Bangalore District Court
Refex Energy Ltd vs Bharat Heavy Electricals Limited on 18 March, 2025
KABC170017572022
IN THE COURT OF LXXXVI ADDL. CITY CIVIL & SESSIONS
JUDGE, (COMMERCIAL COURT) BENGALURU (CCH-87)
Dated this the 18th day of March, 2025
Present: SRI. JITHENDRANATH c.s., B.A., LL.M.,
LXXXVI ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.P.No.66/2022
BETWEEN:
PETITIONER Refex Energy Ltd.
(Now known as Svaryu Energy Ltd.)
No.203, Centre Point,
Opp. Parel Post Office, Jijibhoy Lane,
Lalbaug, Mumbai - 400 012
Authorized Representative
Mr.R.K. Sharma
(By Sri.Venkatesh P. Dalwai, Advocate)
- Vs -
RESPONDENTS 1. Bharat Heavy Electricals Ltd.
Regd. office: BHEL House, Siri Fort,
New Delhi
Electronics Division Office at:
BHEL, Electronics Division,
Mysore Road,
Bengaluru - 560 026
(By Sri.Parvathy Giri, Advocate)
2. Mr. Justice A. V. Chandrashekhar,
No.406, 3rd Floor,
Ramsridhar Apartment,
2nd Cross, 9th Main,
BTM Layout, 2nd Stage,
Bengaluru - 560 076
2 Com.A.P.No.66/2022
Date of Institution : 30.06.2022
Nature of the Petition : Sec.34 r/w Sec.28(1) and (3) of
the Arbitration & Conciliation Act
Date on which the
Judgment was pronounced : 18.03.2025
Total Duration : Year/s Month/s Day/s
02 08 18
(JITHENDRANATH C.S.)
LXXXVI Addl. City Civil & Sessions Judge
(Commercial Court), Bengaluru
ORDER
Feeling aggrieved by the arbitral award dated 20.11.2021 passed by the learned sole arbitrator, the respondent before the arbitral tribunal has filed the present petition under Section 34 r/w Sec.28(1) and 28(3) of the Arbitration and Conciliation Act, praying this court to call for the records in the matter of the arbitration dispute and to set aside the impugned award to the extent, allowing the claim of the respondent and rejecting the claim of the petitioner.
2. Petitioner herein was the respondent and the respondent No.1 (hereinafter referred to as 'Respondent' for 3 Com.A.P.No.66/2022 brevity) herein was the claimant before the learned arbitral tribunal. The respondent is a Govt. company incorporated under the Companies Act. The respondent had secured a contract for establishment of 15 MW Solar PV Power Plant from Thermal Power Unit from National Thermal Power Corporation (NTPC). The worth of the project was approximately Rs.90,00,00,000/-. The entire project had to be completed before 25.04.2014. In order to execute a part of work, the respondent had floated several tenders, one such tender was bearing No.RFQ HBSMM dated 25.10.2013. Several companies participated in the bid and the petitioner herein emerged as a successful L1 bidder. In pursuance of acceptance of the tender, the respondent had issued four separate purchase orders from 03.01.2014, the total cost thereof was Rs.18,00,90,449/-. The respondent interalia imposed a condition that, all the works except installation and commission shall be completed before 04.04.2014 and the entire contract shall be completed before 24.05.2014.
3. As per the purchase orders, the petitioner was required to (i) supply 12 numbers of 1600 KVA transformers of the value of Rs.8,49,00,000/-, (ii) Construction of 4 Com.A.P.No.66/2022 approach road and level crossing, value of which was Rs.4,82,00,000/-, (iii) Installation and commissioning of transformers, the value of which was Rs.3,26,75,000/-, and
(iv) For operation and maintenance, the value of which was Rs.1,43,15,449/-.
4. The version of the respondent before the learned arbitral tribunal was that, the petitioner did not carry out the works entrusted in the aforementioned purchase orders. In view of the petitioner abandoned the work, the respondent was compelled to invoke Risk Purchase Clause in the agreement and called for a fresh tender to get the works executed by another agency and finally entrusted the work to another agency for a value of Rs.99.00 lakhs, Rs.61.20 lakhs and Rs.72.00 lakhs respectively and incurred loss due to escalation in the cost of the works done by another agency. The work of boundary wall, watch tower, work control room and other civil works was entrusted to M/s J. K. Constructions for Rs.51.86 lakhs and M/s Track and Towers for a sum of Rs.3.77 Crores. As a result of escalation in the value of the contract entrusted to the new agencies, the respondent incurred an additional cost of Rs.7,02,27,600/-. 5 Com.A.P.No.66/2022 In view of the work getting executed by other agencies, the delay was occurred to which the NTPC imposed a penalty of Rs.4,47,76,983/- on the respondent. In this background, the respondent made the following claims before the arbitral tribunal -
Sl.No. Details of Claims Amount (Rs.)
