Claims Raised Before The Arbitral Tribunal Cannot Be Rejected Even If Not Mentioned In The Notice Issued Under Section 21 Of The A&C Act: Delhi High Court

The Single Bench of Justice Vibhu Bakhru held that a notice under Section 21 is required to set out the disputes between the parties, and upheld the view of the Arbitral Tribunal that the claims raised by the claimant before the Arbitral Tribunal cannot be rejected only on the ground that they were not mentioned in the notice issued under Section 21.

The Organising Committee of Commonwealth Games, 2010 invited bids for appointing a Logistics Service Provider. The respondent Agility Logistic Pvt Ltd submitted its bid and was declared successful. A Letter of Intent was issued to the respondent, awarding the contract for providing Logistic Services, and an Agreement was executed between the parties. Thereafter, disputes arose between the parties in relation to the said Agreement, with Agility claiming that its rights as an exclusive logistics service provider were breached along with the non-payment of dues by the Organizing Committee. After terminating the said Agreement, Agility invoked the Arbitration Agreement to refer the disputes to arbitration. The Arbitral Tribunal held that the Ministry of Youth Affairs and Sports (MYAS) had breached the terms of the Agreement by engaging third party service providers and that Agility had an exclusive right under the said Agreement which was breached by the Organising Committee. The Arbitral Tribunal awarded damages to Agility for breach of its right of exclusive sponsorship and a sum towards the bills raised but not paid by the Organising Committee. Against the award of the Arbitral Tribunal, the MYAS filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court.

The Counsel for MYAS submitted that the Arbitral Tribunal did not consider the fact that the amount claimed by Agility in its Statement of Claims filed before the Arbitral Tribunal was much higher than the amount mentioned by it in the notice issued under Section 21 of the A&C Act. The Counsel contended that the Arbitral Tribunal cannot award any claim in excess of the claim in respect of which arbitration was invoked or entertain any other claim. The Counsel averred that Agility could not have claimed an amount higher than the amount claimed by it in the notice issued under Section 21 or raise any claim before the Arbitral Tribunal that was not mentioned in the said notice. The Counsel for the respondent Agility contended that the findings made by the Arbitral Tribunal were based on appreciation of the material on record and the scope of Section 34 of the A&C Act does not extend to re-appreciation of evidence.

Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

The High Court held that it cannot supplant its view in place of that of the Arbitral Tribunal and that the scope of examination under Section 34 of the A&C Act is limited to examining whether the arbitral award falls foul of any of the grounds set out in Section 34. The Court ruled that the findings drawn by the Arbitral Tribunal could not be regarded as patently erroneous or in conflict with the public policy of India.

The Court ruled that it is not necessary that a notice issued under Section 21 of the A&C Act quantifies the amounts claimed by the claimant and that it was only required to set out the disputes between the parties. The Court held that the notice issued by Agility under Section 21 of the A&C Act clearly communicated the disputes between the parties. The Court observed that the Arbitral Tribunal had held that it was not necessary for the claims to be specifically stated in the notice issued under Section 21 of the A&C Act, and therefore the claims raised by the claimant Agility before the Arbitral Tribunal could not be rejected only on the ground that they were not mentioned in the said notice.

The Court added that since the claims raised by the respondent/claimant Agility fell within the scope of the Arbitration Agreement and the same were not barred by the Limitation Act, 1963, the arbitral award could not be said to be rendered without jurisdiction.

The Court held that the Arbitral Tribunal is the final adjudicator of the quantity and quality of evidence and the Court is not required to re-appreciate or re-evaluate the evidence to re-adjudicate the dispute.

The Court thus dismissed the petition filed by MYAS.

Case Title: Ministry of Youth Affairs & Sports versus Agility Logistic Pvt Ltd

Citation: 2022 LiveLaw (Del) 307

Dated: 07.04.2022 (Delhi High Court)

Counsel for the Petitioner: Mrs. Bharathi Raju

Counsel for the Respondent: Mr. Abhay Raj Varma, Ms. Priyanka Ghosh and Ms. Vidhi Jain

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