Judgment

S.B. Sinha, J.—Leave granted.

Background facts

The parties herein entered into a Power Purchase Agreement on 31.03.1997 for short gestation liquid fuel based power project of 355 MW.

2. The said agreement contained an arbitration clause in Article 14 thereof.

Dispute

3. The Plant was commissioned. In terms of the said agreement, the power generated in the Plant constructed by the Respondent herein was to be supplied to the Appellant Corporation. The price to be paid therefor by the Appellant included ‘capacity charges’ and ‘variable charges’. Upon commission of the Plant, various tests as regard capacity of the plant to generate electricity were carried out. The Appellant herein had been paying capacity charges on the output of the Plant which was fixed at 368.144 MW from 08.11.2001. A notice, however, was issued by the Appellant alleging that the capacity charges payable by it with reference to the installed capacity should have been fixed at 334.75 MW x Rh (relative humidity) factor with tolerance limit of + or - 5 as per the agreement which works out at 351.49 MW and on that premise as to why future payments should not be made accordingly and why the previous bills should no