Case clarifies limitation in arbitration counter-claims

By Vivek Vashi and Zeus Dhanbhoora, Bharucha & Partners
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A Supreme Court judgment on 14 February, in the case of Voltas Ltd v Rolta India Ltd, has clarified the position of law with respect to the issue of limitation in filing a counter-claim under the Arbitration and Conciliation Act, 1996.

Facts of the case

On 3 December 2004, Rolta terminated its civil construction contract with Voltas. Correspondence ensued eventually leading to Voltas invoking arbitration via a letter dated 29 March 2006. Rolta failed to appoint an arbitrator but nonetheless responded to Voltas by a letter dated 17 April 2006, specifying claims totalling ₹680 million (US$11.25 million) under various heads against Voltas and also requesting that arbitration be invoked.

Vivek Vashi
Vivek Vashi

Voltas filed an application under section 11 of the Arbitration and Conciliation Act before Bombay High Court for an arbitrator to be appointed. The high court via an order dated 19 November 2010 appointed a sole arbitrator.

Voltas filed its statement of claim on 13 April 2011, claiming a sum of approximately ₹230 million. Rolta filed a counter-claim on 24 August 2011, containing claims to the tune of approximately ₹3.33 billion. Voltas contended that the counter-claim was not maintainable on the ground that it was barred by limitation.

The arbitrator passed an interim award in favour of Voltas, ruling that the counter-claim was barred by limitation as it was beyond the limitation period prescribed by the Limitation Act, 1963, i.e. three years, which in the arbitrator’s opinion began to run from 29 March 2006.

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Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Zeus Dhanbhoora is an associate.

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