1. Towards Risk Cost, that is differential of aggregate values POs on new 7,02,27,600/-
contractors/vendors and value of all the POs issued to respondent
2. Penalty / LD by NTPC for delay 4,47,76,983/-
3. Total of claims 11,50,04,583/-
4. Add : BHEL Handling charges @ 30% on 3,63,61,346/-
above total of Rs.11,50,04,583/-
Total Claim Amount 15,13,75,929/-
5. The petitioner herein had filed his statement of defence before the learned arbitral tribunal interalia contending that, as per the commercial terms and conditions (annexed to the Purchase Orders) the petitioner was required to supply 12 numbers of 1600 KVA transformers within 12 weeks from the date of approval of the engineering documents, the installation and commissioning was required to be completed within four weeks after receipt of transformers at site. The respondent was required to supply 6 Com.A.P.No.66/2022 the drawings within one week from the date of purchase orders. The petitioner alleged that, within one week from the date of purchase orders, the respondent had supplied some of the drawings and remaining drawings were not furnished. The petitioner further alleged that, the respondent did not furnish any technical inputs to the petitioner during pre award stage and respondent did not consider any time required for approval of the engineering documents in the purchase orders. Though the terms provided only one week from the date of purchase order for submission of drawings, the respondent failed to provide technical specifications of the inverters until mid of January 2014 and further also failed to provide model drawing list prepared as part of the contract with NTPC until 16.01.2014 which was further revised on 29.01.2014. The tender between the respondent and NTPC specified IRC-37 as the standard approach road to be built and the same was not incorporated by the respondent in the tender document issued to the petitioner. This constrained the petitioner to revise the drawings for the approach road since after submission of the drawings in compliance with IRC-37 as required by the NTPC. The respondent also revised the schedule of activities and pressured the petitioner to 7 Com.A.P.No.66/2022 complete the approach road by 20.01.2014 when this activity was to be completed by 04.04.2014 and modules were required at the site for installations only in April 2014. The petitioner herein further contended that, in the meeting held on 25.02.2014 the specifications in the tender were also unilaterally altered by NTPC with respect to the boundary wall. Therefore, the petitioner was not in a position to execute the work at higher cost factoring the NTPC charges and recover the same from the respondent. The petitioner with all diligence provided drawings of the boundary wall and also addressed the concerns of the respondent's design consultant. Ultimately, the respondent was unable to convince NTPC to give-up the change in specifications. In the meantime, the petitioner also made some progress in the project and in spite of that, the respondent without cancelling the contract with the petitioner issued a fresh tender. The petitioner had raised invoices of Rs.21,48,139/- towards the works done. The respondent did not make any payment towards the said invoice. Therefore, the petitioner sought for counter claim for recovery of Rs.21,48,139/- apart from Rs.2,70,13,567/- towards the loss of profit along with interest thereon.
8 Com.A.P.No.66/2022
6. On the basis of the pleadings, the learned arbitral tribunal had framed as many as 19 issues. Both parties had adduced their respective oral and documentary evidences. Having heard the matter, the learned arbitral tribunal allowed the claim of the respondent herein of Rs.7,02,27,600/- towards Risk Cost, i.e., differential of aggregate values POs on new contractors/vendors and value of all the POs issued to respondent. The rest of the claims of the respondent was rejected. The counter claim of the petitioner was rejected in its entirety. Against the said arbitral award, the petitioner has preferred the present petition on the grounds mentioned in the petition.
7. In response to the court notice, the respondent appeared before the court by engaging an advocate and filed objections to the main petition defending the findings and final decision of the learned arbitral tribunal.
8. This court has heard the arguments addressed by learned counsel for the respective parties. They have also filed their written submissions.
