pvr 1 ap105-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.105 OF 2011 M/s.Nandi Cylinders Pvt.Ltd. ...Petitioner vs. Hindustan Petroleum Corpn.Ltd. ...Respondent --- Ms.Asha Bhambwani i/b. Raval Shah & Co., for Petitioner. Mr.M.D.Siodia with Agarwal Nikhil & Kaushik Naresh Singh i/b. Rustamji & Ginwala, for Respondent. --- CORAM: D.K.DESHMUKH, J. DATED: 30th June,2011. pvr 2 ap105-11 P.C.:- 1. Admit. Heard finally by consent of parties. By this petition, the petitioner challenges the Award made by the learned Arbitrator whereby the learned Arbitrator has allowed the counterclaim submitted by the Respondent for liquidated damages in the amount of Rs.52,05,050/- and has rejected the claim made by the petitioner. The petitioner had entered into a contract to supply LPG cylinders to the respondent. That contract was in existence from 7.6.2004 to 6.6.2005. According to the petitioner, the petitioner was entitled to payment of Rs.5,48,478/-, but that amount was not paid by the respondent and the payment was withheld because, according to the respondent, the respondent was entitled to recover from the petitioner an amount of approximately Rs.52 lakhs as liquidated damages. The petitioner, pvr 3 ap105-11 therefore, made a claim for the amount of Rs. 5,48,478/-. It was also claimed that the respondent is not entitled to withhold that amount because of its claim of liquidated damages. Admittedly, the respondent has filed written statement denying the claim and making the counterclaim for liquidated damages in the amount of Rs.52,05,050/- on 8.9.2008. In the reply to the counterclaim, the petitioner submitted that the counterclaim submitted on 8.9.2008 is barred by law of limitation because the contract under which the counterclaim arose itself came to an end in the month of June,2005 and therefore, any claim arising out of that contract should have been made within a period of three years from the date on which the contract came to an end. The learned Arbitrator has rejected this contention and awarded the counterclaim made by the respondent. 2. I have heard the learned Counsel pvr 4 ap105-11 appearing for both the sides. Perusal of the Award shows that the learned Arbitrator has referred to the objection raised on behalf of the petitioner that the counterclaim was not filed within period of limitation. The learned Arbitrator has decided that objection in his Award. The learned Arbitrator has held that the respondent could not file its counterclaim because the petitioner did not file his statement of claim immediately after the matter was referred to the learned Arbitrator, and therefore, according to the learned Arbitrator, the counterclaim is within limitation. In my opinion, the Award of the learned Arbitrator and the reasons given by him for holding that the counterclaim is within limitation, discloses total non application of mind by the learned Arbitrator to the relevant law that the claim or the counterclaim has to be filed within the period of limitation, because the cause of action for claiming liquidated damages for short supply pvr 5 ap105-11 of cylinders would arise to the respondent at any time during the currency of the contract. Admittedly, the contract was current and continued till 6.6.2005, and therefore, the claim for recovery of that liquidated damages will have to be made within a period of three years from accrual of cause of action. A cause of action for recovery of liquidated damages would accrue to the respondent at some point of time on or before 6.6.2005 and therefore, the claim or the counterclaim, if any, will have to be made within a period of three years, in any case, from 6.6.2005. In the present case, the counterclaim has admittedly been lodged on 8.9.2008, therefore, it was clearly beyond the period of limitation. In this view of the matter, therefore, it is clear that the finding of the learned Arbitrator that the counterclaim was lodged within the period of limitation is erroneous and is liable to be set aside. If the counterclaim was not lodged within the period of pvr 6 ap105-11 limitation, the Award of the learned Arbitrator awarding that claim in favour of the respondent has to be set aside. 3. In the result, therefore, the present petition succeeds and is allowed. The Award impugned in the petition is set aside. The petition is disposed of. (D.K.DESHMUKH, J.) ---