High Court · 2025

balance amount of Rs. 8,10,12,035/- be got released for payment to the firm.

7. Aggrieved, the respondent sought appointment of Arbitrator, on failure, application under Section 11 of the Act was filed and the Arbitral Tribunal was constituted.

8. Before the Tribunal, against the claim made by the respondent, plea pertaining to the claim being barred by limitation was raised. The Arbitral Tribunal came to the conclusion that the cause of action arose on 12.02.2018 and the claim was within limitation. The Tribunal also came to the conclusion that the agreement did not provide for charge of interest and as such, the claim made for interest was de hors the agreement and consequently, passed the award impugned ordering for payment of Rs. 5,01,46,387/- deducted from the bills of the respondent with interest at the rate of 10 percent per annum from 05.05.2018 till actual payment along with costs of the arbitration. Feeling aggrieved, the present appeal has been filed.

9. Learned counsel for the appellant made vehement submissions that the Tribunal was not justified in coming to the conclusion that the claim was within limitation, as the same was ex facie barred by limitation. It was submitted that as the respondent had, by its letter dated 24.04.2014, disputed/rejected the appellant's claim of 12 percent interest on the sum of Rs. 10 crores, the cause of action, if any, arose from the said date and the limitation started running and consequently, as the claim was made after six years, the same was barred by limitation.

10. Further submissions were made that the Tribunal failed to consider the provisions of Section 28(3) of the Act, which recognise trade usages and as charging of interest was based on trade usages, mere fact that the same did not form part of the agreement, could not be made the basis for awarding claim made by the respondent and on that count, the award impugned being against public policy and being patently illegal, deserves to be set aside. 4

11. Learned counsel for the respondent supported the award and the order passed under Section 34 of the Act. Submissions were made that the Tribunal and the Commercial Court have rightly come to the conclusion that the cause arose only on 12.02.2018 when an amount of Rs. 5 crores towards interest was sought to be deducted from the final payment of the respondent, prior to which, though the appellant claimed interest on the amount of Rs. 10 crores, no action and/or indication was made regarding adjusting the amount of Rs. 1.76 crores towards interest at any point of time, therefore, the plea raised in this regard has no substance.

12. Further submissions were made that the plea raised regarding charging interest based on the ground of recognised trade usages is ex facie baseless, inasmuch as neither any plea was raised before the Arbitral Tribunal nor any evidence in this regard was led and in absence whereof, the trade usages cannot be assumed and consequently, the appeal deserves to be dismissed.

13. We have considered the submissions made by counsel for the parties and have perused the material available on record.

14. The Arbitral Tribunal, under Issue No.1 pertaining to the claim being barred by limitation, after going through the entire documentary evidence led by the parties, came to the conclusion that the final deduction having been made on 12.02.2018, the said date would be considered for reckoning the period of limitation. The Commercial Court, by its impugned judgment, also came to the conclusion that only by way of communication dated

12.02.2018, the information pertaining to deduction of a sum of Rs. 5,01,46,387/- as well as adjustment of Rs. 1.76 crores was given to the respondent, which essentially was the accrual of cause of action and not the demand raised by the appellant which was duly contested by the respondent and consequently, rejected the contention in this regard.

15. A perusal of entire sequence of events would reveal that the agreement provided payment of amount towards supply of transformer and reactor in 5 August 2013. The respondent made supplies prior to the same and on a request made for preponing the payment, the part payment to the tune of Rs. 10 crores was released in June 2013 but a condition was added that the respondent would be required to make payment of intrest at the rate of 12 percent per annum from the date of payment of Rs. 10 crores till the erection of the equipment, which took place in the year 2017. The respondent immediately contested the liability to make payment of interest on the said amount. Apparently, the parties continued to exchange correspondence on the said aspect of the matter and ultimately, at the time of final payment, by communication dated 12.02.2018, the respondent was informed of deduction of a sum of Rs. 5,01,46,387/- towards interest as well as an adjustment of Rs. 1.76 crores.

