The Supreme Court bench of Justice M.M. Sundaresh and Justice J.B. Pardiwala presiding, provided relief to Oriental Structural Engineers by endorsing the Arbitration Tribunal’s ruling to either refund or apply a deduction for the overpaid taxes.
The appellant, Oriental Structural Engineers Ltd, filed the Special Leave Petition (SLP) before the Supreme Court of India against the Secretary to Department Public Works (D) of Government of Kerala.
The sole matter under examination pertains to the interpretation of dispute number 18 in the award, which concerns the elucidation of sub-clause 70.8. Based on this interpretation, the Arbitrator issued a decision in favour of the appellant, affirming that due to a subsequent alteration in the law, the excess tax payments made by the appellant should either be refunded or deducted.
The said view being possible and plausible view received the imprimatur from the court in exercise of powers under Section 34 of the Arbitration and Conciliation Act, 1996. Section 34 stipulates that an application for setting aside an arbitral award cannot be submitted more than 3 months after the party received the award.
If the Court finds that the applicant had a valid reason that prevented them from filing within the initial 3-month period, it may consider the application for an additional 30 days, but no longer. However, by the impugned order pronounced by the Court, it was overturned.
The Supreme Court noted that the perspective presented by the Tribunal is indeed a reasonable one. Under the authority granted by Section 37 of the Arbitration Act, this perspective cannot be substituted, even though an alternative viewpoint is also conceivable.
Further the apex court stated that “Admittedly in the case on hand, the tax was reduced by the operation of law whereas the appellant has paid higher tax as was in existence earlier. In such a view of the matter, we are inclined to set aside the order impugned. The civil appeal stands allowed.”
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