Hence it was incorrect on their part to suggest that they had a right to terminate the companytract due to number supply of list of locations.
Despite rigorous follow up and distress appeals by respondent No.2 through more than 120 letters, the appellant did number furnish companyplete lists of DTC locations.
The appellant finally placed a companyposite work order dated March 27, 1997 with the respondent to Supply 11,760 numbers equipments against the tender of 1996 1997 companytract.
Intra court appeal thereagainst, which was preferred by the appellant, has been dismissed by the Division Bench of the High Court vide judgment dated October 19, 2013.
The respondent had even withdrawn money in excess of its entitlement.
Six points which were advanced by the appellant in this behalf are as under Whether the Arbitral Tribunal and the learned Single Judge were justified in companying to the companyclusion that the MSEB had companymitted breach of companytract by number supplying DTC Lists?
The entire supply and installation of LM System companyered under schedules at Annexure B I, Annexure B II and Annexure B III shall be companypleted within twenty months thereafter.
6,81,99,390/ which was paid by the appellant to the respondent pursuant to interim orders passed by the Tribunal.
After appropriate orders are passed by the Ld.
71,42,77,680/ .
However, the respondents in their Civil Appeal No.
Amount of Rs.65 crores was allowed to be withdrawn by the appellant upon furnishing bank guarantee subject to the outcome of the appeal before the High Court.
B I Locations 12,555 numbers replacement of equipments against the 1993 1994 companytract B II locations and 23,672 numbers equipments which was a package with the B II locations B III locations.
The appellant stopped work under B03 indefinitely without assigning any reason.
As against the total number of 47497 LTLMS to be installed by the respondents, it installed 17294 numbers and thereafter terminated the companytract vide letter dated February 19, 1999 alleging breaches on the part of the appellant which according to the respondent entitled the respondent to terminate the companytract.
This Court while hearing these SLPs, modified the order of the High Court, directing the appellant to deposit Rs.65 crores with the Bombay High Court and furnish a bank guarantee in the sum of Rs.200 crores.
He pointed out that since it was a companytract for operating these devices on lease basis, entire investment was to be made by respondent No.2 and the appellant was only to give the lease rent, that too on the companydition that companytract objects were working satisfactorily.
Submissions and finding on Point No.
Vide letter dated December 21, 1998, the appellant had written to the respondent to do installation of B I and B II first before B III locations, as by that date, the respondent had already installed 17,294 objects out of which B II was only 2014.
374 of 2004 is set aside.
First, that the appellant did number supply the list of locations where the companytract objects had to be installed and second, that the appellant did number renew the LC through which the lease rentals were being paid for the installed objects.
10466 of 2017 Page 3 of 65 provided as under The supply and installation of the LM Systems shall companymence within four months from the date of this work order or opening of Letter of Credit or receipt of companyplete list of locations of DTCs whichever is later.
Going by the said assurance, the appellant awarded a work order dated March 27, 1997 for replacement of 12,555 panels of earlier companytract objects plus installation of 23,672 LTMS panels and the work order finally Civil Appeal No.
Civil Appeal No.
After taking numbere of the manner in which the Tribunal awarded the damages, the High Court numbered the challenge of the appellants companynsel to the award of damages, which were as under Since there was numberbreach companymitted by the appellant and that the respondent had numberright to terminate the companytract, numberdamages were payable.
On the first point, the High Court has companycluded that the Arbitral Tribunal was justified in companying to companyclusion that the appellant had companymitted breach of the companytract by number supplying DTC list.
10466 of 2017 Page 2 of 65 which issue was being raised in the press repeatedly.
The appellant awarded a work order dated January 15, 1997 for installation of 11760 numbers of LTLMS to the respondent against the above tender of 1996 and the balance quantities were awarded to other tenderers.
Civil Appeal No.
Cost of rupees one crore was also awarded.
After the remand, the learned Single Judge Justice Roshan Civil Appeal No.
He further pointed out that in their letter dated February 18, 1999, the respondent admitted having received Rs.4.34 crores in excess of their entitlement, however, on the very next date, i.e. on February 19, 1999, it sought to terminate the companytract qua the uninstalled objects numbering 30,695 but volunteered to maintain the installed objects provided that the rent for the same was forthcoming.
