The main legal point established in the judgment is that challenges to arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996 must be based on evidence and statutory provisions, and the court will not interfere unless the awards are contrary to the fundamental policy of Indian law.

1. These two petitions have been filed by the Petitioner, Public Joint Stock Company Power Machines - Ztl, Lmz, Electrosila, Energomachexport under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’). The challenge in OMP No.344/2015 is to the partial Award dated 18th February, 2015 passed by the three-member Arbitral Tribunal (‘AT’) and the challenge in OMP (Comm.) No. 316/2016 is to the final Award dated 12th April, 2016 whereby the costs to be paid by the Petitioner to the Respondent, Bharat Heavy Electricals Limited (‘BHEL’), were determined.

2. At the outset, it required to be noticed that the predecessor-in-interest of the Petitioner was M/s OJSC Power Machines and it was substituted by the Petitioner on 3rd February, 2017.

Relevant facts

3. The Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (‘UPRVUNL’) is the owner of the Obra Thermal Power Station. UPRVUNL approached BHEL to undertake modernization, refurbishment and upgrading of the units. BHEL in turn approached PM. OJSC Power Machines (‘PM’) entered into a 'principal to principal' contract with BHEL on 28 August, 2006 for the supply of imported portion for R & M and U of 5x200 MW units of the Obra Thermal Power Plant (Units 9 to 13 ) located in Uttar Pradesh, India.

4. The provisions of the Contract relevant to the present petition provided that:

(i) BHEL would pay a fixed lump sum contract price of US$ 46,643,968.

(ii) Advance Payment in the sum of 10% of the contract price was payable by BHEL.

(iii) 60% of the contract price was payable by BHEL upon shipment of the equipment. For this payment, BHEL was required to open a letter of credit (L/C) two months before the shipment. The L/C was to remain valid for one month after the completion of supply.

(iv) 20% of the contract price was to be paid by BHEL on submission of invoice and Delivery Receipt Certificate issued by BHEL. For this payment, a separate L/C was required to be opened two months before receipt of material at the site and valid until one month after completion of supply at site.

(v) 5% of the contract price was payable by BHEL against submission of invoice and Take-over Certificate issued by BHEL after completion of commissioning.

(vi) The remaining 5% was payable against submission of invoice and completion certificate to be issued by BHEL after successful completion and acceptance of PG Test.

(vii) The PM was required to provide an Advance Payment Bank Guarantee (APBG) and a Performance Bank Guarantee (PBG), each for 10% of the contract price.

(viii) For Units 9 to 11, in the event of delay in completion of commissioning due to the fault of PM, it was required to pay 0.5% of delayed unit price value per full week of delay with a limit of 10% of delayed unit price value. For Units 12 and 13, in the event of delay in delivery due to PM’s fault, PM was required to pay 0.5% of delayed unit price per full week of delay with limit of 10% of delayed unit price value. The maximum liability of PM for liquidated damages (LD) could not exceed 15% of the contract value.

5. Further, BHEL was required to provide certain basic engineering documents to PM pursuant to Appendix 6B of the Contract. These included inter alia the site plan, the general plant layout, operational history and steam, oil and cooling water analyses. PM was also required to provide certain basic engineering documents to BHEL under Appendix 6 of the Contract.

6. Disputes arose between the parties. BHEL invoked the BGs and subsequently, by letter dated 6th August, 2009, PM terminated the Contract.

7. Article 12.7 stated that that the Contract was governed by Indian law. Article 14 of the Contract provided for resolution of disputes by arbitration under the Act. The seat of the arbitration was New Delhi. By letter dated 7th September 2010, PM invoked the arbitration clause.

Claims and Counter-Claims

8. PM's case was that BHEL failed to effect timely delivery of the Appendix 6B Documents; failed to make full payment for the deliveries effecte