9 Com.A.P.No.66/2022
9. Sri.Sameer Parekh, learned advocate for the petitioner argued that, the petitioner had supplied 1600 KVA transformers and other equipment. However, there were disputes about the nature of the civil works to be carried out. NTPC wanted additional specifications which the petitioner was not able to carry out unless the variation was issued. In order to discuss these matters, a meeting was held on 04.04.2014, wherein the petitioner and respondent had decided to amicably settle the dispute with no claims against each other. The respondent had agreed to short close the purchase orders and requested the petitioner to continue to provide temporary storage, material handling, security services until new contractor takes charge. Against the consensus arrived at the meeting dated 04.04.2014, the respondent issued a notice dated 09.05.2014 sought to invoke risk purchase clause. Learned arbitral tribunal in para No.56 of its award recorded its reasons and disbelieved that there was a settlement. Learned counsel argued that, when the agreement is recorded by way of exchange of letters, the same amounts to novation short closing the original contract. Learned counsel submits that, ignoring the vital evidence of exchange of letters would amount to patent illegality on the 10 Com.A.P.No.66/2022 face of the award U/Sec.34(2A) of the Arbitration and Conciliation Act. The decision of the arbitral tribunal is seems to be contrary to Sec.28(2) of the Arbitration and Conciliation Act wherein the learned tribunal by imposing its own understanding has sought to overwrite the agreement between the parties. Learned counsel further argued that, though there was no evidence produced with respect to carrying out of the work or payment for the work or the completion of the work, considering that BHEL is a private sector undertaking and a responsible entity, the learned arbitrator awarded about Rs.7.2 Crores by way of risk purchase.
10. The learned counsel further submits that, the arbitral tribunal held that, time is the essence of the contract only for the reason that, the time stipulated by NTPC was a fact known to RW1. In fact, NTPC contract was not provided to the petitioner. The finding of the learned arbitrator is based on the contract between NTPC & respondent and not on the contract between the petitioner & respondent. This is a violation of Sec.28(2) of the Arbitration and Conciliation Act. Learned counsel cited the decisions of the Hon'ble 11 Com.A.P.No.66/2022 Supreme Court in M/s Hind Construction Contractors by its sole proprietor Bhikam Chand Mulchand Jain (Dead) by LRs Vs State of Maharashtra [1979 (2) SCC 70], Arosan Enterprises Ltd. Vs Union of India & Anr. [(1999) 9 SCC 449] and McDermott International Inc. Vs Burn Standard Co. Ltd. & Ors. [(2006) 11 SCC 18] to the proposition that, in a construction contract, time is not of the essence especially, when there is a provision for extension of time. Learned arbitral tribunal has not followed the law laid down in the said cases and therefore, as held by the Hon'ble Supreme Court in Associate Builders Vs DDA [2015 (3) SCC 49], the judgment in violation and disagreeing the orders of the superior courts in India would be regarded as being contrary to the fundamental policy of Indian law.
11. Learned counsel submits that, the impugned award does not even record the submissions of the petitioner under the terms of the contract clauses. The failure of the learned tribunal to record the submissions of the petitioner, or to consider them is contrary to Sec.31(3) of the Arbitration and Conciliation Act. Learned counsel submits that, as held by the Hon'ble Supreme Court in PSA SICAL Terminals Pvt. 12 Com.A.P.No.66/2022 Ltd. Vs Board of Trustees of V.O.Chidambranar Port Trust Tuticorin & Ors. [2021 SCC Online SC 508], a decision which is perverse would certainly amount to a patent illegality appearing on the face of the award. However, a finding based on no evidence at all or an award which ignores vital evidence in arriving that, its decision would be perverse and liable to be set aside on the ground of patent illegality.
12. On hearing his arguments, the court asked learned counsel for the petitioner to propose the points for consideration. Learned counsel formulated the following points for consideration:
Proposed points for Consideration (1) Whether the award is contrary to the documents on record and tribunal arrived at the conclusion based on contract which was not part of the record said to have entered into between respondent and a third party?
(2) Whether the arbitral tribunal failed to follow the substantive law of India and also not followed settled legal position and judgments cited? (3) Whether the arbitral tribunal inserted provisions in the contract which were admitting not found in the contract?13 Com.A.P.No.66/2022
(4) Whether the arbitral tribunal decided the computation of damages despite no evidence?
(5) Whether the arbitral tribunal decided the matter in favour of the respondent not following the clauses of contracts strictly or the law of land?
