1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. ARBITRATION PETITION NO.33 OF 2008 M/s.Arihant Corporation. ...Petitioner. Vs. Union of India. ...Respondents. .... Ms. Shilpa Kapil for the Petitioner. Mr.Suresh Kumar for the Respondents. ..... CORAM :DR.D.Y.CHANDRACHUD, J. February 5, 2008. P.C.: By a letter of acceptance dated 17th December 2003, the Respondent had awarded a contract for certain Civil Works at Santacruz to the Petitioner at the tendered cost of Rs. 46.05 lakhs. The contract was terminated by the Respondent on 24th August 2004. There being an arbitration clause in the contract, an application was filed under Section 11 of the Arbitration and Conciliation Act, 1996, upon which an order was passed on 26th August 2005, directing the General Manager of the Western Railway to constitute an Arbitral 2 Tribunal. The Arbitral Tribunal was constituted upon which the claims and counter claims of the parties were referred for adjudication. The Respondent addressed a counter claim in the amount of Rs.3,27,427/- on account of risk and cost payment. On 23rd February 2007, parties submitted a concluding statement before the Arbitral Tribunal requesting the Tribunal to publish the award stating that the parties did not have further submissions to urge. The parties were waiting for arbitral award to be published when the Deputy Chief Engineer by a letter dated 24th October 2007, demanded an amount of Rs.15,25,776/- on account of risk and cost payment. The Arbitral Tribunal declared its award on 23rd November 2007. The claim of the Petitioner has been allowed in the amount of Rs.1,81,060/- while the counter claim of the Respondent has been rejected. The counter claim has been rejected on the ground that during the course of the hearing, the Respondent had neither raised an issue of counter claim, nor was any document submitted in favour thereof. The Petition under Section 9 of the Arbitration and 3 Conciliation Act, 1996, has been instituted on the apprehension that acting on the letter dated 24th October 2007, the Respondent would proceed to withhold or recover an amount of Rs.15,25,775/-. When the Petition came up for hearing on the last occasion, it was adjourned in order to enable Counsel appearing for the Respondent to seek instructions. Admittedly, the counter claim of the Respondent on account of risk and cost payment was in the amount of Rs.3,27,427/-. The counter claim has been rejected. The Respondent would undoubtedly be entitled to challenge the arbitral award by adopting due proceedings under the law. However, there is merit in the submission of the Petitioner that it is not open to the Respondent to demand an amount of Rs.15,25,775/- and call for a deposit of the aforesaid amount when even in the arbitral proceedings the counter claim was restricted to an amount of Rs.3,27,427/-. The relief which has been sought in these proceedings is for restraining the Respondent from adjusting or recovering an amount of Rs.15,25,775/- from any other bills due and payable to the Petitioner in view of the award of the Arbitral Tribunal dated 23rd November 2007. The 4 contention of the Petitioner is well founded. It was open to the Respondent to raise a counter claim in the arbitration and as already noted, the claim was in the amount of Rs.3,27,427/-. The Respondent would be at liberty to agitate its challenge against the arbitral award, in so far as it rejects the aforesaid claim as well as on the other grounds available in law including in respect of the amount which has been awarded to the Petitioner. However, it would manifestly not open to the Respondent to recover or adjust an amount even in excess of the aforesaid amount which was claimed in arbitration under the same head of risk and cost payment in respect of the same contract. The Arbitration Petition is accordingly made absolute in terms of prayer clauses (a) and (b), subject to the clarification that this shall not preclude the Respondent from adopting appropriate proceedings under the law in order to challenge the award of the Arbitral Tribunal dated 23rd November 2007 or for asserting such other claims as they may have in accordance with law. ......