16. The submissions made that as the respondent denied liability to make payment of interest by its communication dated 24.04.2014, the same would constitute cause of action, apparently is fallacious inasmuch as the denial by the respondent may have given cause to the appellant to enforce its claim against the respondent, however, by disputing the liability, till such time that the liability was enforced against the respondent, no cause arose for the respondent to seek any redressal in this regard. It is only when the appellant sought deduction of the amount from the final bill, that the cause arose and from the said date i.e. 12.02.2018, the claim was well within limitation.

17. The said aspect may also be examined from another angle, as on

24.04.2014, only the amount of Rs. 1.76 crores, was outstanding from the bills, and therefore qua the balance amount of Rs. 3.34 crores, it cannot be said, by any stretch of imagination, that cause had arisen in the year 2014 based on the said letter. It is not even the case of the appellant that at any point of time prior to 12.02.2018, the respondent was informed of having adjusted a sum of Rs. 1.76 crores towards interest. 6

18. In that view of the matter, the plea sought to be raised pertaining to the claim being barred by limitation is ex facie baseless and the finding recorded by the Tribunal, as upheld by the Commercial Court, cannot be faulted.

19. So far as the second ground raised is concerned, it is not in dispute that the contract/agreement does not provide for charging of any interest and as such, the appellant has chosen to fall back upon trade usages with the aid of Section 28(3) of the Act.

20. Apparently, the said plea pertaining to the trade usages was not raised before the Arbitral Tribunal and no evidence worth the name in this regard was adduced and for the first time, the plea is sought to be projected before this Court. In absence of any plea pertaining to trade usages having been raised/evidence led before the Arbitral Tribunal, the plea sought to be raised for the first time before this Court cannot be countenanced and as such, the plea raised in this regard also apparently has no substance.

21. In view of above discussion, we do not find any reason to interfere with the order passed by the Commercial Court. There is no substance in the appeal, the same is therefore, dismissed. Order Date :- 22.8.2025 AHA (Jaspreet Singh, J) (Arun Bhansali, CJ) AFZAL HUSAIN ABBASI High Court of Judicature at Allahabad, Lucknow Bench

balance amount of Rs. 8,10,12,035/- be got released for payment to the firm.

7. Aggrieved, the respondent sought appointment of Arbitrator, on failure, application under Section 11 of the Act was filed and the Arbitral Tribunal was constituted.

8. Before the Tribunal, against the claim made by the respondent, plea pertaining to the claim being barred by limitation was raised. The Arbitral Tribunal came to the conclusion that the cause of action arose on 12.02.2018 and the claim was within limitation. The Tribunal also came to the conclusion that the agreement did not provide for charge of interest and as such, the claim made for interest was de hors the agreement and consequently, passed the award impugned ordering for payment of Rs. 5,01,46,387/- deducted from the bills of the respondent with interest at the rate of 10 percent per annum from 05.05.2018 till actual payment along with costs of the arbitration. Feeling aggrieved, the present appeal has been filed.

9. Learned counsel for the appellant made vehement submissions that the Tribunal was not justified in coming to the conclusion that the claim was within limitation, as the same was ex facie barred by limitation. It was submitted that as the respondent had, by its letter dated 24.04.2014, disputed/rejected the appellant's claim of 12 percent interest on the sum of Rs. 10 crores, the cause of action, if any, arose from the said date and the limitation started running and consequently, as the claim was made after six years, the same was barred by limitation.

10. Further submissions were made that the Tribunal failed to consider the provisions of Section 28(3) of the Act, which recognise trade usages and as charging of interest was based on trade usages, mere fact that the same did not form part of the agreement, could not be made the basis for awarding claim made by the respondent and on that count, the award impugned being against public policy and being patently illegal, deserves to be set aside. 4

11. Learned counsel for the respondent supported the award and the order passed under Section 34 of the Act. Submissions were made that the Tribunal and the Commercial Court have rightly come to the conclusion that the cause arose only on 12.02.2018 when an amount of Rs. 5 crores towards interest was sought to be deducted from the final payment of the respondent, prior to which, though the appellant claimed interest on the amount of Rs. 10 crores, no action and/or indication was made regarding adjusting the amount of Rs. 1.76 crores towards interest at any point of time, therefore, the plea raised in this regard has no substance.

