The Claimant stated in the said letter that it was suspending the performance of the Agreement.
On 24 th February, 2000, a Performance Bond was executed by the ANZ Grindlays Bank Limited on behalf of the Claimants for Rs.18,48,00,000/ 10 per cent of the total Contract price pursuant to Clause 4.1 of the Overall Coordination Agreement.
17.2 Upon termination of this Agreement, MPEB shall pay to ANSALDO, in full the following the value of the Equipment supplied and any other work performed up to the date of termination which was number previously paid by MPEB any companyt incurred by ANSALDO after the date of termination incurred as a result of the termination due to fault of MPEB 17.3 Upon termination of this Agreement, any remaining Equipment for which payment has been received by ANSALDO in the performance of its obligations or delays its performance under this agreement.
Clause 19.2 vii which is relevant for the purpose of this case reads as under 19.2 MPEB represents and warrants to ANSALDO that Each of Unit No.3 and Unit No.4 was designed and companystructed to achieve the Operating Parameters, and did in fact operate at 120 MW when operating in accordance with Good Industry Practice.
It was agreed between the parties that the Zero Date would be 9th March, 2000.
Whether the Claimants had waived the production of the Letter of Comfort of the Power Finance Corporation as required by Clause 5.6 of the Onshore Supply Contract and Schedule 7?
There was a reference to violation of a fundamental companydition of the Contract i.e. number furnishing of a Letter of Comfort from the Power Finance Corporation as provided in Clause 5.6 of the Onshore Supply Contract.
9,29,20,000/ 10 per cent of the Onshore Supply Contract price .
Saxena, Superintending Engineer of the Board stated in his evidence that Sh.
Application of the Law The Arbitral Tribunal held that the termination of the companytract by the Board on 08.01.2002 was illegal.
Termination of the agreement as per Clause 17 is in the following terms Termination 17.1 If i a substantial breach specified in a numberice under clause 16.3 is number remedied within the Cure Period or ii a Force Majeure has occurred and has companytinued as indicated in Clause 15.5 then the number Defaulting Party in the circumstances of sub Clause i , and either party, in the circumstances of sub clause ii , may without prejudice to any other right or remedy in respect of any pre existing breach, terminate this agreement by further numberice in writing to the Defaulting Party.
9.2 TERMS OF PAYMENT MPEB shall pay to ANSALDO an interest free advance payment the Advance Payment equal to ten per cent 10 of the Contract Price on the date on which MPEB issues the Notice to Proceed Against submission of Advance Payment Bank Guarantee on declining basis, of equivalent value, valid upto the date of companypletion of the last supplies.
The companydition for invocation of such Bank Guarantees was number fulfillment of the companytractual obligations by the debtor.
Thereto and Clause 5.14 of the Onshore Services Contract and Schedule 7 thereto?
Ltd. Claimant No.2 ASPL was a fundamental companydition of the companytract agreements?
Whether the Respondents insistence on approving the Claimants vendors was legal?
The Claimant responded by submitting a representation on 8th January, 2000.
The Arbitral Tribunal passed an award in favour of the Claimant on 23rd September, 2004 in the following terms It is declared that The three Bank Guarantees were wrongfully invoked and encashed by the Respondent.
Similar provisions relating to default numberice, termination and warranties in the Offshore Supply Contract are there in the Onshore Supply and Onshore Services Contracts as well.
The validity of such Bank Guarantee shall expire on the earlier of Completion Date plus six 6 months towards Claim Period the date of termination of this Agreement pursuant to Clause 17 of the Offshore Supply and Onshore Supply Contract or Clause 18 of the Onshore Services Contract plus six 6 months towards Claim Period provided the termination is number due to breach of Contract on part of ANSALDO.
The said application was dismissed by the learned Additional District Judge.
Clause 9.2 of the Offshore and Onshore Supply Contracts which provides for issuance of Bank Guarantee against submission of advance payment, reads as under OFFSHORE SUPPLY CONTRACT 9 Contract Price and Terms of Payment 9.1 As payment for ANSALDOS performance of the supplies and obligations under this Contract, MPEB shall pay to ANSALDO an amount of Seventeen Million Eighty One Thousand 17.081 Million US Dollars, as per the price breakdown furnished in the Sixth Schedule.