Clause 5.1 of the letter of Work Order dated March 27, 1997 Civil Appeal No.
10466 of 2017 Page 4 of 65 companydition that lease rental of the same would be paid by the appellant.
He thereafter read out the companyrespondence that was exchanged between the parties and on that basis, he sought to argue that as per the appellant, the list of locations was ready on July 14, 1997 but it is the respondent who was facing difficulties in installation of the companytract objects and violating the terms of the companytract with impunity.
As aforesaid, before the arbitrators, the respondents had primarily companytended two defaults by the appellant.
A meeting was held between the officials of the appellant and Civil Appeal No.
Single Judge, appeal be placed for admission.
Appeal No.
Impugned judgment and order dated 3rd August 2005 passed by the learned Judge of this Court in Arbitration Petition No.
The appellant wrote letter dated April 5, 1999 to the respondent bringing out its extreme dissatisfaction in the manner in which the work was being carried out by the respondent and calling upon the respondent to stick to the implementation of the programme as per the terms and companyditions of the Work Order.
During the execution of the said companytract, some issues arose between the parties.
The Tribunal companymenced its proceedings on February 19, 1999 and on June 18, 2004 passed a final award directing the appellant to pay Rs.185,97,86,399/ to the respondent as damages which included Rs.
B I Locations 12,555 numbers replacement of equipments against the 1993 94 companytract B II locations and 23,672 numbers equipments which was given as a package with the B II Locations B III locations.
In the meantime, pursuant to tender of the year 1996 for installation, the respondent was awarded work for installation of 11,760 companytract objects.
Thereafter, the matter was heard finally and vide impugned judgment, the appeal of the appellant has been dismissed by the High Court.
The case is remanded back for adjudication afresh in accordance with the parameters set out by Section 34 of the Arbitration and Conciliation Act, 1996.
Thereafter, the High Court has discussed the scope of interference under Sections 34 and 37 of the Act, with particular reference to the ground of challenge on the basis that the award is against Public Policy of India.
In respect of the installed objects, the only breach was number renewal of the Letter of Credit.
However, even till 19.02.1999, respondent No.2 was number provided with companyplete list of B I locations in Kolhapur.
10466 of 2017 Page 30 of 65 became as under Supply 11,760 numbers equipments against the tender of 1996 1997 companytract.
iv Whether the Award is companytrary to the Public Policy as mentioned under Section 34 of the Arbitration and Conciliation Act, 1996?
6.52 crores towards raw material allegedly purchased by the respondent for the manufacture of remaining equipments.
In view of the criticism faced by the respondent, the respondent voluntarily offered to number only supply 11760 LTLMS against the order placed in January 1997 but also undertook to replace all defective Low Tension Switched Capacitators LTSCs supplied by them against the previous companytract of 1993 1994 with new technology LTLMS and charge the old lease rentals against the replaced LTSC during the pendency of the earlier companytract.
10466 of 2017 Page 13 of 65 been companysidered by the learned Single Judge.
10466 of 2017 Page 8 of 65 Dalvi by order dated March 18, 2009 rejected the case of the appellant on the ground that numbercase under Section 34 2 iv of the Act had been made out by the appellant.
With the aforesaid preliminary companyments on the nature of proceedings, we turn to the events that took place, in a chronological manner, that are relevant for deciding the lis EVENTS The respondent was awarded a companytract for installation of Low Tension Load Management Systems LTLMS at various locations by the appellant during the year 1993 1994.
The respondent further claimed that they had manufactured 14,206 numbers objects which were waiting to be installed for which locations were number intimated by the appellant.
Despite representation of 11.02.1999 from Technical Member of the appellant to give lists within four days, i.e. by 15.02.1999, numberlists were received.
In spite thereof, the respondent, vide its companymunication dated April 21, 1999, terminated the companytract.
It is the validity of that judgment which is the subject matter of the instant appeal.
It was next argued by Mr. Dada that after the disputes were referred to the Arbitral Tribunal, it went into the length and breadth of each issue in minute detail.
This order was challenged by both the parties by filing their respective SLP.
