'Reference To Wrong Provision, As Long As Power Exists Would Not Matter': Supreme Court On Maintainability Of Appeal Under Section 34 Instead Of Section 37 Arbitration Act

A bench comprising Justices Sanjiv Khanna and Bela M. Trivedi allowed an appeal filed challenging the order of the Madras High Court, wherein the arbitrator's order rejecting the application of the appellant to revive its counterclaim was affirmed.

Factual Background

In 2009 M/s. Premier Sea Foods Exim Pvt. Ltd. ("Premier"), the appellant, filed a suit against M/s. Caravel Shipping Services Pvt. Ltd. ("Caravel"), the respondent, before the Subordinate Judges Court, Kochi to recover Rs. 26,53,593 along with future interest. Once the summons were served upon Caravel, it filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 ("Act") before the Subordinate Judge, which was rejected. While the Section 8 application was pending, Caravel had filed an application under Section 11 of the Act before the Madras High Court, which was allowed on 09.01.2015 and subsequently, Caravel filed a claim petition before the arbitrator. Premier filed a written statement and counter claim before the arbitrator. However, later on 21.08.2015, the counter claim was withdrawn in view of the suit pending on the same subject-matter before the Subordinate Judges Court, Kochi.

An appeal from the order of the Subordinate Judge was filed before the Kerala High Court which was rejected on 08.09.2015 and the review application was dismissed on 14.06.2016. In the meanwhile in December, 2015, Caravel had filed a written statement in the suit. On 29.10.2018, the Supreme Court allowed the Special Leave Petition filed by Caravel challenging the order in the review petition dated 14.06.2021 and the matter was referred to arbitration. Premier filed an application before the arbitrator seeking revival of the counter claim. The arbitrator rejected the application on the ground that the same was filed and withdrawn without liberty to revive the counterclaim. This was challenged by Premier in a petition under Section 37(2) of the Act along with an application for condonation of delay. The Madras High Court was of the opinion that the arbitrator had rightly disallowed Premier to revive the counter claim.

Decision of the Supreme Court

The Supreme Court was of the opinion that even if the application under Section 37 was not maintainable, an objection under Section 34 would have been maintainable in the present case. A wrong reference to a provision would not be a matter of concern as the jurisdictional court had the power to adjudicate the appeal. However, considering the delay in filing the appeal, the Court stated that Premier would be entitled to file the counter claim only on payment of cost of Rupees Two lakh (Rs. 2,00,000) to Caravel. It was further clarified that Caravel would be entitled to raise all defences before the arbitrator including the defence that the counter claim was barred by limitation.

Case Name: M/s. Premier Sea Foods Exim Pvt. Ltd. v. M/s. Caravel Shipping Services Pvt. Ltd.

Citation: 2022 LiveLaw (SC) 54

Case No. and Date: Civil Appeal No. 195 of 2022 | 6 Jan 2022

Corum: Justices Sanjiv Khanna and Bela M. Trivedi

Counsel for the appellant: Advocates Mr. Ankur Khandelwal, Mr. Himanshu Handa, Ms. Kaveri Vats and Advocate-on-Record Mr. Utkarsh Sharma

Counsel for the respondent: Advocate-on-record Ms. Liz Mathew and Advocate Ms. Sonali Jain

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