Clause 16.3 of the Offshore Supply Contract requires a written numberice to be issued to the defaulting party in case of a substantial breach of the Agreement.
Award of the Arbitral Tribunal The Arbitral Tribunal framed the following issues for determination of the dispute raised by the Claimant Whether the Respondent had supplied the technical documents and information to the Claimants as required by Clause 5.8 iv of the Onshore Services Agreement?
Aggrieved by the judgment of the High Court, the Board has filed the above Appeal.
On the basis of the opinion that the Arbitral Tribunal had acted in excess of its jurisdiction in granting relief to the Claimant under the above heads, the learned Additional District Judge set aside the award.
Relying upon the companyditions in the Bank Guarantees which related to the invocation only on the number fulfillment of companytractual obligations, the High Court approved the findings of the Arbitral Tribunal that the Board companyld number have invoked the Bank Guarantees without proving breach of companytractual obligations on the part of the Claimant.
Thereafter, there was exchange of companyrespondence and several meetings held between the Claimant and the Board for resolution of certain issues.
The Zero Date i.e. effective date of Contract as per Clause 7 of the Overall Coordination Agreement is as follows Notice to Proceed 7.1 Zero Date Effective Date of Contract The zero date of the Contract shall mean the date on which the all the following companyditions are fulfilled Signature of the Contract Receipt by ANSALDO of the Notice to Proceed Receipt by MPEB the Bank Guarantee from ANSALDO for the Advance Payment 10 of the Contract Price Receipt by ANSALDO of the Advance Payment Receipt by ANSALDO of the Letter of Credit for the Offshore Supply and Letter of Comfort/ Support for Onshore Supply and Onshore Services Financial tie up of PFC loans 7.2 If the Start Date has number occurred on or before six 6 months after the date hereof, then the Contract will automatically expire, without any liability on either side and the price will cease to be valid and will be subject to renegotiation.
The Petition filed by the Board under Section 34 of the Arbitration and Conciliation Act, 1996 for short the Act was allowed by the learned 7 th Additional District Judge, Jabalpur and the award dated 23 rd September, 2004 of the Arbitral Tribunal set aside.
The above Bank Guarantees were given towards advance payment that was to be made by the Board.
Thereafter, the Board proceeded to issue a numberice for default as provided in Clause 16.3 of the Offshore and Onshore Supply Contracts and Clause 17.3 of Onshore Services Contracts on 29 th August, 2001.
The Bank Guarantees given on 22.02.2000 and 23.02.2000 were companyditional.
The Claimant further companyplained of a misrepresentation of the warranty companytained in Clause 19.2 vii of both the Onshore and Offshore Supply Contracts and Clause 20.2 of the Onshore Services Contract.
Not satisfied with the explanation given by the Claimant, the Board terminated the companytract.
However, the Learned Additional District Judge found fault with the award pertaining to Bank Guarantees and the amounts specified in Exhibit GG of the Claim Petition.
Four Agreements in all were entered into between the Claimant and the Board.
Whether Units 3 and 4 of the Amarkantak Power Station did in fact operate at a capacity of 120 MW when they were first installed in 1997 when operating in accordance with Good Industry Practice as warranted by the Respondent in Clause 19.2 vii of the companyditions of companytract for Offshore and Onshore Supplies and Clause 20.2 of the companyditions of companytract for Onshore Services?
Another Bank Guarantee was furnished by the Claimants on 23rd February, 2000 as per the stipulation in Clause 9.2 a of the Offshore Supply Agreement for US 1,708,100/ .
Whether the Respondent companyoperated with the Claimants in carrying out the RLA tests?
The validity of the Bank Guarantee shall expire upon the earlier of the Completion Date plus six 6 months towards Claim Period the date of termination of this Agreement pursuant to Clause 17 of the Offshore Supply and Onshore Supply Contract or Clause 18 of the Onshore Services Contract plus six 6 months towards Claim Period provided the termination is number due to breach of Contract on part of ANSALDO upon submission of Guarantee Bond as per clause 4.3 of this Agreement.
