‘Updation Application’ Seeking To Change The Amount Of Counter-Claims In Arbitral Proceedings, Is An Application For ‘Amendment’: Delhi High Court

The bench of Justice V. Kameswar Rao was dealing with a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), challenging the Arbitral Tribunal’s order where it had rejected the party’s application seeking updation/revision of its counter claims on the ground that the same was filed belatedly.

Referring to the provisions of Section 23(3) of the A&C Act, the Court held that the Tribunal was within its right to reject the application for updation / revision, which in effect was for amendment of the counter-claims, on the ground that the same was made belatedly.

Section 23(3) of the A&C provides that, unless otherwise agreed by the parties, either party may amend/ supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.

The petitioner, NTPC Ltd, executed an agreement with a Joint Venture consisting of respondent No. 1, Larsen and Toubro (L&T), and respondent No.2, Alpine Mayreder Bau GmbH.

After certain disputes arose between the parties under the agreement, the same were referred to arbitration. NTPC filed its Statement of Defense and Counter-Claims against the Statement of Claims filed by L&T, who was the claimant before the Arbitral Tribunal.

Subsequently, NTPC moved an application before the Arbitral Tribunal seeking permission to update/revise its counter claims. The Arbitral Tribunal rejected the said application on the ground that the same was filed belatedly, while granting liberty to NTPC to invoke fresh arbitration with regard to the updated claims.

Against the said order, NTPC filed a petition under Section 34 of the A&C Act before the Delhi High Court.

The petitioner, NTPC, pleaded before the High Court that the Tribunal had erred in holding that the updation application filed by it was in fact an application for amendment of the substantive pleadings in respect of the counter-claims. NTPC contended that it merely sought updation/ revision of the relevant counter-claims by moving an application, without changing the pleading or the cause of action.

It argued that the amount of the counter-claims, with the passage of time, had enhanced. The said updation was formal in nature which did not change the nature of the case, it added.

Disputing the maintainability of the petition, the respondent, L&T, averred that a petition under Section 34 is maintainable only against an ‘award’, as defined under Section 2(1)(c) read with Section 31 (6) of the A&C Act. Since the said order was neither an ‘award’ nor an ‘interim award’ under the A&C Act, a Section 34 petition against the said order was not maintainable, it pleaded.

Perusing the order passed by the Tribunal, the Court reckoned that the Tribunal had concluded that the application moved by NTPC was, in fact, for amendment of the counter-claims. This was so because the amount of the counterclaims and even the methodology for calculating such amounts had been changed, the Tribunal had observed. The Tribunal also opined that there was no concept of updation of claims/counter-claims provided under the A&C Act, and therefore, the changes sought to be made by NTPC necessarily had to be through amendment of its counter-claims.

The Court thus dismissed the contention of NTPC that it merely intended to update/revise its counter-claims.

By stating that the application was for updation/revision, NTPC was primarily seeking amendment of its counter-claims, the bench ruled. It added: “The purpose of the petitioner seeking updation/revision is primarily to alter/change the amounts of the counter-claims. In that sense, though the application has been termed as updation application by the petitioner was in effect for amendment.”

Referring to the definition of “revise” and “amend”, as provided in the Black’s Law Dictionary, the bench held that the updation/revision sought by NTPC had the effect of amending its counter-claims.

The Court thus held, “It is reiterated that the Tribunal was right in holding that the application filed by the petitioner was for seeking amendment of the counter-claims. If that be so, the Tribunal was within its right in the given facts to not to allow the application for updation / revision, which in effect was for amendment of the counter-claims, on the ground that the same was made belatedly.”

The bench further rejected the argument of NTPC that the Tribunal had only refused to allow the updation / amendment of the counter-claims, primarily on the ground that the same was sought belatedly, in terms of Section 23 (3) of the A&C Act.

The Court concluded that the Arbitral Tribunal had also rejected the application on the ground of delay and the resultant prejudice that will be caused to the opposite party in allowing the amendment, considering that the proceedings were at the final arguments stage.

The Court further noted that the Tribunal in its order had drawn a distinction between the delay in making an application for amendment / updation as against a claim itself being barred by limitation. The Court reckoned that the Tribunal had only rejected the application for amendment on the ground that the same was made after a long lapse of time. Further, the issue of limitation with respect to the merits of the counter-claims sought to be amended/updated, had not been referred to by the Tribunal at all, it noted.

Since the said counter- claims of NTPC had not been decided finally on its merits, the order did not fulfil the requirements of an award or an interim award under the A&C Act, it ruled. Thus, the petition under Section 34 was not maintainable against the said order, the Court held.

The Court thus dismissed the petition.

Case Title: NTPC Ltd vs. Larsen and Toubro Limited & Anr.

Citation: 2023 LiveLaw (Del) 273

Counsel for the Petitioner: Ms. Maninder Acharya, Sr. Adv. with Mr. Tarkeshwar Nath, Mr. Deepanshu Dudeja, Mr. Lalit Mohan, Mr. Virat Saharan & Mr. Harshit Singh, Advs.

Counsel for the Respondent: Mr. Rajeev Virmani, Sr. Adv. with Mr. Kirat Singh Nagra, Mr. Kartik Yadav, Mr. Hardik Jain, Mr. Vardaan Wanchoo and Ms. Sumedha Chadha, Advs. for R-1

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