13. Learned counsel for the respondent in her arguments submitted that, on 14.01.2014 a meeting was held via Video Conferencing to discuss the changes to be made to the boundary wall. The petitioner on 27.01.2014 submitted the drawing of boundary wall (Ex.C27) and the same was not in accordance with tender specification. The said drawing was a pre-cast, pre-designed boundary wall, but, whereas the tender drawing was a raft foundation. Therefore, on 25.02.2014 a meeting was held wherein the petitioner was agreed to prepare a new drawing of the compound wall on par with the tender specification. On 07.03.2014, the respondent furnished a new drawing [Ex.R35(a)] which was also not in the line with the agreed specifications. The delay in submitting the drawings was attributable to the petitioner.
14. Learned counsel further submits that, the petitioner repeatedly claiming that, the dispute between the 14 Com.A.P.No.66/2022 parties was settled by mutual agreement which was taken place on 04.04.2014 without any claims against each other is not true. On 04.04.2014, the petitioner informed the respondent that, they are withdrawing from the contract. The respondent responded to the letter dated 04.04.2014 stating that, "as per the petitioner's request for withdrawal from the contract made in the meeting held on the same day and the corresponding letter, the respondent had to short close the four Purchase Orders without prejudice to any rights of the respondent under the contracts including its right to initiate any action to invoke the Risk Purchase Clause/any other penal action against the petitioner as per the contract terms of the respondent's policies". The petitioner has not produced any minutes of the meetings held on 04.04.2014 to substantiate that, on that day an amicable settlement has reached. Having appreciated oral and documentary evidence on record, the learned arbitral tribunal held that, no prudent owner would agree for terms 1 to 3 as indicated in Ex.C6, the letter dated 04.04.2014 addressed by RW1 to the claimant. Any agreement of this nature, if reached, would necessarily end in a minutes of meeting.
15 Com.A.P.No.66/2022
15. Learned counsel submits that, the arbitral tribunal has followed the guidelines issued by the Hon'ble Supreme Court in Muralidhar Chiranjilal Vs Harishchandra Dwarakadas & Anr. [AIR 1962 SC 366] and computed the damages. The value of the contract awarded to the petitioner was Rs.18,05,40,500/- and whereas the value of the contract awarded to the new vendors was Rs.25,69,68,050/-. The respondent had to pay extra to get the work that was awarded to the petitioner. In Mahanandi Coal Fields Ltd. & Ors. Vs Dhansar Engineering Company Pvt. Ltd. & Ors. (citation not provided), the Hon'ble Supreme Court held that, failure to comply with the contractual obligations of executing the quantity of work or the extra work as the case may be must visit the petitioners with liability to compensate the appellants in terms of the other express clauses of the contract to the extent of unfinished work and in particular the financial loss suffered by the appellants for getting the same work done through a third agency at a higher rate.
16. Learned counsel argued that, even if there was no express clause stating that, the time is of the essence, it 16 Com.A.P.No.66/2022 generally presumed that, in a commercial contract time will be of essence. The petitioner had the knowledge of the delivery period from October 2013 and the exact delivery date was informed to the petitioner through the purchase orders. Therefore, the learned tribunal having appreciated the attendant circumstances held that, the time was the essence of the contract.
Analysis of Issues :
17. The counter claim of the petitioner has been rejected by the learned arbitral tribunal. The petitioner, in its petition U/Sec.34 of the Act, has not questioned the correctness of the award in so far as rejection of his counter claim. The petitioner has questioned the correctness of the award in so far as allowing of one of the claims made by the respondent before the arbitral tribunal. For the sake of ready reference and at the cost of repetition, the claims of the respondent before the arbitral tribunal reproduced below:
Sl.No. Details of Claims Amount (Rs.)
1. Towards Risk Cost, that is differential of aggregate values POs on new 7,02,27,600/-
contractors/vendors and value of all the POs issued to respondent
2. Penalty / LD by NTPC for delay 4,47,76,983/-
3. Total of claims 11,50,04,583/-
17 Com.A.P.No.66/2022
4. Add : BHEL Handling charges @ 30% on 3,63,61,346/-
above total of Rs.11,50,04,583/-
Total Claim Amount 15,13,75,929/-
18. Out of the above claims, Claim No.1 alone came to be allowed and rest of the claims have been rejected. The soul of the findings of the arbitral tribunal is that, the time was the essence of the contract, in view of the short closing of the contract by the petitioner, the respondent was compelled to get its works done through the third party by which the respondent has incurred an additional cost of Rs.7,02,27,600/- and hence, the respondent is entitled to recover the same from the petitioner. In the background of this analysis, the following points alone arise for this court's consideration:
Points for Consideration (1) Whether the learned tribunal committed a patent illegality in arriving at a conclusion that the time is the essence of the contract ?