The Claimant raised a dispute which was referred to Arbitration.
4.2 ANSALDO shall deliver to MPEB a Bank Guarantee as per attachment to this Co ordination Agreement in the sum of twelve and one half per cent 12 of the Total Contract Price to guarantee the successful achievement of the Guarantee Parameters Indemnity Bank Guarantee .
The agreements are voidable at the option of the Claimants and have been avoided by them.
9.2 TERMS OF PAYMENT MPEB shall pay to ANSALDO an interest free advance payment the Advance Payment equal to ten per cent 10 of the Contract Price on the date on which MPEB issues the Notice to Proceed Against submission of Advance Payment Bank Guarantee on declining basis, of equivalent value, valid upto the date of companypletion of the last supplies.
The Respondent shall pay to the Claimants i the sum of Rs 39,80,98,429/ with interest thereon at the rate of 12 per annum from 5th July, 2001 till the date of the Award and thereafter until payment or realization.
Shrivastava, Additional Superintending Engineer of the Board was referred to by the Arbitral Tribunal to hold that they admitted to the fact that there was numberwaiver to the production of Letter of Comfort in writing by the Claimants.
A cure period of 30 days is provided in Clause 16.4 to the defaulting party after receipt of the numberice under Clause 16.3.
The Claimants companytention before the Arbitral Tribunal was that the production of the Letter of Comfort was a fundamental companydition of the agreements and the failure to produce it was a breach of the companytract.
The above findings on the Letter of Comfort are on appreciation of evidence.
According to the Arbitral Tribunal, the Claimant did number insist on the Letter of Comfort to be produced as a pre condition to the Zero Date, which did number preclude to their seeking the same at a later date as per Clause 16.5 of the Overall Co ordination Agreement and Clause 22 23 of the Supply and Services Contracts respectively.
The third Bank Guarantee was given by ANZ Grindlays Bank, New Delhi on behalf of the Claimant for Rs.18.48 crores which was towards performance guarantee under Clause 4.1 of the Overall Coordination Agreement.
Saxena.
Whether the Claimants are entitled to the amount claimed in Exhibit FF to the Statement of Claim?
However, the details of the meeting companyld number be given by Sh.
There is a further requirement in the said Clauses that the Board shall ensure that the Letter of Comfort is maintained in full force and effect throughout the term of the agreements.
The oral evidence of Sh.
The Appeal filed by the Claimant against the judgment of the learned Additional District Judge was later withdrawn and the dismissal has attained finality.
The learned Additional District Judge upheld the findings of the Arbitral Tribunal on Issues No.1 to 7.
The Board subsequently made advance payments of the amounts equivalent to the two Bank Guarantees dated 22nd February, 2000 and 23rd February, 2000 given by the Claimant.
Whether the unilateral amendment by the Respondent of the Letter of Credit without the companysent in writing of ANSALDO Energia P.A. Claimant No.1 ANSALDO was wrongful and whether such amendment required the companysent of ANSALDO and of its bankers?
Whether the invocation and encashment by the Respondent of the Bank Guarantees was wrongful, premature, illegal and fraudulent?
The Agreements As stated above, the Contract between the Claimant and the Board pertains to refurbishment of Units 3 and 4 of the Amarkantak Thermal Power Station located in Shadol District of Madhya Pradesh.
The breach of the companytract on the part of the Board was due to the failure in furnishing Letter of Comfort from the Power Finance Corporation, number supply of the technical documents and information as required by Clause 5.8 iv of the Onshore Service Agreement and misrepresentation.
Letter of Comfort and Waiver Clause 5.14 of the Onshore Services Contract and Clause 5.6 of the Onshore Supply Contract provide for an irrevocable Letter of Comfort to be issued by the Power Finance Corporation in favour of the Claimant, on the date of issuance of the Notice to Proceed by the Board.
The Arbitral Tribunal refused to accept the point canvassed by the Board relating to waiver on the basis of the evidence of Sh.
This finding was on the basis that the Board companymitted a breach of the companytract.
Saxena.
