The court established that the alteration to a contract does not necessarily change the original terms and conditions, and the applicability of contract provisions may vary depending on the stage of the contract.

RAJIV SHAKDHER, J.

1. This appeal is directed against the order of the learned single Judge dated 4.7.2007. The learned Single Judge by virtue of the impugned judgment has sustained the award dated 30.3.2007.

2. The background in which the present controversy has arisen is briefly as follows:

2.1 The respondent had placed an Advance Purchase Order (for short „APO?) dated 10.9.1998 for supply of “400W TWT high power amplifier in C-band for AC” (in short equipment) on the appellant.

2.2 The APO was admittedly altered by the respondent vide communication dated 22.9.1998. It is also not in dispute that the appellant by a return communication dated 30.9.1998, accepted the alteration proposed by the respondent. It is important to note that the alteration suggested by the respondent, admittedly brought about a change qua the model of the equipment. More pertinently, the letter of alteration clearly indicated that apart from the modification suggested therein, all other terms & conditions as already stipulated would apply. While, accepting the alteration to the initial APO dated 10.9.1998, the appellant unreservedly accepted all terms & conditions.

2.3 Thereafter, on 23.10.1998, the appellant sought extension of time for various reasons. The respondent was not in a mood to comply, and consequently, vide letter dated 19.11.1998 cancelled/terminated the APO as amended.

2.4 It is in this background that the appellant had come to this Court by way of a petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the „Act?), being: OMP No.64/1999, seeking an injunction on the encashment of the bank guarantee in the sum of Rs. 21.00 lakh; which had been furnished at the stage of submission of the bid.

2.5 This Court vide order dated 9.3.1999, had granted injunction on the encashment of the bank guarantee.

2.6 The matter thereafter was taken to the arbitrator for adjudication who, as noticed above by us, by virtue of the impugned award dismissed the claims preferred by the appellant. The claims of the appellant were varied. These being as follows:

i. Loss of profit on account of wrongful termination of the contract;

ii. Charges incurred in keeping the performance bank guarantee alive;

iii. Litigation costs incurred on account of what the appellant claimed was illegal termination of the contract; and

iv. Lastly, additional claims; which were stated as ones, qua which, the appellant was unable to crystalise the claims at that stage.

2.7 As against this, the respondent filed not only its rebuttal, but also raised counterclaims which, inter alia included their right to retain the bank guarantee amount of Rs.21.00 lakh against damages suffered by them. In addition interest was also sought by the respondent.

2.8 The arbitrator by virtue of the impugned award, rejected all the claims of the appellant and allowed those of the respondent with interest @ 12 per cent per annum from the date of invocation of the bank guarantee till date of payment.

2.9 Aggrieved by the same, the appellant preferred their objections under Section 34 of the Act. By virtue of the impugned judgment, as noticed above, the objections of the appellant were dismissed.

3. Before us, Mr. De, learned counsel for the appellant, has made two submissions:

i. The letter of termination issued by the respondent is not in terms of Clause 5 of the APO; and

ii. The provisions of Clause 22 of the general terms & conditions of the contract mandated that before the respondent proceeded to terminate the contract it had to issue a written notice granting, at least, 30 days time for the appellant to cure the defect. Having not done so, the termination was bad in law and, therefore, the claims of the appellant, at least, for recovery of Rs.21.00 lakh ought to be rejected.

3.1 On the other hand, Mr. Sanjeev Narula, learned counsel for the respondent, has largely relied upon the award and the observations of the learned single Judge. In particular, Mr.