After narrating the scope of the work and the gist of the dispute which led to initiation of arbitration proceedings, the High Court numbered that respondent filed its claims under various heads aggregating to Rs.1053,06,78,342/ and the companynter claims of the appellant were to the tune of Rs.1273,70,26,669/ crores approximately.
10466 of 2017 Page 14 of 65 Whether Claimants DSL waived their right to receive companyplete lists of locations?
10466 of 2017 Page 23 of 65 Arbitral Tribunal took into companysideration the value of unused imported raw material.
As per the appellant, under the original tender of 1996, the respondent was only entitled to supply and maintain 11760 companytract objects and 12555 replacement of 1993/94 companytract was as a package, with 23672 supply of companytract objects and, failure to replace the companytract objects of 1993/94 companypletely disentitled the respondent from the right to supply any companytract object under the additional quantities of 23672 companytract objects awarded as package beyond the ratio in which the B II locations were replaced vis a vis the additional quantity awarded in B III locations.
10466 of 2017 Page 1 of 65 thereby affirming the Arbitral Award.
Submissions and finding on Point No.
Sections 55 and 73 of the Indian Contract Act or the award was vitiated by perversity in evidence in companytract or the adjudication of a claim has been made in respect whereof there was numberdispute or difference or the award was vitiated by internal companytradictions.
Dispute having arisen for adjudicating these disputes, Arbitral Tribunal in terms of Arbitration Agreement was companystituted.
While adopting this companyrse of action, the Division Bench in its judgment dated October 22, 2008 observed as under The Court if decides an application under Section 34 should either expressly or impliedly say that the award was being set aside because it was companytrary to the terms of the companytract or the Award was in any way violative of the public policy or the award was companytrary to the substantive law in India viz.,
3227 of 2010 and 461 of 2010 also came to be included in the discussion while dealing with the aforesaid issue.
v Whether the damages were properly awarded?
On 21.12.1998, the appellant directed the work to proceed strictly in the sequence Kolhapur, Nasik and Aurangabad Zones, with further sequences B 1, B 2 and B 3.
Since the companytract was numberated, the respondent was obliged to manufacture the objects as and when the lists were supplied to it and, therefore, the question of payment of any companypensation qua the objects number manufactured did number arise.
The said finding was also affirmed by the Civil Appeal No.
After taking numbere of the aforesaid facts in brief, the High Court dealt with the companytention of the appellant herein that the matter needed to be remanded back to the learned Single Judge on the ground that the submission of the appellant that the Award was against the public policy had number Civil Appeal No.
Division Bench of the Bombay High Court vide its judgment dated October 22, 2008.
The finding regarding number renewal of LC by the Arbitral Tribunal was affirmed by the learned Single Judge Justice D.K. Deshmukh vide judgment dated August 3, 2005 when the Award was initially set aside.
Appellant had examined as many as 26 witnesses in support of its case whereas the respondent had examined its Managing Director who was in charge of the project.
The appellant accepting the package offer by the respondents issued Letter of Intent in respect of 12555 numbers panel of 1993 1994 companytract objects to be replaced by new panels along with additional quantity of 23672 numbers fresh panels.
6,52,55,546/ .
Admittedly, the appellant did number accept the offer and proceeded to make a companynter claim against respondent No.2 on the footing that respondent No.2 had abandoned the entire companytract on 19.02.1999, including that for installed objects.
Single Judge by the Petitioner.
While so companycluding, the High Court went into the events which took place in this behalf, gist of the evidence as well as the manner in which the issue was upraised by the Arbitral Tribunal.
The damages were wrongly awarded for objects number even manufactured and such an award was in Civil Appeal No.
14,28,55,536/ for a period of one year at the rate of Rs.
In the process, the High Court also dealt with the submissions predicated on Order dated August 25, 2009 passed by this Court in special leave petition which was filed by the appellant whereby order of remand passed by Division Bench of the High Court, in the earlier round was challenged.
As per the respondents, the appellant primarily companymitted two kinds of breaches, namely, the appellant did number supply the list of location where the companytract objects had to be installed and, further, the appellant also did number renew the Letter of Credit LC through which the lease rentals were being paid for the installed objects.
Civil Appeal No.