(2) Whether the award of the learned arbitral tribunal in awarding Rs.7,02,27,600/- is patently illegal or opposed to the public policy or opposed to the very basic notions of Indian Law?
(3) Whether the arbitral tribunal failed to follow the substantive law of India and also not followed settled legal precedents?18 Com.A.P.No.66/2022
(4) What order?
19. The court answers the above points as follows:
Point No.1 : In the negative, Point No.2 : In the negative, Point No.3 : In the negative, Point No.4 : As per the final order for the following REASONS Point Nos.1 to 3 :
20. The core version of the respondent is that, the respondent was adhered to the terms of the contract entered into between it and NTPC. In order to execute the works awarded by NTPC, the respondent floated tenders. The successful bidder was required to carry out the works within the time stipulated by NTPC in its contract with the respondent. Failure to carry out the works awarded by NTPC within the timeline would attract penalties. In fact, the NTPC imposed a penalty of Rs.4,47,76,983/- upon the respondent for causing delay. The version of the petitioner is that, since there was an express contract between the petitioner and respondent, the contract between the respondent and NTPC should not have dragged into picture; the reason being that, 19 Com.A.P.No.66/2022 the petitioner is not a party to the contract taken place with NTPC. The clauses of time frame in contract with the NTPC was unnecessarily brought into the picture and made the arbitral tribunal to read the clauses of contract between petitioner and respondent in the backdrop of clauses with NTPC, which was not permissible to the arbitral tribunal. In the background of these issues, points No.1 to 3 have been framed. These three points are inter connected and overlapping on each other. Therefore, these points have been taken up for common discussion.
21. Learned arbitral tribunal framed Issue No.4 and 13 with respect to, whether the time is the essence of contract or not? Learned arbitral tribunal in para No.17 to 45 made elaborate discussions on this issue and held that, the time was the essence of the contract. Learned arbitral tribunal appreciated the evidence of RW1 in the background of agreement entered into between NTPC and respondent. In his cross examination, RW1 had clearly admitted that, he was well aware the requirements as well as the procedure followed by NTPC in these types of commercial contracts. In fact, RW1 Mr.R.K.Sharma was a graduate in mechanical 20 Com.A.P.No.66/2022 engineering and a diploma holder in Management apart from being a chartered engineer on the panel of Ministry of New and Renewable Energy, Govt. of India. He was also an Ex-
employee of respondent BHEL and he served to the said institution for a period of 35 years in energy sector and his designation was General Manager of BHEL during his retirement in August 2011. It appears the petitioner in order to utilize the rich experience of Mr.R.K.Sharma recruited him. If the NTPC was not entered into an agreement with the respondent, the respondent had no occasion to float the tender. Mr.R.K.Sharma admitted that, the respondent was executing the works of NTPC. The learned arbitral tribunal, therefore, appreciated his evidence in the background of contract with NTPC. Interference of this court U/Sec.34 of the Arbitration and Conciliation Act is very limited one. This court is not supposed to re-appreciate the evidence on record. This court, however, look into the manner of appreciation made by the arbitral tribunal to know that, whether the appreciation done by the arbitral tribunal is against to the very basic notions of the rules of appreciation. Mr.R.K.Sharma being an Ex-employee of BHEL and the employee of petitioner had a reasonably sound knowledge in 21 Com.A.P.No.66/2022 the field. He had first handed information with respect to the transactions between petitioner and respondent with respect to the purchase orders. The petitioner having felt that, Mr.R.K.Sharma is the competent person to adduce evidence on its behalf has examined him as RW1. Therefore, this court do not find any lapses on the part of learned arbitral tribunal in appreciating the evidence of Mr.R.K.Sharma in the background of agreement with NTPC.
