Summary
In arbitration over interest on aviation-fuel payments, Go Airlines counterclaimed for CENVAT invoices or monetary relief. The Court upheld the setting aside of the arbitrator’s threshold rejection of that counterclaim. Its contractual basis, arbitrability and relationship to the reference required enquiry; neither the High Court nor the Supreme Court finally decided entitlement to CENVAT credit.
Issues
- Whether the CENVAT-invoice counterclaim could be rejected for want of jurisdiction at the threshold.
Provisions considered
- Clause 7, Aviation Fuel Supply AgreementThe invoicing requirements supplied the asserted contractual foundation for the counterclaim, whose scope and effect required enquiry. (¶¶ 15, 16, 23)
Held
- Failure to specify the precise counterclaim in the letter accepting the arbitrator did not, by itself, justify its threshold rejection. Whether it arose under the agreements and fell within the arbitration agreement and reference required examination by the arbitrator. (¶¶ 14, 19, 23)
- An arbitrator’s jurisdiction may be limited by a specific reference. Subject to contractual restrictions, arbitrable claims and counterclaims may be advanced; the Court did not finally hold this particular counterclaim arbitrable or meritorious. It could still be rejected after enquiry. (¶¶ 21, 22, 23)
- The parties’ substantive contentions were left open. The High Court’s observations concerning availability of CENVAT credit were not to be treated as an opinion on merits. (¶¶ 24, 25)
Result
The High Court judgment was affirmed and BPCL’s appeal dismissed without costs. The arbitrator was directed to proceed on the merits in accordance with law, without treating the High Court’s CENVAT-credit observations as a merits determination.