant, cost of consultancy fees and other expenses, loss
of profit for four years based on revenue generated per G
employee, etc. and outstanding mobilization advance remaining
with the appellant. The total sum as mentioned in the letter was
Rs.74,78,34,921.54. Fromthe said amount monies retained by
the respondent and monies received by the respondent as per
the contract, i.e., Rs.6,14,62,178.46 were reduced. Needless H
    816     SUPREME COURT REPORTS                   [2014] 2 S.C.R.

A to emphasize, the validity of the claims had to be addressed
  by the learned Arbitrator but the fact remains that the
  respondent had raised the claims by giving heads. Thus, there
  can be no scin"tilla of doubt that the respondent had
  particularized or specified its claims and sought arbitration for
B the same.

         20. Keeping in view the aforesaid factual scenario we shall
    now proceed to appreciate what has been stated by this Court
    in Praveen Enterprises (supra). In the said case, the
    respondent therein had raised certain claims and given a notice
C   to the appellant-therein to appoint an arbitrator in terms of the
    arbitration clause. As the appellant did not do so, the
    respondent filed an application under Section 11 of the Act and
    an arbitrator was appointed. The respondent filed its claim
    statement before the arbitrator and the learned arbitrator
D   passed an award. In regard to the counter claims made by the
    appellant, the arbitrator awarded certain sum without any
    interest. An application under Section 34 of the Act was filed
    by the respondent challenging the award for rejection of its other
    claims and award made on a particular item of the counter
E   claim. The civil court disposed of the matter upholding the
    award in respect of the claims of the respondent but accepted
    the objection raised by it in regard to the award made on the
    counter claim opining that the arbitrator could not have enlarged
    the scope of the reference and entertain either fresh claims by
F   the claimants or counter claims from the respondent. The said
    judgment came to be assailed before the High Court which
    dismissed the appeal by holding that the counter claims were
     bad in law as they were never placed before the court by the
    appellant in the proceeding under Section 11 of the Act and
G   they were not referred to by the court to arbitration and,
    therefore, the arbitrator had no jurisdiction to entertain the
     matter.

        21. This Court posed two questions, namely, whether the
    respondent in an arbitration proceeding is precluded from
H
          VOLTAS LTD. v. ROLTA INDIA LTD.                    817
                 [DIPAK MISRA, J.]
making a counter claim, unless (a) it had served a notice upon       A
the claimant requesting that the disputes relating to that,counter
claim be referred to arbitration and the claimant had concurred
in referring the counterclaim to the same arbitrator; and/or (b)
it had set out the said counterclaim in its reply statement to the
application under Section 11 of the Act and the Chief Justice        B
or his designate refers such counter claim also to arbitration.
Thereafter. the Court referred to the concept of "reference to
arbitration" and, analyzing the anatomy of Sections 21 and 43
of the Act and Section 3 of the Limitation Act, 1963, opined
thus: -                                                              c
     "Section 3 of the Limitation Act, 1963 specifies the date
     of institution for suit, but does not specify the date of
     "institution" for arbitration proceedings. Section 21 of the
     Act supplies the omission. But for Section 21 there would
     be considerable confusion as to what would be the date D
     of "institution" in regard to the arbitration proceedings. It
     will be possible for the respondent in an arbitration to argue
     that the limitation has to be calculated as on the date on
     which statement of claim was filed, or the date on which
     the arbitrator entered upon the reference, or the date on . E
     which the arbitrator was appointed by the court, or the date
     on which the application was filed under Section 11 of the
     Act. In view of Section 21 of the Act providing that the
     arbitration proceedings shall be deemed to commence on
     the date on which "a request for that dispute to be referred F
     to arbitration is received by the respondent" the said .
     confusion is cleared. Therefore, the purpose of Section 21
     of the Act is to determine the date of commencement of
     the arbitration proceedings, relevant mainly for deciding
     whether the claims of the claimant are barred by limitation G
     or not."

     22. Thereafter, addressing the issue pertaining to counter
claims, the Court observed as follows: -
                                                                     H
    818       SUPREME COURT REPORTS                   [2014] 2 S.C.R.


A         "20. As far as counterclaims are concerned, there is no
          room for ambiguity in regard to the relevant date for
          determining the limitation. Section 3(2)(b) of the Limitation
          Act, 1963 provides that in regard to a counterclaim in suits,
          the date on which the counterclaim is made in court shall
B         be deemed to be the date of institution of the
          counterclaim. As the Limitation Act, 1963 is made
          applicable to arbitrations, in the case of a counterclaim by
          a respondent in an arbitral proceeding, the date on which
          the counterclaim is made before the arbitrator will be the
c         date of "institution" insofar as counterclaim is concerned.
          There is, therefore, no need to provide a date of
          "commencement" as in the case of claims of a claimant.
          Section 21 of the Act is therefore not relevant for
          counterclaims. There is however one exception. Where the
          respondent against whom a claim is made, had also made
D
          a claim against the claimant and sought arbitration by
          serving a notice to th~ 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 Act, the limitation for
E         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."