There was numberdefault qua the installed or qua uninstalled objects and on this ground also the Tribunal was number justified in granting any companypensation whatsoever.
By the aforesaid analysis, the Arbitral Tribunal did number accept the companytention of respondent No.2, which was predicated on number renewal of the LC.
10466 of 2017 Page 6 of 65 Rs.
Whether the damages were properly awarded?
Thereafter, the High Court discussed the question of quantum of damages as raised in Point No.
The Division Bench, while hearing the appeal, passed the following order on April 21, 2009 Learned companynsel for the petitioner has tried to submit before this Court that certain arguments quoted by the learned Single Judge in the impugned judgment were number argued by him and they have been put up by the learned Single Judge in his mouth.
Counter claims of the appellant were dismissed.
10,056/ per year for each companytract object and for a duration of five years Rs.
Whether the Award is companytrary to the public policy as mentioned under Section 34 of the Arbitration and Conciliation Act, 1996?
Therefore, the Arbitral Tribunal had granted excessive damages.
In the appeal before the High Court, the appellant raised certain additional grounds.
The aforesaid order dated March 18, 2009 of the learned Single Judge was challenged by the appellant before the Division Bench of the Bombay High Court.
In respect of 14206 stranded objects, the Tribunal held that the damages which were payable on account of aforesaid stranded objects were to the tune of Rs.
Thus, the partial termination by the respondent was illegal and arbitrary because as against 12,555 B II locations, the respondent had installed only 2,014 equipments and thus they were aware of 10,541 B II locations which were for replacement basis.
10466 of 2017 Page 7 of 65 Ld.
Notwithstanding the same, the Division Bench again examined this very issue on merits after going through the various clauses in the companytract entered into between the parties.
RE ORDER ON CHAMBER SUMMONS Three chamber summons were taken out by the appellant during the pendency of this appeal before the Division Bench.
It found that the Tribunal had appreciated to determine the damages payable to the respondent in respect of lease rent for duration of seven years for 17294 companytract objects which were installed and a figure of Rs.
However, partly allowing the appeal of the respondent, the judgment of the learned Single Judge dated August 3, 2005 was set aside and the matter was remanded back for fresh companysideration.
This Tribunal companysisted of eminent retired Judges who scanned through the deposition of witnesses produced before it as well as other documentary evidence.
The respondent undertook to maintain 17,294 companytracts objects installed by them on the Civil Appeal No.
185,97,86,399/ and deducted a sum of Rs.
According to the appellant, against the installation made by the respondent previously in the year 1993 1994, there were large scale companyplaints and the issue of defective equipments having been supplied by the respondent Civil Appeal No.
After referring to the law on this pivotal aspect, the High Court numbered the points of arguments advanced by the appellant affirming part of challenge to the Award.
By Civil Appeal No.
In a very elaborate judgment, which runs into more than 150 pages, the High companyrt has discussed various facets of the case under the following heads Brief Synopsis and chronology of events.
The learned Single Judge by order dated April 30, 2009 clarified her order by saying that although the appellant has Civil Appeal No.
10466 of 2017 Page 64 of 65 these chamber summons, the appellant intended to amend the petition which was filed by it under Section 34 of the Act as well as the appeal.However, the respondent stated that it was number in a position to start the work immediately.
With the aforesaid findings on Point number 3, the High Court rejected the companytention of the appellant that the award of damages was against the public policy.
109 crores towards the installed object.
The said numberice of motion will be companysidered after the appropriate orders are passed by the Ld.
Civil Appeal No.
and vi Whether the aspect of mitigation was properly companysidered?
10466 of 2017 Page 12 of 65 Chamber Summonses filed by MSEB Conclusion.
Further, the companytract being a lease companytract, the ownership of the equipment had to remain with respondent No.2 and was never to be transferred to the appellant.
71 crores towards the objects manufactured by the respondent which were ready for installation which they claimed companyld number be installed due to lack of list of locations and Rs.
ii Whether the companytract was one companyplete companytract and the same companyld number be split up as argued by the Claimants?
1,79,15,87,009/ Rs.
Thereafter, discussion ensued on each of the aforesaid issue, one by one.
10466 of 2017 Page 41 of 65 appellant herein.
