The court held that the Arbitral Tribunal exceeded its jurisdiction by interpreting the contract against its clear terms, which specified the responsibility for royalty charges lay with the Respondent-Claimant.

JUDGMENT :

R.I. Chagla, J.

1. By the Commercial Arbitration Petition No. 646 of 2021, the Petitioner- Respondent in the arbitral proceedings has impugned the majority Award dated 22nd May 2020 (“the said Award”) under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”).

2. In the companion Commercial Arbitration Petition No. 641 of 2021, an identical Award has been challenged. In view of the parties having referred to the pleadings and records of the Commercial Arbitration Petition No. 646 of 2021 during the oral arguments and the written submissions filed therein, the facts in that Arbitration Petition is being adverted to.

3. The brief background of facts are as under:-

(i) The National Thermal Power Corporation (“NTPC”)had proposed setting up the Super Thermal Power Plan (“STPP”) in Tehsil Gadarwara, District Narsinghpur, Madhya Pradesh. Accordingly, NTPC invited tenders for the work of “DPR & Detailed Engineering, Project Management and Construction of Coal Transportation System including Associated Electricals Package for Gadarwara Super Thermal Power Plant, Stage-I”.

(ii) NTPC issued a Letter of Award on 25th June 2014 appointing the Petitioner- Respondent as the Project Management Consultant / Project Executing Agency for the work.

(iii) The Petitioner- Respondent in turn published a Notice dated 23rd November 2016 inviting tenders for the subject work described in the Notice at (Exh.B to the Petition).

(iv) Technical bids of the bidders were opened on 26th December 2016.

(v) The financial bids of the bidders were opened on 31st March 2017.

(vi) The Respondent-Claimant was found to be the ‘L1’ bidder.

(vii) The Petitioner-Respondent issued a Letter of Acceptance (“LoA”) on 16th May 2017 in favour of the Respondent-Claimant in respect of the subject work for the total cost of Rs. 122,32,98,483/- with the completion period of 15 months (which period was subsequently duly extended from time to time), which was countersigned and accepted unconditionally by the Respondent-Claimant.

(viii) The Respondent-Claimant commenced the subject work in July 2017.

(ix) The Petitioner-Respondent and the Respondent-Claimant executed Contract Agreement on 5th December 2017.

(x) The Collector’s office (Mineral Branch), Madhya Pradesh addressed a demand letter dated 27th December 2018 directing the Respondent-Claimant to make payment of Royalty charges at the rate of Rs. 100/- per cubic meter (cum) for the earth used in making the embankment for the subject work (aggregating approximately Rs. 22,00,00,000/-).

(xi) The Respondent-Claimant issued a Notice invoking Arbitration on 13th June 2019.

(xii) The Three Members Arbitral Tribunal comprising Mr.A.K. Mittal (Presiding Arbitrator), Mr. Atul Mohan (Co-Arbitrator) and Mr. P.S. Rao (Co-Arbitrator), entered into reference on 20th August 2019.

(xiii) The Arbitral Tribunal passed the said Award. The Presiding Arbitrator passed a separate Dissent Note on 22nd May 2020.

(xiv) By the said Award, the Arbitral Tribunal held that the liability to pay royal