I.A. No. 4430/1997

1. I.A. No. 4430/1997 in Suit No. 3022A/1996 are the objections under Sections 30 and 33 of the Arbitration Act, 1940, filed by the objector M/s. National Thermal Power Corporation Limited (NTPC). The objections are with respect to the Award dated 19.11.1996 of the Arbitration Tribunal comprising of three members, namely, Sh. P.P.

Dharwadkar, FIE Presiding Arbitrator, Justice Rajender Sachar, Retd. Chief Justice, Delhi High Court and Justice Avadh Behari Rohatgi, Retd. Judge of this Court. There are two Awards, a majority Award and a minority Award. The majority Award is of Sh. P.P. Dharwadkar and Justice Avadh Behari Rohatgi (Retd.) and the minority Award is of Justice Rajender Sachar (Retd.).

2. The disputes which arose between the parties pertain to the tender called for by the objector for design, manufacture, supply of pumps with erection, testing and commissioning of circulating water pumps (CW pumps) for the project of the objector at Ramagundam in the State of Andhra Pradesh. The non-objector (hereafter “Flowmore”) submitted its offer on 29.7.1979 and it was accepted by NTPC by issuing a Letter of Intent on 18.1.1980. Flowmore under the contract was to supply 7 CW pumps along with electric motors as also some spare parts. Flowmore was also to undertake installation of the pumps at site. The total value of the contract was Rs. 1,15,02,900/- for supply of the equipment, spares and erection. It may be noted that the contract was for supply of Stainless Steel Impellers (S.S. Impellers). The S.S. impellers were to be purchased by Flowmore from M/s. Peerless Pumps Inc. U.S.A. M/s. Peerless Pumps failed to supply the S.S. Impellers and NTPC therefore agreed to purchase indigenously manufactured S.S. Impellers. Flowmore started manufacturing pumps with indigenous technology approved by NTPC. The sum and substance of the matter is that Flowmore could not supply pumps with S.S. Impellers and it could only supply pumps with bronze impellers which was agreed by NTPC. A total of 5 pumps were supplied by Flowmore to NTPC of which one was with cast iron impellers and 4 with bronze impellers. NTPC in the meanwhile on account of default of Flowmore in supplying the pumps purchased 3 CW pumps with bronze impellers from Johnston Pumps Limited, Calcutta.

3. The two charts showing the supply of pumps by Flowmore and by Johnston Pumps are as under:

“DETAILS OF C.W. PUMPS SUPPLIED BY M/s. FLOWMORE

Scheduled date of completion of Trial Actual dates of completion of Trial Operation

Operation as per contract conducted by claimant

i) First CW Pump 1.7.82 20.4.84

ii) Second CW Pump 1.7.82 16.6.84

iii) Third CW Pump 1.7.82 7.11.84

iv) Fourth CW Pump 1.12.82 22.2.86

v) Fifth CW Pump 1.12.82 2.12.87

vi) Sixth & Seventh CW Pumps 1.4.83 Order cancelled on 1.10.1987. Contract amended on 29.9.1988.

DETAILS OF C.W. PUMPS SUPPLIED BY M/s. Johnston to NTPC

Date of LOA Schedule date of Despatch Actual date of Despatch Date of receipt at site

1st Pump 15.7.82 4.11.82 30.9.82 29.11.82

2nd Pump 15.7.82 4.11.82 31.5.83 8.9.83

3rd Pump 29.2.84 30.4.84 30.4.84 18.6.84”

4. Flowmore therefore supplied 5 pumps and 5 motors for which NTPC made payments from time to time but did not make the payment of the last instalment being the 10% balance amount of the price. Before the remaining 6th and 7th pumps could be supplied by Flowmore, NTPC vide its letters dated 1.10.1987 and 29.9.1988 deleted the supply of the 6th and 7th pumps from the scope of the supply under the contract. Flowmore submitted its bills amounting to Rs. 24.23 lakhs on account of the balance price of 10% and other bills for supplies made and work done. Since Flowmore had a balance of Rs. 2,89,730/- in their hands out of the initial advance paid to them by the NTPC they adjusted this balance and asked for balance amount payment of Rs. 21,63,105/-. Since NTPC did not pay, Flowmore issued a legal notice dated 27.2.1990 demanding the said amount. Finally arbitration clau