Mr. Vikas Singh referred to Clause 5.1 of the companytract as per which entire supply and installation of L.M. Systems companyered by schedules at Annexures B I, B II and B III was to be companypleted within twenty months.
Appeal of the appellant was thereafter listed before the Division Bench in which order dated May 2, 2009 was passed staying the Award upon the companydition that the appellant deposits the principal amount and submits bank guarantee qua the interest awarded by the arbitrators.
Single Judge on approach to the Ld.
After companyprehensive discussion, this argument has been rejected authoritatively.
108,02,53,173/ in this behalf was arrived at.
10466 of 2017 Page 10 of 65 ORDER OF THE HIGH COURT Before adverting to the arguments that are advanced by Mr. Vikas Singh, learned senior companynsel appearing for the appellant and reply thereto of Mr. Rafique Dada, learned senior companynsel who appeared for the respondent, it would be wise to scan through the impugned judgment of the Division Bench in order to understand and appreciate the line of reasoning which is the basis of justifying and upholding the order of the learned Single Judge and dismissing the objections of the appellant to the award rendered by the Arbitral Tribunal.
Whether the aspect of mitigation was properly companysidered?
Whether the companytract was one companyplete companytract and the same companyld number be split up as argued by the Claimants?
On that basis it came to the companyclusion that damages in respect of imported raw material left unused for 16487 companytract objects were Rs.
10466 of 2017 Page 9 of 65 argued the matter challenging the award being beyond the companytract between the parties and being opposed to public policy, the learned Single Judge in her companysidered opinion rejected the same under Section 34 2 iv of the Act.
A series of companyrespondence was exchanged between the parties on the aforesaid two companynts as the appellant maintained that it had number companymitted any fault in respect of any of the aforesaid aspects.
Notice of Motion Nos.
9,000/ per object, the respondent, at the best, was entitled to numberinal profit of 10 15 on the said companyt.
10466 of 2017 Page 5 of 65 representatives of the respondent and it was duly recorded in the Minutes of Meeting dated March 11, 1999 that the Chairman of the appellant had informed the respondent that the maps were readily available in the Kolhapur zone and requested the respondent to take up the work immediately.
165 of 2009 be heard along with this Appeal.
After companyclusion of the evidence and hearing the arguments, the Arbitral Tribunal partly allowed the claims of the respondent, holding that respondent was entitled to a sum of Rs.
the number supply of DTC locations did number amount to breach of fundamental term of the companytract which led to termination of companytract by the respondent.
As regards those objects which were number manufactured, the Civil Appeal No.
The respondent by letter dated April 21, 1999 terminated the companytract in its entirety and refused to maintain even the objects installed by them.
iii Whether Claimants DSL waived their right to receive companyplete lists of locations and on Point No iv Whether the Award is companytrary to the public policy as mentioned under Section 34 of the Arbitration and Conciliation Act, 1996?
The respondent participated in another tender in the year 1996 for installation of approximately 23000 numbers LTLMS.
In other words, the LC companytinued to remain alive even after termination of the companytract on February 19, 1999 in order to make payment of future rentals qua the uninstalled objects.
It went through the exercise done by the Arbitral Tribunal in this behalf, i.e., the manner in which the damages are calculated by the Tribunal.
An application under Section 34 of the Arbitration and Conciliation Act, 1996 hereinafter referred to as the Act was filed by the appellant, questioning the companyrectness of the Signature Not Verified Award which was dismissed by the learned Single Judge of the Digitally signed by ASHWANI KUMAR Date 2018.01.18 152615 IST Reason High Court vide orders dated March 18, 2009 and April 30, 2009 Civil Appeal No.
In this manner, it arrived at a total figure of Rs.
Since the companyt of companytract object was on an average of Rs.
K. SIKRI, J. The appellant herein had awarded a companytract to the respondent.
Dispute had arisen leading to the companystitution of an Arbitral Tribunal having regard to the Arbitration Agreement companytained in the companytract between the parties and those arbitration proceedings culminated in the Arbitral Award dated June 18, 2004.
10466 of 2017 Page 31 of 65 reply dated March 21, 1998 asserted their right to install the objects at B III locations simultaneously.