                                                       [Italics is ours]
F
         23. Mr. R.F. Nariman, learned senior counsel appearing
  for the respondent, submitted that the case of the respondent
  comes within that exception because it had raised its claims
  on various dates and crystallized it by letter dated 17.4.2006
G and had sought arbitration also. It is his submission that the
  learned single Judge had incorrectly understood the exception
  carved out in the aforesaid case and has opined that the date
  of filing of the counter claims, i.e., 26.9.2011 is the pertinent
  date. lt is urged by him that the Division Bench has correctly
H determined the date to be 17.4.2006. Mr. Venugopal, learned
          VOLTAS LTD. v. ROLTA INDIA LTD.                   819
                 [DIPAK MISRA, J.]
senior counsel, has disputed the said position by relying upon      A
Section 3 of the Limitation Act which stipulates the limitation
to be mandatory.

      24. On a careful reading of the verdict in Praveen
Enterprises (supra), we find that the two-Judge Bench, after        8
referring to, as we have stated hereinbefore, Sections 21 and
43 of the Act and Section 3 of the Limitation Act has opined,
regard being had to the language employed in Section 21, that
an exception has to be carved out. It saves the limitation for
filing a counter claim if a respondent against whom a claim has     C
been made satisfies the twin test, namely, he had made a claim
against the claimant and sought arbitration by serving a notice
to the claimant. In our considered opinion the said exception
squarely applies to the case at hand inasmuch as the appellant
had raised the counter claim and sought arbitration by              D
expressing its intention on number of occasions. That apart, it
is also perceptible that the appellant had assured for
appointment of an arbitrator. Thus, the counter claim was
instituted on 17.4.2006 and hence, the irresistible conclusion
is that it is within limitation.
                                                                    E
     25. Presently to the alternative submission of Mr.
Venugopal, learned senior counsel for the appellant. It basically
pertains to the nature, scope and gamut of applicability of the
exception carved out in Praveen Enterprises (supra) for the
purpose of saving a counter claim being barred by limitation.       F
The learned senior counsel would submit that the respondent
had crystallized its claims by letter dated 17.4.2006 amounting
to Rs.68,63,72,743.08 whereas in the counter claim dated
26.9.2011 filed before the learned Arbitrator amounts to
Rs.333, 73,35,026/- which is impermissible. In essence, the         G
submission of Mr. Venugopal is that the claims which were not
raised in the letter dated 17.4.2006 have to be treated as being
barred by limitation. Mr. R.F. Nariman, learned senior counsel
for the respondent, on the contrary, has referred to paragraph
11 of the Praveen Enterprises (supra) to buttress his               H
    820     SUPREME COURT REPORTS                    [2014) 2 S.C.R.


A submission that when all the disputes are referred to the
  arbitrator, he has the jurisdiction to decide all the disputes, i.e.,
  both the claims and counter claims. That apart, the respondent
  had reserved its rights to quantify the claim. In this regard, he
  has also drawn inspiration from McDermott International Inc.
B (supra) wherein this Court has stated that while claiming
  damages, the amount therefor is not required to be quantified,
  for quantification of a claim is merely a matter of proof. Mr.
  Nariman has also commended us to the decision in Bharat
  Sanchar Nigam Limited and another v. Motorola India Private
c Limited8 wherein it has been ruled that the question of holding
  a person liable for liquidated damages and the question of
  quantifying the amount to be paid by way of liquidated damages
  are entirely different. Fixing of liability is primary while the
  quantification is secondary to it.
D
        26. In our considered opinion, the aforesaid decisions do
  not render any assistance to the proposition canvassed by the
  learned senior counsel for the respondent. We are inclined to
  think so on two counts. First, in Praveen Enterprises (supra)
  the Court has carved out an exception and, while carving out
E an exception, has clearly stated that the limitation for "such
  counter claim" should be computed as on the "date of service
  of notice" of "such claim on the claimant" and not on the date
  of final counter claim. We are absolutely conscious that a
  judgment is not to be read as a statute but to understand the
F correct ratio stated in the case it is necessary to appreciate
  the repetitive use of the words. That apart, if the counter claim
  filed after the prescribed period of limitation before the arbitrator
  is saved in entirety solely on the ground that a party had vaguely
  stated that it would be claiming liquidated damages, it would
G not attract the conceptual exception carved out in Praveen
  Enterprises (supra). In fact, it would be contrary to the law laid
  down not only in the said case, but also to the basic principle
  that a time barred claim cannot be asserted after the prescribed
H s.    (2009) 2 sec 337.
             VOLTAS LTD. v. ROLTA INDIA LTD.                   821
                    [DIPAK MISRA, J.]
 period of limitation.                                                 A