An Overall Coordination Agreement was executed on 24th August, 1999 which provided for three other Agreements which are Offshore Supply Contract, Onshore Supply Contract, Onshore Services Contract.
iii The respondent shall pay to the Claimants the sum of Rs.2000000 as and by way of companyts, including the companyts of the arbitration proceedings.
G.Ravindran was companysidered by the Arbitral Tribunal with reference to the evidence on record.
The Boards response to such companytention was that the Claimant is deemed to have waived the production of the Letter of Comfort.
The agreements were wrongfully terminated by the Respondent.
Breach of companytract by the Board in view of a violation of a fundamental companydition of the companytract i.e., number furnishing Letter of Comfort from Power Finance Corporation and, b misrepresentation by the Board in Clause 19.2 vii of the agreements as companycluded by the Arbitral Tribunal were approved by the learned Additional District Judge.
The production of the Letter of Comfort was a fundamental companydition of the agreements and the failure to produce the same was a breach by the Board.
as per the price breakdown furnished in the Sixth Schedule.
Aggrieved by the rejection of Issue No.13 by the Arbitral Tribunal which pertains to amounts mentioned in Exhibit HH to the Statement of Claim Damages for the wrongful breach of Contract , the Claimant preferred an application under Section 34 of the Act.
The Board companyplained of substantial breach of Agreement on the part of the Claimant.
The companytents of the letter dated 10.03.2000, written by the Claimant to the Board were examined by the Arbitral Tribunal to companyclude that there was numberwaiver of production of the Letter of Comfort.
Such Bank Guarantee shall be delivered to MPEB on the date ANSALDO submits its initial monthly invoice for payment to MPEB.
M.P. Power Generation Co. Ltd. formerly known as Madhya Pradesh Electricity Board hereinafter referred to as the Board invited proposals for refurbishment of Units 3 and 4 of the Thermal Power Plants at Amarkantak having the capacity of 120 MW by a numberice inviting tender dated 24th October, 1996.
These records were number furnished to the Claimants despite repeated requests by the Claimants.
The Board invoked the three Bank Guarantees on 23rd June, 2001.
Whether the issuance of the Letter Comfort/ Support by Power Finance Corporation to Asia Power Projects Pvt.
Saxena, Superintending Engineer and Sh.
NAGESWARA RAO, J. Leave granted.
ii the sum of Rs.11,14,55,042/ with interest thereon at the rate of 12 per annum from 29th July, 2002, being the date of the claim, till the date of the Award and thereafter until payment or realization.
The validity of such Bank Guarantee shall expire at the end of the third year after the date of the Second Unit Completion Date.
Two Bank Guarantees dated 22.02.2000 and 23.02.2000 were for Rs.9.29 crores and US 1,708,100/ towards the advance payment to be paid by the Board.
The Bank Guarantees dated 22.02.2000 and 23.02.2000 were in terms of Clause 9.2 of the Onshore and Offshore Supply Contracts respectively.
G.Ravinderan made a companycession of waiver of production of the Letter of Comfort in a meeting.
7.3 MPEB may number issue a Notice to Proceed under any of the Refurbishment Contracts without issuing a Notice to Proceed under all of the Contracts.
Representations and warranties on the part of the Board are dealt with in Clause 19.2.
The Claimant was given 30 days time for curing the defaults.
Whether the termination of the Contract Agreements by the Respondent was wrongful?
In response to a letter written by the Board on 15 th June, 2001, the Claimant wrote to the Board on 21 st June, 2001 to treat the Agreement as expired.
Thereafter, on 24th August, 1999 four Agreements were signed between the Claimants and the Board viz Overall Coordination Agreement, Offshore Supply Contract, Onshore Supply Contract and Onshore Services Contract.
A provisional Letter of Intent for refurbishment of Thermal Power Plant of 2 x 120 MW PhaseII was issued by the Board to Respondent No.1, ANSALDO Energia SPA for short the Claimant on 11th May, 1999.
A Bank Guarantee dated 22 nd February, 2000 was furnished by the Claimants as per Clause 9.2 a of the Onshore Supply Contract for Rs.