12. Further submissions were made that the plea raised regarding charging interest based on the ground of recognised trade usages is ex facie baseless, inasmuch as neither any plea was raised before the Arbitral Tribunal nor any evidence in this regard was led and in absence whereof, the trade usages cannot be assumed and consequently, the appeal deserves to be dismissed.

13. We have considered the submissions made by counsel for the parties and have perused the material available on record.

14. The Arbitral Tribunal, under Issue No.1 pertaining to the claim being barred by limitation, after going through the entire documentary evidence led by the parties, came to the conclusion that the final deduction having been made on 12.02.2018, the said date would be considered for reckoning the period of limitation. The Commercial Court, by its impugned judgment, also came to the conclusion that only by way of communication dated

12.02.2018, the information pertaining to deduction of a sum of Rs. 5,01,46,387/- as well as adjustment of Rs. 1.76 crores was given to the respondent, which essentially was the accrual of cause of action and not the demand raised by the appellant which was duly contested by the respondent and consequently, rejected the contention in this regard.

15. A perusal of entire sequence of events would reveal that the agreement provided payment of amount towards supply of transformer and reactor in 5 August 2013. The respondent made supplies prior to the same and on a request made for preponing the payment, the part payment to the tune of Rs. 10 crores was released in June 2013 but a condition was added that the respondent would be required to make payment of intrest at the rate of 12 percent per annum from the date of payment of Rs. 10 crores till the erection of the equipment, which took place in the year 2017. The respondent immediately contested the liability to make payment of interest on the said amount. Apparently, the parties continued to exchange correspondence on the said aspect of the matter and ultimately, at the time of final payment, by communication dated 12.02.2018, the respondent was informed of deduction of a sum of Rs. 5,01,46,387/- towards interest as well as an adjustment of Rs. 1.76 crores.

16. The submissions made that as the respondent denied liability to make payment of interest by its communication dated 24.04.2014, the same would constitute cause of action, apparently is fallacious inasmuch as the denial by the respondent may have given cause to the appellant to enforce its claim against the respondent, however, by disputing the liability, till such time that the liability was enforced against the respondent, no cause arose for the respondent to seek any redressal in this regard. It is only when the appellant sought deduction of the amount from the final bill, that the cause arose and from the said date i.e. 12.02.2018, the claim was well within limitation.

17. The said aspect may also be examined from another angle, as on

24.04.2014, only the amount of Rs. 1.76 crores, was outstanding from the bills, and therefore qua the balance amount of Rs. 3.34 crores, it cannot be said, by any stretch of imagination, that cause had arisen in the year 2014 based on the said letter. It is not even the case of the appellant that at any point of time prior to 12.02.2018, the respondent was informed of having adjusted a sum of Rs. 1.76 crores towards interest. 6

18. In that view of the matter, the plea sought to be raised pertaining to the claim being barred by limitation is ex facie baseless and the finding recorded by the Tribunal, as upheld by the Commercial Court, cannot be faulted.

19. So far as the second ground raised is concerned, it is not in dispute that the contract/agreement does not provide for charging of any interest and as such, the appellant has chosen to fall back upon trade usages with the aid of Section 28(3) of the Act.

20. Apparently, the said plea pertaining to the trade usages was not raised before the Arbitral Tribunal and no evidence worth the name in this regard was adduced and for the first time, the plea is sought to be projected before this Court. In absence of any plea pertaining to trade usages having been raised/evidence led before the Arbitral Tribunal, the plea sought to be raised for the first time before this Court cannot be countenanced and as such, the plea raised in this regard also apparently has no substance.

21. In view of above discussion, we do not find any reason to interfere with the order passed by the Commercial Court. There is no substance in the appeal, the same is therefore, dismissed. Order Date :- 22.8.2025 AHA (Jaspreet Singh, J) (Arun Bhansali, CJ) AFZAL HUSAIN ABBASI High Court of Judicature at Allahabad, Lucknow Bench