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Indian Case Summary

M/S Welspun Enterprises Ltd vs M/S Ncc Ltd on 10 October, 2022 – Case Summary

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In the case of M/s Welspun Enterprises Ltd vs M/s NCC Ltd, heard in the Delhi High Court on 10th October 2022, the court was tasked with examining a dispute that arose from an Engineering, Procurement, and Construction (EPC) contract.

Facts of the Case

The EPC contract was initially executed between Indian Oil Corporation Limited (IOCL) and Nafto Gaz India Private Limited (Nafto Gaz) for the Panipat Naphtha Cracker Project. This contract was then awarded to the respondent, M/s NCC Ltd (NCC), who subsequently subcontracted part of the work to M/s Welspun Enterprises Ltd (Welspun).

Welspun completed the work and submitted the final bill on 30th October 2010, which was certified by NCC. However, disputes arose over the payment of the bill, leading to Welspun issuing a legal notice in August 2012. In response, NCC claimed that it would only pay Welspun upon receipt of corresponding payments from Nafto Gaz.

After attempts to resolve the dispute amicably failed, Welspun invoked the agreement to refer the disputes to arbitration in January 2014.

Issues and Court Observations

The key issue in the case was whether Welspun’s claims, as included in the final bill, were barred by limitation. The Arbitration Tribunal, by a majority of 2:1, held that the claims were indeed barred by limitation. The dissenting arbitrator, however, held that Welspun was entitled to its claims.

Welspun challenged the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that its claims were raised within the period of limitation. However, the learned Single Judge concurred with the majority view of the Arbitration Tribunal, holding that the claims were barred by limitation. The judge found that the cause of action had accrued when the final bill was certified on 29th November 2010, and that Welspun’s notice under Section 21 of the Arbitration and Conciliation Act was beyond the period of three years from the said date.

Conclusion

The court upheld the arbitral award, agreeing with the majority view of the Arbitration Tribunal that Welspun’s claims were barred by limitation. The court also agreed with NCC’s contention that the retention money was refundable once the same was received by NCC from Nafto Gaz, and therefore, the claim for refund of retention money was premature and within the period of limitation.