22. The learned arbitral tribunal in para No.27 of the award has taken note of an important aspect of the matter that, the contract between petitioner and responded do not provide for imposition of any penalty for extending time and held that, if there had been any class providing for extension of time on imposition of penalty it would have been something different. Since the respondent had entered into a contract with NTPC, the respondent was required to complete the contractual obligations within the stipulated time. Unless, the NTPC extended the time to the respondent, the respondent had no occasion to extend the time to the petitioner. In fact, the respondent was imposed with a penalty by NTPC for causing delay. Learned arbitral tribunal 22 Com.A.P.No.66/2022 has taken note of the settled principle of law declared by the Hon'ble Supreme Court1 that, the agreement should be read as a whole along with the corresponding obligations of the parties in order to gather the true intention of the parties that, the time is the essence of the contract or not. The learned arbitral tribunal taking into consideration the observations made by the Hon'ble Supreme Court 2 held that, Solar power project is a public utility service and any delay in executing such a public service scheme would affect the public at large and whoever is responsible for the delay is liable to indemnify the loser. The learned arbitral tribunal however, in the concluding paragraphs 44 and 45 opined that, the loss suffered could be compensated by means of penalty that is what exactly the law is laid down by the Hon'ble Supreme Court. It is to be noted that, the NTPC has allegedly imposed penalty on the respondent for having caused the delay. The NTPC has not terminated the contract only on the ground that, the time was the essence of the contract. The test to decide whether the time is the essence of
1. 1.Arosan Enterprises Ltd. Vs Union of India [1999 (9) SCC 449]
1. 2. Hind Construction Contractors Vs State of Maharashtra [1979(2) SCC 70] 2Construction and Design Services Vs Delhi Development Authority [2015 (1) CBR 153 SC] 23 Com.A.P.No.66/2022 the contract or not is that, it is relevant to refer the interpretation of Sec.55 of the Contract Act in Arosan Enterprises Ltd. (foot note 1.1), the same is as follows:
"If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so."
Incidentally the law is well settled on this score on which no further dilation is required in this judgment to the effect that when the contract itself provides for extension of time, the same cannot be termed to be the essence of the contract and default however, in such a case does not make the contract voidable either. It becomes voidable provided the matter in issue can be brought within the ambit of 24 Com.A.P.No.66/2022 the first paragraph of Section 55 and it is only in that event that the Government would be entitled to claim damages and not otherwise. In Pollock & Mulla's Indian Contract & Specific Relief Acts, three several cases have been very lucidly discussed, where time can be termed to be the essence of contract: "1. Where the parties have expressly stipulated in their contract that the time fixed for performance must be exactly complied with. 2. Where the circumstances of the contract or the nature of the subject matter indicate that the fixed date must be exactly complied with and 3. Where time was not originally of the essence of the contract, but one party has been guilty of undue delay, the other party may give notice requiring contract to be performed within reasonable time and what is reasonable time is dependent on the nature of the transaction and on proper reading of the contract in its entirety."
23. In the present case, the parties to the agreement have expressly stipulated in their contract that the time fixed for performance must be exactly complied with, the circumstances for insertion of such a clause is that, the respondent was entered into contract with NTPC, within the period stipulated by the NTPC the respondent was required to complete the assignments. The nature of the subject matter 25 Com.A.P.No.66/2022 between the petitioner and respondent indicate that the fixed date must be exactly complied with. Therefore, the tests provided in Arosan Enterprise Ltd. (Supra) is complied with and it can be conveniently held that, the time was the essence of the contract. The learned arbitral tribunal having appreciated the evidence and circumstances before it has opined that, the time was the essence of the contract and therefore, this court has no reason to interfere with the finding of the arbitral tribunal in this regard.
24. In the email dated 06.01.2014 (part of Ex.R16) the respondent had intimated the petitioner that, the project commissioning is scheduled on 02.05.2014. In the background of the date scheduled for commissioning, a meeting was held on 04.04.2014. Mr.Anil Jain (RW2) had participated in the meeting. In his evidence he deposed that, Mr.R.K.Sharma - the representative of the petitioner was not attended the meeting and no minutes of the meeting were recorded. It is not in dispute that, the respondent BHEL in the said meeting expressed its intention to cancel the contract with the petitioner. The petitioner urged before the learned arbitral tribunal that, in the said meeting the parties 26 Com.A.P.No.66/2022 arrived at an amicable settlement. The learned arbitral tribunal rejected the version of petitioner that, an amicable settlement was arrived for the reason that, no such acceptable proof was produced before the tribunal.