       27. Mr. Nariman, learned senior counsel, has also
  contended that the counter claims filed before the learned
  Arbitrator is an elaboration of the amount stated in the notice
  and, in fact, it is an amendment of the claim of the respondent      B
  which deserved to be dealt with by the learned Arbitrator. In this
  context, we may refer with profit to the ruling in K. Raheja
  Construcitons ·Ltd. and another v. Alliance Ministeries and
  others9 wherein the plaintiff had filed a suit for permanent
  injunction and sought an amendment for grant of relief of            c
. specific performance. The said prayer was rejected by the
  learned trial court. A contention was canvassed that the
  appellant had not come forward with new plea and, in fact, there
  were material allegations in the plaint to sustain the amendment
  of the plaint. The Court observed that having allowed the period     D
  of seven years to elapse from the date of filing the suit, and
  the period of limitation being three years under Article 54 of
  the Schedule to the Limitation Act, 1963, any amendment on
  the grounds set out, would defeat the valuable right of limitation
  accruing to the respondent. The said principle has been
                                                                       E
  reiterated in South Konkan Distilleries and another v.
  Prabhakar Gajanan Naik and others 10 and Van Vibhag
  Karamchari Griha Nirman Sahkari Sanstha Maryadit
  (Registered) v. Ramesh Chander and others 11 •

       28. In Revajeetu Builders and Developers v.                     F
 Narayanaswamy and sons and others12, while laying down
 some basic principles for considering the amendment, the
 Court has stated that as a general rule the court should decline
 amendments if a fresh suit on the amended claims would be
 barred by limitation on the date of application.                      G

  9.   1995 Supp. (3) sec 11.
  10. c2008) 14 sec 632.
  11. c2010> 14 sec 596.
  12. (2009) 10 sec 84.                                                H
     '
    822      SUPREME COURT REPORTS                  [2014] 2 S.C.R.


A      29. In the present case, when it is absolutely clear that the
  counter claim in respect of the enhanced sum is totally barred
  by limitation and is not saved by exception carved out by the
  principle stated in Praveen Enterprises (supra), we are unable
  to agree with the view of the Division Bench of the High Court
B that the counter claim, as a whole, is not barred by limitation.
  Thus analysed, the counter claim relating to the appeal which
  deals with civil contracts shall be restricted to the amount stated
  in the letter dated 17.4.2006, i.e., Rs.68,63,72,178.08, and as
  far as the other appeal which pertains to air-conditioning
c contract, the quantum shall stand restricted to as specified in
  the letter dated 21.3.2006, i.e., Rs.19,99, 728.58.

         30. At this juncture, we may, for the sake of completeness,
    deal with the justifiability of the interference by the Division
D   Bench in the award passed by the learned Arbitrator. It has
    been urged by Mr. Venugopal, learned senior counsel for the
    appellant, that the view expressed by the learned Arbitrator
    being a plausible interpretation of the contract the same did· not
    warrant interference. We have already analyzed at length how
E   the interim award is indefensible as there has been incorrect
    and inapposite appreciation of the proposition of law set out
    in Praveen. Enterprises's case. In Rashtriya /spat Nigam
    Limited (supra) this Court has opined that the learned Arbitrator
    had placed a possible interpretation on clause 9.3 of the
    contract involved therein and hence, the interference was
F   exceptionable. In the present case, the factual matrix and the
    controversy that have emanated are absolutely different and
    hence, the principle stated in the said authority is not
    applicable. Thus, we unhesitatingly repel the submission of the
    learned senior counsel for the appellant that the award passed
G   by the learned Arbitrator did not call for any interference.

         31. Consequently, both the appeals are allowed in part, the
    judgment of the Division Bench in Appeals Nos. 7 of 2013 and
    8 of 2013 is modified and the interim award passed by learned
H
          VOLTAS LTD. v. ROLTA INDIA LTD.                     823
                 [DIPAK MISRA, J.]
Arbitrator as regards rejection of the counter claims in toto         A
stands nullified. The learned Arbitrator shall now proceed to
deal with the counter claims, as has been indicated
hereinabove by us. Needless to say, we have not expressed
any opinion on the merits of the claims or the countef claims
put forth by the parties before the learned Arbitrator. The parties   B
shall bear their respective costs.

D.G.                                      Appeal partly allowed.