Waiver of Even-Numbered Arbitral Composition and Threshold for Interference under Section 34 Reconciliation Claims

The parties entered into a Memorandum of Understanding (2005) and Joint Venture Agreements for electrification projects in Uttar Pradesh and Rajasthan

Genus Power was the lead bidder, and Supreme Advertising executed the works. Disputes arose regarding delays, withholding of payments, and alleged abandonment of project sites by Supreme Advertising in August 2006

Following a meeting on 08.10.2006 (MOM/MOU), the parties attempted reconciliation of accounts and materials, which failed, leading to arbitration

The Arbitral Tribunal (AT), comprising two retired judges, issued an award on 07.03.2014, later corrected via a Modified Award on 17.05.2014

Both parties challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 ("A&C Act")

1. Whether the constitution of an even-numbered (two-member) Arbitral Tribunal vitiates the award under Section 10 of the A&C Act.

2. Whether the findings on Counterclaim No. 1 (unaccounted material) and No. 2 (dismantled material) were based on "no evidence" or patent illegality.

3. Whether the plea of limitation against counterclaims can be raised for the first time during oral arguments in Section 34 proceedings.

4. Whether the Modified Award constituted an impermissible review of the original award.

The Court applied Section 10(1) regarding the number of arbitrators and Section 4 regarding waiver of the right to object

It relied on Narayan Prasad Lohia v. Nikunj Kumar Lohia, establishing that Section 10 is a "derogable" provision and an even-numbered tribunal is not a jurisdictional nullity if the party fails to object under Section 16

The Court followed Associate Builders v. DDA and Ssangyong Engineering v. NHAI to define "patent illegality" and "perversity," holding that a court cannot re-appreciate evidence under Section 34

It applied Section 3 of the Limitation Act, 1963, and the principle that limitation is a mixed question of law and fact, citing Ramesh B. Desai v. Bipin Vadilal Mehta

Section 33 of the A&C Act was applied regarding the correction of computational or clerical errors

Regarding the tribunal’s composition, the Court noted that Supreme Advertising participated for years without invoking Section 16; thus, the objection was waived under Section 4

On Counterclaim No. 1 (shortages), the Court found the AT did not rely solely on Genus Power's schedules but reconciled them with Supreme Advertising's own erection bills and witness admissions

For dismantled material (Counterclaim No. 2), the AT relied on Supreme Advertising's letter dated 02.01.2007 claiming deposits with authorities, which was found to be a factual admission

The Court refused the limitation plea because it was a mixed question of fact (requiring accrual dates and acknowledgments) never pleaded before the AT or in the Section 34 petition

The Modified Award was upheld as the AT specifically rejected substantive changes and restricted itself to correcting arithmetical slips in transcription

It upheld the counterclaims, noting that the AT's view was a plausible interpretation of evidence

The plea of limitation was rejected as it cannot be raised for the first time at the oral argument stage if it requires factual inquiry

The Modified Award was found to be within the scope of Section 33. All challenges in O.M.P.(COMM) 115/2016 and 159/2016 were dismissed