25. The respondent was keep on reminding the petitioner with respect to time scheduled for completion of the project. At no point of time, the respondent extended the scheduled time to complete the project. As per Sec.55 of the Contract Act, if in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non performance of the promise at the time agreed, at the time such acceptance, he gives notice to the promisor of his intention to do so. In the present case, the respondent herein neither expressly nor impliedly extended the agreed time. Therefore, there is no novation of contract by way of exchange of letters.
26. The arbitral tribunal in para No.60 to 77 elaborately discussed on Issue No.2 and held that, the 27 Com.A.P.No.66/2022 petitioner herein has failed to submit the drawings as per the requirements of NTPC as mentioned in the agreement with the respondent. The petitioner in his petition U/Sec.34 of the Arbitration and Conciliation Act has not questioned the correctness of the findings of the arbitral tribunal on issue No.2. In the light of the failure on the part of petitioner in submission of drawings as per the requirement of NTPC, the arbitral tribunal in para No.79 held that, the respondent was constrained to terminate the purchase order vide termination notice dated 09.05.2014. The arbitral tribunal further held that, in view of the respondent justified the termination of contract has a right to claim, risk cost and damages from the respondent. The petitioner herein has committed the breach of contract without carrying the works assigned to it within the stipulated period. As per Sec.73 of the Contract Act, when a contract has been broken the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose the course of things from such breach or which the parties knew, when they made the contract, to be likely to result from the breach of it. 28 Com.A.P.No.66/2022 Illustration-(f) appended to Sec.73 is applicable to the facts and circumstances of the present case is as follows:
"(f) A contracts to repair B's house in a certain manner, and receives payment in advance. A repairs the house, but not according to contract. B is entitled to recover from A the cost of making the repairs conform to the contract."
27. Since the petitioner herein did not perform his part of contract in execution of the work in accordance with the agreed terms and agreed period, the respondent was compelled to float a fresh tender and got the works done through a new contractor. The contract amount in respect of four purchase orders issued to the respondent was Rs.18,05,40,500/- and the value of the contract awarded to the new vendor was Rs.25,69,68,050/-. The respondent herein had claimed Rs.7,02,27,600/- under the heads towards the risk cost, that is differential of aggregate values, POs on new contractors / vendors and value of all the POs issued to the respondent. The learned arbitral tribunal granted this relief alone by rejecting the claim of Rs.4,47,76,983/-, the penalty imposed by NTPC and also 29 Com.A.P.No.66/2022 handling charges at the rate of 30% on the total compensation of Rs.11,50,04,583/-.
28. It is to be noted that, the respondent has not preferred any petition U/Sec.34 of the Arbitration and Conciliation Act questioning the correctness of arbitral award for not granting the other claims. The petitioner has not questioned the correctness of the arbitral award for rejection of its counter claim.
29. The court exercising its jurisdiction U/Sec.34 of the Arbitration and Conciliation Act, usually will not interfere with the findings and decision of the arbitral tribunal unless, it is made out the grounds available under the said provision. Since there was no consensus between the parties in appointing the arbitrator, the Hon'ble High Court of Karnataka in CMP No.97/2020 appointed Justice A.V.Chandrashekar, a Former Judge of Hon'ble High Court of Karnataka as an arbitrator. Absolutely, there is no whisper about the integrity and proprietary of the arbitrator. It is not the case of petitioner that, the learned arbitrator has not provided equal opportunities to the parties. The learned arbitrator having satisfied that, the respondent herein has 30 Com.A.P.No.66/2022 justified in terminating the contract for the reason of breach by the other side allowed one among the three claims of the respondent. The arbitral award is neither patently illegal nor opposed to the public policy nor in contravention with the fundamental policy of Indian law. Therefore, this court has no reason to interfere with the arbitral award. Point No.4 :
30. In view of the findings on aforesaid issues, I proceed to pass the following :
ORDER The petition filed under Section 34 r/w Sec.28(1) and 28(3) of the Arbitration and Conciliation, 1996 is hereby dismissed.
The parties shall bear their respective costs.
[Dictated to the Stenographer, transcribed by her, corrected and signed by me and then pronounced in the open court on this the 18th day of March, 2025] (JITHENDRANATH C.S.) LXXXVI Addl. City Civil & Sessions Judge (Commercial Court), Bengaluru