[Case Brief] M/s Indian Farmers Fertilizers Co-Op. Ltd v/s M/s Bhadra Products, 2018

Case NameM/s Indian Farmers Fertilizers Co-Op. Ltd v/s M/s Bhadra Products
Case NumberCivil Appeal Number 824 of 2018
CourtSupreme Court of India
BenchJustice R.F. Nariman and Justice Navin Sinha
Author of the judgmentJustice R.F. Nariman
Decided OnJanuary 23, 2018
Relevant Act/SectionsArbitration and
Conciliation Act, 1996-
Sections 2, 16, 31, 32, 37
Author of the briefLavanya Gupta

BRIEF FACTS AND PROCEDURAL HISTORY

M/s Indian Farmers Fertilizers Co-Operative Limited issued a tender enquiry to 19 parties, including M/s Bhadra Products, for supply of Defoamers. M/s Bhadra Products submitted its bid, pursuant to which a Letter of Intent dated 2nd November, 2006 was issued to M/s Indian Farmers Fertilizers Co-op Ltd for supply of 800 Metric Tonnes of Defoamers to be used for further production. By 11th April, 2007, M/s Bhadra Products had all of the 800 M/s Indian Farmers Fertilizers Co-Op. Ltd v/s M/s Bhadra Products Civil Appeal Number 824 of 2018 Before Supreme Court of India Decided On: January 23, 2018. Bench of Judges: 1) Justice R.F. Nariman (Author of the judgment) 2) Justice Navin Sinha Relevant Act and Sections: 1) Arbitration and Conciliation Act, 1996- Sections 2, 16, 31, 32, 37 Metric Tonnes. On 6th June, 2011 M/s Bhadra asked for the payment to be done on 27th September, 2012 but M/s Indian Farmers Fertilizers Co-op Ltd. said that no payment was due. On 1st October, 2014 M/s Bhadra Products invoked arbitration and on 25th January 2015, an arbitrator was appointed. The issue of limitation was taken up by the arbitrator, for which it was decided that the limitation period was not over. A petition was filed under Section 34 of Arbitration and Conciliation Act, 1996 which was dismissed by the District Judge due to lack of jurisdictional powers of the Court. An appeal was made to the High Court of Odisha which was dismissed again on the same grounds as earlier. An appeal was filed in the Supreme Court.

ISSUES BEFORE THE COURT OF LAW

1) Whether an award delivered by an Arbitrator, which decides the issue of limitation, can be said to be an interim award. 2) Whether the award on the issue of limitation can be re-adjudicated upon by the Courts.

RATIO OF THE COURT

Yes, the award on the issue of limitation is an interim award. The Arbitration and Conciliation Act, 1996 does not have a definition of the term “interim award” except in Section 31(6) which gives a very wide definition of the term. On careful reading of Section 31(6), it is clear that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim award. This is supported by the English Law as well. Now, as the award on limitation was an interim award, it cannot be re-adjudicated upon by the Courts. Only the arbitral tribunal may rule on its own jurisdiction, which has been stated in Section 16 of the Arbitration and Conciliation Act, 1996 (by the Kompetenz-kompetenz principle). The principle is supported by the UNCITRAL Model Law, the English Law as well as various judicial precedents.

DECISION HELD

An arbitral tribunal may award various interim awards, though that might delay the process and increase costs. The interim awards are said to be final and cannot be decided upon by the Courts all over again. The Supreme Court allowed the appeal and deemed it fit that the Parliament should amend Section 34 of Arbitration and Conciliation Act, 1996 to consolidate all interim awards, so that one challenge under Section 34 can be made after delivery of final award, to prevent delays. The High Court’s judgement was set aside.

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